Some Specific Concerns with the New General Jurisdiction

SOME SPECIFIC CONCERNS WITH THE NEW GENERAL JURISDICTION Richard D. Freer* INTRODUCTION General jurisdiction1 allows a court to enter a judgment against a defendant regarding a claim that did not arise in the forum. For generations, no one has doubted that such “all-purpose jurisdiction”2 can be based upon a corporation’s extensive business activities in the forum.3 Though the verbal formulations have differed, the standard phrase has been that general jurisdiction is permissible when the corporate activities in the forum are continuous and systematic.4 To be sure, courts have reached irreconcilable conclusions concerning where the line should be drawn,5 but it has long been unquestioned that at some point a corporation’s level of engagement in the forum justifies subjecting it to general jurisdiction. In Goodyear Dunlop Tires Operations, S.A. v. Brown6 and Daimler AG v. Bauman,7 the Supreme Court restricted activity-based general jurisdiction over corporations. Now, general jurisdiction is proper only where the defendant is “at home.”8 The Court does not define “at home” but provides paradigms: a * Robert Howell Hall Professor of Law, Emory University. It is a privilege to participate in this Symposium honoring Steve Subrin. I am very grateful to Tom Arthur, Stan Cox, Collin Freer, Peter Hay, Dan Klerman, Jonathan Nash, Adam Steinman, and Wendy Perdue for reading and commenting on earlier drafts of this paper. Claire Jordan, Emory Law class of 2015, provided valuable research and editorial assistance. 1 General jurisdiction is to be contrasted with specific jurisdiction, under which the defendant is sued for a claim arising from its activities in or having an effect in the forum. See infra note 32 and text accompanying note 37. 2 Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011). 3 See infra Part I.A. 4 See J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2786 (2011) (discussing purposeful availment). 5 Compare Bryant v. Finnish Nat’l Airline, 208 N.E.2d 439, 441–42 (N.Y. 1965) (finding general jurisdiction over a foreign airline based upon its maintaining a one-and-a-half room office in the state and employment of several people at that office), with Follette v. Clairol, Inc. 829 F. Supp. 840, 845 (W.D. La. 1993), aff’d mem., 998 F.2d 1014 (5th Cir. 1993), cert. denied, 510 U.S. 1163 (1994) (rejecting general jurisdiction over Wal-Mart despite its operation of 264 retail stores in Texas). 6 Goodyear, 131 S. Ct. at 2852. 7 Daimler AG v. Bauman, 134 S. Ct. 746, 751, 757, 762 (2014). 8 See infra Part I.A. 1161 1162 NEVADA LAW JOURNAL [Vol. 15:1161 corporation is “at home” in its state of incorporation and in the state in which it has its principal place of business.9 The Court appears to define the latter, however, as the company’s “nerve center”—that is, the place where decisions are made, rather than where the company necessarily engages in business activities.10 Though the Court conceded in Daimler that there might be cases in which general jurisdiction can be based upon the transaction of business, its view on this score is extremely parsimonious.11 As a result, activities-based general jurisdiction likely has been curtailed significantly. Goodyear and Daimler were easy cases. In Goodyear, the North Carolina Court of Appeals upheld general jurisdiction over European tire manufacturers based on a stream-of-commerce theory.12 In view of the difficulty of using the stream of commerce to support even specific jurisdiction (in which the claim arises from activities in the forum),13 the holding was obviously questionable. Indeed, it is not apparent that any court had previously tried to base general jurisdiction on stream-of-commerce contacts.14 In Daimler, the Ninth Circuit upheld general jurisdiction in California over a German automobile manufacturer by attributing to it the California contacts of its American subsidiary.15 These attributed contacts, the Ninth Circuit concluded, were sufficient to support jurisdiction in California over the German company for claims based upon acts by an Argentine subsidiary in Argentina.16 The Court reversed in both cases without dissent.17 It soon became apparent, though, that the Court was not interested in using the cases to hone the meaning of “continuous and systematic.” It wanted to establish a new and narrower test. I do not lament the circumscription of general jurisdiction as such. Maybe it is a good thing.18 But the Court’s efforts are puzzling. For one thing, the 9 Daimler, 134 S. Ct. at 760; Goodyear, 131 S. Ct. at 2853–54. See infra Part I.B. 11 See infra Part I.C. 12 Goodyear, 131 S. Ct. at 2851. Three defendants, subsidiaries of Goodyear USA, manufacture tires, respectively, in in France, Luxembourg, and Turkey. Id. at 2850. 13 See supra note 1. 14 Goodyear, 131 S. Ct. at 2855 (“The North Carolina court’s stream-of-commerce analysis elided the essential difference between case-specific and all-purpose (general) jurisdiction.”). 15 Daimler AG v. Bauman, 134 S. Ct. 746, 751–53 (2014). 16 Id. Interestingly, then, Goodyear involved jurisdiction over the foreign subsidiary of a U.S. parent corporation, while Daimler involved jurisdiction over the foreign parent of a U.S. subsidiary. Goodyear, 131 S. Ct. at 2850; Daimler, 134 S. Ct. at 750–51. 17 Goodyear, 131 S. Ct. at 2850–51; Daimler, 134 S. Ct. at 750. Justice Ginsburg wrote the opinion for the entire Court in Goodyear. In Daimler, her opinion spoke for eight justices, with Justice Sotomayor concurring. Goodyear, 131 S. Ct. at 2850; Daimler, 134 S. Ct. at 750. 18 Indeed, the restriction will lessen the kind of abusive forum shopping permitted in Ferens v. John Deere Co., 494 U.S. 516 (1990). In that case, a Pennsylvania plaintiff sued a manufacturing company in tort. Because the statute of limitations had expired in Pennsylvania, he sued in federal court in Mississippi, invoking diversity of citizenship jurisdiction. The Mississippi statute of limitations had not expired. Plaintiff then moved for transfer to federal 10 Summer 2015] THE NEW GENERAL JURISDICTION 1163 Court seems unaware that it is upsetting common understandings of general jurisdiction. Goodyear and Daimler are notable for what was not litigated. Embedded in each case were closer questions on which the Court’s guidance would have been useful. In neither case, however, were the questions asked. In Goodyear, the better question was whether Goodyear USA, an Ohio corporation, should be subject to general jurisdiction in North Carolina. It had three manufacturing plants and employs hundreds of people in that state and because of these contacts, Goodyear USA assumed that it was amenable to general jurisdiction in North Carolina.19 In Daimler, the better question was whether Mercedes Benz USA (“MBUSA”), a Delaware entity with its principal place of business in New Jersey,20 was subject to general jurisdiction in California. MBUSA maintains a regional office and vehicle (...truncated)