Civ Pro II: Garrett

Spring 2001

Personal Jurisdiction

Sources of authority

Statutory Law: is there an authorizing statute?

Constitutional: Does it comport with Const. principles?

3 Types of PJ

In personem

In rem: property present in state and subject of law suit

Quasi in rem (Attachment): Jurisdiction over matters unrelated to property, but property serves as basis (security) for jurisdiction

  • Judgment limited to value of land
  • Harris v. Balk: Debt in debtor is considered property and can be attached; you can sue wherever debtor is and collect from him
  • Whole premise of International Shoe is at odds with quasi in rem’s justificaiton

The Old Approach: 3 Bases for traditional juridiction

Presence

  • Pennoyer v. Neff (1877): Presence is both sufficient and necessary
  • Facts:

1st suit (in personem): Mitchell sued Neff (P) in OR ct. for non-payment of legal fees and won via default judgment;

Mitchell was non-resdient of OR and not physically present in OR at time of service, made by publication in local paper

2nd suit (quasi in rem): Suit brought by Neff for ejectment in OR court

Statute: required either in-state property or appearance in court

Neither was satisfied

  • Holding: first court did not have PJ over P in first proceeding
  • Presence

Sufficiency: Each state has exclusive jurisdiction and sovereignty over persons and property within its territory

Over-inclusive: fraud, duress, trickery

Transitory jurisdiction: State can exercise jurisdiction over an individual present in state, whether permanently or temporarily

Necessary: No state can exercise jurisdiction over persons or property outside its borders

Under-inclusive: mobile world

  • Importance and justification of presence

Notice (Rule 4)

Sovereignty: federalism concerns

In Pennoyer, derives from concerns of interational law

  • Futility of exercising jurisdiction over another state’s citizens
  • Practical concerns (causing war, e.g.)

Due Process Clause restricts power of state governments

  • Requires jurisdiction before party is given service

Full Faith and Credit Clause (Art. IV, §1): courts honor other states judgments but not if there was no PJ over D in first case

  • Collateral attack: D may attack judgment rendered in first suit on grounds of lack of PJ only if he did not appear in first suit

Fairness to D: P is in control of rest of lawsuit; want to level the playing field

Bias against D: regional bias; not as common today

  • Advantages of Presence

Bright line rule

Eliminates worries about adequate notice

Courts today have adopted different tests

Forces property owners to be more cautioius where they own land; check if there land has been attached

Decreases frivolous lawsuits but increases costs of meritorious ones

  • Special appearances: most states allow P to contest the validity of jurisdiction without becoming amenable to suit by being there contesting

Consent

  • Carnival Cruise Lines, Inc. v. Shute (1991, p. 169): forum selection clause is sufficient consent: Express Consent
  • Facts: WA travel agent sells CA Ps ticket that requires suits to be brought in FL; Ps admit to reading the clause
  • Consent is the second traditional basis of PJ; can override presence

Rule 12(g) and (h): Ds waive objection to PJ if they do not object at outset of litigation

SMJ can never be waived

  • Hess v. Pawloski (1927, Supp. 1): Implied Consent
  • Facts: D (PA resident) injured by P on MA highway; no personal service made upon D; no land attached
  • To establish PJ, 2 step inquiry

Statute: anyone traveling on roads is subject to PJ b/c equivalent of appointing agent, plus, D must be served by mail

Despite fact D was likely unaware of statutes, statute and implied consent are OK for PJ

D derives benefits from driving (reciprocity) on MA roads; witnesses in MA; MA’s interest in hearing cases that affect their citizens’ safety

Constitution

Might have had problem if we only served him by mail

Domicile

  • Milliken v. Meyer (1940, supp. 3)
  • Facts: Milliken sues Meyer in WY and wins; Meyer was domiciled, but not present, in WY
  • Domicile alone is sufficient basis for jurisdiction
  • Defined: where you have true, fixed, and permanent home and indefinite desire to remain

Don’t lose domicile until you establish a new one

  • Reciprocity: State offers citizens protection and benefits
  • Under this regime, no real problems with bias, convenience, or state sovereignty

The Modern Approach

International Shoe v. Washington (1945, p. 95)

  • Facts: International Shoe employed 11-13 salesmen in WA to exhibit shoe samples and solicit orders. WA sued to recover unpaid contributions to state employment fund (enacted by WA Unemployement Act).
  • Held: IS’s systematic and continuous activities in WA were enough to make PJ appropriate
  • Under Pennoyer, court would have looked for presence and consent; no longer the standard
  • In personem jurisdictioun requires only D “have certain minimum contacts so that maintenance of the suit does not offend traditional notions of fair play and substantial justice.” (97)
  • Court must look at the quality and nature of these contacts; no objective test, rather court adopts a functional test by evaluating

Level of activity in state

Relationship between cause of action and activity

State regulatory interests

Inconveniences to D and/or D

Efficiency of litigation

  • 2 Types of Jurisdiction
  • General Jurisdiciton (Dispute-blind): Continuous operations even if unrelated to cause of action

Probably, IS; maybe between General and specific

Courts are reluctant to grant: hard to get without domicile (individuals) or principal place of business and/or place of incorporation (corporations)

Issue of reciprocity enters

Specific jurisdiction (Dispute-specific)

If single activity is tied to cause of action, it will often be sufficient

  • Depends on frequency and nature of action

Casual, isolated, or unrelated contacts are insufficient

  • Notice: D must be reasonably assured of actual notice
  • Generally
  • Culmination of Pennoyer/Presence standard
  • State sovereignty is not as strong a concern

State borders are still an issue; fairness is dependent upon them

  • Moves from “is it there” to “is it fair”
  • Remaining questions

Whether presence is still sufficient for PJ (Pennoyer)?

Is transitory jurisdiction still permissible?

  • Dissent (Black)
  • Worried about open-endedness of test (wants a standard)
  • Potential restriction of jurisdiction due to broad application of vagueness

Actually turned out to expand jurisdiction significantly

McGee v. International Life Insurance Co. (1957, p. 116): Most expansive (high-watermark) of PJ

  • Facts: CA beneficiary (P) of CA policy holder; TX ins. co. that solicited P’s bsuiness; CA court
  • Holding: Jurisdiction was proper since D had a substantial connection (mailings of premiums, solicitation of business, not much else) with CA
  • High watermark of PJ: if there is any reasonable connection, then PJ
  • Factors to examine (McGee Factors)
  • P’s interest (becoming increasingly important; not as impt. if P is corp.) in obtaining convenient and effective relief
  • Forum state’s interest in adjudicating dispute
  • Burden on D
  • Interstate judicial system’s interest in obtaining most efficient resolution of dispute

Efficiency of litigation (evidence, etc.)

  • Shared interest of several states in furthering fundamental social policies
  • Refocuses two-step inquiry:
  • Does statute authorize PJ? 2 Types

Long-arm statutes (RI): PJ if const. permissible

Less confusing: collapses into one inquiry

Self-adjusting

Enumerated Act Statutes (IL): reaction to IS; enumerate sufficient contacts (tortious act within state, conducting business within state, owning property in state, etc.)

Justifications for

  • Model (IL: first one) was enumerated
  • Reluctance to change it if it has worked well in past
  • Provides guidance to non-residents
  • States don’t want to authorize PJ in every case that barely passes constitutional muster

Still require claim arise out of act itself (like IS)

Enumerated statute that intends to extends PJ to constitutional limits

  • Specific categories of PJ of LA statute are to be interpreted as liberally as d.p.c. allows; does not fill in gaps not enumerated by LA statute but covered under f.d.p.
  • Whether PJ is constitutional under federal due process?

Can exceed constitutional scope in certain instances

Such a statute is not unconstitutional but exercise of PJ would be in certain circumstances

  • Legistlatures grant liberally since usually invoked by Ps who live in state and prefer to sue at home

Purposeful Availment

  • Hansen v. Denckla (1958): court is willing to put a limit on McGee
  • Facts: Dispute over the validity of a trust which was established in DE by a settlor who later changed domicile to FL; DE trustee never went to FL
  • Unilateral activity of those who claim relationship with non-resident D cannot settle requirements of contact with foreign state”
  • Unilateral contracts are insufficient
  • Rather, there must be “Some act by which D purposely avails itself of the privilege of conducting activities within the forum state, thus invoking benefits and protection of its laws”
  • Worldwide Volkswagen v. Woodson (1980, p. 119)
  • Facts: Robinson family purchased new Audi in NY. As they moved to AZ, they passed through OK where they were hit from behind and injured. Robinsons brought products liability action against Audi claiming defective gas tank and fuel system. s named were VW, World-wide (distributor) and Seaway (retailer)
  • Held (White): No PJ: There was no purposeful availment; marginal revenues; no solicitation of business; do not avail themsleves of privileges or benefits; no substantial business activity

Reasonableness factors also weighed in D’s favor (no evidence in OK, not convenient to P in OK)

  • 3 Factors of Purposeful availment (not premised upon distance)

Foreseeability: not foreseeability that cars would be driven into OK, but rather, that D’s actions made it expected to be haled into OK court

Want to match expectations so that D can modify their behavior

Reciprocity: Get benefits, assume responsibility

Federalism issues

Focus on D’s state reemerges (after being gone in IS and McGee)

  • Dissent (Brennan): steps into Black’s shoes (IS dissent): disagrees with foreseeability definition

Ps are usually smaller parties; thus, wants (as usual) to expand PJ, especially to little guys

Purposeful availment should be the threshold question

Bifurcated inquiry: Purposeful availment then McGee factors

  • Asahi v. Superior Court (1986, p. 129)
  • Facts: Zurcher involved in an accident and filed a products liabiliy action in CA. Superior Court alleged this motorcycle’s tire, tube and sealant were defective. Zurcher won against Cheng Shin Rubber, which filed against Asahi. Asahi moved to quash arguing CA could not assert jurisdiction.
  • Purposeful Availment: knowledge that product will go into commerce isn’t enough; what is?

O’Connor (w/o majority): Must market product, target the audience

Brennan: Knowledge is enough for purposeful availment

Concerned with relative position of parties: if both are sophisticated, costs and inconviences are less important

Stevens: Purposeful availment is dependent upon volume, value, and character (dangerous?) of components; but no need to address since McGee factors aren’t met

Question remains unanswered for most part

  • McGee Factors

All agree that they are not met: Foreign litigation concern (costs to both parties, terribly inefficient, impact on foreign relations)

If purposeful availmnet is found, McGee factors will usually be met

Contracts: different definition of purposeful availment than in torts; more than K is required (although making foreign K does affect foreseeability)

  • Burger King v. Rudzewicz (1985, p. 137)
  • Facts: Dispute between BK HQ in FL and franchisees in MI; Ds had traveled to FL to negotiate
  • What more than K is enough?

Brennan (majority): Here: substantial continuous relationship

Negotiations in FL; supervision from FL; K from FL (saying FL law would govern)

D received fair notice that it might be haled into court through its course of dealing with FL

D did not show why FL would be unreasonable

  • Brennan (expansive PJ focusing on due process clause because little guys are usually Ps) thinks McGee factors should be used to determine PJ
  • Black agrees but puts more emphasis on forum state’s interest
  • Brennan is more concerned with P’s interest

Looks at terms of K, negotiations and course of dealing, length of relationship

  • Dissent (Stevens): D had no choice: take it or leave it K

General Jurisdiction: much tougher to show (try specific jurisdiction first): Sup. Ct. has never found general jurisdiction

  • Always applies when
  • Individuals: state of domicile
  • Corporations: place of incorpration and principal place of business
  • Washington Equipment Manufacturing Co. v. Concrete Placing Co. (Wash App., 1970, p. 148)
  • WA statute required foreign co’s to get certificate appointing agent; statute doesn’t say why agent is required or what jurisdiction will be established
  • Court rejects statute to mean general jurisdiction b/c legislature could have drafted it such

Most states interpret these as broadly as possible (unlike this one)

  • Court decides that there was no statutory basis for jurisdiction
  • Zippo (Supp. p. )
  • Jurisdiction appropriate given interactivity among users plus

Volume

Subscription requirement

Other factors

  • Shows that internet cases will need to be considered very seriously under our framework that puts so much emphasis on purposeful availment

Quasi in Rem Jurisdiction

  • Shaffer v. Heitner (1977, p. 104): abolition of quasi-in rem and other traditional labels
  • Facts: Shareholder’s derivative suit. Shareholder sues directors/officers (no contact with DE) of Greyhound (incorporated in DE) for breach of fiduciary duty and ‘sequesters’ stock belonging to s.  moved to quash service of process and vacate sequestration order.
  • Garrett thinks Ps could have gotten PJ over directors (foreseeability, reciprocity)
  • Held: abolished concept of quasi in rem jurisdiction and all labels (in rem)

All assertions of state court jurisdiction must be evaluated by notions of ‘fair play and substantial justice’ as set out in International Shoe (to have jurisdiction over property is to have jurisdiction over person).

Traditional in rem jurisdiction, however, would almost always mean PJ since claim was tied to land

Is Presence still sufficient (transitory jurisdiction)?

  • Burnham v. Superior Court (1990, p. 150): Transitory jurisdiction is still OK
  • Facts: Mr. & Mrs. Burnham get a divorce in NJ and Mrs. Burnham moves to CA. Mrs. B files for divorce and serves husband with process when he comes to CA on a business trip and visits his children. Mr. B moves to quash service of process claiming CA cannot have jurisdiction.
  • Held, state has transient jurisdiction over non-resident visiting party

But, Burnham’s presence in CA was related to cause of action and availed himself of CA benefits: roads,etc.

  • Scalia (historical pedigree): Presence is traditional way to establish PJ; “traditional notions of fair play and substantial justice” are not evolving standards that give judges too much discretion

Advantages

Bright-line: Presence is good proxy for fair-play and substantial justice; good guide to potential Ds

Tradition: tried and tested

Constituional question: reminds us that this is still Const. issue

Distinguishes Shaffer by saying this was about in personem jurisdiction

  • Brennan: applies minimum contacts broadly to find purposeful availment; presence is not touchstone

Reciprocity

Health & Safety guaranteed by State’s emergency services

Use of State’s roads and waterways

Enjoys fruits of State’s economy

Protection of State law & right of access to State’s courts.

Brennan at his extreme: would be subject to PJ anywhere you’ve traveled

  • White: likes bright line test

PJ rules in federal court

  • Same two step inquiry
  • Is there a statute allowing PJ?
  • Is it constituional to exercise PJ?

SC has never decided whether minimum contacts with US generally is sufficient to justify PJ in a federal court

  • Rule 4k sets out territorial reach of federal courts
  • 4k(1): four rules of federal court

(a) Federal jurisdiction is appropriate over a person who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located

  • This is the main rule for jurisdiction in federal courts
  • (b) Federal courts can exercise jurisdiction over a person joined under Rule 14 or 19, and served not more than 100 miles from the district court
  • Rule 14 lets you add people (Asahi)
  • Rule 19 deals with necessary parties (the trustee in Hanson)
  • This is called the “bulge rule” because it bulges the state line out a little bit
  • This rule is generally not important unless you’re practicing in New York; New York business deals often deal with CT, MA, DE parties, etc, who they can’t get into court under purposeful availment. This will allow them to exercise jurisdiction over these parties
  • (c) Who is subject to Federal Interpleader jurisdiction
  • In this type of lawsuit, it is essential to get everyone who has a claim into the courtroom
  • Therefore,“Nationwide service of process”
  • Asserting jurisdiction based on an aggregate of contacts with the nation, not a specific state
  • Under this interpleader rule, the U.S. will have jurisdiction over anyone who has contacts with the U.S.
  • (d) When authorized by a statute of the United States
  • This is just the catch-all
  • If the statute says that it is a federal cause of action, jurisdiction goes to federal courts, and they’re authorizing a nationwide service of process, they will look at contacts with the U.S. to authorize jurisdiction
  • Congress doesn’t do this very often, though they could do this whenever they wanted to. It probably wouldn’t be unconstitutional.
  • (2) If the exercise of jurisdiction is Constitutional, you can summon someone with respect to claims arising under federal law, to establish personal jurisdiction over any defendant who is not subject to the jurisdiction of the courts of any state

Test is probably whether D has minimum contacts with US as a whole that make PJ OK under 5th Amendment

Limitations

Can only use it if there would not be a single state in the country where jurisdiction would be proper

Claim must arise under federal law

Extremely controversial since it arguably expands the substantive rights of people (not purpose of FRCP)

But we need a rule that expands the right of some Ps to give them day in court

  • Gibbons v. Brown (FL Dist., 1998, p. 192)
  • Whether D subjected herself to PJ in FL by bringing prior suit in FL
  • Court says that Mrs. Gibbons does not satisfy the Long Arm statute requirement; her contacts with Florida are not enough
  • Party is not subject to suit indefinitely in state where they previously brought an unrelated claim
  • Different than Adam v. Saenger (194) where SC ruled that a party was subject to PJ for a counterclaim brought by opponent

Challenges to PJ

  • Special Appearance
  • D can challenge PJ in state court where action is filed without subjecting itself to PJ in that state
  • 12 (b) (2) defense
  • Can be raised with other issues but not after other defenses (must be raised first)
  • Either defense must be raised immediately or will be lost (12 (g) and 12 (h))
  • In most states, D can appeal ruling that PJ existed at any time thereafter
  • In a few states, D waives defense (even if filed) once he defends on merits

Stick to your guns; if no PJ, then don’t defend merits