Review. I will be available to discuss examination results during the Fall semester, beginning after Thursday, September 13, 2007. I will not discuss examination results or any other grade-related matter before that date.
Review will proceed as follows:
1. Get your examination from Professor Malavet (please be sure to have your examination number with you when you come to pick it up, because they are organized by exam number). You may make a copy of your examination for your own reference, but you must return the original because faculty are required to store them for some time.
2. Review your exam, together with the feedback memorandum. Please pay special attention to any notes written on the exam itself, as they will give you explanations of your errors, and sometimes your strengths.
3. Schedule a meeting to discuss your examination. However, be advised that the purpose of exam review is for you to become a better exam taker, I do not change grades.
GENERAL COMMENTS
The response to the multiple choice was 80.3% correct, as I intended. This was about coverage. The demanding part of the test was intended to be essay, and indeed it was, with the average failing to break 70 out of a possible 360 points. It was a tough question.
109 students received grades from the course. 93 students used exam soft, and to my knowledge there were no glitches. Certainly I received all exams promptly and in good order.
Part I: Multiple-Choice (40%)
1. Mr. Jamie Oliver suffers a severe attack of food-poisoning that he alleges was caused by the negligence of Federal Express, which mishandled a shipment raw oysters sent to this London home from Florida, U.S.A. Mr. Oliver is a citizen of the United Kingdom, who resides in London, U.K., and has never visited the United States. Federal Express is a Delaware corporation with its principal place of business in Nashville, Tennessee. Mr. Oliver files a federal suit against Fedex in the U.S. District Court for the Middle District of Tennessee, Nashville Division. He alleges damages caused by the illness, including medical costs, pain and suffering and loss of income because he was unable to perform in his weekly television program, "The Naked Chef." If proved, these are all legitimate claims under applicable law. The damages claimed exceed, exclusive of costs and interest, $1,000,000.00. May the federal court hear this action?
a. Yes, because Mr. Oliver raises a claim arising under the laws of the United States.
b. No, because aliens cannot be plaintiffs in U.S. courts.
c. Yes, because there is alienage jurisdiction under 28 U.S.C. ¤ 1332.
d. No, because Mr. Oliver is not a permanent resident alien.
Answer: C. An alien is suing a U.S. citizen and the claims exceed $75,000.00, hence, there is alienage jurisdiction under 28 USC ¤ 1332(a)(2). The other alternatives are wrong. The complaint is not an arising under situation, i.e., it is not a 1331 case. Aliens can be plaintiffs or defendants in US courts and resident alien status only affects citizenship in certain cases, it is not a requirement for filing suit.
2. Jerry Seinfeld has sued Cosmo Cramer for the tort of assault and battery with weird hair. He claims over $750,000.00 in damages exclusive of costs and interest. He has filed the action in the US District Court for the Southern District of New York, where all the relevant acts occurred. He claims diversity jurisdiction because he is a citizen of New York, and Cosmo Cramer is a citizen of Florida. Mr. Cramer has tendered to the court a Third Party Complaint impleading, for contribution only, his hair dresser, one George "Scissors" Costanza, a citizen of New York. The court rules that under applicable New York law, which provides for joint and several liability, Mr. Costanza might be adjudged to owe contribution to Mr. Cramer, to the full extent of any judgment against him in favor of Mr. Seinfeld. Accordingly, the Court may:
a. Grant leave to file the third-party complaint, and allow Mr. Cramer to sue Mr. Costanza for contribution only; subject-matter jurisdiction over this claim may properly be based on 28 U.S.C. ¤ 1367.
b. Order the dismissal of the case pursuant to Rule 19(b), because the joinder is not feasible.
c. Grant leave to file the third-party complaint, and allow Mr. Cramer to sue Mr. Costanza for contribution only; subject-matter jurisdiction over this claim may properly be based on 28 U.S.C. ¤ 1332.
d. Refuse to order the joinder of Mr. Costanza pursuant to Rule 19, and proceed with the case as filed.
Answer: C. The defendant has filed a third party complaint, not a motion to dismiss for failure to join a party under Rule 19, that alone would eliminate both b and d. But "joint and several liability" as we discussed repeatedly in relation to the practical project, also takes compulsory joinder out of play. That said, the court has found that a contribution claim can properly be pleaded by Mr. Cramer against Mr. Costanza under the applicable New York law to the full extent of the original claim for $750,000.00. Thus, you have a proper 14(a)[1] contribution claim, and the leave required by 14(a)[3] should be granted. Since the claim is for full contribution based upon a $750,000.00 claim, it exceeds the diversity jurisdictional amount. Furthermore, Mr. Costanza is a citizen of New York and Mr. Cramer a citizen of Florida, therefore, there is diversity and the proper basis of subject-matter jurisdiction is ¤ 1332, which makes A incorrect, since supplemental jurisdiction is only available (or really necessary) if there is a defect in original subject-matter jurisdiction. B and D are Rule 19 scenarios, not applicable to impleader, which is governed by Rule 14. Joinder of Costanza as a co-defendant by Mr. Seinfeld would in fact not be feasible because both parties are citizens of New York, but, the court has held that he is not a necessary party, meaning that his joinder is not compulsory under Rule19, even if a motion to that effect was before the court, but the question is about Rule 14(a) impleader, not Rule 19 compulsory joinder.
3. Amy Smith, a citizen of Louisiana, files a federal suit alleging diversity jurisdiction against Jonathan Jones, a citizen of Florida, in the United States District Court for the Northern District of Florida. She claims that defendant Jones owes her $35,000.00, exclusive of costs and interest, on account an unpaid debt. She further claims that Jones owes her $10,000.00, exclusive of costs and interest, for unpaid rent. She finally claims that Defendant Jones owes her $31,000.00, exclusive of costs and interest, for damage cause to her car in an automobile accident. May these claims be pursued in a single federal case?
a. Yes.
b. No, because each claim fails to meet the jurisdictional amount.
c. Yes, because these claims may properly be joined under rule 20(a).
d. No, because these claims did not arise out of the same transaction or occurrence.
ANSWER: A. yes. The claims may be joined under rule 18(a) and there is diversity and jurisdictional amount is met by aggregation. C is incorrect because Rule 20(a) applies to joinder of parties, not of claims. B is incorrect because of the aggregation rule and D is incorrect because the required commonality both for joinder under Rule 18(a) and aggregation is same plaintiff against same defendant.
4. Ally McBeal, a citizen of Massachusetts, kicks Oren Koolie, a citizen of New York, when he is visiting her law office in Boston. She mistook him for "Mr. Huggy," an imaginary dancing baby. Unfortunately, Mr. Koolie is a very real, small person, who happens to be a lawyer. Naturally, Mr. Koolie sues Ms. McBeal in the U.S. District Court for the District of Massachusetts. Ms. McBeal is the only named defendant in the suit. In addition to Ms. McBeal and Mr. Koolie, there were two eyewitnesses to this incident, John Cage, a partner in the law offices Koolie was visiting, and Elaine Vassal, a secretary at that same firm. Lloyds of Cleveland Insurance Company provides insurance coverage to Ms. McBeal. Ms. McBeal called the company on the date of the occurrence and asked it to start preparing her defense to the reasonably anticipated litigation. Harry Smith, an agent for Lloyds, took statements from Mr. Cage and from Ms. Vassal. Mr. Smith wrote down what Ms. Vassal and Mr. Cage said and each of them, after reading their respective statement, signed the document. While Mr. Smith was taking down the statements, Mr. Koolie could be heard outside the door to the office that Smith was using screaming "I am going to sue you for every penny you've got, McBeal." Mr. Koolie's request for copies of the statements given by Vassal and Cage was denied by the trial court because Vassal and Cage are available for depositions, therefore, Koolie was unable to show "substantial need" and "undue hardship" as required by the pertinent rule. May Ms. Vassal request a copy of her statement to Smith?
a. No, because the statements were collected in anticipation of litigation and are protected "work-product."
b. Yes, because the pertinent rule allows such a request.
c. No, because Vassal is not a party to the case.
d. Yes, because the statements were not collected in anticipation of litigation and are not protected "work-product."
Answer: B: is correct because of the language of the second sentence of the second paragraph of 26(b)(3) which allows a non-party witness to obtain copies of their statements upon request. A is correct in asserting that the work-product protection in Rule 26(b)(3) applies since the statements were taken in reasonable anticipation of litigation, as shown by the fact that Koolie was unable to make the substantial need and undue hardship showing required by the rule to overcome the protection. But the rule expressly allows the witness to obtain a copy of her own statement, regardless of the work-product protection. C was about reading the rule, the rules expressly allows a non-party witness to make the request. D is an incorrect characterization of the facts, which point to anticipation of litigation and work-product protection.
5. Juan Gonzalez was severely beaten by four Los Angeles Police officers during the course of an illegal arrest. The actions of the police can be argued to have violated Mr. Gonzalez's rights under the Constitution of the United States. Such a claim would be both reasonable and substantial. The facts giving rise to this claim occurred in Los Angeles. All the officers involved live in Simi Valley, a suburb of Los Angeles, and are citizens of California. After this ugly incident, Mr. Gonz?lez, a lifetime Angelino, moves to Arizona, and becomes a citizen of Arizona. He then sues the officers and the City of Los Angeles in U.S. District court for the Central District of California, Western Division, using 42 U.S.C. sec. 1983 to pursue claims arising out of the beating and the illegal arrest. May this matter be heard in a single federal case?
a. No, because each defendant must be sued in a separate action.
b. Yes, because there is diversity of citizenship among the parties and the joinder of claims and parties is consistent with the rules.
c. No, because diversity of citizenship was artificially manufactured.
d. Yes, because there is federal question jurisdiction and the joinder of claims and parties is consistent with the rules.
ANSWER: D. there is section 1331 federal question jurisdiction in this case, and Rule 20 allows plaintiff to pursue claims against multiple defendants arising out the beating/arrest, and Rule 18(a) would allow him to pursue multiple claims against each defendant in the same case. A is simply not correct because of Rule 20. B is a red herring, since this is a federal question case. Similarly C would not apply, plus, you can move to establish diversity.
6. Robert Ludlum, a citizen of Virginia, is involved in a traffic accident with Tom Clancy, a citizen of Virginia. The accident occurred in Alexandria, Virginia —which is one of the cities in which court is held for the Eastern District of Virginia— when Mr. Clancy destroyed Mr. Ludlum's $1.4 million Ferrari by running over it with his M-4 Sherman tank a few seconds after Mr. Ludlum ran away from the car. Ludlum files suit using Virginia's direct action statute in the U.S. District Court for the Eastern District of Virginia, against [Clancy's insurer, ]CIA Insurance, Inc., a corporation under the laws of the state of Delaware with its principal place of business in New York City, New York. He pleads only diversity subject-matter jurisdiction and his claims for damages exceed $75,000.00 exclusive of costs and interest. May this case proceed as filed?
a. No, the case should be dismissed for lack of subject-matter jurisdiction.
b. Yes, there is diversity between plaintiff and defendant that the amount in controversy exceeds $75,000.00 exclusive of costs and interest.
c. No, the case should be dismissed for lack of venue.
d. Yes, there is supplemental jurisdiction over this case.
Answer: A. The case should be dismissed for lack of subject-matter jurisdiction because the insurer in a direct action is deemed a citizen of the state of citizenship of its insured. Venue is proper because the accident occurred within the Eastern District of Virginia, so the facts given preclude this from being an appropriate answer, plus there is no information about motions, whereas subject matter jurisdiction is the ubber defense. While the jurisdictional amount is met, diversity is not present by application of the insurer direct action language of 1332(c). Supplemental jurisdiction requires an anchor claim, and none is given here. During the examination I clarified that CIA was Clancy's insurance company.
7. Jerry Seinfeld has sued Cosmo Cramer for the tort of assault and battery with weird hair. He claims over $750,000.00 in damages exclusive of costs and interest. He has filed the action in the US District Court for the Southern District of New York, where all the relevant acts occurred. He claims diversity of citizenship because he is a citizen of New York, and Cosmo Cramer is a citizen of Florida. Mr. Cramer has moved the court to dismiss the action for failure to join a party under Rule 19. He argues that his hair dresser, one George "Scissors" Costanza, a citizen of New York, was not made a defendant to the complaint in violation of Rule 19. The court rules that Mr. Costanza is not a "necessary" party as defined in Rule 19(a), therefore, the court should:
a. Grant leave to Mr. Cramer to sue Mr. Costanza under Rule 14(a), for contribution only.
b. Order the dismissal of the case pursuant to Rule 19(b), because the joinder is not feasible and the party is indispensable.
c. Grant leave to Mr. Cramer to sue Mr. Costanza under Rule 14(a), but prevent Mr. Seinfeld from making any claims against Mr. Costanza, because, though allowed by Rule 14(a), to the extent that they arise out of the same transaction or occurrence, they are precluded by 28 USC ¤ 1367(b).
d. Deny the motion to dismiss, refuse to order the joinder of Mr. Costanza, and proceed with the case as filed.
ANSWER: D Once the court has ruled that the party is NOT necessary, as it has here, i.e., the court has ruled that the party is not the type of party defined by Rule 19(a)(1) or (2), therefore, it should refuse compulsory joinder and proceed with the case as filed, as repeatedly discussed in class. Joinder is not possible here, because that would destroy diversity given both Mr. Seinfeld and Mr. Costanza are citizens of New York. No supplemental jurisdiction would be available as to plaintiff's claim under 1367(b). Thus, if the joinder were required, the case would have to be dismissed, thus, C appears tempting. But 19(b) is not triggered because the court has rules that the party is not necessary, so you do not reach, the "indispensable" question. As to the Rule 14 alternatives, they are red herrings here because there is no third-party complaint.
8. Hercule Poirot, a citizen of Belgium, files suit in the United States District Court for the Middle District of Florida against Agatha Christie, a citizen of the United Kingdom. He pleads that the court has jurisdiction pursuant to 28 U.S.C. ¤ 1332. The complaint pleads an action in tort alleging that Ms. Christie attempted to kill Mr. Poirot with a candle holder, in the dining room of his rented bungalow on the grounds of the Grand Floridian Hotel at Disney World in Orlando. The damages claimed exceed $75,000.00 exclusive of costs and interest. Is there subject-matter jurisdiction over this action?
a. No, because foreign citizens may not sue in U.S. courts.
b. No, because the court lacks subject-matter jurisdiction.
c. Yes, because the suit involves citizens of different countries and it exceeds the jurisdictional amount.
d. Yes, if Poirot is admitted to the United States for permanent residence.
Answer: B. The court lacks jurisdiction over the subject matter because there are foreign citizens on opposite sides of the case, thus violating the complete diversity rule in applying 1332. Foreign citizens can sue in U.S. courts, but, there must be at least one American citizen involved, as we discussed in class. Even those courts that have ruled that the amended language of 1332(a) might allow a permanent resident alien to sue another alien have stated that this may only happen if at least one U.S. citizen is also a party, and none is present here.
9. A traffic accident involving three vehicles occurs at the intersection of University Avenue and 34th Street in Gainesville, Florida. All three vehicles suffer severe damage and all three drivers suffer serious bodily injury as a result of the accident. The driver of one car, Michelle Jeffreys, of Gainesville, Florida, files suit in the United States District Court for the Northern District of Florida against the drivers of the two other vehicles, Jason Richards, a citizen of Georgia, and Juan Carlos Cruz, a citizen of Iowa. The complaint states that the jurisdiction of the court is based on diversity and claims against each of the defendants exceed $75,000.00, exclusive of costs and interest. Does the court have original jurisdiction over this action?
a. Yes, because there federal question subject-matter jurisdiction.
b. No, because not all defendants reside in the same state.
c. Yes, because there is diversity subject-matter jurisdiction.
d. No, because the court lacks personal jurisdiction over the defendants.
ANSWER C. The question asks about original subject-matter jurisdiction, which in this is governed 28 USC 1332. That made A an incorrect choice, and C the correct one because you have a properly pleaded diversity case. If you recall our practical project you should have known that the lack of personal jurisdiction argument is silly beyond words, thus rejecting D; more fundamentally, that was not the question. As to all defendants residing in the same state, that is a venue requirement, and you know that venue here is based on the occurrence of the accident, and, yet again, that was not the question, thus invalidating B.
10. Using the same facts in question 9 above, consider what happens when the Plaintiff also includes in her complaint claims against the Universal Insurance Company, a corporation under the laws of the state of New York, with its principal place of business in Miami, Florida. Universal insures defendant Cruz, and Plaintiff's claims against Universal are in excess of $75,000.00 exclusive of costs and interest. Does the court have original jurisdiction over this action?
a. No, because the parties are not completely diverse.
b. Yes, because the insurance company would be deemed to be a citizen only of Iowa.
c. Yes, because the insurance company does not reside in the same district as the plaintiff.
d. No, because the rules of civil procedure preclude the joinder of these claims.
ANSWER A. The joinder of the Insurance Company, which is a citizen of Florida and New York, destroys complete diversity, so the case should be dismissed. The insurance company will not be deemed a citizen of Iowa because the insured is a party, moreover, if this was a direct action, the insurance company would be given an ADDITIONAL citizenship, not an exclusive one. C was a silly red herring to see if you were confused between venue and citizenship rules. Citizenship is in the state, not in the district. The joinder argument is equally silly and that was not the question.
PART II: Essay (60%)
Do not assume any facts not given to you. examination.
Answer
The facts came from Aero Toy Store, LLC, v. Grieves, 279 Ga. App. 515, 631 S.E.2d 734, 2006 Ga. App. LEXIS 626 (Court of Appeals of Georgia, Fulton County Dist. 2006). Most state courts tend to be liberal in allowing the exercise of jurisdiction over persons, and this court certainly was.
A couple of students (three) did not follow the instructions and wrote opinions finding that the exercise of jurisdiction was improper. Since these opinions failed to provide an answer to my question, they scored no points.
The question was designed to give you a challenging opportunity to apply the leading minimum contacts cases that we covered in class. The basics of International Shoe and its progeny, especially Burger King, Asahi, World-Wide and Shaffer v. Heitner. It also gave you the opportunity to deal with Zippo v. Zippo, the leading case on the internet's effect on personal jurisdiction, and Carnival Cruise Line on contractual choice of forum clauses. Simply put, this is the material that is in the casebook I used, and we spent weeks on the subject in class.
Burnham and Pennoyer could be used to illustrate the history of Personal Jurisdiction and its strictly territorial origin and expansion to allow substituted service (a phrase that was rarely used in the answers). You could also use Burnham, Asahi and Shaffer to discuss the deeper constitutional issues and accompanying divisions within the court along the lines of "traditional" vs. "contemporary" notions of fair play and substantial justice. I reserved some points for that discussion, but that really had the effect of turning the question from a 360 point to a 280 point question. Generally, you had to recognize that International Shoe and its progeny are a line of cases that must be treated as a coherent doctrine. You had to construct an overall analysis incorporating them any parts, not treat each case as island.
I was surprised and disappointed by many references to Gray, McGee and Hanson v. Denckla. While these cases were tangentially referenced in cases we covered, why would you not use, or at least emphasize, the cases that we explored in class?
(1) The Affirmative Defense of Lack of Personal Jurisdiction, a matter of Rules.
Initially, Aero has apparently preserved its Personal Jurisdiction defense. This was a state case, but you could use the Federal Rules of Civil Procedure to illustrate how these matters are handled, since you were told to assume that the applicable rules of procedure were the FRCP. That said, I expected some acknowledgement of the state nature of the case, and thoughtful use of the federal rules. Referring to rule 4(k) in a case that is not filed an federal court was not very thoughtful. However, using the rules to refer to motions practice and to preserving and properly presenting affirmative defenses was thoughtful.
12(b)(2) personal jurisdiction and 12(b)(3) venue are least favored defenses which are waived if not presented early (12(h)(1)). By filing a motion that is being substantively considered by the court, Aero has preserved its defenses and is entitled to a resolution of the matter. Moreover, a special appearance is not required under the Federal Rules (no defenses are waived by being presented with others under Rule 12(b)). Though affidavits were submitted and clearly used by the court in reaching its resolution, and though those are clearly "matters outside the pleadings," this is not a 12(b)(6) motion that would become a Summary Judgment motion, since Aero moved to dismiss for lack of personal jurisdiction and venue. The contract clause, however, does make this one interesting, because it might be treated as a motion under 12(b)(6), or one for Summary Judgment, based on the contract clause (check Carnival). But here it was treated as a 12(b)(2) motion.
(2) In deciding the Personal Jurisdiction question, the court first had to deal with the contract choice of forum clause:
Many students chose to address the clause in the reasonableness section of the answer. This was not appropriate. Carnival Cruise line makes it clear that a proper choice of forum clause is fully dispositive of the matter and obviates the need to engage in constitutional analysis. In this regard, it is analogous to the majority opinion in Burnham, and to the absolute rules of Pennoyer v. Neff.
As we saw in Carnival Cruise Lines, at page 190 of your casebook, a valid choice of forum clause in a contract may be dispositive of the jurisdictional question. In this case, since the clause provides for a Florida forum, it would have been negatively dispositive on behalf of the defendant. In other words, if you have a valid choice of forum clause, then the exercise of jurisdiction in this case is improper, as a contractual matter, and that would dispose of the case without any need to reach the constitutional question.
The facts stated that the trial court found that the Plaintiff-Purchaser had not agreed to the choice of forum clause. That finding must be adopted by the appellate court in its de novo review, in order to reach the result that you were instructed to reach.
Carnival Cruise lines extended to private consumer contracts the rule of The Bremen, that "a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect." In this case, the choice of forum clause, would have been enforceable, had plaintiff received proper notice of it. But the court could find otherwise, and had to do so in order to reach the result desired.
I was fairly astonished to see students discussing Carnival and Burger King as reaching the same result. They are very different cases in that in Carnival the forum choice clause became absolutely dispositive of case by deeming it to be a consent clause, and in Burger King it became a part of the analysis of a complex business relationship.
Having disposed of the contractual issue, then you did the standard analysis in Personal Jurisdiction cases.
(3) Is the exercise of Personal Jurisdiction Consistent with Georgia Law? In other words, is this situation covered by the GA Long Art Statute? Why does the court need to apply the Georgia long-arm statute in this case? Because it is a Georgia state court case. How should it interpret it?
I noticed a great of confusion between the Minimum Contacts analysis and the statutory analysis. While there are states, such as California, which simply establish that its courts may exercise jurisdiction to the full extent that is consistent with the Due Process clause, thus making the statutory and constitutional analysis one and the same, that is not the case in Georgia. You had to apply the statute. In conducting your statutory interpretation, some students managed to use the minimum contacts cases to illustrate by analogy how to interpret the language of the statute, but many answers went awry by failing to do statutory interpretation at all, and simply going into a discussion of minimum contacts without trying to interpret the facts in the context of the statutory language.
On the substance of the Personal Jurisdiction discussion, first, we have an "absent defendant", i.e., a non-resident foreign corporation. Aero is a Florida corporation and no information is given to make it a Georgia corporation and the affidavits give facts that are not contested by the plaintiff that the corporation is a Florida company with no licenses or agents in Georgia. In other words, the two bases for the exercise of jurisdiction under the Territoriality Principle --(1) Personal service on the party within the state, and (2) Voluntary appearance by the party-- are not present.
This being a state case, the state court simply applies its long arm statute over the non-resident defendant. But, on what basis? The more appropriate basis was subsection (3), having done things that had an effect in Georgia. But, without guidance to the contrary, many students chose (1) as the path of least resistance. That was Ok, though it did not earn as many points as going for (3).
(4) Are there "minimum contacts" in this case? Purposeful Availment? Zippo: Active website on the sliding scale?
Once done with the statutory analysis, you had to move on to test the statute as applied here against the federal constitutional limitations.
A. Are there minimum contacts, and
B. Is the exercise of jurisdiction consistent with (traditional?) notions of fair play and substantial justice.
Thus you now have to determine if the exercise of personal jurisdiction in this situation was constitutional. In articulating your opinion, you had to use the cases that we had discussed in our class.
The Due Process clause of the Fourteenth Amendment to the U.S. Constitution imposes limitations on the exercise of personal jurisdiction. Pennoyer v. Neff. After Pennoyer, in order to be consistent with the Due Process clause of the 14th amendment, the exercise of jurisdiction had to be based on physical presence within the state, or on consent, actual or implied, by the defendant. International Shoe v. Washington, extended the old territoriality-principle bases of in personam jurisdiction, to allow exercises of personal jurisdiction upon non-resident defendants. It allows the states to exercise jurisdiction over non-resident defendants provided that they have certain minimum contacts with the forum. The test: (1) Minimum contacts and (2) Traditional Notions of Fair Play and Substantial Justice. (aka, "Reasonableness"). International Shoe put it as follows at page 689 of the casebook:
"*** But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have [1] certain minimum contacts with it [2] such that the maintenance of the suit does not offend Ôtraditional notions of fair play and substantial justice.'
Essentially, you had to show that there was "Purposeful Availment" by the defendant of the Georgia Market and that the "Nature and Quality" of the contacts justified the exercise of personal jurisdiction. The discussion in the next two sections earned the bulk of the points for this essay.
This was not an invitation for students to transcribe their entire outlines on Personal Jurisdiction analysis. Rather, it was an invitation to set up the fundamental nature of your analysis: The Due Process Clause of the 14th Amendment imposes limitations on the exercise of Personal Jurisdiction. Pennoyer had applied to allow for the exercise of PJ based on personal service of process or voluntary submission to the jurisdiction the court. International shoe extended PJ to allow exercises over non-resident defendants.
I was shocked by references to Burger King as a single contract case. After our discussion in class of the complexities of that contractual relationship, this was simply not acceptable—or perhaps a reflection that such references came from a canned outline rather than from my course.
One particularly good statement of the Minimum Contacts by way of affirmative conduct, i.e., purposeful availment analysis, which I deconstructed for you in class, is found in Burger King, at pages 731-732:
[1, MC] The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful "contacts, ties, or relations." International Shoe Co. v. Washington, .... By [CB-732] [2-A, MC] requiring that individuals have "fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign," Shaffer v. Heitner, ... (1977) (Stevens, J., concurring in judgment), [2-b, MC] the Due Process Clause "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit," World-Wide Volkswagen Corp. v. Woodson, ... (1980).
Where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, [2-c, MC] this "fair warning" requirement is satisfied if the defendant has "purposefully directed" his activities at residents of the forum, Keeton v. Hustler Magazine, Inc., ... (1984), [3-a, Specific Jurisdiction MC] and the litigation results from alleged injuries that "arise out of or relate to" those activities, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, ... (1984). (FN15) [3-b, MC] Thus "[t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State" and those products subsequently injure forum consumers. World-Wide Volkswagen Corp. v. Woodson, ***
Could this automobile be classified as a product specially designed for one market? I think not. Its a BMW, made for the US market, maybe, but that is about it. However, this case is not one car making it into the forum state through a unilateral act of the plaintiff (World-Wide), nor is it a stream of commerce situation in which the defendant has no control over if or how the product makes it to Georgia. Rather, it is a situation in which even the most conservative application of the minimum contacts test would pass muster. Compare the language of Asahi at page 746:
[Asahi] has no office, agents, employees, or property in California. It does not advertise or otherwise solicit business in California. It did not create, control, or employ the distribution system that brought its valves to California. Cf. Hicks v. Kawasaki Heavy Industries, 452 F.Supp. 130 (M.D.Pa.1978).
In the case at hand, defendant reached out to plaintiff and negotiated with him knowing he was in Georgia. They used E-bay, which would classify as an active website under the Zippo v. Zippo standard that we discussed in class. The sale is not completed until delivery is accomplished and defendant chooses and pays for the delivery.
Zippo was remarkably useful given the facts of this case, and because of its clear articulation of the legal standard.
[General vs. Specific, cb. 177]
The constitutional limitations on the exercise of personal jurisdiction differ depending upon whether a court seeks to exercise general or specific jurisdiction over a non-resident defendant. Mellon, 960 F.2d at 1221. General jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for non-forum related activities when the defendant has engaged in "systematic and continuous" activities in the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-416 (1984). In the absence of general jurisdiction, specific jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for forum-related activities where the "relationship between the defendant and the forum falls within the 'minimum contacts' framework" of International Shoe Co. v. Washington, 326 U.S. 310 (1945), and its progeny. Mellon, 960 F.2d at 1221. Manufacturing does not contend that we should exercise general personal jurisdiction over Dot Com. Manufacturing concedes that if personal jurisdiction exists in this case, it must be specific.
[The constitutional test, 177]:
A three-pronged test has emerged for determining whether the exercise of specific personal jurisdiction over a non-resident defendant is appropriate: (1) the defendant must have sufficient "minimum contacts" with the forum state, (2) the claim asserted against the defendant must arise out of those contacts, and (3) the exercise of jurisdiction must be reasonable. [Keep in mind that 1 and 2 are part of the minimum contacts constitutional analysis, and reasonableness is the traditional/contemporary notions of fair play and substantial justice] Id. The "Constitutional touchstone" of the minimum contacts analysis is embodied in the first prong, "whether the defendant purposefully established" contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (citing International Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)).
[THE SLIDING SCALE at page 179 of the casebook] the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. This sliding scale is consistent with well developed personal jurisdiction principles. At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. E.g., CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir.1996). At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction. E.g. Bensusan Restaurant Corp., v. King, 937 F. Supp. 295 (SD.N.Y.1996). The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site. E.g., Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (ED. Mo. 1996).
Remember the other internet cases that I showed you: Hall v. LaRonde, 66 Cal. Rptr. 399(1997). (New York defendant submitted to California court jurisdiction by creating a continuing relationship to distribute software with a Californian over the internet.) Bensusan Restaurant Group v. King, 126 F3d 25 (2d cir 1997) ("passive" web page cannot subject someone to jurisdiction anywhere it is viewed), but compare Inset Systems, Inc. v. Instruction Set, Inc., 937 F Supp 161 (D.Conn. 1996) (upholding jurisdiction based on creation of a web page "directed ... toward not only the state of Connecticut, but to all states"). Blumenthal v. Drudge, 992 F Supp. 44 (1998) (Matt Drudge subject to jurisdiction in DC because his internet column was especially targeted at Washington DC, and Drudge visited that city for fundraising).
In this case, you had a strong argument for "specially targeting" and for the creation of continuing relationships to particular states. Volume was not high here. Viewing it the light most favorable to the court's conclusion, the actual sales may have been only 2, but the Florida defendant was clearly more than happy to attempt to complete transactions with 12 Georgia winners in the Ebay trading system. (Compare Calder, 12% of national circulation, twice the national average, and Keeton, a tiny part of national distribution which went to New Hampshire was enough).
Certainly, the defendant controls the chain of distribution, under the facts given. (See cases discussed in Asahi at page 746). Could this be classified as a Complex Relationship, a la Burger King? Could it be single incident of a special nature, like an automobile accident? It seems like something in-between, though clearly not rising to the level of complexity of Burger King, but it did involve substantial negotiations between purchaser and seller, and transportation logistics, etc. More than a fortuitous auto accident.
Can they adjust their primary conduct? Sure. And indeed they tried purposefully to avoid any jurisdiction other than Georgia, but that was specifically rejected by the buyer.
That is certainly enough for minimum contacts.
Several students made good use of cases like McGee (receiving regular payments on one contract from state); Burger King (long-term contractual relationship with one state); Calder v. Jones (publication particularly directed at one state); and Keeton v. Hustler (subscriptions in one state, though a small percentage of revenues, substantial contact with the state). You had to illustrate your factual discussion with case illustrations and citations to the rules established in the cases.
(5) Is the exercise of Personal Jurisdiction in this case "reasonable"?
Furthermore, in Asahi, the court clearly emphasized that in addition to the required Minimum Contacts, the exercise of Personal Jurisdiction must be "reasonable." For example, at page 746, the court states:
We have previously explained that the determination of the reasonableness of the exercise of jurisdiction in each case will depend on an evaluation of several factors. A court must consider the burden on the defendant, the interests of the forum state, and the plaintiff's interest in obtaining relief. It must also weigh in its determination "the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies." World-Wide Volkswagen,
The application of the balancing of the different factors, as I listed for you:
o Volume of Contacts
o Systematic and continuous nature of contacts
o Balance of conveniences
o State interest in regulating defendant's conduct
o State interest in opening its courts to its residents
o Location of witnesses or evidence
o Foreseeability of suit in that forum
o Availability of an Alternative forum.
You had to establish where these factors came from and what the policy behind them is, not recite as some kind of mindless incantation.
Clearly, there is some overlap between these factors and the minimum contacts analysis, but the important difference is simply that minimum contacts is a threshold finding of constitutional permissibility. In the reasonableness analysis, you now make qualitative balancing of the factors. If you chose to discuss foreseeability, volume and systematic contacts only in Minimum Contacts, that was fine. Although I think that the volume helps your discussion of the balance of conveniences in litigating, since the individual is at a disadvantage, and the volume of sales, shows a command and control structure easily capable of participating in long-distance litigation.
However, I noticed a great deal of confusion among some students who believed that Purposeful Availment and/or predictability of being amenable to suit in the forum state were ONLY reasonableness factors. Purposeful availment such that the party is on fair notice of being amenable to suit are the new hallmarks of voluntary minimum contacts. Georgia has an interest in protecting Georgia consumers in these situations. Additionally, relative to the big bad corporation, the purchases is a little person for whom going even to Florida is difficult, and it is obviously not relatively hard for the corporation to defend in Georgia.
Bootstrapping arguments were, in my view, irrelevant. However, I did note several arguments which got bootstrapping completely backwards. Bootstrapping arguably allows a weak Minimum Contacts situation to become constitutionally permissible for the exercise of Personal Jurisdiction, because of a strong reasonableness balance favoring the plaintiff. However, the opposite is not true. Minimum Contacts are defeated by reasonableness favoring the defendant, as we saw a clear Majority of the court rule in Asahi. Scalia did not reach this because he did not find Minimum contacts, but, if he had, he certainly would then have gone on to reasonableness.
(6) Is the exercise of Personal Jurisdiction Constitutional? General Discussion
The 14th Amendment Due Process Clause imposes constitutional limitations on the exercise of in personam jurisdiction. I reserved 80 points for a general discussion of the Constitutional test and for developing certain themes such as is there a Federalism prong to this test, in addition to the Due Process limitations? Also, the discourse between Scalia and Marshall in Burnham about "Traditional" notions of fair play and substantial justice or "Contemporary" ones, as Justice Marshall suggests in Shaffer, and states quite clearly in his dissent in Burnham.