Case Study: Plaintiff Unable to Establish Jurisdiction Over Global Law Firm in Nevada

Conn Kavanaugh
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A recent decision from the U.S. District Court for the District of Nevada highlights the importance of analyzing whether a defendant law firm has a viable jurisdictional defense, even when the law firm has a global footprint. In China Auto Logistics, Inc. v. DLA Piper, LLP, No. 220CV00646GMNEJY, 2021 WL 830189, at *1 (D. Nev. Mar. 3, 2021), the court dismissed a Nevada company’s legal malpractice claims against DLA Piper because the law firm’s work occurred in China, not in Nevada.

THE PARTIES:

  1. China Auto Logistics, Inc. (“CALI”), an importer of luxury vehicles from China, based in Nevada, with offices in Tianjin, China.
  2. DLA Piper, LLP (“DLA Piper”), a law firm organized as a Maryland limited liability partnership, with offices in various U.S. states (not including Nevada) and around the world.

THE CASE:

The plaintiff, China Auto Logistics, Inc. (“CALI”), imported luxury vehicles from China. A minority shareholder informed the company that it planned to file a lawsuit against CALI and its board of directors. The board hired law firm DLA Piper, LLP (“DLA Piper”) to investigate the claim.

During the investigation, DLA Piper collected electronic materials from CALI’s offices in Tianjin, China. The law firm allegedly required CALI’s employees to turn over their personal electronic devices in contravention of Chinese law. The employees complained to Chinese authorities, which led to a police investigation. In the wake of this investigation, several CALI executives resigned, and CALI missed important regulatory deadlines. CALI claimed that the law firm’s tactics exposed it to potential criminal and civil penalties. CALI pointed to the fact that the law firm was not licensed to practice law in China, and failed to associate with a local law firm familiar with Chinese law and customs.

CALI brought legal malpractice claims against DLA Piper in Nevada. The law firm moved to dismiss the case based on a lack of personal jurisdiction. DLA Piper argued that it owns no property, has no employees, and has no offices in Nevada; the investigation focused on CALI’s offices in China, not Nevada; and the law firm had not solicited business in Nevada. CALI argued that it was a Nevada-based client and DLA Piper had other Nevada-based clients; DLA Piper represented clients in Nevada courts and assisted with billion-dollar transactions in Nevada; and 11 attorneys were licensed to practice law in Nevada. The court sided with DLA Piper and concluded that these contacts with Nevada were not enough to confer personal jurisdiction over the law firm. For general jurisdiction purposes, the contacts were not enough to show that DLA Piper was “at home” in Nevada, particularly where DLA Piper had never registered to do business in Nevada. CALI also failed to meet the test for specific jurisdiction, because the court concluded that simply entering into a contract to provide legal services to a company with ties to Nevada was not sufficient to constitute “purposeful availment” of the benefits of doing business in the state. The court suggested that the result might have been different had there been evidence that DLA Piper solicited CALI for business in Nevada. Because CALI failed to establish that the Nevada court had personal jurisdiction over DLA Piper, its legal malpractice claims were dismissed.

THE TAKEAWAYS:

  1. Defense attorneys should assess the viability of a jurisdictional defense for any out-of-state law firm, even one with a global footprint.
  2. Law firms asked to render services in foreign jurisdictions should consider associating with local counsel to ensure adequate familiarity with local laws and customs.

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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