Sunday, March 23, 2014

Federal Court Forum Shopping Over Non-Resident Corporate Defendants Coming to an End?

According to a recent March 4, 2014 Pennsylvania Law Weekly article by Attorney Will Sylianteng of the WES Litigation Group LLP entitled “Does Daimler Mark the End of Forum Shopping?”, the recent United States Supreme Court decision in the case of Daimler AG v. Baumen, 571 US ___ (2014), may serve to end the practice of forum shopping against corporate Defendants and others.  

As noted in Attorney Sylianteng’s article, the Due Process Clause of the 14th Amendment to the United States Constitution limits the rights of states to exercise personal jurisdiction over non-resident Defendants.   The limitation is based upon the nature and quality of the Defendant’s contacts with the forum state.   The courts have held that a non-resident Defendant’s contacts could possibly give rise to either specific or general personal jurisdiction over that Defendant. 

Attorney Sylianteng notes that, traditionally, the exercise of specific jurisdiction over a Defendant would be proper if the underlying conduct upon which the suit is based occurred within the forum state.  

In contrast, under general personal jurisdiction concepts, a broader stance was taken and a forum state would be permitted to exercise jurisdiction over a non-resident Defendant, even for acts or conduct that did not occur within the forum state, if the non-resident Defendant had “continuous and systematic” contacts in the forum state.  

According to Attorney Sylianteng, in its decision in Diamler, the United States Supreme Court limited the “continuous and systematic” tests to cases involving specific jurisdiction only.  Accordingly, it appears that the continuous and symptomatic contacts argument can no longer be utilized in a case when general jurisdiction over a non-resident corporate defendant is being sought.  

Ultimately, in the post-Diamler world, it would appear that only a limited number of states could exercise general jurisdiction over a corporate Defendant.   Those states would be the state of the corporations and corporation and, if different, the state within which the corporation has its principal place of business.   Another possible place in which a non-resident Defendant could be brought to court would be under specific jurisdiction principles where the underlying tortious act occurred within a particular forum state. 

In his article, Attorney Sylianteng anticipates increased litigation over the issue of personal jurisdiction in cases involving non-resident Defendants, particularly where the underlying incident occurred at a location outside of the state within which the lawsuit is brought.  

Anyone wishing to review Attorney Sylianteng’s article in the Pennsylvania Law Weekly may click on this LINK.

Here's a LINK to the Daimler v. Bauman decision itself.

 

Source:  Pennsylvania Law Weekly, 37 PLW at 196 (March 4, 2014). 

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