Agenda for 20th Class

1. Agenda for 20th Class • Admin • Name plates • Handouts • Slides • Review of Erie • Review of Choice of Law • Choice of law questions • Personal Jurisdiction: • International Shoe • General and Specific Jurisdiction • Challenging jurisdiction • McGee; Hanson v Denkla • Introduction to Stream of Commerce

2. Assignment for Next Class Yeazell, 103-114 (WG1) Briefly summarize World-Wide Volkswagen 3 Blackboard Questions on World-Wide Volkswagen (WG2&3) If Audi and Volkswagen of America had contested jurisdiction, how do you think the court would have decided? Be sure to try to argue both for and against jurisdiction. (WG4) 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? (WG5&6) 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

3. Assignment II Yeazell pp. 114-25 Questions to think about (WG7) Briefly summarize McIntyre (WG1&2) 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(see 2nd paragraph on p. 107) (WG3) How would McIntyre have been decided under O’Connor’s “stream of commerce” plus theory (WG4) 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

4. Assignment III (WG5) 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? (WG6) 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? (WG7) 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

5. 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 Would applying federal rule in federal court encourage forum shopping, because then plaintiff could get different law in federal and state court? If yes, apply state law. Avoid inequitable administration of law Would applying federal rule in federal court be inequitable, because non-diverse parties would have to litigate in state court where a different (state) rule would apply? If yes, apply state law. Modern trend is to apply federal practices Federal practice is something procedural (like standards of review or mediation confidentiality) that is not in the FRCP 5

6. 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 resident

7. 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.

8. 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, 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.

9. 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 owns property, but only up to value of that property

10. International Shoe State of Washington sued International Shoe for worker’s compensation contributions in Washington state court International Shoe Incorporated in Delaware PPB Missouri Manufactures and sells shoes No office in Washington Makes no contracts in Washington No stock of merchandise in Washington Employs salesmen who reside in Washington Salesmen show samples to customers Sometimes salesmen rent rooms to display shoes International Shoe argued no jurisdiction b/c not “present” in Washington Supreme Court Corporation is legal fiction, so it’s “presence” is not a meaningful question Instead, ask whether corporation has “minimum contacts” with forum state so that it is “reasonable…. to require the corporation to defend the particular suit which is brought there.” 10

11. 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) But not helpful, and probably not accurate today Individuals. Citizenship, residence, presence, quasi-in-rem (but no longer constitutional) Corporations: Where “at home”. Goodyear v Dunlop (2011), Daimler (2014), BNSF (2017) where incorporated, where headquartered Unlikely. 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 Consent can also be thought of as specific jurisdiction 11

12. Questions on 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 better Yeazell pp. 86ff. Qs 1a, 2 12

13. 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 Denckla (1958). Yeazell p. 89 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 Contacts only count if voluntarily made by defendant 13

14. 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 jurisdiction, defendant cannot then challenge judgment on merits 14

15. F-J

16. 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 mfgor 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 could be satisfied. 16