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PAPER SYMPOSIUM

MAKING SENSE OF PERSONAL JURISDICTION AFTER GOODYEAR AND NICASTRO

 

INTRODUCTION: DUE PROCESS, BORDERS, AND THE QUALITIES OF SOVEREIGNTY—SOME THOUGHTS ON J. MCINTYRE MACHINERY V. NICASTRO

John T. Parry

16 Lewis & Clark L. Rev. 827 (2012)

The Supreme Court’s announcement that it would hear two personal jurisdiction cases last Term raised the hope that it would clarify an area of doctrine that has been unclear for 20 years. The Court’s decision on general jurisdiction satisfied those expectations at least in part. The Court’s specific personal jurisdiction decision, by contrast, only made things worse. This essay provides a critical analysis of the Nicastro decision on specific personal jurisdiction. Part Two surveys some of the history of personal jurisdiction doctrine, with an emphasis on the tension between rules and standards. Part Three grapples with Nicastro and its possible meanings and concludes that Nicastro undermines much of the understanding (such as it was) that shaped the last thirty-plus years of personal jurisdiction doctrine. Part Four suggests an approach to personal jurisdiction based in state interests and relative burdens—one that takes federalism seriously yet at the same time would uphold more assertions of jurisdiction. Part Five turns to a different topic: the rhetoric of Justice Kennedy’s and Justice Breyer’s opinions. Justice Kennedy repeatedly insisted that personal jurisdiction is about “submission” to sovereign (judicial) authority, and I consider some of the ramifications of this claim, particularly in relationship to Justice Kennedy’s opinions in other cases. For his part, Justice Breyer provided examples of people over whom he thought personal jurisdiction would be inappropriate. These examples rest on a set of assumptions about national and regional characteristics, as well as a conception about jurisdiction that assumes a sharp distinction between periphery and metropole. His approach, in other words, rests on a different, more cosmopolitan, but perhaps also more disturbing, idea of sovereignty.

LETTING THE PERFECT BECOME THE ENEMY OF THE GOOD:
THE RELATEDNESS PROBLEM IN PERSONAL JURISDICTION

Robin J. Effron

16 Lewis & Clark L. Rev. 867 (2012)

The Supreme Court’s recent decision in J. McIntyre Machinery v. Nicastro had the potential to resolve nearly two decades of confusion in personal jurisdiction doctrine. Confronted with the earlier Asahi plurality opinions, which had established competing “stream of commerce” theories, the Court produced a fractured 4–2–3 opinion that resolved little beyond holding that the New Jersey courts could not exercise personal jurisdiction over the defendant in the instant case.

In this Article, I consider one dimension of the doctrinal deadlock that the Supreme Court produced in Nicastro: the concept of specific jurisdiction itself. In recent cases, most notably in Nicastro, the Court has become obsessed with the general and abstract contours of the relationship between a defendant and the forum state. However, one of the most important aspects of the distinction between general and specific jurisdiction is the relatedness between the lawsuit and the forum state. In conceptualizing relatedness at the highest level of generality, the Supreme Court has characterized the relatedness problem in a way that is nearly impossible to answer in any concrete case that comes before it. In other words, the Supreme Court has let the perfect become the enemy of the good. Instead of producing a flexible, workable, if not entirely global or perfect rule, the Court has given the lower courts hardly any rule at all.

This Article suggests that in order to break the stream of commerce stalemate, the Supreme Court should refocus specific jurisdiction doctrine so that it produces concrete answers to the two dimensions of the relatedness problem. It further argues that Justice Brennan’s stream of commerce position from Asahi remains the most viable path for specific jurisdiction analysis. The expansive scope of the Brennan position fits well with modern understandings of commerce and the domestic and international sale and distribution of goods. Moreover, in tandem with a robust fairness analysis, the stream of commerce position will allow courts to examine the two dimensions of relatedness in a useful, concrete, and doctrinally consistent manner.

THE FUNCTIONAL AND DYSFUNCTIONAL ROLE OF FORMALISM IN FEDERALISM: SHADY GROVE VERSUS NICASTRO

Glenn S. Koppel

16 Lewis & Clark L. Rev. 905 (2012)

 In 2010 and 2011, a fractured Supreme Court handed down two consecutive decisions which, yet again, addressed, but did not resolve, perennially vexing questions about where to strike the balance in judicial federalism in both the intra-state Erie context—in Shady Grove Orthopedic Associates v. Allstate Insurance Co. (2010)—and the inter-state and international context of personal jurisdiction—in J. McIntyre Machinery, Ltd. v. Nicastro (2011). In each case, a plurality opinion pursued a rigidly formalist approach, a dissenting opinion adopted a functional approach, and a concurring opinion limited the precedential reach of the plurality’s strictly formalist approach. These decisions are the latest in the Court’s ongoing struggle to develop an approach to Erie and personal jurisdiction doctrine that is principled enough to provide guidance to practitioners and lower courts, yet flexible enough to adapt to changing social, political, and economic realities.

The parallel formalist–functionalist split in these two decisions offers a unique opportunity to contrast the functional and dysfunctional roles of formalism in calibrating the appropriate judicial balance of power in vertical and horizontal federalism and, most pertinent to this Symposium, to evaluate the Nicastro opinions through the formalist–functionalist lens. This Article seeks to demonstrate that formalism and functionalism are not mutually exclusive dogmas but represent complementary aspects of decision-making. Each approach, as well as a balanced blend of each that I call “modified formalism,” can offer something of value to the decision-making process in the appropriate doctrinal context. Shady Grove’s formalist defense of rules uniformity offers an example of the functional use of formalism in federalism. Nicastro, by contrast, illustrates its dysfunctional use.

Since International Shoe, this formalist–functionalist tension has been played out in the Court’s personal jurisdiction jurisprudence manifested in a series of decisions in which the Justices debate the relevance of state sovereignty versus fairness in “minimum contacts” analysis. Nicastro is the latest round in this duel between two jurisprudential perspectives set against the contemporary backdrop of global commerce. The Nicastro opinions, in the supreme courts of New Jersey and the United States, clash over the following question: Given the practical irrelevance of international borders in international trade and the Internet since International Shoe, what is their legal relevance in defining the limits of state court adjudicatory power over alien defendants?

This Article evaluates Nicastro’s opinions through the larger formalist–functionalist perspective that informs the Court’s federalism decisions generally and concludes that the rigid formalism of Justice Kennedy’s plurality opinion and the modified formalism of Justice Breyer’s concurrence produced a dysfunctional consequence that ignores the reality of contemporary international commerce. I propose that the Court adopt a different modified formalist model that preserves the significance of territorial sovereignty, like Justice Breyer’s concurrence, but that adapts the sovereignty concept to the reality of global commerce to achieve a functionally fair result.

GOODYEAR DUNLOP: A WELCOME REFINEMENT OF THE LANGUAGE OF GENERAL PERSONAL JURISDICTION

James R. Pielemeier

16 Lewis & Clark L. Rev. 969 (2012)

In its 2011 decision in Goodyear Dunlop Tires v. Brown, the United States Supreme Court directly addressed the constitutional permissibility of general personal jurisdiction for only the third time since its landmark personal jurisdiction decision in International Shoe v. Washington in 1945. The language of pre-Goodyear opinions on general jurisdiction, jurisdiction based on a defendant’s contacts with the forum state regardless of their relationship to the plaintiff’s claim, suggested that it was constitutionally permissible if the defendant had “continuous and systematic general business contacts” with the forum state. The Court had held that contacts such that the forum was the corporate defendant’s principal place of business satisfied this test, yet millions of dollars of purchases and training by the defendant from the forum state over a seven year period did not. The wide gray area in between these two factual circumstances and the generality of the Court’s “continuous and systematic contacts” test has led lower courts to reach very divergent results on the issue.

In a unanimous opinion in Goodyear Dunlop, the Court clarified that using regular sales in the forum as a basis for general personal jurisdiction, a basis that had been held sufficient by a minority of lower courts, fell “far short” of the types of contacts necessary for general jurisdiction. And significantly, the Court’s opinion introduced a question, drawn from language in International Shoe but not previously stressed in its general jurisdiction opinions, asking whether the defendant’s contacts were such “as to render them essentially at home in the forum state.” This Article argues that this refinement of the language of general personal jurisdiction is a welcome addition, as it should assist in marking more clearly the outer bounds of general jurisdiction and in limiting the forum shopping mischief and added costs of litigation that can occur with more expansive and ill defined borders.

 

ERSKINE WOOD SR. CHAIR INSTALLATION LECTURE

 

FLEECING GRANDMA: A REGULATORY PONZI SCHEME

Jennifer J. Johnson

16 Lewis & Clark L. Rev. 993 (2012)

This Article examines the regulatory failure that allowed Medical Capital to engage in a Ponzi scheme to market over $2 billion in promissory notes as private placements. Utilizing a vast stockbroker network, Medical Capital sold the notes to more than 20,000 retail investors including vulnerable senior citizens.  The Article explains how in spite of many warning signs, none of the potential gatekeepers, including the SEC, FINRA, the stockbrokers, the banks, the attorneys, or the independent due diligence analyst interceded to protect the investors.

Under current SEC rules, issuers can sell any dollar amount of private placement securities to an unlimited number of defined accredited investors with virtually no governmental oversight. The Article recommends that in line with its authority under the Dodd–Frank Act, the Commission  tighten the standards for accredited investor status.  The Article further argues that, coupled with untethered stockbroker activity, the current regulatory structure unduly favors small business at the expense of retail investors. This problem will be exacerbated by the 2012 JOBS Act, which mandates looser advertising rules for Rule 506 private placements. The Medical Capital fraud  suggests that Congress and the SEC are misguided in their heavy reliance upon stockbrokers as effective intermediaries. The Article concludes with a modest proposal to rein in the activities of the brokers.

 

2012 HIGGINS DISTINGUISHED VISITOR LECTURE

 

THE SUPREME COURT’S RECENT CLASS ACTION JURISPRUDENCE: GAZING INTO A CRYSTAL BALL

Mary Kay Kane

16 Lewis & Clark L. Rev. 1015 (2012)

In this Article, Professor Kane analyzes the six class-action cases most recently in the Supreme Court, starting with the Court’s opinion in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co. at the end of the 2009–10 Term through the five cases in the 2010–11 Term to determine if there is any common theme underlying the decisions, as well as what their impact may be. She draws two conclusions. First, the cluster of class-action cases decided by the Court is particularly significant largely because it covers many different and important issues central to the field rather than because the Court embarked on new, uncharted paths. Second, although the availability of class arbitration has been severely restricted, if not effectively eliminated for state consumer claims, the Court has not sounded the death knell for future class litigation and Rule 23 may continue to serve as a viable procedural remedy for resolving aggregate disputes. This is seen by examining how the lower courts are interpreting these opinions and are continuing to certify class actions under the Court’s newly-articulated standards.

 

COMMENTS

 

TWO STORIES OF TAXATION OF CAPITAL

Erik Nelson

16 Lewis & Clark L. Rev. 1049 (2012)

The discussion on whether and to what to degree to tax wealth and capital in the United States is as old as the country itself. This Comment analyzes the debate and its history through the lenses of two different general theories of property. The first is a Lockean ideal of the sanctity of private property and capital. The second focuses on the role of the community in the creation of capital and the ramifications that it has for taxation. Both stories can be traced from the very beginning of income taxation in the United States to current debates on capital gains and wealth transfer taxes. Through this Comment, I seek to better understand these theories and, through them, better understand the debates on taxation of capital in which they are used.

LIABILITY AND SALVAGE: TITANIC JURISPRUDENCE IN UNITED STATES FEDERAL COURT

Matthew E. Zekala

16 Lewis & Clark L. Rev. 1075 (2012)

On May 31, 1911, the R.M.S Titanic was launched from the Harland & Wolff shipyard in Belfast, Ireland. On August 15, 2011, the District Court for the Eastern District of Virginia awarded R.M.S. Titanic, Inc., an in specie salvage award for artifacts recovered from the wreck of the Titanic. One hundred years after its launch, the Titanic still is perhaps the most famous ship in modern history and, despite its British ownership and loss in international waters, the sinking and salvage of the ship has been heavily litigated in United States courts. This Comment examines the legal history of the Titanic’s admiralty jurisprudence in United States federal courts, beginning with the shipowner’s effort to limit its liability, and culminating with an analysis of the eighteen-year litigation that led to the salvage award. This Comment argues that public policy is best served by court-supervised salvage awards and that recovery and restoration of historical artifacts is neither “exploitation” nor “grave robbing” as some detractors have maintained. Salvors such as R.M.S. Titanic, Inc., should be recognized for performing a valuable public service—the preservation of cultural treasures that otherwise would be lost to the natural elements—through judicially supervised compensation that provides adequate protection for wreck sites and recovered artifacts. As newer and better underwater exploration technology becomes available, more wrecks will be discovered and known wrecks that currently are inaccessible may be explored. It is important to provide incentives to those willing to assume the risks involved in this type of recovery, and clear guidance from the courts is essential for would-be salvors to evaluate whether to undertake a particular project. Judicial oversight also protects the public interest by regulating the treatment of the historical wrecks, limiting the types of artifacts that may be recovered, and controlling how those artifacts are displayed. The salvor makes a bargain with the court—the salvor is granted exclusive access to a wreck site but may not simply sell the artifacts to the highest bidder, which could deprive access to the public. The salvage award granted in R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel represents a sensible approach that should be adopted for yet-to-be-explored historical shipwrecks.