Academic journal article Defense Counsel Journal

Are You Defending Your Clients Where They Don't Belong? Corporate Defendants' New Potent Defense Is Personal (Jurisdiction, That Is)

Academic journal article Defense Counsel Journal

Are You Defending Your Clients Where They Don't Belong? Corporate Defendants' New Potent Defense Is Personal (Jurisdiction, That Is)

Article excerpt

PENNOYER v. Neff (1) may be just a vague memory from Civil Procedure class in law school, but no doubt every lawyer remembers learning the same fundamentals of personal jurisdiction. To sue a defendant in a particular forum, a plaintiff must show personal jurisdiction over the defendant in compliance with that forum's long-arm statute and the Constitution's Due Process Clause. Personal jurisdiction comes in two forms--specific jurisdiction and general jurisdiction. While specific jurisdiction likely got ample airtime on the intricacies of "minimum contacts" and "stream-of-commerce," general jurisdiction typically was reduced to a single sound bite: "continuous and systematic" activities by a corporation in a particular state were sufficient to subject that corporate defendant to general jurisdiction in that forum.

Civil Procedure professors were not the only ones, however, to give short shrift to general jurisdiction. In a nearly 70 year period, the Supreme Court issued scores of opinions featuring specific jurisdiction to a mere three opinions on general jurisdiction. Thus, general jurisdiction played little or no role in the defense strategy of large companies conducting business on a national scale. Unless the plaintiff named the wrong corporate entity as a defendant, most companies conceded personal jurisdiction in every state because they were doing business in every state; companies (and courts) usually accepted the prevailing general jurisdiction mantra of "continuous and systematic" to be sufficient.

In January 2014, however, the United States Supreme Court catapulted general jurisdiction into the spotlight and turned conventional wisdom on its head about the reach of general personal jurisdiction with its eight-Justice majority decision in Daimler AG v. Bauman. (2) The Supreme Court eliminated the "continuous and systematic" test and gave Civil Procedure professors, district courts, and most importantly, corporate defense counsel a new sound bite with powerful teeth: a corporation may be subject to general jurisdiction only where it is "at home." (3) The two paradigm places a corporation is "at home" are its state of incorporation and its principal place of business. Consequently, general jurisdiction now should be an essential element of corporate defense strategy in any case in which specific jurisdiction is lacking as to one or more plaintiffs.

I. The Beginning: International Shoe and Its (Sparse) Progeny

The Supreme Court's 1945 decision in International Shoe Co. v. Washington (4) laid the foundation for general personal jurisdiction over corporate defendants. The Supreme Court adopted a broad interpretation of personal jurisdiction and the limits placed on it by the Due Process Clause. The Supreme Court issued the often-quoted rule of specific jurisdiction that the defendant need only have certain "minimum contacts" with the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" (5) But for a corporate defendant, the Court explained that "the continuous operations" in the forum state could be "so substantial and of such a nature as to justify suit against it in causes of action arising from dealings entirely distinct from those activities." (6) The parameters of this early formulation of general jurisdiction, however, remained unclear. And in the nearly 70 years that followed International Shoe, the Supreme Court decided only two general jurisdiction cases.

A. Perkins v. Benguet Consolidated Mining

In the first case, Perkins v. Benguet Consolidated Mining, (7) the Supreme Court formalized International Shoe's "continuous and systematic" activities test. (8) Plaintiff Perkins, a nonresident, sued a foreign mining company in Ohio for dividends she claimed as a stockholder and for damages resulting from the company's alleged failure to issue stock certificates to her. (9) The mining company was organized under the laws of the Philippine Islands, where it operated profitable gold and silver mines. …

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