Attributing One Party's Contacts With the Forum State to Another: Conspiracy Jurisdiction in Alabama
| Publication year | 2010 |
| Pages | 0305 |
by Professor McKay Cunningham
Your Contacts are My Contacts
You don't reside in the forum state. You have no office there, no personal representative to receive service on your behalf, no advertising targeted toward the forum state and you have not personally conducted business in the forum state, but you have a business associate who has. When your business associate is sued, can the court attribute his contacts with the forum state to you? What if the claimant alleges that you and your business associate conspired or are agents of one another? In other words, what effect does one defendant's personal relationship with a foreign defendant have on the constitutional limits articulated in the "minimum contacts" analysis?
Minimum Contacts Jurisdiction
Of course we all remember the first year of law school and the well-established line of cases beginning with International Shoe. International Shoe Co. v. Washington, 326 U.S. 310, 316, (1945). But before revisiting the constitutional minimum, we must determine whether Alabama's long-arm statute extends to the constitutional limit. An Alabama court's personal jurisdiction over a person or corporation is governed by Rule 4.2, Ala. R. Civ. P. As amended in 2004, Rule 4.2(b) states:
"(b) Basis for Out-of-State Service. An appropriate basis exists for service of process outside of this state upon a person or entity in any action in this state when the person or entity has such contacts with this state that the prosecution of the action against the person or entity in this state is not inconsistent with the constitution of this state or the Constitution of the United States...."
Under the plain language of Rule 4.2, Alabama's long-arm rule has been interpreted by the Alabama Supreme Court to extend the jurisdiction of Alabama courts to the permissible limits of due process. See e.g., Duke v. Young, 496 So.2d 37 (Ala. 1986); DeSotacho, Inc. v. Valnit Indus., Inc., 350 So.2d 447 (Ala. 1977). Driving home the point, the court reiterated in Ex parte McInnis, 820 So.2d 795, 802 (Ala. 2001) that "Rule 4.2, Ala. R. Civ. P. extends the personal jurisdiction of the Alabama courts to the limit of due process under the federal and state constitutions."
As noted above, the Due Process Clause of the Fourteenth Amendment permits a forum state to subject a nonresident defendant to its courts only when that defendant has sufficient "minimum contacts" with the forum state. International Shoe, 326 U.S. 310, 316 (1945). The critical question with regard to the nonresident defendant's contacts is whether the contacts are such that the nonresident defendant "should reasonably anticipate being hauled into court" in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 (1985) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980)).
Two types of contacts can form a basis for personal jurisdiction: general contacts and specific contacts. General contacts, which give rise to general personal jurisdiction, are unrelated to the cause of action and are both "continuous and systematic." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.9, 415 (1984) (citations omitted). Specific contacts, which give rise to specific jurisdiction, are directly related to the cause of action. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-75 (1985). Although the related contacts need not be continuous and systematic, they must rise to such a level as to cause the defendant to anticipate being hauled into court in the forum state. Id; Ex parte Phase III Constr., Inc., 723 So.2d 1263, 1266 (Ala. 1998). In the case of either general jurisdiction or specific jurisdiction, "[t]he 'substantial connection' between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State." Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 112 (1987); Elliott v. Van Kleef, 830 So.2d 726, 730-31 (Ala. 2002).
The well-established minimum contacts analysis defines the outer boundaries of due process. Conspiracy jurisdiction-by imputing contacts from one party to another-arises outside of and independently from the minimum contacts analysis. Although the courts that recognize conspiracy jurisdiction usually reiterate the minimum contacts standard above, they do not apply it.
Agency Jurisdiction
Some liken conspiracy jurisdiction to agency law, but this analogy is an imperfect one. Certainly, the jurisdictional contacts of one can be attributed to another in some cases. But, usually, this attribution of jurisdictional contacts is justified because one party is expressly acting on behalf of the other. For example, the parent-subsidiary relationship has been considered by several courts when determining personal jurisdiction. In most parent-subsidiary disputes one entity is subject to jurisdiction, the other arguably is not and the claimant argues the affiliation between them establishes jurisdiction that would not exist independently. See e.g., Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984); Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333 (1925). While the existence of a parent-subsidiary relationship alone is not sufficient to establish personal jurisdiction over the parent on the basis of the subsidiaries' contacts with the forum, a court will impute the subsidiaries' contacts to the parent if the parent exercises a sufficient amount of control over the subsidiary. See Bauman v. DaimlerChrysler Corp., 579 F.3d 1088, 1094-96 (9th Cir. 2009).
Courts increasingly rely on agency law when determining whether to attribute personal contacts to a parent that would not otherwise be amenable to jurisdiction. "To impute the subsidiaries' contacts to the parent on an agency theory, the parent must exert control that is so pervasive and continual that the subsidiary may be considered an agent or instrumentality of the parent." Lisa McConnell, Inc. v. Idearc, Inc., 2010 WL 364172 (S.D. Cal. 2010) (internal citation omitted); see Worthy v. Cyberworks Technologies, Inc., 835 So.2d 972 (Ala. 2002). Imputation of contacts based on agency is not confined to the parent-subsidiary relationship. In a widely criticized case, an art collector (the foreign defendant) participated in an auction by telephone. He placed bids through an employee of the art gallery over the phone. The court said that the gallery employee was "loaned" to the foreign art collector such that the gallery employee became the...
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