Personal Jurisdiction and Choice of Law

Author:Stewart E. Sterk
Position:Professor of Law, Benjamin N. Cardozo School of Law
Pages:1163-1206
 
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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 FORUMS SOVEREIGN INTERESTS ............................... 1200
D. CONCERNS ABOUT LOCAL PRODUCERSAND 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).

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