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Personal jurisdiction Civil Procedure I Class 9 & 10 Helicopteros v. Hall (p. 96) Consorcio/WSH (pipeline in Colombia) Helicopteros Decedents (WSH employees) (contract for helicopter services) Helicopteros v. Hall General jurisdiction? "Even when the cause of action does not arise out of or relate to the foreign corporation's activities in the forum State, due process is not offended by a State's subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation.“ (p. 98) Helicopteros How to define? Court cites Perkins case, where general jurisdiction was upheld when foreign corporation had been carrying on in Ohio "a continuous and systematic, but limited, part of its general business," and the assertion of general jurisdiction was "reasonable and just.“ Place of business in the forum Licensed to do business in the state Helicopteros: specific jurisdiction? Helicol’s contacts with Texas: --Entered into contract to provide helicopter services with Consorcio, the alter ego of WSH, a Texas joint venture. --Helicol CEO met in Houston with WSH to negotiate contract. --$5 million in payments from WSH were sent out of a Texas bank account into Helicol’s New York bank account. --Purchased 80% of its fleet from a company in Fort Worth. --Sent pilots to Fort Worth for training and to move the helicopters to South America. Helicopteros Is there a difference between a cause of action that “arises out of” or the defendant’s forum contacts, and a cause of action that is “related to” the defendant’s forum contacts? Ex.: Carnival Cruise Lines v. Shute. Carnival advertised in WA and the Shutes purchased a cruise. Mrs. Shute was injured on the cruise in a slip-and-fall accident, which was not in WA. What is the relationship between the advertising contacts and the cause of action? Some courts adopt a “but for” analysis to establish the connection. Here, for example, but for Carnival’s advertising and selling tickets in WA, the Shutes would not have purchased a Carnival cruise and Mrs. Shute would not have been injured. Consent to personal juridiction Remember Pennoyer: “voluntary appearance in the forum” acceptable for exercise of personal jurisdiction. Waiver: failure to raise defense of lack of personal jurisdiction in the time required by rules of civil procedure (in Federal Rules, in first pre-answer motion or in answer if no pre-answer motion has been filed). Consent: by appointing agent for accepting service of process National Equipment v. Szukhent (p. 107) Defendants were Michigan farmers who leased farm equipment from NY company. Lease appointed Florence Weinberg, in New York, defendants agent for accepting service of process. When defendants failed to pay rent, plaintiff filed suit in New York and served Florence, who sent defendants a copy of the summons. Supreme Court upheld jurisdiction over defendants in New York. Consent: by using court procedures Hypo: Shoe salesman in Washington, with no contacts in Missouri, sues International Shoe in Missouri for unpaid benefits. International Shoe counterclaims for misappropriation of trade secrets. Can Missouri court exercise personal jurisdiction over salesman? Yes, Adam v. Saenger, p. 107. Consent: forum selection clause Carnival Cruise Lines v. Shute (p. 107) Couple from Washington state purchased nonrefundable tickets on Carnival Cruise; back of tickets mandated jurisdiction in Florida. Mrs. Shute injured on cruise; couple sued in Washington. Supreme Court upheld forum selection clause and dismissal of case, although FSC is “subject to judicial scrutiny for fundamental fairness.” “Consent”: as discovery sanction Insurance Corp. of Ireland v. CBG (p. 107) Plaintiff CBG was a bauxite mining company in Guinee, Africa. Purchased business interruption insurance from Insurance Corp. of Ireland (“ICI”), an Irish company. When ICI refused to pay on the policy, CBG filed suit in federal district court in Pennsylvania. ICI filed a motion to dismiss complaint for lack of personal jurisdiction. Insurance Corp. of Ireland v. CBG In connection with juridictional motion, CBG requested document discovery of all policies ICI had issued in Pennsylvania. ICI refused to comply. CBG’s motion to compel production was granted. When ICI failed to comply with production order, district court entered an order upholding personal jurisdiction as a discovery sanction authorized by the FRCP. Insurance Corp. of Ireland v. CBG ICI argued on appeal that the trial court did not have jurisdiction to enter such a sanctions order until it was determined that the trial court had jurisdiction. U.S. Supreme Court rejected that argument, stating that the requirement of personal jurisdiction is an individual right that can be waived. Also, "the expression of legal rights is often subject to certain procedural rules." Back to in rem jurisdiction Shaffer v. Heitner (p. 108)(1977) Parties? Plaintiff: Heitner, a stockholder in Greyhound -- one share of stock. Defendants: Greyhound (DE corp.; PPOB AZ) and 28 directors and officers of Greyhound, one of which is Shaffer. Court? Shaffer v. Heitner (p. 108) Plaintiff’s cause of action? Defendants breached fiduciary duties in permitting Greyhound to incur substantial antitrust liabilities arising out of their activities in Oregon. Procedure plaintiff used to obtain jurisdiction over the 21 individual appellants? Sequestration of their Greyhound stock. A Delaware statute “deemed” the stock certificates to be in Delaware, and they were "seized" by placing stop transfer orders on the corporation's books. Did Greyhound contest jurisdiction? Why or why not? Shaffer v. Heitner Lower court ruling? Who are appellants? 21 individual defendants who had their Greyhound stock seized Under Pennoyer, could a plaintiff obtain jurisdiction based upon seizure of property in the state at the beginning of the lawsuit? Yes, to the extent of the property seized. But Pennoyer was talking about in rem -- this seemed to be more a device for forcing in personam jurisdiction. Justice Thurgood Marshall (1908- 1993) Appointed to U.S. Sup. Ct. by Lyndon B. Johnson in 1967. Legal director of the NAACP from 1940 to 1961; argued Brown v. Board of Education in 1954. Defined “equal” for Justice Frankfurter as “getting the same thing, at the same time and in the same place." During a death penalty argument in 1981, Justice Rehnquist suggested that an inmate's repeated appeals had cost the state too much money. Justice Marshall interrupted, "It would have been cheaper to shoot him right after he was arrested, wouldn't it?" Shaffer v. Heitner If Pennoyer said the attachment of defendant’s property in the forum state was a proper exercise of jurisdiction, what was the problem? International Shoe What is the issue? "Whether the standard of fairness and substantial justice set forth in International Shoe should be held to govern actions in rem as well as in personam." More specifically, whether this Delaware statute (§ 366) is unconstitutional as applied. Shaffer v. Heitner According to the majority, are in rem actions subject to the same standards as International Shoe prescribed for in personam jurisdiction? Yes -- "All" assertions of state court jurisdiction must satisfy the minimum contacts analysis of International Shoe. Shaffer v. Heitner Argument for jurisdiction #1: Wrongdoer should not be allowed to escape payment by removing his assets to a place where he is not subject to in personam liability. Example: Peter claims that Donia fraudulently obtained $100,000 of Peter's money in Texas and deposited it into a bank account in Maine. Donia has no other contacts with Maine. Traditional view was that Maine court had jurisdiction based on the presence of the bank account by garnishing the account. Shaffer v. Heitner Justice Marshall’s response? There has been no case-specific inquiry as to whether the property is in the state to avoid payment elsewhere, to see if that rationale applies in this case. Presence of bank account in Maine does not support jurisdiction to adjudicate the underlying claim. At most, Maine should have jurisdiction to attach that property as security while the state with proper personal jurisdiction is litigating the issue. Shaffer v. Heitner Under Shaffer v. Heitner, could Maine exercise personal jurisdiction over Donia to adjudicate entitlement to the money by garnishing Donia's Maine bank account? What if Donia stole a $100,000 Picasso painting (rather than cash) and moved it from Texas to Maine? Would Maine court be able to exercise personal jurisdiction over Donia in an action to recover the painting? The "relationship among the defendant, the forum, and the litigation" (p. 111) becomes stronger when the property is not fungible. Shaffer v. Heitner Back to the $100,000 cash example. Say Peter sues Donia in Texas, which has personal jurisdiction, and Peter recovers a judgment in Texas against Donia for $100,000. Now Peter goes to enforce the judgment in Maine. After Shaffer, is there a due process problem with allowing Maine to enforce this judgment without making a minimum contacts analysis? No -- full faith and credit requires Maine to recognize and enforce the Texas judgment. Why doesn’t Maine have to do another minimum contacts analysis? Shaffer v. Heitner Argument for jurisdiction #2: Jurisdiction based only upon the presence of property in the state is that it assures plaintiff of a certain forum and avoids the uncertainty created by the International Shoe factors analysis. How does Justice Marshall respond? The application of International Shoe is easy in most cases, and in the hard ones, we're not going to sacrifice fairness for certainty. Shaffer v. Heitner Plaintiff’s argument # 3: jurisdiction based only upon the presence of property in the state is all right because of the “long history” of in rem jurisdiction. How does Justice Marshall respond? “Traditional notions of fair play and substantial justice" can be offended by old forms as well as new. Shaffer v. Heitner After Shaffer, if property in the forum state alone is not sufficient for personal jurisdiction, what is its jurisdictional significance? Depends on the relationship between the claim and the property. Property in the forum may still supply the basis for jurisdiction because it counts as a contact with the forum state. "[T]he presence of property in a State may bear on the existence of jurisdiction by providing contacts among the forum state, the defendant, and the litigation.” For example, “when claims to the property itself are the source of the underlying controversy between the plaintiff and the defendant, it would be unusual for the State where the property is located not to have jurisdiction.” Shaffer v. Heitner Is any part of Pennoyer v. Neff overruled by this case? “For the type of quasi in rem action typified by Harris v. Balk [i.e., attachment jurisdiction], . . . accepting the proposed analysis would result in significant change.” Shaffer v. Heitner Applying the minimum contacts test, did Delaware have jurisdiction over defendants based on their Delaware contacts, in the majority's view? Only contact (besides the “deemed” ownership of stock in Delaware) was they were directors of a Delaware corporation. Delaware had not enacted a statute requiring directors to consent to jurisdiction there. But if Delaware had such a statute (which it now does), could Delaware constitutionally exercise jurisdiction over the officers and directors? The majority's opinion suggests it could, and a Delaware state court has so held. The statute places potential defendants on notice. It is related to their activities because the statute only covers malfeasance in their corporate capacity. Shaffer v. Heitner With what part of the Court’s opinion does Justice Brennan concur? International Shoe standard should be applied in all cases. On what point did Justice Brennan disagree with Justice Marshall? Says the Court shouldn't even have reached the minimum contacts analysis because it wasn't argued and there was no record (through discovery or otherwise) below. What was the point of Justice Powell's concurrence? Believed that a court should retain quasi in rem jurisdiction over real property. Hypotheticals, pp. 121-122 Fred is a CA citizen who owns real estate in DE. (a) Fred doesn’t make his mortgage payments. Bank wants to foreclose. Is there personal jurisdiction over Fred for a foreclosure action in DE? (b) Someone trips and falls on Fred’s property in DE. Is there p.j. over Fred in a personal injury action filed in DE? Hypotheticals, p. 122 2(c). Sally, a CA citizen, has a contract with Fred. The deal goes bad, and Sally sues Fred in CA and wins. Fred refuses to pay the judgment. Sally goes to DE and enforces the judgment by attaching Fred’s Delaware real estate. Is this permitted after Shaffer? (d). Suppose the directors in Shaffer had owned real estate in DE instead of stock. Would that have changed the result?
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