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The Reach of Doing Business Jurisdication and Transacting Business Jurisdiction Over Non-U.S. Individuals and Entities

Professor Paul R. Dubinsky
New York Law School
Executive Summary

Courts in the United States commonly exercise personal jurisdiction over defendants, especially defendant business entities, based on either of two related concepts: doing business jurisdiction and transacting business jurisdiction. Both of these concepts emerge from the view that individuals or entities that carry on a certain level of business activity within the United States or directed at the United States should be subject to the jurisdiction of U.S. courts to answer for any harms they may have caused in the course of such activity. Although this view of business activity as giving rise to personal jurisdiction did not generally emerge in the United States until the 20th century, it is now accepted by the courts of all fifty states and also the federal courts.

As explained in more detail in Part III of this paper, doing business jurisdiction is one type of what is called "general jurisdiction" and is reserved for defendants who conduct regular, extensive, and frequent business activities in the United States. Often such defendants have employees or agents based in the U.S. Usually they generate substantial revenue from U.S. business activities. Such defendants also may, but need not, own property or operate facilities in the United States, even though their principal place of business or site of incorporation is elsewhere. Once a U.S. court finds that a foreign defendant is doing business in a particular state of the United States for jurisdictional purposes, it means that this defendant may be sued in that state on any cause of action, whether or not the claim relates to the business activities that actually were being conducted in the U.S. jurisdiction.

Transacting business is one type of what is called "specific jurisdiction" and is both a broader and a more limited concept. It is broader in that it enables U.S. courts to exercise jurisdiction over foreign defendants based in some cases on a single transaction in the United States, directed at the United States, or with a U.S. customer or supplier. Thus the plaintiff will not be required to show as high a level of business activity as is necessary to establish doing business jurisdiction. At the same time, transacting business is a more limited concept in that it permits a court to exercise jurisdiction only with respect to claims that arise out of or relate to the business transacted. Unlike with doing business jurisdiction, a foreign defendant hailed into court under a transacting business statute cannot be sued in the United States based on acts that are completely unrelated to its activities in the United States or directed at the United States.

As Part III explains, not all transactions will give rise to transacting business jurisdiction. Nor are the approaches to this concept taken by the fifty states of the U.S. uniform. Rather, a lawyer trying to provide advice to a client on this subject would need to consult the law of the specific state involved and would usually have to do a highly fact-intensive analysis, looking at past court precedents for guidance.

What follows is not intended to be an exhaustive analysis of doing business and transacting business jurisdiction. It seeks to be an introduction to the topic for those unfamiliar with this aspect of American procedural law. It does so first by sketching the historical development of these concepts. Part III then summarizes the relationship between doing business/transacting business jurisdiction and the Due Process Clause of the U.S. Constitution. Part IV provides an overview of the 50 separate state statutes governing doing business and transacting business jurisdiction and how these statutes treat contractual and tortious activities. Part V then attempts to give the reader some sense of how these state statutes are applied in practice by courts. It does so by addressing two specific industries, travel and insurance, that have received much attention in the case law and also by discussing the subject of jurisdiction based on the acts of agents, subsidiaries, and distributors. It should be noted that this is a small sample of the number of specific applications that could be discussed. There are literally many thousands of reported U.S. court decisions on this subject, covering a wide range of economic activity. This paper seeks merely to distill the main principles of this area of American law and to serve as an introduction for those who wish to study specific industries or applications in greater depth.

Finally, as this paper seeks to make clear, one advantage of U.S. ratification of a Convention on Jurisdiction, Recognition, and Enforcement of Foreign Judgments from the viewpoint of the foreign defendant is that it might bring greater predictability to this area of American law. Currently, it is difficult to predict with complete accuracy whether a foreign defendant will fall within the reach of a U.S. court under either a doing business or transacting business standard. Because the subject is governed largely by state law, the answer in any given case depends on the nuances of a specific state jurisdictional statute and the court decisions interpreting it. In contrast, a treaty on the subject would immediately introduce a significant and uniform federal law component to the subject. By defining the types of business activities that give rise to jurisdiction over a defendant, the Convention could provide clear guidance to non-U.S. parties of when an enforceable judgment could be entered against them and when they can be reassured that their activities fall below the threshold that would place their assets at risk in litigation in the United States. Moreover, if the Convention were to include a definition of doing business or transacting business jurisdiction, although that definition would not preempt state statutes on the subject, nonetheless over time it likely would cause some state legislatures to revise their statutes in light of the Convention. In addition, it probably would cause U.S. courts interpreting these statutes in light of the Convention to view with disfavor the more aggressive assertions of doing business and transacting business jurisdiction that conflict with the Convention.

I. General Introduction: The Impact of Federalism on American Concepts of Personal Jurisdiction

The fact that the United States is a federal state has several important ramifications for the subject of this paper. First, it means that the U.S. has two sets of courts: state courts and federal courts. Some types of controversies must be heard in state court; some must be heard in federal court; and some can be heard in either. Second, the law governing a given case can be either state law or federal law depending on the subject matter of the dispute. The areas of contracts and torts, for instance, are governed largely by state law, which consists of the state constitution, the statutes of the state legislature, the regulations of state administrative bodies, and the decisions of the state's courts. Other areas of law, such as antitrust and civil rights, are largely federal law, which consists of the federal constitution, congressional statutes, rules enacted by federal agencies, and the decisions of federal courts. Yet other areas of law, such as environmental law or banking, are extensively governed by both federal and state law.

Whether a suit is heard in state court or in federal court often has nothing to do with whether the applicable law is state law or federal law. The U.S. Constitution and federal statutes provide that certain suits can sometimes be heard in federal court based on the citizenship of the parties.1 For example, suits between citizens of different states of the U.S. are often heard in federal court if the amount of money in controversy between them is large enough.2 In such instances, the federal court will apply the same substantive law as a state court located in the state where the federal court sits. For example, a federal court located in Miami hearing a breach of contract suit between a Florida citizen and a citizen of Illinois will apply whichever choice of law rule that a Florida state court would apply to the controversy.

Non-U.S. parties can find themselves in either state court or federal court. Under some circumstances, a foreign party has a right to have its case heard in a federal court, such as in cases in which it litigates solely against U.S. parties.3 But the suit will go to state court if the controversy is between two or more non-U.S. parties and, according to most court decisions, in multiparty litigation where there are non-U.S. parties on both sides of the controversy. When a foreign government is a party to a suit against U.S. citizens, it has a right to be heard in federal court. See 28 U.S.C. 1332 (a)(4).

The state and federal procedural rules that govern jurisdiction must be consistent with the federal constitution, which contains two provisions that are especially relevant for jurisdictional matters. The Due Process Clause of the 5th Amendment to the U.S. Constitution limits the power of the federal government. It provides that no person shall be "deprived of life, liberty, or property, without due process of law." Supreme Court cases have long held that enforcement of a civil judgment against a person -- whether a natural person or a legal person -- by a court that did not properly have jurisdiction over the defendant is a violation of this constitutional provision.6 The Due Process Clause of the 14th Amendment limits the power of individual states of the United States. It provides that no state may "deprive any person of life, liberty, or property, without due process of law." In practice this means that even in litigation in which all parties are U.S. persons, a court of one state may not enter a judgment against a citizen of another state if it lacks jurisdiction over that person.

The concept of due process is fundamental to understanding this area of U.S. law and is discussed at greater length in the accompanying paper by Professor Ronald Brand.7

II. Historical Development of Personal Jurisdiction in the United States: From Territoriality to Minimum Contacts

Until the 20th century, courts in the United States chiefly asserted in personal jurisdiction over defendants based on "tag jurisdiction" -- the physical presence of the defendant within the geographic jurisdiction of the court at the time the defendant was served with process. The principle supporting this practice was, according to Justice Oliver Wendell Holmes, that "the foundation of jurisdiction is physical power . . . " McDonald v. Mabee, 243 U.S. 90, 91 (1917).8 Hence a person domiciled in New York, but served with legal process while temporarily visiting Massachusetts could be required to defend the action in Massachusetts, even in the absence of substantial ties between the defendant and the state of Massachusetts.9

Prior to the beginning of this century, "[t]he view of most courts in [the United States] was that a court simply could not exercise in personam jurisdiction over a nonresident who had not been personally served with process in the forum." Burnham v. Superior Court of California, 495 U.S. 604, 616 (1990). This 19th century view of personal jurisdiction and the requirements of the Due Process Clauses of the U.S. constitution was supported by the Supreme Court's decision in Pennoyer v. Neff, a suit for the recovery of land located in the state of Oregon and brought against a defendant who resided in another state and who had not been served with process in Oregon. In that case, a judgment for the plaintiff was overturned on appeal by the Supreme Court because the initial court had not validly obtained personal jurisdiction over the absent defendant. As the Court put it, "[p]rocess from the tribunals of one State cannot run into another State, and summon parties there domiciled to leave its territory and respond to proceedings against them." 95 U.S. 714, 727 (1877).10

Throughout the 19th century, the Pennoyer view of personal jurisdiction and due process prevailed and governed not only state-court practice, but also the practice of federal courts. Hence, the personal jurisdiction of a federal court in the Pennoyer era shared two characteristics with a state court located in the same state: (1) a federal court in Texas, for instance, could assert personal jurisdiction over a defendant who had been served with process while in Texas, even if the defendant had been in Texas for just a brief period of time, and (2) that same court, like a Texas state court, could not obtain jurisdiction over a defendant physically absent from Texas, even one with extensive contacts with the state of Texas.11

The first part of this two-part formula -- the viability of tag jurisdiction -- was reaffirmed by the Supreme Court as recently as 1990. In Burnham v. Superior Court of California, a man residing in New Jersey was served with a divorce petition while temporarily visiting his children in California, where his wife lived. The husband's only relevant contacts with the state of California were a few visits there to see his children. Nonetheless, the Supreme Court upheld a California state-court judgment against the defendant. In Justice Scalia's words, "[t]he 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 . . . " 495 U.S. at 619.

However, the second aspect of Pennoyer -- the inability of courts to gain jurisdiction over physically absent defendants -- has dramatically changed over the course of this century. With the increase of interstate commerce and communications at the turn of the century, courts began to see cases in which non-resident defendants had carried on extensive business activities within the jurisdiction but could not physically be served there. On the other side of these suits were individuals lacking the resources to litigate out of state and alleging that they had suffered severe harm by the acts of non-resident corporations.

Faced with this situation, American courts began to uphold personal jurisdiction based on service of process outside the jurisdiction so long as jurisdiction was supported by certain other contacts with the state. Domicile was one such contact. A defendant habitually living in one state could be sued in that state even if, at the time suit was brought, he or she temporarily resided elsewhere and had to be served outside of the state. See e.g., Milliken v. Meyer, 311 U.S. 457 (1940). Nationality was another. A U.S. court could obtain jurisdiction over an American citizen living abroad based purely on that person's nationality. See Blackmer v. United States, 284 U.S. 421 (1932).

Consent was yet another avenue. A court could acquire jurisdiction over a defendant who had consented to the court's exercise of jurisdiction, even if absent such consent, the court would not be able to adjudicate the case. Consent could take several forms. A defendant could give actual consent. For example, in signing a contract, the defendant could agree to a clause agreeing to litigate any contract dispute in a specific court that otherwise would not have jurisdiction over him. Consent could also be implied. For example, a non-resident who files suit in the jurisdiction may be deemed impliedly to have consented to the court's jurisdiction over any counterclaims or crossclaims asserted against him in the same litigation. See Adam v. Saenger, 303 U.S. 59 (1938).

This notion of implied consent greatly expanded as courts struggled to meet the needs of a growing interstate economy. They adopted the view that if a state theoretically could require a non-resident to consent to the jurisdiction of its courts before being permitted to use certain state facilities (such as highways), then use of such facilities could be the basis for inferring the defendant's consent to the jurisdiction of that state's courts to adjudicate highway accidents. While formally adhering to Pennoyer and its central idea that physical presence was the basis of jurisdiction, courts began evading Pennoyer's restrictiveness and expanding the concept of "consent" so that it often was a fiction. American courts began exercising jurisdiction under the consent rationale even where the defendant's actual consent clearly had not been given.

At the close of World War II, the Supreme Court decided International Shoe Co. v. Washington, 326 U.S. 310 (1945), a landmark case that partly overturned Pennoyer and ushered in the era of jurisdiction based on "substantial contacts" with the forum. In doing so, International Shoe made unnecessary the fiction of implied consent, and it dramatically changed the way that American courts conceptualized personal jurisdiction. In adjudicating personal jurisdiction issues, American courts today rarely rely on cases decided before International Shoe.

International Shoe was a case in which jurisdiction could not easily be obtained over the defendant under the Pennoyer precedent. The suit was by the state of Washington against a Delaware corporation that manufactured shoes outside of Washington state and sold them to Washington residents through approximately a dozen employees based in Washington state. Washington sued the company for its failure to pay unemployment compensation contributions to the state. The Supreme Court upheld jurisdiction. Rather than attempt to ground jurisdiction on some notion of implied consent -- e.g., by employing people in Washington and seeking customers there, the company implicitly had consented to the jurisdiction of Washington courts -- the Court expressly stated that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions' of fair play and substantial justice" 326 U.S. at 316.12

Since International Shoe, the Perkins13 case, and an influential scholarly article that appeared in the Harvard Law Review in 1966,14 American courts have increasingly conceptualized personal jurisdiction over defendants as falling into two categories: specific jurisdiction and general jurisdiction. Specific jurisdiction over a party means that a court can adjudicate only a narrow set of claims against that party -- claims that arise from or somehow relate to the party's contacts with the jurisdiction. Claims that do not relate to the party's contacts with the forum fall outside the court's jurisdiction. For example, an insurance company, with its state of incorporation and principal place of business outside the jurisdiction, may insure property located within the forum state. Courts within the forum state likely will have specific jurisdiction over the company for the purpose of adjudicating claims brought by owners of the insured property. These same contacts with the state -- entering into insurance contracts with state residents and insuring property located in the state -- would not, however, support jurisdiction over a suit brought by the company's shareholders alleging that officers of the company had embezzled funds.

In contrast, general jurisdiction would support the latter type of claim. When a U.S. court has general jurisdiction over a defendant, it means that it has jurisdiction to resolve any kind of action against the defendant, even claims that do not relate to the forum. However, to support this much wider assertion of adjudicative authority, there must be a finding that there exist "continuous and systematic contacts" between the defendant and the forum state. These contacts must be more extensive than those required to uphold specific jurisdiction. For instance, merely selling products within the jurisdiction or advertising in the jurisdiction normally will not suffice. On the other hand, these contacts need not be so extensive as being incorporated in the jurisdiction or having one's principal place of business there.

Once a court has general jurisdiction over a defendant manufacturer, for example, a suit against the defendant for a faulty product can be heard in that jurisdiction even though the product was not made there and the plaintiff was not injured there.

To put things into perspective, it is important to point out that in the large majority of cases the power of American courts to adjudicate a controversy is based on specific rather than general jurisdiction.15 This is mostly because plaintiffs tend to sue where the accident occurred or the injury arose or the contract was breached. Suit is filed in a jurisdiction having some relationship to the actions giving rise to the controversy. Second, the legal standard for asserting specific jurisdiction is more precise than that for general jurisdiction. Consequently, in cases where the plaintiff alleges jurisdiction based either on specific jurisdiction or general jurisdiction, courts will often evaluate the specific jurisdiction allegations first and only address the general jurisdiction allegations if it finds that specific jurisdiction does not exist.

III. The Basic Approach: State Longarm Statutes and a Due Process Analysis

Whether suit is brought in state court or federal court and whether the underlying cause of action is based on state law or federal law, the basic, two-step approach to a personal jurisdiction problem is similar. If the cause of action is derived from state law,16 the court will first look at the state procedural rule or statute that the plaintiff relies upon for jurisdiction.17 The court will interpret the state rule and determine whether it authorizes jurisdiction over the defendant under the circumstances of the case. If it does not, the case is dismissed. If it does, the court then proceeds to a second level of analysis -- whether the statute's attempt to assert jurisdiction complies with the Due Process Clause of the 14th Amendment to the U.S. Constitution?18 If it does not, again the case is dismissed.

The analysis is similar when the cause of action is based on federal law, such as in cases alleging violations of federal statutes regulating antitrust, securities, copyright, civil rights, patent laws or other federal statutes. The court first examines the federal statute or procedural rule relied upon by the plaintiff. In interpreting this rule, if the court finds that it was not intended to provide jurisdiction in the case under review, then the case is dismissed. Otherwise, the court proceeds to a second level of analysis -- whether the federal rule relied upon is consistent with the Due Process Clause of the Fifth Amendment to the U.S. Constitution.19 In conducting this latter inquiry, the court may find that the due process standard under the Fifth Amendment is different than under the Fourteenth Amendment, since the question before the court is whether the foreign defendant comes within the adjudicative power of the United States as a whole, rather than within that of any one particular state. In certain cases, the federal rules of civil procedure authorize worldwide service of process or direct the court to look at the defendant's contacts with the United States as a whole. In cases in state courts, only the defendant's contacts with a particular state will be at issue.

A. Supreme Court Due Process Jurisprudence on Doing Business Jurisdiction

Doing business jurisdiction is probably the most common form of general jurisdiction, at least with respect to out-of-state business entities. This form of jurisdiction allows a state court to adjudicate claims against business entities incorporated or based elsewhere so long as the defendant carries on such extensive and wide-ranging business activities within the forum as to be present there for practical purposes.

In determining how extensive and wide-ranging a defendant's activities within the state are, courts look only to the sum total of a defendant's activities within that particular state, not to activities elsewhere. This means that foreign business entities planning their business affairs in the United States and concerned about being susceptible to doing business jurisdiction, need to think of individual states of the United States as jurisdictionally separate, at least for purposes of doing business jurisdiction. Such foreign entities should consider the degree and quantity of their activities in particular states, with the knowledge that their activities elsewhere in the United States will not be relevant under a doing business analysis. For example, in a suit that is brought in Florida based on an assertion that a defendant is doing business there, a defendant's extensive contacts with California will not contribute to a determination of whether or not the defendant is doing business in Florida.

It is difficult to summarize with precision the types and quantities of business activities within a state of the United States that will support a conclusion that the defendant is "doing business" there and will be required to defend a lawsuit unrelated to its activities in that state. The phrase most frequently repeated by the Supreme Court is "continuous and systematic general business contacts" within the jurisdiction.20

Post-International Shoe, there have been two main Supreme Court cases on doing business jurisdiction: Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952) and Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984).

Perkins involved a suit in an Ohio state court against a mining company incorporated in the Philippines. The lawsuit was brought by one of Benguet's shareholders for unpaid dividends and failure to issue stock certificates to the shareholder. The defendant's business chiefly consisted of mining gold and silver in the Philippines. During the Japanese occupation its operations in the Philippines had been closed down and its president had moved to Ohio, where he carried on a limited amount of the company=s business activities. The company's main business, mining, was entirely suspended during much of the war.

The Supreme Court framed the jurisdictional issue as follows: could the state of Ohio "entertain a cause of action against a foreign corporation, where the cause of action arose from activities entirely distinct from its activities in Ohio." 342 U.S. at 447. Focusing on Benguet's "continuous and systematic" corporate activities in Ohio during the war, the Supreme Court held that Ohio courts could do so. Id. at 448.

The Court referred to the following activities: The company had held directors' meetings in Ohio. During the war, the president, and principal stockholder had maintained an office in Ohio, where he had kept the company's files and from which he had sent correspondence relating to the company and its employees. The company had also maintained bank accounts in Ohio, from which it drew salary checks for three employees. Its transfer agent was an Ohio bank. The company's president "discharged his duties as president and general manager" in Ohio during the war, and acting from Ohio, he dispatched funds to rehabilitate the company's properties in the Philippines at the end of the war. 342 U.S. at 448.

The Court's general method in Perkins is typical of subsequent "doing business" cases. The opinion does not single out any one or two of the defendant's activities in Ohio as being dispositive. Rather, the opinion aggregates all of the various activities in Ohio and arrives at a point -- difficult to define with precision -- when the defendant's activities are "continuous and systematic."

In the Helicopteros case, the claim arose from a helicopter crash in Peru. A wrongful death action was brought by a U.S. citizen in a Texas court against the Columbian corporation that had owned the helicopter and that had provided helicopter transportation to a consortium of U.S. businesses building an oil pipeline in Peru. Helicopteros's only relevant contacts with the state of Texas were that it had bought that helicopter and others from a Texas manufacturer, that its chief corporate officer had gone to Texas to negotiate the helicopter purchase, and that its pilots had been trained in Texas by the helicopter manufacturer. The contracts under which the helicopter transportation was provided stated that the residence of all parties was in Lima, Peru.

The Supreme Court, overruling the Texas courts, held that under these circumstances the defendant could not be hailed into court in Texas on a cause of action that did not arise out of its activities in Texas.21 In certain respects, the opinion in Helicopteros reads like that in Perkins; the court counts up each of the defendant's contacts with the forum state, weighs both the significance of each of these contacts and their cumulative force, and then pronounces whether or not these contacts are "continuous and systematic." In the course of denying jurisdiction in Helicopteros, however, the court provided some guidance as to what sorts of activities count for very little. For example, in evaluating the fact that the defendant had accepted checks from a Texas helicopter manufacturer that had been drawn on a Texas bank, the Court stated that the "unilateral activity of another party or a third person is not an appropriate consideration." 466 U.S. 408, 417 (1984). Reviewing the contract negotiations in Texas, the Court found that "[p]urchases and related trips, standing alone, are not a sufficient basis for a state's assertion of jurisdiction." Id., citing Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S. 516 (1923) (Brandeis, J.), a case in which the court had concluded that a small retailer based in Tulsa, Oklahoma did not subject itself to the jurisdiction of New York courts merely by repeatedly buying merchandise from suppliers in New York, either by mail or in person. The pilot training in Texas did not "in any way enhance" the nature of [the defendant's] contacts with Texas," because it was "part of the package of goods and services purchased." 466 U.S. at 418.

The general picture that emerges from Perkins and Helicopteros is that American courts are hesitant to assert doing business jurisdiction over defendants who are not incorporated in the state, are not licensed to do business in the state, do not have a major facility in the state, and do not operate through an agent in the state.22 This is especially so when the claim does not relate to the forum state. Part V below summarizes in greater detail how lower federal courts and state courts have construed doing business jurisdiction in the context of specific industries and types of activities.23

B. Supreme Court Due Process Jurisprudence: Transacting Business

Whereas the doing business case law seeks to determine what types and levels of business activity amount to "continuous and systematic general business contacts," the cases evaluating jurisdiction under the transacting business standard focus on "minimum contacts." That is, the question in transacting business cases is what is the bare minimum business contacts between the defendant and the forum state that will justify the courts of the forum state in requiring a foreign individual or entity to defend an action based on those contacts. The reason for this shift in focus, to a lower level of contacts with the forum state is, of course, because the stakes are lower; transacting business jurisdiction based on minimum contacts can only support actions that relate to the defendant's contacts with the forum. Unlike "continuous and systematic" contacts that support doing business jurisdiction, minimum contacts cannot support general jurisdiction, or the bringing of claims against the defendant that have nothing to do with the defendant's contacts with the forum.

Any analysis of the exercise of specific jurisdiction or transacting business jurisdiction by a U.S. court invariably involves a discussion of World-Wide Volkswagen v. Woodson, 444 U.S. 286 (1980), which is discussed at length in Working Document No. 43 at pp. 18-21. In that case, which involved highly tenuous ties between the defendant and the forum state, the Supreme Court found that the defendant's contacts with the state of Oklahoma fell beneath the very minimum level that could support jurisdiction consistent with the Due Process Clause of the 14th Amendment. Hence, even though the Oklahoma courts could find that the Oklahoma longarm statute authorized them to exercise jurisdiction over the defendant under the facts of that case, nonetheless the U.S. Supreme Court overturned the result, finding that the contacts present in that case fell below the bare minimum required by the Due Process Clause of the 14th Amendment. Put in other words, the U.S. Supreme Court ruled that such an exercise of legislative and judicial authority by the state of Oklahoma against a foreign defendant would be in violation of the Constitution of the United States.

The facts in World-Wide Volkswagen were that the plaintiffs bought an automobile in New York and subsequently drove the car across the country to the state of Oklahoma, where it became involved in an accident. The plaintiffs alleged that the car was defective, and that the defect caused the accident and the injuries that ensued. They sued the regional distributor of the car, who had its offices in New York and who distributed cars to retail dealers in the states of New York, New Jersey, and Connecticut. They also sued the specific retail dealer from whom they had purchased the car in New York.

The wholesale distributor, World-Wide Volkswagen, did not sell any cars in Oklahoma, did not advertise in Oklahoma, and did not play any part in causing the car to be driven to Oklahoma. The latter act followed from unilateral actions taken by the plaintiffs.

Confronting these facts, the Court articulated several seminal principles that have subsequently come to dominate due process analysis in specific jurisdiction cases. First, in order to establish the court's jurisdiction, the plaintiff must satisfy a two-part test. Part one of this test is that the defendant must have purposefully availed itself of the privilege of conducting activities within the forum state. There must be some quid pro quo; the defendant must have obtained some benefit from the forum state in order to justify imposing on it the burden of defending a lawsuit in the forum. Part two of the test requires the plaintiff to demonstrate that even if the defendant purposefully availed itself of some benefit of conducting activities in the forum state, the exercise of jurisdiction must also be "reasonable."

Applying this test to the facts of World-Wide Volkswagen, the Court ruled that the Oklahoma courts could not exercise jurisdiction over the defendant. The distributor had not purposefully availed itself of the benefits of conducting business activities in Oklahoma. Although it could foresee that a car that it sold in New York could be driven to Oklahoma, this type of foreseeability was insufficient. Purposeful availment, according to the Court, entails efforts more clearly targeted at the forum state, such as advertising in that market or selling products regularly to that market.24 Moreover, such an exercise of jurisdiction would not be reasonable under the Court's balancing test. That test led the Court to balance such factors as the burden on the defendant, the forum State's interest in adjudicating the dispute (which is highter when the dispute is primarily of a local nature or touches upon important state social policies), the plaintiff's interest in obtaining convenient and effective relief, and the interests of the U.S. judicial system in obtaining an efficient resolution of controversies. In World-Wide Volkswagen, the Court concluded that the burden on the defendant was great in comparison to the relatively small interests of the state of Oklahoma in adjudicating the controversy and the plaintiffs' interest in litigating in Oklahoma.

In sum, World-Wide Volkswagen established the principle that in order to be consistent with the Due Process Clause of the Fourteenth Amendment, the exercise of transacting business jurisdiction must be based on some purposeful activity by the defendant seeking the benefit of serving a particular market. Unilateral acts by consumers who move products into a new jurisdiction do not satisfy this standard.

In the context of contractual relationships, Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (see Working Doc. No. 43 at 24) demonstrated that entering into a contract with a resident of the forum state and choosing the law of the forum as the law governing the contractual relationship were sufficient to constitute purposeful availment. The contract in Burger King was a franchise agreement, and the suit concerned an alleged breach of the agreement. In that case and subsequently, American courts have tended to view a defendant's act of signing a contract with a choice of law clause selecting the forum's law as a deliberate act taking advantage of a specific benefit of the forum state, namely its legal rules, which are presumed to have been part of the bargain that the parties negotiated over. In addition, Burger King, like World-Wide Volkswagen, established that a defendant need not ever physically enter a state in order to be sued there.

Finally, in Asahi Metal Industry Co., Ltd. v. Superior Court of Calif., 480 U.S. 102 (1987), a divided Court shed some light on two aspects of World-Wide Volkswagen's two-part test. First, in evaluating purposeful availment, the plurality opinion implied that it was insufficient to support jurisdiction for a defendant product manufacturer merely to have sold its products in the "stream of commerce," even if it was aware that a certain percentage of those products typically wound up in California. The defendant's actions must be more directed at the forum state. Hence in Asahi, a Japanese manufacturer of tire valves who sold the valves outside of the U.S. to a Taiwanese manufacturer of motorcycle-tire tubes who then sold the tubes to customers in California had not purposefully availed itself of some benefit of transacting business in California. Second, the exercise of jurisdiction by the California court in that case would not have been reasonable. As a result of settlement efforts, all that remained of that case were the contribution claims of the Korean tire manufacturer against the Japanese valve manufacturer. Under these circumstances, the plurality opinion concluded that California had little interest in resolving the controversy and that it would be unreasonable to require these two remaining foreign parties to litigate their claims in a U.S. court.

IV. Analysis of State Longarm Statutes and Doing Business Statutes

In the aftermath of International Shoe, state legislatures in the United States began enacting statutes and procedural rules directing their courts to assert personal jurisdiction over non-residents. One of the first and most influential of these statutes was the Illinois longarm statute, enacted in 1955. Many other states followed suit, some following the Illinois approach, others departing from it. In 1963, the Commissioners on Uniform State Laws25 put forward a model longarm statute26 and encouraged all states to enact it and thereby bring about uniform treatment of the subject of personal jurisdiction over nonresidents. Since then approximately 20 states either have followed or borrowed extensively from the approach of this uniform act.

Currently, all fifty states have enacted some kind of longarm statute.27 Although there are many minor variations among these laws, the statutes generally fall into three main categories. First, approximately 33 states have longarm statutes that list specific categories of activities that shall be deemed to subject a nonresident defendant to the personal jurisdiction of the state's courts. Another 6 states fall into a second category of states that have enacted statutes that empower their courts to assert jurisdiction over nonresidents up to the limits permitted by the Due Process Clause.28 Hence in these states, a personal jurisdiction problem is a one-step analysis; if the Due Process Clause of the U.S. Constitution would permit jurisdiction over the defendant, then no other requirement need be satisfied. Third, the remaining eleven states have statutes that are a hybrid of the previous two approaches.29 These statutes list specific activities, such as transacting business or committing tortious acts, and state that with respect to other activities, the courts of the state may exercise jurisdiction up to the limits of due process.

A number of states have statutes separate from the longarm statute that define when a nonresident shall be deemed to be doing business within the jurisdiction for purposes of general jurisdiction.30 The doing business jurisdiction of many other states has been developed by case law and not by statute. Yet a third group of states has amended their doing business statutes so as to incorporate activities that would ordinarily be thought of as transacting business or some other activity giving rise to specific jurisdiction.31

The trend in the past decades has been for states to expand the reach of their longarm statutes. For example, in the last five years the states of Arkansas and Nevada have changed their longarm statutes. Previously these statutes contained an enumerated list. Now they extend personal jurisdiction to the full limits of the Due Process Clause. The trend toward increasingly expansive jurisdictional provisions, however, is moderated by the willingness of courts under the doctrine of forum non conveniens to dismiss actions either to the courts of other states or other countries.32

In differentiating "doing business" from "transacting business," courts have focused on differences in frequency and continuity. As one court in Texas put it: "'Doing business' in the state imports a carrying on of business of the corporation for the purposes of its organization, while the 'transaction of business' in the state rather imports the idea of isolated transactions in the line of the purposes of its creation." Austin Fireproof Warehouse Transfer Co. v. Faltinson, 144 S.W. 2d 905 (Tex. Civ. App. 1940). See also Braband v. Beech Aircraft Corp., 51 Ill App. 3d 296 (1977); Harco. v. Ithaca Gun Co. 309 F. Supp. 585 (D. Utah 1969).

A. Jurisdiction Based on Contractual Acts -- Relatively few of the state longarm statutes expressly address which aspects of entering into a contractual relationship will subject a nonresident to jurisdiction. Delaware, for example, provides that any nonresident, who "in person or through an agent . . . contracts to supply services or things in th[e] State" is subject to specific jurisdiction.33 The majority of states take a different approach. These states have a longarm statute that contains a catchall phrase providing specific jurisdiction over nonresidents who "transact business" in the state. The state's courts are thus left with the task of articulating through case law which sorts of contractual and other activities constitute "transacting business" within the meaning of the longarm statute. This section seeks to provide an overview of which activities performed by nonresidents in the course of a contractual relationship are typically found by courts to constitute "transacting business."

Contractual activity can take many forms. Nonresidents may contract to supply goods to buyers in the forum state. They may also contract to buy goods from sellers located in the forum state. In both of these circumstances, negotiation, contract execution, and delivery of the goods can take place without the nonresident ever stepping foot inside the forum state. Contracts can also pertain to services. In the case of a nonresident agreeing to provide services to a buyer within the forum state, by definition either the nonresident or its agent will enter the forum state in connection with the contract. Insurance and mortgage lending contracts comprise what can be seen as a third category. If the insurer or the lender is the nonresident it may never physically enter the state but nonetheless its contractual duty may focus on something -- such as a piece of real estate or an insured risk -- that is thought physically to be located in the state.

One generalization that can be made about the thousands of state and federal court decisions on personal jurisdiction based on contract-related acts is that American courts attach special importance to whether or not the nonresident defendant ever physically entered the state for such purposes as negotiating the contract, inspecting goods or facilities, or receiving some form of training. Where neither the defendant nor its agents ever entered the state, the likelihood of a court sustaining specific jurisdiction is reduced, and the likelihood of there being general jurisdiction is greatly reduced. In fact the understanding that many courts have of "systematic and continuous" business activity is such as largely to preclude cases in which the defendant had no physical contact with the state.

For example, in a recent federal appeals court case from the Eighth Circuit involving two very large commercial litigants, the court in Minnesota Mining and Manufacturing Co. v. Nippon Carbide Industries Co., 63 F.3d 694 (8th Cir. 1995) greatly relied on a series of negotiations held in Minnesota. There the court upheld personal jurisdiction over a Japanese defendant for its alleged breach of a settlement agreement, even though these were its only contacts with Minnesota and even though the agreement itself did not pertain to an ongoing business relationship but rather was an effort to settle separate litigation relating to patent infringement.

A second generalization that is largely born out by the case law is that for a given set of "contacts" with the state, American courts are more likely to assert jurisdiction over defendants who supply goods or services to buyers within the state than over nonresidents who purchase goods or services from sellers located within the state. Indeed, some longarm statutes expressly or implicitly distinguish between the two cases. Most courts have upheld jurisdiction over the nonresident supplier of goods or services if there are two physical nexuses to the state: some amount of contract negotiation or solicitation took place within the state, and the contract called for the goods or services to be provided within the state.

The large majority of cases hold that a buyer entering into a single contract for the delivery of goods or the performance of services does not thereby become subject to the personal jurisdiction of the state in which the seller is located. Where the buyer is a consumer, several courts have based this result on due process grounds. Where the buyer and seller are of more equal bargaining power, several courts have nonetheless justified the same result by noting that it would not be in the interests of the forum state to discourage out-of-state or foreign buyers from buying products produced within the state.34

When the contract is concluded purely by telephone or fax, the situation is less clear. Some jurisdictions hold that jurisdiction can be sustained purely based on the destination to which the goods were to be shipped or the place in which services were to be provided. Courts in other jurisdictions find such contacts insufficient.

Finally, courts deciding contract disputes routinely attach importance to choice of law provisions and choice of forum clauses in the contract. Choosing to have a dispute resolved under the law of a U.S. jurisdiction is widely interpreted to be a "purposeful availment" of the benefits of transacting business in the forum. In United Airlines, Inc. v. ALG, Inc., 873 F. Supp. 147 (N.D. Ill. 1995), the court sustained jurisdiction over Tajik Air Limited for breaching its guarantee of an aircraft lease agreement. In that case, the Illinois choice of law and forum provisions were in the underlying lease agrement, but not in the separate guarantee agreement, but the court nonetheless concluded that the guarantee of an obligation governed by Illinois law and to be litigated in Illinois courts constituted minimum contacts with the state.

B. Jurisdiction Based on Tortious Acts -- Almost all of the state longarm statutes confer personal jurisdiction over nonresidents based on certain of their tortious acts. Though the specific language of these statutes varies, section 1.03(a)(3) & (4) of the Uniform Interstate and International Procedure Act is representative. It provides that:

(a) A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a [cause of action] [claim for relief] arising from the person's . . .

There is an important body of case law applying these formulations to product liability actions, with the seminal case being decided by the Illinois Supreme Court in Gray v. American Radiator & Standard Sanitary Corp., 176 N.E. 2d 761 (Ill. 1961). In that case an Ohio manufacturer of component parts sold parts to a manufacturer in Pennsylvania, which incorporated these components into water heaters. The water heaters were widely distributed throughout the United States, including Illinois, where one malfunctioned and caused injury. The Illinois Supreme Court upheld jurisdiction over the component manufacturer based on the latter's having delivered its products into the stream of commerce with the expectation that they would be purchased by consumers in Illinois.

This formulation, also known as the "stream of commerce theory," was soon followed by many other states. For example, in McCombs v. Cerco Rentals, 622 S.W.2d 822 (Tenn. Ct. Appeals 1981), a Tennessee appellate court interpreted the Tennessee longarm statute (which extends to the limits of due process) as conferring jurisdiction over a French crane manufacturer whose crane had been sold in North Carolina and then used in Tennessee, where it eventually caused injury. According to the McCombs court, "it is not unreasonable nor unjust to hold the defendant answerable when the defendant has voluntarily placed its products into the channels of national commerce for ultimate use in another state and those channels have carried the product to Tennessee where it has caused damages. This holds true even where the product has entered the state through an independent middleman." Id. at 825.

It is not entirely clear whether the stream of commerce theory articulated in McCombs and similar state cases is fully consistent with the limits imposed on that theory by the United States Supreme Court's interpretation of the Due Process Clause. Two cases discussed above require further mention.

The court in World-Wide Volkswagen significantly limited the stream-of-commerce theory. The "mere foreseeability" that a product could find its way into the forum and cause injury was not a sufficient basis for jurisdiction. What was required was some effort by the manufacturer or distributor to serve, directly or indirectly, the market for its products in the forum state, such as by placing its products in the stream of commerce with the expectation that they would be purchased by consumers in the forum state, rather than wind up there as a result of the "unilateral activity" of the plaintiffs. Hence, in the World-Wide Volkswagen case, the foreseeability that one of the defendants would purchase a car in New York and drive it to Oklahoma was not enough. The defendant had not targeted the Oklahoma market and had obtained no benefits from the state of Oklahoma.

Similarly, Asahi is at odds with the notion that a manufacturer can be susceptible to transacting business jurisdiction merely by injecting its products into the stream of commerce with the knowledge that a certain percentage of these products typically end up been consumed in the forum state. Like World-Wide Volkswagen, the Supreme Court's plurality opinion in Asahi suggests that these older state cases may be incorrect to the extent that they permit the exercise of jurisdiction over defendant producers who have not taken some more targeted action directed at marketing or otherwise benefiting from the forum market.

V. Analysis of Specific Activities and Industries: The final portion of this paper seeks to convey a more concrete sense of how the statutory and constitutional principles discussed above are applied by state and lower federal courts in the United States. In doing so, this Part focuses on two specific industries and some typical problems that present themselves in questions of jurisdiction litigated by parties in these industry. A larger survey of a full range of industries and substantive areas of law is beyond the scope of this Paper.

A. Hotels and Travel -- American courts have reviewed a large number of cases in which an American plaintiff brings suit in a U.S. court against the owner or operator of a hotel tour company, or cruise ship located outside the United States. In the typical fact pattern, the American plaintiff is injured abroad allegedly because of the negligence or breach of contract of the foreign provider. Usually this provider has done some degree of advertising in the United States. The question for the court is whether these advertisements within the jurisdiction constitute "transacting business" such as to provide personal jurisdiction over the defendant.

The textbook rule in such cases is that "mere solicitation" alone will not render the defendant susceptible to jurisdiction. So for example, in Rye v. Atlas Hotels Inc., 566 N.E. 2d 617 (Mass. App. Ct. 1991), a Massachusetts appellate court ruled that a California hotel company did not transact business in Massachusetts by advertising in magazines that were distributed in Massachusetts and receiving telephone calls from Massachusetts via a toll-free line that it had maintained and advertised. Similarly, in Wedeman v. Cunard Line Ltd., 380 N.E. 2d 932 (Ill. App. Ct. 1978), the activities of the Cunard Line in promoting its cruises through the activities of its employees and through travel agents in Illinois did not amount to transacting business. New York courts reached the same conclusion in Ziperman v. Frontier Hotel of Las Vegas, 374 N.Y.S. 2d 697 (N.Y. App. Div. 1975), where the defendant advertised a toll-free telephone number in local New York telephone books.

However, once the defendant takes steps beyond "mere solicitation" to provide service to potential customers in the state, jurisdiction may be upheld. A leading case is Frummer v. Hilton Hotels International, Inc., 19 N.Y. 2d 533 (1967), decided by New York's highest court. In Frummer, the court found that Hilton U.K. (a British corporation) had been doing business in New York through the Hilton Reservation Service, which had a New York office, a New York bank account, and a New York phone number. The court also attached special importance to the fact that the Service was able to make and confirm room reservations at the London Hilton, thereby doing "all the business which Hilton (U.K.) could do were it here by its own officials." Id. at 854. In addition, Hilton U.K. and the Hilton Reservations Service were owned by a common corporate parent. As a result, that case held that New York courts had general jurisdiction over Hilton U.K. and thus could adjudicate claims that did not arise from the New York contacts, such as the plaintiff's claim that he had sustained injury while staying at a Hilton Hotel in London because of the defendant's negligence.

Perhaps the most far-reaching approach to these "injured tourist" cases is that adopted by the Massachusetts courts. Those courts have interpreted "transacting business" under the Massachusetts longarm statute to extend to any act or contact in Massachusetts that is a "but for cause" of the plaintiff's injury. In Nowak v. Tak How Investment Ltd., 899 F. Supp. (D. Mass. 1995), the court applied this standard to find jurisdiction over a Hong Kong hotel based on a drowning death in the hotel's swimming pool. The court concluded that the hotel's solicitations within Massachusetts, including faxes specifically sent to the decedent, set in motion a chain of reasonably foreseeable events resulting in the death.

Most other states do not apply nearly so expansive an approach as Massachusetts in these cases, and the courts of several other states have specifically rejected the Massachusetts approach.

B. Parent/Subsidiary Relationships -- Frequently companies serve a market with the help of other entities ranging in closeness from independent distributors, to subsidiaries, to agents and branches located in the United States. If these subsidiaries or agents do business or transact business under state longarm statutes, does this mean that the parent company or principal falls within the jurisdictional reach of the longarm statute as well? Put another way, will the activities and contacts of the subsidiary or agent be imputed to the parent or principal for jurisdictional purposes?

The answer is clearest in the case of independent distributors. In Kuenzle v. HTM Sport-und Freizeitgerate, 102 F.3d 453 (10th Cir. 1996), a U.S. federal appellate court ruled that the Austrian manufacturer of ski bindings was not doing business in Wyoming by virtue of the acts of an independent distributor of its equipment.

In the case of subsidiaries, U.S. courts usually respect the distinctiveness of separately incorporated entities for both jurisdictional purposes and for issues of substantive liability. Hence, "[j]udicial jurisdiction over a subsidiary corporation does not of itself give a state judicial jurisdiction over the parent corporation. This is true even though the parent owns all of the subsidiary's stock."35 And a parent corporation generally is not liable for the acts or omissions of its subsidiary.

There are however, important exceptions to this general rule. This paper will focus on two. First, a defendant may come within the reach of the jurisdiction of U.S. courts by being the alter ego of a related corporate entity. Second, jurisdiction may be upheld based on a finding that the U.S. entity is the agent of the foreign entity. In both cases, the relevant law is almost entirely case law.

The alter ego approach is similar to piercing the corporate veil in other contexts; if two corporate entities do not in fact function at arms length, then the debts and liabilities of one may in certain cases be the responsibility of the other. The rationale for exercising jurisdiction in these cases is that the parent exercises such control over the subsidiary that they are not really separate and distinct; in reality thy are one and the same corporation for purposes of jurisdiction. Where the issue is personal jurisdiction, however, U.S. courts often apply a less stringent standard for veil piercing than at the substantive liability stage of proceedings. They focus not only on whether there was a failure to observe corporate formalities, whether funds where commingled, or whether a subsidiary was undercapitalized. They also consider whether the "degree of control exercised by the parent [was] greater than that normally associated with common ownership and directorship."36

To some degree, all parent corporations "control" their subsidiaries, especially their wholly-owned subsidiaries. Courts that have upheld jurisdiction over the foreign corporation based on an alter ego theory, often focus on particular indications of excess control or dominance, such as where the parent's involvement is not only with the general policy decisions of the subsidiary, but also with day-to-day operational decisions.

As the Frummer case demonstrates,37 jurisdiction over a foreign entity can also be based on a finding that it does business in the jurisdiction through an agent. Under this approach, the plaintiff need not show that the principal exercises unusual control over the agent or that there is any failure to observe corporate formalities. Rather, if the relationship between the foreign principal and the agent located in the United States is such that the principal is using the agent to perform a full array of marketing and servicing activities that the principal would ordinarily do if it were located in the U.S., this may be sufficient to support jurisdiction over the principal under either a doing business or transacting business theory.

C. Insurance -- The longarm statutes of most states contain a provision that extends personal jurisdiction to an insurer who insures a person, real property, personal property, or other risks located in the state at the time of contracting. This will be so even if the insurance contract was negotiated or executed outside the state. Usually this jurisdiction over insurers is specific; there will be jurisdiction over the foreign insurer only in connection with suits that are related to the insurance contract.

The main Supreme Court precedent in this area is McGee v. International Life Ins. Co., 355 U.S. 220 (1957), a judgment entered by a California state court against a life insurer based in Texas. The insurer's only contacts with California were that the insured resided and died in California, that the executed policy had been sent to the insured in California, and that the premiums had been mailed to the insurer from California. Otherwise, the insurer did no business in California and maintained no office there.

In upholding jurisdiction in McGee, the Supreme Court applied International Shoe to a particular kind of contract, an insurance contract. It first found that the Due Process Clause required only that the suit was based on a contract that had "a substantial connection" with the forum state. 355 U.S. at id. Next it found that "California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims." Id. Finally, it noted that while it might be inconvenient for an insurer to be amenable to suit wherever its insured resides, the inconvenience was "certainly nothing which amounts to a denial of due process." Id. at 224.

Since McGee, a number of U.S. jurisdictions have amended their longarm statutes to assert jurisdiction over any person who contracts to insure any risk located in the jurisdiction at the time of contracting. The wording of these longarm provisions dealing with insurance, however, varies significantly from state to state.

In Washington, D.C., jurisdiction may be upheld even if the person, property, or risk was not located within the jurisdiction at the time of contracting. This is so, for example, for product liability insurers. In Eli Lilly and Co. v. Home Ins. Co., 794 F.2d 710 (D.C. Cir. 1986), a federal appeals court held that a drug manufacturer facing claims that its products had caused cancer was entitled to sue its insurer in the District of Columbia, even though neither the insurer nor the insured was based there. According to the court, the contract insured against risks arising from use of the product, and this risk existed wherever the products were used. The D.C. longarm statute has thus been interpreted as granting jurisdiction where a product was moved into the District of Columbia after the time of contracting if the injury occurred in the District.

Florida has a more restrictive approach. The Florida longarm extends jurisdiction to insurers that issue policies "held by Florida residents which are issued and delivered to them in Florida." See Fla. Stat. Ann. section 626.906. In construing this provision, Florida courts have dismissed cases in which no policy was delivered in Florida, even though the insured was a Florida resident,38 and there was a foreseeable risk of a loss occurring in Florida.39

_________________________

1 In such cases, a state-law matter is litigated in federal court for the purpose of providing a more neutral forum. The federal court will apply state law, including state jurisdictional statutes.

2 28 U.S.C. section 1332 (amount in controversy must exceed $75,000). In such cases, the federal court is said to exercise "diversity jurisdiction," because the state citizenship of the parties to the dispute is diverse or different.

3 See 28 U.S.C. Section 1332(a)(2) which provides that federal district courts have jurisdiction over cases in which at least $75,000 is in dispute and the controversy is "between citizens of a State and citizens or subjects of a foreign state."

4 See, e.g., Joseph Muller Corp. Zurich v. Soc’ˇte Anonyme de Gˇrance, 451 F.2d 727 (2d Cir. 1971).

5 See, e.g., Eze v. Yellow Cab Co., 782 F.2d 1064 (D.C. Cir. 1986).

6 See, e.g., Pennoyer v. Neff, 95 U.S. 714 (1877).

7 See Special Commission on the Question of Jurisdiction, Recognition and Enforcement of Foreign Judgments, Working Document No. 43, "Due Process As a Limitation on Jurisdiction in U.S. Courts and a Limitation on the United States at the Hague Conference on Private International Law."

8 At the time Holmes was writing, the prevailing U.S. view was that courts had physical and adjudicative power completely but solely over individuals and entities found within a given geographic area.

9 Once the defendant is served with the complaint, he or she remains subject to the jurisdiction of the Massachusetts court throughout the course of the lawsuit, even after leaving the jurisdiction.

10 Pennoyer v. Neff thus established the principle that a judgment of the courts of one U.S. state is not entitled to full faith and credit by the courts of other states if it does not satisfy the requirements of the Due Process Clause. If it does not meet those requirements, it is not properly enforceable even within the State which rendered it. See Philip Kurland, "The Supreme Court, the Due Process Clause and the In Personam Jurisdiction of State Courts," 25 U. Chi. L. Rev. 569, 573 (1958).

11 In some cases federal courts sitting in diversity can maintain personal jurisdiction over defendants in cases where a state court could not. See Fed R. Civ. P. 4(k)(1)(B)(jurisdiction over defendants who are served "not more than 100 miles from the place from which the summons issues").

12 In a subsequent case, the Court clarified that although there must be minimum contacts between the defendant and the forum state, there need not be such minimum contacts between the plaintiff and the forum state. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 779 (1984) (permitting plaintiff to bring libel suit in New Hampshire even though she had "extremely limited" contacts with that state).

13 Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), discussed infra in Part III(A).

14 See Arthur von Mehren and Donald Trautman, "Jurisdiction to Adjudicate: A Suggested Analysis," 79 Harv. L. Rev. 1121 (1966).

15 See Part III, infra.

16 Because the United States is a federal state, some areas of law are governed by state law and some by federal law. The most frequent areas of civil litigation -- e.g., contracts, torts, property, corporate law, family law, trusts and estate law -- are predominantly governed by state law.

17 These state statutes are frequently called "longarm statutes" because they stretch the long arm of the state's power beyond its territory.

18 Working Document No. 43, written by Professor Ronald Brand, analyzes U.S. case law on the limits that the Due Process Clause puts on a state's attempt to assert jurisdiction over individuals and entities served with process outside the state.

19 Unlike the Fourteenth Amendment, the Fifth Amendment limits the power of the federal government.

20 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984).

21 A number of commentators have noted that this case could have been viewed as raising questions of specific jurisdiction, but was not argued in that manner by the parties.

22 For a discussion of agency relationships, see Part V, infra.

23 Those wishing to review the large number of state and federal cases on this topic should consult Robert C. Casad, Jurisdiction in Civil Actions (2d ed. 1991 & 1997 Supp.).

24 See 444 U.S. at 297-98 ("The forum state does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.")

25 The National Conference of Commissioners on Uniform State Laws was created in 1892 and consists of representatives from all 50 states, the District of Columbia, and Puerto Rico. These representatives are lawyers, legislators, judges, and law professors who meet annually and identify areas of law where states take divergent approaches and where these divergences produce undesirable results, such as inefficiencies for business, poor administration of the laws, or obstacles to interstate commerce. Typically, the Commission drafts a model statute on a subject, such as commercial law for instance, and then encourages the legislatures of all U.S. jurisdictions to enact the model law as a statute. Prior to their enactment by state legislatures, these model laws have no binding force, and the Commission has no power, other than persuasion, for securing the enactment of these model laws.

26 That model law provides in relevant part:

(a) A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a [cause of action] [claim for relief] arising from the person's

(b) When jurisdiction over a person is based solely upon this section, only a [cause of action] [claim for relief] arising from acts enumerated in this section may be asserted against him.

27 Although it is difficult to ascertain which states are most important in a jurisdictional sense from the viewpoint of non-U.S. parties, the following data sheds some light: The top ten states in terms of levels of foreign direct investment in the state are California, Texas, New York, Illinois, Ohio, New Jersey, Alaska, Florida, Louisiana, and Pennsylvania. See U.S. Dept of Commerce, Statistical Abstract of the United States 793 (117th ed., 1997) (providing data as of 1994). The top ten states in terms of the dollar-value of goods exported from the state are California, Texas, New York, Michigan, Washington, Illinois, Ohio, Louisiana, Florida, and North Carolina. Id. at table 1311 (providing data as of 1996). The top ten major customs districts for the import of goods for consumption are: Los Angeles, New York, Detroit, San Francisco, New Orleans, Chicago, Laredo, Buffalo, Houston, and Seattle. Id. at table 1309 (providing data as of 1996).

28 An example of this approach is the California statute. See California Civil Procedure Code, section 410.10 ("A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States").

29 For example, the Nebraska longarm statute provides:

A court may exercise personal jurisdiction over a person:

(1) Who acts directly or by an agent, as to a cause of action arising from the person:

(2) Who has any other contact with or maintains any other relation to this state to afford a basis for the exercise of personal jurisdiction consistent with the Constitution of the United States.

Nebraska Revised Statutes, section 25-536. See also the longarm statutes of Alabama, the District of Columbia, Illinois, Louisiana, Maine, Oklahoma, Oregon, Pennsylvania, Tennessee, and Utah.

30See, e.g., Pennsylvania Consolidated Statutes, Title 42, section 5301:

(a) General rule. -- The existence of any of the following relationships between a person and this Commonwealth shall constitute a sufficient basis of jurisdiction to enable the tribunals of this Commonwealth to exercise general personal jurisdiction over such person, or his personal representative in the case of an individual, and to enable such tribunals to render personal orders against such person or representative:

(1) Individuals. --

(2) Corporations. -- (3) Partnerships, limited partnerships, partnership associations, professional associations, unincorporated associations and similar entities. -- (b) Scope of jurisdiction. -- When jurisdiction over a person is based upon this section any cause of action may be asserted against him, whether or not arising from acts enumerated in this section. Discontinuance of the acts enumerated in subsection (a)(2)(i) and (iii) and 3(i) and (iii) shall not affect jurisdiction with respect to any act, transaction or omission occurring during the period such status existed.

31 See the longarm statutes of Iowa, Mississippi, Pennsylvania, and Texas.

32 Forum non conveniens is a common law doctrine that gives courts the discretion, once they have jurisdiction over the subject matter and the parties of a dispute, nonetheless to dismiss the action based on their judgment that it would be more efficient and more convenient for the parties and witnesses for the matter to be litigated elsewhere. In some states, the doctrine has been codified in statutory form. See Arkansas Code Ann., section 16-4-101(D) ("Inconvenient Forum: When the court finds that in the interest of substantial justice the action should be heard in another forum, the court may stay or dismiss the action in whole or in part on any conditions that may be just."). For the leading Supreme Court case applying forum non conveniens and discussing the principal factors to be considered in determining whether to dismiss a case, see Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981).

33 Delaware Code, section 3104.

34 See March Chem. Co. v. White Cross Laboratories, Inc., 339 So. 2d 398 (La. App. 1976).

35 Restatement (Second) Conflict of Laws section 52, comment b (1971).

36 Hargrave v. Fibreboard Corp., 710 F.2d 1154 (5th Cir. 1983).

37 See Part V(A), infra.

38 See e.g., Hassneh Ins. Co. of Israel, Ltd. v. Plastigone Technologies, Inc. (no jurisdiction because insurance policies were delivered to the insured in Israel).

39 See Meyer v. Auto Club Insurance Ass'n, 492 So.2d 1314 (Fla. 1986).

[end of document]

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