Recent Supreme Court Cases Change (Or At Least Reset) The Game For Personal Jurisdiction

by Baker Donelson
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In two recent decisions with critical implications for maritime practitioners and litigants in particular, the United States Supreme Court has re-written the script for determining the existence of personal jurisdiction over defendants/corporations sued outside of their home jurisdiction. The first opinion (Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014)) addresses the relatively rarely invoked concept of general or “all-purpose” jurisdiction, while the second opinion (Walden v. Fiore, 134 S. Ct. 1115 (2014), addresses specific or “case-linked” jurisdiction. Daimler marks a deliberate shift in the approach to general jurisdiction, whereas Walden provides a less dramatic – but equally important, in terms of succinct clarification – restatement of the law. Maritime practitioners and their clients should be equally conversant with both, as they may provide bases for dismissal and/or transfer of lawsuits filed against vessel-operating corporate defendants whose voyages may proceed well beyond the limits of their home fora.

Daimler

First, and most importantly, the Daimler decision (authored by Justice Ginsberg, and joined by six other Justices, with Justice Sotomayor concurring) marks a tectonic shift in the concept of general “all purpose” jurisdiction over out-of-state corporate defendants. Barring “exceptional circumstances” (of which the sole example discussed involved corporate relocation due to enemy occupation during World War II), the only place where a corporate defendant may be subject to general personal jurisdiction is (1) its place of incorporation and/or (2) its principal place of business. As the Court summarized, “the paradigm forum” for general jurisdiction for a corporation is “one in which the corporation is fairly regarded as at home,” and “the place of incorporation and principal place of business are paradigm bases for [such] general jurisdiction.” 134 S. Ct. at 759.

By way of context, Daimler involved claims by Argentinian nationals against Daimler AG (a German corporation and manufacturer of Mercedes-Benz vehicles) arising out of alleged atrocities committed in Argentina during the so-called “Dirty War” between 1976-1983. Plaintiffs claimed general jurisdiction over Daimler in California based on the imputation of the contacts of a Daimler subsidiary – itself incorporated in Delaware with its principal place of business in New Jersey – which distributes Daimler vehicles (through independent dealers) and is the largest luxury vehicle supplier in California, a market that accounted for 10% of Daimler’s total sales in the U.S. and 2.4% of its revenue worldwide.

The Court held that even assuming the subsidiary’s California contacts could be imputed to Daimler in Germany, those contacts would not suffice for general, “all-purpose” jurisdiction. Critically, the Court clarified that the familiar phraseology from the Court’s watershed International Shoe opinion regarding personal jurisdiction – that jurisdiction can be asserted where a corporation’s in-state activities are “continuous and systematic” – was phrased in the context of specific, “case-linked” jurisdiction and does not apply equally to general, “all-purpose” jurisdiction,. 134 S. Ct. at 762. In other words, the general jurisdiction inquiry “is not whether a foreign corporation’s in-forum contacts can be said to be in some sense ‘continuous and systematic,’ it is whether the corporations affiliations with the State are so ‘continuous and systematic’ as to render it essentially at home in the forum State.” Id.

Thus, because “neither Daimler nor [its subsidiary] is incorporated in California, [and because] [n]either entity has its principal place of business there,” general, “all-purpose” personal jurisdiction did not exist in California. Id. at 761.

Walden

Second, the Court (in a unanimous opinion authored by Justice Thomas) rearticulated the standards for determining specific jurisdiction over a defendant, in a case involving claims filed in a Nevada federal court by two Nevada residents against a Georgia police officer relating to confiscation of cash by the police officer in a Georgia airport.

Conceptually, Walden clarified that specific, case-linked personal jurisdiction must be based on a defendant’s case-specific link to the forum: “Specific-jurisdiction questions focus[ ] on the relationship among the defendant, the forum, and the litigation . . .; [and] [f]or a State to exercise jurisdiction consistent with due process, the defendant’s suit-related conduct must create a substantial connection with the forum State.” 134 S.Ct. at 1121. In this regard, the “minimum contacts” sufficient to warrant case-linked jurisdiction focuses on two areas.

First, “the [defendant's] relationship [with the forum] must arise out of contacts that the defendant himself creates with the forum State . . [and] [the] unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.” Id. at 1122. Thus, a plaintiff’s or other party/non-party’s contacts with the forum cannot be bootstrapped to create specific personal jurisdiction over a defendant with no “minimum contacts” link to the forum. “Put simply, however significant the plaintiff’s contacts with the forum may be, those contacts cannot be decisive in determining whether the defendant’ s due process rights are violated.” Id.

Second, “the ‘minimum contacts’ analysis looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there,” and – critically – “the plaintiff cannot be the only link between the defendant and the forum.” Id. in this regard, “due process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the random, fortuitous, or attenuated contacts he makes by interacting with other persons affiliated with the State.” Id.

Bottom Line

Under Daimler, general jurisdiction will only exist over a corporation in the state of its incorporation or principal place of business, absent “exceptional circumstances.” While the contours of this new rule remain to be fleshed out (and while district courts in the months since Daimler was issued have continued to consider the same types of facts in the general jurisdiction analysis as they did before – i.e. whether the defendant has offices, bank accounts, employees, etc. in the forum), Daimler provides a strong basis for disclaiming jurisdiction in any forum other than a defendant’s place of incorporation or principal place of business.

Under Walden, specific jurisdiction requires that a defendant have its own minimum contacts link to a forum; the fact that a plaintiff sues in his home forum, or in a forum with tangential links to the defendant, is not enough.

For maritime operators – whose vessels ply the waters of multiple jurisdictions, whose crew members may hale from multiple jurisdictions, and whose operations may give rise to personal injury claims in multiple jurisdictions – these two decisions (and the jurisprudence already developing in their wake, see Air Tropiques, Sprl v. N. & W. Ins. Co. Ltd., 2014 WL 1323046 (S.D. Tex. Mar. 31, 2014))) may provide powerful threshold bases for dismissal and/or transfer of cases to more efficient fora.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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