The Dormant Commerce Clause As a Limit on Personal Jurisdiction

• Author: John F. Preis
• Position: Professor of Law, University of Richmond School of Law
• Pages: 121-164

121

The Dormant Commerce Clause As a

Limit on Personal Jurisdiction

John F. Preis

ABSTRACT: For over 70 years, the Due Process Clause has defin ed the law of

personal jurisdiction. This makes sense, because being forced to stand trial in a

far-off state will sometimes be fundamentally unfair. What does not make sens e,

however, is the Dormant Commerce Clause’s apparent irrelevance to personal

jurisdiction. The Dormant Commerce Clause addresses state laws affecting

interstate commerce, and a plaintiff’s choice of forum is often a commer cially

driven choice between different state courts. So why isn’t the Dormant Commerce

Clause part of personal jurisdiction doctrine?

This Article makes the case for its relevance, and demonstrates how the Dorman t

Commerce Clause can resolve a new and vexing personal juri sdiction issue. Since

the Supreme Court’s 2014 decision in Daimler AG v. Bauman—a personal

jurisdiction case that significantly curtailed options for forum shoppers—

plaintiffs across the country have been attempting to establish ju risdiction using

a company’s registration to do business in a state, even when the suit has nothing

to do with the company’s business there. Focusing solely on the Due Process Clause,

courts across the country have split on the issue. The Dormant Commerce C lause,

however, presents a clear answer.

This Article offers the first comprehensive analysis of how the Dormant Commerce

Clause impacts personal jurisdiction. It argues that jurisdiction based on a

company’s registration to do business violates the Dormant Commerce Clause—

but only in cases where the lawsuit has no connection to the forum. It also

demonstrates how personal jurisdiction comports with the Dormant Commerce

Clause in most situations deemed constitutional under the Due Process C lause.

In certain general jurisdiction cases (to the extent any remain after Daimler) and

transient jurisdiction cases, however, this Article argues that the Dormant

Commerce Clause renders personal jurisdiction unconstitutional.

 Professor of Law, University of Richmond Scho ol of Law. Special thanks to Kevin

Clermont, Brannon Denning, Jessica Erickson, Andrew McGowan, Tanya Monestier, Wendy

Perdue, Greg Reilly, Rocky Rhodes, Andra Robertson, Shawn Shaunessey and Glen Staszewski.

This Article was generously supported by the Hunton & Williams Summer Research Fellowship

Program.

122 IOWA LAW REVIEW [Vol. 102:121

I. INTRODUCTION ............................................................................. 123

II. PERSONAL JURISDICTION AND THE NEW DEBATE OVER

JURISDICTION-VIA-REGISTRATION ................................................. 126

A. PERSONAL JURISDICTION, BEFORE AND AFTER DAIMLER ........... 126

B. THE NEW FRONTIER OF JURISDICTION-VIA-REGISTRATION ......... 129

1. Arguing Consent After Daimler ..................................... 129

2. Judicial and Scholarly Assessments .............................. 130

3. A Role for the Dormant Commerce Clause? .............. 132

III. JURISDICTION-VIA-REGISTRATION AND THE DORMANT COMMERCE

CLAUSE ......................................................................................... 133

A. PERSONAL JURISDICTION AS UNCONSTITUTIONAL

DISCRIMINATION ..................................................................... 134

1. What is Unconstitutional Discrimination? .................. 134

2. Jurisdiction-via-Registration Is Unconstitutionally

Discriminatory ............................................................... 138

B. PERSONAL JURISDICTION AS UNCONSTITUTIONALLY

BURDENSOME .......................................................................... 144

1. What is an Unconstitutional Burden? ......................... 144

2. Jurisdiction-via-Registration Is Unconstitutionally

Burdensome .................................................................. 147

i. Burden: Choice-of-Law Rules ..................................... 148

ii. Burden: Local Practice ............................................... 150

iii. Benefit: Providing a Forum for Residents or Persons

Injured in the State .................................................... 153

iv. The Balance of Burdens and Benefits ......................... 154

IV. THE DORMANT COMMERCE CLAUSE APPLIED TO OTHER BASES

FOR PERSONAL JURISDICTION ....................................................... 154

A. CONSTITUTIONAL .................................................................... 154

1. Domicile ......................................................................... 155

2. Consent via Contract or Waiver ................................... 155

3. Specific Jurisdiction ...................................................... 156

B. UNCONSTITUTIONAL ............................................................... 157

1. General Jurisdiction ...................................................... 157

2. Transient Jurisdiction ................................................... 159

V. CONCLUSION ................................................................................ 163

2016] THE DORMANT COMMERCE CLAUSE 123

I. INTRODUCTION

Have you ever been to a “judicial hellhole?”1 It is a place where judges

hate summary judgment, and juries love to give money to old ladies burned

by hot coffee. Or at least that is what the defense bar will tell you. The

plaintiffs’ bar will tell you that these dens of iniquity are actually safe havens—

places where the little guy can fight a big corporation that forgot to put a

safety shield in front of a spinning blade. Whether hellhole or haven, there is

one issue that both sides can agree on: forum matters.

Because forum matters, plaintiffs understandably search for the most

advantageous forum in which to bring their suit. A major factor in forum

selection is the law of personal jurisdiction, a body of law based in large part

on the Fourteenth Amendment’s Due Process Clause.2 The Due Process

Clause means many things, but at a minimum, it guarantees litigants the

freedom from random or irregular adjudication.3 In the context of personal

jurisdiction, this means that defendants may not be hauled into court in a far-

off state simply because a plaintiff has chosen to sue them there. In the

Supreme Court’s opinion, a judicial system in which a plaintiff has unfettered

discretion to file suit in dozens of different states, many of them thousands of

miles away, is not an orderly system of law.4

Even though the Due Process Clause is an essential component of

personal jurisdiction law, it is odd that it seems to be the only component. To

the extent that a state’s personal jurisdiction law discourages companies from

doing business in a state (and thus subjecting themselves to jurisdiction

there), the Dormant Commerce Clause—which renders unconstitutional

state laws that discourage outsiders from engaging in commerce in a

particular state—should have much to say about personal jurisdiction.

Indeed, in the first part of the 20th century, courts routinely applied the

Dormant Commerce Clause to limit state assertions of personal jurisdiction.5

After standing in the background for so long, it is high time for the

Dormant Commerce Clause to step forward. In recent years, the Supreme

1. For a list of the leading “hellholes,” see JUDICIAL HELLHOLES, http://www.judicialhell

holes.org (last visited September 16, 2016).

2. U.S. CONST. amend. XIV.

3. See Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (holding that a court’s

assertion of authority over a party must comport with “traditional notions of fair play and

substantial justice” (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940))).

4. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (explaining that

the Due Process Clause “gives a degree of predictability to the legal system that allows potential

defendants to structure their primary conduct with some minimum assurance as to where that

conduct will and will not render them liable to suit”).

5. See, e.g., Denver & Rio Grande W. R.R. Co. v. Terte, 284 U.S. 284, 287 (1932); Michigan

Cent. R.R. Co. v. Mix, 278 U.S. 492, 495 (1929); Davis v. Farmers’ Co-Op. Equity Co., 262 U.S. 312,

315 (1923); Panstwowe Zaklady Graviozne v. Auto. Ins. Co., 36 F.2d 504, 506 (S.D.N.Y. 1928).