In the wake of the U.S. Supreme Court’s decision in Spokeo v. Robins, 136 S. Ct. 1540 (2016), there has been a plethora of litigation in privacy class actions over whether federal courts can exercise subject-matter jurisdiction over the asserted statutory or common law claims. However, in addition to considering whether a court has subject-matter jurisdiction, entities hit with a putative privacy class action should also consider whether the court can exercise personal jurisdiction over the parties and claims.
There are two types of personal jurisdiction: general and specific. Over the course of the last decade, the U.S. Supreme Court has limited the forums in which a court can exercise general – or all purpose – jurisdiction over a defendant. In most cases, those forums will be only an entity’s state of incorporation and principal place of business. The result has been an increased focus on whether courts have specific – or case-linked – jurisdiction. Now, entities – even those that conduct business in all 50 states – may be able to successfully bring a motion to dismiss for lack of personal jurisdiction where the entity’s contacts with the forum did not give rise to the claims against it.
In addition, the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct. 1773 (2017) (Bristol-Myers) opened the door to an additional use of the lack of personal jurisdiction defense in nationwide privacy class actions. Relying on Bristol-Myers, several district courts have permitted entities hit with nationwide class actions to limit the putative class where the absent class members’ claims did not arise from the entity’s contacts with the forum state.
Regardless of whether a court has subject-matter jurisdiction, it must also have personal jurisdiction over each party, including third-party defendants. See Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir. 1974). Further, in most cases, personal jurisdiction must exist under both the applicable state long-arm statute and the Due Process Clause of the U.S. Constitution. (Fed. R. Civ. P. 4(k) identifies certain circumstances where state long-arm statutes may be inapplicable, such as where the federal statute giving rise to the claims permits nationwide service of process).
When asserting a claim, a plaintiff must allege a prima facie case of personal jurisdiction over a defendant. Without such allegations, a defendant may be able to dispose of a case by asserting a facial – as opposed to factual – challenge to personal jurisdiction through a motion to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Even with such allegations, a defendant can still assert a factual challenge to personal jurisdiction by attaching affidavits or other evidence to its Rule 12(b)(2) motion to dismiss. However, in such instances, the Court may choose to conduct an evidentiary hearing to decide the disputed facts relevant to the motion to dismiss.
A defendant is not required to raise the defense of lack of personal jurisdiction in a Rule 12(b)(2) motion to dismiss. Rather, Rule 12(h)(1)(B)(ii) permits a defendant to assert it as an affirmative defense in its answer. Nevertheless, some courts have held that a defendant can waive the defense of lack of personal jurisdiction by its later conduct in the litigation. See, e.g., Cont’l Bank, N.A. v. Meyer, 10 F.3d 1293, 1297 (7th Cir. 1993).
A court with general – or all purpose – jurisdiction over a defendant can hear any claim asserted against that defendant in that forum, even if the claims do not arise from or are unrelated to the defendant’s forum-related conduct. See Bristol-Myers, 137 S. Ct. at 1780. The U.S. Supreme Court has identified two forums where general jurisdiction typically exists for a company: (i) the state of its principal place of business and (ii) the state of its incorporation. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). Outside of those two forums, there can be general jurisdiction only in an “exceptional case.” Daimler AG v. Bauman, 134 S. Ct. 746, 761 n.19 (2014).
In contrast to the exercise of general jurisdiction, for a court to exercise specific jurisdiction over a defendant, “‘the suit’ must ‘arise out of or relat[e] to the defendant’s contacts with the forum.’” Bristol-Myers, 137 S. Ct. at 1780 (citation omitted).
The Court’s analysis of whether it has specific jurisdiction may vary based on whether the claim asserted sounds in tort or contract. See, e.g., Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1068-69 (9th Cir. 2017); Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). For example, a court’s analysis of contract claims will often focus on where the contract was negotiated, executed and performed. See, e.g., Cepia, LLC v. Universal Pictures Visual Programming Ltd., 177 F. Supp. 3d 1129, 1139-40 (E.D. Mo. 2016). For tort claims, the Court’s analysis will often focus on whether the defendant’s conduct was intentional, was aimed at the forum state, and the defendant knew it would cause harm to the plaintiff in the forum state. See Walden v. Fiore, 134 S. Ct. 1115, 1122-23 (2014); Calder v. Jones, 465 U.S. 783, 790 (1984).
Courts have applied this tort analysis when determining whether they have specific jurisdiction over privacy claims. See, e.g., Myers v. Bennett Law Offices, 238 F.3d 1068, 1074 (9th Cir. 2001). Notably, district courts have dismissed privacy claims, such as those based on the illegal access or misuse of data, for lack of specific jurisdiction where the defendant’s only suit-related connection to the forum is that the plaintiff (i.e., the individual to whom the data at issue related) lived there. See, e.g., Zellerino v. Roosen, 118 F. Supp. 3d 946, 952 (E.D. Mich. 2015) (no specific jurisdiction where non-forum state defendant pulled credit report on resident of forum state); Agbottah v. Orange Lake Country Club, No. 12-1019, 2012 WL 2679440, at *4 (D.N.J. July 6, 2012) (no specific jurisdiction where non-forum state defendant furnished information about forum state resident to a consumer reporting agency outside of forum state).
Absent Class Members
Defendants have also recently begun challenging whether district courts can exercise specific jurisdiction over absent class members’ claims in the wake of Bristol-Myers. In Bristol-Myers, the U.S. Supreme Court ruled that a California state court could not exercise specific jurisdiction over mass tort product liability claims asserted against a non-California resident defendant by non-California residents where their claims (which were based on injuries from the use of a drug manufactured by the defendant) did not arise from the defendant’s contacts with the forum. 137 S. Ct. at 1781. The Court held that the fact that their claims were identical to the claims asserted by forum residents – over whose claims the court could exercise specific jurisdiction – was not enough. Id.
Although Bristol-Myers was not a class action, some district courts have applied its analysis to limit nationwide class actions asserted against defendants in forums where they do not reside (i.e., there is no general jurisdiction). In such cases, courts have held that no specific jurisdiction exists over claims by absent class members that do not arise out of the defendant’s forum state contacts. See Chavez v. Church & Dwight Co., Inc., No. 17 C 1948, 2018 WL 2238191, at *9-11 (N.D. Ill. May 16, 2018); Anderson v. Logitech, Inc., No. 17 C 6104, 2018 WL 1184729, at *1 (N.D. Ill. Mar. 7, 2018); McDonnell v. Nature’s Way Prods., LLC, No. 16 C 5011, 2017 WL 4864910, at *3-5 (N.D. Ill. Oct. 26, 2017); Wenokur v. AXA Equitable Life Ins. Co., No. CV-17-00165-PHX-DLR, 2017 WL 4357916, at *4 n.4 (D. Ariz. Oct. 2, 2017); In re Dental Supplies Antitrust Litig., No. 16 Civ. 696 (BMC) (GRB), 2017 WL 4217115, at *9 (E.D.N.Y. Sept. 20, 2017); but see Chernus v. Logitech, Inc., No. 17-673 (FLW), 2018 WL 1981481, at *7-8 (D.N.J. Apr. 27, 2018); In re Chinese-Manufactured Drywall Prods. Liab. Litig., MDL No. 09-2047, 2017 WL 5971622, at *12 (E.D. La. Nov. 30, 2017).
Impact on Defense
Before challenging the court’s personal jurisdiction, defendants should, of course, first consider the impact that a successful challenge would have on their defense of the case. A court’s dismissal for lack of personal jurisdiction pursuant to Rule 12(b)(2) is without prejudice, meaning that the plaintiff could refile the case in a different court. Further, in multiparty litigation, obtaining dismissal for lack of personal jurisdiction could mean that the litigation ultimately proceeds simultaneously against multiple defendants in two or more forums. Similarly, where a putative class is limited only to forum residents, residents in other states could file additional, state-specific class actions.