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Specific Jurisdiction
McGee v. Int’l Life Ins. Co.
- The contacts with the forum state were incredibly small o Basically just one piece of paper going into Cal. o But the paper was extremely relevant and the cause of action was about this contract, so PJ was found
- One of the important points made by the McGee case were the other considerations. The court stated the premiums were: o mailed from California and o the insured was a resident of that State when he died. o California’s interest is also considered CA “interest in providing effective means of redress for its residents when their insurers refuse to pay claims” - But what matters isn’t the interest, but the power to have personal jurisdiction What if the contract had been sent to Arizona and the defendant moved to California before he died? California still has an interest, but D has NO contact with the state. o The residents would be inconvenienced by going to the Texas forum. Those considerations are problematic because previously PJ was determined by D’s actions. o Witnesses are in California o Could inconvenience the insurance company if tried in California.
- These considerations create a power v. convenience (or “McGee factors”) argument. o Convenience: whether the state is a good forum for the suit, but it has less to do with what the defendant did. Looks at how easy it is for people to go there, witnesses, etc. o If we got rid of state sovereignty entirely, then we would consider the McGee factors. We would consider if California is a fair venue. o These factors come into play in an uncertain way, they are sometimes thrown in to encourage the court to choose a state as a forum— especially in specific jurisdictions o McGee factors are a completely differently type of theory than Pennoyer and Int’l Shoe.
- While convenience is not the only consideration in courts, they can be used in arguments for personal jurisdiction. o Be aware of what force they have and where to use these factors. It’s not about power, it’s about convenience.
Returning now to consider PJ only under International Shoe theory (not McGee factors)
- Hypo: o Californian calls Oregonian and offers him $100,000 if he performs work in Nevada. - The Oregonian has made no advertisements encouraging offers. - The Oregonian agrees. - The Californian sends the Oregonian $50,000 as a deposit. - The Oregonian performs the work. - The Californian thinks the work is sub-standard and refuses to give the Oregonian the other $50,000. - Is there PJ in California state court for the Californian's suit against the Oregonian for return of the $50,000 deposit?
No – Oregonian did not reach out to CA, even though he knew he was contracting with a Californian But there was a relationship between the two? Yes Just because there is a relationship, doesn’t necessarily establish contact.
What about PJ in Oregon? D reached out to forum state (the initiator of the relationship). This is similar to McGee. The suit is about breach of contract. The D reached out to make a contract, they sent an offer to a state to Oregon, and P agrees in Oregon.
Take into account: Who is the first mover? Who started the ball going? Very important to determine for PJ. The first mover will often be subject to PJ in that state.
Even better if there is an offer sent to the other state.
Same hypo as above: Is there PJ in Nevada State Court for the Californian’s suit against the Oregonian? D went to the state and did things in Nevada and the cause of action is about those actions Nevada. Yes PJ, couldn’t be stronger – both presence and related actions.
What about the Oregonian suit against California? You want to Talk about what the Californian did to reach out to Nevada and how those actions relate.
Yes: If the Californian had never been to Nevada, would there be any PJ? He sent his “agent” to go to Nevada (He was contracted with the Oregonian) and he was getting his agent to do work in Nevada (and this work and the agent are protected by Nevada law). This is like a business that sends their employees to a state.
D committed a tort by sending a dangerous product to Mississippi where it then caused harm. It’s different between contracts and tort. When a tort, the court is more willing to find PJ in the state where the damage occurred.
The relationship is different in this case as well. They couldn’t break off the relationship because they were trying to fix the bad contract they entered into.
Who made the decision that a master cylinder should be sent? The defendant made that decision, not the plaintiff. In Chung it was the plaintiff’s idea to go get Reindeer horns. Here, it was D that decided to ship a master cylinder.
Takeaway: if someone ships a product to somewhere and then it blows up/causes an accident there, courts are more likely to consider PJ in the state of the accident.
The Internet
Bensusan Restaurant Corp. v. King
- Bensusan, the operator of a New York jazz club sued the operator of a Missouri jazz club for trademark infringement.
- The Internet Web site at issue contained general information about the defendant's club, a calendar of events and ticket information.
- However, the site was not interactive.
- If a user wanted to go to the club, she would have to call or visit a ticket outlet and then pick up tickets at the club on the night of the show. Has D reached out to NY through the website?
Has the defendant reached out to New York through the website.
Does it matter where the server is? Should it? Probably not—the defendant would probably not know where this is, and personal jurisdiction is how the defendant willingly submits.
Everyone can read it
Courts tend to draw a distinction between passive websites (unlikely to find PJ) and interactive websites. The passive website makes the other person the first mover. An interactive website makes the company the first mover.
Issues of defamation are different—generally you are subject to suit in personal jurisdiction in the state where the defamed individual lives.
You can enter into contracts (amazon) or get the product on the internet (electronically deliverable) then you are reaching out to anywhere the website can be seen.
Note: the Supreme Court has not spoken on how the internet works with jurisdiction.
Quasi in Rem What happens to those methods of personal jurisdiction that were OK with Pennoyer v. Neff that don’t seem ok under International Shoe?
Shaffer v. Heitner
Heitner is Delaware resident owning 1 share of Greyhound stock. Suing officers and directors of Greyhound for breach of fiduciary duty due to their actions that brought on an antitrust lawsuit against Greyhound. Action is brought on behalf of Greyhound.
Shareholder derivative action – the money goes back into the corporation. It’s really the corporation suing the officers and directors of the corporation.
- Brought by a shareholder on behalf of the corporation against the officers and directors.
- The concern is that there will be frivolous shareholder derivative actions that benefit the lawyers and few others.
- Federal law has made it so you cannot bring a shareholder derivative action if you only have one share. You have to have a substantial share.
This case is probably not frivolous. The defendants did harm Greyhound by causing it to violate anti-trust law
But what about PJ? The shares are the basis, but the cause of action is unrelated. This is quasi in rem.
The lawsuit is being brought in Delaware. Greyhound is incorporated in Delaware - principal place of business is in Arizona.
Source of jurisdiction is the Shares itself. However, the dispute is not about the shares it’s about the breach of fiduciary duty that happened in Arizona and Oregon.
The action is distinct from the shares, but the shares are creating the jurisdiction.
D contends that the sequestration statute intrudes on their property rights-- prevents them from buying or selling them—intrusion on property rights before there is evidence that you did anything wrong. They argue that this is a violation of due process clause of
his obligations by the expedient of removing his assets to a place where he is not subject to an in personam suit."
This argument is bogus. You simply sue where there’s in personam and then take your judgment and sue on it where the defendant does have assets and you go through a quick lawsuit.
- Hypo: Let’s say student beats up the professor. He wants to sue her in a place where she has property, even though there is not relationship between the properties in DE. She moves all of her assets to a place where she can’t be under in personam.
- Not really necessary. Just get the judgment in a state that has personal jurisdiction, then bring the judgment to the state with the property and sue on the judgment (which they have to uphold, if it’s a good judgment).
Justice Powell concurs in Shaffer and implies that Quasi in Rem should be ok in some cases – e.g. concerning real property
Could one argue that real property quasi in rem actions satisfy international shoe standards?
The property creates the substantial continuous contact? But if that’s true, then you could sue for more than just the value of the property, and you don’t have a real quasi in rem action. You have general in personam.
The argument from Powell is that Quasi in Rem should still exist, because when you purchase or own property in another state, then you are protected in that state up to the value of the property you own. Therefore you should be able to be sued up to that value.
- Stevens offers an argument about foreseeability. It’s a fourth theory. It’s not about whether it’s fair or not. It’s about whether D can anticipate PJ based on his action.
- This will legitimize traditional action of personal jurisdiction even when it does not satisfy international shoe.
- Note: the Supreme court has never gotten rid of quasi in rem cases entirely— it has never addressed the matter again and states still sometimes accept PJ in quasi in rem actions whether the property is bank accounts or real property
o The problem in Sahffer may be that the property was not physically there and it wasn’t something that could be anticipated as giving PJ o By buying property in in a state you can anticipate PJ.
o The argument of foreseeability will show up in later cases (Even though International Shoe doesn’t talk about whether the defendant could anticipate PJ, but whether it was fair) o Powell is arguing that you can expect traditional methods because of how long they’ve been around (ex: tagging) Problem: This is dependent on people’s prior knowledge.
Four theories of PJ
Pennoyer v. Neff – is the D or his property in the state at the initiation of the lawsuit? If so there is PJ for any cause of action. Int’l shoe – Power theory. What did the defendant do to create this reciprocal obligation. McGee – Convenience. Burdens on each side. Is this a good place to try it? Anticipation – could you reasonably anticipate you being held to PJ in this state?
Forget about the Delaware shares then. Are there other ways that D has reached out to the forum state creating specific PJ?
Greyhound is incorporated in Delaware and the Ds chose to become its officers and directors. Is that enough? The Ds live in Arizona, but did the officers and directors interact enough with Delaware? We need to prove benefits they get from the state.
Why not argue that Delaware law protects the officers and directors in their jobs, creating a responsibility to come and answer for causes of actions concerning their jobs in Delaware. They violated their fiduciary duty to care for the corporation when they caused it to violate antitrust law. They would not have a job if it were not for the state of Delaware. Why isn’t this reaching out to the state enough for specific PJ? The SCt seems to demand some kind of physical reaching out to Delaware. But why is that necessary?
