Agenda for 22nd Class
• Admin
– Name plates
– Handouts
• Slides
– Exams 1995-2000 now posted to Secure Document Portal
• But use with caution
• More recent exams will be posted soon
• Review of Erie
• Review of Choice of Law
• Finish choice of law questions
• Personal Jurisdiction:
– International Shoe
– General and Specific Jurisdiction
– Challenging jurisdiction
– McGee; Hanson v Denkla
• Introduction to Stream of Commerce
1
Assignment I
• Yeazell, 103-112
• Questions to think about / Writing assignment for Group 3
– Briefly summarize World Wide Volkswagen
– Yeazell pp. 109ff 1c, 4e
– Did the plaintiffs in World-Wide Volkswagen sue in federal or state court?
How can you tell from the opinion itself (not Yeazell’s notes)?
– What is a writ of prohibition? Why did the defendants seek one?
– Who is Woodson? How did he get in the case?
– Would the case have come out differently if the Robinsons had gotten
into an accident in New Jersey and sued in a New Jersey court, but the
facts were otherwise the same?
– Suppose the Robinsons had purchased their Audi in California from
Pacific Audi in Torrance, had gotten into an accident in California, and
sued Audi, Volkswagen of America, Pacific Volkswagen (the regional
distributor, based in Nevada) and Pacific Audi in a California court.
Would the California court have jurisdiction over all, some, or none of the
defendants? Note that there is a passage in the opinion which directly
addresses this question. Is it dicta?
2
Assignment II
• Yeazell pp. 124-31
• Questions to think about / Writing Assignment for Group 4
– Briefly summarize McIntyre
– Yeazell pp. 131ff Qs 1- 4
– How would McIntyre have been decided under White’s view of the
“stream of commerce” theory as expressed in his opinion in World-Wide
Volkswagen
– How would McIntyre have been decided under O’Connor’s “stream of
commerce” plus theory
– How is Kennedy’s view of jurisdiction based on the “stream of
commerce” different from White’s and O’Connor’s? In what cases would
they reach the same result? In what cases different results?
– Questions on next slide
3
Assignment III
• Suppose the California courts and juries are relatively generous to product
liability plaintiffs, but Nevada courts and juries are relatively stingy. A
Chinese company which is breaking into the US market is considering two
distributors, one based in California and another based in Nevada. The two
distributors seem roughly equal in quality and price. Which distributor would
you advise the Chinese company to select. Why?
• Suppose Washington state is suffering from high unemployment. Its
legislators would like to find a way to expand employment by encouraging
Chinese manufacturers to choose distributors based in Washington state.
You are an adviser to a Washington state legislator. What changes would
you suggest that Washington state make to its laws?
• If you were on the Supreme Court, in what situations would you allow those
injured by products to sue the manufacturer? Would you adopt White’s
Stream of Commerce theory? O’Connor’s Stream of Commerce plus?
Kennedy’s theory in McIntyre? Some other rule?
4
Review of Erie
• Apply state substantive law in federal court in diversity cases
• Apply federal procedure in federal court in diversity cases
• Line between substance and procedure is not clear
– Apply FRCP and interpretations of it
• As long as rule is “arguably procedural”
• E.g. as long as rule is legitimate, which means always
– Apply federal practices when doing so is consistent with
purposes of Erie
• Discourage forum shopping
• Avoid inequitable administration of law
• Modern trend is to apply federal practices
• Federal practice is something procedural (like standards
of review) that is not in the FRCP
5
Last Class -- Choice of Law
• Traditional rules
• Restatement (Second)
– Find all states with contacts with dispute
– Analyze the contacts
• What policies lie behind each state’s laws? How would they be
affected if another state’s laws applied to the dispute
– Would advantage resident party in case?
– Would affect non-parties?
• Choose state with most significant relationship
– E.g. whose policies are most strongly implicated
– Often indeterminate
• Laws have many policies, hard to know which strongest
– Possible biases
• Bias toward applying forum law – judges prefer their own state’s laws
• Bias toward plaintiff -- Judge likely to choose law that favors plaintiff
• Bias toward resident - Judge like to choose law that favors in-state
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resident
Choice of Law Questions III
• 7) Spend, a Nevada domiciliary, is completely irresponsible with money.
Fortunately, he recognizes this fact and has set up a spendthrift trust. Under
the terms of the trust, Spend cannot borrow money without the consent of
Trustee, a friend he trusts. Spend goes to California and borrows money
there from Sharkey to be repaid in one year at Sharkey’s place of business
in California. When Spend doesn’t repay the loan, Sharkey sues Spend in
Nevada. Under Nevada law, loans to someone who has set up a spendthrift
trust are void. California law does not allow people to set up spendthrift
trusts, so under California law, such loans are enforceable. The traditional
rule for contracts was the law of the place the contract was formed governs
disputes about contract validity. Under the traditional rule, what state’s law
would apply? Under the Restatement Second, which state’s law should
apply to the dispute? If the traditional rule and Restatement Second suggest
different answers, which makes more sense?
• 8) Same as (7), except Sharkey sues in California state court.
• 9) Same as (8), except Sharkey traveled to Nevada, loaned Spend the
money there, with repayment to be made to Sharkey when he returns to
Nevada a year later.
7
Choice of Law Questions IV
• 10) Same as (7), except the loan contract includes the following clause:
“This contract shall be governed by California law.” The traditional rule was
not to enforce choice of law clauses. See also Restatement (Second) below
• § 187. Law Of The State Chosen By The Parties
• (1) The law of the state chosen by the parties to govern their contractual
rights and duties will be applied if the particular issue is one which the
parties could have resolved by an explicit provision in their agreement
directed to that issue.
• (2) The law of the state chosen by the parties to govern their contractual
rights and duties will be applied, even if the particular issue is one which the
parties could not have resolved by an explicit provision in their agreement
directed to that issue, unless either
– (a) the chosen state has no substantial relationship to the parties or the
transaction and there is no other reasonable basis for the parties' choice,
or
– (b) application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest than
the chosen state in the determination of the particular issue and which,
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under the rule of § 188, would be the state of the applicable law in the
absence of an effective choice of law by the parties.
Personal Jurisdiction
• Answers question: Court in which state?
• Need statutory or rule authority & statute or rule must be constitutional
– Federal rule: FRCP 4(k)(1)(A)
– State long-arm statutes
• Constitutional constraint: Due Process Clause of 14th Amendment
– Unfair to have to litigate in courts of state with no legitimate authority
over defendant or dispute
– Odd mixture of sovereignty, federalism, and fairness concerns
• Before International Shoe
– In personam:
• Defendant was citizen or resident of forum state
• Defendant was present in forum state
• Defendant consented to jurisdiction
– In rem: Disputes about property, jurisdiction where property is
– Quasi in rem: Dispute not about property, jurisdiction where defendant
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owns property, but only up to value of that property
Questions on International Shoe
• Briefly summarize International Shoe
• If the Supreme Court had not decided to change the rules in
International Shoe, would jurisdiction have been proper under
the prior rules? If your answer is “yes,” why do you think the
Supreme Court changed the rules? If you answer is “no,” why
was the outcome under the new rules bette
• See next slide on General and Specific Jurisdiction
• Yeazell pp. 86ff. Qs 1b, 3
10
General and Specific Jurisdiction
• General jurisdiction
– Court which has general jurisdiction over a defendant can hear any case
against the defendant
• Even if case has nothing to do with forum
– Bases for general jurisdiction
• Continuous and systematic contacts (International Shoe)
• Individuals. Citizenship, residence, presence, quasi-in-rem (but no
longer constitutional)
• Corporations:
– Where “at home”. Goodyear v Dunlop (2011), Daimler (2014)
– Clearly yes: where incorporated, where headquartered
– Maybe. where have (large) factory or office and/or (lots of)
employees and/or where conduct lots of business
• Do not confuse with “court of general jurisdiction” 4(k)(1)(A)
• Do not confuse with citizenship for purposes of diversity jurisdiction
• Specific jurisdiction
– Jurisdiction only over cases related to contacts (International Shoe)
– Most cases we will read for class
– In rem can be thought of as specific jurisdiction
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– Consent can also be thought of as specific jurisdiction
McGee; Hanson
• McGee v International Life (1957). Yeazell p. 89.
– Franklin (CA resident) purchased life insurance by mail from out-of-state
insurer. He died, and insurer refused to pay. Beneficiaries sued insurer
in California.
– Held: California courts can constitutionally exert jurisdiction, because
contract “was delivered in California, the premiums were mailed from
there and the insured was a resident of that State when he died.”
• Hanson v Denkla (1958). Yeazell p. 90
– Mrs. Donner (PA resident) created a trust in Delaware, with a Delaware
bank as trustee. Later she moved to Florida. After she died, potential
beneficiaries filed suit in Florida over the administration of the trust
– Held. Florida courts cannot constitutional exert jurisdiction because:
• Defendant “has no office in Florida and transacts no business there…
no solicitation of business in that State either in person or by mail.”
• “The unilateral activity of [Mrs. Donner] … cannot satisfy the
requirement of contact with the forum state.”
• For jurisdiction, defendant must “purposefully avail[] itself of the
privilege of conducting activities within the forum state, thus invoking
the benefits and protection of its laws.”
– Key for later cases is “purposeful availment” requirements
12
• Contacts only count if voluntarily made by defendant
F-J
Cons v
Manuf.
In CA
Yes
Probably
Cons v
Retailer
in CA
Cons v
Manuf.
In OR
Yes
Probably
Stream of Commerce
Question
Yes
Yes
Yes
Yes
Stream of Commerce
• Product manufactured in A, sold to distributor in B, and sold to consumer by
retailer in C
• White dicta in World-Wide Volkswagen (stream of commerce)
– There is jurisdiction over mfg in C, if sale is “not simply an isolated
occurrence, but arises from the efforts of the mfg or distributor to serve,
directly or indirectly the market for its products” in C
• O’Connor plurality opinion in Asahi (1987) (stream of commerce plus)
– Jurisdiction over mfg in C if White’s criteria satisfied AND “additional
conduct of the defendant [indicates] an intent or purpose to serve the
market” in C, e.g.
• Designing the product for C
• Advertising in C
• Establishing channels for providing regular advice to consumers in C
• Marketing product through distributor who has agreed to serve as the
sales agent in the forum state
– mfg has direct contractual relationship with retailer in state C?
• No majority opinion on stream of commerce in Asahi
– Majority agreed that no jurisdiction in California over indemnity suit
between foreign manufacturer and foreign part supplier, when California
plaintiff had settled with foreign manufacturer, because inconsistent with
“fair play and substantial justice,” even if purposeful availment could14be
satisfied.
2 Ways to Challenge Jurisdiction
• In court where sued
– Make 12(b)(2) motion or state equivalent
– “Special appearance” means defendant appears in court solely to
challenge jurisdiction
• Otherwise, appearance in court could be construed as consent to
jurisdiction
• Collateral attack
– Only possible where defendant does not have assets in forum
• So plaintiff would have to enforce judgment in state where defendant
has assets
• Enforcing judgment in another state requires separate suit in that
state
– But Full Faith & Credit Clause of US Constitution requires state to
respect judgment of another state, IF THE STATE WHICH
RENDERED THE JUDGMENT HAD JURISDICTION
– Defendant does not appear in court where sued
– Default judgment is entered against defendant
– When plaintiff goes to enforce judgment in state where defendant has
assets, defendant raises lack of personal jurisdiction as defense
– Very risky, because if enforcing court decides the original court had 15
jurisdiction, defendant cannot then challenge judgment on merits