Minimum contacts

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Minimum contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state. The United States Supreme Court has decided a number of cases that have established and refined the principle that it is unfair for a court to assert jurisdiction over a party unless that party's contacts with the state in which that court sits are such that the party "could reasonably expect to be haled [lower-alpha 1] into court" in that state. This jurisdiction must "not offend traditional notions of fair play and substantial justice". [1] A non-resident defendant may have minimum contacts with the forum state if they 1) have direct contact with the state; 2) have a contract with a resident of the state; [2] 3) have placed their product into the stream of commerce such that it reaches the forum state; [3] 4) seek to serve residents of the forum state; [4] 5) have satisfied the Calder effects test; [5] or 6) have a non-passive website viewed within the forum state.

Contents

Because the need for minimum contacts is a matter of personal jurisdiction (the power of the court to hear the claim with respect to a particular party) instead of subject matter jurisdiction (the power of the court to hear this kind of claim at all), a party can explicitly or implicitly waive their right to object to the court hearing the case. Minimum contacts can be established by consent where a party signs a contract with a forum selection clause, agreeing to litigate in a specified forum. [6]

Under the Federal Rules of Civil Procedure, a party who wishes to object to the court's jurisdiction must first sign a clause stating that they agree on the matter and will follow all laws/ rules imposed by the state and/or country, or lose the ability to raise such an objection. Furthermore, a court may request that a party provide evidence that its contacts do not rise to the level which would allow the court to have jurisdiction. The Supreme Court has held that if a party refuses to comply with such a request, the court can deem them to have waived their right to object to jurisdiction. [7]

Activities as a basis for jurisdiction

A party's activities within a state can provide the basis for that state to have jurisdiction over that party. The Supreme Court has held that the state can properly assert jurisdiction based on a party's "purposeful availment of the benefits and protections" offered by a state.

General vs. specific jurisdiction

The necessary contacts that a party must have for a state to assert personal jurisdiction may vary depending on the relationship between the contacts and the claim brought against that party. General jurisdiction exists where a court in a given state has jurisdiction over a defendant in that state irrespective of the nature of the claim; but if the state is alleged to have jurisdiction over a defendant because the defendant's activities in that state gave rise to the claim itself, this would be specific jurisdiction.

For example, if a Florida orange grower were to breach a promise to deliver a bushel of oranges to a buyer in Alabama, the breach of that agreement would be sufficient for Alabama courts to assert specific jurisdiction, even if the Florida grower had no other contacts with Alabama, and had never even set foot there. The lone contact of a promise to deliver something to a state is enough to give the state jurisdiction over disputes arising from the breach of that promise. (The mere presence of a contract is not enough to establish specific jurisdiction – Burger King Corp. v. Rudzewicz—something else is needed, maybe if there had been subsequent deliveries.) On the other hand, if one were to sue the Florida orange grower in Alabama for some matter other than that contract, the court would have to determine whether it could exercise general jurisdiction.

In Helicopteros Nacionales de Colombia v. Hall , [8] a helicopter crash caused the death of four Americans in Peru. The Supreme Court found that the state of Texas could not assert general personal jurisdiction over the defendant company that had negotiated the purchase of helicopters and trained its pilots in Texas, because its activities in that forum were not of a continuous and systematic nature. The U.S. Supreme Court has only found general jurisdiction in one case to date, Perkins v. Benguet Mining Co. , [9] though it is routinely found at lower levels.

Presence

A party who receives service of process (formal notification that they are being sued) while physically present in a state is properly subject to personal jurisdiction in that state. [10] The justification for the rule is uncertain. In Burnham v. Superior Court of California , [11] the Court unanimously agreed that this rule was still effective, but split as to the rationale. Justice Scalia wrote for four justices who felt that the rule should apply simply because it was a continuation of a longstanding tradition. Justice Brennan wrote for four justices who felt that the rule should apply because the party was purposefully availing himself of the benefits of being in the state at that time, and that the rule was fair under modern standards because it was well known, therefore putting defendants on notice of their susceptibility to suit in a state if physically present. The ninth vote, by Justice Stevens, agreed that jurisdiction was proper, but did not endorse either Scalia's or Brennan's test.

Commercial activities

Merely placing products in the "stream of commerce" is insufficient to provide minimum contacts with the states where the products end up. The defendant must make an effort to market in the forum state or otherwise purposefully avail himself of the resources of that state. [12] However, since only four of the nine Supreme Court Justices joined the opinion that required a defendant to do more than place his products in a "stream of commerce," some lower courts still rule that doing so is adequate for a court to exercise personal jurisdiction.

Claims arising from the tort of defamation are treated by a different standard. [13]

Internet activities

Courts have struggled with the Internet as a source of minimum contacts. Although not determinately established by the Supreme Court, many courts use the Zippo test, [14] which examines the kind of use to which a defendant's website is being put. Under this test, websites are divided into three categories:

  1. passive websites, which merely provide information, will almost never provide sufficient contacts for jurisdiction. Such a website will only provide a basis for jurisdiction if the website itself constitutes an intentional tort such as slander or defamation, and if it is directed at the jurisdiction in question;
  2. interactive websites, which permit the exchange of information between website owner and visitors, may be enough for jurisdiction, depending on the website's level of interactivity and commerciality, and the number of contacts which the website owner has developed with the forum due to the presence of the website;
  3. commercial websites which clearly do a substantial volume of business over the Internet, and through which customers in any location can immediately engage in business with the website owner, definitely provide a basis for jurisdiction.

Property as a basis for jurisdiction

The Supreme Court has held that the mere fact of ownership of property within a state is not sufficient to provide minimum contacts for a court to hear cases unrelated to that property. [15] However, the property alone provides a sufficient contact for a court having jurisdiction over that geographic area to adjudicate claims relating to the ownership of the property, or relating to injuries which occurred there. In that case, the jurisdiction exercised by the court is referred to as in rem jurisdiction (i.e. jurisdiction over the thing), instead of in personam jurisdiction.

The U.S. Congress has enacted legislation which declares internet domain names to be property for the purposes of such jurisdiction. Therefore, when a webpage infringes a trademark, the owner of the trademark can sue in any jurisdiction where the webpage can be viewed – but only for the remedy of transferring ownership of the webpage to the trademark-holder.

Notes

  1. ↑ The word haled means to summon or compel a person to respond in court.

Related Research Articles

Personal jurisdiction is a court's jurisdiction over the parties, as determined by the facts in evidence, which bind the parties to a lawsuit, as opposed to subject-matter jurisdiction, which is jurisdiction over the law involved in the suit. Without personal jurisdiction over a party, a court’s rulings or decrees cannot be enforced upon that party, except by comity; i.e., to the extent that the sovereign which has jurisdiction over the party allows the court to enforce them upon that party. A court that has personal jurisdiction has both the authority to rule on the law and facts of a suit and the power to enforce its decision upon a party to the suit. In some cases, territorial jurisdiction may also constrain a court's reach, such as preventing hearing of a case concerning events occurring on foreign territory between two citizens of the home jurisdiction. A similar principle is that of standing or locus standi, which is the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case.

Shaffer v. Heitner, 433 U.S. 186 (1977), is a United States corporate law case in which the Supreme Court of the United States established that a defendant's ownership of stock in a corporation incorporated within a state, without more, is insufficient to allow that state courts to exercise jurisdiction over the defendant. The case set forth a framework for evaluating when a defendant will be deemed to have minimum contacts with the forum state sufficient for the exercise of jurisdiction to be consistent with due process under the Fourteenth Amendment.

International Shoe Co. v. Washington, 326 U.S. 310 (1945), was a landmark decision of the Supreme Court of the United States in which the Court held that a party, particularly a corporation, may be subject to the jurisdiction of a state court if it has "minimum contacts" with that state. The ruling has important consequences for corporations involved in interstate commerce, their payments to state unemployment compensation funds, limits on the power of states imposed by the Due Process Clause of the Fourteenth Amendment, the sufficiency of service of process, and, especially, personal jurisdiction.

<i>Quasi in rem</i> jurisdiction

A quasi in rem legal action is a legal action based on property rights of a person absent from the jurisdiction. In the American legal system the state can assert power over an individual simply based on the fact that this individual has property in the state. Quasi in rem jurisdiction does not have much function in the United States any longer. However, in very specific cases, quasi in rem jurisdiction can still be effective.

Long-arm jurisdiction is the ability of local courts to exercise jurisdiction over foreign defendants, whether on a statutory basis or through a court's inherent jurisdiction. This jurisdiction permits a court to hear a case against a defendant and enter a binding judgment against a defendant residing outside the jurisdiction concerned.

Burger King v. Rudzewicz, 471 U.S. 462 (1985), is a notable case in United States civil procedure that came before the Supreme Court of the United States addressing personal jurisdiction.

World-Wide Volkswagen Corp v. Woodson, 444 U.S. 286 (1980), is a United States Supreme Court case involving strict products liability, personal injury and various procedural issues and considerations. The 1980 opinion, written by Justice Byron White, is included in the first-year civil procedure curriculum at nearly every American law school for its focus on personal jurisdiction.

Personal jurisdiction in Internet cases refers to a growing set of judicial precedents in American courts where personal jurisdiction has been asserted upon defendants based solely on their Internet activities. Personal jurisdiction in American civil procedure law is premised on the notion that a defendant should not be subject to the decisions of a foreign or out of state court, without having "purposely availed" himself of the benefits that the forum state has to offer. Generally, the doctrine is grounded on two main principles: courts should protect defendants from the undue burden of facing litigation in an unlimited number of possibly remote jurisdictions, and courts should prevent states from infringing on the sovereignty of other states by limiting the circumstances under which defendants can be "hailed" into court.

<i>Zippo Manufacturing Co. v. Zippo Dot Com, Inc.</i> U.S. District Court ruling establishing the Zippo "Sliding Scale" test

Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, was a decision by the United States District Court for the Western District of Pennsylvania finding that a court has personal jurisdiction over a website originating in a different territory, if the website is accessible to Internet users in the court's territory. The case is a landmark opinion regarding personal jurisdiction for courts deciding Internet-oriented disputes, and it is one of the most frequently cited Internet law precedents.

<i>Cybersell, Inc. v. Cybersell, Inc.</i>

Cybersell, Inc. v. Cybersell, Inc. was a trademark infringement case based on the use of an internet service mark. The United States District Court for the District of Arizona was asked to review whether the allegedly infringing use of a service mark in a home page on the World Wide Web suffices for personal jurisdiction in the state where the holder of the mark has its principal place of business. The Cybersell holding illustrated that passive websites do not establish personal jurisdiction outside the state in which they are based.

Attaway v. Omega, 903 N.E.2d 73, was a decision by the Indiana Court of Appeals in which the Court found personal jurisdiction over an out-of-state defendant who bought a car on eBay then rescinded payment but returned the automobile at buyer's expense.

<i>Bensusan Restaurant Corp. v. King</i> American legal case

Bensusan Restaurant Corp. v. King, 126 F.3d 25, is a 1997 United States Court of Appeals for the Second Circuit case that helped define the parameters of personal jurisdiction in the Internet context, specifically for passive websites that only advertise local services. The opinion, written by Judge Ellsworth Van Graafeiland, affirmed the United States District Court for the Southern District of New York's holding that defendant Richard B. King's Internet website did not satisfy New York's long-arm statute requirements for plaintiff Bensusan Restaurant Corporation to bring a trademark infringement suit in New York. The District Court's decision also likened creating a website to merely placing a product into the stream of commerce, and held that such an act was insufficient to satisfy due process and personal jurisdiction requirements.

<i>Toys "R" Us, Inc. v. Step Two, S.A</i>

Toys "R" Us, Inc. v. Step Two, S.A was a case in the United States Court of Appeals for the Third Circuit which set precedent in this circuit for its application of the "Zippo" test in determining the validity of a claim to personal jurisdiction based on the interactivity of a website. This case was presented as an appeal to a ruling from the District Court which denied Toys "R" Us' request for jurisdictional discovery and dismissed the case over lack of personal jurisdiction. The appellate court held that the denial of jurisdictional discovery was in error, and remanded the case to be reconsidered once this discovery took place.

<i>Mavrix Photo, Inc. v. Brand Technologies, Inc.</i> Case in American intellectual property law

Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218, is a case in American intellectual property law involving personal jurisdiction in the context of internet contacts.

<i>CompuServe, Inc. v. Patterson</i>

CompuServe, Inc. v. Patterson was a court case heard before the Sixth Circuit Court of Appeals which held that contacts and contracts negotiated through the Internet with a party in a different state were sufficient to grant personal jurisdiction in that state. In particular, the court held that Patterson's use of storage, electronic transmission of files, and advertisement through CompuServe's network in Ohio were sufficient to grant Ohio personal jurisdiction over Patterson.

<i>Illinois v. Hemi Group LLC</i> 2010 personal jurisdiction case

Illinois v. Hemi Group, LLC, 622 F.3d 754, was a personal jurisdiction case in which the United States Court of Appeals for the Seventh Circuit affirmed the United States District Court for the Central District of Illinois' ruling finding personal jurisdiction based on Internet transactions. In the initial filing, the state of Illinois sued Hemi Group LLC (Hemi) for selling cigarettes to Illinois residents over the Internet in violation of state law and for failing to report those sales in violation of federal law. Hemi moved to dismiss the suit for lack of personal jurisdiction, but the district court found that the Internet transactions provided a basis for Hemi to be sued in Illinois.

<i>Boschetto v. Hansing</i> Diversity jurisdiction case

Boschetto v. Hansing, 539 F.3d 1011 is a diversity jurisdiction case brought by California resident, Paul Boschetto ("Boschetto") against certain private corporations with their principal place of business in Wisconsin. The case involved the determination of the question whether the sale of an item via the internet consumer-to-consumer trading portal, eBay, by the defendants in Wisconsin to the plaintiff in California, was sufficient to confer personal jurisdiction over a non-resident defendant in the buyer's forum state. At the first instance, the United States District Court for the Northern District of California decided against Boschetto and held that a lone “eBay sale consummated with a California purchaser, was insufficient to establish jurisdiction over any of the defendants.” Boschetto appealed against the decision to the United States Court of Appeals for the Ninth Circuit. The appellate court affirmed the decision of the district court and denied relief to Boschetto. The Court became the first federal appellate court to address whether personal jurisdiction in a forum state could be established when an out-of-state resident makes use of an intermediary website accessible by forum-state citizens.

<i>Hearst Corp. v. Goldberger</i>

Hearst Corp. v. Goldberger was a case out of the U.S. District Court for the Southern District of New York in which the court developed a reasoned framework to determine the proper exercise of personal jurisdiction in cases involving activity in cyberspace. The court determined that it lacked jurisdiction over an out-of-state defendant whose website was accessible to New York residents.

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), was a conflict of laws case decided by the United States Supreme Court.

<i>Maritz, Inc. v. Cybergold, Inc.</i>

Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328, was a personal jurisdiction case in which the United States District Court for the Eastern District of Missouri ruled that operator of website, for which server was located in California, was subject to personal jurisdiction in Missouri under "commission of a tortious act" provision of Missouri's long-arm statute, §506.500 RSMo. The case was brought before the court by Marits, Inc. alleging that the Cybergold's use of mark for advertising internet site was a trademark infringement. Cybergold moved to dismiss the suit for lack of personal jurisdiction, but the court found that the operational nature of the Internet based service provided a connection for Cybergold to be sued in Missouri.

References

  1. ↑ International Shoe Co. v. Washington , 326 U.S. 310 (1945).
  2. ↑ McGee v. International Life Insurance Co. , 355 U.S. 220 (1957).
  3. ↑ Gray v. American Radiator & Standard Sanitary Corp. , N.E.2d. 176: 761. 1961.{{cite journal}}: Missing or empty |title= (help)
  4. ↑ World-Wide Volkswagen Corp. v. Woodson , 222 U.S. 286 (1980).
  5. ↑ Calder v. Jones , 465 U.S. 783 (1984).
  6. ↑ See The Bremen v. Zapata Off-Shore Company , 407 U.S. 1 (1972); Carnival Cruise Lines, Inc. v. Shute , 499 U.S. 585 (1991).
  7. ↑ Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee , 456 U.S. 694 (1982).
  8. ↑ Helicopteros Nacionales De Colombia v. Hall , 466 U.S. 408 (1984).
  9. ↑ Perkins v. Benguet Mining Co. , 342 U.S. 437 (1952).
  10. ↑ Pennoyer v. Neff , 95 U.S. 714 (1878).
  11. ↑ Burnham v. Superior Court of California , 495 U.S. 604 (1990)
  12. ↑ See World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286 (1980); Asahi Metal Industry Co. v. Superior Court of California , 480 U.S. 102 (1987).
  13. ↑ See Keeton v. Hustler Magazine, Inc. , 465 U.S. 770 (1984), and Calder v. Jones , 465 U.S. 783 (1984).
  14. ↑ Zippo Manufacturing Co. v. Zippo Dot Com, Inc. . See also Cybersell, Inc. v. Cybersell, Inc.
  15. ↑ See Shaffer v. Heitner , 433 U.S. 186 (1977).
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