Law School Up Close


A Dive Into Personal Jurisdiction - The Classics



My favorite class of my first semester was definitely Civil Procedure. As an aspiring Patent Attorney, I instantly realized the many connections between patent litigation and the procedural rules of civil litigation. One of the most important topics in Civil Procedure, or “Civ Pro” is personal jurisdiction. In order to bring a suit against a person in a given court, the court must have personal jurisdiction of the defendant, and they also must have subject matter jurisdiction of the case. In this article, I would like to discuss the “mainline” of personal jurisdiction cases, in order to shed light on how all of these cases fit together.

One thing that I have noticed from studying the topic is that the confusing part for people is to understand the background. In torts, contracts, and other first-year courses, the background can sometimes be clearer because the dispute between the two parties provides most of the context. In personal jurisdiction cases, there is often an underlying struggle for power between corporations and the general public. The courts have, is, and always will struggle with this balance because it is so important to the prosperity of our country. If it were too easy to bring suit on a corporate defendant in state court, many corporations would wise up and forego doing business here. On the other hand, as you will see in cases like J. McIntyre, there can be serious issues in leaving loopholes that allow corporations to game the system, such as setting up judgment-proof distribution centers.

So enough with the introductions, let’s dive into this line of cases. In part one of this two-part series, I am going to discuss the pre-modern personal jurisdiction cases. In my opinion, cases in recent years such as J. McIntyre and Bristol-Meyers Squibb are more interesting, but it is important to understand these older cases in order to get a lay of the land before diving into the confounding cases of the 21st century.

Pennoyer v. Neff

   The behemoth of landmark cases that a first-year student will come across, Pennoyer v. Neff is “where it all began” so to speak. In writing this, article, I took some time to try to find a personal jurisdiction case before Pennoyer, but I think that at least as far as the Supreme Court is concerned, this is square one. The part about this case that confuses people is that Pennoyer himself was simply a sad sap that bought the land in controversy. The dispute really started Marcus Neff hired an attorney by the name John H. Mitchell in the hopes of obtaining a land grant in Oregon. Neff didn’t pay Mitchell approximately $300 in attorney’s fees, and so Mitchell sued him in Circuit Court in Oregon.

Neff was a nonresident but had that land in Oregon that Mitchell helped him to acquire. At the time, Oregon had a statute that allowed service through the local newspaper, which Mitchell had done. Nevertheless, Neff did not show up to court, and Mitchell obtained a default judgment. In order to satisfy the judgment, Mitchell told the sheriff to obtain and sell Neff’s by way of a sheriff’s deed, which poor old Pennoyer bought.

Neff came back to Oregon to see that his land had been sold and sued Pennoyer for wrongfully acquiring it. The court agreed that because (a) Neff had not been personally served, and (b) the land had not been attached at the start of the lawsuit, that the land had been fraudulently acquired by Pennoyer, and so it was not rightfully his.

You may be asking why it would have mattered had the land been attached at the start of the lawsuit. There is something called in rem jurisdiction, wherein the court can seize the property of the defendant, and then allow the property to be sued. This form of action can only be used when the suit relates to that property. This form of jurisdiction is highly controversial, and we will see it come up later in this line of cases, so I will not dive into it further here. A famous recent case of this was United States v. One Tyrannosaurus Bataar Skeleton, wherein the court acquired a smuggled dinosaur skeleton that had originally been obtained in Mongolia.

Int’l Shoe v. Washington

The issue of personal jurisdiction did not reach the Supreme Court, aside from an odd divorce case (Haddock v. Haddock) for many years, until 1945 when a company from St. Louis, International Shoe, was sued for unpaid tax on unemployment payments to the company’s salesman in Washington, DC. International Shoe said, “hey, our company is in St. Louis, you can’t sue us in DC because we have a few salesmen out there.”

The court, in turn, said that actually, they did have jurisdiction, because although continuous activity in a state alone isn’t enough for personal jurisdiction, it is when coupled with the fact that the cause of action related to those activities. This gave rise to a “minimum contacts” test of personal jurisdiction, wherein (a) presence in a state is weighed alongside the (b) relatedness of the cause of action to those activities. At the end of the day, the court said that these two factors must be measured to determine if jurisdiction would “offend traditional notions of fair play and substantial justice.” This phrase may sound straightforward, but if you think about it, it is highly discretionary. Who is to say what constitutes “fair play.”

McGee & Hanson v. Denckla

Between 1957 and 1958, two more cases came up to the Supreme Court on the topic. The first, McGee v. International Life Insurance Co., related to a mother trying to collect life insurance for her son’s death in California. International Life Insurance had acquired the policy from another company and argued that this single policy they maintained in California was not enough to establish jurisdiction there. The court said, “hey, did you read Int’l Shoe? This cause of action is related to your activities in California” and so it was considered a “substantial connection.”

In Hanson v. Denckla, a woman named Dora Donner executed a trust in Delaware, while domiciled in Pennsylvania. After that she moved to Florida and died there, there was controversy as to whether her daughter was a rightful trustee to a portion of the money. The daughter brought suit, claiming that because Donner lived there when she died, there was personal jurisdiction. The court said that this was not the case, famously saying that the Delaware corporation had not “purposely availed” themselves to being sued there. As in, they had not contemplated that this trust would be subject to a suit in Florida in their dealings with the late Dora Donner.

World-Wide Volkswagen

   Once you get past Hanson v. Denckla, there are too many of these cases for a 3 or 4 credit Civil Procedure case to cover, so I will just focus on the big ones that we covered. One that I will leave out sadly is Burger King v. Rudzewicz. Nevertheless, we carry on with World-Wide Volkswagen Corp. v. Woodson. This case is famous for confusing students because there are so many players involved, but just try to keep it simple and focus on the basics.

   Harry and Kay Robinson bought an Audi from a dealership called Seaway Volkswagen in Massena, New York. While traveling to Arizona, the car got hit in the rear in Oklahoma. VW’s had a terrible design flaw at the time where the gas tank was in the rear of the vehicle, and so there was an explosion causing severe burns to Kay and her two children.

   After the tragic accident, the couple sued Audi, its American distributor Volkswagen of America, its regional distributor World-Wide Volkswagen, and Seaway in an Oklahoma court. Audi and Volkswagen of America knew they had been selling cars in Oklahoma, so they did attempt to peel off as defendants. But World-Wide Volkswagen and Seaway claimed that they had not been selling cars in Oklahoma, and thus had not availed themselves to suit there. The court reasoned that “hey, these are expensive cars, and you should realize that people are going to buy them and sometimes drive them here, so you availed yourself.” But the Supreme Court reversed this decision, reasoning that this was simply not fair. It just doesn’t make sense that a regional car distributor should contemplate being sued in any state in which one of their cars was driven.

   This case highlights the balancing act that the courts must exercise in determining the scope of liability of companies in their decisions of personal jurisdiction. A regional distributor or seller likely does not have the resources to hire an attorney in any state. It is not only expensive but extremely burdensome to locate an attorney in any given state.

Looking Ahead

   In the second part of this study in personal jurisdiction, I am going to discuss some modern cases that have called into question the holdings of these older cases. Specifically, I find the dynamics in World-Wide Volkswagen to be central to many of these recent cases, as it often involves the fairness of bringing a corporation to court in a given state based on business done there. It’s important to understand that these decisions are often not cut and dry, especially as the Supreme Court has become more politically divided.



Author


Theodore Rand