Civil Procedure Class Notes 8/28/03

“There’s a bell! I just had to ring it. My curiosity has been piqued.”

We’ll soon start picking things up and moving more quickly. We plan to finish International Shoe today and start on Shaffer on Tuesday.

Review

Shoe is a story about the Death of a Salesman! Maybe it’s not that dramatic, but at least the Taxing of a Salesman.

The state of Washington slaps a tax on Shoe to help fund an unemployment compensation scheme to prevent Willy Loman-type situations.

We have a brand new test for personal jurisdiction! It’s the minimum contacts test.

The standard for personal jurisdiction in Shoe

What does this standard not mean? Does it have an effect on in rem jurisdiction? No.

Does it have an effect on personal service within the state? Does it change the possibility of “gotcha” service? No. Stone explicitly excludes cases where the defendant is not in the “territory of the forum”.

If the defendant is out of state, yet has certain minimum contacts within a jurisdiction, we will determine whether that court has personal jurisdiction based on “traditional notions of fair play and substantial justice”. Great!

Here’s the problem: Shoe does a poor job of explaining its terms, namely, “minimum contacts” and “traditional notions of fair play and substantial justice”.

The Shoe model

We’re given a model of what an out-of-state defendant can do within a state that puts that defendant under the personal jurisdiction of that state.

Think about a graph of level of activity versus degree of unrelatedness.

Say a defendant has “continuous and systematic contacts with a forum” that are related to a claim. There’s no doubt that the court has jurisdiction over such activities.

So the “high level of activity/low level of unrelatedness” quadrant gives us jurisdiction, the “low level of activity/high level of unrelatedness” quadrant gives us no jurisdiction.

What about “high level of activity/high level of unrelatedness”? It depends.

What about “low level of activity/low level of unrelatedness”? Again, it depends.

Think about a shaded area under the line y = x.

Let’s apply this vision to an automobile accident like Hess v. Pawloski. You have a single, isolated contact with the forum. You drive through the state once and do a wrong. Even without the consent idea, does the state have jurisdiction under the Shoe formulation? You have only one contact, but that contact is highly related to the claim. If the contact is really, really related, or the contact is the cause of action, the state can have jurisdiction.

Therefore, Hess v. Pawloski fits into Justice Stone’s vision.

If we apply the formulation to Shoe, the claim is highly related to lots of contacts in the state of Washington. This case would fall in the “high contacts/low unrelatedness” quadrant, and jurisdiction would result.

Where would Pennoyer fall onto this graph? In particular, think about Mitchell v. Neff.

What was Neff’s contact with the Oregon forum? He was trying to acquire land there. He went to Oregon and hired an attorney to help him get land in Oregon. That’s a contact. But is that continuous and systematic? Not really.

But how related is that contact to the claim Mitchell had against Neff? The case would fall into the “low contacts/low unrelatedness” quadrant, and we must say “it depends”.

General vs. specific jurisdiction

This doesn’t come directly out of Shoe, but it’s a way that personal jurisdiction is discussed today. This is a different way of dividing the world of personal jurisdiction.

General jurisdiction is the idea that you have personal jurisdiction over all causes of action, even those not arising out of contacts with your forum. This is the “upper right” on the graph.

Specific jurisdiction, on the other hand, is jurisdiction over a specific claim in question, though not necessarily other claims.

Which of these two types of jurisdiction is going on in Shoe? The jurisdiction is only with respect to the specific claim; this is specific jurisdiction.

If I go anywhere in the world and do something bad, anybody from anywhere can come to Ohio and sue me.

The same thing is true of corporations. There’s always somewhere that a corporation can be sued.

Also, claim by claim, there may be individual forums where you may be subject to specific jurisdiction.

In the next few weeks, we’ll be asking the questions: 1. Does the court have specific jurisdiction over the defendant? 2. Does the court have general jurisdiction over the defendant?

Yeazell’s hypotheticals, p. 102

Take the circumstances of Shoe and think about some events taking place in Wyoming.

a. Say a Shoe truck is on the way to Washington and hits a rancher in Wyoming. The rancher sues Shoe in Wyoming for personal injuries. Is this an issue of specific or general jurisdiction? This is specific jurisdiction. Would there be jurisdiction over Shoe in Wyoming? Yes, because the contact is 100% related to the claim.

b. What about a former employee of Shoe who moves to Wyoming and sues for wrongful dismissal? No way. The contact is virtually not a contact at all, and furthermore, Shoe had nothing to do with the plaintiff going to Wyoming. This would fall solidly into the “low level of activity/high degree of unrelatedness” quadrant, and the answer would be no jurisdiction.

c. What if the former employee or the rancher sued in the state of Missouri? Missouri would have jurisdiction. We have a boost in the contacts and the relatedness of the contacts. We go to the “high level of activity/low degree of unrelatedless” quadrant and get a solid case for general jurisdiction. The contacts Shoe has to Missouri are as great as in any forum: “off the charts”!

d. Can we sue Shoe in Delaware? We would not have sufficient contacts related to the forum to justify specific jurisdiction regarding the former employee’s wrongful dismissal claim. But what about general jurisdiction? The law recognizes Delaware as the “state of corporate birth”. As a matter of law and fact, if you want to sue a corporation in the state in which it is incorporated, you can. This is one reason so many corporations are incorporated in the state of Delaware. They have a special system of courts just to deal with corporate issues (Court of Chancery).

e. Say the rancher gets injured, plus gets boned on some bonds he holds from Shoe. Say the rancher sues for both in Wyoming. What will happen? Under our traditional analysis, the court would have jurisdiction over one claim (the injury claim), but not the other (the bond claim). What if the rancher sues for both claims in Missouri? Missouri has general jurisdiction, and so you can sue them for both there. Delaware will have general jurisdiction for both issues, and specific jurisdiction on the bonds, since that’s probably where the bonds were issued.

How will the Internet affect this vision of jurisdiction? This is a growing area of interest and controversy.

How did Justice Stone figure out this case? Stone just made up this vision of jurisdiction.

Shoe’s Minimum Contacts

· Shoe had a “large volume of interstate business”.

· Shoe’s activities in Washington were “systematic and continuous”: they always multiple salespeople in the state during the three year period involved.

· Shoe had the “right to resort to the courts” of the state of Washington.

· Shoe’s “obligation arose out of [its] activities”. The more related the contact is to the claim, the more likely the local forum is to exercise jurisdiction.

Why did Shoe fight this battle?

Shoe did business in a lot of states other than Washington. For Shoe, this is a tax case. They don’t care about jurisdiction. If Washington can tax Shoe, then every state can tax Shoe. That’s really what this case is about for Shoe, even though they carefully crafted their business to avoid paying taxes in states other than Missouri and Delaware.

Corporate counsels engage in this kind of planning, and there’s nothing wrong with it. However, the law can change, like it did here.

Where are they now?[1]

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[1] The former International Shoe started companies like Florsheim, Converse, Ethan Allen, and Broyhill.