Quiz 3 Flashcards
Dan, a lifelong resident of New York, went to New Orleans, Louisiana, for a convention. One night, he tasted a local Cajun whiskey. Liking what he tasted, he bought a case of the whiskey to take back to New York. Upon his return to New York, Dan gave a bottle to his boss, Ben, a citizen of New York. After work that evening, Ben decided to try the whiskey and prepared himself a cocktail consisting of the Cajun whiskey and water. After three or four sips of his cocktail, Ben experienced a severe burning sensation in his throat and stomach. He called his doctor, who advised him to come to the hospital and bring the bottle of the whiskey with him. At the hospital it was determined that the bottle contained a high percentage of acid. Ben was treated accordingly. He survived, but had to have part of his stomach removed and will talk in a low raspy voice for the rest of his life.
Ben comes to you, an attorney in New York, and wants you to represent him in his personal injury action. He wants to sue for $1 million to pay for his medical expenses and be compensated for his pain and suffering and permanent physical impairments. You agree to represent him and immediately begin making certain investigations. You learn that the Cajun whiskey is a product distilled by the De-Lis Whiskey Company, a Louisiana corporation with its principal place of business in Louisiana. It distributes its products in Louisiana, Alabama, and Mississippi.
Assume that the legislature in every state in the country has passed the following statute:
The courts of this state shall have personal jurisdiction over an individual, corporation or other entity who, in person or through an agent: transacts business within the state; or commits a tortious act without the state causing injury within the state; or is personally served within the state; or owns property within the state.
Can a state court in Louisiana exercise general jurisdiction over De-Lis Whiskey Company?
(A)
No, because it does not have a bank account in Louisiana.
(B)
Yes, because it transacts business in Louisiana.
(C)
No, because it did not commit a tortious act in Louisiana.
(D)
Yes, because it is a citizen of Louisiana.
D is the correct answer. State courts have personal jurisdiction over their citizens, even if they are not residing in the forum state at the time suit is brought. There is no need to examine the application of the long-arm statute since these statutes deal with obtaining personal jurisdiction over noncitizens and nonresidents. There is also no constitutional objection to exercising personal jurisdiction over a forum citizen. Consequently, all the other answers are incorrect.
Dan, a lifelong resident of New York, went to New Orleans, Louisiana, for a convention. One night, he tasted a local Cajun whiskey. Liking what he tasted, he bought a case of the whiskey to take back to New York. Upon his return to New York, Dan gave a bottle to his boss, Ben, a citizen of New York. After work that evening, Ben decided to try the whiskey and prepared himself a cocktail consisting of the Cajun whiskey and water. After three or four sips of his cocktail, Ben experienced a severe burning sensation in his throat and stomach. He called his doctor, who advised him to come to the hospital and bring the bottle of the whiskey with him. At the hospital it was determined that the bottle contained a high percentage of acid. Ben was treated accordingly. He survived, but had to have part of his stomach removed and will talk in a low raspy voice for the rest of his life.
Ben comes to you, an attorney in New York, and wants you to represent him in his personal injury action. He wants to sue for $1 million to pay for his medical expenses and be compensated for his pain and suffering and permanent physical impairments. You agree to represent him and immediately begin making certain investigations. You learn that the Cajun whiskey is a product distilled by the De-Lis Whiskey Company, a Louisiana corporation with its principal place of business in Louisiana. It distributes its products in Louisiana, Alabama, and Mississippi. You learn that De-Lis places ads in NOLA magazine at all local hotels, including the one where Dan stayed during his visit. You learn that about 45% of all sales of the Cajun whiskey are made to New York tourists who take the product back to their home state and 50% of its sales are made to New Yorkers who purchase the liquor through De-Lis’s highly interactive web site. Sales to New Yorkers account for in excess of $3 million annually. In addition, you learn that De-Lis Whiskey Company has $500,000 on deposit in a New York bank.
Assume that the legislature in every state in the country has passed the following statute:
The courts of this state shall have personal jurisdiction over an individual, corporation or other entity who, in person or through an agent: transacts business within the state; or commits a tortious act without the state causing injury within the state; or is personally served within the state; or owns property within the state.
Can a state court in New York exercise specific jurisdiction over De-Lis Whiskey Company?
(A) Yes, because De-Lis transacts business in New York and the cause of action arose out of those contacts.
(B) Yes, because of the presence of De-Lis’s bank account in New York
(C) No, because it did not commit a tortious act in New York.
(D) No, because De-Lis has no contacts with New York.
A is the correct answer. The proper approach to determining whether or not a state court can exercise personal jurisdiction is a two-step analysis. First, one must determine whether the applicable state long-arm statute applies. Here, De-Lis is doing more than $3 million in annual business with New York customers, both those that come to New Orleans and bring the whiskey to New York and those who buy it over the Internet. So the statute applies. One must then determine the constitutionality of exercising jurisdiction. That is a multi-step process. First, is the court attempting to exercise specific or general jurisdiction? The question asks only for specific jurisdiction, which means that the cause of action arises out of the defendant’s relationships with the forum state. Here, the cause of action is for damages caused by the defective product. While it could be argued that the defendant’s connection with the forum is only the transport and not the manufacture of the product, if one views the connection as the entire business of producing and distributing liquor, then the cause of action does arise out of the defendant’s relationships with the forum. In that case, one must then evaluate the extent of the defendant’s relationship. Since this appears to be a continuous and systematic relationship, the International Shoe standard is met. One must then also evaluate the “fairness” factors set forth in Volkswagen. Here, the plaintiff is a forum citizen and so both he and the forum state have an interest in having the case heard in the chosen forum. And the interstate judicial system has an interest in having the case heard in New York since many of the witnesses including the plaintiff and his doctors are in the forum.
Plaintiff owns and operates a retail store in California. It licenses software from Defendant, a Texas company that specializes in security technology. Despite the software, hackers broke into Plaintiff’s financial system. Plaintiff sued Defendant in a state court in Delaware for breach of contract, choosing the forum because of its unusually long statute of limitations. Defendant did not object to personal jurisdiction.
Plaintiff loses on the merits; the state court holds that Plaintiff was contributorily negligent for its injuries because it did not properly install the software. Plaintiff then filed a second lawsuit against Defendant, largely repeating the breach-of-contract claim that was dismissed in the first lawsuit, but this time filing the lawsuit in federal district court in Delaware. Defendant answers the complaint raising the affirmative defense of claim preclusion and asserts a counterclaim that the filing of multiple lawsuits has caused Defendant to suffer wrongful injury to reputation, and alleges special damages of lost business in excess of $75,000.
Other than filing the pair of lawsuits, Plaintiff has no contacts with Delaware. Plaintiff moves to dismiss the counterclaim for lack of personal jurisdiction, arguing that no summons was served with the counterclaim. How should the court rule on the motion?
(A) The court should deny the motion, because a compulsory counterclaim does not require an independent basis for jurisdiction.
(B) The court should grant the motion, because a permissive counterclaim requires an independent basis of jurisdiction.
(C) The court should grant the motion for lack of service of process.
(D) The court should deny the motion, because Plaintiff has effectively consented to suit in the forum state.
(D) is the correct answer because the filing of a lawsuit is treated as consent by the plaintiff to personal jurisdiction in the forum “for all purposes for which justice to the defendant requires his presence.” Adam v. Saenger, 303 U.S. 59, 67-68 (1938). As the Supreme Court has explained, deeming the plaintiff to have consented to personal jurisdiction in the forum in which he has elected to sue “is the price which the state may exact as the condition of opening its courts to the plaintiff” and is consistent with the requirements of the Due Process Clause. Id.; see also Schnabel v. Lui, 302 F.3d 1023, 1037-1038 (9th Cir. 2002) (“[A] party cannot avail itself of the court’s jurisdiction, bringing claims which mandate the filing of counterclaims, and thereafter attack personal jurisdiction when judgment is entered against the party on counterclaims.”). The Plaintiff in this case availed itself of personal jurisdiction in the federal district court in Delaware by bringing suit there. By so doing, Plaintiff effectively waived any objection to personal jurisdiction he might have asserted had Defendant elected to file his counterclaim as an original claim in an independent lawsuit.
- The plaintiff, a Texas citizen, brings an action against the defendant, an Ohio corporation, in federal district court in Texas asserting two claims. The first claim alleges a violation of the federal antitrust law, which provides for nationwide service of process. The second claim is for breach of contract with respect to an unrelated matter. The trial court has determined that it can constitutionally exercise personal jurisdiction over the defendant with respect to the federal claim. It has also determined that the defendant is not subject to personal jurisdiction under the terms of the Texas long-arm statute.
How will the federal district court likely handle the personal jurisdiction issue and why?
(A) Decline to exercise personal jurisdiction over the defendant with respect to the entire case, because there is no personal jurisdiction under the Texas long-arm statute.
(B) Exercise personal jurisdiction over the defendant with respect to the entire case, because of the doctrine of pendent personal jurisdiction.
(C) Exercise personal jurisdiction over the defendant with respect to the entire case without need to evaluate the Texas long-arm statute, because federal law trumps state law under the Supremacy Clause of the U.S. Constitution.
(D) Decline to exercise personal jurisdiction over the defendant with respect to the state claim, because the federal and state law claims do not arise out of a common nucleus of operative fact.
D is the correct answer. The issue here is whether the fact that the defendant would not be subject to personal jurisdiction with respect to one of the claims, here the state law claim, precludes the court from exercising jurisdiction over it with respect to the entire case. Also, under the Texas state long-arm statute, there is no basis for exercising personal jurisdiction over the defendant (absent supplemental jurisdiction). Since the state law claim arises out of “an unrelated matter” from the event giving rise to the federal claim, the two claims do not constitute one “case,” i.e., they do not arise out of a common nucleus of operative fact. Hence, the court would not apply the doctrine of pendent personal jurisdiction and the state law claim would have to be dismissed.
- Jake, a lifetime resident of Boston, made his first ever venture out of Massachusetts when he flew to San Francisco, California. He was unable to get a nonstop flight and so had to change planes at John F. Kennedy International Airport in New York City, New York. While sitting in a coffee shop at Kennedy airport, he was served with process in connection with a lawsuit filed against him by his former next-door neighbor. His neighbor, now a citizen of New York, brought suit in New York claiming that Jake had sold him a lemon—Jake’s 2005 automobile. Jake files a motion to dismiss for lack of personal jurisdiction. How should the court rule?
(A) The court should grant the motion because the car sale was consummated entirely in Massachusetts.
(B) The court should grant the motion because Jake is a citizen of Massachusetts.
(C) The court should deny the motion because the plaintiff is a citizen of New York.
(D) The court should deny the motion because Jake was served in New York.
D is the correct answer. A court has jurisdiction over people and property within their jurisdictional borders. If a defendant is present in the jurisdiction when served with process, however briefly, that defendant will be subject to the court’s personal jurisdiction over him. This is called “tag jurisdiction” and has been ruled constitutionally sufficient by the United States Supreme Court.
- University is a for-profit educational institution incorporated in the state of State A. Its main campus is also in State A. The University’s only other campus is a slightly smaller one in State B. Both campuses have operated for over 50 years. A student from State C who attends class at the State A campus sues University for sex discrimination by one of her professors in class. The student brings this suit in a State B federal court and then serves process on the University in State A.
If the University moves to dismiss for lack of personal jurisdiction under Rule 12(b)(2), which doctrine of personal jurisdiction would provide the strongest argument for maintaining jurisdiction in State B?
(A) General jurisdiction based on consent to the State B court’s power
(B) General jurisdiction based on the University’s activity in State B.
(C) In rem jurisdiction
(D) General jurisdiction based on in-forum service.
B is the correct answer. Daimler AG v. Bauman, 571 U.S. 117, 134 S. Ct. 746 (2014) supplies the strongest argument given University’s continuous 50-year operation in State B and its lack of presence anywhere else besides State A. In effect, State B is University’s second home (its first is State A by virtue of its incorporation and campus there). Even though University’s State B campus is smaller than its State A operations, the relative size difference is slight. In contrast, the Supreme Court’s recent decisions have rejected general jurisdiction in cases where the defendant’s activity in the forum state was a much smaller percentage of the defendant’s overall activity.
- Plaintiff files a claim against the defendant, a Delaware corporation with its headquarters located in New York, in federal district court in Los Angeles, California, alleging a violation of the federal antitrust statute. The federal statute contains a provision for nationwide service of process and personal jurisdiction over corporations. The defendant is a major retailer with retail shops in all 50 states and a highly interactive web page that generates hundreds of thousands of dollars of business annually from citizens of all 50 states.
Which of the following governs whether or not the defendant is subject to personal jurisdiction?
(A) California law, because California is the forum state.
(B) Delaware law, because the defendant is a Delaware citizen.
(C) New York law, because the defendant’s headquarters are there.
(D) The federal antitrust statute
D is the correct answer. Under Fed. R. Civ. P. 4(k)(1), a federal court looks to the forum state’s jurisdictional provision unless otherwise provided by federal law. Here, the substantive federal law contains its own jurisdictional provision. Consequently, the federal antitrust statute, rather than state law, applies.
An Arizona citizen brought a $70,000 tort action in Arizona state court against a restaurant located in Florida alleging that she had developed food poisoning while eating in that restaurant because of the unhygienic conditions present in the kitchen. The defendant removed the case. Thereafter, the defendant filed a motion with the federal trial judge requesting that the court dismiss the case for lack of personal jurisdiction over it. The plaintiff acknowledges that the applicable long-arm statute does not provide jurisdiction over this defendant. Should the court grant this motion?
(A) No, because by removing the case the defendant consented to that court’s exercise of personal jurisdictional over it.
(B) Yes, because the defendant is not subject to personal jurisdiction.
(C) No, because the claim is for $70,000.
(D) Yes, because the defendant is not a citizen of the forum state.
B is the correct answer. The defendant has removed a state law claim between diverse parties that does not satisfy the amount in controversy requirement of §1332. Consequently, the federal district court does not have subject matter jurisdiction. Since objections to subject matter jurisdiction are not waivable and, in fact, can be raised by the court sua sponte, this problem raises the question of whether this court can adjudicate the personal jurisdiction challenge prior to determining the existence of subject matter jurisdiction. Obviously, resolution of the subject matter jurisdiction question in this instance pretermits consideration of the defendant’s personal jurisdiction challenge and the case will be remanded to the state court since the claim is not removable because it does not meet the amount in controversy requirement of §1332. This, in turn, means that, to the extent the defendant wants to adjudicate the personal jurisdiction issue, a state, rather than a federal, judge will resolve it. While that result might, in some cases, frustrate the defendant’s desire to have a federal judge resolve that question, since many personal jurisdiction questions involve the construction of state long-arm statutes, it promotes interests of federalism/comity by leaving the interpretation of state law to the state court. In cases where the personal jurisdiction inquiry is either straightforward (as here) or turns primarily on a federal constitutional issue, the federal district court does not abuse its discretion by turning first to personal jurisdiction, particularly when the subject matter jurisdictional question is either complex or novel. Therefore, this court can consider the personal jurisdiction question even though it does not have subject matter jurisdiction over this claim. Therefore, Answer C is incorrect.
