A New Guard at the Courthouse Door: Corporate Personal Jurisdiction in Complex Litigation After the Supreme Court’s Decision Quartet

Authors

David W. Ichel, Duke Law SchoolFollow

Document Type

Article

Publication Date

2018

Abstract

In a quartet of recent decisions, the Supreme Court substantially reshaped the analysis of due process limits for a state's exercise of personal jurisdiction over corporations for the first time since its groundbreaking 1945 decision in International Shoe Co. v. Washington. The Court's decision quartet recasts the International Shoe continuum of corporate contacts for which it would be "reasonable" for the state to exercise jurisdiction based on "traditional notions of fair play and substantial justice" into a more rigid bright-line dichotomy between "general" and "specific" jurisdiction: for a state to exercise general (or all-purpose) jurisdiction over any suit, regardless of the suit's connection to the state, the company must be essentially "at home" in the jurisdiction, generally requiring that the company be incorporated or have its principal place of business there. Otherwise, the court must have "specific" jurisdiction, in which the claims of each plaintiff must "arise out of or relate to" the company's contacts with the state. Justice Sotomayor issued concurring and dissenting opinions warning that the Court's new approach could seriously curtail nationwide class action and mass tort litigation involving corporate wrongdoing, particularly in cases involving foreign country corporations, multiple corporate defendants, and smaller claimants.

Given the critical importance of personal jurisdiction as a gatekeeper for access to our courts, this Article analyzes the changes to International Shoe introduced by the decision quartet as applied to class actions, mass actions, and other large-scale litigation. It concludes that the Supreme Court's decision quartet will reduce forum shopping, that there should continue to be meaningful access to the courts for nationwide or multi-state aggregate litigation, and that other options, such as state-wide only suits brought in states in which plaintiffs are injured, together with nationwide federal Multidistrict Litigation ("MDL') centralization and federal/state court coordination, will also still be available and will often present a better alternative given choice-of-law and other challenges with nationwide and multi-state actions. However, this Article also addresses the very real threats that some courts may too narrowly apply the decision quartet's new tests or apply the tests so as to insulate foreign country companies from jurisdiction. To address these threats, more flexible approaches are proposed for deserving cases with respect to both the decision quartet's "at home" requirement for general jurisdiction and the quartet's "arising out of or related to" requirement for specific jurisdiction. It is also proposed that for nationwide or multistate class actions, courts should apply a presumption that considers only the claims of the named plaintiffs for the specific jurisdiction claim connectedness requirement, rather than the claims of each absent class member, which is similar to how federal diversity jurisdiction is already tested only for the named plaintiffs in class actions, although defendants should be permitted to rebut the presumption by showing that the forum state bears insufficient connection to absent class members to satisfy the reasonableness requirement for the assertion of specific jurisdiction on a class-wide basis. Finally, addressing a troublesome topic concerning which the Supreme Court appears closely divided, it is proposed that a foreign company's systematic "fifty-state" sales targeting be treated as a “purposeful” jurisdictional contact with any state where substantial injury is caused to the plaintiff by the targeting.

Citation

David W. Ichel, A New Guard at the Courthouse Door: Corporate Personal Jurisdiction in Complex Litigation After the Supreme Court’s Decision Quartet, 71 Rutgers University Law Review 1-61 (2018)