A Shifting Equilibrium: Personal Jurisdiction, Transnational Litigation, and the Problem of Nonparties

Abstract

Should a foreign bank that maintains a permanent branch office in New York be subject to personal jurisdiction to enforce an asset-freeze order lodged against its customer? Before the Supreme Court decided Daimler v. Bauman, the answer would have been an easy yes — because the bank’s in-state activity was continuous, systematic, and substantial, the bank would have been subject to general jurisdiction. Now that general jurisdiction is limited to the entity’s home forum, however, the answer is less clear.

This unresolved issue is critical in resolving two pending high profile trademark-infringement cases, where Gucci America and Tiffany & Co. have requested a federal court in New York to order three Chinese banks — all with New York branch offices — to enforce an asset-freeze order against bank customers who allegedly sold products infringing on the plaintiffs’ trademarks. And such issues regarding the courts’ jurisdictional authority are sure to continue to arise in subsequent cases, a potentially ominous development for international commerce, which depends on effective court access to enforce judicial remedies.

In this article, which builds on our previous work, we explore the effects of the Supreme Court’s most recent jurisdictional decisions. We predict that jurisdictional doctrine will shift toward a new equilibrium that broadens the standards for specific jurisdiction and consent-based jurisdiction in response to the narrowing of general jurisdiction. We offer a framework by which courts can exercise jurisdiction over nonparties in transnational cases consistently with constitutional requirements of due process.

Our proposal returns to the Supreme Court’s International Shoe standard, which incorporated an entity’s “continuous and systematic” contacts into the specific jurisdiction analysis. We argue that the type of continuous and systematic contacts present when multinational corporations maintain a local office are strong enough to warrant relaxing the connectedness requirement for specific jurisdiction. If the nature of the entity’s in-forum activities are related to the sovereign regulatory interests in the case — if, for example, an entity provides in-forum banking services, and the court is seeking the entity’s assistance in enforcing an asset freeze — then the forum connectedness standard should be met. Likewise, when an entity intentionally obtains benefits from registering to do business within the state (such as the ability to conduct intrastate business and the right to sue within the forum as a plaintiff), the state may in exchange obtain the entity’s consent to jurisdiction for cases affecting the state’s sovereign interests.

Finally, although we support a somewhat broader constitutional jurisdiction standard that balances state regulatory, individual, and business interests, we also advocate in favor of a strong comity analysis that incorporates foreign sovereign interests and ensures that courts’ exercise of adjudicative power is bounded by the forum’s legislative jurisdiction. We argue that this comity analysis should be separate from personal jurisdiction, both to ensure that it receives the court’s undivided attention and to leave room for the other branches of government to participate in developing a coherent doctrine of court access in cases affecting foreign interests.

Keywords

Personal Jurisdiction, Transnational Litigation, Daimler v. Bauman, Banks, Due Process, Multinational Corporations

Publication Date

2015

Document Type

Article

Place of Original Publication

Lewis & Clark Law Review

Publication Information

19 Lewis & Clark Law Review 643 (2015)

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COinS Charles W. (Rocky) Rhodes Faculty Bio