For these hypotheticals, assume that the following jurisdictional statutes apply in all states:
As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent:
- transacts any business within the state or contracts anywhere to supply goods or services in the state; or
- commits a tortious act within the state; or
- commits a tortious act without the state causing injury to a person or property within the state, if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or
- owns, uses or possesses any real property situated within the state.
Other Jurisdictional Statutes
- A court may exercise personal jurisdiction over individual and corporate domiciliaries of this state.
- A court may exercise personal jurisdiction over individuals served with process while present in this state.
- A court may exercise personal jurisdiction over individuals and corporations that consent to such jurisdiction.
Gasoline, Inc. is a Delaware corporation headquartered in Texas. It manufactures a gasoline additive called TUSL. Gasoline, Inc. has a contract with Distributor, Inc., a Nevada corporation headquartered in Idaho, to sell TUSL in all 50 states. The contract specifies that Distributor should use 10% of its marketing efforts to advertise in California, but otherwise should try to sell as much TUSL as it can throughout the United States, without mentioning other state names. As it turns out, 20% of TUSL sales occur in New York. Due to TUSL’s chemical characteristics, once gasoline containing TUSL has contact with the ground, it spreads farther through groundwater and is more difficult to remediate than other gasoline constituents. The New York Attorney General sued Gasoline and Distributor in New York state court seeking remediation of the damage done to the New York groundwater. Gasoline and Distributor have both filed motions to dismiss for lack of personal jurisdiction. How should the court rule?
Starting with Gasoline, the alleged tortious act occurred outside the state of New York (in Texas), so section 3 of the long-arm statute applies. Under 3(i), Gasoline likely derives substantial revenue from the TUSL used and consumed in New York. Similarly, under 3(ii), Gasoline should reasonably expect that its conduct of manufacturing TUSL would “have consequences” in New York, a large consumer market with a large population, and it derives substantial revenue from interstate commerce, as it sells TUSL in all 50 states.
On the constitutional minimum contacts test, in terms of purposeful availment, the NY AG can argue that 20% of Gasoline’s TUSL sales are in NY; even if they happen through a distributor, that’s a lot of benefit from the NY market. If Gasoline knows that 20% of its sales are in NY, the argument would be even stronger. Gasoline can also use McIntyre to argue that it targeted the country as a whole rather than New York in particular. The NY AG should argue that unlike the isolated, single sale in McIntyre, Gasoline’s sales in New York were continuous and systematic.
Moreover, Gasoline’s contacts with NY relate to its sales of TUSL, and TUSL’s chemicals gave rise to the claims in this lawsuit. As a result, the suit arises out of the relevant contacts.
In terms of the reasonableness factors, the defendant is a Delaware corporation headquartered in Texas. New York is far from Texas but proximate to Delaware. The plaintiff would argue that Gasoline is a major corporation that has the financial capacity to defend itself in NY, but defendant would respond with a limiting principle argument – does its wealth mean it has to defend itself in any state in the nation? The plaintiff should look for evidence that Gasoline has defended in NY before and regularly defends itself against litigation across the US. The forum’s interest is high, especially considering that the plaintiff is the state—as was the case in International Shoe. As the plaintiff, the NY AG prefers litigating its own courts, and the evidence and witnesses about the contamination in NY would be located in NY.
For Distributor, PJ exists under section 1 of the long-arm statute because Distributor contracts to provide TUSL within the state. It seems to have systematic and continuous contacts with NY through the sales of TUSL in that state. The suit arises out of those contacts—i.e., those sales contracts. And it would be fair and reasonable for NY to exercise personal jurisdiction over Distributor given those intentional contacts.
Sansui, a Japanese corporation headquartered in Tokyo, manufactures electronics, including television sets, at its factories in Osaka and Fukui, Japan. Forty percent of its sales are in the United States, and 70% of its American market is in California. Sansui U.S.A., the American subsidiary and Sansui’s exclusive importer and distributor in the United States, is incorporated in Delaware and located in New Jersey, but less than 5% of its American market is in New Jersey. Sansui purchases fiber-optic cables from several Silicon Valley companies on a monthly basis. Jonah Cave, an Australian citizen and permanent resident of the United States (domiciled in Oregon), purchases a Sansui television and gives it to his sister Josie, who lives in Canada, as a gift. While Jonah is visiting Josie, the Sansui television short-circuits and blows up, injuring Jonah, Josie, and two of her children. They file suit in California court against Sansui; Sansui moves to dismiss based on a lack of personal jurisdiction. What arguments do Jonah, Josie and her kids have in support of personal jurisdiction over Sansui? Are they likely to be successful?
Section (1) of the long-arm statute appears to apply because Sansui transacts business in California. The counter-argument is that it’s not clear that the television was purchased in California, so the cause of action may not have arisen from Sansui’s business with California.
The plaintiffs might argue that general jurisdiction exists over Sansui in California under Daimler as the relative magnitude of sales (70% of its American market and 28% of its total sales) in California is far higher than those of MBUSA (where California was 10% of the U.S. market and 2.4% of the worldwide market).
On the minimum contacts test, the question raised by the long-arm statute as to whether the cause of action is related to the contacts may also be problematic. Leaving that to one side, there’s a strong argument that Sansui purposefully avails itself of the California market given the high volume of sales. For Sansui, being subject to suit in California court is certainly foreseeable.
On the reasonableness factors, the burden on the defendant is not large given their extensive contacts with California. The forum state’s interest is mixed: none of the plaintiffs are residents, though they do have an interest in public safety (but we still don’t know where Cave bought the television – if not in California, this argument is much weaker). The plaintiffs are not residents of California so their interest in suing there is weak, though they might not get jurisdiction in Oregon, and the location of the tv purchase again makes a difference here.
In order to make ends meet during law school, you take up part-time employment with Peacock, a company based in Seattle that offers preparatory courses for standardized tests. After a telephone interview, Peacock offers you the job. Your training consists of lessons that they send you by CD-Rom; you never visit Seattle. After several months of this work, you decide that you could earn more money by running your own course. You quit your job with Peacock and start up your own company, but alas, you had signed an agreement with Peacock providing that you would not compete with them for two years after leaving their employment. Peacock sues you in Washington state court to enforce the non-compete agreement. You move to dismiss for lack of personal jurisdiction. What arguments can you make? Are they likely to be successful?
The first step in determining jurisdiction is to analyze the applicability of the state long-arm statute. Here it’s possible for Peacock to argue that you fall within section (1) of the statute because you transacted business within the state of Washington. You would argue that your contacts are all virtual and you did not transact business within the state; Peacock would argue that you received significant benefits from the business you conducted in Seattle. Note that the second portion of (1) does not apply. Though you have a contract with Peacock, you do not supply goods or services in the state. None of the other provisions apply because this is not a tort, but a breach of contract.
On the constitutional prong, your contacts with Washington are directly related to your claim. Because this is a contracts case, Peacock would draw on Burger King to argue that you purposefully availed yourself of the benefits of Washington’s laws and markets, and that you created continuing obligations with residents of the forum. In particular, Burger King offers the proposition that minimum contacts can be found even if you have never visited Washington. You would try to distinguish yourself from Rudzewicz and the Burger King facts (e.g. you are not a sophisticated businessperson). The Burger King test looks to prior negotiations; here, you reached out and negotiated with a Washington corporation. The second factor is the contemplated future consequences of the contract; here, Peacock would want to dig for more facts around your discussions with Peacock to show any links to Washington (and you would do the same in order to dispute those). The terms of the contract is the third factor; here, you would need more facts around the choice of law clause (if any) and where the contract was made. Finally, looking to the fourth factor, the parties course of dealing, Peacock would argue that the training materials came from Washington as presumably did the checks, and that you could have enforced the contract in Washington if you had chosen to. Peacock would argue that this analysis establishes that you had minimum contacts with Washington and that it was foreseeable that you’d be haled into court there.
On the reasonableness factors, your best argument is around the large burden on you to have to travel cross-country to defend this suit. But the interest of Washington in protecting its corporations is fairly high, and Peacock would argue that it should not be required to sue contract-breaching former employees all over the country.
You purchase a vacation home in Hawaii, completing the purchase remotely from Philadelphia. You decide to rebuild the decrepit fence surrounding the property before your first visit. After the fence is complete, your neighbor decides that you have miscalculated the boundary of your property, and that portions of your fence are on his property. He sues you in Hawaii state court. You move to dismiss for lack of personal jurisdiction. What arguments can you make? Are they likely to be successful?
Applying the Hawaii long-arm statute, provision (4) relating to ownership of real property in the state authorizes jurisdiction over you because the cause of action arises from property ownership. Looking at the constitutional test, the property is the source of the controversy, as the suit is about the property boundaries. Shaffer tells us that in such a case, property may be enough to establish contacts in such a case. You have purposefully availed yourself of the protection of the laws of the state, and it’s reasonably foreseeable that you could be haled into court in Hawaii to defend a suit related to your property. In terms of the reasonableness factors, it’s hard to argue that the burden on you is great since you own property in Hawaii. The forum state’s interest in enforcing property rights is very high. The plaintiff can’t be expected to go elsewhere to bring suit concerning real property in Hawaii. The evidence and witnesses are all in Hawaii except for you. The state’s shared substantive policies weigh in favor of enabling the forum state to protect its property owners. As a result, your motion to dismiss for lack of personal jurisdiction is unlikely to be successful.
You take the train from Philadelphia to New Haven in order to attend a conference. While the train is stopped in Penn Station, someone steps into your car and serves you with process for a lawsuit filed in New York (based on a car accident you had in Maryland). You move to dismiss for lack of personal jurisdiction. What arguments can you make? Are they likely to be successful?
This fact pattern should remind you of the Burnham case, as it raises the issue of presence as a basis for personal jurisdiction. The first question is whether there is state statutory authorization for jurisdiction in New York. Because the lawsuit doesn’t arise out of your contacts with New York, none of the provisions of the long-arm statute apply. This is a general jurisdiction case under Burnham. The second jurisdictional statute authorizes personal jurisdiction through service of process, so state law authority exists.
The second question is whether the exercise of personal jurisdiction over you would meet federal constitutional standards. Under Scalia’s test in Burnham, presence alone is sufficient, so jurisdiction would be proper. Under Brennan’s test in Burnham, you have to run the minimum contacts analysis. You could argue, likely unsuccessfully, that the stop in New York was so short that this case is distinguishable from Burnham, as you did not purposefully avail yourself of the protection of New York laws in the same way that Mr. Burnham availed himself of California laws. However, the person trying to establish jurisdiction over you would argue that you intentionally travelled to New York since you knew that the train would not only run through New York but also stop at least once in the state. Given the intentional nature of your travel, it was foreseeable that you might be haled into court in New York. While on the train, you were protected by New York laws, so purposefully availed yourself of those laws in the same way that Mr. Burnham did in California.
Examining the fairness factors, the interest of the plaintiff in having the case heard in New York is not clear. You would want to obtain further information – is the plaintiff a resident of New York? If, as appears from the facts of the case, there’s no strong relationship between the plaintiff and New York, you might want to show that the only reason that the plaintiff chose New York was because of the more favorable tort laws there – this “forum-shopping” argument might appeal to a judge wanting to clear her docket. On the other hand, assuming that you are a resident of Pennsylvania, the burden on you of defending in New York is slight – New York is not very far from Pennsylvania. Finally, New York’s interest in hearing this case doesn’t appear strong. While it might have an interest in protecting its citizens, it’s not clear that the plaintiff is a citizen of New York. Moreover, the accident happened in Maryland, so the interest of New York is minimized. If the witnesses and evidence are primarily located in Maryland, interstate efficiency might argue for dismissal of the case so that it can be heard there – though if you and the plaintiff are both residents of other states, this argument might be less strong. In the end, it’s a tough argument for you to make, and it’s likely that jurisdiction will be extended over you.
You purchase a plane ticket to fly from Philadelphia to Des Moines on Cheapo Airlines, an Arizona corporation. When you get off the plane in Iowa, you are suddenly and violently ill; you see a doctor who tells you that the most likely cause was food poisoning from that smelly tuna sandwich you bought during the flight. You sue Cheapo in Pennsylvania state court; they move to dismiss, pointing to an Alaska forum selection clause in the fine print on the back of your plane ticket. What arguments can you make in opposition to this motion? Are they likely to be successful?
The first issue we face is one of consent to jurisdiction through the forum selection clause. We look to Carnival Cruise Lines here. While the Bremen rule seems to be met here, as the clause is as freely negotiated as the clause in Carnival Cruise Lines and notice seems ample, there is an important distinction to be made. Unlike Carnival’s link to Florida (its principal place of business is Miami, many cruises leave from Florida), Cheapo doesn’t seem to have any such relationship with Alaska, so you could argue that the purpose of this clause is to discourage legitimate claims.
If you’re able to get the forum selection clause knocked out, prong (1) of the state long-arm statute applies fairly clearly, as Cheapo transacts business in Pennsylvania.
General jurisdiction over Cheapo in Pennsylvania seems unlikely unless Philadelphia is a hub for the airline. If it is a hub, you could make an argument under Daimler that the relative magnitude of operations in Pennsylvania is large and that Cheapo’s connection to Philadelphia is comparable to being incorporated or headquartered there.
Looking to the question of specific jurisdiction, it seems that Cheapo’s contacts with Pennsylvania are closely related to the claim. On the minimum contacts test, the airline flies to Philadelphia and regularly sells tickets to Pennsylvania residents, so there’s a solid argument that it purposefully avails itself of Pennsylvania (benefiting from state laws) and that it’s reasonably foreseeable that it would be haled into court in Pennsylvania. On the fair play factors, the burden on Cheapo to defend in Pennsylvania is small (“Get on a plane!”), although it might prefer a forum that might be friendlier. Pennsylvania has a strong interest in protecting its citizens from food poisoning, and you have a strong interest in suing in Pennsylvania, rather than Arizona, which seems like the only other reasonable forum. As far as interstate efficiency goes, Cheapo’s records are likely to be in Arizona and your medical records and witnesses are in Iowa, so that’s not a strong argument in your favor.
You purchase a cell phone on Sahara.com, a well-known website that is incorporated in California, with its principal place of business in San Francisco; Sahara.com sells books, clothes, electronics, and many other items over the internet. When the phone arrives, it is not the same model that you ordered; in fact, it is a much cheaper and less reliable model. You call Sahara.com to complain, and they tell you that you must direct your complaints to Tiny, the Idaho company that shipped the phone to you. (Tiny does not have a website of its own, but takes orders from Sahara.com and sends phones all over the country.) When you call Tiny, they refuse to refund or exchange the phone, and tell you that they sent you the phone that you requested on Sahara.com. You sue Sahara.com and Tiny for false advertising in Pennsylvania court; they both move to dismiss for lack of personal jurisdiction. Are they likely to be successful?
Looking at the state long-arm statute, under (1) both Sahara and Tiny contracted to supply goods (at least one phone) in Pennsylvania.
Unless Sahara’s sales to Pennsylvania are relatively much higher than in other states, you will not be able to obtain general jurisdiction over them under Daimler. For both defendants, there are contacts with Pennsylvania related to the claim, so it makes more sense to try for specific jurisdiction. We look to the test laid out in Zippo to determine minimum contacts in cases relating to websites. While not crystal clear from the facts, Sahara is arguably an active website that does business over the internet with Pennsylvania and is therefore subject to personal jurisdiction. (You would want more information about Sahara’s volume of sales to Pennsylvania residents to make this argument.)
The question of which minimum contacts test we apply to Tiny is more complicated. Tiny has no website, so the Zippo test seems inappropriate. And while it may appear to be a stream of commerce case, it’s not quite – the phone orders coming through Sahara can come from any state in the nation, but Tiny sends the phones directly to the purchasers (exiting the stream of commerce), and indisputably knows which markets it impacts. It makes the most sense, then, to apply the general minimum contacts standards laid out in World-Wide Volkswagen. Tiny seems to have purposefully availed itself of the forum by conducting business with a Pennsylvania resident, thus invoking the benefits and protections of Pennsylvania laws. The phone exits the chain of distribution in Pennsylvania, so Tiny’s action of sending the phone to Pennsylvania might be sufficient to create a reasonable anticipation of being haled into court here. Ideally, you’d investigate further to determine how many phones Tiny had sent to Pennsylvania, and if they have any other contacts with the state – though this case seems similar to McGee, where the Court found that one sale of life insurance in the state was enough to subject the defendant to suit in that state, given that the suit arose from that very sale
The fair play and substantial justice factors cut both ways. On the one hand, Sahara is a large, national internet retailer that would seem to be able to defend a case in any of the states in which it does business. On the other, what is the limiting principle under such a conception of fairness? For Tiny, it may be more of a burden to defend in Pennsylvania, and the question of limiting principles may become even more important. As the plaintiff, you might want to dig around to see whether they’ve sued or defended in or near Pennsylvania before. Pennsylvania has an interest in protecting its consumers, and the plaintiff has an interest in suing in Pennsylvania over an item purchased over the web from her Pennsylvania home. Judicial efficiency would be best served by allowing the plaintiff to sue Sahara and Tiny in one state, and for that purpose, Pennsylvania may be the best forum.