Nonparty Jurisdiction.

AuthorSimowitz, Aaron D.

Table of Contents I. Introduction 434 II. Daimler and Nonparties 438 A. Nonparties before Daimler 438 B. Daimler v. Bauman 442 C. Nonparties after Daimler 446 III. Daimler's Dead Ends 454 A. Jurisdictional Contacts Not Required 454 B. Jurisdiction by Injunction 456 C. In Rem Jurisdiction 461 D. Daimler Applies to Nonparties without Modification 463 IV. Post-Daimler Paths 466 A. A Different General Jurisdiction Standard... 466 B. Specific Jurisdiction Adapted for Nonparty Actions 469 C. The Special Problem of 28 U.S.C. [section] 1782 478 V. Conclusion 482 "Wfiereas fulhblown litigation exposes a defendant to extensive costs and subjects It to liability of Its own, a nonparty faces no liability.... It faces almost no litigation burden and no liability of Its own." (1)

"If anything, one would think that a more restrictive standard should apply when assessing personal jurisdiction over nonparties, not a looser one, because unlike defendants they are not accused of violating the plaintiff's rights and essentially have 'no dog In the fight. '" (2)


    Jurisdiction governs far more than the question of which court shall adjudicate a case between a plaintiff and a defendant. For example, jurisdiction determines when courts can exercise power over persons not a party to the case at all. Courts exercise power over nonparties for many purposes--enforcing a judgment, freezing assets pending adjudication, or compelling production of evidence. Nonparties are relative strangers to the underlying dispute. They find themselves on the receiving end of a subpoena or a writ because they happen to be in possession of documents, testimony, or assets important to the plaintiff or defendant. The current theoretical structure of jurisdiction fails to address these assertions of judicial power.

    Until recently, the breadth of US courts' power over persons concealed this void. But "only when the tide goes out do you discover who's been swimming naked." (3) The tide went out on January 14, 2014, when the US Supreme Court decided Daimler AG v. Bauman, which dramatically tightened the limits on where a party could be sued for any conduct--so-called "general" or "all-purpose" jurisdiction. (4) For over half a century, a party could be sued for any claims in a forum where it had "continuous and systematic" contacts--for example, where it maintained a leased sales office with a handful of employees-sometimes referred to as "doing business" jurisdiction. (5) After Daimler, a party can only be sued for any and all claims where it is "at home"-absent exceptional circumstances, its place of incorporation or principal place of business. (6)

    Before Daimler, nearly every transnational foreign nonparty action involved "doing business" jurisdiction. (7) There was no need for a more sophisticated theory of nonparty jurisdiction--or any theory-because the "doing business" standard of jurisdiction was so easy to meet. For example, US courts have frequently exercised their power over multinational companies as witnesses. This ability of US courts to compel testimony or the production of documents is one of the defining features of US dispute resolution. However, US courts' power over these witnesses has been almost completely reliant on the old "doing business" jurisdiction. This reliance was not limited to civil adjudication--grand jury subpoenas relied on the same jurisdictional basis. (8) If Daimler applies in this context, US courts may no longer be able to gather information as they have for decades.

    Recently, courts have looked to other bases of jurisdiction. (9) Some courts have relied on specific jurisdiction, which permits courts to hear claims when the defendant has contacts in the forum "arising out of or related to the claim." (10) But they have not resolved what "claim" means in this context--in other words, whether the nexus had to be with the underlying action (for example, an anti-counterfeiting action against Chinese website operators) or the action for discovery. If the nexus had to be with the underlying action, discovery could only be had from a nonparty if it had contacts in the US forum connected with the plenary action against the defendant, a difficult standard to satisfy. If the nexus had to be with the action for discovery, it is not at all clear what contacts would "arise out of or relate" to a subpoena. The very formulation of the specific jurisdiction standard indicates its origins in plenary actions. To fill the gap left by Daimler, subsequent courts have deployed various other bases of jurisdiction ill-suited to the task. (11)

    The concerns motivating the constitutional doctrine of personal, or adjudicative, jurisdiction are notoriously murky. However, two factors seem to predominate: the burdens on the target of the action and the nature of the action itself.

    As to burdens, the Court in Phillips Petroleum Co. v. Shutts distinguished between the protections owed to absent class plaintiffs and to defendants, reasoning that "[b]ecause States place fewer burdens upon absent class plaintiffs than they do upon absent defendants in nonclass suits, the Due Process Clause need not and does not afford the former as much protection from state-court jurisdiction as it does the latter." (12) Shutts is the closest the Court has ever come to addressing the due process protections owed to non-defendants, and so the "burdens upon" nonparties have been central to the thinking of lower courts since. Courts have struggled with the question of what burdens are faced by a nonparty. Courts and scholars have yet to analyze whether, how, or why these burdens are different from those faced by a defendant in plenary action. Courts and commentators tend to treat "burdens" or "'litigation burdens" as a monolithic concept. In fact, there are many different types of burdens. Parties and nonparties face different burdens of responding to being served with a complaint, petition, or subpoena; different burdens of complying with the action; different burdens of litigating the action; and different burdens if the action is lost or ignored. Disaggregating these types of burdens is the first step to an assessment of whether burdens he more heavily on the parties or the nonparties and, if so, which ones. These burdens are also likely to vary for foreign nonparties.

    As to the nature of the action, the landmark decision of Shaffer u. Heitner distinguished between the ability of plaintiffs to sue defendants on any claim where a defendant's property could be found (so-called type two quasi-in-rem jurisdiction) and the ability of a creditor to obtain jurisdiction for actions to recognize and enforce a judgment wherever the debtor's property is found. (13)

    As post-Daimler litigation makes clear, every possibility is on the table, from discovery entirely unrestrained by due process jurisdictional protections, to a dramatic retrenchment of the power of US courts to compel discovery from multinationals, even those with documents in the United States. Some possibilities can be ruled out. Elimination of jurisdictional protections would wrongly assume that burdens on nonparties are always minimal or nonexistent. US courts seem drawn to concepts rooted in in-rem or quasi-in-rem jurisdiction, but this slide toward asset jurisdiction fundamentally misunderstands the nature of discovery actions as laid out in the Federal Rules of Civil Procedure. Personal jurisdiction can be asserted over nonparties when they aid or abet in the knowing violation of an injunction, but linking personal jurisdiction to the injunctive power risks distorting one or both. Finally, the Supreme Court could not have meant to simply eliminate this long-standing pillar of US procedure in cross-border cases. There is no such suggestion in Daimler or in other decisions. Indeed, the Court's decisions suggest sustained support for crossborder discovery.

    The burdens on nonparties and the nature of nonparty actions also suggest the most promising paths forward. Daimler should not apply of its own force to the very different context of nonparty actions, just as it should not apply to post-judgment actions. (14) The burdens on nonparties are different from those on defendants. It is difficult to say that, in every instance, nonparties will face lesser burdens. However, the primary burden on foreign nonparties is the vise of foreign compulsion, where foreign law forbids what US law requires. (15) This particular type of burden should not weigh heavily in the jurisdictional analysis. Foreign compulsion is subject to a separate, tailored inquiry that US courts apply after the jurisdictional stage. (16) To import these concerns into the jurisdiction analysis would be to double-count them. Specific jurisdiction is another potential path forward. Whereas general jurisdiction is normally justified as appropriate for insiders (e.g., citizens and domiciliaries), specific jurisdiction is most appropriately used to enforce a sovereign's regulatory policies. Discovery is a species of regulation. In addition, disclosure regimes are tailored to support other areas of substantive law. However, the very formulation of specific jurisdiction belies its origins in merits actions. Specific jurisdiction permits power over a foreign defendant when its contacts in the forum "arise out of or relate to the claim." For nonparty actions, courts have struggled even to determine which is the relevant "claim"--the action for discovery or the underlying merits action.


    Before Daimler, US courts used the old formulation for "doing business" jurisdiction to exercise broad powers over foreign nonparty witnesses and garnishees in both civil and criminal cases. In Daimler, the Supreme Court pruned general jurisdiction in the context of a human rights claim asserted by a foreign plaintiff, based on foreign conduct, against a foreign defendant. After Daimler, transnational nonparty practice has been...

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