Personal Jurisdiction and Choice of Law

• Author: Stewart E. Sterk
• Position: Professor of Law, Benjamin N. Cardozo School of Law
• Pages: 1163-1206

1163

Personal Jurisdiction and Choice of Law

Stewart E. Sterk

INTRODUCTION .................................................................................... 1164

I. WHY LOCALIZE JURISDICTION? ............................................................ 1166

A. THE DECLINE OF INCONVENIENCE ................................................... 1166

B. STATE SOVEREIGN AUTHORITY ....................................................... 1168

1. Historical Background ......................................................... 1168

2. World-Wide Volkswagen, Allstate, and the New Sovereignty .. 1170

3. Why Protect Sovereignty Through Personal

Jurisdiction? .......................................................................... 1174

C. THE RELATIONSHIP BETWEEN SOVEREIGNTY AND LIBERTY ............... 1177

D. THE CHALLENGES OF MODERN COMMERCE ..................................... 1180

II. JURISDICTION DOCTRINE AS A PROTECTION OF THE SOVEREIGN

INTERESTS OF SISTER STATES (AND THE LIBERTY INTERESTS OF

PERSONS WHO ACT IN THOSE STATES) ............................................... 1181

A. THE DEMISE OF QUASI-IN-REM JURISDICTION ................................... 1182

B. THE NARROW CONFINES OF GENERAL JURISDICTION ........................ 1183

C. DOMICILE ...................................................................................... 1186

D. THE “PURPOSEFUL AVAILMENT” STANDARD FOR SPECIFIC

JURISDICTION ................................................................................. 1187

1. The Significance of Choice-of-Law Clauses ........................ 1188

2. Actions Outside the Forum Causing Effects Within the

Forum .................................................................................... 1189

3. The “Stream of Commerce” Controversy ........................... 1194

E. THE OUTLIER: BURNHAM AND “TAG” JURISDICTION ....................... 1195

III. J. MCINTYRE AND ITS IMPLICATIONS ..................................................... 1197

A. THE CASE ...................................................................................... 1197

B. POWER TALK ................................................................................. 1198

C. IGNORING THE FORUM’S SOVEREIGN INTERESTS ............................... 1200

D. CONCERNS ABOUT LOCAL PRODUCERS—AND THE WAY FORWARD .... 1202

CONCLUSION ....................................................................................... 1205

 Mack Professor of Law, Benjamin N. Cardozo School of Law. The author would like t o

thank David Carlson, Margaret Lemos, Max Minzner, and Charles Yablon for invaluable

comments on earlier drafts.

1164 IOWA LAW REVIEW [Vol. 98:1163

INTRODUCTION

A New Jersey resident, injured while working in his home state, seeks

relief from the United Kingdom manufacturer of a shearing machine

marketed at trade shows held at various American locations. What reason is

there to prevent New Jersey from providing a forum for its injured resident?

In J. McIntyre Machinery, Ltd. v. Nicastro,1 a plurality of the United States

Supreme Court invoked both “individual liberty”2 and “sovereign authority”3

to justify its conclusion that New Jersey lacked personal jurisdiction over the

British defendant. But the plurality’s failure to identify the liberty and

sovereignty interests at stake have left personal-jurisdiction jurisprudence

even more conceptually muddled and practically confused than it was before

the Court’s most recent foray into the area.

When Pennoyer v. Neff

4 controlled issues of personal jurisdiction,

sovereignty’s role was clear: a state could not exercise personal jurisdiction

over a defendant unless the state had physical power over that defendant.5

Since the Court abandoned Pennoyer and replaced it with International Shoe’s

emphasis on “traditional notions of fair play and substantial justice,”6 the

Court has struggled to explain why state lines should be relevant at all in

personal-jurisdiction cases.7 In World-Wide Volkswagen Corp. v. Woodson, the

Court offered its best explanation to date, recognizing that “the sovereign

power to try causes in their courts” was an essential attribute of state

sovereignty, but emphasizing that “[t]he sovereignty of each State, in turn,

implied a limitation on the sovereignty of all of its sister States.”8 As abstract

as it is, that explanation provides a touchstone for invocations of sovereignty

in personal-jurisdiction cases: The inquiry must focus on the impact a forum

state’s exercise of jurisdiction will have on the sovereign interests of other

states or countries, not on the connection between the defendant and the

forum state. If the United Kingdom were prepared to require its

corporations to submit to worldwide jurisdiction as the price for obtaining

1. J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780 (2011).

2. See id. at 2789 (“Personal jurisdiction, of course, restricts ‘judicial power not as a

matter of sovereignty, but as a matter of individual liberty’ . . . .” (quoting Ins. Corp. of Ir. v.

Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982))); id. at 2791 (“[T]he

Constitution commands restraint before discarding liberty in the name of expediency.”).

3. See id. at 2789 (“[W]hether a judicial judgment is lawful depends on whether the

sovereign has authority to render it.”).

4. Pennoyer v. Neff, 95 U.S. 714 (1878).

5. See Allan R. Stein, Styles of Argument and Interstate Federalism in the Law of Personal

Jurisdiction, 65 TEX. L. REV. 689, 693 (1987) (discussing the power rationale of Pennoyer).

6. Int’l Shoe Co. v. Washington, 326 U.S.310, 316 (1945) (quoting Milliken v. Meyer,

311 U.S. 457, 463 (1940)) (internal quotation marks omitted).

7. For instance, in Hanson v. Denckla, 357 U.S. 235, 251 (1958), the Court merely stated,

without further explanation, that restrictions on personal jurisdiction “are a consequence of

territorial limitations on the power of the respective States.”

8. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293 (1980).

2013] PERSONAL JURISDICTION AND CHOICE OF LAW 1165

corporate status, there would be no sovereignty-based reason for the

Supreme Court to limit New Jersey’s power to assert jurisdiction over an

entity incorporated in the United Kingdom.

Recognizing that personal jurisdiction’s concern with sovereignty

should focus on whether the forum state’s assertion of jurisdiction

impermissibly interferes with the interests of some other state also sheds

light on the liberty interest emphasized in the J. McIntyre opinion. If limits

on New Jersey’s personal jurisdiction protect the United Kingdom’s interest

in regulating persons, entities, and activities within the United Kingdom’s

sphere of sovereign authority, the same limits also safeguard the liberty

interests of persons and entities who act in accordance with the United

Kingdom’s regulatory scheme. That is, jurisdictional rules protect an entity

against defending itself in a forum likely to ignore the legal norms and rules

the entity might reasonably expect to govern its legal affairs.

These concerns about the sovereign interests of other jurisdictions and

the expectations of parties who rely on particular rules of law dominate the

discussion in a closely related doctrinal area: choice of law. Not surprisingly,

choice of law is the “elephant in the room” in most personal-jurisdiction

cases. The Supreme Court’s explicit acknowledgment that choice of law

plays a role in jurisdictional determinations has been grudging at best.9 But

the Court’s holdings (and the doctrinal rules it has developed) have—with

narrow exceptions—been consistent with the premise that choice of law is a

critical factor in jurisdictional determinations. The cases in which the Court

has held that the forum lacked personal jurisdiction have almost uniformly

been cases in which application of forum law posed an unjustified threat to

the regulatory scheme of another jurisdiction and a concomitant danger to

defendants who assumed that their actions would be governed by that

regulatory scheme. Goodyear Dunlop Tires Operations, S.A. v. Brown,10 decided

concurrently with J. McIntyre, fits that pattern; J. McIntyre does not.

Part I explores the reasons for imposing limits on personal jurisdiction

and argues that both the sovereignty and liberty bases for those limits are

9. Thus, in Asahi Metal Industry Co. v . Superior Court, 480 U.S. 102, 115 (1987) (plurality

opinion), the Court acknowledged (in a model of indirection) that “it is not at all clear at thi s

point that California law should govern the question whether a Japanese corporation sh ould

indemnify a Taiwanese corporation on the basis of a sale made in Taiwan and a shipment of

goods from Japan to Taiwan.” The Court, however, declined to make that an explicit basis of its

decision holding that California lacked jurisdiction over the Japanese corporation. Id. at 116. In

other cases, the Court has been more blunt in denying a connection between jurisdiction and

choice of law. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 778 (1984) (“[W]e do not

think that such choice-of-law concerns should complicate or distort the jurisdictional inquiry.”);

Hanson, 357 U.S. at 254 (“The issue is personal jurisdiction, not choice of law.”); see also A.

Benjamin Spencer, Jurisdiction To Adjudicate: A Revised Analysis, 73 U. CHI. L. REV. 617, 658–59

(2006) (noting the Court’s reluctance to endorse a connection between choice of law and

judicial jurisdiction).

10. Goodyear Dunlop Tires O perations, S.A. v. Brown, 131 S. Ct. 2846 (2011).