October Term, 2013
February 25, 2014
Today the Supreme Court issued one decision, described below, of interest to the business community.
Personal Jurisdiction—Specific Personal Jurisdiction Based On Defendant’s Actions in Forum State
Walden v. Fiore , No. 12-574
A trial court’s exercise of personal jurisdiction over a defendant is limited by the Constitution’s Due Process Clause. Today, in Walden v. Fiore, No. 12-574, the U.S. Supreme Court held that “[a] forum State’s exercise of jurisdiction over an out-of-state intentional tortfeasor must be based on intentional conduct by the defendant that creates the necessary contacts with the forum.” Accordingly, the crucial question is “whether the defendant’s actions connect him to the forum,” and not whether the defendant caused the plaintiff to sustain an injury in the forum.
This case favorably resolves an issue of vital concern to the business community. Employing the so-called “effects test” of personal jurisdiction, plaintiffs have obtained personal jurisdiction over businesses for a wide variety of claims, particularly in the product liability realm. Today, the Supreme Court has cut short that practice.
The plaintiffs in this case were professional gamblers traveling from Puerto Rico to their home in Nevada. Their route home from Puerto Rico included a layover in Atlanta. While at the Atlanta airport, the defendant, a deputized DEA officer, seized almost $97,000 from the plaintiffs on suspicion that the money was involved in the drug trade. The plaintiffs maintained that they were carrying the cash in conjunction with their work as gamblers. The defendant advised the plaintiffs that their money would be returned if they later demonstrated that it had been legitimately gained. Over the next two months, the plaintiffs provided documentation proving that the money was gained lawfully. At some point after seizing the money, the defendant also assisted in drafting an affidavit to show probable cause for forfeiture of the cash and forwarded the affidavit to the U.S. Attorney’s Office in Georgia. The plaintiffs maintained that the affidavit was false and misleading. In the end, no forfeiture complaint was filed and the funds were returned to the plaintiffs.
The plaintiffs filed suit against the defendant DEA agent in federal district court in Nevada, alleging violations of their Fourth Amendment rights. The District Court granted the defendant’s motion to dismiss the complaint, holding that his search of the plaintiffs and seizure of their cash in Georgia, accompanied by his drafting of the affidavit in Georgia, did not establish a basis for personal jurisdiction. The Ninth Circuit reversed. It held that under the “effects” test, personal jurisdiction over the defendant in Nevada did not exceed due process limits. According to the Ninth Circuit, the Due Process Clause required only that the defendant act “outside the forum state for the purpose of affecting a particular forum resident or a person with strong forum connections.”
The Supreme Court reversed. Writing for a unanimous Court, Justice Thomas held that a court in Nevada may not exercise personal jurisdiction over the defendant because the “plaintiff’s contacts with the forum State” are not the determinative factor and the defendant had “no other contacts with Nevada.” The Supreme Court made clear that “Due Process requires that a defendant be haled into a court in a forum state based on his own affiliation with the State, not based on the ‘random, fortuitous, or attenuated’ contacts he makes by interacting with other persons affiliated with the State.” Going forward, the controlling inquiry will look to “whether the defendant’s conduct connects him to the forum in a meaningful way,” and not to “where the plaintiff experiences a particular injury or effect.”
Any questions about this case should be directed to Brian D. Netter (+1 202 263 3339) or Charles A. Rothfeld (+1 202 263 3233) in our Washington office.
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