Personal jurisdiction based on the local effects of intentional misconduct.

• Author: Erbsen, Allan
• Position: III. Making Sense of the Effects Test for Future Cases A. Reframing the Aiming Inquiry by Refining the Forum/Resident Distinction 1. The Forum/Resident Distinction Is Imprecise and Needlessly Formal b. The Court Might Have Required Contacts with States as Incorporeal Entities, but Such a Requirement Would Be Incoherent through Conclusion, with foot

2. The Court Might Have Required Contacts with States as Incorporeal Entities, but Such a Requirement Would Be Incoherent

   If Walden did not focus on contacts with the forum's territory, then it must have focused on contacts with the forum as a government entity. Yet legal entities have no corporeal existence aside from their territory, so there is nothing else to contact directly. States as entities exist through their institutions, agents, and laws. These manifestations of the state in turn define interests that the state seeks to protect, such as the well-being of its residents and markets. (165)

   If Walden meant to require contact with a state as a legal entity, then the Court's distinction between contacts with a state and with its residents is incoherent. There was no way for Walden to have contacts with the entity "Nevada" other than by interacting with a manifestation of Nevada's existence, such as an institution or resident. (166) Walden had such an interaction when he deprived Nevada residents of Nevada-based property. Deeming Walden to have no contacts "with Nevada" despite his contacts with local residents and property ignores Nevada's incorporeal attributes. (167) Having ignored these incorporeal facets of Nevada's existence, the Court failed to explain what contact "with the State" could mean.

   Walden's contacts with manifestations of Nevada do not necessarily mean that jurisdiction was appropriate. Residents of different states routinely interact without subjecting themselves to jurisdiction in each other's domiciles. The difference between interactions that create jurisdiction and interactions that do not hinges on the nature and consequences of the activity. Courts should not evade this complex inquiry by searching for ethereal contacts with the state "itself." (168)

3. Whether the Forum/Resident Distinction Requires Contact with Territory or an Entity, It Needlessly Revives Archaic Formal Approaches to Jurisdiction that the Court Repudiated in International Shoe

   Interpreting Walden to require direct contacts between the defendant and the forum "itself' would revive archaic theories that the Court rejected seventy years ago. The modern history of personal jurisdiction doctrine, in a nutshell, has three phases. First, the Court in Pennoyer v. Neff held that a state could exercise jurisdiction only over defendants who were present "within its territory" at the time of service. (169) Second, courts relaxed the "presence" requirement by allowing jurisdiction based on "fictions" such as "constructive presence" in the forum at the time of wrongdoing. (170) The idea was that even an incorporeal defendant, such as a corporation, could be present based on activities it caused to occur within the forum. As Judge Learned Hand explained, "[w]hen we say ... that a corporation may be sued only where it is 'present,' we understand that the word is used, not literally, but as shorthand for something else." (171) Third, the Court in International Shoe Co. v. Washington (172) "abandoned" the "presence" test in favor of focusing on the defendant's "contacts" with the forum. (173) Jurisdiction became appropriate when the defendant had "sufficient contacts or ties with the state of the forum to make it reasonable and just, according to our traditional conception of fair play and substantial justice, to permit the state to enforce the obligations which appellant has incurred there." (174)

   International Shoe's analysis was transformative. (175) Yet courts confronting unsettling new problems often overlook Shoe's insights. (176) International Shoe considered a state's effort to tax an out-of-state corporation's local employees. The corporation disputed jurisdiction because it had carefully structured its operations to minimize its local presence: employees solicited orders in the state, but contracts were accepted and fulfilled outside the state. (177) These facts presented an opportunity for the Court to refine the presence inquiry. (178) Instead, the Court realized that the presence inquiry was misguided because deeming an incorporeal defendant "present" "beg[s] the question to be decided,"--whether its "activities" were "sufficient to satisfy the demands of due process." (179)

   In essence, International Shoe held that the "presence" label masquerades as a factual conclusion about the defendant's conduct but is really a policy conclusion about the state's power. Chief Justice Stone's analysis reflects his extensive exposure to and partial embrace of legal realism. (180) Power was the central issue, so the presence inquiry was a distraction. The answer to the question "was the defendant present in the state" had no significance independent from the legal context in which the question was asked. Once the legal context was clear, broader context-specific values eclipsed the notion of presence.

   Chief Justice Stone had made the same point in an earlier case about due process constraints on a state's taxing power. In Curry v. McCanless, the Court held that the potential "presence" of intangible property within a state could not determine whether the state could tax it. (181) Curry and International Shoe address two sides of the same coin: a state's authority to impose a tax and its authority to provide a forum for enforcing a tax. (182)

   A fascinating aspect of International Shoe is that it replicates Curry's analysis without ever citing Curry. Neither courts nor commentators have analyzed similarities between the two cases. (183)

   Consider the following table comparing quotations from the two decisions: (184)

   Table 2 International Shoe Curry Defendant's argument hinged on Defendant's argument hinged on whether "its activities within "the situs or location to be the state were ... sufficient to attributed to the intangibles." manifest its presence' there." "Since the corporate personality Noted "the impossibility of is a fiction ... its 'presence' attributing a single location to without ... the state of its that which has no physical origin can be manifested only by characteristics." activities carried on in its behalf." "[S]ome of the decisions ... have "While fictions are sometimes been supported by resort to the invented in order to realize the legal fiction that [the judicial conception of justice, defendant] has given its consent we cannot define the to service and suit.... But more constitutional guaranty in terms realistically it may be said that of a fiction so unrelated to those authorized acts were of reality." such a nature as to justify the fiction." Rejecting need to "symbolize" the Rejecting need for a "fictitious defendant's activity with "terms" situs." like "present" or "presence." State power depends on whether State power depends on whether the defendant "exercises the the defendant "extends his privilege of conducting activities with respect to his activities within a state, [such intangibles, so as to avail that] it enjoys the benefits and himself of the protection and protection of the laws of that benefit of the laws ... in such a state. The exercise of that way as to bring his person or privilege may give rise to property within the [state's] obligations." reach." "[T]he criteria by which we mark "We find it impossible to say the boundary line between those that taxation of intangibles can activities which justify the be reduced in every case to the subjection of a corporation to mere mechanical operation of suit, and those which do not, locating at a single place, and cannot be simply mechanical." there taxing, every legal interest growing out of all the complex legal relationships which may be entered into between persons." The close connection between Curry and International Shoe highlights how personal jurisdiction doctrine should not be perceived as an idiosyncratic field at the margins of constitutional law. International Shoe did not attempt to create a unique doctrine to address the seemingly technical problem of adjudicative jurisdiction. Instead, the opinion cloaked personal jurisdiction in broader principles of constitutional law and legal reasoning. The Court recognized that adjudicative jurisdiction to enforce taxes, like prescriptive jurisdiction to impose taxes, is one of many interrelated problems that arise from the allocation of power between fifty coequal states. Analyzing these connections can lead to a more nuanced understanding of how personal jurisdiction doctrine should operate. (185)

   Curry also illustrates that Chief Justice Stone's critique of substituting categorical fictions for nuanced analysis was not merely a reaction to Pennoyer. Instead, International Shoe's departure from the constructive presence test reflected a deep suspicion of analytical shortcuts, including the shortcut that animates Walden. (186)

   Reading Walden to focus on direct contacts with the forum "itself" would revive the discredited constructive presence test. Instead of asking whether the defendant acted in a way that justified the assertion of state power, the Court would be looking for a shortcut--such as something sent to the forum, an idiosyncratic quirk of the governing tort law, or a basis for treating an ethereal "state" as a concrete entity. (187) International Shoe rejected such "mechanical" inquiries in favor of a more nuanced assessment of the "quality and nature of the [defendant's] activity." (188) Walden purported to rely on "[w]ell-established principles of personal jurisdiction," which counsels against reading Walden to resuscitate fictions that International Shoe interred. (189)

   A judicial opinion that invokes the categorical forum/resident distinction twenty-seven times--as does Walden (190)--protests too much. The distinction was apparently a convenient way of resolving the case without revisiting Nicastro's theoretical schism. (191) That shortcut did no damage in Walden because the case was relatively easy: Walden was a local police officer acting locally who had at...