Answer to Jurisdiction #3 Essay

 

ANSWER

Subject Matter Jurisdiction

 

There is no federal subject matter jurisdiction for this case. First of all, there is no federal law concerning product liability, so federal question jurisdiction is unavailable. Second, even setting aside the jurisdictional minimum, this is not a diversity case falling under 28 USC 1332(a). A good deal of this was already discussed in connection with Essay Q. 1, but I’ll repeat it here.

 

A Canadian suing a French corporation and a Californian is not a suit between “citizens of different States,” 1332(a)(1). An example of that would be a Californian suing a Delawarean corporation. It is also not a suit between “citizens of a State and citizens or subjects of a foreign state,” 1332(a)(2). An example of that would be a Californian and Delawarean corporation suing a French corporation and a Canadian. It is also not a suit between “citizens of different States and in which citizens or subjects of a foreign state are additional parties, 1332(a)(3). An example of that would be a Californian suing a Delawarean corporation and a French corporation. Finally, it is not a suit between “a foreign state … as plaintiff and citizens of a State or of different States, 1332(a)(4), for obvious reasons.

 

Many of you divided up the subject matter jurisdiction issue into two parts, one concerning P’s action against the D Corp. and another concerning P’s action against E. You then said that E would not be able to dismiss for lack of SMJ (because the action against him is a suit by a Canadian against a Californian, which would fall under 1332(a)(2)) but the D Corp. would be able to get P’s suit against them dismissed, since there is no SMJ for a suit by an alien against an alien. That’s incorrect. Both the D Corp and E could make a motion to dismiss for lack of SMJ. As I said many times in class, one determines SMJ by looking at all the defendants joined by the plaintiff.

 

Although some simply said that there was no SMJ for P’s action against the D Corp, others considered the possibility of whether there would be supplemental jurisdiction for it. It is, after all, part of the same constitutional case or controversy as P’s suit against E. But supplemental jurisdiction would not be available under 1367(b), because “original jurisdiction [for P’s suit against E] is founded solely on section 1332,” P’s claim against the D Corp is a claim by a plaintiff against a person made a party under FRCP 20, and “exercising supplemental jurisdiction over [P’s claim against the D Corp] would be inconsistent with the jurisdictional requirements of section 1332” (because an alien would be suing an alien).

 

Although either E or the D Corp could make a motion to dismiss for lack of SMJ, it is worth noting that the court would have the discretion to dismiss only P’s action against the D Corp, in order to preserve a suit that had diversity jurisdiction. (We never discussed this in class.) P himself could also amend his complaint in response to the motion to dismiss to get rid of the D Corp as a party. But absent these events, the entire case would be dismissed, not merely P’s suit against the D Corp.

 

Venue

 

There is also no venue for this suit. It is true that the D Corp. is an alien, and aliens may be sued in any district, 28 USC 1391(d). But E is not an alien, so venue in the N.D.N.Y. still must be justified. There is no venue under 1391(a)(1) because, although the D Corp’s residence cannot be used to argue that there is no venue, E does not reside in the N.D.N.Y., or indeed anywhere in NY. There is also no venue under 1391(a)(2) because it is not the case that a “substantial part of the events or omissions giving rise to the claim occurred” in the N.D.N.Y. – the relevant events occurred in the S.D.N.Y., California, and France. Finally, the fall-back position 1391(a)(3) does not apply, because there is another district that has venue, e.g. the S.D.N.Y. (a district where a “substantial part of the events or omissions giving rise to the claim occurred”).

 

PJ over the D Corp

 

First of all, we can show PJ over the defendants only by showing that a New York state court would be able to assert PJ over them. See FRCP 4(k)(1)(A). It is insufficient to point to the fact that the President of the D Corp. was served in hand in New York state to show that there is PJ over the D Corp. Unless the President was appointed as the D Corp.’s agent for service of process (and nothing indicating this in the question is provided), PJ over the D Corp. must be answered by showing that there are sufficient Int’l Shoe contacts with the forum state.

The only hope is showing that there is specific jurisdiction over the D Corp (that is, that the contacts with New York that gave rise to PJ are related to the cause of action). There is certainly insufficient evidence of the sort of substantial continuous contacts with New York that could give rise to general jurisdiction there. The D Corp. has no factory or headquarters in New York.

 

Prior to Asahi, this would be considered an easy case. As Brennan noted in his dissent in Worldwide Volkswagen, it is commonly accepted that manufacturers are subject to specific PJ in states where their product is sold, even when the product ends up in the state as a result of the actions of a distributor. Simply being able to reasonably foresee that one’s product would end up in the forum state through the distributor is enough. See also Gray v. American Radiator & Standard Sanitary Corp., 22 Ill. 2d 432, 176 N. E. 2d 761 (1961). Indeed, in Worldwide Volkswagen, there was little doubt that Audi of Germany was subject to PJ in Oklahoma, even though Audis ended up in Oklahoma through the actions of Audi’s distributor, Volkswagen of America. Accordingly, it seems that there should be PJ over the D Corp.

Incidentally, some of you assumed, bizarrely, that the D Corp was not aware that its products were sold in the US. This is highly implausible and makes the argument that there is no PJ over the D Corp too easy. You certainly should have also answered the question on the assumption that the D Corp did know that its products were going to the US (although it never contracted with the X Corp for it to act as its US distributor).

 

Although it seems clear that there is PJ over the D Corp, Asahi may cast doubt upon this. According to O’Connor’s opinion:

The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.

 

True, in Asahi, the product ended up in the forum state as a component of a larger product, but O’Connor’s language is equally applicable to distributor cases. And we do not have evidence that the D Corp did anything more to indicate an intent to serve the New York (or indeed the US) market. For example, the D Corp did not contract with the X Corp for it to distribute the product in the US.

 

But remember that O’Connor’s opinion only had four Justices behind it (O’Connor, Rehnquist, Powell & Scalia). There were also four Justices behind Brennan’s opinion (Brennan, White, Marshall, & Blackmun), which argued that the foreseeability that the product will end up in the forum state is enough. Finally, there is Stevens opinion, which had three Justices behind it (Stevens, White & Blackmun). Stevens appears to accept O’Connor’s requirement that something more than foreseeability is required, but he argued that this requirement can be satisfied by the simple increase in production to satisfy demand in the forum state. Since we have that in this case, it would appear that a majority of the Justices at the time of the Asahi decision would agree that there is PJ in our case (Brennan, White, Marshall, Blackmun, & Stevens).

 

It is also worth mentioning that even if there is power over the D Corp, it is still possible for there to be no PJ because of convenience-McGee considerations. But these considerations do not argue nearly as strongly against PJ as they did in Asahi. In Asahi, all that was left in Cal. State court was an indemnification action by Cheng-Shin (a Taiwanese company) against Asahi (a Japanese company). The applicable law was either Japanese or Taiwanese, the event being litigated was not the accident in California but the contract that the two companies entered into in Asia, and the relevant witnesses were all in Asia. Although we have a foreign plaintiff and defendant here, the event being litigated occurred in New York, many of the witnesses will be in New York and the applicable law may be New York’s. California did not have a strong interest in the action at issue in Asahi, but New York would surely have an interest in actions concerning things blowing up on the streets of New York City.

 

I did not insist that you come to the conclusion that there would be PJ over the D Corp, but I did expect you to speak of the issues discussed above.

 

PJ over E

 

E was tagged in the forum state and it is bedrock law that tagging is a method of gaining PJ over a defendant. This was recently affirmed (albeit somewhat confusedly) in Burnham.

 

But it is worth noting that if there were a case in which the SCt might reverse its position on tagging, it is this one. The problem with tagging is that the contacts with the forum state establishing PJ can often be very meager and the cause of action is almost always utterly unrelated to those contacts. If tagging were examined from an Int’l Shoe perspective, it would often be unacceptable as a means of gaining PJ, as this case shows. E’s contact with New York is very small (just transferring in an airport in the state) and the cause of action does not relate to those contacts. The argument for PJ is weaker than in Burnham, for in that case the defendant father visited California for a longer period of time and his visit was in part to see his children, which meant that his contact was at least somewhat related to the cause of action.

 

But it is unclear whether we should worry that tagging fails to satisfy Int’l Shoe. Although Brennan insisted in his concurring opinion in Burnham that tagging be assessed from an Int’l Shoe perspective (he just thought that Int’l Shoe was satisfied in the Burnham case itself), there were only four Justices (Brennan, Marshall, Blackmun & O’Connor) behind that opinion.

 

There were four Justices (Scalia, Rehnquist, White & Kennedy) behind Scalia’s approach that there can be PJ over a defendant if the defendant would be subject to PJ according to the standards accepted at the time of the enactment of the 14^th Amendment and currently largely accepted by the states, even if the criteria of Int’l Shoe are not satisfied. We have no majority opinion on the matter, because Stevens argued that there was PJ in Burnham without giving much an argument of any sort (he claimed it was “a very easy case”). So although we know that tagging can provide PJ over a defendant in a case like Burnham, we aren’t sure whether the reason is that Burnham satisfied Int’l Shoe or because Int’l Shoe does not matter.

 

If Brennan’s reasoning applies, there is an argument that there should be no PJ in this case.