Obtaining Personal Jurisdiction: A Deceptively Complex Stage of Litigation, 0518 ALBJ, 79 The Alabama Lawyer 175 (2018)

AuthorStephanie S. Monplaisir, J.
PositionVol. 79 3 Pg. 175

Obtaining Personal Jurisdiction: A Deceptively Complex Stage of Litigation

Vol. 79 No. 3 Pg. 175

Alabama Bar Lawyer

May, 2018

Stephanie S. Monplaisir, J.

While liability and damages are certainly the bread and butter of litigation, personal jurisdiction is emerging as one of the most complex areas of personal-injury and product-liability practice. Just as with liability and damages, a plaintiff must properly plead and prove that his chosen forum has personal jurisdiction over the defendant. A plaintiff must carefully craft his complaint with proper jurisdictional allegations and obtain jurisdictional discovery to prove those allegations. The defendant must timely file an answer or a motion to dismiss asserting the defense. Failure to properly preserve a defense of personal jurisdiction can result in waiver. Litigating personal jurisdiction requires both parties to navigate the ever-changing legal landscape of jurisdictional precedent.

Personal jurisdiction is the court's authority to enter a judgment against a defendant and is based on the Due Process Clause of the U.S. Constitution. As with any due process analysis, the cornerstone of personal jurisdiction precedent has always been fairness. The central question with personal jurisdiction is whether the defendant has such a connection with the forum that he should reasonably anticipate being haled into court there. Determining whether the defendant has this type of connection with the forum is not as easy as it sounds. Courts must determine: 1) whether the defendant has sufficient minimum contacts with the forum state; and 2) whether exercising jurisdiction would offend traditional notions of fair play and substantial justice.[1]

The extent of contacts required to fall within the parameters of "minimum" depends on whether a court is trying to assert general or specific jurisdiction. General jurisdiction requires that the defendant have "continuous and systematic contacts" with the forum state so the court can exercise jurisdiction over the defendant for any claim, even if the claim is not related to the defendant's contacts with the state. Specific jurisdiction requires contacts with the forum that are purposeful and related to the cause of action so that the defendant could reasonably anticipate litigation in the forum.2 Once the court analyzes the defendant's contacts, the court must then determine whether exercising jurisdiction would be fair by looking to several factors, such as: 1) the burden on the defendant; 2) the forum state's interest in litigating the claim in that forum; 3) the plaintiff's interest in convenient and effective relief; 4) the judicial system's interest in efficient resolution of controversies; and 5) the forum state's interest in furthering its fundamental social policies.3

For almost 40 years, the U.S. Supreme Court has emphasized that personal jurisdiction is a fact-intensive inquiry.

Like any standard that requires a determination of "reasonableness," the "minimum contacts" test of International Shoe is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite "affiliating circumstances" are present. We recognize that this determination is one in which few answers will be written "in black and white. The greys are dominant and even among them the shades are innumerable." Kulko v. Superior Court of California In & For City & Cty. of San Francisco, 436 U.S. 84, 92 (1978)(emphasis added). Over the course of that same 40 years, however, courts have attempted to obliterate the grey areas by creating bright-line rules. While helpful in other areas of the law, bright-line rules for personal jurisdiction ignore the fundamental concepts of fairness, reasonableness and predictability. A surge of jurisdictional bright-line rules occurred in the wake of decisions issued by the U.S. Supreme Court from 2011-2014. This article explores the recent developments in personal-jurisdiction precedent and how these developments affect the Alabama practitioner.

The U.S. Supreme Court Ushers in a New Era of Jurisdictional Battles

The predominate issue for courts from 1980-2011 was whether a defendant's contacts with a forum were "purposeful." For manufacturers, courts developed what is known as the "stream of commerce test," which subjects an out-of-state manufacturer to jurisdiction in a forum where its product causes injury if that manufacturer expects its product to be sold there.4 This test comes from World-Wide Volkswagen Corp. v. Woodson,5 where the U.S. Supreme Court noted that a manufacturer is subject to jurisdiction in a forum where its product causes injury if the manufacturer directly or indirectly sought to serve the forum. A manufacturer seeks to serve a forum's market when its products are regularly sold in the forum.

Hence, if the sale of a product of a manufacturer or distributor ... is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its product in other states, it is not unreasonable to subject it to suit in one of those states if its allegedly defective merchandise has there been the source of injury to its owner or to others.[6]

As long as there is a regular course of sales in the forum where the injury occurs, specific jurisdiction would be proper under World-Wide Volkswagen.7

After World-Wide Volkswagen, courts developed different tests to determine whether a manufacturer "expected" its product to be distributed to the forum. Asahi Metal Indus. Co. v. Superior Court of California, Solano Cty.8 considered, but did not definitively answer, whether the stream-of-commerce test requires a manufacturer to have more than "mere awareness" that its products will be distributed and sold in the forum to have minimum contacts with the forum.9 Justice O'Connor's plurality opinion reasoned that "[t]he placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State."10

Instead, the defendant must engage in some additional conduct that indicates an intent or purpose to serve the market in that state, which could include: 1) designing the product for the market in the forum state; 2) advertising in the forum state; 3) establishing channels for providing regular advice to customers in the forum state; or 4) marketing the product through a distributor who has agreed to serve as the sales agent in the forum state.11

Justice Brennan's concurrence rejected the plurality's "additional conduct" requirement for a stream-of-commerce test.12 Justice Brennan reasoned that when a manufacturer's products arrive in the forum state through the "regular and anticipated flow of products," and the manufacturer "is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise."13 The manufacturer benefits economically from this regular and anticipated flow of products into the forum regardless of whether the manufacturer directly conducts business there.[14] The Alabama Supreme Court adopted the "pure stream of commerce" test from World-Wide Volkswagen and Justice Brennan's Asahi concurrence in Ex parte DBI, Inc., 23 So.3d 635 (Ala. 2009).

From 1987-2011, personal jurisdiction remained a relatively uninteresting part of the law primarily reserved for law-school hypotheticals. Then, with its simultaneously released stream-of-commerce opinions in J.

Mclntyre Mach., Ltd. v. Nicastro[15] and Goodyear Dunlop Tires Operations, S.A. v. Brown,16 the U.S. Supreme Court launched an avalanche of jurisdictional challenges from defendant manufacturers. The J. Mclntyre plurality found that a defendant must "target the forum" with its distribution of goods. According to the plurality, prediction that the goods might reach the forum state is not sufficient for jurisdiction.17 Justice Breyer's concurrence, however, found the plurality's "targeting" standard "unwise" in light of modern-day globalization of the world economy.18 Instead, he wrote, a manufacturer's delivery of its goods into the stream of commerce with the expectation that they will be purchased in the forum is purposeful activity in the forum.19 Upon the release of J.

Mclntyre, defendants argued that a stream-of-commerce test could no longer be utilized for specific jurisdiction unless the plaintiff presented evidence that the defendant manufactured its product for the particular state and directed it specifically into the state.

In Goodyear, the U.S. Supreme Court held that the stream-of-commerce test cannot establish general jurisdiction, i.e., jurisdiction based on claims unrelated to the defendant's contacts. In addition, the U.S. Supreme Court greatly restricted the forums where a defendant could be subject to general jurisdiction. Before Goodyear, the test for general jurisdiction was whether the defendant had "continuous and systematic" contacts with the forum. Instead, Goodyear held that general jurisdiction exists where the defendant is "essentially at home." For a corporation, those places are where the corporation is incorporated and where it keeps its principal place of business.

Goodyear did clarify that the stream-of-commerce test should subject a manufacturer to specific jurisdiction when "a nonresident defendant, acting outside the forum, places in the stream of commerce a product that ultimately causes harm inside the forum."20 The Court noted that specific jurisdiction is appropriate when there is "an 'affiliatio[n] between the forum and the underlying controversy' principally, activity or an occurrence that takes place in the forum State and is therefore subject to the...

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