An Overview of U.S. Personal Jurisdiction Law

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1 An Overview of U.S. Personal Jurisdiction Law Jasmine K. Singh Kerr & Wagstaffe LLP

2 Personal Jurisdiction Refers to court s jurisdiction over the parties to a lawsuit It is a constitutional requirement but shaped by state long-arm statutes and Rule 4 of the Federal Rules of Civil Procedure. Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons. See FRCP4(k)(1)(A).

3 Long Arm Statutes Some states have what are called long-arm statutes, which provide that the courts may exercise personal jurisdiction on any basis not inconsistent with the state or federal Constitution. See CCP Section California s statute allows the exercise of personal jurisdiction to the full extent permissible under the US Constitution. Thus, the inquiry is whether jurisdiction is appropriate under federal due process. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).

4 An Overview of Seminal Cases There are two kinds of jurisdiction: general and specific. A court may assert jurisdiction over a foreign corporation to hear any and all claims against it (referring to general jurisdiction) only when the corporation s affiliations with the state in which the suit is brought are so constant and pervasive as to render it essentially at home in the forum state. Goodyear Dunlop Tires Operations, S.A. v Brown, 131 S.Ct (2011).

5 Overview of Seminal Cases International Shoe Co. v. Washington, 326 US 310 (1945) set the stage for the exercise of jurisdiction over an out of state defendant where the defendant has certain minimum contacts with the state such that the maintenance of the suit does not offend the traditional notions of fair play and substantial justice. Jurisdiction can arise out of conduct with the forum state or where an entity has sufficient contacts with a state, out of conduct that arose somewhere else this is the distinction between general and specific jurisdiction.

6 Overview of Seminal Cases Perkins v. Benguet Consol. Mining Co. is the seminal case on general jurisdiction exercised over a foreign corporation that has not consented to suit in the forum. The defendant in Perkins, Benguet, was a company incorporated under the laws of the Philippines, where it operated gold and silver mines. Benguet ceased its mining operations in the Philippines, its president moved to Ohio, where he kept an office, maintained the company s files and oversaw the company s activities. The plaintiff, an Ohio resident, sued Benguet on a claim that did not arise in Ohio and did not relate to the corporation s activity in that State. The court held that Ohio courts could exercise general jurisdiction over Benguet because Ohio was the corporation s principal, even if temporary, place of business.

7 Overview of Seminal Cases Helicopteros, 466 U.S. 408 is also instructive. There, four US citizens died in an accident in Peru and brought suit in Texas state court against the helicopter s owner and operator, a Columbian corporation. The company s contacts with Texas were confined to sending its chief executive officer to Houston for a contract negotiation session, accepting into its New York bank account checks drawn on a Houston bank, purchasing helicopters, equipment and training services from a Texas-based helicopter company for substantial sums and sending personnel to Texas for training. Those contacts bore no relationship to the accident that gave rise to the suit. The court held that the company s Texas connections did not resemble the continuous and systematic general business contacts found to exist in Perkins. Purchases, even if at regular intervals, are not enough to warrant a state s assertion of in personal jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions.

8 Overview of Seminal Cases In the Goodyear case, the court answered the question of whether foreign subsidiaries of a United States parent corporation are amendable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum state. The case involved a bus accident outside Paris that killed two children from North Carolina. The parents brought a wrongful death suit in North Carolina alleging that the bus tires were defectively manufactured. The complaint named The Goodyear Tire and Rubber Company (Ohio corporation) and Goodyear s Turkish, French, and Luxembourgian subsidiary. Those foreign subsidiaries lacked any affiliation with North Carolina. A small number of tires manufactured by these subsidiaries were distributed in North Carolina but the court found that was not sufficient. The placement of a product into the stream of commerce may make a case for specific jurisdiction, but this does not warrant a determination that based on those ties that the forum has general jurisdiction.

9 Latest Supreme Court case: Daimler AG v. Bauman In Daimler, the court explained that the Ninth Circuit s analysis for determining whether the parent can be hailed into California centered on the question of whether the subsidiary acted as Daimler s agent for jurisdictional purposes, permitting attributing the subsidiary s California contacts to Daimler. The question was whether the subsidiary performs services that are sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporations own officials would undertake to perform substantially similar services. The Supreme Court explained, however, that even if the subsidiary was home in California and even if the subsidiary s contacts are imputed to Daimler, that is not enough. The Court explained that it is not the case that general jurisdiction can be exercised in every state in which a corporation engages in substantial, continuous and systematic course of business. The Court found that neither Daimler nor the subsidiary were incorporated in California and neither has a principal place of business there.

10 How should the various defendants defend against suit in the US? The case law instructs that we must look to each potential defendants contact with different states in the US Placing a product into the stream of commerce is not enough Minimal contacts with a state are not sufficient Focus on where an entity can be considered to be home

11 Suit Against Dance Gear, Inc. Remember this entity is incorporated in Delaware If Dance Gear Inc. s only contacts with the state of California are through its subsidiaries (namely, when those subsidiaries place products in the stream of commerce), then it is not likely that Dance Gear, Inc. will be subject to general jurisdiction in California, for the reasons explained in Daimler. Dance Gear, Inc. is not at home in CA and regardless of whether its subsidiaries conduct can be imputed to it, its affiliations with the state are not so continuous and systematic as to render it essentially at home in California. But because the company is incorporated in Delaware, suit could be brought there.

12 Suit against Las Brisas Remember that Las Brisas is incorporated in Mexico Jurisdiction would depend on Las Brisas conduct in California. We would look at things like advertising in California, travel to and training in California, location of executives, place of incorporation, principal place of business, and other contact with the state. If the plaintiffs wanted to file in the United States, they ought to determine where in the US Las Brisas makes the most contact.

13 Suit against the elevator manufacturer Remember the company is incorporated in the US. Analysis of jurisdiction would turn on the factors we have discussed. If we consider California jurisdiction, it would depend on the company s contacts with the state of California. If the company has no contact with any state in the United States, it is not likely that suit will be permitted in any state. We would need to do the same contact analysis as discussed previously.

14 Suit against elevator maintenance company Remember this is a Canadian entity The same analysis would need to take place here does the company have any contact with any states? Where is the greatest level of contact?

15 Legal Analysis The steps followed are traditionally this: Is the defendant a resident of the forum state? Did the defendant consent to jurisdiction in the forum state? If not, then determine whether general or specific jurisdiction can be found using minimum contacts analysis. Subject matter jurisdiction is also a relevant inquiry This will control whether a matter can be heard in state or federal court

16 Other Considerations Venue Under Section 1391, venue is proper wherever a defendant resides, the transaction occurred, or the court otherwise has personal jurisdiction. Where venue is improper, a court can transfer the case or dismiss it. Forum non conveniens Is the forum inconvenient to the defendant? Will turn on the plaintiff s choice of forum, whether an alternative forum is available, what private interests are at stake and what public interest are at stake. Courts will then determine whether state or federal law applies, pursuant to the Erie Doctrine.

17 THE CANADIAN LEGAL SYSTEM AND ITS PRIVATE INTERNATIONAL LAW ABA Vancouver November 17, 2014 T. J. Law, Partner Heifetz, Crozier, Law

18 Overview of the System The Courts 10 Provinces and 3 Territories, each of which has a Superior Court and a Court of Appeal. A judgment from the Superior Court can be appealed to the Court of Appeal. Supreme Court of Canada is third and final level of court. Appeal to this court from one of the Appeal courts requires leave. Leave is sought in writing to a panel of 3 of the 9 judges of the court. Case must be one of public importance, i.e. deals with an issue that is of importance to all of Canada not just the parties involved in the case, for leave to be granted. Federal Court System deals with specialized areas of law, for example immigration, Intellectual Property and Shipping.

19 Overview of the System Federal Law Constitution of Canada provides for the Federal government and the Provincial and Territorial governments. The Federal government may legislate on certain subjects, e.g. criminal law, and those laws are then the same across the country. Provincial & Territorial Law Provincial and Territorial governments may legislate on subjects of a local or private nature, e.g. property, contracts and insurance, and those laws can therefore be different in each province and territory. 9 of the Provinces and the 3 Territories use common law. Quebec uses a civil law system, based on the French Napoleonic Code, and its judges interpret the sections of the Code but also use judgments from other judges as a guide to deciding a case.

20 Private International Law Jurisdiction Simpliciter Club Resorts Ltd. v. Van Breda [2012] S.C.C. 17; Club Resorts Ltd. v. Charron [2012] S.C.C. 17 Focused on the real and substantial connection test and clarified the law of the Canadian Courts jurisdiction in an attempt to make it more predictable for parties to know whether or not a Canadian court has jurisdiction in a particular case. Jurisdiction will exist if one of the 4 connecting factors is found: a) the defendant is domiciled or resident in the province; b) the defendant carries on business in the province; c) the tort was committed in the province; d) a contract connected with the dispute was made in the province. If a defendant is contesting the Canadian court s jurisdiction it must demonstrate that the connecting factor being relied on by the plaintiff only points to a weak link between the subject of the case and Canada.

21 Private International Law Forum Non Conveniens If the court finds that one of the 4 connecting factors exists between the subject matter of the case and the defendant, the court can then consider whether Canada is the convenient forum for the case. It can only do so if the defendant raises the issue for consideration. The defendant can then demonstrate that another forum is a more appropriate one based on: the domicile of the parties, the location of witnesses and evidence, parallel proceedings, juridical advantage, the interests of both parties and the interests of justice.

22 Court Jurisdiction and Proceedings Transfer Act In some provinces there are additional factors which will allow the courts to presume that the real and substantial connection test has been met and therefore assume jurisdiction. These are in addition to the factors already set out in the Van Breda decisions and exist pursuant to the Court Jurisdiction and Proceedings Transfer Act (CJPTA) enacted in British Columbia, The Yukon, Nova Scotia and Saskatchewan. Under the CJPTA, there is the presumption of a real and substantial connection if the proceeding: Is brought to enforce or assert rights or an interest in property located in the province Concerns a deceased person s estate and property of the deceased located in the province, or property of a deceased who was ordinarily resident in the province at the time of death Concerns restitutionary obligations that, to a substantial extent, arose in the Province Is a claim for a injunction ordering a party to do or refrain from doing any act within the province, or an injunction in relation to property located in the province Is for a determination of the personal status or capacity of a person ordinarily resident in the province Is for enforcement of a court judgment or arbitral award, made in or outside the Province Is for the recovery of taxes or other indebtedness, brought by Her Majesty in right of the Province or of Canada or by a municipality or other local authority

23 Avoiding Canadian Jurisdiction Keep Company Domestic Ensure that the company is not carrying on business in Canada. Having a website on the internet that is only informational will not be considered carrying on business in Canada. Carrying in business requires an actual presence in Canada, for example an office or regular visits to the country, or the ability to transact through the website. Formation of the Contract Make sure that the contract is formed outside of Canada - based on the law that applies to the formation of the contract or the choice of law clause in the contract.

24 Avoiding Canadian Jurisdiction/Law Choice of Forum Provisions Choosing the court in which the case must take place can give a location and home court advantage. Choosing a forum does not however mean that the law of the forum must be applied. A choice of law clause should therefore also be included in the contract. Choice of Law Provisions Choosing the law that applies to the dispute can give the advantage of limiting the types of claim and the amounts of each claim that can be made. Choosing the law that applies to the dispute could lead a Canadian Court to chose another country as the most convenient place to hear the case. Arbitration At the very least choosing arbitration can keep the case confidential. Using arbitration permits the parties to choose the law and the place where the hearing will take place. Note that because Mexico is a signatory to the New York Convention, Mexican courts have the ability to enforce an arbitration decision in Mexico as if it were a court order.

25 Overview of Latest Case Law Export Packers Co. v. SPI International Transportation, 2012 ONCA 481 CANLII (Ontario Court of Appeal) Facts: Appeal by SPI of the dismissal of its third party claim against Entrepot du Nord Cold Storage ( ENC ) a Quebec company. Main Plaintiff was Export Packers (an Ontario company) which sold food products and which purchased pork and arranged for storage at ENC. Export Packers sold pork stored at ENC to a Florida company, and arranged for a shipping agent, SPI, to transport the pork. SPI in turn engaged Transvision (an Ontario company) to transport the pork. A rogue party picked up the pork from ENC, claiming it had been sent by Transvision, and absconded with the pork. Export Packers sued SPI for breach of contract and negligence, and SPI in turn added ENC and Transvision to the Ontario lawsuit as third parties, claiming ENC was negligent in releasing the pork. The motion judge stayed the third party claim against ENC because there was no real and substantial connection between it, the claim against it and Ontario. SPI appealed. Decision (unanimous): ENC did not carry on business and was not domiciled in Ontario. There was no tort committed in Ontario, as the pork was released from the Quebec warehouse, and therefore the negligence occurred in Quebec and its tort law would apply. The court acknowledged there were contracts made in Ontario, but these contracts in the underlying action (including those between Export Packers and SPI, SPI and Transvision, common carrier contract re shipping), did not serve to connect ENC to the dispute in Ontario, and none dealt with ENC s duties regarding the release of the product. ENC entered into a contract with the original seller of the pork, which had also stored the pork at a Quebec warehouse, and dealt with ENC s role as storer, but this contract stated Quebec was the forum for resolving disputes. Export Packers did not do anything to change the basis under which ENC stored the pork. SPI argued that a new presumptive factor should be recognized for third party claims, based on promoting the goals of efficiency and fairness. This was rejected and the court stated that efficiency is not enough for a presumptive factor unless there is also some factual basis for assuming jurisdiction over a foreign defendant. If there are no presumptive factors, then jurisdiction should not be assumed.

26 Overview of Latest Case Law Haufler (Litigation guardian of) v. Hotel Riu Palace Cabo San Lucas, 2013 ONSC 6044 CANLII (Ontario Superior Court) Facts: Haufler was injured during her 2006 vacation to Mexico on an ATV excursion operated by a local Mexican operator, Rancho Tours. Haufler sued the hotel and Rancho Tours. The hotel was owned by a Spanish company (Riu) that operated hotels internationally and did not market or sell rooms outside Mexico. The hotel sold blocks of rooms to a company in Spain, pursuant to a contract made in Mexico, which in turn sold the rooms to a wholesaler and the rooms were fully paid for by the wholesaler. The hotel did not receive payment for the the ATV excursion, which was purchased in Mexico, and it had no relationship with Rancho Tours. The hotel brought a motion to stay the suit based on the Ontario Superior court s lack of jurisdiction. Decision: The parties agreed that the only presumptive factor which could apply was whether the hotel carried on business in Ontario. The court allowed the hotel s motion and declined to assume jurisdiction. Advertising was not sufficient to establish that the hotel carried on business in Ontario, because in 2006 when the accident occurred, Riu did not advertise in Ontario, except in travel agent/tour operator brochures, and the court found this advertising was that of the tour operator/wholesaler, and not that of Riu. Having representatives market the Riu brand in Ontario was not sufficient to establish a business connection, because the representative did not represent this hotel specifically, and her functions included attending trade shows and visiting wholesalers, etc. At best, this amounts to the Spanish company contracting with a third party to attend in Ontario a few days a year to attend trade shows and market the Riu hotels to wholesalers, but did not demonstrate the hotel did business in Ontario. The hotel had no agency relationships in Ontario, by way of the travel wholesalers as they did not have contracting authority on behalf of the hotel. The hotel did not carry on business in Ontario via its website, as carrying on business means a real, and not just a virtual, connection and during the relevant timeframe Riu did not sell directly to tourists through the internet.

27 Overview of Latest Case Law Aleong v. Aleong, 2013 BCSC 1428 CANLII (BC Superior Court) Facts: Wife requested leave, nunc pro tunc, to serve the notice of family action and other court documents in the action on the husband in Trinidad. Husband brought an application to dismiss or stay the action. The parties were born and raised in Trinidad, moved to BC in 1970, married later that year and had three children who were born and raised in BC. The parties returned to Trinidad in 1994, giving up their BC driver's licences, club memberships, medical coverage and credit cards and they transferred property they owned in BC to their children. Between 1994 and 2001, the parties frequently returned to Canada to visit. In 2005, the wife began residing in BC fulltime. Until at least 2009, the husband made frequent trips to BC and the wife made occasional trips to Trinidad. The parties separated in 2009, according to the husband, and 2011 according to the wife. The parties had property valued in the millions of dollars, most of which was located outside of BC. The parties owned retirement savings plans and other accounts in BC. The wife commenced a claim in BC for spousal support, a restraining order and an equal division of property. The husband filed an action in Trinidad for a divorce and an order that the wife be awarded reasonable financial relief. The husband opposed the relief sought by the wife in BC. He argued that there was no real and substantial connection between BC and the facts on which the wife's claims were based. He sought an order that the BC action be dismissed or stayed, either on the grounds that the court did not have jurisdiction or because the court should decline jurisdiction in favour of Trinidad, which was a more convenient forum. Decision: There was no real and substantial connection between BC and the claim, as the husband had been ordinarily resident in Trinidad since 1994, was not ordinarily resident in BC at the time the wife alleged that the parties separated, and he was not ordinarily resident in BC when the BC action was filed. Given the scope of the property claims in issue and that the value of property located in BC was dwarfed by the value of assets located outside of BC, the wife could not rely on the presumption in s. 10(a) of the Court Jurisdiction and Proceedings Transfer Act to establish a real and substantial connection between BC and the facts on which her claim was based. The facts pointed to only a weak relationship between BC and the subject matter of the BC action. Spending most of their marriage in BC and visiting children and grandchildren in BC were not sufficient connecting factors.

28 Overview of Latest Case Law Tamminga v. Tamminga, 2014 ONCA 478 CANLII (Ontario Court of Appeal) Facts: Plaintiff residing in Ontario commenced a claim with respect to an accident which occurred in Alberta and in which she was a passenger. Suit was commenced against her insurance company (relying on the underinsured or uninsured coverage), which was in Ontario, as well as two Albertan defendants. The motion judge stayed the action against the Albertan defendants on the basis that there was no jurisdiction. Plaintiff appealed. Decision (unanimous): The court rejected the Plaintiff s argument that the insurance contract in Ontario and her claim against her insurer was sufficient to connect the Albertan defendants, as they were not parties to or beneficiaries of the contract. The contract was not a contract which was connected with the dispute, and therefore not a presumptive connected factor. The fact that the Albertan defendants were proper parties to the claim was not a presumptive connecting factor. The connection between the insurance policy and the dispute only arose in the aftermath of the tort, and was conditional on the outcome of the plaintiff s claim against the Albertan defendants.

29 Suit by the Canadian VP Against Can Gear The Canadian court in the jurisdiction in which it is domiciled and those in which it carries on business - will have jurisdiction over it. Query with respect to there being a cause of action (basis for a claim) against it unless it was somehow responsible for the safety of the VP while she was in that particular hotel. Enforcement will be no issue in the province in which suit was commenced, otherwise procedure will be determined by the relevant Reciprocal Enforcement of Judgments Act or simple suit to enforce in cases where the relevant province is not a signatory.

30 Suit by the Canadian VP Canadian Tour Operator (company that organized the trip) No issue with there being jurisdiction in the relevant province(s) in which it is domiciled and/or carries on business. Cause of action exists assuming it acted as "tour operator (meaning that it put together the flight, ground transportation and hotel) however in Canada it can defend the claim if it can demonstrate that it choose a competent supplier for the hotel. Enforcement will be no issue in the province in which suit was commenced, otherwise procedure will be determined by the relevant Reciprocal Enforcement of Judgments Act or simple suit to enforce in cases where the relevant province is not a signatory.

31 Suit by the Canadian VP Mexican Hotel If the hotel has operations in Canada and/or offers ability for people in Canada to book with it - by way of website or telephone it may be carrying on business in Canada and/or the contract could be found to have been formed in Canada. If there is jurisdiction for one of these reasons, and the hotel does not successfully have the suit stayed for forum non conveniens reasons, the rights of the Canadian VP will then be determined either by the contract or by the tort law of the place in which the incident occurred pursuant to the principle of lex loci delicti. Mexican law will determine what type of damages the VP can sue for and the law of the province in Canada will determine the amount of those damages. For example, if the law of Mexico provides for a claim for general damages (for pain and suffering) the law of BC will then determine what the amount is for that part of the claim. The law of Mexico may however not allow for a Family Law Act claim (for loss of care guidance and companionship) by the husband of the VP and therefore there can be no such claim in Ontario. Enforcement of the Canadian judgment may be challenging because the Mexican private international law with respect to jurisdiction may not acknowledge the basis on which the Canadian court took jurisdiction.

32 Suit by the Canadian VP US Elevator manufacturer Presuming the manufacturer is resident in the US, has no operations in Canada and that any contract that it was party to had nothing to do with the injured VP, it is not likely that a Canadian court would have jurisdiction over it. If there were to be jurisdiction the rights of the Canadian VP would still be determined by the tort law of the place in which the incident occurred pursuant to the principle of lex loci delicti. If the law of Mexico does not allow for a punitive damages claim there can be no such claim in the Canadian province. Enforcement of the Canadian judgment may be challenging because the US private international law (conflicts law) with respect to jurisdiction may not acknowledge the basis on which the Canadian court took jurisdiction.

33 Suit by the Canadian VP Canadian elevator maintenance company No issue with there being jurisdiction in the relevant province(s) in which it is domiciled and/or carries on business. The rights of the Canadian VP will then be determined by the tort law of Mexico pursuant to the lex loci delicti principle. Mexican law determines what type of damages the VP can sue for and the law of the province in which the suit is commenced determines the amount of those damages. Enforcement will be no issue in the province in which suit was commenced, otherwise procedure will be determined by the relevant Reciprocal Enforcement of Judgments Act or simple suit to enforce in cases where the relevant province is not a signatory.

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