Shaffer v. Heitner (1977) (in rem Greyhound action sequestering property)

a.       Facts- Δ is Greyhound Corp and some of its officers, while Π is a shareholder of Greyhound Corp. Π sued Δ for causing it to be liable for an action in Oregon. Π filed for motion to sequester Δ’s (officer’s) property, which are stock shares and options. Δs argued that minimum contacts, according to International Shoe were not met, and the property cannot be attached to the suit (because it has nothing to do with the suit).

b.      Procedural History- Del. Ct of Chancery found for Π, Del. Sup Ct affirmed. U.S. Sup Ct reversed.

c.       Issue- Whether a Δ needs to have minimum contacts with a forum State, as in International Shoe, for that State to exercise in rem Jx.

                                                              i.      And if so, must the contact with the forum State be related to the cause of action?

d.      Holding- Yes, a Δ must have minimum contacts with a forum State for that State to exercise in rem Jx over the Δ. Further, the cause of action must be related to the contact with the forum State.

                                                              i.      Concurrence: Stevens, J.- Majority should not eliminate in rem (where property is only contact with forum State)

                                                            ii.      Concur./Dissent: Brennan, J.- Officers have “purposefully availed” themselves of Del. laws. Del. has interests in protecting its corps from suits by non-resident shareholders. Δs benefitted from incorporation in Del.

e.       Rule- When the only contact a Δ has with the forum State is owning property within that State, the forum State cannot exercise personal Jx unless the contacts satisfy International Shoe (purposeful availment).

f.       Rationale-

                                                              i.      In rem is not a proceeding against a property, it is a proceeding against a person’s interest in that property.

                                                            ii.      Having property in a State does NOT give the State the power to exercise Jx over claims not related to the property---the person must also pass the International Shoe test

                                                          iii.      If it is unconstitutional to exercise Jx of a person directly, then it is unconstitutional to exercise Jx indirectly

g.      Notes-

                                                              i.      It is unlikely for a Ct to exercise Jx over a Δ whose only contact with the forum State is owning property. Even if the property is connected to the suit, International Shoe minimum standards must still be satisfied.

                                                            ii.      Del.’s sequestration statute is meant to “compel foreign Δs to answer actions in Del.”

                                                          iii.      The stock was not the subject matter of the case, the fiduciary breach was the subject matter (Case is NOT about property)

                                                          iv.      It’s quasi in rem to compel the Δs to answer in Del.

                                                            v.      Two types of quasi in rem

1.      Type I: Π is seeking to secure a pre-existing claim in the subject property; and to quiet all claims to said property

2.      Type II: To use the property to enforce a judgment

                                                          vi.      MAIN POINT: International Shoe (minimum contacts) must still be applied to in rem and quasi in rem actions

1.      If you have property in a State, there are minimum contacts that subject you to the Jx of that State

                                                        vii.      We cannot do away with quasi in rem (but check to make sure that “quasi in rem” is still around)

Pavlovich v. Superior Court (2002) (DVD decryption software)

a.       Facts- Π is a company that encrypts DVDs for motion picture corporations, located in Cal. Δ is computer engineer located in Texas. Δ developed a code that defeated Π’s encryption software. Δ had a “feeling it was illegal” and “heard of a company that encrypts DVDs”. Π then sued for injunctive relief for infringement. Δ argued that Jx is improper, Π responded by saying Δ’s harm was done in CA.

b.      Procedural History- Trial Ct held Jx was proper, Cal Sup Ct reversed

c.       Issue- Whether knowledge of [potential] harm is sufficient to establish “express aiming” for Jx purposes

d.      Holding- No, knowledge of [potential] harm is NOT enough to satisfy “express aiming” requirements to establish Jx

                                                              i.      Dissent: By intentionally uploading decryption code on site, Δ was NOT targeting a specific person or corp, but an entire industry. Δ also knew that these industries were in CA, thus Δ “knew” that his acts would have harm in CA

e.       Rule- To exercise Jx over a non-resident Δ, Π must show contacts that establish “expressly aimed” conduct towards the forum State

f.       Rationale- Two ways to establish personal Jx:

                                                              i.      Merely asserting that a Δ “knew or should have known” harm would be done in forum State is NOT enough

                                                            ii.      Π must point to contacts that establish “expressly aimed” conduct towards the forum State

g.      Notes-

                                                              i.      Ct applied the Effects Test (3 part test)

1.      Intentional tortious action –He intentionally made the site

2.      Harm in forum State- harm was felt in CA

3.      Δ has knowledge that harm would be felt in forum State- But did he have knowledge that the harm would be felt in CA?

                                                            ii.      It was questionable whether he knew that a company would sue him in CA

Burger King v. Rudzewicz (1985)

a.       Facts- P is Burger King and D is a franchisee thereof. P is headquartered in FL, while D is headquartered in MI. When D’s business was doing badly, D was unable to continue payments to P. P then filed suit, in FL, against D for various claims. D objected to the idea of FL Cts having Jx over him, because D’s business was in MI, and the Burger King office he dealt with was also in MI.

b.      Procedural History- Trial Ct found for P, Ct of appeals found for P, U.S. Sup Ct reversed and remanded

c.       Issue- Whether a Ct can exercise personal Jx over a non-resident D over a claim arising from a contract that was between a company’s headquarters, assuming D has the means to answer in the foreign Ct AND was given notice that he may have to answer in the foreign Ct, if a suit arises

d.      Holding- Yes, the FL Ct had proper Jx over D’s

                                                              i.      Dissent-

1.      Ds did NO business in FL, nor did they reasonably expect their products to go to FL

2.      Ds primarily dealt with the MI office

3.      The term in the contract was “boilerplate” language and should not be the control in this issue

4.       

e.       Rule- When a business relationship is established by agreement and the executed contract expressly states the forum of choice, the forum State may exercise Jx over the D, unless by doing so would result in grave hardship…thus violating the Due Process Clause

f.       Rationale- The executed contract included a clause that expressly stated the forum of choice (FL) and the body of law to be adhered to.

g.      Notes:

                                                              i.      The term in the contract constituted “purposeful availment” of the benefits and protection of FL law

                                                            ii.      The Ds “reached out” beyond MI for “the manifold benefits that would derive from the affiliation with a nationwide organization”.

                                                          iii.      The “choice of law” provision in the contract was relevant

                                                          iv.      Rudzewicz and McShara were NOT in a legal relationship…only an informal relationship, McShara considered employee

                                                            v.      One purpose of personal Jx is to increase predictability

1.      Companies can predict where they might be subject to Jx

2.      Companies can know where they need to hire attorneys/buy insurance

                                                          vi.      Why would FL have an interest in having Jx over D?

1.      There can be sufficient contacts in more than one State…and a suit can be brought in any one of those States

2.      Because D has purposefully availed itself of the FL laws

                                                        vii.      You have to “reach out” to establish a minimum contacts

                                                      viii.      Minimum also protects from weak and random suits

                                                          ix.      Balancing Test:

1.      Purpose is to determine reasonableness

2.      Considerations for test-

a.       Burden on D

b.      Forum State’s interest

c.       P’s interest in convenient forum

d.      Interest of interstate system in efficiency (the Cts on a whole want to spend the least amount of money)

e.       Shared interest of fundamental social policy

3.      “Adhesion” contract- take it or leave it contract…the terms cannot be changed

Calder v. Jones (1984) (libel in FL towards CA…Jx in CA)

a.       Facts- P is an actress and Ds an editor and writer. D produced a libelous article in FL about P, who lives in CA. P sued in CA Ct for damages (IIED). D challenged on the basis that CA Ct’s do NOT have Jx over D, a resident of FL.

b.      Procedural History- Ds appealed CA’s Jx over them

c.       Issue- Whether CA Ct has Jx over non-resident D’s for claims arising from a libelous article directed toward a CA resident.

d.      Holding- Yes, CA can have Jx over a non-resident D for an article directed towards a CA resident

e.       Rule- Any State can exercise personal Jx over anyone whose intentional acts, of which are the claim of suit, reach somebody of that State

f.       Rationale- Even though Ds are employees of a magazine, this does NOT preclude them from answering claims arising from their intentional acts

                                                              i.      Ex: A welder working for a boiler company may NOT have to answer when the boiler explodes, but he might have to answer if he intentionally tampered with the boiler

g.      Notes:

                                                              i.      Although D’s did NOT go to CA, their actions resulted in harm in CA. CA was the focal point of the claim. Damage was suffered in CA, her reputation was affected in CA, and the article was directed towards her who lived in CA

                                                            ii.      Effects- “Brunt of the harm” test: Harm was done in CA (she wouldn’t be able to get a job in CA)

1.      Targeting: there were intentional actions that were expressly aimed at CA

                                                          iii.      3 parts “Effects” test

1.      Intentional act

2.      Whether the effect of the harm was in the forum State

3.      Whether the D intends OR knows the harm will be effected in the forum State

World-Wide Volkswagen Corp. v. Woodson (1980) (car crash in OK, jurisdiction not found)

a.       Facts- P bought a car from D in NY. P then traveled across the country. During said travel, P’s car got into an accident an in Oklahoma. P then brought suit in an OK Ct against D for product liability. D challenged OK’s personal jurisdiction over D.

b.      Procedural History- Trial Ct found for P, P appealed to U.S. Sup Ct on personal jurisdiction basis

c.       Issue- Whether an OK Ct can exercise personal jurisdiction over a non-resident business (person) in a suit, when the only connection said person has with OK is that a car it sold in NY has traveled to OK

d.      Holding- No, OK Ct’s cannot exercise in personam jurisdiction over a non-resident person where the person’s ONLY connection is the fact that it sold a car in NY that eventually made its way to OK

                                                              i.      Dissent-

1.      International Shoe “minimum contacts” is outdated. Now people can travel across the country in hours; the “inconvenience” to D’s is almost gone and D’s products can be anywhere in the country in the matter of hours

2.      Cars are intended to travel across States therefore dealers foresee sufficient “contact” with other States

3.      We need to distinguish between commercial and personal affairs when determining Jx

4.      Since hospitalization, accident, evidence, and witnesses were all in OK, OK forum would be MOST practical place

e.       Rule- A consumer’s “unilateral” act of bringing a company’s products in a certain State does NOT allow that certain State to exercise personal jurisdiction over a D

f.       Rationale-

                                                              i.      D did NOT make use of or enjoy OK laws, so why should they answer to OK laws?

                                                            ii.      They do NOT advertise in OK or reasonably think ANY of their advertisements will reach OK

                                                          iii.      POLICY: If we allow somebody to sue in the State which they bring the chattel to, then in effect we are saying that the company has appointed an agent of process in its chattel

1.      Ex. Ability to be served travels with the sold chattel

                                                          iv.      “Foreseeability” is not a sufficient measure to apply the Due Process Clause….just because we can foresee cars moving from State to State does NOT mean that Ct’s can exercise jurisdiction over a dealer in EVERY State

g.      Notes:

                                                              i.      Businesses should contemplate whether their products will sufficiently establish contact with other States. If so, they should curb the risk by way of insurance or sever all ties with State completely.

                                                            ii.      3 things must be analyzed when considering personal Jx in accordance to the Due Process Clause:

1.      Inconvenience for the D

2.      Inconvenience for the P

3.      State’s interest in having its own law resolve the controversy

                                                          iii.      “Stream of commerce”- through commercial interaction, a product is bought into another State

                                                          iv.      Why didn’t they sue in Federal Ct?

1.      Because no Federal question was presented

2.      No diversity Jx (with Seaway and World-Wide)

                                                            v.      Minimum contacts of D v. State sovereignty (reasonable and fairness)---balance these factors

1.      State sovereignty gives the State the ability to have its own judicial system

2.      The Ct is balancing the interest of D against the interest of a State

3.      OK has an interest in this case

                                                          vi.      The majority said that there wasn’t “continuous and systematic contact”