Where to Sue and Defend: An Update on Personal Jurisdiction Law, 0218 COBJ, Vol. 47, No. 2 Pg. 26

• Author: JORDAN LIPP AND EMILY WASSERMAN, J.
• Position: Vol. 47, 2 [Page 26]

47 Colo.Law 26

Where to Sue and Defend: An Update on Personal Jurisdiction Law

Vol. 47, No. 2 [Page 26]

The Colorado Lawyer

February, 2018

TIHTEL CEIVIL LITIGATOR

JORDAN LIPP AND EMILY WASSERMAN, J.

This article discusses personal jurisdiction requirements under Colorado and federal law as well as recent decisions affecting how litigants and courts analyze personal jurisdiction issues.

Where a plaintiff can maintain a lawsuit against a defendant is of the utmost importance to litigators. Every first-year law student learns the general proposition from International Shoe Co. v. Washington¹ that a defendant must have certain “minimum contacts” with a forum before a court can assert personal jurisdiction over that defendant. Application of the “minimum contacts” requirement has recently emerged as a hot topic in the law.

In 2014, the U.S. Supreme Court issued two landmark decisions that clarified and limited the scope of personal jurisdiction. The Court followed up with two additional personal jurisdiction decisions in this term. And in the last two years, the Colorado Supreme Court has issued six opinions on the topic of personal jurisdiction. Given this changing landscape, now is a good time for a refresher on personal jurisdiction.

This article provides a general primer on the basics of personal jurisdiction and discusses the four recent U.S. Supreme Court decisions and six recent Colorado Supreme Court decisions on the topic. The article concludes with a few thoughts about what these recent decisions might mean for civil litigants in Colorado.

Personal Jurisdiction Basics

Colorado courts have personal jurisdiction over resident defendants. For Colorado courts to have personal jurisdiction over nonresident defendants, the lawsuit must comply with the requirements of both constitutional “due process and Colorado’s long-arm statute.”² “Colorado’s long arm statute, CRS § 13-1-124, extends the jurisdiction of Colorado courts to the maximum limit permitted by the due process clauses of the United States and Colorado Constitutions.”³ Accordingly, courts “engage in a constitutional due process analysis to determine whether a Colorado court has jurisdiction over an out-of-state defendant.”⁴

Since International Shoe, the U.S. Supreme Court has recognized only two bases for personal jurisdiction: general jurisdiction (also known as “all-purpose jurisdiction”) and specific jurisdiction (also known as “conduct-linked jurisdiction”).^[5] General jurisdiction permits a court to exercise jurisdiction over a defendant regardless of whether the events giving rise to the lawsuit occurred within the forum state.⁶ Specific jurisdiction, on the other hand, allows a court to exercise jurisdiction over a defendant only for claims arising from the defendant’s forum-related contacts.^[7]

General Jurisdiction

General jurisdiction exists over an out-of-state corporate defendant where its contacts and affiliation with the forum state “‘are so ‘continuous and systematic’ as to render it essentially at home in the forum State.’”⁸ A corporation’s “place of incorporation and principal place of business are the paradigm bases for general jurisdiction.”^[9] Outside of these bases, only a limited set of affiliation with a forum will subject a corporation to general jurisdiction—and this will only occur in the “exceptional case.”¹⁰ Indeed, the U.S. Supreme Court rejected the blanket exercise of general jurisdiction in every state where a corporation engages in a “substantial, continuous, and systematic course of business” as “unacceptably grasping.”¹¹

Specific Jurisdiction

Specific jurisdiction, on the other hand, exists when the “controversy is related to or ‘arises out of ’ a defendant’s contacts with the forum.”¹² The defendant’s suit-related conduct must create “a substantial connection with the forum state;”¹³ the defendant must have “‘purposefully directed’ his activities at the residents of the forum state,” and “the litigation [must] ‘arise[] out of’ the defendant’s forum-related conduct.”^[14]

Even if jurisdiction has been established through minimum contacts, the nonresident defendant’s contacts with the forum “may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with ‘fair play and substantial justice.’”¹⁵ In determining the fairness of exercising jurisdiction over an out-of-state defendant, a court considers three things: “the burden on the defendant, the forum state’s interest in adjudicating the dispute, and the plaintiff's interest in obtaining convenient and effective relief . . . .”^[16]

With these general concepts in mind, this article turns to the recent case law examining personal jurisdiction.

Recent U.S. Supreme Court Decisions

In 2014, the U.S. Supreme Court handed down two landmark decisions on personal jurisdiction, Daimler AG v. Bauman¹⁷ and Walden v. Fiore,¹⁸ The Court followed up with two more jurisdictional decisions of note in 2017, Bristol-Myers Squibb Co. v. Superior Court of California^[19] and BNSF Railway Co. v. Tyrrell.²⁰

Daimler AG v. Bauman

In Daimler AG v. Bauman, the Court held that Daimler could not be subject to general jurisdiction in California simply because its subsidiary conducted a substantial amount of business in the state. Specific jurisdiction was lacking because none of the activities giving rise to the lawsuit occurred in California.²¹

The plaintiffs argued that there was general jurisdiction because the American subsidiary of the German entity Daimler, Mercedes-Benz USA (MBUSA), is subject to general jurisdiction in California, and those contacts could be imputed to Daimler. The Court rejected the plaintiffs’ argument that a subsidiary’s contacts with the forum could be imputed to the parent whenever the subsidiary was acting as an agent of the parent.²² It explained that this would improperly “subject foreign corporations to general jurisdiction whenever they have an in-state subsidiary or affiliate,” which would “sweep beyond even the ‘sprawling view of general jurisdiction’ we rejected in Goodyear.” ²³ The Court clarified that for general jurisdiction, it is not enough that a company “engage in a substantial, continuous, and systematic course of business” in the forum.²⁴ Rather, the proper inquiry is whether the corporation’s “‘affiliation with the State are so “continuous and systematic” as to render [it] essentially at home in the forum State.’”²⁵ Finding Daimler subject to general jurisdiction in California would lead to the absurd result that Daimler is subject to general jurisdiction anywhere MBUSA has significant sales.²⁶ A corporation’s “place of incorporation and principal place of business are the paradigm bases for general jurisdiction.”²⁷ Outside of these bases, only a limited set of affiliation with a forum will subject a corporation to general jurisdiction—and this will only occur in the “exceptional case.”^[28]

Walden v. Fiore

In Walden v. Fiore, the Supreme Court addressed whether the defendant, a Georgia resident, could be sued in Nevada where the defendant “knew his allegedly tortious conduct in Georgia would delay the return of funds to plaintiffs with connections to Nevada,” but had no other contacts with Nevada.²⁹ On these facts, the Court held that Nevada lacked jurisdiction over the defendant.

The opinion explains that the specific jurisdiction inquiry focuses on the “the relationship among the defendant, the forum, and the litigation,”³⁰ rather than on the defendant’s contacts with the plaintiff or the plaintiff’s contacts with the forum. The relationship between the defendant and the forum must “arise out of contacts that the ‘defendant himself’' creates with the forum State,”³¹ and the minimum contacts analysis focuses on “the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.”³² Critically, “the plaintiff cannot be the only link between the defendant and the forum.”³³

Bristol-Myers Squibb Co. v. Superior Court of California

In Bristol-Myers Squibb Co. v. Superior Court of California,³⁴ a group of plaintiffs, the majority of whom were not California residents, sued Bristol-Myers Squibb (BMS) alleging that Plavix, t he company’s drug, had damaged their health.³⁵ Although BMS engages in business in California and sells Plavix there, BMS did not do any work related to the drug in the state. Specifically, it did not “develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval for Plavix” in California.^[36] Furthermore, BMS is neither incorporated nor headquartered in California.³⁷ On these facts, the California Supreme Court found that while there was no general jurisdiction, there was specific jurisdiction.^[38] The California Supreme Court reached this decision by applying a “sliding scale approach” whereby if the defendant has extensive contacts with the forum, even if those contacts are unrelated to the claim, the strength of the requisite connection between the forum and the claims is relaxed.³⁹ The U.S. Supreme Court granted certiorari to decide whether there was specific jurisdiction over BMS and reversed.⁴⁰

Relying on its past decisions, the Court rejected California’s sliding scale approach, characterizing it as a “loose and spurious form of general jurisdiction.”⁴¹ The Court explained that, under a specific jurisdiction analysis, the fact that BMS conducted some activity in the state was irrelevant.^[42] Rather, specific jurisdiction requires an “affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State. When no such connection exists, specific jurisdiction is...