Jurisdiction in Civil Procedure: Understanding Personal Jurisdiction and Minimum Contacts, Study notes of Commercial Law

Download Jurisdiction in Civil Procedure: Understanding Personal Jurisdiction and Minimum Contacts and more Study notes Commercial Law in PDF only on Docsity! Civil Procedure – Civ Pro us.docsity.com B. The Modern Constitutional Formulation of Power 1. Redefining Constitutional Formulation of Power Corporations were always an issue for personal jurisdictions – service of process rules did not work very well • corporation is a fiction – entity created by operation of law • if corporation was created by laws of state, it is a citizen of that state but what about the other states? • Courts tries to look at it under both options created under Pennoyer – seemed inconsistent (diff. jurisdictions) o consent – state can create presumption that by doing business within the state, you are consenting to jurisdiction within that state § this would give the state the power to adjudicate only those claims against the corporation that involved activity within the state... state gets specific jurisdiction o physical presence – if you say that doing business in the state is the same as personal service of process, then you are acquiring general jurisdiction § once they leave the state, lose jurisdiction • the 2 concepts flow together into “doing business” as a basis for asserting personal jurisdiction over corporation Milliken v. Meyer • 2 partners sued each other; Meyer was resident in Wyoming but was served in Colorado • Court determined that it was OK even though process was served outside of the states boundaries • court says that by being a domiciliary of a state, the courts of that state could exact personal jurisdiction - mutual benefits o established domicile as basis for jurisdiction (residence plus intent to remain) International Shoe Co. v. Washington (1945) p.76 • Facts: o ISC is a Delaware corporation with its principal place of business in St. Louis, MI § engaged in the manufacture and sale of shoes and other footwear o ISC maintains no offices in WA, no contracts for sale or purchase there, no stock in that state, makes no deliveries in interstate commerce § employed 11-13 salesman who resided in WA (where their principal activities occurred) § orders were shipped f.o.b. from points outside of WA into the state (invcd. at place of shpmt) o Washington sues to recover unpaid contributions to the state unemployment compensation fund Civil Procedure – Civ Pro us.docsity.com § statute allowed, and WA complied with both, service of process against one of the employees in the state and mailed process to headquarters o ISC contends that is activities within the state are insufficient to confer jurisdiction and thus it would be a denial of due process to subject them to taxation. § used the device of special appearance to raise defense – lost in admin agency and state courts § US SC: affirms • Issue: Within the limitations of the Due Process clause of the 14th Amendment, has ISC, by its activities in the State of Washington, rendered itself amenable to proceedings in the courts of that state? • Holding: Yes (thus, it is not a denial of due process to exact taxes on them) o Old Rule: jurisdiction to render judgment in personam is grounded in de facto power over their person o New Rule: To be subject to a state’s jurisdiction, a party must have certain minimum contacts with it such that maintenance of the suit does not offend traditional notions of fair play and substantial justice • Analysis o Assertion of jurisdiction by a state where it does not comply with requirements violates due process, thus it is a federal constitutional issue (giving rise to jurisdiction) o if you are within the boundaries of the state, then personal service of process still sufficient § but, when not within the boundaries, then minimum contacts are sufficient o Previous Law § Bases for Personal Jurisdiction ú presence – “doing business” ú consent ú implied consent • “doing business” • driving + tort ú domicile § ISCo – the Court is looking back over all the decisions (general rule plus exceptions) and looking at the underlying principle behind them ú saying the Courts in the past were instead basing decisions unconsciously on the minimum contacts principle (which is broad enough to cover these exceptions) o Minimum Contacts: § 2 Components ú continuous and systematic ú activities in the state give rise to the claim § Insufficient ú isolated and casual Civil Procedure – Civ Pro us.docsity.com p.162 (b) – thinks that should have had jurisdiction under these facts 01/31/2008 B. The Modern Constitutional Formulation of Power 2. Absorbing In Rem Jurisdiction See p. 84 Harris v. Balk • illeogical extreme extension of quasi-in-rem jurisdiction • allowed you to sue someone by attaching debt to them, and then using transitory movement to assert jurisdiction o Garnishment § debt clings to the debtor § attaches and allows you to adjudicate (just as with real property) • Note: this is no longer good law o see Shaffer v. Heitner McGee v. International Life Insurance Co. (1957) p.84 • Facts: o Franklin, CA resident, purchased life insurance policy and when the ins. co. was bought out, accept the reinsurance certificate that was sent to him. § paid premiums by mail from his CA home to Ins. Co.’s TX office o when Franklin died, Ins. Co. refused to pay, claiming he had committed suicide and McGee brought suit in CA § Ins. Co. claims no jurisdiction • Issue: Jurisdiction? • Holding: Yes. • Analysis o Insurance Companies Contacts with State of CA: § Frequency – one long standing contracting (pretty low on this side) § Relatedness – directly related, the contract is the exact thing being sued on o This case is a lot like Hess where a single tort was enough for assertion of specific jurisdiction § Here: a single contract within the state is enough to subject yourself to jurisdiction on it o What if he signed in Oregon, then moved to California and continued paying premiums from there? § still isolated and casual and still highly related so seems like this too would be a yes. § but... it was up to Π to move to CA, ins. co. had no control over contract being related to CA Hanson v. Denckla (1958) p.85 Civil Procedure – Civ Pro us.docsity.com • Facts o dispute arose over the assets of deceased mother who had lived in Pennsylvania, established a trust in Delaware and later moved to FL where she died § while in FL, correspondence of the trust was mailed to her § wrote a will in FL, giving all assets other than trust to 2 daughters and the trust remainder to the third daughter o 2 daughters sue in FL to say that trust is invalid (meaning they would get all assets); 3rd daughter sued in DE claiming that the trust was valid § Parties disagreed whether FL or DE had jurisdiction (if FL – 2 daughters got estate, if DE – 3 shared) ú SC: FL had no jurisdiction over the Delaware trustee • Issue: Jurisdiction? • Holding: Delaware. o Rule: Unilateral activity of those who claim some relationship with a nonresident defendant is not enough; it is essential that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the State, thus invoking its benefits and protections of its laws. • Analysis o the trustee had no control over whether she moved to FL or not, and thus never purposefully subjected themselves to FL jurisdiction o if the test is the rule above, what is the problem? § mom moved to FL under her own free will and the trustee was obligated to continue maintaining the trust Adds Third Variable • Frequency • Relatedness • Causation (defendant caused the contact with the state) *Shaffer v. Heitner (1977) p.87 • Facts o Heitner owned single share of stock in Greyhound – filed shareholder’s derivative suit (suit on behalf on the corporation) naming 28 present or former officers as defendants § claimed that they had violated their duties to Greyhound by causing it to engage in activated that resulted in it being held liable for substantial damages in a private antitrust suit § H filed a motion for sequestration of DE property – signed the day it was filed ú he had a stop transfer order put on their stock – attached property o Defendants responded by entering special appearance – contended that the ex parte sequestration did not accord due process of law, that the property seized Civil Procedure – Civ Pro us.docsity.com was not capable of attachment in DE and that they did not have sufficient contract with DE to sustain the jurisdiction of that states courts § DE Courts: rejected Δs claims – asserted quasi in rem jurisdiction § US SC: reversed • Issue: Should the standard of fairness and substantial justice set forth in International Shoe Co. be held to govern actions in rem as well as in personam? • Holding: Yes. o Rule: all assertions of state curt jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny. • Analysis o the court is asserting quasi-in-rem: using its jurisdiction over the stock to assert jurisdiction over the nonresident defendants § the stock has nothing to do with the litigation itself § attachment at outset of the litigation of property of defendant completely unrelated to claim ú Note: DE had statute saying that stock was property of state in which incorporated o Why does it make sense that ISC should extend to cases involving the presence of property? § asserting jurisdiction based on the presence of property is a fiction ú the presence of property has no significance unless it represents a contact o The Court does not hold that presence of property in the state is irrelevant § can provide evidence of contacts o Also: for pure in-rem actions, the presence of property in the state is enough § when the law suit relates to the property within the jurisdiction, it would make sense to assert jurisdiction (even if minimal contacts, highly related) o Here: § the stock is completely unrelated to the litigation and does not suggest contacts that would meet the other tests for jurisdiction – thus no jurisdiction o Re-Evaluation of Harris v. Balk § isolated, contact, likely not cause à no grounds for jurisdiction o What about real property? § if law suit has nothing to do with the land, then probably still do not have jurisdiction § might be sufficient if even though completely unrelated, totally continuous and systematic ú ie: deriving income off a farm that you own but do not work it yourself 3. Specific Jurisdiction Civil Procedure – Civ Pro us.docsity.com o California Superior Court (the state trial court): found that it was not unreasonable that Asahi should defend claims of defect on international scale § Asahi appeals to US S.C. à Reversed. • Issue: Does mere awareness that the components the defendant manufactured, sold, and delivered outside the US would reach the forum State in the stream of commerce constitute minimum contacts? • Holding: No. Not reasonable. o More care should be given in asserting jurisdiction in the international context. § heavy burden on Δ, little interest for state of adjudicate– perfect anti- reasonableness argument • Analysis o World-Wide: a consumer’s unilateral act of bringing defendant’s product into the forum State is an insufficient constitutional basis for personal jurisdiction over the defendant o also looked into whether it would be reasonable and fair o Sales: Asahis à Cheng Shen à Honda à Zurcher § Cheng Shen affidavit: Asahi is aware that the parts they make are incorporated in tires that will ultimately go into US and into CA o Long Arm Statute: asserts limit to the extent of the Constitution and thus apply the same test o 2 Part Tests (1) Minimum Contacts/ Purposeful Availment ú The “substantial connection” between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State” – this is not court holding (4/9 votes) ú Stream of Commerce position • maybe (2) Reasonableness (Fair Play and Substantial Justice) ú court determines that the burden on this case would be severe (this is the holding) Should we have separate technology review standards or should we adopt technology neutral internet standards? Blue Note Case: • name of NY Jazz Club and Record Label – trademark holder • Columbia, Missouri – also opened a Blue Note o claimed trademark violation o sued in NYC – why? advertised on the internet, links to TicketMaster etc § Court found no jurisdiction Zippo Case • CA company provided information over internet, subscription service Civil Procedure – Civ Pro us.docsity.com o provided information to individuals in PA o Zippo Mfg. in PA sued in PA for trademark infringement § Court determined that there was personal jurisdiction ú here, there is a direct service to paying subscribers as opposed to Blue Note which was just informational § Sliding Scale Test (mentioned in Pavlovich) 02/07/2008 Most Frequently Cited Test for Internet Cases: Sliding Scale • most often cited from Zippo Case • refers to the degree of interactiveness of the website o more analogous to a store front Palovich v. Superior Court (2002) p.120 • Facts o Palovich operated a website that provided DeCSS program source code along with other information § Palovich started the website while he was a student at Purdue in Indiana § now resides in Texas and is president of a technology consulting company there o The Code of the unencryption software contained some of the algorithms of the CSS software § this is copyright infringement § also allows them to get at the encrypted content o DCD CAA, owner of CSS technology, brought suit against Palovich in CA § CA court exercised jurisdiction over Palovich § US SC reverses • Issue: Does CA have personal jurisdiction? • Holding: No. o Look to see if you can attribute local harm to the activities of the non-resident defendant. • Analysis o Argument for asserting personal jurisdiction: § because he targeted businesses, should be subject to jurisdiction § applied Calder v. Jones (defamation case) effects test ú where you commit an intentional tort, and you know the effects will be localized in one area, may provide a basis for personal jurisdiction ú Key: intentional torts, intended effects § Arguing that Δ knew he was making it easier to obtain pirated information and thus should have known CA residents would be harmed o Zippo Case Civil Procedure – Civ Pro us.docsity.com § look at the level of interactivity and commercial nature of the exchange of information that occurs on the Web Site § Here: passive website 4. General Jurisdiction Costal Video Communications Corp. v. The Staywell Corp. (Va. 1999) p.126 • Facts o Krames publishes “Safety Zone: Using Natural Limits to Protect Your Back” and holds copyright o Costal published “Defending Your Safety Zone: Back Protection” and sought a declaration from VA Ct. that did not violate Krames’ copyright § Krames filed motion to dismiss for lack of jurisdiction § Ct: motion for discovery is granted to the extent it goes towards proving general jurisdiction • Issue: Does the court have personal jurisdiction? • Holding: ???? – granted discovery request to allow for determination o Rule: Court may exercise general personal jurisdiction over the defendant if the requisite minimum contact between the defendant and the forum state are fairly extensive. § Only when the continuous corporate operations within a state is though so substantial and of such a nature as to justify suit on causes of action arising from dealings entirely distinct from those activities may a court assert general jurisdiction over a corporate defendant. (ISC) • Analysis: o Π bears the burden of demonstrating personal jurisdiction by a preponderance of the evidence once its existence is questioned by the defendant o the court will look at the nature and extent of defendant’s internet contact with the state § high degree of interactivity of website § traditional business contacts with the state § sales generated in the state through the interactive website § how many times the website has bee accessed by residents or businesses of the state o The issue is whether the Πs book is infringing the Δs book – whether this is occurring has nothing to do with whether Δ is actually selling his book in VA 02/11/2008 Rule 4(k)(2): For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.