Are you defending your clients where they don't belong? Corporate defendants' new potent defense is personal (jurisdiction, that is).

AuthorSykes, Phillip S.

PENNOYER v. Neff (1) may be just a vague memory from Civil Procedure class in law school, but no doubt every lawyer remembers learning the same fundamentals of personal jurisdiction. To sue a defendant in a particular forum, a plaintiff must show personal jurisdiction over the defendant in compliance with that forum's long-arm statute and the Constitution's Due Process Clause. Personal jurisdiction comes in two forms--specific jurisdiction and general jurisdiction. While specific jurisdiction likely got ample airtime on the intricacies of "minimum contacts" and "stream-of-commerce," general jurisdiction typically was reduced to a single sound bite: "continuous and systematic" activities by a corporation in a particular state were sufficient to subject that corporate defendant to general jurisdiction in that forum.

Civil Procedure professors were not the only ones, however, to give short shrift to general jurisdiction. In a nearly 70 year period, the Supreme Court issued scores of opinions featuring specific jurisdiction to a mere three opinions on general jurisdiction. Thus, general jurisdiction played little or no role in the defense strategy of large companies conducting business on a national scale. Unless the plaintiff named the wrong corporate entity as a defendant, most companies conceded personal jurisdiction in every state because they were doing business in every state; companies (and courts) usually accepted the prevailing general jurisdiction mantra of "continuous and systematic" to be sufficient.

In January 2014, however, the United States Supreme Court catapulted general jurisdiction into the spotlight and turned conventional wisdom on its head about the reach of general personal jurisdiction with its eight-Justice majority decision in Daimler AG v. Bauman. (2) The Supreme Court eliminated the "continuous and systematic" test and gave Civil Procedure professors, district courts, and most importantly, corporate defense counsel a new sound bite with powerful teeth: a corporation may be subject to general jurisdiction only where it is "at home." (3) The two paradigm places a corporation is "at home" are its state of incorporation and its principal place of business. Consequently, general jurisdiction now should be an essential element of corporate defense strategy in any case in which specific jurisdiction is lacking as to one or more plaintiffs.

  1. The Beginning: International Shoe and Its (Sparse) Progeny

    The Supreme Court's 1945 decision in International Shoe Co. v. Washington (4) laid the foundation for general personal jurisdiction over corporate defendants. The Supreme Court adopted a broad interpretation of personal jurisdiction and the limits placed on it by the Due Process Clause. The Supreme Court issued the often-quoted rule of specific jurisdiction that the defendant need only have certain "minimum contacts" with the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" (5) But for a corporate defendant, the Court explained that "the continuous operations" in the forum state could be "so substantial and of such a nature as to justify suit against it in causes of action arising from dealings entirely distinct from those activities." (6) The parameters of this early formulation of general jurisdiction, however, remained unclear. And in the nearly 70 years that followed International Shoe, the Supreme Court decided only two general jurisdiction cases.

    1. Perkins v. Benguet Consolidated Mining

      In the first case, Perkins v. Benguet Consolidated Mining, (7) the Supreme Court formalized International Shoe's "continuous and systematic" activities test. (8) Plaintiff Perkins, a nonresident, sued a foreign mining company in Ohio for dividends she claimed as a stockholder and for damages resulting from the company's alleged failure to issue stock certificates to her. (9) The mining company was organized under the laws of the Philippine Islands, where it operated profitable gold and silver mines. (10) Indisputably, Perkins' claims had no connection with the state of Ohio; therefore, the court did not have specific personal jurisdiction over the defendant.

      Nevertheless, the Plaintiff argued that the court had general jurisdiction over the foreign defendant due to certain of its activities during World War II. Due to Japanese occupation of the Philippine Islands during the war, the mining company halted its operations, and the president of the company (who was also its general manager and principal stockholder) relocated his office to Ohio, where he resided. (11) From that Ohio location, he carried on the correspondence of the company, drew salary checks, and otherwise remotely supervised the rebuilding of the company's operations. (12) He also maintained two active bank accounts in Ohio and held several board meetings at his office or home in Ohio. (13) Disagreeing with the Ohio Supreme Court, the Supreme Court held that these wartime activities in Ohio--though limited in time--were "continuous and systematic" and established general jurisdiction over the foreign corporation. (14)

      Perkins presented unusual facts not likely to arise in other cases, and it was not until 32 years later that the Supreme Court in Keeton v. Hustler Magazine (15) clarified that the "continuous and systematic" activities giving rise to general personal jurisdiction over the corporate defendant in Perkins were so pronounced that they effectively rendered the forum state "the corporation's principal, if temporary, place of business." (16) But the Supreme Court's single footnote in Keeton, suggesting that its general jurisdiction decisions were largely fact-driven and that it maintained reservations about broad application of the "continuous and systematic" test, came more than 30 years too late. In the decades that followed Perkins, many district courts and circuit courts of appeal embraced Perkins' holding as the one-size-fits-all, definitive test for general personal jurisdiction. (17)

    2. Helicopteros Nacionales de Colombia S.A. v. Hall

      Although the second general jurisdiction case was issued the same year as Keeton, the Supreme Court did not attempt to limit Perkins to its facts or otherwise limit the boundaries of general jurisdiction. Instead, in Helicopteros Nacionales de Colombia S.A. v. Hall, (18) the Court merely repeated its "continuous and systematic" formulation of general jurisdiction. (19) The Court declined to find that it had general personal jurisdiction over the foreign corporate defendant. (20)

      In Helicopteros, four United States citizens employed by a Peruvian consortium were killed in a helicopter crash in Peru while working on an oil pipeline. (21) Plaintiffs, the survivors and personal representatives of the deceased employees, brought wrongful death claims against the foreign helicopter company in Texas state court. (22) The Peruvian consortium was the alter ego of a joint venture headquartered in Houston, Texas. (23) The defendant helicopter company, a Colombian corporation, had entered into a contract to provide transportation for the Peruvian alter ego. (24) At the request of the Houston-based joint venture, the chief executive officer of the Colombian helicopter company had traveled to Houston for the limited purpose of negotiating the transportation-services contract. (25) Otherwise, the foreign defendant had no connection to the State of Texas; it did not have a place of business in Texas, nor had it ever been licensed in that state. (26) The Supreme Court held that sending personnel to Texas for training sessions, purchasing helicopters for large sums, and accepting checks drawn on a Texas bank did not give rise to personal jurisdiction in Texas over the foreign defendant. (27)

      For more than 60 years after International Shoe, general jurisdiction simply was not the focus of the Supreme Court's personal jurisdiction. General jurisdiction was summarily captured in the "continuous and systematic" activities catch-phrase. That accepted notion of general jurisdiction, coupled with a growing national and international economy and the rise of online commerce, contributed to companies' resignation--and plaintiffs' delight-- that they could be called to defend themselves against lawsuits in all 50 states. Litigation tourism boomed, and plaintiffs gained the...

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