Part I: 9-0
Part II-A: 4-5
Part II-B: 8-1
Part III: 4-5
[743-44] Asahi shipped valves from Japan to Cheng Shin in Taiwan, where they were incorporated into tire tubes. Between 1978 and 1982, Asahi's sales to Cheng Shin ranged between 100,000 and 500,000 units per year and accounted for approximately 1% of Asahi's income. Cheng Shin used valves from other suppliers as well, and marketed its tire tubes throughout the world. There was no indication how many Asahi valves reached California, and Asahi denied that the valve on Zurcher's motorcycle was one of its products. Cheng Shin submitted the affidavit of its purchasing manager, who asserted that Asahi was aware its valve assemblies would be used in products sold in California. The affidavit of the president of Asahi, on the other hand, averred that it "never contemplated that its limited sales of tire valves to Cheng Shin in Taiwan would subject it to lawsuits in California."
[Note that there is an open question about whether or not the valve in question was in fact an Asahi valve. Note additionally, that counsel for Cheng Shin conducted a "survey" by sending an investigator to California motorcycle supply stores, to see if Asahi valve assemblies were being sold there. They found a few.]
[The analysis then becomes:
[1. Does the California Long-Arm statute contemplate in personam jurisdiction in this situation? If you will remember, the California statute extends personal jurisdiction to the maximum allowed by the Due Process clause. CB-697]
[2. Are there Minimum contacts]
[3. Is the exercise of personal jurisdiction reasonable]
PART II-A
[744] "[T]he constitutional touchstone" of the determination whether an exercise of personal jurisdiction comports with due process "remains whether the defendant purposefully established 'minimum contacts' in the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). Most recently we have reaffirmed the oft-quoted reasoning of Hanson v. Denckla, * * *, that minimum contacts must have a basis in "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." Burger King, * * * "Jurisdiction is proper ... where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State." Ibid., quoting McGee v. International Life Insurance Co., * * *.[745] We now find this latter position to be consonant with the requirements of due process. The "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. The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.
[At page 746, still in part II-A, Justice O'Connor cites Kawasaki and Rockwell. In Kawasaki, the Japanese manufacturer of motorcycles, distributed them throughout the US via a US corporation. The court found that Kawasaki had control of this distribution network, and was therefore availing itself of state market concerned. Rockwell purchased a helicopter from Augusta and after a crash sued Augusta and a European company that supplied Augusta with a part that was custom-built for that model helicopter, which was targeted for the American and European corporate markets.]
PART II-B
[Please keep in mind that until a majority of the Court adopts the reasoning expressed in part II-A, we follow the old rules. Although, as discussed in class, I believe that the current court will turn Part II-A into the majority view. But that, and fifty cents gets you coffee in most cheap establishments.][746: THE TEST] The strictures of the Due Process Clause forbid a state court from exercising personal jurisdiction over Asahi under circumstances that would offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S., at 316, 66 S.Ct., at 158.
[746 FACTORS] 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, 444 U.S., at 292, 100 S.Ct., at 564.
[746 The International Nature of the case matters.] The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders.
[746] In the present case, however, the interests of the plaintiff and the forum in California's assertion of jurisdiction over Asahi are slight. All that remains is a claim for indemnification asserted by Cheng Shin, a Taiwanese corporation, against Asahi.
[747] Because the [THIRD-PARTY]plaintiff is not a California resident, California's legitimate interests in the dispute have considerably diminished.
[747 Safety Regulation] The possibility of being haled into a California court as a result of an accident involving Asahi's components undoubtedly creates an additional deterrent to the manufacture of unsafe components; however, similar pressures will be placed on Asahi by the purchasers of its components as long as those who use Asahi components in their final products, and sell those products in California, are subject to the application of California tort law.
[747 SOVEREIGNTY cuts both ways] The procedural and substantive interests of other nations in a state court's assertion of jurisdiction over an alien defendant will differ from case to case. In every case, however, those interests, as well as the Federal interest in its foreign relations policies, will be best served by a careful inquiry into the reasonableness of the assertion of jurisdiction in the particular case, and an unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State.
[Note how both separate opinions emphasize that a majority of the court, albeit one which is now mostly gone, believes in the continued viability of the "stream of commerce" idea, at least when the ultimate consumer is injured in the forum state. This requires a particular view of World-Wide Volkswagen, explained by Justice Brennan]
[748-749] The Court in World-Wide Volkswagen thus took great care to distinguish "between a case involving goods which reach a distant State through a chain of distribution and a case involving goods which reach the same State because a consumer ... took them there." 444 U.S., at 306-307, 100 S.Ct., at 584 (Brennan, J., dissenting). The California Supreme Court took note of this distinction, and correctly concluded that our holding in World-Wide Volkswagen preserved the stream-of-commerce theory.
[Thus, the citation to Gray in World-Wide is not so puzzling after all.]
[Review Note 2, following the case]
[What do you think about the micronite filter case in note 3 at page 750?]
[Note 4: Note that in Parry the item was purchased in Idaho, and taken to Utah, where the injury occurs. Shades of World-Wide. Note that in the Gar-Tech case the specialty catalogue was not controlled by the manufacturer, as in Kawasaki.]
[Note 5: Audi did not challenge personal jurisdiction all the way to the Supreme Court, however, if it had, it probably should have won, if you take O'Connor's view.]
Does the internet present a completely new paradigm of doing business? Or is it just an evolution of catalogs (which have been around for centuries); mail-order, telephone sales?
Millennium Enterprises, Inc. v. Millennium Music, LP
The case is important because if gives a thorough overview of the Internet cases.
[750] Plaintiff files suit seeking damages and injunctive relief for alleged trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127. Plaintiff also alleges state statutory claims ...
[750] Plaintiff, Music Millennium, is a business incorporated in Oregon with its principal place of business located in Portland, Oregon. *** Defendant Millennium Music, Inc., is a South Carolina corporation and general partner of defendant Millennium Music, L.P., a South [CB-751] Carolina limited partnership. Defendants operate retail music stores in South Carolina under the name "Millennium Music." Defendants sell products through their retail outlets and their Internet Web site, although the vast majority of sales occur at their retail stores. From March 1998 through September 1998, defendants sold fifteen compact discs to nine separate customers in six states and one foreign country. The [Internet] sales totaled approximately $225. During the same period, defendants' retail sales were $2,180,000. Defendants also offer franchising circulars through the Internet and have two franchised stores in North Carolina.
[751] In September of 1998, defendants added a disclaimer to their Web site indicating that their products and franchise circulars were not available in Oregon.
[752] ["Passive" vs. "Active" Web Sites] Turning to the jurisdictional significance of defendant's Web site, the court noted that, unlike other media, a web site containing advertisements is not directed at specific markets. In Zippo Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa.1997), the court described a "sliding scale" approach to jurisdiction based on defendant's maintenance of a Web site. ["Active"] On one end are situations in which defendant "conducts business" over the Internet with forum residents, in which case jurisdiction is almost always proper. At the other end are cases in which defendant merely posts information on a "passive" Web site accessible to all. In between are situations in which defendant operates an "interactive" web site, in which event the court should assess the "level of interactivity and commercial nature of the exchange of information" to determine whether jurisdiction is proper.
[752] In Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir.1997), the Ninth Circuit followed the plurality opinion in Asahi, supra p. 739, and insisted on "something more" than creation of a Web site to show that defendant directed its activities toward the forum. ***
[752] [Are Internet Sales Enough?] Arguably, the capability of selling compact discs through the Web site could constitute "doing business" over the Internet and confer personal jurisdiction almost as a matter of course. However, the court finds such designation intended for those businesses which conduct a significant portion of their business through ongoing Internet relationships; for example, by entering "into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet."
[CB-753] [Can Compuserve (or AOL) sue you at their home state?] An example of such business is found in CompuServe v. Patterson, 89 F.3d 1257 (6th Cir.1996). In that case, the defendant was a subscriber of plaintiffs Internet provider services and entered into an agreement with plaintiff under which the defendant electronically transmitted 32 software files to plaintiff, a corporation located in Ohio. The Sixth Circuit found that the defendant "purposefully availed" himself of the privilege of doing business in Ohio by purposefully contracting with the plaintiff and utilizing the plaintiffs services to market his products.
[753] [Is this a Passive or Active Site?] Here, defendants have done nothing more than publish an interactive Web site. Defendants have not purposefully entered into contracts with Oregon residents through the Internet, other than Ms. Lufkin, nor have defendants otherwise exchanged files electronically with forum residents so as to create "repeated" or "ongoing obligations." ***
[753] *** However, the court finds that the middle interactive category of Internet contacts as described in Zippo needs further refinement to include the fundamental requirement of personal jurisdiction: "deliberate action" within the forum state in the form of transactions between the defendant and residents of the forum or conduct of the defendant purposefully directed at residents of the forum state.***
[753] *** [Foreseeability] Defendants maintain a Web site which allows users to purchase products, thus rendering it foreseeable that residents of Oregon, or [CB-754] any other state or country for that matter, could purchase a product from defendants. However, it is well-established that foreseeability alone cannot serve as the constitutional benchmark for personal jurisdiction. ***
[754] *** The fact that someone who accesses defendants' Web site can purchase a compact disc does not render defendants' actions "purposefully directed" at this forum. It is the conduct of the defendants, rather than the medium utilized by them, to which the parameters of specific jurisdiction apply.
[754] Furthermore, plaintiff offers no evidence that defendants targeted Oregon residents with the intent or knowledge that plaintiff could be harmed through their Web site. ***
[754] A review of defendants' Web site furthers the conclusion that defendants did not intentionally or purposefully target its activities at Oregon. The site proclaims "Come Visit Us!" and provides a map of the location of defendants' stores. The maps are local in nature, providing little more than a showing of the cross-streets surrounding the stores. Nothing published on the Web site suggests that defendants intended to target Oregon residents, some 3,000 miles away, any more than they intended to target residents of other states. Rather, from defendants' invitation to visit their retail outlets, one could reasonably infer that defendants intended to target residents in their area [of South Carolina]. In sum, the court finds that this, too, is a case where "something more" is required.
[755] Rather, the user must take affirmative action to access either a passive or interactive Web Site. The user must turn on a computer, access the Internet and the Web, and browse the Web for a particular site. Thus, contrary to the scenario described in Inset, information published on Web sites is not thrust upon users indiscriminately.
[755] Likewise, the court declines to [find that] contacts unrelated to the plaintiff s claim are considered in conjunction with a Web site in order to assert specific jurisdiction. Specific jurisdiction is not proper unless the forum-related contacts give rise or relate to the plaintiffs cause of action. Accordingly, the court does not consider defendants' purchases from Allegro in conjunction with their Internet site for purposes of personal jurisdiction analysis. Those purchases do not give rise or relate to plaintiffs claims of trademark infringement and unfair competition.
[755] Absent actual exchanges or transactions with residents of the forum or evidence that local residents were targeted, the distinctions between specific and general jurisdiction become blurred. As the courts in Inset and Maritz point out, Web sites are accessible day and night to all who possess the necessary technological know-how and equipment. Thus, if an interactive Web site can constitute "purposeful availment" of a forum simply by being continuously accessible to residents of that forum, surely that contact can be considered "continuous and systematic" for purposes of general jurisdiction. Taking this reasoning to its logical conclusion, a plaintiff could sue a foreign defendant in any forum and claim jurisdiction based on the defendant's interactive Web site, even if the cause of action is unrelated to the Web site. Such results hardly conform with [CB-756] notions of "fair play and substantial justice." The grasp of personal jurisdiction was never intended to reach so far and so wide.
[756] [Inconsistency] Moreover, the imposition of broad territorial concepts of personal jurisdiction on the commercial uses of the Internet has dramatic implications, "opening the Web user up to inconsistent regulations throughout fifty states, indeed, throughout the globe."
Notes and Questions
1. Is the internet a really big deal or not?
2. Virtual Trials?
What about solicitations in the forum, but injury occurring outside of the forum?
What about AOL and Compuserve and its subscribers, is more required for the services to sue you in their "home" states?
[778] "The purposeful availment inquiry ... focuses on the defendant's intentionality. This prong is only satisfied when the defendant purposefully and voluntarily directs his activities toward the forum so that he should expect, by virtue of the benefit he receives, to be subject to the court's jurisdiction based on" his contacts with the forum. Thus, the " 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts, or of the 'unilateral activity of another party or a third person.'.]" (Burger King [v. Rudzewicz], 471 U.S. at p. 475 [105 S.Ct. at p. 2183].) "When a [defendant] 'purposefully avails itself of the privilege of conducting activities within the forum State,' it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State." (World-Wide Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297 [100 S.Ct. 559, 567, 62 L.Ed.2d 490] (World-Wide Volkswagen).)
Despite this struggle, most courts agree that merely asserting that a defendant knew or should have known that his intentional acts would cause harm in the forum state is not enough to establish jurisdiction under the effects test. Instead, the plaintiff must also "point to contacts
[CB-779]
which demonstrate that the defendant expressly aimed its tortious conduct at the forum .... " (IMO, supra, 155 F.3d at p. 265.)
* * *
In this case, Pavlovich's sole contact with California is LiVid's posting of the DeCSS source code containing DVD CCA's proprietary information on an Internet Web site accessible to any person with Internet access. Pavlovich never worked in California. He owned no property in California, maintained no bank accounts in California, and had no telephone listings in California. Neither Pavlovich nor his company solicited or transacted any business in California. The record also contains no evidence of any LiVid contacts with California.
Internet Business: Active, Passive, somewhere in between
Although we have never considered the scope of personal jurisdiction based solely on Internet use, other courts have considered this issue, and most have adopted a sliding scale analysis. "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. 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. 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 inter activity and commercial nature of the exchange of information that occurs on the Web site." (Zippo Mfg· Co. v. Zippo Dot Com, Inc. (W.D.Pa. 1997) 952 F.Supp. 1119, 1124.)[780 Thus, the only question in this case is whether Pavlovich's knowledge that his tortious conduct may harm certain industries centered in California —i.e., the motion picture, computer, and consumer electronics industries— is sufficient to establish express aiming at California. As explained below, we conclude that this knowledge, by itself, cannot establish purposeful availment under the effects test.
First, *** the foreseeability that third parties may use DeCSS to harm the motion picture industry cannot, by itself, satisfy the express aiming requirement. Because nothing in the record suggests that Pavlovich encouraged Web site visitors to use DeCSS to illegally pirate copyrighted motion pictures, his mere "awareness" they might do so does not show purposeful availment. (See Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S. 102, 112 [107 S.Ct. 1026, 1032, 94 L.Ed.2d 92] (plur. opn. of O'Connor, J.) [the mere awareness that third parties will sweep the defendant's product into the forum state does not convert its act of selling the product to third parties "into an act purposefully directed toward the forum State"].)
Second, Pavlovich's knowledge of the effects of his tortious conduct on the consumer electronics and computer industries centered in California is an even more attenuated basis for jurisdiction.
[781] Cases citing a defendant's knowledge of the effects of its tortious conduct on an industry centered in the forum state to support a finding of jurisdiction under the effects test are inapposite. In exercising jurisdiction, those courts concluded that the defendant's knowledge of industrywide effects in the forum state in conjunction with other evidence of express aiming at the forum state established purposeful availment under the effects test.6 Thus, those cases merely hold that such knowledge is relevant to any determination of personal jurisdiction. They do not establish that such knowledge, by itself, establishes express aiming. Indeed, DVD CCA does not cite, and we have not found, any case where a court exercised jurisdiction under the effects test based solely on the defendant's knowledge of industry-wide effects in the forum state.
Foonote 6. (See Panavision, supra, 141 F.3d at p. 1322 [the defendant "engaged in a scheme to register [a forum resident's] trademarks as his domain names for the purpose of extorting money from" that resident]; Cable News Network v. GoSMS.com, Inc. (S.D.N.Y. 2000) 56 u.S.P.Q.2d 1959, 1963 [2000 WL 1678039, *4] [the defendant "transmitted infringing content to" forum residents]; 3DO Co. v. Pop top Software Inc. (N.D.Cal. 1998) 49 U.S.P.Q.2d 1469, 1472, 1998 WL 962202 [the defendants "encourage[d] and facilitate[d] users" in the forum state "to download allegedly infringing copies" from its Web site and used a server in the forum state to operate the site].)
[782] We, however, emphasize the narrowness of our decision. A defendant's knowledge that his tortious conduct may harm industries centered in California is undoubtedly relevant to any determination of personal jurisdiction and may support a finding of jurisdiction. We merely hold that this knowledge alone is insufficient to establish express aiming at the forum state as required by the effects test. Because the only evidence in the record even suggesting express aiming is Pavlovich's knowledge that his conduct may harm industries centered in California, due process requires us to decline jurisdiction over his person.
DISSENT:
BAXTER, J. [DISSENTING, CB-782]
I respectfully dissent. That this case involves a powerful new medium of electronic communication, usable for good or ill, should not blind us to the essential facts and principles. The record indicates that, by intentionally posting an unlicensed decryption code for the Content Scrambling System (CSS) on their Internet Web sites, defendant and his network of "open source" associates sought to undermine and defeat the very purposes of the licensed CSS encryption technology, i.e., copyright protection for movies recorded on digital versatile discs (DVD's) and limitation of playback to operating systems licensed to unscramble the encryption code. The intended targets of this effort were not individual persons or businesses, but entire industries. Defendant knew at least two of the intended targets-the movie industry and the computer industry involved in producing the licensed playback systems-either were centered in California or maintained a particularly substantial presence here.
[CB-783]
Thus, the record amply supports the trial court's conclusion, for purposes of specific personal jurisdiction, that defendant's intentional act, even if committed outside California, was "expressly aimed" at California.The dissent also detailed information from Pavlovich's deposition. He said that LiVid was seeking "to develop an open source DVD player for Liunx" so "we could play ... DVDs on the systems that we had bought that had DVD drives." He insisted that anyone who buys a DVD should have the freedom to duplicate it. He admitted having heard that one needed a license to use the DeCSS code, but did not seek one because "more than likely a license would not allow us to release the source code and things like that that didn't follow the same development path as open source followed." He also understood that DeCSS had been obtained by reverse engineering, and wrote in an e-mail dated Oct. 1, 1999, that "[r]everse engineering is illegal in most (if not all) of the countries that developers of this project live in." He also testified that he knew that Hollywood was where the movie industry is centered and that Silicon Valley is a top technology hot spot.]
[784] Accordingly, the necessary minimum contacts required by Calder, supra, 465 U.S. 783, are present. Pavlovich engaged in " '(1) intentional actions (2) expressly aimed at the forum state (3) causing harm, the brunt of which is suffered-and which the defendant knows is likely to be suffered-in the forum state.' " (Panavision, supra, 141 F.3d 1316, 1321.) Accordingly, he should reasonably anticipate he would be haled into California's courts to account for his conduct.
However, defendants who aim conduct at particular jurisdictions, expecting and intending that injurious effects will be felt in those specific places, cannot shield themselves from suit there simply by using the Internet, or some other generalized medium of communication, as the means of inflicting the harm.4
4. The majority imply that the maintenance of a passive Internet Web site cannot be considered "express aiming" at any jurisdiction because such a site is just a way of allowing interested persons to search for and retrieve information stored in remote computers. But the maintenance of a Web site that includes content intended and expected to harm particular individuals, entities, or interests in specific places is no more "passive" in this regard than television broadcasts which all or none may watch as they choose (see Indianapolis Colts, Inc. v. Baltimore Football Club Limited Partnership [supra p. 751 n.6]) or a recorded toll-free telephone message which all or none may hear as they choose (cf. Inset Systems, Inc., supra, 937 F.Supp. 161, 165).[785] I believe that the unusual and unprecedented facts of this case demonstrate purposeful activity directed toward this forum sufficient to establish minimum contacts under the Calder test. As a result of his actions, defendant Pavlovich should reasonably have anticipated being haled into court in this state, and recognition of California's jurisdiction thus meets constitutional standards of fairness.
The posting of the DeCSS source code on Pavlovich's LiVid Web site was done with the specific goal of negating, by illegal means, the licensed CSS technology Pavlovich knew had been jointly developed by the movie and DVD industries for their mutual protection. Pavlovich's immediate aim, he acknowledged, was to promote development of alternative DVD playback systems not dependent on CSS licensure. However, he also knew CSS was intended to afford crucial copyright protection to DVD movies. He has denied any personal desire to pirate movies, or to encourage others to do so. But by deciding to display the DeCSS source code without restriction on the universally accessible Web site, Pavlovich offered visitors to the site the patent opportunity to exploit this information as they chose.
NOTES:
[788] Defamation: In Blumenthal v. Drudge, 992 F.Supp. 44 (D.D.C.1998), the court held that a White House staffer could sue Matt Drudge, the Internet columnist, in D.C. Drudge solicited contributions of information from people in D.C., focused much of his column on activities in the capitol, and visited the District to promote his column. Contrast Young v. New Haven Advocate, 315 F.3d 256 (4th Cir.2002), in which a Connecticut newspaper published an article about the transfer of inmates to a prison in Virginia that was posted in its Web site and could be read there. Plaintiff, the warden of the Virginia prison, claimed that the article was libelous, but except for Internet access no copies of the newspaper were distributed in Virginia. The court held there was no jurisdiction. Compare Gordy v. Daily News, supra p. 748 n. 1. In Griffis v. Luban, 646 N.W.2d 527 (Minn.2002), cert. denied, 538 U.S. 906, 123 S.Ct. 1483, 155 L.Ed.2d 225 (2003), plaintiff sued defendant in Alabama for posting uncomplimentary assertions about plaintiff on an Internet newsgroup site for those interested in archeology. The Minnesota court held that
[CB-789]
plaintiffs Alabama default judgment was not entitled to full faith and credit because jurisdiction was not warranted under Calder. The postings were about archaeology and directed, not to Alabama, but to an Internet community likely spread across the country and the world.
Trademark infringement: In Zippo Manuf. Co. v. Zippo Dot Com, Inc., 952 F.8upp. 1119 (W.D.Pa.1997), plaintiff manufactured tobacco lighters in Pennsylvania. Defendant operated an Internet news service in California to which customers could subscribe and, for a fee, view and/or download Internet newsgroup messages stored on defendant's server in California. Plaintiff objected to defendant's use of the word "Zippo" in its domain name. The court found jurisdiction warranted because defendant had contracted with approximately 3,000 individuals and seven Internet access providers in Pennsylvania, and these interactions formed one basis for plaintiffs claims of infringement. Would there be any way that defendant could operate without thus being subject to jurisdiction in Pennsylvania? Contrast Carefirst of Maryland v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390 (4th Cir.2003), in which a Maryland plaintiff sued a defendant that used the same name in Illinois. Defendant's website sought donations for its Chicago-area activities, but it had only received $1,500 (0.0174%) of its contributions from Maryland residents.
These seizures were accomplished by placing "stop transfer" orders or their equivalents on the books of the Greyhound Corp. So far as the record shows, none of the certificates representing the seized property was physically present in Delaware. [753]
"The primary purpose of 'sequestration' as authorized by 10 Del.C. Sec. 366 is not to secure possession of property pending a trial between resident debtors and creditors on the issue of who has the right to retain it. On the contrary, as here employed, 'sequestration' is a process used to compel the personal appearance of a nonresident defendant to answer and defend a suit brought against him in a court of equity. It is accomplished by the appointment of a sequestrator by this Court to seize and hold property of the nonresident located in this State subject to further Court order. If the defendant enters a general appearance, the sequestered property is routinely released, unless the plaintiff makes special application to continue its seizure, in which event the plaintiff has the burden of proof and persuasion." [753]
The overwhelming majority of commentators have also rejected Pennoyer 's premise that a proceeding "against" property is not a proceeding against the owners of that property. Accordingly, they urge that the "traditional notions of fair play and substantial justice" that govern a State's power to adjudicate in personam should also govern its power to adjudicate personal rights to property located in the State. [754].
We think that the time is ripe to consider 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.[755]
"[t]he phrase, "judicial jurisdiction over a thing', is a customary elliptical way of referring to jurisdiction over the interests of persons in a thing." Restatement (Second) of Conflict of Laws Sec. 56, Introductory Note (1971) (hereafter Restatement). This recognition leads to the conclusion that in order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising "jurisdiction over the interests of persons in a thing." (FN23) The standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard elucidated in International Shoe. [755]
[First, lets break-down the classifications discussed by the court at footnote 17, incorporated by footnote 24.]
[1] IN REM: "A judgment in rem affects the interests of all persons in designated property."
[2] QUASI IN REM: "A judgment quasi in rem affects the interests of particular persons in designated property. The latter is of two types."
[a] Quasi In Rem Type I: "In one the plaintiff is seeking to secure a pre-existing claim in the subject property and to extinguish or establish the nonexistence of similar interests of particular persons."
[b] Quasi In Rem Type II: "In the other the plaintiff seeks to apply what he concedes to be the property of the defendant to the satisfaction of a claim against him. Restatement, Judgments, 5-9." Hanson v. Denckla, 357 U.S. 235, 246 n. 12, 78 S.Ct. 1228, 1235, 2 L.Ed.2d 1283 (1958)."
[Justice Marshall further subdivides Quasi In Rem Type II into:
[1] Related to the Property. For example, a tort claim in which the accident occurs on defendant's land, tries to establish jurisdiction by seizing the land.]
[2] Unrelated to the Property. For example, a person seeking a tort judgment related to a car accident, tries to establish jurisdiction by seizing land. ]
[The analysis for acquiring personal jurisdiction, after cases SUBSEQUENT to Shaffer, is
[1. Is jurisdiction allowed by the state long-arm statute? In this context, it becomes the state sequestration statute. Which is the reason why the classifications discussed above are still important.[2. Are minimum contacts present? This is threshold question as indicated in Hanson v. Denckla and more clearly in World-Wide Volkswagen].
[3. Is the exercise of jurisdiction reasonable? Factors of International Shoe, Asahi, Part II-B]
[In effect, within the modern structure of the test described above, we can assume that continued viability of Shaffer may be established by allowing the presence of the property to decide the now-threshold question of minimum contacts, but the presence of property becomes just one factor in the reasonableness analysis. Note how Justice Marshall goes from the Sequestration statute to a balancing test, i.e., the reasonableness test of International Shoe and Asahi Part II-B. Since the court "clarified" that minimum contacts was a threshold matter in World-Wide (over Marshall's dissent, to be sure) after Shaffer was decided, and given the further refinements introduced by Burger King and Asahi, the proper structure for the analysis is as described above.]
[Back to the case]
[755-756] This paragraph is crucial] This argument, of course, does not ignore the fact that the 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. [i.e., property is one factor in the reasonableness analysis] For example, when claims to the property itself are the source of the underlying controversy between the plaintiff and the defendant, (FN24) it would be unusual for the State where the property is located not to have jurisdiction. [I.e., as to In Rem AND Quasi In Rem type I, Justice Marshall believes, little has changed, in effect, from pre-Shaffer decisions.] In such cases, the defendant's claim to property located in the State would normally indicate that he expected to benefit from the State's protection of his interest. The State's strong interests in assuring the marketability of property within its borders and in providing a procedure for peaceful resolution of disputes about the possession of that property would also support jurisdiction, as would the likelihood that important records and witnesses will be found in the State. (FN28) [Then he addresses Quasi In Rem Type II, Sub-Type 1, also a relatively-easy case] The presence of property may also favor jurisdiction in cases such as suits for injury suffered on the land of an absentee owner, where the defendant's ownership of the property is conceded but the cause of action is otherwise related to rights and duties growing out of that ownership.
[But, there is SOME change] [756] For the type of quasi in rem action typified by Harris v. Balk [supra p. ___] and the present case, however, accepting the proposed analysis would result in significant change. These are cases where the property which now serves as the basis for state-court jurisdiction is completely unrelated to the plaintiff's cause of action. Thus, although the presence of the defendant's property in a State might suggest the existence of other ties among the defendant, the State, and the litigation, the presence of the property alone would not support the State's jurisdiction. If those other ties did not exist, cases over which the State is now thought to have jurisdiction could not be brought in that forum.
[Distinguish using property to establish jurisdiction over the thing, which after Shaffer is really personal jurisdiction, FROM execution of an out of state judgment by seizing in-state property. 757, footnote 36] Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.
[758] This history must be considered as supporting the proposition that jurisdiction based solely on the presence of property satisfies the demands of due process, cf. Ownbey v. Morgan, 256 U.S. 94, 111, 41 S.Ct. 433, 438, 65 L.Ed. 837 (1921), but it is not decisive. "[T]raditional notions of fair play and substantial justice" can be as readily offended by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures that are inconsistent with the basic values of our constitutional heritage. Cf. Sniadach v. Family Finance Corp., 395 U.S., at 340, 89 S.Ct., at 1822. The fiction that an assertion of jurisdiction over property is anything but an assertion of jurisdiction over the owner of the property supports an ancient form without substantial modern justification. Its continued acceptance would serve only to allow state-court jurisdiction that is fundamentally unfair to the defendant.
Part IV
[The court first says that under the reasonableness analysis of International Shoe and its progeny, this exercise of Quasi In Rem, Type II, Sub-Type 2, jurisdiction is not proper. Plaintiff tried to argue that defendants had established minimum contacts under traditional in personam jurisdiction analysis by being corporate officers. Justice Marshal rejects this notion, to the chagrin of Justice Brennan, who thinks that it should not have been decided.][Note how Delaware responded to Shaffer, discussed in Note 6 at page 766. Note also the Discussion of different types of actions at note 4, at page 766. I addressed these issues in class.]
[For tomorrow, consider the following possibility. You are in an aircraft, flying from Florida to New York. The pilot announces that you are flying over Tennessee. Assume that is correct. A person gets up from their seat and hands you a summons and complaint issued by and filed in the courts of Tennessee. Is this proper "personal service, within the state"?]
[771] The question presented is whether the Due Process Clause of the Fourteenth Amendment denies California courts jurisdiction over a nonresident, who was personally served with process while temporarily in that State, in a suit unrelated to his activities in the State.
[772] The proposition that the judgment of a court lacking jurisdiction is void traces back to the English Year Books, see Bowser v. Collins, Y.B.Mich. 22 Edw. 4, f. 30, pl. 11, 145 Eng.Rep. 97 (1482), and was made settled law by Lord Coke in Case of the Marshalsea, 10 Co.Rep. 68b, 77 Eng.Rep. 1027, 1041 (K.B.1612). * * * In Pennoyer v. Neff, 95 U.S. 714, 732, 24 L.Ed. 565 (1878), we announced that the judgment of a court lacking personal jurisdiction violated the Due Process Clause of the Fourteenth Amendment as well.
[772] In what has become the classic expression of the criterion, we said in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), that a State court's assertion of personal jurisdiction satisfies the Due Process Clause if it does not violate " 'traditional notions of fair play and substantial justice.' "
[773] The view developed early that each State had the power to hale before its courts any individual who could be found within its borders, and that once having acquired jurisdiction over such a person by properly serving him with process, the State could retain jurisdiction to enter judgment against him, no matter how fleeting his visit. See, e.g., Barrell v. Benjamin, 15 Mass. 354 (1819).
[We talked about the dubious nature of the historical origin of this rule.]
[773] Accurate or not, however, judging by the evidence of contemporaneous or near-contemporaneous decisions one must conclude that Story's understanding was shared by American courts at the crucial time for present purposes: 1868, when the Fourteenth Amendment was adopted.
[774] Decisions in the courts of many States in the 19th and early 20th centuries held that personal service upon a physically present defendant sufficed to confer jurisdiction, without regard to whether the defendant was only briefly in the State or whether the cause of action was related to his activities there. [Justice Scalia cited more than ten state court decisions between 1881 and 1904.] Although research has not revealed a case deciding the issue in every State's courts, that appears to be because the issue was so well settled that it went unlitigated.
[These two excerpts can be worrisome. First, an historical **error** is sufficient to establish a constitutional rule. Second, abscence of express evidence can be interpreted to favor our argument.]
[775] We initially upheld these laws under the Due Process Clause on grounds that they complied with Pennoyer 's rigid requirement of either "consent," see, e.g., Hess v. Pawloski, supra at 356, or "presence". As many observed, however, the consent and presence were purely fictional. Our opinion in International Shoe cast those fictions aside, and made explicit the underlying basis of these decisions: due process does not necessarily require the States to adhere to the unbending territorial limits on jurisdiction set forth in Pennoyer.
[776] The distinction between what is needed to support novel procedures and what is needed to sustain traditional ones is fundamental, as we observed over a century ago:
[775-776] The short of the matter is that jurisdiction based on physical presence alone constitutes due process because it is one of the continuing traditions of our legal system that define the due process standard of "traditional notions of fair play and substantial justice." That standard was developed by analogy to "physical presence," and it would be perverse to say it could now be turned against that touchstone of jurisdiction.
[777] It goes too far to say, as petitioner contends, that Shaffer compels the conclusion that a State lacks jurisdiction over an individual unless the litigation arises out of his activities in the State. Shaffer, like International Shoe, involved jurisdiction over an absent defendant, and it stands for nothing more than the proposition that when the "minimum contact" that is a substitute for physical presence consists of property ownership it must, like other minimum contacts, be related to the litigation.
[777] Shaffer was saying, in other words, not that all bases for the assertion of in personam jurisdiction (including, presumably, in-state service) must be treated alike and subjected to the "minimum contacts" analysis of International Shoe; but rather that quasi in rem jurisdiction, that fictional "ancient form," and in personam jurisdiction, are really one and the same and must be treated alike--leading to the conclusion that quasi in rem jurisdiction, i.e., that form of in personam jurisdiction based upon a "property ownership" contact and by definition unaccompanied by personal, in-state service, must satisfy the litigation-relatedness requirement of International Shoe. [Actually, Shaffer WAS saying the all are subject to International Shoe analysis. However, Justice Marshall said that it was hard to aniticipate different RESULTS in all cases except Qasi In Rem Type II, Sub-Type 1.]
[778] Where, however, as in the present case, a jurisdictional principle is both firmly approved by tradition and still favored, it is impossible to imagine what standard we could appeal to for the judgment that it is "no longer justified." While in no way receding from or casting doubt upon the holding of Shaffer or any other case, we reaffirm today our time-honored approach, see, e.g., Ownbey v. Morgan, 256 U.S. 94, 110-112, 41 S.Ct. 433, 438, 65 L.Ed. 837 (1921). For new procedures, hitherto unknown, the Due Process Clause requires analysis to determine whether "traditional notions of fair play and substantial justice" have been offended. International Shoe, 326 U.S., at 316, 66 S.Ct., at 158. But a doctrine of personal jurisdiction that dates back to the adoption of the Fourteenth Amendment and is still generally observed unquestionably meets that standard.
[779] The subjectivity, and hence inadequacy, of this approach becomes apparent when the concurrence tries to explain why the assertion of jurisdiction in the present case meets its standard of continuing-American-tradition-plus-innate-fairness. Justice Brennan lists the "benefits" Mr. Burnham derived from the State of California--the fact that, during the few days he was there, "his health and safety [were] guaranteed by the State's police, fire, and emergency medical services; he [was] free to travel on the State's roads and waterways; he likely enjoy[ed] the fruits of the State's economy."
[This part of Justice Brennan's argument is not strong, in my view. Additionally, if we take it that there are minimum contacts in this case, how do we relate them to the claim being asserted? Or is Justice Brennan suggesting that such fleeting presence can subject defendant to General Jurisdiction?]
[779] It would create "an asymmetry," we are told, if Burnham were permitted (as he is) to appear in California courts as a plaintiff, but were not compelled to appear in California courts as [a] defendant; and travel being as easy as it is nowadays, and modern procedural devices being so convenient, it is no great hardship to appear in California courts. The problem with these assertions is that they justify the exercise of jurisdiction over everyone, whether or not he ever comes to California.
[I must confess that I also find Justice Brennan's arguments of asymmetry unconvincing. A plaintiff voluntarily seeks the assitance of a particular court, and should be forced to take the good with the bad. Defendants are involuntary parties. That distinction has an important difference.]
[Beyond this part, we have a debate about history and policy and who gets to interpret them. Justice White to some extent, but much more Justice Stevens, seem to suggest that the Justices should give their judgment and leave the philosophical debate for a more appropriate case. Note also that the results are similar under either analysis, but the philosophical underpinnings take on added importance in other contexts.]
[Review footnote 13 at page 786, Justice Brennan gives you a good summary of how Personal Jurisdiction fits into other types of analysis, such as venue and forum non-conveniens, and how these arguments fit within Federal Practice more generally.]
I. Long-Arm or Sequestration Statute
II. Minimum Contacts: Threshold
A. Person: Minimum Contacts
B. In Rem, Quasi In Rem: Property
III. Reasonableness: Balancing Factors
?. Is Reasonableness a way of studying the relationship between the contacts and the claim, i.e., shorthand for specific jurisdiction?
[790] All parties to the present case concede that respondents' claims against Helicol did not "arise out of," and are not related to, Helicol's activities within Texas. We thus must explore the nature of Helicol's contacts with the State of Texas to determine whether they constitute the kind of continuous and systematic general business contacts the Court found to exist in Perkins. We hold that they do not.
[But the court sure gives you a lot of hints about it].
[In reading this decision and Justice Brennan's dissent, please go back to the language I excerpted from International Shoe, as I showed in class.]
It is undisputed that Helicol does not have a place of business in Texas and never has been licensed to do business in the State. Basically, Helicol's contacts with Texas consisted of [1]its chief executive officer to Houston for a contract-negotiation session; [2]into its New York bank account checks drawn on a Houston bank; [3]helicopters, equipment, and training services from Bell Helicopter for substantial sums; and [4] sending personnel to Bell's facilities in Fort Worth for training. [790] [Pay close attention at how the court disposes of each of these factors].[791] In accordance with Rosenberg, we hold that mere purchases, even if occurring at regular intervals, are not enough to warrant a State's assertion of in personam jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions. (FN12)
[Footnote 12, page 791] This Court in International Shoe cited Rosenberg for the proposition that "the commission of some single or occasional acts of the corporate agent in a state sufficient to impose an obligation or liability on the corporation has not been thought to confer upon the state authority to enforce it." Arguably, therefore, Rosenberg also stands for the proposition that mere purchases are not a sufficient basis for either general or specific jurisdiction. Because the case before us is one in which there has been an assertion of general jurisdiction over a foreign defendant, we need not decide the continuing validity of Rosenberg with respect to an assertion of specific jurisdiction, i.e., where the cause of action arises out of or relates to the purchases by the defendant in the forum State.
[792] [T]he Court refuses to consider any distinction between contacts that are "related to" the underlying cause of action and contacts that "give rise" to the underlying cause of action. In my view, however, there is a substantial difference between these two standards for asserting specific jurisdiction. Thus, although I agree that the respondents' cause of action did not formally "arise out of" specific activities initiated by Helicol in the State of Texas, I believe that the wrongful death claim filed by the respondents is significantly related to the undisputed contacts between Helicol and the forum.
[792-93] Even though the pilot was trained in Texas, the Court assumes that the Texas courts may not assert jurisdiction over the suit because the cause of action "did not 'arise out of,' and [is] not related to," that training. If, however, the applicable substantive law required that negligent training of the pilot was a necessary element of a cause of action for pilot error, or if the respondents had simply added an allegation of negligence in the training provided for the Helicol pilot, then presumably the Court would concede that the specific jurisdiction of the Texas courts was applicable.
[The debate discussed in note 1 is very important.]
First is the citation of Prof. Brilmayer at page 793:
A contact is related to the controversy if it is the geographical qualification of a fact relevant to the merits. A forum occurrence which would ordinarily be alleged as part of a comparable domestic complaint is a related contact. In contrast, an occurrence in the forum State of no relevance to a totally domestic cause of action is an unrelated contact, a purely jurisdictional allegation with no substantive purpose. If a fact is irrelevant in a purely domestic dispute, it does not suddenly become related to the controversy simply because there are multistate elements.
Brilmayer, How Contacts Count: Due Process Limitations on State Court Jurisdiction, 1980 Sup.Ct.Rev. 77, 82. It this a desirable standard?
Professor Twitchell has criticized this approach on the ground that it is underinclusive. In World-Wide Volkswagen v. Woodson (supra p. 707), for example, it would seem that Audi's sales of cars in Oklahoma lacked that sort of relationship to the claim by the Robinsons, who bought their car in New York. She feels that specific jurisdiction should reach such a case:* * *
Twitchell, The Myth of General Jurisdiction, 101 Harv.L.Rev. 610, 661-62 (1988). Did the Court implicitly endorse this analysis in World-Wide Volkswagen? See supra p. 721 n. 8.
[I do not think so. Audi chose not to challenge to the Supreme Court, it appeared to assume that it was subject to personal jurisdiction in Oklahoma. It appears that this was a hasty conclusion. I believe that there are strong reasonableness and equity interests in support of Professor Twitchell's point, which she makes very well in the cited article. Ultimately, however, the argument might fail simply because of how federalism affects our analysis. We started with Justice Black's opinion in International Shoe, indicating that the states should have a sovereign prerogative to open their courts to whom they see fit. But that view was rejected by the court in World-Wide. Sovereignty and federalism are relative in our system. One state must respect the sovereignty of other states. State boundaries are important, even if the result seems unduly formalistic, even silly.]
[Following class, students asked if there were any easy cases in which we do not do the complete International Shoe analysis. The answer is yes. Burham, and the case of personal service within the jurisdiction on a transient defendant is one, according to the Scalia, White and Stevens group. Not so for Justice Brennan, but this was a minority view. Corporations are normally required to appoint an agent for service of process and to consent to jurisdiction in their place of incorporation, thus being subjected to general personal jurisdiction. Beyond that, the courts will do the International Shoe analysis to determine if specific or general jurisdiction is appropriate elsewhere. Other examples are discussed at note 5 at page 796:]
5. With natural persons, the state of defendant's domicile may exercise jurisdiction that is analogous to general jurisdiction. To some extent this idea is inherent in Pennoyer 's affirmation that a state has jurisdiction over its citizens. It was partly confirmed in Blackmer v. United States, 284 U.S. 421, 52 S.Ct. 252, 76 L.Ed. 375 (1932), which upheld the power of the United States to subpoena an American in France. In Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278 (1940), the Court applied the same idea to state court jurisdiction over an absent citizen: "Domicile in the state is alone sufficient to bring an absent defendant within the reach of the state's jurisdiction for purposes of a personal judgment by means of appropriate substituted service. * * * As in the case of the authority of the United States over its absent citizens, the authority of a state over one of its citizens is not terminated by the mere fact of his absence from the state." Is state "citizenship" really analogous to national citizenship? In general, one is said to be a citizen of a state until he establishes domicile elsewhere, but all that requires is that he establish residence in that state and intend to remain there indefinitely.
[The warning made by our casebook authors at page 796 is terribly important, especially now, since we will move into subject matter jurisdiction next week.]
[796] 6. The term "general jurisdiction" is used to describe a very different concept in connection with subject matter jurisdiction, where we will find that some courts (like the federal courts) are allowed only to hear claims of certain types or involving certain minimum or maximum amounts, while others are courts of "general jurisdiction" and may hear claims of all types. Be careful not to confuse the two ideas.