Supreme Court narrows the scope of ‘specific jurisdiction’ in federal courts

by John Chapman

Federal courts recognize two different categories of jurisdiction over a defendant. One category is known as “general jurisdiction.” Under this category, jurisdiction depends on the defendant’s contact with the forum “in general” and does not depend on the conduct at issue in the particular case. For an individual, “the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.” Daimler AG v. Bauman, 571 U.S. 134 S.Ct. 746 (2014).

The other category is called “specific jurisdiction,” and it encompasses cases in which the suit arises out of or relates to the defendant’s specific contacts with the forum. As the name suggests, jurisdiction under that category is case-specific: it depends on a connection between the forum and the defendant’s conduct at issue in the lawsuit. “Specific” or “case-linked” jurisdiction “depends on an ‘affiliatio[n] between the forum and the underlying controversy’ ” ( i.e., an “activity or an occurrence that takes place in the forum state and is therefore subject to the State’s regulation”). Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011).

As we previously reported, the U.S. Supreme Court recently limited the reach of general jurisdiction, thereby assuring that “specific jurisdiction will come into sharper relief and form a considerably more significant part of the scene.” Daimler AG v. Bauman, 134 S.Ct. at 755. Deciding its first specific jurisdiction case since that opinion, the doctrine has indeed come into sharper relief. In Walden v. Fiore, 2014 WL 700098 (U.S. Feb. 25, 2014), the Supreme Court held that a police officer lacked the minimal contacts with Nevada required for the exercise of personal jurisdiction even if the officer knew that his allegedly tortious conduct in Georgia would cause harm to persons with connections to Nevada.

The case concerned a lawsuit in Nevada against a law enforcement officer residing and working in Georgia. The plaintiffs were airline passengers temporarily in the Atlanta airport changing planes and carrying $97,000 in cash. When questioned about the money, the plaintiffs explained they were professional gamblers returning from gambling at a casino in Puerto Rico. The agents decided to seize the cash and informed the plaintiffs that their funds would be returned if they later proved a legitimate source for the cash. The plaintiffs boarded their plane and went home without their money. On two occasions over the next month, the police officer received documentation from the plaintiffs’ attorney regarding the legitimacy of the funds. The plaintiffs explained that the funds were legal gambling proceeds, not evidence of drug transactions. Their story turned out to be true.

At some point after the defendant officer seized the cash, he helped draft an affidavit to show probable cause for forfeiture of the funds and forwarded that affidavit to a United States Attorney’s Office in Georgia. According to the plaintiffs, the officer’s affidavit was false and misleading because the officer misrepresented the encounter at the airport and omitted exculpatory information regarding the lack of drug evidence and the legitimate source of the funds. In the end, no forfeiture complaint was filed, and the DEA eventually returned the funds to the plaintiffs.

The plaintiffs filed suit claiming the seizure and later efforts to institute forfeiture proceedings were unconstitutional. They sued in Las Vegas, Nevada where they were heading, lived at least part time, and suffered the inconvenience of arriving with absolutely no money, as well as other financial injuries. The district court dismissed the lawsuit for lack of personal jurisdiction over the officer.

The Ninth Circuit reversed. The Court of Appeals assumed the District Court had correctly determined that petitioner’s search and seizure in Georgia could not support exercise of jurisdiction in Nevada. The court held, however, that the District Court could properly exercise jurisdiction over the false probable cause affidavit aspect of the case. According to the Court of Appeals, the defendant officer “expressly aimed” his submission of the allegedly false affidavit at Nevada by submitting the affidavit with knowledge that it would affect persons with a “significant connection” to Nevada. After determining that the delay in returning the funds to respondents caused them “foreseeable harm” in Nevada and that the exercise of personal jurisdiction over petitioner was otherwise reasonable, the Court of Appeals found that the District Court’s exercise of personal jurisdiction was proper. The Supreme Court has now reversed the Court of Appeals and found that there was no personal jurisdiction over the defendant. Walden v. Fiore, 2014 WL 700098.

The Supreme Court’s decision turns in large part on its interpretation of the decision in Calder v. Jones, 465 U.S. 783 (1984). In Calder, a California actress brought a libel suit in California state court against a reporter and an editor, both of whom worked for the National Enquirer at its headquarters in Florida. The plaintiff’s libel claims were based on an article written and edited by the defendants in Florida for publication in the National Enquirer, a national weekly newspaper with a California circulation of roughly 600,000. The Supreme Court held that California’s assertion of jurisdiction over the defendants was consistent with due process:

The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms both of respondent’s emotional distress and the injury to her professional reputation, was suffered in California. In sum, California is the focal point both of the story and of the harm suffered. Jurisdiction over petitioners is therefore proper in California based on the “effects” of their Florida conduct in California.

Calder, 465 U.S. at 788-789.

In the recent Walden case, the Supreme Court drew a distinction between the “effects” of the libel claim in Calder and those at issue in Walden. The Supreme Court essentially reduced Calder to its facts, i.e. to a libel claim that is necessarily concerned with reputational injury in the plaintiff’s home community:

The crux of Calder was that the reputation-based “effects” of the alleged libel connected the defendants to California, not just to the plaintiff. The strength of that connection was largely a function of the nature of the libel tort. However scandalous a newspaper article might be, it can lead to a loss of reputation only if communicated to (and read and understood by) third persons. See Restatement (Second) of Torts § 577, Comment b (1976); see also ibid. (“[R]eputation is the estimation in which one’s character is held by his neighbors or associates”). Accordingly, the reputational injury caused by the defendants’ story would not have occurred but for the fact that the defendants wrote an article for publication in California that was read by a large number of California citizens. Indeed, because publication to third persons is a necessary element of libel, see id., § 558, the defendants’ intentional tort actually occurred in California. Keeton, 465 U.S., at 777, 104 S.Ct. 1473 (“The tort of libel is generally held to occur wherever the offending material is circulated”). In this way, the “effects” caused by the defendants’ article— i.e., the injury to the plaintiff’s reputation in the estimation of the California public—connected the defendants’ conduct to California, not just to a plaintiff who lived there. That connection, combined with the various facts that gave the article a California focus, sufficed to authorize the California court’s exercise of jurisdiction.

Walden, 2014 WL 700098.

The Supreme Court held that the defendant officer’s actions in Georgia did not create sufficient contacts with Nevada “simply because he allegedly directed his conduct at plaintiffs whom he knew had Nevada connections.” Id. The court stated that “[s]uch reasoning improperly attributes a plaintiff’s forum connections to the defendant” and “obscures the reality that none of petitioner’s challenged conduct had anything to do with Nevada itself.”

The plaintiffs argued that, like the plaintiff in Calder, they suffered the “injury” caused by defendant’s allegedly tortious conduct ( i.e., the delayed return of their gambling funds) while they were residing in the forum. The Supreme Court disagreed:

This emphasis is likewise misplaced. As previously noted, Calder made clear that mere injury to a forum resident is not a sufficient connection to the forum. Regardless of where a plaintiff lives or works, an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum State. The proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant’s conduct connects him to the forum in a meaningful way.

[The plaintiffs’] claimed injury does not evince a connection between petitioner and Nevada. Even if we consider the continuation of the seizure in Georgia to be a distinct injury, it is not the sort of effect that is tethered to Nevada in any meaningful way. [The plaintiffs] lacked access to their funds in Nevada not because anything independently occurred there, but because Nevada is where [the Plaintiffs] chose to be at a time when they desired to use the funds seized by [the defendant officer]. [The plaintiffs] would have experienced this same lack of access in California, Mississippi, or wherever else they might have traveled and found themselves wanting more money than they had. Unlike the broad publication of the forum-focused story in Calder, the effects of [the defendant’s] conduct on [the plaintiffs] are not connected to the forum State in a way that makes those effects a proper basis for jurisdiction.

Walden, 2014 WL 700098.

In sum, the proper focus of the “minimum contacts” inquiry, the court held, is “the relationship among the defendant, the forum, and the litigation.” It is the defendant, not the plaintiff or third parties, who must create contacts with the forum state. In this case, the officer’s relevant conduct occurred entirely in Georgia, and the mere fact that his conduct affected plaintiffs with connections to Nevada did not suffice to authorize jurisdiction.

by John Chapman

John Chapman is a licensed attorney with experience in complex commercial litigation (including securities fraud, RICO, shareholder oppression, and derivative actions) and personal injury litigation.