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Thursday, January 16, 2014

Quick thoughts on personal jurisdiction

A few thoughts on personal jurisdiction following Tuesday's decision in Daimler v. Bauman, an 8-0-1 opinion by Justice Ginsburg, with Justice Sotomayor concurring in the judgment. Here is a good recap/summary.

1) I think the majority got it right. It clarified what it said three years ago in Goodyear--general jurisdiction is appropriate only if the defendant has continuous and systematic contacts that render it at home in the forum state, which usually means state of incorporation and principal place of business. The Court rejected the common lower court approach, still coming even after Good Year, applying general jurisdiction where an entity "engages in a substantial, continuous, and systematic course of business." The Court called this "unacceptably grasping," as it means any large corporation is subject to general jurisdiction pretty much nationwide.

2) The Court did leave open the possibility that a corporation could be subject to general jurisdiction in states other than incorporation and P/P/B, although there were strong hints this would be rare. The analysis would depend not only on the corporation's contacts with the forum, but also its contacts with other fora--the inquiry is whether the corporation is at home in the state--if it just does a lot of business everywhere, it is not at home there. The civ pro listserv jumped to the example of Boeing in Washington State--Boeing is incorporated in Delaware and headquartered in Illinois, but does most of its work in Washington.

3) In footnote 20, the Court erased any doubt that the two-step approach to personal jurisdiction everyone learned in law school (1) contacts 2) reasonableness only if there were contacts) remains the proper framework, but only for specific jurisdiction. There was some doubt about this after Nicastro, where all three opinions seemed to conflate the two prongs and Kennedy seem especially averse to jurisdiction based on some sense of convenience. But Kennedy signed onto the footnote here.

4) This was the point of departure with Justice Sotomayor, who wanted to apply the two-step approach even to general jurisdiction. The majority said that asking whether it is reasonable to subject a defendant to suit in its home would be superfluous.

5) This is a good teaching case. Justice Ginsburg starts with Pennoyer and the evolution of personal jurisdiction and spends time on the development and differences between specific and general jurisdiction. Ginsburg did the same thing in Good Year, but she really draws it out here. In teaching thiss area, I cover International Shoe, then introduce and define some concepts before diving into the 1980s cases beginning with World Wide. Ginsburg's discussion in Daimler will work well for introducing the two types of personal jurisdiction.

6) The one thing the Court did not resolve is when and how the contacts of a subsidiary can form the basis for gaining jurisdiction over a parent. The plaintiffs had tried to get Daimler in California through Mercedes Benz USA, which actually conceded general jurisdiction in California (ironically, the Court's ultimate analysis means MBUSA is not subject to general jurisdiction in California, since it is incorporated in Delaware and has its PPB in New Jersey). So what happens if Daimler is sued in, say, New Jersey, where MBUSA is "home"? Does that mean the parent is subject to general jurisdiction? Or will the Court say that the parent is only home in its own state of incorporation/PPB (which may not even be in the US)? Stay tuned.

Posted by Howard Wasserman on January 16, 2014 at 09:31 AM in Civil Procedure, Howard Wasserman | Permalink

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Comments

I don't really understand how due process is offended by subjecting a corporation that does a great deal of business in a given forum to the jurisdiction of that forum's courts.

I can see how there might be other better places for a given case to be heard depending on all the facts, but that sounds a lot more like a venue concern than a fundamental due process concern about the unfairness of being haled into a given court.

Certainly general jurisdiction for large corporations anywhere they have permanently stationed employees is considerably less unfair than tag jurisdiction for individuals who happen to wander across state lines however so briefly.

Posted by: brad | Jan 16, 2014 11:51:19 AM

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