Wednesday, June 29, 2011

More SCOTUS Action on Personal Jurisdiction via Summary Dispositions

Professor Charles Campbell at Faulkner University, Jones School of Law was kind enough to share the following information:

Yesterday, the Supreme Court granted certiorari, vacated, and remanded one personal jurisdiction case, Dow Chemical Canada ULC v. Fandino, No. 10-250, to the California 2nd District Court of Appeals, for reconsideration in light of Nicastro. The Court denied certiorari in four other personal jurisdiction cases:

Roberts v. Kauffman Racing Equipment, L.L.C., No. 10-617;
Clemens v. McNamee, No. 10-966;
Pirelli Pneus LTDA v. Gunn, No. 10-1004; and
Abbyy Production, LLC v. Nuance Communications, Inc., No. 10-1019.

Roberts and Clemens both involved alleged defamation and Calder v. Jones. Pirelli was a stream-of-commerce case involving an allegedly defective motorcycle tire. In Abbyy, the Federal Circuit upheld personal jurisdiction over a Russian software developer based on the developer electronically shipping a master copy of software to a nonexclusive licensee in California.

Today’s order list is here. SCOTUSblog has a bit more information in its most recent “hold and relist watch” post, if anyone is interested.

Tuesday, June 28, 2011

SCOTUS Decides Goodyear

The Supreme Court has issued a unanimous opinion in Goodyear Dunlop Tires Operations v. Brown, rejecting the claim that general jurisdiction can be asserted over a foreign corporation whose product caused harm outside of the forum state but who also has products that reach the forum state through the stream of commerce. Here is an excerpt from the Syllabus:

Held: Petitioners were not amenable to suit in North Carolina on claims unrelated to any activity of petitioners in the forum State. Pp. 6–14.

(a) The Fourteenth Amendment ’s Due Process Clause sets the outer boundaries of a state tribunal’s authority to proceed against a defendant. The pathmarking decision of International Shoe Co. v. Washington, 326 U. S. 310 , provides that state courts may exercise personal jurisdiction over an out-of-state defendant who has “certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Id. , at 316. Endeavoring to give specific content to the “fair play and substantial justice” concept, the Court in International Shoe classified cases involving out-of-state corporate defendants. First, the Court recognized that jurisdiction could be asserted where the corporation’s in-state activity is “continuous and systematic” and gave rise to the episode-in-suit. Id., at 317. It also observed that the commission of “single or occasional acts” in a State may be sufficient to render a corporation answerable in that State with respect to those acts, though not with respect to matters unrelated to the forum connections. Id. , at 318. These two categories compose what is now known as “specific jurisdiction.” Helicopteros Nacionales de Colombia, S. A. v. Hall , 466 U. S. 408 , n. 8. International Shoe distinguished from cases that fit within the “specific jurisdiction” categories, “instances in which the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” 326 U. S., at 318. Adjudicatory authority so grounded is now called “general jurisdiction.” Helicopteros, 466 U. S., at 414, n. 9. Since International Shoe , this Court’s decisions have elaborated primarily on circumstances that warrant the exercise of specific jurisdiction. In only two decisions postdating International Shoe has this Court considered whether an out-of-state corporate defendant’s in-state contacts were sufficiently “continuous and systematic” to justify the exercise of general jurisdiction over claims unrelated to those contacts: Perkins v. Benguet Consol. Mining Co. , 342 U. S. 437 ; and Helicopteros , 466 U. S. 408 . Pp. 6–9.

(b) Petitioners lack “the kind of continuous and systematic general business contacts” necessary to allow North Carolina to entertain a suit against them unrelated to anything that connects them to the State. Helicopteros , 466 U. S., at 416. The stream-of-commerce cases on which the North Carolina court relied relate to exercises of specific jurisdiction in products liability actions, in which a nonresident defendant, acting outside the forum, places in the stream of commerce a product that ultimately causes harm inside the forum. Many state long-arm statutes authorize courts to exercise specific jurisdiction over manufacturers when the events in suit, or some of them, occurred within the forum State. The North Carolina court’s stream-of-commerce analysis elided the essential difference between case-specific and general jurisdiction. Flow of a manufacturer’s products into the forum may bolster an affiliation germane to specific jurisdiction, see, e.g. , World-Wide Volkswagen Corp. v. Woodson , 444 U. S. 286 ; but ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant. A corporation’s “continuous activity of some sorts within a state,” International Shoe instructed, “is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.” 326 U. S., at 318.

The opinion of the Court is available here.

SCOTUS "Decides" Nicastro

The Supreme Court has decided J. McIntyre Machinery, Ltd. v. Nicastro, No. 09-1343. Unfortunately, the Court did not resolve the issue left unresolved in Asahi, namely what is required of a defendant who places a product in the stream of commerce to subject it to jurisdiction in a state where the product causes harm. Justice Kennedy authored an opinion in which only three other Justices joined, embracing the O'Connor approach from Asahi. Breyer and Alito agreed that there could be no jurisdiction in the case but declined to join Kennedy's opinion.

Here is an excerpt from the Syllabus of the case:

Justice Kennedy , joined by The Chief Justice, Justice Scalia , and Justice Thomas , concluded that because J. McIntyre never engaged in any activities in New Jersey that revealed an intent to invoke or benefit from the protection of the State’s laws, New Jersey is without power to adjudge the company’s rights and liabilities, and its exercise of jurisdiction would violate due process. Pp. 4–12.

(a) Due process protects the defendant’s right not to be coerced except by lawful judicial power. A court may subject a defendant to judgment only when the defendant has sufficient contacts with the sovereign “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington , 326 U. S. 310 . Freeform fundamental fairness notions divorced from traditional practice cannot transform a judgment rendered without authority into law. As a general rule, the sovereign’s exercise of power requires some act by which the defendant “purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla , 357 U. S. 235 . In cases like this one, it is the defendant’s purposeful availment that makes jurisdiction consistent with “fair play and substantial justice” notions. No “stream-of-commerce” doctrine can displace that general rule for products-liability cases.

The rules and standards for determining state jurisdiction over an absent party have been unclear because of decades-old questions left open in Asahi. The imprecision arising from Asahi , for the most part, results from its statement of the relation between jurisdiction and the “stream of commerce.” That concept, like other metaphors, has its deficiencies as well as its utilities. It refers to the movement of goods from manufacturers through distributors to consumers, yet beyond that descriptive purpose its meaning is far from exact. A defendant’s placement of goods into commerce “with the expectation that they will be purchased by consumers within the forum State” may indicate purposeful availment. World-Wide Volkswagen Corp. v. Woodson , 444 U. S. 286 . But that does not amend the general rule of personal jurisdiction. The principal inquiry in cases of this sort is whether the defendant’s activities manifest an intention to submit to the power of a sovereign. See, e.g., Hanson , supra , at 253. In Asahi , Justice Brennan’s concurrence (joined by three other Justices) discarded the central concept of sovereign authority in favor of fairness and foreseeability considerations on the theory that the defendant’s ability to anticipate suit is the touchstone of jurisdiction. 480 U. S., at 117. However, Justice O’Connor’s lead opinion (also for four Justices) stated that “[t]he ‘substantial connection’ between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State.” Id., at 112. Since Asahi, the courts have sought to reconcile the competing opinions. But Justice Brennan’s rule based on general notions of fairness and foreseeability is inconsistent with the premises of lawful judicial power under this Court’s precedents. Today’s conclusion that the authority to subject a defendant to judgment depends on purposeful availment is consistent with Justice O’Connor’s Asahi opinion. Pp. 4–10.

(b) Nicastro has not established that J. McIntyre engaged in conduct purposefully directed at New Jersey. The company had no office in New Jersey; it neither paid taxes nor owned property there; and it neither advertised in, nor sent any employees to, the State. Indeed, the trial court found that petitioner did not have a single contact with the State apart from the fact that the machine in question ended up there. Neither these facts, nor the three on which Nicastro centered his jurisdictional claim, show that J. McIntyre purposefully availed itself of the New Jersey market. Pp. 10–12.

The opinions in the case may be downloaded by clicking here

Monday, June 13, 2011

Sixth Circuit Notes Split Re Subclassing and Bifurcation

Civil Procedure—Class Actions

Randleman v. Fidelity National Title Insurance Co.
 (79 U.S.L.W. 2590) (May 2011)

Issue: May subclassing and bifurcation be used to remedy predominance issues in class actions? The Sixth Circuit, declining to take sides, notes that the Second and Ninth circuits allow the practices so long as common issues predominate, while the Fifth and Eleventh Circuits do not permit them.

Second Circuit Weighs in on Split Re Meaning of "Otherwise Defend" in FRCP 55(a)

Civil Procedure—Default Judgment

City of New York v. Mickalis Pawn Shop LLC
 (79 U.S.L.W. 2511) (May 2011)

Does a defendant's withdrawal from a suit after initially defending on personal jurisdiction constitute a failure to “otherwise defend” the suit under Fed. R. Civ. P. 55(a)? The Second Circuit holds that it does, agreeing with the First, Third, Fourth, Eighth, and Ninth circuits' broad reading of Rule 55;the Fifth and Eleventh circuits have read the rule more narrowly.