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Thursday, July 07, 2011
How Can We Fix Personal Jurisdiction?
The Supreme Court heard two personal jurisdiction cases this term, Goodyear (general jurisdiction) and Nicastro (specific jurisdiction). The Nicastro case could have resolved an open question in civil procedure, namely whether defendants in products liability cases can be subject to personal jurisdiction based on the "stream of commerce" test, whereby placing an article in the stream of commerce and knowing that it might end up in the forum state is sufficient for personal jurisdiction, or whether defendants should be subject to personal jurisdiction under the "stream of commerce plus" test whereby the defendant also must have targeted the forum or purposefully availed itself of the forum state. Each of these theories commanded a four Justice plurality in the Asahi case.
Alas, the Supreme Court could not bring itself to resolve this question in Nicastro. In a 4-2-3 decision, the court found that New Jersey could not exercise jurisdiction over a foreign company which sold machines to a U.S. distributor (the distributor then sold the machines, and the machine which caused plaintiff's injury ended up in New Jersey). A four justice plurality led by Justice Kennedy basically endorsed the "stream of commerce plus" test, while the three dissenters would have found jurisdiction based on Justice Brennan's stream of commerce theory.
But Justices Breyer and Alito held resolution at bay, agreeing that NJ lacked jurisdiction, but refusing to sign onto the plurality's reasoning. The Breyer opinion suggests that this case does not reflect the modern realities of commerce and therefore is a poor vehicle to make broad conclusions and pronouncements about jurisidiction.
There is much to be said about the merits of each position and the reasoning in the opinions in this case, but I'd like to use this post to raise a small structrual question: In the absence of a clear statement from the Court about personal jurisdiction, is there any way to move forward with clearer jurisdictional rules? Should we expect more from the Court in this area of law?
The outer boundaries on personal jurisdiction come from the due process clauses in the Fifth and Fourteenth amendments to the Constitution. They are not rules that were drafted by Congress, or by another legislative or regulatory body. Does this mean that we are stuck with uncertainty until the Court sees fit to resolve the issue? Maybe, and maybe not. Congress and/or the drafters of the Federal Rules of Civil Procedure could expand the possibility of nationwide service of process which is currently available in federal question cases in which the defendant is not subject to jurisdiction in any one forum. In other words, it cover situations in which the "aggregate" contacts with the U.S. might be sufficient when contacts with individual states are not. Perhaps this rule could be expanded to include cases brought under diversity jurisdiction. This might be possible under the analysis that it is the "sovereign" (here, the U.S.) that must have power over the defendant, but such a rule would noticeably leave state courts out of the solution. Furthermore, interpreting such a rule would probably land us rather quickly back to the central due process questions from Asahi and Nicastro anyhow.
So, given that a solution to this problem is almost entirely in the hands of the Court, should we have expected better of them in terms of giving an answer? I am skeptical of Justice Breyer's search for the "better" case in which to announce a rule. If there is one reality of modern commerce, it is probably that transactions are so intricate and diverse in nature, and that there is not a prototypical case. District courts will regularly confront cases in which a product ends up in a forum state with the help of a distributor and without the help of the Internet or e-commerce, and they would benefit from clarity in this area. Yes, each case will look a little different, but that is what has bedeviled personal jurisdiction from its modern International Shoe origins. It would not have been impossible to give an answer in Nicastro and then further clarify it in later cases in which e-commerce raises genuinely unique questions.
Each opinion stresses the primacy of the due process analysis in personal jurisdiction cases. But, due process is at the heart of every case precisely because personal jurisdiction must be present in each case. In an area of law which touches virtually every single civil case that is filed, is it not itself a problem for the Court to deprive us of answers?
Posted by Robin Effron on July 7, 2011 at 05:55 PM in Civil Procedure | Permalink
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Comments
Thanks, as usual, for great comments. Especially to Allen for giving the answer to the question before I could! I think that what is clear is that the REA question and the Erie question both affect extension to diversity cases, but in different ways. it's one of the reasons why I wonder if this is not something that Congress should be addressing, rather than just adjusting Rule 4(k).
Posted by: Robin | Jul 9, 2011 4:09:42 PM
The Enabling Act objection to nationwide service in diversity cases would disappear if Congress enacts a statute authorizing jurisdiction. The inquiry would then shift to whether the statute is constitutional. I briefly noted the lack of controlling precedent on this issue in a recent article that in part considered whether removal to a federal forum empowered to serve nationwide process would be a sufficient remedy for jurisdictional overreaching by state courts. See Allan Erbsen, Impersonal Jurisdiction, 60 Emory L.J. 1 (2010). Here is the relevant excerpt about Erie and choice of law:
“[A statute authorizing nationwide service in diversity cases would raise two distinct questions:] (1) can a federal long-arm statute in diversity cases be longer than the statute that would apply in state court?; and (2) even if federal and state long-arm statutes are coextensive (because the state statute asserts the maximum constitutionally-permissible reach), can the Fifth Amendment open a federal diversity forum to a case that the Fourteenth Amendment excludes from state court? The Supreme Court has not directly addressed either question. Cf. Stewart Org. v. Ricoh Corp., 487 U.S. 22 (1988) (holding that federal statute governing venue transfer displaces inconsistent state forum selection rules in diversity cases, but not considering whether Congress may authorize venue within states in which the Constitution would not otherwise tolerate personal jurisdiction); Hanna v. Plumer, 380 U.S. 460 (1965) (holding that Congress can specify rules governing the manner of service in diversity cases, but not considering whether Congress can expand the scope of personal jurisdiction beyond what would be permissible in the local state court); Woods v. Interstate Realty Co., 337 U.S. 535, 538 (1949) (holding that when “one is barred from recovery in the state court, he should likewise be barred in the federal court,” but citing cases discussing state limits on remedies rather than jurisdiction); see also Arrowsmith v. UPI, 320 F.2d 219, 226 (2d Cir. 1963) (en banc) (Friendly, J.) (“[T]he constitutional doctrine announced in [Erie] would not prevent Congress or its rule-making delegate from authorizing a district court to assume jurisdiction over a foreign corporation in an ordinary diversity case although the state court would not.”). Commentators disagree about how the Erie doctrine would apply. Compare Paul D. Carrington, Continuing Work on the Civil Rules: The Summons, 63 NOTRE DAME L. REV. 733, 746 (1988) (nationwide jurisdiction in diversity cases “[a]rguably . . . would present a serious constitutional issue” because it “would cut deeply against the grain of Erie . . . and would provide a powerful incentive to forum-shop”), with Carol Rice Andrews, The Personal Jurisdiction Problem Overlooked in the National Debate About “Class Action Fairness,” 58 SMU L. REV. 1313, 1379 (2005) (“[A] statute authorizing nationwide jurisdiction of federal courts in diversity cases would be constitutional under Erie . . . .”). Cf. Allan R. Stein, Erie and Court Access, 100 YALE L.J. 1935, 1986 (1991) (suggesting that states may be “indifferent to federal adjudication of cases” that could not be heard in state court); id. at 1994 n.280 (“The availability of broad federal personal jurisdiction would . . . divert some business from the state courts” and therefore create “state-federal friction”).”
Posted by: Allan Erbsen | Jul 8, 2011 3:29:16 PM
Robin - This is a very interesting post. The problem with expanding Rule 4(k) to diversity cases is, of course, the Erie doctrine. Would such a rule fun afoul of the Rules Enabling Act? Would it abridge, enlarge, or modify a substantive right? After all, it would definitely lead to a different outcome for diversity cases brought in federal court than those brought in state court, one of the questions that courts look at in determining whether applying a federal rule or law would run afoul of Erie. The committee that promulgated Rule 4(k)(2) was concerned about this even in federal question cases. It would also flood the federal courts with garden-variety state-law tort cases, unlikely to be a popular policy with Congress.
Posted by: Vickie Williams | Jul 8, 2011 11:59:48 AM
Great post Robin. One question: As against an FRCP 4(k) nationwide service of process type solution you correctly note it would leave the state courts out but go on to say "Furthermore, interpreting such a rule would probably land us rather quickly back to the central due process questions from Asahi and Nicastro anyhow."
I would have thought it would raise a different and easier question than Asahi, whether the 5th Amendment Due Process clause allows personal jurisdiction over the issue. I always thought Stewart's comments in dissent in Stafford v. Briggs, 444 U.S. 527 (1980) were most people's understand of this, that you only need minimum contacts with the sovereign that created the court, such that the question in the 5th Amendment context is only minimum contacts with the United States, not a particular state. If so, then it seems we are less likely (though it is not impossible) to encounter a case where determining minimum contacts with the united states will depend on resolving the stream-of-commerce question.
Now maybe I am wrong in thinking that most people have that understanding of how the 5th Amendment analysis differs from the 14th Amendment one, but I was curious what you thought.
Posted by: I. Glenn Cohen | Jul 8, 2011 10:15:10 AM
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