OK, in the last post we discussed the long arm statutes of various states and if you were left with anything at all, it was that states try to exert their jurisdiction to the maximum extent possible.
Conceivably, if one reads some of the long arm statutes literally you could find yourself in court in a different state simply because you have a website that someone in that state visited.
Surely there has to be some limit to this kind of unbridled exercise of jurisdiction, because if not, we would find ourselves embroiled in lawsuit all over the country.
Actually there are some very good limitations in the form of the due process clause of the fourteenth amendment to the Constitution. Stated differently, the federal courts have developed a long history of judicial decisions that sharply limit when and how states can impose personal jurisdiction upon non-residents.
The United States is really a bit unusual compared to other countries in that the states under the Constitution retain a considerable amount of power, independent of the federal government. Because of this, as soon as interstate commerce developed in the early United States, it became quickly obvious that there were going to be conflicts between the laws of different states and even between state and federal law. There was, early on, a need to sort out where and how disputes would be resolved in situations that involved several states. With the development of railroads, which astronomically accelerated interstate commerce, the need became even greater.
A man in Colorado orders a machine that is made from steel forged in Ohio, but is assembled with other parts from Pennsylvania. The seller of the final machine is in New York. Upon delivery and installation in Colorado the machine breaks because of a crack in the steel. The buyer wants refuses to pay the balance of what he owes, and demands refund of what he has already paid. It becomes the classic case of everyone pointing fingers at everyone else, and of course no one wants to pay.
Where do you go to resolve this? Does the buyer have to go to New York? Can the seller be required to litigate in Colorado. What about the steelmaker in Ohio who had no idea the steel would end up in a machine on its way to Colorado? As you can see, the issues are endless, but to resolve this, somebody is going to end up in court outside of where they do business.
In reality, at least two states in this scenario could try to impose personal jurisdiction. Colorado because that’s where the machine ended up, and the seller knew that he was shipping to Colorado, or, New York, because the seller will argue that that was where the contract was entered into.
Early on this issue hit the U.S. Supreme Court which, in the case of International Shoe v. Washington, held that notwithstanding state long arm statutes, a state court could only exercise personal jurisdiction over a non-resident defendant that had minimum contacts with the forum state.
Of course, if you’ve been reading this blog at all, you can appreciate how that kind of decision could only result in endless litigation over issues like “what are minimum contacts”, does it matter who initiated the contact, who must the minimum contacts be with and so forth.
The result is the inevitable chain of federal court decisions, which today leave us with the premise that in order for a non-resident defendant to be subject to the jurisdiction of the courts of a state, they must not only have had minimum contacts with that states, but they must have purposely availed themselves of the right to do or conduct business in the state.
Sounds simple – but as with most things legal, it’s not.
The federal decisions, and the state’s responses in the form of different legislation have also left us with the somewhat twisted dichotomy of general versus specific jurisdiction.
We’ll talk about that and some specific considerations regarding jurisdiction soon.