CARNIVAL CRUISE LINES, INC. v.
SHUTE ET VIR CERTIORARI TO THE UNITED required to set aside the clause on grounds of inconvenience. Pp. 594-595.
STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 89-1647 Argued
January 15, 1991 Decided April 17, 1991
After the respondents Shute, a Washington State couple, purchased passage on a
ship owned by petitioner, a Florida-based cruise line, petitioner sent them tickets
containing a clause designating courts in Florida as the agreed-upon fora for the
resolution of disputes. The Shutes boarded the ship in Los Angeles, and, while in
international waters off the Mexican coast, Mrs. Shute suffered injuries when she
slipped on a deck mat. The Shutes filed suit in a Washington Federal District Court,
which granted summary judgment for petitioner. The Court of Appeals reversed,
holding, inter alia, that the forum-selection clause should not be enforced under The
Bremen v. Zapata Off-Shore Co., 407 U.S. 1 , because it was not "freely bargained
for," and because its enforcement would operate to deprive the Shutes of their day in
court in light of evidence indicating that they were physically and financially incapable
of pursuing the litigation in Florida.
Held:
The Court of Appeals erred in refusing to enforce the forum-selection clause. Pp. 590-
597.
(a) The Bremen Court's statement that a freely negotiated forum-selection clause,
such as the one there at issue, should be given full effect, 407 U.S. at 12-13, does not
support the Court of Appeals' determination that a nonnegotiated forum clause in a
passage contract is never enforceable simply because it is not the subject of
bargaining. Whereas it was entirely reasonable for The Bremen Court to have
expected the parties to have negotiated with care in selecting a forum for the
resolution of disputes arising from their complicated international agreement, it would
be entirely unreasonable to assume that a cruise passenger would or could negotiate
the terms of a forum clause in a routine commercial cruise ticket form. Nevertheless,
including a reasonable forum clause in such a form contract well may be permissible
for several reasons. Because it is not unlikely that a mishap in a cruise could subject
a cruise line to litigation in several different fora, the line has a special interest in
limiting such fora. Moreover, a clause establishing ex ante the dispute resolution
forum has the salutary effect of dispelling confusion as to where suits may be brought
and defended, thereby sparing litigants time and expense and conserving judicial
resources. Furthermore, it is likely that passengers purchasing tickets [499 U.S. 585,
586] containing a forum clause like the one here at issue benefit in the form of
reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in
which it may be sued. Pp. 590-594.
(b) The Court of Appeals' conclusion that the clause here at issue should not be
enforced because the Shutes are incapable of pursuing this litigation in Florida is not
justified by The Bremen Court's statement that "the serious inconvenience of the
contractual forum to one or both of the parties might carry greater weight in
determining the reasonableness of the forum clause." Id., at 17. That statement was
made in the context of a hypothetical "agreement between two Americans to resolve
their essentially local disputes in a remote alien forum." Ibid. Here, in contrast, Florida
is not such a forum, nor - given the location of Mrs. Shute's accident - is this dispute
an essentially local one inherently more suited to resolution in Washington than in
Florida. In light of these distinctions, and because the Shutes do not claim lack of
notice of the forum clause, they have not satisfied the "heavy burden of proof," ibid.
CONFLICT OF LAWS 3D 1/08-09 Page 1 of 97
(c) Although forum selection clauses contained in form passage contracts are
subject to judicial scrutiny for fundamental fairness, there is no indication that
petitioner selected Florida to discourage cruise passengers from pursuing legitimate
claims or obtained the Shutes' accession to the forum clause by fraud or
overreaching. P. 595.
(d) By its plain language, the forum selection clause at issue does not violate 46
U.S.C. App. 183c, which, inter alia, prohibits a vessel owner from inserting in any
contract a provision depriving a claimant of a trial "by court of competent
jurisdiction" for loss of life or personal injury resulting from negligence. Pp. 595-597.
897 F.2d 377 (CA9 1990), reversed.
BLACKMUN, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and
WHITE, O'CONNOR, SCALIA, KENNEDY, and SOUTER, JJ., joined. STEVENS, J.,
filed a dissenting opinion, in which MARSHALL, J., joined, post, p. 597.
Richard K. Willard argued the cause for petitioner. With him on the briefs were
David L. Roll and Lawrence D. Winson.
Gregory J. Wall argued the cause and filed a brief for respondents. *
JUSTICE BLACKMUN delivered the opinion of the Court.
In this admiralty case we primarily consider whether the United States Court of
Appeals for the Ninth Circuit correctly refused to enforce a forum selection clause
contained in tickets issued by petitioner Carnival Cruise Lines, Inc., to respondents
Eulala and Russel Shute.
I
The Shutes, through an Arlington, Wash., travel agent, purchased passage for a 7-
day cruise on petitioner's ship, the Tropicale. Respondents paid the fare to the
agent, who forwarded the payment to petitioner's headquarters in Miami, Fla.
Petitioner then prepared the tickets and sent them to respondents in the State of
Washington. The face of each ticket, at its left-hand lower corner, contained this
admonition:
SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES IMPORTANT!
PLEASE READ CONTRACT - ON LAST PAGES 1, 2, 3" App. 15.
The following appeared on "contract page 1" of each ticket:
Atty. Jose A. Bernas

"TERMS AND CONDITIONS OF PASSAGE CONTRACT TICKET"
.....
3. (a) The acceptance of this ticket by the person or persons named hereon as
passengers shall be deemed to be an acceptance and agreement by each of them of
all of the terms and conditions of this Passage Contract Ticket.
.....
8. It is agreed by and between the passenger and the Carrier that all disputes and
matters whatsoever arising under, in connection with or incident to this Contract [499
U.S. 585, 588] shall be litigated, if at all, in and before a Court located in the State of
Florida, U.S.A. to the exclusion of the Courts of any other state or country. Id., at 16.
The last quoted paragraph is the forum selection clause at issue.
II
Respondents boarded the Tropicale in Los Angeles, Cal. The ship sailed to Puerto
Vallarta, Mexico, and then returned to Los Angeles. While the ship was in
international waters off the Mexican coast, respondent Eulala Shute was injured when
she slipped on a deck mat during a guided tour of the ship's galley. Respondents filed
suit against petitioner in the United States District Court for the Western District of
Washington, claiming that Mrs. Shute's injuries had been caused by the negligence of
Carnival Cruise Lines and its employees. Id., at 4.
Petitioner moved for summary judgment, contending that the forum clause in
respondents' tickets required the Shutes to bring their suit against petitioner in a court
in the State of Florida. Petitioner contended, alternatively, that the District Court
lacked personal jurisdiction over petitioner because petitioner's contacts with the
State of Washington were insubstantial. The District Court granted the motion,
holding that petitioner's contacts with Washington were constitutionally insufficient to
support the exercise of personal jurisdiction. See App. to Pet. for Cert. 60a.
The Court of Appeals reversed. Reasoning that, "but for" petitioner's solicitation of
business in Washington, respondents would not have taken the cruise and Mrs.
Shute would not have been injured, the court concluded that petitioner had sufficient
contacts with Washington to justify the District Court's exercise of personal
jurisdiction. 897 F.2d 377, 385-386 (CA9 1990). * [499 U.S. 585, 589]
Turning to the forum selection clause, the Court of Appeals acknowledged that a
court concerned with the enforceability of such a clause must begin its analysis with
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), where this Court held that
forum selection clauses, although not "historically . . . favored," are "prima facie valid."
CONFLICT OF LAWS 3D 1/08-09
Id., at 9-10. See 897 F.2d, at 388. The appellate court concluded that the forum
clause should not be enforced because it "was not freely bargained for." Id., at 389.
As an "independent justification" for refusing to enforce the clause, the Court of
Appeals noted that there was evidence in the record to indicate that "the Shutes are
physically and financially incapable of pursuing this litigation in Florida," and that the
enforcement of the clause would operate to deprive them of their day in court, and
thereby contravene this Court's holding in The Bremen. 897 F.2d, at 389.
We granted certiorari to address the question whether the Court of Appeals was
correct in holding that the District Court should hear respondents' tort claim against
petitioner. 498 U.S. 807 -808 (1990). Because we find the forum selection clause to
be dispositive of this question, we need not consider petitioner's constitutional
argument as to personal jurisdiction. See Ashwander v. TVA, 297 U.S. 288, 347
(1936) (Brandeis, J., concurring) ("`It is not the habit of the Court to decide
questions of a constitutional nature unless [499 U.S. 585, 590] absolutely
necessary to a decision of the case,'" quoting Burton v. United States, 196 U.S. 283,
295 (1905)).
III
We begin by noting the boundaries of our inquiry. First, this is a case in admiralty,
and federal law governs the enforceability of the forum selection clause we
scrutinize. See Archawski v. Hanioti, 350 U.S. 532, 533 (1956); The Moses Taylor,
4 Wall. 411, 427 (1867); Tr. of Oral Arg. 36-37, 12, 47-48. Cf. Stewart Organization,
Inc. v. Ricoh Corp., 487 U.S. 22, 28 -29 (1988). Second, we do not address the
question whether respondents had sufficient notice of the forum clause before
entering the contract for passage. Respondents essentially have conceded that they
had notice of the forum selection provision. Brief for Respondent 26 ("The
respondents do not contest the incorporation of the provisions nor [sic] that the
forum selection clause was reasonably communicated to the respondents, as much
as three pages of fine print can be communicated."). Additionally, the Court of
Appeals evaluated the enforceability of the forum clause under the assumption,
although "doubtful," that respondents could be deemed to have had knowledge of
the clause. See 897 F.2d, at 389 and n. 11.
Within this context, respondents urge that the forum clause should not be enforced
because, contrary to this Court's teachings in The Bremen, the clause was not the
product of negotiation, and enforcement effectively would deprive respondents of
their day in court. Additionally, respondents contend that the clause violates the
Limitation of Vessel Owner's Liability Act, 46 U.S.C. App. 183c. We consider these
arguments in turn.
IV
A
Both petitioner and respondents argue vigorously that the Court's opinion in The
Bremen governs this case, and each side purports to find ample support for its
position in that [499 U.S. 585, 591] opinion's broad-ranging language. This
Page 2 of 97 Atty. Jose A. Bernas
seeming paradox derives in large part from key factual differences between this case
and The Bremen, differences that preclude an automatic and simple application of
The Bremen's general principles to the facts here.
In The Bremen, this Court addressed the enforceability of a forum selection clause in
a contract between two business corporations. An American corporation, Zapata,
made a contract with Unterweser, a German corporation, for the towage of Zapata's
ocean-going drilling rig from Louisiana to a point in the Adriatic Sea off the coast of
Italy. The agreement provided that any dispute arising under the contract was to be
resolved in the London Court of Justice. After a storm in the Gulf of Mexico seriously
damaged the rig, Zapata ordered Unterweser's ship to tow the rig to Tampa, Fla., the
nearest point of refuge. Thereafter, Zapata sued Unterweser in admiralty in federal
court at Tampa. Citing the forum clause, Unterweser moved to dismiss. The District
Court denied Unterweser's motion, and the Court of Appeals for the Fifth Circuit,
sitting en banc on rehearing, and by a sharply divided vote, affirmed. In re Complaint
of Unterweser Reederei, GmBH, 446 F.2d 907 (1971).
This Court vacated and remanded, stating that, in general, a freely negotiated private
international agreement, unaffected by fraud, undue influence, or overweening
bargaining power, such as that involved here, should be given full effect. 407 U.S., at
12 -13 (footnote omitted). The Court further generalized that "in the light of present-
day commercial realities and expanding international trade we conclude that the
forum clause should control absent a strong showing that it should be set aside." Id.,
at 15. The Court did not define precisely the circumstances that would make it
unreasonable for a court to enforce a forum clause. Instead, the Court discussed a
number of factors that made it reasonable to enforce the clause at issue in The
Bremen and [499 U.S. 585, 592] that, presumably, would be pertinent in any
determination whether to enforce a similar clause.
In this respect, the Court noted that there was "strong evidence that the forum clause
was a vital part of the agreement, and [that] it would be unrealistic to think that the
parties did not conduct their negotiations, including fixing the monetary terms, with the
consequences of the forum clause figuring prominently in their calculations." Id., at 14
(footnote omitted). Further, the Court observed that it was not "dealing with an
agreement between two Americans to resolve their essentially local disputes in a
remote alien forum," and that, in such a case, "the serious inconvenience of the
contractual forum to one or both of the parties might carry greater weight in
determining the reasonableness of the forum clause." Id., at 17. The Court stated
that, even where the forum clause establishes a remote forum for resolution of
conflicts, "the party claiming [unfairness] should bear a heavy burden of proof." Ibid.
In applying The Bremen, the Court of Appeals in the present litigation took note of the
foregoing "reasonableness" factors and rather automatically decided that the forum
selection clause was unenforceable because, unlike the parties in The Bremen,
respondents are not business persons, and did not negotiate the terms of the clause
with petitioner. Alternatively, the Court of Appeals ruled that the clause should not be
enforced because enforcement effectively would deprive respondents of an
opportunity to litigate their claim against petitioner.
The Bremen concerned a "far from routine transaction between companies of two
different nations contemplating the tow of an extremely costly piece of equipment
from Louisiana across the Gulf of Mexico and the Atlantic Ocean, through the
Mediterranean Sea to its final destination in the Adriatic Sea." Id., at 13. These facts
CONFLICT OF LAWS 3D 1/08-09 Page 3 of 97
suggest that, even apart from the evidence of negotiation regarding the forum
clause, it was entirely reasonable for the Court in The [499 U.S. 585, 593] Bremen
to have expected Unterweser and Zapata to have negotiated with care in selecting a
forum for the resolution of disputes arising from their special towing contract.
In contrast, respondents' passage contract was purely routine, and doubtless nearly
identical to every commercial passage contract issued by petitioner and most other
cruise lines. See, e. g., Hodes v. S.N.C. Achille Lauro ed Altri-Gestione, 858 F.2d
905, 910 (CA3 1988), cert. dism'd, 490 U.S. 1001 (1989). In this context, it would be
entirely unreasonable for us to assume that respondents - or any other cruise
passenger - would negotiate with petitioner the terms of a forum-selection clause in
an ordinary commercial cruise ticket. Common sense dictates that a ticket of this
kind will be a form contract the terms of which are not subject to negotiation, and
that an individual purchasing the ticket will not have bargaining parity with the cruise
line. But by ignoring the crucial differences in the business contexts in which the
respective contracts were executed, the Court of Appeals' analysis seems to us to
have distorted somewhat this Court's holding in The Bremen.
In evaluating the reasonableness of the forum clause at issue in this case, we must
refine the analysis of The Bremen to account for the realities of form passage
contracts. As an initial matter, we do not adopt the Court of Appeals' determination
that a nonnegotiated forum-selection clause in a form ticket contract is never
enforceable simply because it is not the subject of bargaining. Including a
reasonable forum clause in a form contract of this kind well may be permissible for
several reasons: first, a cruise line has a special interest in limiting the fora in which
it potentially could be subject to suit. Because a cruise ship typically carries
passengers from many locales, it is not unlikely that a mishap on a cruise could
subject the cruise line to litigation in several different fora. See The Bremen, 407
U.S., at 13 and n. 15; Hodes, 858 F.2d, at 913. Additionally, a clause establishing
ex ante the forum for dispute resolution has the salutary [499 U.S. 585, 594] effect
of dispelling any confusion about where suits arising from the contract must be
brought and defended, sparing litigants the time and expense of pretrial motions to
determine the correct forum, and conserving judicial resources that otherwise would
be devoted to deciding those motions. See Stewart Organization, 487 U.S., at 33
(concurring opinion). Finally, it stands to reason that passengers who purchase
tickets containing a forum clause like that at issue in this case benefit in the form of
reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in
which it may be sued. Cf. Northwestern Nat. Ins. Co. v. Donovan, 916 F.2d 372, 378
(CA7 1990).
We also do not accept the Court of Appeals' "independent justification" for its
conclusion that The Bremen dictates that the clause should not be enforced
because "[t]here is evidence in the record to indicate that the Shutes are physically
and financially incapable of pursuing this litigation in Florida." 897 F.2d, at 389. We
do not defer to the Court of Appeals' findings of fact. In dismissing the case for lack
of personal jurisdiction over petitioner, the District Court made no finding regarding
the physical and financial impediments to the Shutes' pursuing their case in Florida.
The Court of Appeals' conclusory reference to the record provides no basis for this
Court to validate the finding of inconvenience. Furthermore, the Court of Appeals
did not place in proper context this Court's statement in The Bremen that "the
serious inconvenience of the contractual forum to one or both of the parties might
carry greater weight in determining the reasonableness of the forum clause." 407
Atty. Jose A. Bernas
U.S., at 17 . The Court made this statement in evaluating a hypothetical "agreement
between two Americans to resolve their essentially local disputes in a remote alien
forum." Ibid. In the present case, Florida is not a "remote alien forum," nor - given the
fact that Mrs. Shute's accident occurred off the coast of Mexico - is this dispute an
essentially local one inherently more suited to resolution in the State of Washington
than in Florida. In [499 U.S. 585, 595] light of these distinctions, and because
respondents do not claim lack of notice of the forum clause, we conclude that they
have not satisfied the "heavy burden of proof," ibid. required to set aside the clause
on grounds of inconvenience.
It bears emphasis that forum selection clauses contained in form passage contracts
are subject to judicial scrutiny for fundamental fairness. In this case, there is no
indication that petitioner set Florida as the forum in which disputes were to be
resolved as a means of discouraging cruise passengers from pursuing legitimate
claims. Any suggestion of such a bad faith motive is belied by two facts: petitioner has
its principal place of business in Florida, and many of its cruises depart from and
return to Florida ports. Similarly, there is no evidence that petitioner obtained
respondents' accession to the forum clause by fraud or overreaching. Finally,
respondents have conceded that they were given notice of the forum provision and,
therefore, presumably retained the option of rejecting the contract with impunity. In
the case before us, therefore, we conclude that the Court of Appeals erred in refusing
to enforce the forum selection clause.
B
Respondents also contend that the forum selection clause at issue violates 46 U.S.C.
App. 183c. That statute, enacted in 1936, see 49 Stat. 1480, provides:
"It shall be unlawful for the . . . owner of any vessel transporting passengers between
ports of the United States or between any such port and a foreign port to insert in any
rule, regulation, contract, or agreement any provision or limitation (1) purporting, in
the event of loss of life or bodily injury arising from the negligence or fault of such
owner or his servants, to relieve such owner . . . from liability, or from liability beyond
any stipulated amount, for such loss or injury, or (2) purporting in such event to
lessen, weaken, or avoid the right of any claimant to a trial by court of competent [499
U.S. 585, 596] jurisdiction on the question of liability for such loss or injury, or the
measure of damages therefor. All such provisions or limitations contained in any such
rule, regulation, contract, or agreement are declared to be against public policy and
shall be null and void and of no effect."
By its plain language, the forum selection clause before us does not take away
respondents' right to "a trial by [a] court of competent jurisdiction," and thereby
contravene the explicit proscription of 183c. Instead, the clause states specifically that
actions arising out of the passage contract shall be brought "if at all," in a court
"located in the State of Florida," which, plainly, is a "court of competent jurisdiction"
within the meaning of the statute.
Respondents appear to acknowledge this by asserting that, although the forum
CONFLICT OF LAWS 3D 1/08-09 Page 4 of 97
clause does not directly prevent the determination of claims against the cruise line,
it causes plaintiffs unreasonable hardship in asserting their rights, and therefore
violates Congress' intended goal in enacting 183c. Significantly, however,
respondents cite no authority for their contention that Congress' intent in enacting
183c was to avoid having a plaintiff travel to a distant forum in order to litigate. The
legislative history of 183c suggests, instead, that this provision was enacted in
response to passenger ticket conditions purporting to limit the shipowner's liability
for negligence or to remove the issue of liability from the scrutiny of any court by
means of a clause providing that "the question of liability and the measure of
damages shall be determined by arbitration." See S.Rep. No. 2061, 74th Cong., 2d
Sess. 6 (1936); H.R.Rep. No. 2517, 74th Cong., 2d Sess., 6 (1936). See also Safety
of Life and Property at Sea: Hearings Before the Committee on Merchant Marine
and Fisheries, 74th Cong., 2d Sess., pt. 4, pp. 20, 36-37, 57, 109-110, 119 (1936).
There was no prohibition of a forum selection clause. Because the clause before us
allows for judicial resolution of claims against petitioner and does [499 U.S. 585,
597] not purport to limit petitioner's liability for negligence, it does not violate 183c.
V
The judgment of the Court of Appeals is reversed.
It is so ordered
[ Footnote * ] The Court of Appeals had filed an earlier opinion also reversing the
District Court and ruling that the District Court had personal [499 U.S. 585, 589]
jurisdiction over the cruise line, and that the forum selection clause in the tickets
was unreasonable, and was not to be enforced. 863 F.2d 1437 (CA9 1988). That
opinion, however, was withdrawn when the court certified to the Supreme Court of
Washington the question whether the Washington long-arm statute,
Wash.Rev.Code 4.28.185 (1988), conferred personal jurisdiction over Carnival
Cruise Lines for the claim asserted by the Shutes. See 872 F.2d 930 (CA9 1989).
The Washington Supreme Court answered the certified question in the affirmative
on the ground that the Shutes' claim "arose from" petitioner's advertisement in
Washington and the promotion of its cruises there. 113 Wash.2d 763, 783 P.2d 78
(1989). The Court of Appeals then "refiled" its opinion "as modified herein." See 897
F.2d at 380, n. 1.
JUSTICE STEVENS, with whom JUSTICE MARSHALL joins, dissenting.
The Court prefaces its legal analysis with a factual statement that implies that a
purchaser of a Carnival Cruise Lines passenger ticket is fully and fairly notified
about the existence of the choice of forum clause in the fine print on the back of the
ticket. See ante at 587-588. Even if this implication were accurate, I would disagree
with the Court's analysis. But, given the Court's preface, I begin my dissent by
noting that only the most meticulous passenger is likely to become aware of the
forum selection provision. I have therefore appended to this opinion a facsimile
[omitted] of the relevant text, using the type size that actually appears in the ticket
itself. A careful reader will find the forum selection clause in the eighth of the twenty-
five numbered paragraphs.
Atty. Jose A. Bernas
Of course, many passengers, like the respondents in this case, see ante at 587, will
not have an opportunity to read paragraph 8 until they have actually purchased their
tickets. By this point, the passengers will already have accepted the condition set
forth in paragraph 16(a), which provides that "[t]he Carrier shall not be liable to make
any refund to passengers in respect of . . . tickets wholly or partly not used by a
passenger." Not knowing whether or not that provision is legally enforceable, I
assume that the average passenger would accept the risk of having to file suit in
Florida in the event of an injury, rather than canceling - without a refund - a planned
vacation at the last minute. The fact that the cruise line can reduce its litigation costs,
and therefore its liability insurance premiums, by forcing this choice on its passengers
does not, in my opinion, suffice to render the [499 U.S. 585, 598] provision
reasonable. Cf. Steven v. Fidelity & Casualty Co. of New York, 58 Cal.2d 862, 883,
377 P.2d 284, 298 (1962) (refusing to enforce limitation on liability in insurance policy
because insured "must purchase the policy before he even knows its provisions").
Even if passengers received prominent notice of the forum selection clause before
they committed the cost of the cruise, I would remain persuaded that the clause was
unenforceable under traditional principles of federal admiralty law, and is "null and
void" under the terms of Limited Liability Act, 49 Stat. 1480, as amended, 46 U.S.C.
App. 183c, which was enacted in 1936 to invalidate expressly stipulations limiting
shipowners' liability for negligence.
Exculpatory clauses in passenger tickets have been around for a long time. These
clauses are typically the product of disparate bargaining power between the carrier
and the passenger, and they undermine the strong public interest in deterring
negligent conduct. For these reasons, courts long before the turn of the century
consistently held such clauses unenforceable under federal admiralty law. Thus, in a
case involving a ticket provision purporting to limit the shipowner's liability for the
negligent handling of baggage, this Court wrote:
"It is settled in the courts of the United States that exemptions limiting carriers from
responsibility for the negligence of themselves or their servants are both unjust and
unreasonable, and will be deemed as wanting in the element of voluntary assent;
and, besides, that such conditions are in conflict with public policy. This doctrine was
announced so long ago, and has been so frequently reiterated, that it is elementary.
We content ourselves with referring to the cases of the Baltimore & Ohio &c. Railway
v. Voigt, 176 U.S. 498, 505 , 507, and Knott v. Botany Mills, 179 U.S. 69, 71 [(1900)],
where the previously adjudged cases are referred to and the principles [499 U.S. 585,
599] by them expounded are restated." The Kensington, 183 U.S. 263, 268 (1902).
Clauses limiting a carrier's liability or weakening the passenger's right to recover for
the negligence of the carrier's employees come in a variety of forms. Complete
exemptions from liability for negligence or limitations on the amount of the potential
damage recovery, 1 requirements that notice of claims be filed within an
unreasonably short period of time, 2 provisions mandating a choice of law that is
favorable to the defendant in negligence cases, 3 and forum-selection clauses are all
similarly designed to put a thumb on the carrier's side of the scale of justice. 4 [499
U.S. 585, 600]
Forum selection clauses in passenger tickets involve the intersection of two strands of
CONFLICT OF LAWS 3D 1/08-09 Page 5 of 97
traditional contract law that qualify the general rule that courts will enforce the terms
of a contract as written. Pursuant to the first strand, courts traditionally have
reviewed with heightened scrutiny the terms of contracts of adhesion, form contracts
offered on a take-or-leave basis by a party with stronger bargaining power to a party
with weaker power. Some commentators have questioned whether contracts of
adhesion can justifiably be enforced at all under traditional contract theory because
the adhering party generally enters into them without manifesting knowing and
voluntary consent to all their terms. See, e. g., Rakoff, Contracts of Adhesion: An
Essay in Reconstruction, 96 Harv.L.Rev. 1173, 1179-1180 (1983); Slawson, Mass
Contracts: Lawful Fraud in California, 48 S.Cal.L.Rev. 1, 1213 (1974); K. Llewellyn,
The Common Law Tradition 370-371 (1960).
The common law, recognizing that standardized form contracts account for a
significant portion of all commercial agreements, has taken a less extreme position,
and instead subjects terms in contracts of adhesion to scrutiny for reasonableness.
Judge J. Skelly Wright set out the state of the law succinctly in Williams v. Walker-
Thomas Furniture Co., 121 U.S. App. D.C. 315, 319-320, 350 F.2d 445, 449-450
(1965) (footnotes omitted):
"Ordinarily, one who signs an agreement without full knowledge of its terms might
be held to assume the risk that he has entered a one-sided bargain. But when a
party of little bargaining power, and hence little real choice, signs a commercially
unreasonable contract with little or no knowledge of its terms, it is hardly likely that
his consent, or even an objective manifestation of his consent, [499 U.S. 585, 601]
was ever given to all of the terms. In such a case, the usual rule that the terms of
the agreement are not to be questioned should be abandoned and the court should
consider whether the terms of the contract are so unfair that enforcement should be
withheld."
See also Steven, 58 Cal.2d at 879-883, 377 P.2d at 295-297; Henningsen v.
Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960).
The second doctrinal principle implicated by forum selection clauses is the
traditional rule that "contractual provisions, which seek to limit the place or court in
which an action may . . . be brought, are invalid as contrary to public policy." See
Dougherty, Validity of Contractual Provision Limiting Place or Court in Which Action
May Be Brought, 31 A.L.R.4th 404, 409, 3 (1984). See also Home Insurance Co. v.
Morse, 20 Wall. 445, 451 (1874). Although adherence to this general rule has
declined in recent years, particularly following our decision in The Bremen v. Zapata
Off-Shore Co., 407 U.S. 1 (1972), the prevailing rule is still that forum selection
clauses are not enforceable if they were not freely bargained for, create additional
expense for one party, or deny one party a remedy. See 31 A.L.R. 4th, at 409-438
(citing cases). A forum selection clause in a standardized passenger ticket would
clearly have been unenforceable under the common law before our decision in The
Bremen, see 407 U.S. at 9, and n. 10, and, in my opinion, remains unenforceable
under the prevailing rule today.
The Bremen, which the Court effectively treats as controlling this case, had nothing
to say about stipulations printed on the back of passenger tickets. That case
involved the enforceability of a forum selection clause in a freely negotiated
Atty. Jose A. Bernas
international agreement between two large corporations providing for the towage of a
vessel from the Gulf of Mexico to the Adriatic Sea. The Court recognized that such
towage agreements had generally been held unenforceable in American [499 U.S.
585, 602] courts, 5 but held that the doctrine of those cases did not extend to
commercial arrangements between parties with equal bargaining power.
The federal statute that should control the disposition of the case before us today was
enacted in 1936, when the general rule denying enforcement of forum selection
clauses was indisputably widely accepted. The principal subject of the statute
concerned the limitation of shipowner liability, but, as the following excerpt from the
House Report explains, the section that is relevant to this case was added as a direct
response to shipowners' ticketing practices.
"During the course of the hearings on the bill (H.R. 9969) there was also brought to
the attention of the committee a practice of providing on the reverse side of steamship
tickets that, in the event of damage or injury caused by the negligence or fault of the
owner or his servants, the liability of the owner shall be limited to a stipulated amount,
in some cases $5,000, and in others substantially lower amounts, or that in such
event the question of liability and the measure of damages shall be determined by
arbitration. The amendment to chapter 6 of title 48 of the Revised Statutes proposed
to be made by section 2 of the committee amendment is intended to, and in the
opinion of the committee will, put a stop to all such practices and practices of a like
character." H.R.Rep. No. 2517, 74th Cong., 2d Sess., 6-7 (1936) (emphasis added);
see also S.Rep. No. 2061, 74th Cong., 2d Sess., 6-7 (1936). [499 U.S. 585, 603]
The intent to "put a stop to all such practices and practices of a like character" was
effectuated in the second clause of the statute. It reads:
"It shall be unlawful for the manager, agent, master, or owner of any vessel
transporting passengers between ports of the United States or between any such port
and a foreign port to insert in any rule, regulation, contract, or agreement any
provision or limitation (1) purporting, in the event of loss of life or bodily injury arising
from the negligence or fault of such owner or his servants, to relieve such owner,
master, or agent from liability, or from liability beyond any stipulated amount, for such
loss or injury, or (2) purporting in such event to lessen, weaken, or avoid the right of
any claimant to a trial by court of competent jurisdiction on the question of liability for
such loss or injury, or the measure of damages therefor. All such provisions or
limitations contained in any such rule, regulation, contract, or agreement are declared
to be against public policy and shall be null and void and of no effect." 46 U.S.C. App.
183c (emphasis added).
The stipulation in the ticket that Carnival Cruise sold to respondents certainly lessens
or weakens their ability to recover for the slip and fall incident that occurred off the
west coast of Mexico during the cruise that originated and terminated in Los Angeles,
California. It is safe to assume that the witnesses - whether other passengers or
members of the crew - can be assembled with less expense and inconvenience at a
CONFLICT OF LAWS 3D 1/08-09
west coast forum than in a Florida court several thousand miles from the scene of
the accident.
A liberal reading of the 1936 statute is supported by both its remedial purpose and
by the legislative history's general condemnation of "all such practices." Although
the statute does not specifically mention forum selection clauses, its language is
broad enough to encompass them. The absence of a [499 U.S. 585, 604] specific
reference is adequately explained by the fact that such clauses were already
unenforceable under common law, and would not often have been used by carriers,
which were relying on stipulations that purported to exonerate them from liability
entirely. Cf. Moskal v. United States, 498 U.S. 103, 110 -113 (1990).
The Courts of Appeals, construing an analogous provision of the Carriage of Goods
by Sea Act, 46 U.S.C. App. 1300 et seq., have unanimously held invalid as
limitations on liability forum selection clauses requiring suit in foreign jurisdictions.
See, e. g., Hughes Drilling Fluids v. M/V Luo Fu Shan, 852 F.2d 840 (CA5 1988),
cert. denied, 489 U.S. 1033 (1989); Union Ins. Soc. of Canton, Ltd. v. S.S. Elikon,
642 F.2d 721, 724-25 (CA4 1981); Indussa Corp. v. S.S. Ranborg, 377 F.2d 200,
203-204 (CA2 1967). Commentators have also endorsed this view. See, e. g., G.
Gilmore & C. Black, The Law of Admiralty 145, and n. 23 (2nd ed. 1975);
Mendelsohn, Liberalism, Choice of Forum Clauses and the Hague Rules, 2 J. of
Maritime Law & Comm. 661, 663-666 (1971). The forum selection clause here does
not mandate suit in a foreign jurisdiction, and therefore arguably might have less of
an impact on a plaintiff's ability to recover. See Fireman's Fund American Ins. Cos.
v. Puerto Rican Forwarding Co., 492 F.2d 1294 (CA1 1974). However, the plaintiffs
in this case are not large corporations, but individuals, and the added burden on
them of conducting a trial at the opposite end of the country is likely proportional to
the additional cost to a large corporation of conducting a trial overseas. 6
Under these circumstances, the general prohibition against stipulations purporting
"to lessen, weaken, or avoid" the passenger's right to a trial certainly should be
construed to apply to the manifestly unreasonable stipulation in these passengers'
[499 U.S. 585, 605] tickets. Even without the benefit of the statute, I would
continue to apply the general rule that prevailed prior to our decision in The Bremen
to forum selection clauses in passenger tickets.
I respectfully dissent.
Page 6 of 97 Atty. Jose A. Bernas
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Syllabus
Petitioner Unterweser made an agreement to tow respondent's drilling rig from
Louisiana to Italy. The contract contained a forum-selection clause providing for the
litigation of any dispute in the High Court of Justice in London. When the rig under
tow was damaged in a storm, respondent instructed Unterweser to tow the rig to
Tampa, the nearest port of refuge. There, respondent brought suit in admiralty
against petitioners. Unterweser invoked the forum clause in moving for dismissal for
want of jurisdiction and brought suit in the English court, which ruled that it had
jurisdiction under the contractual forum provision. The District Court, relying on
Carbon Black Export, Inc. v. The Monrosa, 254 F.2d 297, held the forum-selection
clause unenforceable, and refused to decline jurisdiction on the basis of forum non
conveniens. The Court of Appeals affirmed.
Held: The forum-selection clause, which was a vital part of the towing contract, is
binding on the parties unless respondent can meet the heavy burden of showing that
its enforcement would be unreasonable, unfair, or unjust. Pp. 407 U. S. 8-20
428 F.2d 888 and 446 F.2d 907, vacated and remanded.
BURGER, C. J., delivered the opinion of the Court, in which BRENNAN, STEWART,
WHITE, MARSHALL, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. WHITE,
J., filed a concurring statement, post, p. 407 U. S. 20. DOUGLAS, J., filed a
dissenting opinion, post, p. 407 U. S. 20.
Page 407 U. S. 2
MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari to review a judgment of the United States Court of Appeals for
the Fifth Circuit declining to enforce a forum selection clause governing disputes
arising under an international towage contract between petitioners and respondent.
The circuits have differed in their approach to such clauses. [Footnote 1] For the
reasons stated hereafter, we vacate the judgment of the Court of Appeals.
In November, 1967, respondent Zapata, a Houston-based American corporation,
contracted with petitioner Unterweser, a German corporation, to tow Zapata's ocean-
going, self-elevating drilling rig Chaparral from Louisiana to a point off Ravenna, Italy,
in the Adriatic Sea, where Zapata had agreed to drill certain wells.
Zapata had solicited bids for the towage, and several companies, including
Unterweser, had responded. Unterweser was the low bidder and Zapata requested it
to submit a contract, which it did. The contract submitted by Unterweser contained the
following provision, which is at issue in this case:
"Any dispute arising must be treated before the London Court of Justice. "
Page 407 U. S. 3
CONFLICT OF LAWS 3D 1/08-09
In addition, the contract contained two clauses purporting to exculpate Unterweser
from liability for damages to the towed barge. [Footnote 2]
After reviewing the contract and making several changes, but without any alteration
in the forum selection or exculpatory clauses, a Zapata vice-president executed the
contract and forwarded it to Unterweser in Germany, where Unterweser accepted
the changes, and the contract became effective.
On January 5, 1968, Unterweser's deep sea tug Bremen departed Venice,
Louisiana, with the Chaparral in tow bound for Italy. On January 9, while the flotilla
was in international waters in the middle of the Gulf of Mexico, a severe storm
arose. The sharp roll of the Chaparral in Gulf waters caused its elevator legs, which
had been raised for the voyage, to break off and fall into the sea, seriously
damaging the Chaparral. In this emergency situation, Zapata instructed the Bremen
to tow its damaged rig to Tampa, Florida, the nearest port of refuge.
On January 12, Zapata, ignoring its contract promise to litigate "any dispute arising"
in the English courts, commenced a suit in admiralty in the United States
Page 407 U. S. 4
District Court at Tampa, seeking $3,500,000 damages against Unterweser in
personam and the Bremen in rem, alleging negligent towage and breach of contract.
[Footnote 3] Unterweser responded by invoking the forum clause of the towage
contract, and moved to dismiss for lack of jurisdiction or on forum non conveniens
grounds, or, in the alternative, to stay the action pending submission of the dispute
to the "London Court of Justice." Shortly thereafter, in February, before the District
Court had ruled on its motion to stay or dismiss the United States action,
Unterweser commenced an action against Zapata seeking damages for breach of
the towage contract in the High Court of Justice in London, as the contract provided;
Zapata appeared in that court to contest jurisdiction, but its challenge was rejected,
the English courts holding that the contractual forum provision conferred jurisdiction.
[Footnote 4]
Page 407 U. S. 5
In the meantime, Unterweser was faced with a dilemma in the pending action in the
United States court at Tampa. The six-month period for filing action to limit its
liability to Zapata and other potential claimants was about to expire, [Footnote 5] but
the United States District Court in Tampa had not yet ruled on Unterweser's motion
to dismiss or stay Zapata's action. On July 2, 1968, confronted with difficult
alternatives, Unterweser filed an action to limit its liability in the District Court in
Tampa. That court entered the customary injunction against proceedings outside
the limitation court, and Zapata refiled its initial claim in the limitation action.
[Footnote 6]
Page 407 U. S. 6
It was only at this juncture, on July 29, after the six-month period for filing the
limitation action had run, that the District Court denied Unterweser's January motion
Page 7 of 97 Atty. Jose A. Bernas
to dismiss or stay Zapata's initial action. In denying the motion, that court relied on the
prior decision of the Court of Appeals in Carbon Black Export, Inc. v. The Monrosa,
254 F.2d 297 (CA5 1958), cert. dismissed, 359 U. S. 180 (1959). In that case, the
Court of Appeals had held a forum selection clause unenforceable, reiterating the
traditional view of many American courts that
"agreements in advance of controversy whose object is to oust the jurisdiction of the
courts are contrary to public policy, and will not be enforced."
254 F.2d 300-301. [Footnote 7] Apparently concluding that it was bound by the
Carbon Black case, the District Court gave the forum selection clause little, if any,
weight. Instead, the court treated the motion to dismiss under normal forum non
conveniens doctrine applicable in the absence of such a clause, citing Gulf Oil Corp.
v. Gilbert, 330 U. S. 501 (1947). Under that doctrine "unless the balance is strongly in
favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." Id. at
330 U. S. 508. The District Court concluded: "The balance of conveniences here is
not strongly in favor of [Unterweser] and [Zapata's] choice of forum should not be
disturbed."
Thereafter, on January 21, 1969, the District Court denied another motion by
Unterweser to stay the limitation action pending determination of the controversy in
the High Court of Justice in London, and granted Zapata's motion to restrain
Unterweser from litigating
Page 407 U. S. 7
further in the London court. The District Judge ruled that, having taken jurisdiction in
the limitation proceeding, he had jurisdiction to determine all matters relating to the
controversy. He ruled that Unterweser should be required to "do equity" by refraining
from also litigating the controversy in the London court, not only for the reasons he
had previously stated for denying Unterweser's first motion to stay Zapata's action,
but also because Unterweser had invoked the United States court's jurisdiction to
obtain the benefit of the Limitation Act.
On appeal, a divided panel of the Court of Appeals affirmed, and, on rehearing en
banc, the panel opinion was adopted, with six of the 14 en banc judges dissenting. As
had the District Court, the majority rested on the Carbon Black decision, concluding
that, "at the very least,'" that case stood for the proposition that a forum selection
clause "`will not be enforced unless the selected state would provide a more
convenient forum than the state in which suit is brought.'" From that premise, the
Court of Appeals proceeded to conclude that, apart from the forum selection clause,
the District Court did not abuse its discretion in refusing to decline jurisdiction on the
basis of forum non conveniens. It noted that (1) the flotilla never "escaped the Fifth
Circuit's mare nostrum, and the casualty occurred in close proximity to the district
court"; (2) a considerable number of potential witnesses, including Zapata crewmen,
resided in the Gulf Coast area; (3) preparation for the voyage and inspection and
repair work had been performed in the Gulf area; (4) the testimony of the Bremen
crew was available by way of deposition; (5) England had no interest in or contact
with the controversy other than the forum selection clause. The Court of Appeals
majority further noted that Zapata was a United States citizen and "[t]he discretion
Page 407 U. S. 8
of the district court to remand the case to a foreign forum was consequently limited" --
CONFLICT OF LAWS 3D 1/08-09 Page 8 of 97
especially since it appeared likely that the English courts would enforce the
exculpatory clauses. [Footnote 8] In the Court of Appeals' view, enforcement of
such clauses would be contrary to public policy in American courts under Bisso v.
Inland Waterways Corp., 349 U. S. 85 (1955), and Dixilyn Drilling Corp. v. Crescent
Towing & Salvage Co., 372 U. S. 697 (1963). Therefore,
"[t]he district court was entitled to consider that remanding Zapata to a foreign
forum, with no practical contact with the controversy, could raise a bar to recovery
by a United States citizen which its own convenient courts would not countenance.
[Footnote 9]"
We hold, with the six dissenting members of the Court of Appeals, that far too little
weight and effect were given to the forum clause in resolving this controversy. For at
least two decades, we have witnessed an expansion of overseas commercial
activities by business enterprises based in the United States. The barrier of distance
that, once tended to confine a business concern to a modest territory no longer
does so. Here we see an American
Page 407 U. S. 9
company with special expertise contracting with a foreign company to tow a
complex machine thousands of miles across seas and oceans. The expansion of
American business and industry will hardly be encouraged if, notwithstanding
solemn contracts, we insist on a parochial concept that all disputes must be
resolved under our laws and in our courts. Absent a contract forum, the
considerations relied on by the Court of Appeals would be persuasive reasons for
holding an American forum convenient in the traditional sense, but in an era of
expanding world trade and commerce, the absolute aspects of the doctrine of the
Carbon Black case have little place, and would be a heavy hand indeed on the
future development of international commercial dealings by Americans. We cannot
have trade and commerce in world markets and international waters exclusively on
our terms, governed by our laws, and resolved in our courts.
Forum selection clauses have historically not been favored by American courts.
Many courts, federal and state, have declined to enforce such clauses on the
ground that they were "contrary to public policy," or that their effect was to "oust the
jurisdiction" of the court. [Footnote 10] Although
Page 407 U. S. 10
this view apparently still has considerable acceptance, other courts are tending to
adopt a more hospitable attitude toward forum selection clauses. This view,
advanced in the well reasoned dissenting opinion in the instant case, is that such
clauses are prima facie valid, and should be enforced unless enforcement is shown
by the resisting party to be "unreasonable" under the circumstances. [Footnote 11]
We believe this is the correct doctrine to be followed by federal district courts sitting
in admiralty. It is merely the other side of the proposition recognized by this Court in
National Equipment Rental, Ltd. v. Szukhent, 375 U. S. 311 (1964), holding that in
federal courts a party may validly consent to be sued in a jurisdiction
Page 407 U. S. 11
where he cannot be found for service of process through contractual designation of
an "agent" for receipt of process in that jurisdiction. In so holding, the Court stated:
Atty. Jose A. Bernas
"[I]t is settled . . . that parties to a contract may agree in advance to submit to the
jurisdiction of a given court, to permit notice to be served by the opposing party, or
even to waive notice altogether."
Id. at 375 U. S. 315-316. This approach is substantially that followed in other common
law countries, including England. [Footnote 12] It is the view advanced by noted
scholars, and that adopted by the Restatement of the Conflict of Laws. [Footnote 13]
It accords with ancient concepts of freedom of contract, and reflects an appreciation
of the expanding horizons of American contractors who seek business in all parts of
the world. Not surprisingly, foreign businessmen prefer, as do we, to
Page 407 U. S. 12
have disputes resolved in their own courts, but, if that choice is not available, then in
a neutral forum with expertise in the subject matter. Plainly, the courts of England
meet the standards of neutrality and long experience in admiralty litigation. The
choice of that forum was made in an arm's length negotiation by experienced and
sophisticated businessmen, and, absent some compelling and countervailing reason,
it should be honored by the parties and enforced by the courts.
The argument that such clauses are improper because they tend to "oust" a court of
jurisdiction is hardly more than a vestigial legal fiction. It appears to rest at core on
historical judicial resistance to any attempt to reduce the power and business of a
particular court, and has little place in an era when all courts are overloaded and
when businesses, once essentially local, now operate in world markets. It reflects
something of a provincial attitude regarding the fairness of other tribunals. No one
seriously contends in this case that the forum selection clause "ousted" the District
Court of jurisdiction over Zapata's action. The threshold question is whether that court
should have exercised its jurisdiction to do more than give effect to the legitimate
expectations of the parties, manifested in their freely negotiated agreement, by
specifically enforcing the forum clause.
There are compelling reasons why a freely negotiated private international
agreement, unaffected by fraud, undue influence, or overweening bargaining power,
[Footnote 14] such
Page 407 U. S. 13
as that involved here, should be given full effect. In this case, for example, we are
concerned with a far from routine transaction between companies of two different
nations contemplating the tow of an extremely costly piece of equipment from
Louisiana across the Gulf of Mexico and the Atlantic Ocean, through the
Mediterranean Sea to its final destination in the Adriatic Sea. In the course of its
voyage, it was to traverse the waters of many jurisdictions. The Chaparral could have
been damaged at any point along the route, and there were countless possible ports
of refuge. That the accident occurred in the Gulf of Mexico and the barge was towed
to Tampa in an emergency were mere fortuities. It cannot be doubted for a moment
that the parties sought to provide for a neutral forum for the resolution of any disputes
arising during the tow. Manifestly, much uncertainty and possibly great inconvenience
to both parties could arise if a suit could be maintained in any jurisdiction in which an
accident might occur or if jurisdiction were left to any place where the Bremen or
Unterweser might happen to be found. [Footnote 15] The elimination of all such
uncertainties by agreeing in advance on a forum acceptable to both parties is an
indispensable element in international trade,
CONFLICT OF LAWS 3D 1/08-09 Page 9 of 97
Page 407 U. S. 14
commerce, and contracting. There is strong evidence that the forum clause was a
vital part of the agreement, [Footnote 16] and it would be unrealistic to think that the
parties did not conduct their negotiations, including fixing the monetary terms, with
the consequences of the forum clause figuring prominently in their calculations.
Under these circumstances, as Justice Karminski reasoned in sustaining jurisdiction
over Zapata in the High Court of Justice, "[t]he force of an agreement for litigation in
this country, freely entered into between two competent parties, seems to me to be
very powerful."
Page 407 U. S. 15
Thus, in the light of present-day commercial realities and expanding international
trade, we conclude that the forum clause should control absent a strong showing
that it should be set aside. Although their opinions are not altogether explicit, it
seems reasonably clear that the District Court and the Court of Appeals placed the
burden on Unterweser to show that London would be a more convenient forum than
Tampa, although the contract expressly resolved that issue. The correct approach
would have been to enforce the forum clause specifically unless Zapata could
clearly show that enforcement would be unreasonable and unjust, or that the clause
was invalid for such reasons as fraud or overreaching. Accordingly, the case must
be remanded for reconsideration.
We note, however, that there is nothing in the record presently before us that would
support a refusal to enforce the forum clause. The Court of Appeals suggested that
enforcement would be contrary to the public policy of the forum under Bisso v.
Inland Waterways Corp., 349 U. S. 85 (1955), because of the prospect that the
English courts would enforce the clauses of the towage contract purporting to
exculpate Unterweser from liability for damages to the Chaparral. A contractual
choice of forum clause should be held unenforceable if enforcement would
contravene a strong public policy of the forum in which suit is brought, whether
declared by statute or by judicial decision. See, e.g., Boyd v. Grand Trunk W. R.
Co., 338 U. S. 263 (1949). It is clear, however, that whatever the proper scope of
the policy expressed in Bisso, [Footnote 17] it does not reach this case. Bisso
rested on considerations with respect to the towage business strictly in
Page 407 U. S. 16
American waters, and those considerations are not controlling in an international
commercial agreement. Speaking for the dissenting judges in the Court of Appeals,
Judge Wisdom pointed out:
"[W]e should be careful not to over-emphasize the strength of the [Bisso] policy. . . .
[T]wo concerns underlie the rejection of exculpatory agreements: that they may be
produced by overweening bargaining power; and that they do not sufficiently
discourage negligence. . . . Here, the conduct in question is that of a foreign party
occurring in international waters outside our jurisdiction. The evidence disputes any
notion of overreaching in the contractual agreement. And, for all we know, the
uncertainties and dangers in the new field of transoceanic towage of oil rigs were so
great that the tower was unwilling to take financial responsibility for the risks, and
the parties thus allocated responsibility for the voyage to the tow. It is equally
Atty. Jose A. Bernas
possible that the contract price took this factor into account. I conclude that we should
not invalidate the forum selection clause here unless we are firmly convinced that we
would thereby significantly encourage negligent conduct within the boundaries of the
United States."
428 F.2d 907-908. (Footnotes omitted.)
Courts have also suggested that a forum clause, even though it is freely bargained for
and contravenes no important public policy of the forum, may nevertheless be
"unreasonable" and unenforceable if the chosen forum is seriously inconvenient for
the trial of the action. Of course, where it can be said with reasonable assurance that,
at the time they entered the contract, the parties to a freely negotiated private
international commercial agreement contemplated the claimed inconvenience, it is
difficult to see why any such claim of inconvenience should be heard to render the
forum clause unenforceable.
Page 407 U. S. 17
We are not here dealing with an agreement between two Americans to resolve their
essentially local disputes in a remote alien forum. In such a case, the serious
inconvenience of the contractual forum to one or both of the parties might carry
greater weight in determining the reasonableness of the forum clause. The
remoteness of the forum might suggest that the agreement was an adhesive one, or
that the parties did not have the particular controversy in mind when they made their
agreement; yet even there, the party claiming should bear a heavy burden of proof.
[Footnote 18] Similarly, selection of a remote forum to apply differing foreign law to an
essentially American controversy might contravene an important public policy of the
forum. For example, so long as Bisso governs American courts with respect to the
towage business in American waters, it would quite arguably be improper to permit an
American tower to avoid that policy by providing a foreign forum for resolution of his
disputes with an American towee.
This case, however, involves a freely negotiated international commercial transaction
between a German and an American corporation for towage of a vessel from the Gulf
of Mexico to the Adriatic Sea. As noted, selection of a London forum was clearly a
reasonable effort to bring vital certainty to this international transaction, and to provide
a neutral forum experienced and capable in the resolution of admiralty litigation.
Whatever "inconvenience" Zapata would suffer by being forced to litigate in the
contractual forum as it agreed to do was clearly
Page 407 U. S. 18
foreseeable at the time of contracting. In such circumstances, it should be incumbent
on the party seeking to escape his contract to show that trial in the contractual forum
will be so gravely difficult and inconvenient that he will, for all practical purposes, be
deprived of his day in court. Absent that, there is no basis for concluding that it would
be unfair, unjust, or unreasonable to hold that party to his bargain.
In the course of its ruling on Unterweser's second motion to stay the proceedings in
Tampa, the District Court did make a conclusory finding that the balance of
convenience was "strongly" in favor of litigation in Tampa. However, as previously
noted, in making that finding, the court erroneously placed the burden of proof on
Unterweser to show that the balance of convenience was strongly in its favor.
[Footnote 19] Moreover, the finding falls far short of a conclusion that Zapata would
CONFLICT OF LAWS 3D 1/08-09 Page 10 of 97
be effectively deprived of its day in court should it be
Page 407 U. S. 19
forced to litigate in London. Indeed, it cannot even be assumed that it would be
placed to the expense of transporting its witnesses to London. It is not unusual for
important issues in international admiralty cases to be dealt with by deposition. Both
the District Court and the Court of Appeals majority appeared satisfied that
Unterweser could receive a fair hearing in Tampa by using deposition testimony of
its witnesses from distant places, and there is no reason to conclude that Zapata
could not use deposition testimony to equal advantage if forced to litigate in London,
as it bound itself to do. Nevertheless, to allow Zapata opportunity to carry its heavy
burden of showing not only that the balance of convenience is strongly in favor of
trial in Tampa (that is, that it will be far more inconvenient for Zapata to litigate in
London than it will be for Unterweser to litigate in Tampa), but also that a London
trial will be so manifestly and gravely inconvenient to Zapata that it will be effectively
deprived of a meaningful day in court, we remand for further proceedings.
Zapata's remaining contentions do not require extended treatment. It is clear that
Unterweser's action in filing its limitation complaint in the District Court in Tampa
was, so far as Zapata was concerned, solely a defensive measure made necessary
as a response to Zapata's breach of the forum clause of the contract. When the six-
month statutory period for filing an action to limit its liability had almost run without
the District Court's having ruled on Unterweser's initial motion to dismiss or stay
Zapata's action pursuant to the forum clause, Unterweser had no other prudent
alternative but to protect itself by filing for limitation of its liability. [Footnote 20] Its
action in so doing was a direct consequence
Page 407 U. S. 20
of Zapata's failure to abide by the forum clause of the towage contract. There is no
basis on which to conclude that this purely necessary defensive action by
Unterweser should preclude it from relying on the forum clause it bargained for.
For the first time in this litigation, Zapata has suggested to this Court that the forum
clause should not be construed to provide for an exclusive forum or to include in
rem actions. However, the language of the clause is clearly mandatory and all-
encompassing; the language of the clause in the Cabon Black case was far
different. [Footnote 21]
The judgment of the Court of Appeals is vacated, and the case is remanded for
further proceedings consistent with this opinion.
Vacated and remanded.
MR. JUSTICE WHITE, concurring.
I concur in the opinion and judgment of the Court except insofar as the opinion
comments on the issues which are remanded to the District Court. In my view, these
issues are best left for consideration by the District Court in the first instance.
MR. JUSTICE DOUGLAS, dissenting.
Petitioner Unterweser contracted with respondent to tow respondent's drilling barge
from Louisiana to Italy. The towage contract contained a "forum selection clause"
Atty. Jose A. Bernas
Page 407 U. S. 21
providing that any dispute must be litigated before the High Court of Justice in
London, England. While the barge was being towed in the Gulf of Mexico, a casualty
was suffered. The tow made for Tampa Bay, he nearest port, where respondent
brought suit for damages in the District Court.
Petitioners sued respondent in the High Court of Justice in London, which denied
respondent's motion to dismiss.
Petitioners, having previously moved the District Court to dismiss, filed a complaint in
that court seeking exoneration or limitation of liability as provided in 46 U.S.C. § 185.
Respondent filed its claim in the limitation proceedings, asserting the same cause of
action as in its original action. Petitioners then filed objections to respondent's claim
and counterclaimed against respondent, alleging the same claims embodied in its
English action, plus an additional salvage claim.
Respondent moved for an injunction against petitioners' litigating further in the
English case, and the District Court granted the injunction pending determination of
the limitation action. Petitioners moved to stay their own limitation proceeding pending
a resolution of the suit in the English court. That motion was denied. 296 F.Supp. 733.
That was the posture of the case as it reached the Court of Appeals, petitioners
appealing from the last two orders. The Court of Appeals affirmed. 428 F.2d 888, 446
F.2d 907.
Chief Justice Taft, in Hartford Accident Co. v. Southern Pacific, 273 U. S. 207, 273 U.
S. 214, in discussing the Limitation of Liability Act, said that
"the great object of the statute was to encourage shipbuilding, and to induce the
investment of money in this branch of industry, by limiting the venture of those who
build the ship to the loss of the ship itself or her freight then pending, in cases of
damage or wrong, happening without the privity or
Page 407 U. S. 22
knowledge of the ship owner, and by the fault or neglect of the master or other
persons on board; that the origin of this proceeding for limitation of liability is to be
found in the general maritime law, differing from the English maritime law; and that
such a proceeding is entirely within the constitutional grant of power to Congress to
establish courts of admiralty and maritime jurisdiction."
Chief Justice Taft went on to describe how the owner of a vessel who, in case the
vessel is found at fault, may limit his liability to the value of the vessel and may bring
all claimants "into concourse in the proceeding, by monition," and they may be
enjoined from suing the owner and the vessel on such claims in any other court. Id. at
273 U. S. 215.
Chief Justice Taft concluded:
"[T]his Court has, by its rules and decisions, given the statute a very broad and
equitable construction for the purpose of carrying out its purpose and for facilitating a
settlement of the whole controversy over such losses as are comprehended within it,
and that all the ease with which rights can be adjusted in equity is intended to be
given to the proceeding. It is the administration of equity in an admiralty court. . . . The
proceeding partakes in a way of the features of a bill to enjoin a multiplicity of suits, a
CONFLICT OF LAWS 3D 1/08-09 Page 11 of 97
bill in the nature of an interpleader, and a creditor's bill. It looks to a complete and
just disposition of a many-cornered controversy, and is applicable to proceedings in
rem against the ship, as well as to proceedings in personam against the owner, the
limitation extending to the owner's property as well as to his person."
Id. at 273 U. S. 215-216.
The Limitation Court is a court of equity, and, traditionally, an equity court may
enjoin litigation in another court where equitable considerations indicate that the
other litigation might prejudice the proceedings in the Limitation Court. Petitioners'
petition for limitation
Page 407 U. S. 23
subjects them to the full equitable powers of the Limitation Court.
Respondent is a citizen of this country. Moreover, if it were remitted to the English
court, its substantive rights would be adversely affected. Exculpatory provisions in
the towage control provide (1) that petitioners, the masters and the crews "are not
responsible for defaults and/or errors in the navigation of the tow" and (2) that
"[d]amages suffered by the towed object are in any case for account of its Owners."
Under our decision in Dixilyn Drilling Corp v. Crescent Towing & Salvage Co., 372
U. S. 697, 372 U. S. 698, "a contract which exempts the tower from liability for its
own negligence" is not enforceable, though there is evidence in the present record
that it is enforceable in England. That policy was first announced in Bisso v. Inland
Waterways Corp., 349 U. S. 85, and followed in Boston Metals Co. v. The Winding
Gulf, 349 U. S. 122; Dixilyn, supra; Gray v. Johanesson, 287 F.2d 852 (CA5);
California Co. v. Jumonville, 327 F.2d 988 (CA5); American S.S. Co. v. Great Lakes
Towing Co., 333 F.2d 426 (CA7); D. R. Kincaid, Ltd. v. Trans-Pacific Towing, Inc.,
367 F.2d 857 (CA9); A. L. Mechling Barge Lines, Inc. v. Derby Co., 399 F.2d 304
(CA5). Cf. United States v. Seckinger, 397 U. S. 203. Although the casualty
occurred on the high seas, the Bisso doctrine is nonetheless applicable. The
Scotland, 105 U. S. 24; The Belgenland, 114 U. S. 355; The Gylfe v. The Trujillo,
209 F.2d 386 (CA2).
Moreover, the casualty occurred close to the District Court, a number of potential
witnesses, including respondent's crewmen, reside in that area, and the inspection
and repair work were done there. The testimony of the tower's crewmen, residing in
Germany, is already available by way of depositions taken in the proceedings.
Page 407 U. S. 24
All in all, the District Court judge exercised his discretion wisely in enjoining
petitioners from pursuing the litigation in England. *
I would affirm the judgment below.
It is said that, because these parties specifically agreed to litigate their disputes
before the London Court of Justice, the District Court, absent "unreasonable"
circumstances, should have honored that choice by declining to exercise its
jurisdiction. The forum selection clause, however, is part and parcel of the
exculpatory provision in the towing agreement which, as mentioned in the text, is
not enforceable in American courts. For only by avoiding litigation in the United
Atty. Jose A. Bernas
States could petitioners hope to evade the Bisso doctrine.
Judges in this country have traditionally been hostile to attempts to circumvent the
public policy against exculpatory agreements. For example, clauses specifying that
the law of a foreign place (which favors such releases) should control have regularly
been ignored. Thus, in The Kensington, 183 U. S. 263, 183 U. S. 276, the Court held
void an exemption from liability despite the fact that the contract provided that it
should be construed under Belgian law, which was more tolerant. And see E. Gerli &
Co. v. Cunard S.S. Co., 48 F.2d 115, 117 (CA2);Oceanic Steam Nav. Co. v.
Corcoran, 9 F.2d 724, 731 (CA2); In re Lea Fabrics, Inc., 226 F.Supp. 232, 237 (NJ);
F. A. Straus & Co. v. Canadian P. R. Co., 254 N.Y. 407, 173 N.E. 564; Siegelman v.
Cunard White Star, 221 F.2d 189, 199 (CA2) (Frank, J., dissenting). 6A A. Corbin on
Contracts § 1446 (1962).
The instant stratagem of specifying a foreign forum is essentially the same as
invoking a foreign law of construction, except that the present circumvention also
requires the American party to travel across an ocean to seek relief. Unless we are
prepared to overrule Bisso, we should not countenance devices designed solely for
the purpose of evading its prohibition.
It is argued, however, that one of the rationales of the Bisso doctrine, "to protect those
in need of goods or services from being overreached by others who have power to
drive hard bargains" (349 U.S. at 349 U. S. 91), does not apply here, because these
parties may have been of equal bargaining stature. Yet we have often adopted
prophylactic rules rather than attempt to sort the core cases from the marginal ones.
In any event, the other objective of the Bisso doctrine, to "discourage negligence by
making wrongdoers pay damages" (ibid.) applies here and in every case, regardless
of the relative bargaining strengths of the parties.

CONFLICT OF LAWS 3D 1/08-09 Page 12 of 97 Atty. Jose A. Bernas

BURGER KING CORP. V. RUDZEWICZ, 471 U.S. 462 (1985)
Appellant is a Florida corporation whose principal offices are in Miami. It conducts
most of its restaurant business through a franchise operation, under which
franchisees are licensed to use appellant's trademarks and service marks in leased
standardized restaurant facilities for a period of 20 years. The governing contracts
provide that the franchise relationship is established in Miami and governed by
Florida law, and call for payment of all required monthly fees and forwarding of all
relevant notices to the Miami headquarters. The Miami headquarters sets policy and
works directly with the franchisees in attempting to resolve major problems. Day-to-
day monitoring of franchisees, however, is conducted through district offices that in
turn report to the Miami headquarters. Appellee is a Michigan resident who, along
with another Michigan resident, entered into a 20-year franchise contract with
appellant to operate a restaurant in Michigan. Subsequently, when the restaurant's
patronage declined, the franchisees fell behind in their monthly payments. After
extended negotiations among the franchisees, the Michigan district office, and the
Miami headquarters proved unsuccessful in solving the problem, headquarters
terminated the franchise and ordered the franchisees to vacate the premises. They
refused and continued to operate the restaurant. Appellant then brought a diversity
action in Federal District Court in Florida, alleging that the franchisees had breached
their franchise obligations and requesting damages and injunctive relief. The
franchisees claimed that, because they were Michigan residents and because
appellant's claim did not "arise" within Florida, the District Court lacked personal
jurisdiction over them. But the court held that the franchisees were subject to personal
jurisdiction pursuant to Florida's long-arm statute, which extends jurisdiction to any
person, whether or not a citizen or resident of the State, who breaches a contract in
the State by failing to perform acts that the contract requires to be performed there.
Thereafter, the court entered judgment against the franchisees on the merits. The
Court of Appeals reversed, holding that "[j]urisdiction under these circumstances
would offend the fundamental fairness which is the touchstone of due process."
Held:
The District Court's exercise of jurisdiction pursuant to Florida's long-arm statute did
not violate the Due Process Clause of the Fourteenth Amendment. Pp. 471-487. [471
U.S. 462, 463]
(a) A forum may assert specific jurisdiction over a nonresident defendant where an
alleged injury arises out of or relates to actions by the defendant himself that are
purposefully directed toward forum residents, and where jurisdiction would not
otherwise offend "fair play and substantial justice." Jurisdiction in these circumstances
may not be avoided merely because the defendant did not physically enter the forum.
Pp. 471-478.
(b) An individual's contract with an out-of-state party cannot alone automatically
establish sufficient minimum contacts in the other party's home forum. Instead, the
prior negotiations and contemplated future consequences, along with the terms of the
contract and the parties' actual course of dealing, must be evaluated to determine
CONFLICT OF LAWS 3D 1/08-09 Page 13 of 97
whether a defendant purposefully established minimum contacts within the forum.
Pp. 478-479.
(c) Here, appellee established a substantial and continuing relationship with
appellant's Miami headquarters, and received fair notice from the contract
documents and the course of dealings that he might be subject to suit in Florida.
The District Court found that appellee is an "experienced and sophisticated"
businessman who did not act under economic duress or disadvantage imposed by
appellant, and appellee has pointed to no other factors that would establish the
unconstitutionality of Florida's assertion of jurisdiction. Pp. 479-487.
724 F.2d 1505, reversed and remanded.
BRENNAN, J., delivered the opinion of the Court, in which BURGER, C. J., and
MARSHALL, BLACKMUN, REHNQUIST, and O'CONNOR, JJ., joined. STEVENS,
J., filed a dissenting opinion, in which WHITE, J., joined, post, p. 487. POWELL, J.,
took no part in the consideration or decision of the case.
Joel S. Perwin argued the cause and filed briefs for appellant.
Thomas H. Oehmke argued the cause and filed a brief for appellee.
JUSTICE BRENNAN delivered the opinion of the Court.
The State of Florida's long-arm statute extends jurisdiction to "[a]ny person, whether
or not a citizen or resident of this state," who, inter alia, "[b]reach[es] a contract in
this state by failing to perform acts required by the contract to be performed in this
state," so long as the cause of action [471 U.S. 462, 464] arises from the alleged
contractual breach. Fla. Stat. 48.193 (1)(g) (Supp. 1984). The United States District
Court for the Southern District of Florida, sitting in diversity, relied on this provision
in exercising personal jurisdiction over a Michigan resident who allegedly had
breached a franchise agreement with a Florida corporation by failing to make
required payments in Florida. The question presented is whether this exercise of
long-arm jurisdiction offended "traditional conception[s] of fair play and substantial
justice" embodied in the Due Process Clause of the Fourteenth Amendment.
International Shoe Co. v. Washington, 326 U.S. 310, 320 (1945).
I
A
Burger King Corporation is a Florida corporation whose principal offices are in
Miami. It is one of the world's largest restaurant organizations, with over 3,000
outlets in the 50 States, the Commonwealth of Puerto Rico, and 8 foreign nations.
Burger King conducts approximately 80% of its business through a franchise
operation that the company styles the "Burger King System" - "a comprehensive
restaurant format and operating system for the sale of uniform and quality food
products." App. 46. 1 Burger King licenses its franchisees to use its trademarks and
service marks for a period of 20 years and leases standardized restaurant facilities
Atty. Jose A. Bernas
to them for the same term. In addition, franchisees acquire a variety of proprietary
information concerning the "standards, specifications, procedures and methods for
operating [471 U.S. 462, 465] a Burger King Restaurant." Id., at 52. They also
receive market research and advertising assistance; ongoing training in restaurant
management; 2 and accounting, cost-control, and inventory-control guidance. By
permitting franchisees to tap into Burger King's established national reputation and to
benefit from proven procedures for dispensing standardized fare, this system enables
them to go into the restaurant business with significantly lowered barriers to entry. 3
In exchange for these benefits, franchisees pay Burger King an initial $40,000
franchise fee and commit themselves to payment of monthly royalties, advertising and
sales promotion fees, and rent computed in part from monthly gross sales.
Franchisees also agree to submit to the national organization's exacting regulation of
virtually every conceivable aspect of their operations. 4 Burger King imposes these
standards and undertakes its rigid regulation out of conviction that "[u]niformity of
service, appearance, and quality of product is essential to the preservation of the
Burger King image and the benefits accruing therefrom to both Franchisee and
Franchisor." Id., at 31.
Burger King oversees its franchise system through a two-tiered administrative
structure. The governing contracts [471 U.S. 462, 466] provide that the franchise
relationship is established in Miami and governed by Florida law, and call for payment
of all required fees and forwarding of all relevant notices to the Miami headquarters. 5
The Miami headquarters sets policy and works directly with its franchisees in
attempting to resolve major problems. See nn. 7, 9, infra. Day-to-day monitoring of
franchisees, however, is conducted through a network of 10 district offices which in
turn report to the Miami headquarters.
The instant litigation grows out of Burger King's termination of one of its franchisees,
and is aptly described by the franchisee as "a divorce proceeding among commercial
partners." 5 Record 4. The appellee John Rudzewicz, a Michigan citizen and resident,
is the senior partner in a Detroit accounting firm. In 1978, he was approached by
Brian MacShara, the son of a business acquaintance, who suggested that they jointly
apply to Burger King for a franchise in the Detroit area. MacShara proposed to serve
as the manager of the restaurant if Rudzewicz would put up the investment capital; in
exchange, the two would evenly share the profits. Believing that MacShara's idea
offered attractive investment and tax-deferral opportunities, Rudzewicz agreed to the
venture. 6 id., at 438-439, 444, 460.
Rudzewicz and MacShara jointly applied for a franchise to Burger King's Birmingham,
Michigan, district office in the autumn of 1978. Their application was forwarded to
Burger King's Miami headquarters, which entered into a preliminary agreement with
them in February 1979. During the ensuing four months it was agreed that Rudzewicz
and MacShara would assume operation of an existing facility in Drayton Plains,
Michigan. MacShara attended the prescribed management courses in Miami during
this period, see n. 2, supra, and the franchisees purchased $165,000 worth of
restaurant equipment from Burger King's Davmor Industries division in [471 U.S. 462,
467] Miami. Even before the final agreements were signed, however, the parties
began to disagree over site-development fees, building design, computation of
monthly rent, and whether the franchisees would be able to assign their liabilities to a
corporation they had formed. 6 During these disputes Rudzewicz and MacShara
negotiated both with the Birmingham district office and with the Miami headquarters. 7
CONFLICT OF LAWS 3D 1/08-09 Page 14 of 97
With some misgivings, Rudzewicz and MacShara finally obtained limited
concessions from the Miami headquarters, 8 signed the final agreements, and
commenced operations in June 1979. By signing the final agreements, Rudzewicz
obligated himself personally to payments exceeding $1 million over the 20-year
franchise relationship. [471 U.S. 462, 468]
The Drayton Plains facility apparently enjoyed steady business during the summer
of 1979, but patronage declined after a recession began later that year. Rudzewicz
and MacShara soon fell far behind in their monthly payments to Miami.
Headquarters sent notices of default, and an extended period of negotiations began
among the franchisees, the Birmingham district office, and the Miami headquarters.
After several Burger King officials in Miami had engaged in prolonged but ultimately
unsuccessful negotiations with the franchisees by mail and by telephone, 9
headquarters terminated the franchise and ordered Rudzewicz and MacShara to
vacate the premises. They refused and continued to occupy and operate the facility
as a Burger King restaurant.
B
Burger King commenced the instant action in the United States District Court for the
Southern District of Florida in May 1981, invoking that court's diversity jurisdiction
pursuant to 28 U.S.C. 1332(a) and its original jurisdiction over federal trademark
disputes pursuant to 1338(a). 10 Burger King alleged that Rudzewicz and
MacShara had breached their franchise obligations "within [the jurisdiction of] this
district court" by failing to make the required payments "at plaintiff's place of
business in Miami, Dade County, Florida," _ 6, App. 121, and also charged that they
were tortiously infringing [471 U.S. 462, 469] its trademarks and service marks
through their continued, unauthorized operation as a Burger King restaurant, __ 35-
53, App. 130-135. Burger King sought damages, injunctive relief, and costs and
attorney's fees. Rudzewicz and MacShara entered special appearances and
argued, inter alia, that because they were Michigan residents and because Burger
King's claim did not "arise" within the Southern District of Florida, the District Court
lacked personal jurisdiction over them. The District Court denied their motions after
a hearing, holding that, pursuant to Florida's long-arm statute, "a non-resident
Burger King franchisee is subject to the personal jurisdiction of this Court in actions
arising out of its franchise agreements." Id., at 138. Rudzewicz and MacShara then
filed an answer and a counterclaim seeking damages for alleged violations by
Burger King of Michigan's Franchise Investment Law, Mich. Comp. Laws 445.1501
et seq. (1979).
After a 3-day bench trial, the court again concluded that it had "jurisdiction over the
subject matter and the parties to this cause." App. 159. Finding that Rudzewicz and
MacShara had breached their franchise agreements with Burger King and had
infringed Burger King's trademarks and service marks, the court entered judgment
against them, jointly and severally, for $228,875 in contract damages. The court
also ordered them "to immediately close Burger King Restaurant Number 775 from
continued operation or to immediately give the keys and possession of said
restaurant to Burger King Corporation," id., at 163, found that they had failed to
prove any of the required elements of their counterclaim, and awarded costs and
attorney's fees to Burger King.
Atty. Jose A. Bernas
Rudzewicz appealed to the Court of Appeals for the Eleventh Circuit. 11 A divided
panel of that Circuit reversed the [471 U.S. 462, 470] judgment, concluding that the
District Court could not properly exercise personal jurisdiction over Rudzewicz
pursuant to Fla. Stat. 48.193(1)(g) (Supp. 1984) because "the circumstances of the
Drayton Plains franchise and the negotiations which led to it left Rudzewicz bereft of
reasonable notice and financially unprepared for the prospect of franchise litigation in
Florida." Burger King Corp. v. MacShara, 724 F.2d 1505, 1513 (1984). Accordingly,
the panel majority concluded that "[j]urisdiction under these circumstances would
offend the fundamental fairness which is the touchstone of due process." Ibid.
Burger King appealed the Eleventh Circuit's judgment to this Court pursuant to 28
U.S.C. 1254(2), and we postponed probable jurisdiction. 469 U.S. 814 (1984).
Because it is unclear whether the Eleventh Circuit actually held that Fla. Stat.
48.193(1)(g) (Supp. 1984) itself is unconstitutional as applied to the circumstances of
this case, we conclude that jurisdiction by appeal does not properly lie and therefore
dismiss the appeal. 12 Treating the jurisdictional [471 U.S. 462, 471] statement as a
petition for a writ of certiorari, see 28 U.S.C. 2103, we grant the petition and now
reverse.
II
A argued that foreseeability of causing injury in another State should be sufficient to
The Due Process Clause protects an individual's liberty interest in not being subject
to the binding judgments of a [471 U.S. 462, 472] forum with which he has
established no meaningful "contacts, ties, or relations." International Shoe Co. v.
Washington, 326 U.S., at 319 . 13 By requiring that individuals have "fair warning that
a particular activity may subject [them] to the jurisdiction of a foreign sovereign,"
Shaffer v. Heitner, 433 U.S. 186, 218 (1977) (STEVENS, J., concurring in judgment),
the Due Process Clause "gives a degree of predictability to the legal system that
allows potential defendants to structure their primary conduct with some minimum
assurance as to where that conduct will and will not render them liable to suit," World-
Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
Where a forum seeks to assert specific jurisdiction over an out-of-state defendant
who has not consented to suit there, 14 this "fair warning" requirement is satisfied if
the defendant has "purposefully directed" his activities at residents of the forum,
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984), and the litigation results
from alleged injuries that "arise out of or relate to" those activities, Helicopteros
Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408, 414 [471 U.S. 462, 473]
(1984). 15 Thus "[t]he forum State does not exceed its powers under the Due Process
Clause if it asserts personal jurisdiction over a corporation that delivers its products
into the stream of commerce with the expectation that they will be purchased by
consumers in the forum State" and those products subsequently injure forum
consumers. World-Wide Volkswagen Corp. v. Woodson, supra, at 297-298. Similarly,
a publisher who distributes magazines in a distant State may fairly be held
accountable in that forum for damages resulting there from an allegedly defamatory
story. Keeton v. Hustler Magazine, Inc., supra; see also Calder v. Jones, 465 U.S.
783 (1984) (suit against author and editor). And with respect to interstate contractual
obligations, we have emphasized that parties who "reach out beyond one state and
CONFLICT OF LAWS 3D 1/08-09 Page 15 of 97
create continuing relationships and obligations with citizens of another state" are
subject to regulation and sanctions in the other State for the consequences of their
activities. Travelers Health Assn. v. Virginia, 339 U.S. 643, 647 (1950). See also
McGee v. International Life Insurance Co., 355 U.S. 220, 222 -223 (1957).
We have noted several reasons why a forum legitimately may exercise personal
jurisdiction over a nonresident who "purposefully directs" his activities toward forum
residents. A State generally has a "manifest interest" in providing its residents with a
convenient forum for redressing injuries inflicted by out-of-state actors. Id., at 223;
see also Keeton v. Hustler Magazine, Inc., supra, at 776. Moreover, where
individuals "purposefully derive benefit" from their interstate activities, Kulko v.
California Superior Court, [471 U.S. 462, 474] 436 U.S. 84, 96 (1978), it may well
be unfair to allow them to escape having to account in other States for
consequences that arise proximately from such activities; the Due Process Clause
may not readily be wielded as a territorial shield to avoid interstate obligations that
have been voluntarily assumed. And because "modern transportation and
communications have made it much less burdensome for a party sued to defend
himself in a State where he engages in economic activity," it usually will not be
unfair to subject him to the burdens of litigating in another forum for disputes relating
to such activity. McGee v. International Life Insurance Co., supra, at 223.
Notwithstanding these considerations, the constitutional touchstone remains
whether the defendant purposefully established "minimum contacts" in the forum
State. International Shoe Co. v. Washington, supra, at 316. Although it has been
establish such contacts there when policy considerations so require, 16 the Court
has consistently held that this kind of foreseeability is not a "sufficient benchmark"
for exercising personal jurisdiction. World-Wide Volkswagen Corp. v. Woodson, 444
U.S., at 295 . Instead, "the foreseeability that is critical to due process analysis . . .
is that the defendant's conduct and connection with the forum State are such that he
should reasonably anticipate being haled into court there." Id., at 297. In defining
when it is that a potential defendant should "reasonably anticipate" out-of-state
litigation, the Court frequently has drawn from the reasoning of Hanson v. Denckla,
357 U.S. 235, 253 (1958):
"The unilateral activity of those who claim some relationship with a nonresident
defendant cannot satisfy the requirement of contact with the forum State. The
application [471 U.S. 462, 475] of that rule will vary with the quality and nature of
the defendant's activity, but it is essential in each case that there be some act by
which the defendant purposefully avails itself of the privilege of conducting activities
within the forum State, thus invoking the benefits and protections of its laws."
This "purposeful availment" requirement ensures that a defendant will not be haled
into a jurisdiction solely as a result of "random," "fortuitous," or "attenuated"
contacts, Keeton v. Hustler Magazine, Inc., 465 U.S., at 774 ; World-Wide
Volkswagen Corp. v. Woodson, supra, at 299, or of the "unilateral activity of another
party or a third person," Helicopteros Nacionales de Colombia, S. A. v. Hall, supra,
at 417. 17 Jurisdiction is proper, however, where the contacts proximately result
from actions by the defendant himself that create a "substantial connection" with the
Atty. Jose A. Bernas
forum State. McGee v. International Life Insurance Co., supra, at 223; see also Kulko
v. California Superior Court, supra, at 94, n. 7. 18 Thus where the defendant
"deliberately" has [471 U.S. 462, 476] engaged in significant activities within a State,
Keeton v. Hustler Magazine, Inc., supra, at 781, or has created "continuing
obligations" between himself and residents of the forum, Travelers Health Assn. v.
Virginia, 339 U.S., at 648 , he manifestly has availed himself of the privilege of
conducting business there, and because his activities are shielded by "the benefits
and protections" of the forum's laws it is presumptively not unreasonable to require
him to submit to the burdens of litigation in that forum as well.
Jurisdiction in these circumstances may not be avoided merely because the
defendant did not physically enter the forum State. Although territorial presence
frequently will enhance a potential defendant's affiliation with a State and reinforce
the reasonable foreseeability of suit there, it is an inescapable fact of modern
commercial life that a substantial amount of business is transacted solely by mail and
wire communications across state lines, thus obviating the need for physical presence
within a State in which business is conducted. So long as a commercial actor's efforts
are "purposefully directed" toward residents of another State, we have consistently
rejected the notion that an absence of physical contacts can defeat personal
jurisdiction there. Keeton v. Hustler Magazine, Inc., supra, at 774-775; see also
Calder v. Jones, 465 U.S., at 788 -790; McGee v. International Life Insurance Co.,
355 U.S., at 222 -223. Cf. Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 317
(1943).
Once it has been decided that a defendant purposefully established minimum
contacts within the forum State, these contacts may be considered in light of other
factors to determine whether the assertion of personal jurisdiction would comport with
"fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S., at
320 . Thus [471 U.S. 462, 477] courts in "appropriate case[s]" may evaluate "the
burden on the defendant," "the forum State's interest in adjudicating the dispute," "the
plaintiff's interest in obtaining convenient and effective relief," "the interstate judicial
system's interest in obtaining the most efficient resolution of controversies," and the
"shared interest of the several States in furthering fundamental substantive social
policies." World-Wide Volkswagen Corp. v. Woodson, 444 U.S., at 292 . These
considerations sometimes serve to establish the reasonableness of jurisdiction upon
a lesser showing of minimum contacts than would otherwise be required. See, e. g.,
Keeton v. Hustler Magazine, Inc., supra, at 780; Calder v. Jones, supra, at 788-789;
McGee v. International Life Insurance Co., supra, at 223-224. On the other hand,
where a defendant who purposefully has directed his activities at forum residents
seeks to defeat jurisdiction, he must present a compelling case that the presence of
some other considerations would render jurisdiction unreasonable. Most such
considerations usually may be accommodated through means short of finding
jurisdiction unconstitutional. For example, the potential clash of the forum's law with
the "fundamental substantive social policies" of another State may be accommodated
through application of the forum's choice-of-law rules. 19 Similarly, a defendant
claiming substantial inconvenience may seek a change of venue. 20 Nevertheless,
minimum requirements inherent in the concept of "fair play and substantial [471 U.S.
462, 478] justice" may defeat the reasonableness of jurisdiction even if the
defendant has purposefully engaged in forum activities. World-Wide Volkswagen
Corp. v. Woodson, supra, at 292; see also Restatement (Second) of Conflict of Laws
36-37 (1971). As we previously have noted, jurisdictional rules may not be employed
CONFLICT OF LAWS 3D 1/08-09
in such a way as to make litigation "so gravely difficult and inconvenient" that a party
unfairly is at a "severe disadvantage" in comparison to his opponent. The Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 18 (1972) (re forum-selection provisions); McGee
v. International Life Insurance Co., supra, at 223-224.
B
(1)
Applying these principles to the case at hand, we believe there is substantial record
evidence supporting the District Court's conclusion that the assertion of personal
jurisdiction over Rudzewicz in Florida for the alleged breach of his franchise
agreement did not offend due process. At the outset, we note a continued division
among lower courts respecting whether and to what extent a contract can constitute
a "contact" for purposes of due process analysis. 21 If the question is whether an
individual's contract with an out-of-state party alone can automatically establish
sufficient minimum contacts in the other party's home forum, we believe the answer
clearly is that it cannot. The Court long ago rejected the notion that personal
jurisdiction might turn on "mechanical" tests, International Shoe Co. v. Washington,
supra, at 319, or on "conceptualistic . . . theories of the place of contracting or of
performance," Hoopeston Canning Co. v. Cullen, [471 U.S. 462, 479] 318 U.S., at
316 . Instead, we have emphasized the need for a "highly realistic" approach that
recognizes that a "contract" is "ordinarily but an intermediate step serving to tie up
prior business negotiations with future consequences which themselves are the real
object of the business transaction." Id., at 316-317. It is these factors - prior
negotiations and contemplated future consequences, along with the terms of the
contract and the parties' actual course of dealing - that must be evaluated in
determining whether the defendant purposefully established minimum contacts
within the forum.
In this case, no physical ties to Florida can be attributed to Rudzewicz other than
MacShara's brief training course in Miami. 22 Rudzewicz did not maintain offices in
Florida and, for all that appears from the record, has never even visited there. Yet
this franchise dispute grew directly out of "a contract which had a substantial
connection with that State." McGee v. International Life Insurance Co., 355 U.S., at
223 (emphasis added). Eschewing the option of operating an independent local
enterprise, Rudzewicz deliberately "reach[ed] out beyond" Michigan and negotiated
with a Florida corporation for the purchase of a long-term franchise and [471 U.S.
462, 480] the manifold benefits that would derive from affiliation with a nationwide
organization. Travelers Health Assn. v. Virginia, 339 U.S., at 647 . Upon approval,
he entered into a carefully structured 20-year relationship that envisioned continuing
and wide-reaching contacts with Burger King in Florida. In light of Rudzewicz'
voluntary acceptance of the long-term and exacting regulation of his business from
Burger King's Miami headquarters, the "quality and nature" of his relationship to the
company in Florida can in no sense be viewed as "random," "fortuitous," or
"attenuated." Hanson v. Denckla, 357 U.S., at 253 ; Keeton v. Hustler Magazine,
Inc., 465 U.S., at 774 ; World-Wide Volkswagen Corp. v. Woodson, 444 U.S., at 299
. Rudzewicz' refusal to make the contractually required payments in Miami, and his
continued use of Burger King's trademarks and confidential business information
Page 16 of 97 Atty. Jose A. Bernas
after his termination, caused foreseeable injuries to the corporation in Florida. For
these reasons it was, at the very least, presumptively reasonable for Rudzewicz to be
called to account there for such injuries.
The Court of Appeals concluded, however, that in light of the supervision emanating
from Burger King's district office in Birmingham, Rudzewicz reasonably believed that
"the Michigan office was for all intents and purposes the embodiment of Burger King"
and that he therefore had no "reason to anticipate a Burger King suit outside of
Michigan." 724 F.2d, at 1511. See also post, at 488-489 (STEVENS, J., dissenting).
This reasoning overlooks substantial record evidence indicating that Rudzewicz most
certainly knew that he was affiliating himself with an enterprise based primarily in
Florida. The contract documents themselves emphasize that Burger King's operations
are conducted and supervised from the Miami headquarters, that all relevant notices
and payments must be sent there, and that the agreements were made in and
enforced from Miami. See n. 5, supra. Moreover, the parties' actual course of dealing
repeatedly confirmed that decisionmaking authority was vested in the Miami
headquarters [471 U.S. 462, 481] and that the district office served largely as an
intermediate link between the headquarters and the franchisees. When problems
arose over building design, site-development fees, rent computation, and the
defaulted payments, Rudzewicz and MacShara learned that the Michigan office was
powerless to resolve their disputes and could only channel their communications to
Miami. Throughout these disputes, the Miami headquarters and the Michigan
franchisees carried on a continuous course of direct communications by mail and by
telephone, and it was the Miami headquarters that made the key negotiating
decisions out of which the instant litigation arose. See nn. 7, 9, supra.
Moreover, we believe the Court of Appeals gave insufficient weight to provisions in
the various franchise documents providing that all disputes would be governed by
Florida law. The franchise agreement, for example, stated:
"This Agreement shall become valid when executed and accepted by BKC at Miami,
Florida; it shall be deemed made and entered into in the State of Florida and shall be
governed and construed under and in accordance with the laws of the State of
Florida. The choice of law designation does not require that all suits concerning this
Agreement be filed in Florida." App. 72.
See also n. 5, supra. The Court of Appeals reasoned that choice-of-law provisions are
irrelevant to the question of personal jurisdiction, relying on Hanson v. Denckla for the
proposition that "the center of gravity for choice-of-law purposes does not necessarily
confer the sovereign prerogative to assert jurisdiction." 724 F.2d, at 1511-1512, n. 10,
citing 357 U.S., at 254 . This reasoning misperceives the import of the quoted
proposition. The Court in Hanson and subsequent cases has emphasized that choice-
of-law analysis - which focuses on all elements of a transaction, and not simply on the
defendant's conduct - is distinct from minimum-contracts jurisdictional analysis -
which focuses at the threshold [471 U.S. 462, 482] solely on the defendant's
purposeful connection to the forum. 23 Nothing in our cases, however, suggests that
a choice-of-law provision should be ignored in considering whether a defendant has
"purposefully invoked the benefits and protections of a State's laws" for jurisdictional
purposes. Although such a provision standing alone would be insufficient to confer
CONFLICT OF LAWS 3D 1/08-09 Page 17 of 97
jurisdiction, we believe that, when combined with the 20-year interdependent
relationship Rudzewicz established with Burger King's Miami headquarters, it
reinforced his deliberate affiliation with the forum State and the reasonable
foreseeability of possible litigation there. As Judge Johnson argued in his dissent
below, Rudzewicz "purposefully availed himself of the benefits and protections of
Florida's laws" by entering into contracts expressly providing that those laws would
govern franchise disputes. 724 F.2d, at 1513. 24
(2)
Nor has Rudzewicz pointed to other factors that can be said persuasively to
outweigh the considerations discussed above and to establish the
unconstitutionality of Florida's assertion of jurisdiction. We cannot conclude that
Florida had no "legitimate interest in holding [Rudzewicz] answerable [471 U.S. 462,
483] on a claim related to" the contacts he had established in that State. Keeton v.
Hustler Magazine, Inc., 465 U.S., at 776 ; see also McGee v. International Life
Insurance Co., 355 U.S., at 223 (noting that State frequently will have a "manifest
interest in providing effective means of redress for its residents"). 25 Moreover,
although Rudzewicz has argued at some length that Michigan's Franchise
Investment Law, Mich. Comp. Laws 445.1501 et seq. (1979), governs many aspects
of this franchise relationship, he has not demonstrated how Michigan's
acknowledged interest might possibly render jurisdiction in Florida unconstitutional.
26 Finally, the Court of Appeals' assertion that the Florida litigation "severely
impaired [Rudzewicz'] ability to call Michigan witnesses who might be essential to
his defense and counterclaim," 724 F.2d, at 1512-1513, is wholly without support in
the record. 27 And even to the extent that it is inconvenient [471 U.S. 462, 484] for
a party who has minimum contacts with a forum to litigate there, such
considerations most frequently can be accommodated through a change of venue.
See n. 20, supra. Although the Court has suggested that inconvenience may at
some point become so substantial as to achieve constitutional magnitude, McGee v.
International Life Insurance Co., supra, at 223, this is not such a case.
The Court of Appeals also concluded, however, that the parties' dealings involved "a
characteristic disparity of bargaining power" and "elements of surprise," and that
Rudzewicz "lacked fair notice" of the potential for litigation in Florida because the
contractual provisions suggesting to the contrary were merely "boilerplate
declarations in a lengthy printed contract." 724 F.2d, at 1511-1512, and n. 10. See
also post, at 489-490 (STEVENS, J., dissenting). Rudzewicz presented many of
these arguments to the District Court, contending that Burger King was guilty of
misrepresentation, fraud, and duress; that it gave insufficient notice in its dealings
with him; and that the contract was one of adhesion. See 4 Record 687-691. After a
3-day bench trial, the District Court found that Burger King had made no
misrepresentations, that Rudzewicz and MacShara "were and are experienced and
sophisticated businessmen," and that "at no time" did they "ac[t] under economic
duress or disadvantage imposed by" Burger King. App. 157-158. See also 7 Record
648-649. Federal Rule of Civil Procedure 52(a) requires that "[f]indings of fact shall
not be set aside unless clearly erroneous," and neither Rudzewicz nor the Court of
Appeals has pointed to record evidence that would support a "definite and firm
conviction" that the District Court's findings are mistaken. United States v. United
States Gypsum Co., 333 U.S. 364, 395 (1948). See also [471 U.S. 462, 485]
Atty. Jose A. Bernas
Anderson v. Bessemer City, 470 U.S. 564, 573 -576 (1985). To the contrary,
Rudzewicz was represented by counsel throughout these complex transactions and,
as Judge Johnson observed in dissent below, was himself an experienced accountant
"who for five months conducted negotiations with Burger King over the terms of the
franchise and lease agreements, and who obligated himself personally to contracts
requiring over time payments that exceeded $1 million." 724 F.2d, at 1514.
Rudzewicz was able to secure a modest reduction in rent and other concessions from
Miami headquarters, see nn. 8, 9, supra; moreover, to the extent that Burger King's
terms were inflexible, Rudzewicz presumably decided that the advantages of
affiliating with a national organization provided sufficient commercial benefits to offset
the detriments. 28
III
Notwithstanding these considerations, the Court of Appeals apparently believed that it
was necessary to reject jurisdiction in this case as a prophylactic measure, reasoning
that an affirmance of the District Court's judgment would result in the exercise of
jurisdiction over "out-of-state consumers to collect payments due on modest personal
purchases" and would "sow the seeds of default judgments against franchisees owing
smaller debts." 724 F.2d, at 1511. We share the Court of Appeals' broader concerns
and therefore reject any talismanic jurisdictional formulas; "the [471 U.S. 462, 486]
facts of each case must [always] be weighed" in determining whether personal
jurisdiction would comport with "fair play and substantial justice." Kulko v. California
Superior Court, 436 U.S., at 92 . 29 The "quality and nature" of an interstate
transaction may sometimes be so "random," "fortuitous," or "attenuated" 30 that it
cannot fairly be said that the potential defendant "should reasonably anticipate being
haled into court" in another jurisdiction. World-Wide Volkswagen Corp. v. Woodson,
444 U.S., at 297 ; see also n. 18, supra. We also have emphasized that jurisdiction
may not be grounded on a contract whose terms have been obtained through "fraud,
undue influence, or overweening bargaining power" and whose application would
render litigation "so gravely difficult and inconvenient that [a party] will for all practical
purposes be deprived of his day in court." The Bremen v. Zapata Off-Shore Co., 407
U.S., at 12 , 18. Cf. Fuentes v. Shevin, 407 U.S. 67, 94 -96 (1972); National
Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 329 (1964) (Black, J., dissenting)
(jurisdictional rules may not be employed against small consumers so as to "crippl[e]
their defense"). Just as the Due Process Clause allows flexibility in ensuring that
commercial actors are not effectively "judgment proof" for the consequences of
obligations they voluntarily assume in other States, McGee v. International Life
Insurance Co., 355 U.S., at 223 , so too does it prevent rules that would unfairly
enable them to obtain default judgments against unwitting customers. Cf. United
States v. Rumely, 345 U.S. 41, 44 (1953) (courts must not be "`blind'" to what "`[a]ll
others can see and understand'"). [471 U.S. 462, 487]
For the reasons set forth above, however, these dangers are not present in the
instant case. Because Rudzewicz established a substantial and continuing
relationship with Burger King's Miami headquarters, received fair notice from the
contract documents and the course of dealing that he might be subject to suit in
Florida, and has failed to demonstrate how jurisdiction in that forum would otherwise
be fundamentally unfair, we conclude that the District Court's exercise of jurisdiction
pursuant to Fla. Stat. 48.193(1)(g) (Supp. 1984) did not offend due process. The
CONFLICT OF LAWS 3D 1/08-09
judgment of the Court of Appeals is accordingly reversed, and the case is remanded
for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE POWELL took no part in the consideration or decision of this case.
JUSTICE STEVENS, with whom JUSTICE WHITE joins, dissenting.
In my opinion there is a significant element of unfairness in requiring a franchisee to
defend a case of this kind in the forum chosen by the franchisor. It is undisputed
that appellee maintained no place of business in Florida, that he had no employees
in that State, and that he was not licensed to do business there. Appellee did not
prepare his French fries, shakes, and hamburgers in Michigan, and then deliver
them into the stream of commerce "with the expectation that they [would] be
purchased by consumers in" Florida. Ante, at 473. To the contrary, appellee did
business only in Michigan, his business, property, and payroll taxes were payable in
that State, and he sold all of his products there.
Throughout the business relationship, appellee's principal contacts with appellant
were with its Michigan office. Notwithstanding its disclaimer, ante, at 478, the Court
seems ultimately to rely on nothing more than standard boilerplate language
contained in various documents, ante, at 481, [471 U.S. 462, 488] to establish that
appellee "`purposefully availed himself of the benefits and protections of Florida's
laws.'" Ante, at 482. Such superficial analysis creates a potential for unfairness not
only in negotiations between franchisors and their franchisees but, more
significantly, in the resolution of the disputes that inevitably arise from time to time in
such relationships.
Judge Vance's opinion for the Court of Appeals for the Eleventh Circuit adequately
explains why I would affirm the judgment of that court. I particularly find the following
more persuasive than what this Court has written today:
"Nothing in the course of negotiations gave Rudzewicz reason to anticipate a
Burger King suit outside of Michigan. The only face-to-face or even oral contact
Rudzewicz had with Burger King throughout months of protracted negotiations was
with representatives of the Michigan office. Burger King had the Michigan office
interview Rudzewicz and MacShara, appraise their application, discuss price terms,
recommend the site which the defendants finally agreed to, and attend the final
closing ceremony. There is no evidence that Rudzewicz ever negotiated with
anyone in Miami or even sent mail there during negotiations. He maintained no staff
in the state of Florida, and as far as the record reveals, he has never even visited
the state.
"The contracts contemplated the startup of a local Michigan restaurant whose profits
would derive solely from food sales made to customers in Drayton Plains. The sale,
Page 18 of 97 Atty. Jose A. Bernas
which involved the use of an intangible trademark in Michigan and occupancy of a circumstances would offend the fundamental fairness which is the touchstone of
Burger King facility there, required no performance in the state of Florida. Under the due process." 724 F.2d 1505, 1511-1513 (1984) (footnotes omitted).
contract, the local Michigan district office was responsible for providing all of the
services due Rudzewicz, including advertising and management consultation.
Supervision, moreover, emanated from that office alone. To Rudzewicz, the Michigan Accordingly, I respectfully dissent. [471 U.S. 462, 491]
office was for all intents and purposes the embodiment [471 U.S. 462, 489] of
Burger King. He had reason to believe that his working relationship with Burger King
began and ended in Michigan, not at the distant and anonymous Florida
headquarters. . . .

"Given that the office in Rudzewicz' home state conducted all of the negotiations and
wholly supervised the contract, we believe that he had reason to assume that the
state of the supervisory office would be the same state in which Burger King would
file suit. Rudzewicz lacked fair notice that the distant corporate headquarters which
insulated itself from direct dealings with him would later seek to assert jurisdiction
over him in the courts of its own home state. . . .

"Just as Rudzewicz lacked notice of the possibility of suit in Florida, he was financially
unprepared to meet its added costs. The franchise relationship in particular is fraught
with potential for financial surprise. The device of the franchise gives local retailers
the access to national trademark recognition which enables them to compete with
better-financed, more efficient chain stores. This national affiliation, however, does
not alter the fact that the typical franchise store is a local concern serving at best a
neighborhood or community. Neither the revenues of a local business nor the
geographical range of its market prepares the average franchise owner for the cost of
distant litigation. . . .

"The particular distribution of bargaining power in the franchise relationship further

impairs the franchisee's financial preparedness. In a franchise contract, `the
franchisor normally occupies [the] dominant role'. . . .

"We discern a characteristic disparity of bargaining power in the facts of this case.
There is no indication that Rudzewicz had any latitude to negotiate a reduced rent or
franchise fee in exchange for the added risk of suit in Florida. He signed a standard
form contract whose terms were non-negotiable and which appeared [471 U.S. 462,
490] in some respects to vary from the more favorable terms agreed to in earlier
discussions. In fact, the final contract required a minimum monthly rent computed on
a base far in excess of that discussed in oral negotiations. Burger King resisted price
concessions, only to sue Rudzewicz far from home. In doing so, it severely impaired
his ability to call Michigan witnesses who might be essential to his defense and
counterclaim.

"In sum, we hold that the circumstances of the Drayton Plains franchise and the
negotiations which led to it left Rudzewicz bereft of reasonable notice and financially
unprepared for the prospect of franchise litigation in Florida. Jurisdiction under these
CONFLICT OF LAWS 3D 1/08-09 Page 19 of 97 Atty. Jose A. Bernas

SECOND DIVISION
G.R. No. L-37750 May 19, 1978
SWEET LINES, INC., petitioner,
vs.
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII,
LEOVIGILDO TANDOG, JR., and ROGELIO TIRO, respondents.
Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for petitioner.
Leovigildo Vallar for private respondents.
SANTOS, J.:
This is an original action for Prohibition with Pre Injunction filed October 3, 1973 to
restrain respondent Judge from proceeding further with Civil Case No. 4091, entitled
Leovigildo D. Tandog, Jr. and Rogelio Tiro v. Sweet Lines, Inc." after he denied
petitioner's Motion to Dismiss the complaint, and the Motion for Reconsideration of
said order. 1
Briefly, the facts of record follow. Private respondents Atty. Leovigildo Tandog and
Rogelio Tiro, a contractor by professions, bought tickets Nos. 0011736 and 011737
for Voyage 90 on December 31, 1971 at the branch office of petitioner, a shipping
company transporting inter-island passengers and cargoes, at Cagayan de Oro City.
Respondents were to board petitioner's vessel, M/S "Sweet Hope" bound for
Tagbilaran City via the port of Cebu. Upon learning that the vessel was not
proceeding to Bohol, since many passengers were bound for Surigao, private
respondents per advice, went to the branch office for proper relocation to M/S "Sweet
Town". Because the said vessel was already filled to capacity, they were forced to
agree "to hide at the cargo section to avoid inspection of the officers of the Philippine
Coastguard." Private respondents alleged that they were, during the trip," "exposed to
the scorching heat of the sun and the dust coming from the ship's cargo of corn grits,"
and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not
honored and they were constrained to pay for other tickets. In view thereof, private
respondents sued petitioner for damages and for breach of contract of carriage in the
alleged sum of P10,000.00 before respondents Court of First Instance of Misamis
Oriental. 2
Petitioner moved to dismiss the complaint on the ground of improper venue. This
motion was premised on the condition printed at the back of the tickets, i.e., Condition
No. 14, which reads:
14. It is hereby agreed and understood that any and all actions
CONFLICT OF LAWS 3D 1/08-09 Page 20 of 97
arising out of the conditions and provisions of this ticket,
irrespective of where it is issued, shall be filed in the competent
courts in the City of Cebu. 3
The motion was denied by the trial court. 4 Petitioner moved to reconnsider the
order of denial, but no avail. 5 Hence, this instant petition for prohibition for
preliminary injunction, 'alleging that the respondent judge has departed from the
accepted and usual course of judicial preoceeding" and "had acted without or in
excess or in error of his jurisdicton or in gross abuse of discretion. 6
In Our resolution of November 20, 1973, We restrained respondent Judge from
proceeding further with the case and required respondent to comment. 7 On January
18, 1974, We gave due course to the petition and required respondent to answer. 8
Thereafter, the parties submitted their respesctive memoranda in support of their
respective contentions. 9
Presented thus for Our resolution is a question is aquestion which, to all
appearances, is one of first impression, to wit � Is Condition No. 14 printed at the
back of the petitioner's passage tickets purchased by private respondents, which
limits the venue of actions arising from the contract of carriage to theCourt of First
Instance of Cebu, valid and enforceable? Otherwise stated, may a common carrier
engaged in inter-island shipping stipulate thru condition printed at the back of
passage tickets to its vessels that any and all actions arising out of the ocntract of
carriage should be filed only in a particular province or city, in this case the City of
Cebu, to the exclusion of all others?
Petitioner contends thaty Condition No. 14 is valid and enforceable, since private
respndents acceded to tit when they purchased passage tickets at its Cagayan de
Oro branch office and took its vessel M/S "Sweet Town" for passage to Tagbilaran,
Bohol � that the condition of the venue of actions in the City of Cebu is proper
since venue may be validly waived, citing cases; 10 that is an effective waiver of
venue, valid and binding as such, since it is printed in bold and capital letters and
not in fine print and merely assigns the place where the action sing from the
contract is institution likewise citing cases; 11 and that condition No. 14 is
unequivocal and mandatory, the words and phrases "any and all", "irrespective of
where it is issued," and "shag" leave no doubt that the intention of Condition No. 14
is to fix the venue in the City of Cebu, to the exclusion of other places; that the
orders of the respondent Judge are an unwarranted departure from established
jurisprudence governing the case; and that he acted without or in excess of his
jurisdiction in is the orders complained of. 12
On the other hand, private respondents claim that Condition No. 14 is not valid, that
the same is not an essential element of the contract of carriage, being in itself a
different agreement which requires the mutual consent of the parties to it; that they
had no say in its preparation, the existence of which they could not refuse, hence,
they had no choice but to pay for the tickets and to avail of petitioner's shipping
facilities out of necessity; that the carrier "has been exacting too much from the
public by inserting impositions in the passage tickets too burdensome to bear," that
the condition which was printed in fine letters is an imposition on the riding public
Atty. Jose A. Bernas
and does not bind respondents, citing cases; 13 that while venue 6f actions may be
transferred from one province to another, such arrangement requires the "written
agreement of the parties", not to be imposed unilaterally; and that assuming that the
condition is valid, it is not exclusive and does not, therefore, exclude the filing of the
action in Misamis Oriental, 14
There is no question that there was a valid contract of carriage entered into by
petitioner and private respondents and that the passage tickets, upon which the latter
based their complaint, are the best evidence thereof. All the essential elements of a
valid contract, i.e., consent, cause or consideration and object, are present. As held in
Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc., 15
It is a matter of common knowledge that whenever a passenger
boards a ship for transportation from one place to another he is
issued a ticket by the shipper which has all the elements of a
written contract, Namely: (1) the consent of the contracting parties
manifested by the fact that the passenger boards the ship and the
shipper consents or accepts him in the ship for transportation; (2)
cause or consideration which is the fare paid by the passenger as
stated in the ticket; (3) object, which is the transportation of the
passenger from the place of departure to the place of destination
which are stated in the ticket.
It should be borne in mind, however, that with respect to the fourteen (14) conditions
� one of which is "Condition No. 14" which is in issue in this case � printed at the
back of the passage tickets, these are commonly known as "contracts of adhesion,"
the validity and/or enforceability of which will have to be determined by the peculiar
circumstances obtaining in each case and the nature of the conditions or terms
sought to be enforced. For, "(W)hile generally, stipulations in a contract come about
after deliberate drafting by the parties thereto, ... there are certain contracts almost all
the provisions of which have been drafted only by one party, usually a corporation.
Such contracts are called contracts of adhesion, because the only participation of the
party is the signing of his signature or his 'adhesion' thereto. Insurance contracts, bills
of lading, contracts of make of lots on the installment plan fall into this category" 16
By the peculiar circumstances under which contracts of adhesion are entered into �
namely, that it is drafted only by one party, usually the corporation, and is sought to
be accepted or adhered to by the other party, in this instance the passengers, private
respondents, who cannot change the same and who are thus made to adhere thereto
on the "take it or leave it" basis � certain guidelines in the determination of their
validity and/or enforceability have been formulated in order to that justice and fan play
characterize the relationship of the contracting parties. Thus, this Court speaking
through Justice J.B.L. Reyes in Qua Chee Gan v. Law Union and Rock Insurance
Co., 17 and later through Justice Fernando in Fieldman Insurance v. Vargas, 18 held �
The courts cannot ignore that nowadays, monopolies, cartels and
concentration of capital endowed with overwhelm economic power,
manage to impose upon parties d with them y prepared
'agreements' that the weaker party may not change one whit his
CONFLICT OF LAWS 3D 1/08-09 Page 21 of 97
participation in the 'agreement' being reduced to the alternative 'to
take it or leave it,' labelled since Raymond Saleilles 'contracts by
adherence' (contracts d' adhesion) in contrast to those entered
into by parties bargaining on an equal footing. Such contracts (of
which policies of insurance and international bill of lading are
prime examples) obviously cap for greater strictness and vigilance
on the part of the courts of justice with a view to protecting the
weaker party from abuses and imposition, and prevent their
becoming traps for the unwary.
To the same effect and import, and, in recognition of the character of contracts of
this kind, the protection of the disadvantaged is expressly enjoined by the New Civil
Code �
In all contractual property or other relations, when one of the
parties is at a disadvantage on account of his moral dependence,
ignorance indigence, mental weakness, tender age and other
handicap, the courts must be vigilant for his
protection. 19
Considered in the light Of the foregoing norms and in the context Of circumstances
Prevailing in the inter-island ship. ping industry in the country today, We find and
hold that Condition No. 14 printed at the back of the passage tickets should be held
as void and unenforceable for the following reasons first, under circumstances
obligation in the inter-island ship. ping industry, it is not just and fair to bind
passengers to the terms of the conditions printed at the back of the passage tickets,
on which Condition No. 14 is Printed in fine letters, and second, Condition No. 14
subverts the public policy on transfer of venue of proceedings of this nature, since
the same will prejudice rights and interests of innumerable passengers in different s
of the country who, under Condition No. 14, will have to file suits against petitioner
only in the City of Cebu.
1. It is a matter of public knowledge, of which We can take judicial notice, that there
is a dearth of and acute shortage in inter- island vessels plying between the
country's several islands, and the facilities they offer leave much to be desired.
Thus, even under ordinary circumstances, the piers are congested with passengers
and their cargo waiting to be transported. The conditions are even worse at peak
and/or the rainy seasons, when Passengers literally scramble to whatever
accommodations may be availed of, even through circuitous routes, and/or at the
risk of their safety � their immediate concern, for the moment, being to be able to
board vessels with the hope of reaching their destinations. The schedules are � as
often as not if not more so � delayed or altered. This was precisely the experience
of private respondents when they were relocated to M/S "Sweet Town" from M/S
"Sweet Hope" and then any to the scorching heat of the sun and the dust coming
from the ship's cargo of corn grits, " because even the latter was filed to capacity.
Under these circumstances, it is hardly just and proper to expect the passengers to
examine their tickets received from crowded/congested counters, more often than
not during rush hours, for conditions that may be printed much charge them with
Atty. Jose A. Bernas
having consented to the conditions, so printed, especially if there are a number of
such conditions m fine print, as in this case. 20
Again, it should be noted that Condition No. 14 was prepared solely at the ms of the
petitioner, respondents had no say in its preparation. Neither did the latter have the
opportunity to take the into account prior to the purpose chase of their tickets. For,
unlike the small print provisions of contracts � the common example of contracts of
adherence � which are entered into by the insured in his awareness of said
conditions, since the insured is afforded the op to and co the same, passengers of
inter-island v do not have the same chance, since their alleged adhesion is presumed
only from the fact that they purpose chased the tickets.
It should also be stressed that slapping companies are franchise holders of
certificates of public convenience and therefore, posses a virtual monopoly over the
business of transporting passengers between the ports covered by their franchise.
This being so, shipping companies, like petitioner, engaged in inter-island shipping,
have a virtual monopoly of the business of transporting passengers and may thus
dictate their terms of passage, leaving passengers with no choice but to buy their
tickets and avail of their vessels and facilities. Finally, judicial notice may be taken of
the fact that the bulk of those who board these inter-island vested come from the low-
income groups and are less literate, and who have little or no choice but to avail of
petitioner's vessels.
2. Condition No. 14 is subversive of public policy on transfers of venue of actions.
For, although venue may be changed or transferred from one province to another by
agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such
an agreement will not be held valid where it practically negates the action of the
claimants, such as the private respondents herein. The philosophy underlying the
provisions on transfer of venue of actions is the convenience of the plaintiffs as well
as his witnesses and to promote 21 the ends of justice. Considering the expense and
trouble a passenger residing outside of Cebu City would incur to prosecute a claim in
the City of Cebu, he would most probably decide not to file the action at all. The
condition will thus defeat, instead of enhance, the ends of justice. Upon the other
hand, petitioner has branches or offices in the respective ports of call of its vessels
and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI
of Misamis Oriental, as was done in the instant case, will not cause inconvenience to,
much less prejudice, petitioner.
Public policy is ". . . that principle of the law which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against the public
good ... 22 Under this principle" ... freedom of contract or private dealing is restricted
by law for the good of the public. 23 Clearly, Condition No. 14, if enforced, will be
subversive of the public good or interest, since it will frustrate in meritorious cases,
actions of passenger cants outside of Cebu City, thus placing petitioner company at a
decided advantage over said persons, who may have perfectly legitimate claims
against it. The said condition should, therefore, be declared void and unenforceable,
as contrary to public policy � to make the courts accessible to all who may have
need of their services.
CONFLICT OF LAWS 3D 1/08-09 Page 22 of 97
WHEREFORE, the petition for prohibition is DISMISS. ED. The restraining order
issued on November 20, 1973, is hereby LIFTED and SET ASIDE. Costs against
petitioner.
Fernando (Chairman), Aquino, Concepcion, Jr., JJ., concur.
Antonio, J., reserves his vote.
Separate Opinions
BARREDO, J., concurring:
I concur in the dismissal of the instant petition.
Only a few days ago, in Hoechst Philippines, Inc. vs. Francisco Torres, et al., G. R.
No. L-44351, promulgated May 18, 1978, We made it clear that although generally,
agreements regarding change of venue are enforceable, there may be instances
where for equitable considerations and in the better interest of justice, a court may
justify the laying of, the venue in the place fixed by the rules instead of following
written stipulation of the parties.
In the particular case at bar, there is actually no written agreement as to venue
between the parties in the sense contemplated in Section 3 of Rule 4, which
governs the matter. I take it that the importance that a stipulation regarding change
of the venue fixed by law entails is such that nothing less than mutually conscious
agreement as to it must be what the rule means. In the instant case, as well pointed
out in the main opinion, the ticket issued to private respondents by petitioner
constitutes at best a "contract of adhesion". In other words, it is not that kind of a
contract where the parties sit down to deliberate, discuss and agree specifically on
all its terms, but rather, one which respondents took no part at all in preparing, since
it was just imposed upon them when they paid for the fare for the freight they
wanted to ship. It is common knowledge that individuals who avail of common
carriers hardly read the fine prints on such tickets to note anything more than the
price thereof and the destination designated therein.
Under these circumstances, it would seem that, since this case is already in
respondent court and there is no showing that, with its more or less known
resources as owner of several inter-island vessels plying between the different ports
of the Philippines for sometime already, petitioner would be greatly inconvenienced
by submitting to the jurisdiction of said respondent court, it is best to allow the
proceedings therein to continue. I cannot conceive of any juridical injury such a step
can cause to anyone concerned. I vote to dismiss the petition.
Footnotes
Atty. Jose A. Bernas
 1 Rollo, p. 2. 1975), 64 SCRA 111, 116.

2 Id, P. 12, Annex "B", 22 Ferrazini v. Gsell, 34 Phil 711-712 (1916).

3 Id., p. 18, Annex "C". 23 Id., p. 712.

4 Id., p. 20, Annex "D".

5 Id., pp. 21 an d 26, Annexes "E" and "F"

6 Rollo, p. 5; Petition, paars. 8, 9 &10.

7 Id., p. 30.

8 Id., p. 47.

9 Id., pp. 66 and 76.

10 Manila Company vs. Attorney General 20 Phil 523; Central Azucarera de

Tarlac vs. de Loon, 56 Phil 129; Marquez Lain Cay vs. Del Rosario, 55 Phil 622;
Abuton vs. Paler, 54 Phil 519, De la Rosa vs. De Borja, 53 Phil 990; Samson vs.
Carra 50 Phil 647, See Rollo, p. 77.

11 Central Azucarera de Tarlac vs. de Leon, supra; Air France v C , 18 SCRA,

(Sept. 28, 1966), p. 155, Id, pp. 77 and 80.

12 Rollo, pp. 81-81, Memorandum of Petitioner.

13 Shewaram v PAL Inc., G.R. No. L-20099, July 7, 1966, 17 SCRA 606-612;
Mirasol vs. Robert Dollar and Company, 53 Phil 124, See Rollo, p. 79.

14 Rollo. pp- 66-70, Memorandum of Respondents, citing Polytrade Corporation

v. Blanco, 30 SCRA 187-191.

15 106 Phil 485 (1959).

16 Paras, Civil Code of the Philippines, Seventh ed., Vol. 1, p. 80.

17 98 Phil 95 (1955).

18 L-24833. 25 SCRA 70 (1968).

19 Civil Code, Art. 24.

20 Condition No. 14 is the last condition printed at the back of the 4 x 6 inches pa
tickets.

21 See Nicolas v. Reparations Commission et al G. R. No. L-28649 (21 May

CONFLICT OF LAWS 3D 1/08-09 Page 23 of 97 Atty. Jose A. Bernas

 Supreme Court of Appeals of West Virginia. morning of the next day, but he is detained there by sickness until he dies, and
WHITE et al. never does in fact return to his new home.
v.
TENNANT et al. *596 P. H. Keck and J. Marshall Hagans, for appellants.
December 1, 1888. Berkshire, Sturgiss & Baker and A. F. Haymond, for appellees.

Syllabus by the Court. SNYDER, J.

Where a person entirely abandons his former residence in one state, with no intention
of resuming it, and goes with his family to another residence, which he has rented in
another state, with the intention of making the latter his residence for an indefinite
time, the latter state is his domicile, notwithstanding that after he and his family arrive
at the new residence, which is only about a half a mile from the state line, they go on
the same day on a visit to spend the night with a neighbor in the former state,
intending to return in the morning of the next day, but he is detained there by sickness
until he dies, and never does in fact return to his new home.
This is a suit brought December, 1886, in the circuit court of Monongalia county by
William L. White and others against Emrod Tennant, administrator of Michael White,
deceased, and Lucinda White, the widow of said Michael White, to set aside the
settlement and distribution made by the administrator of the personal estate of said
decedent, and have the same settled and distributed according to the laws of the
state of Pennsylvania, which state it is claimed was the domicile of said decedent at
the time of his death. The plaintiffs are the brothers and sisters of the decedent, who
died in this state intestate. On October 28, 1887, the court entered a decree
dismissing the plaintiffs' bill, and they have appealed.

The laws of the state in which the domicile of a decedent is at the time of his death The sole question presented for our determination is whether the said *597 Michael
control and govern the distribution of his personal estate, although he may die in White, at the time of his death, in May, 1885, had his legal domicile in this state or in
another state. the state of Pennsylvania. It is admitted to be the settled law that the law of the state
in which the decedent had his domicile at the time of his death will control the
Appeal from circuit court, Monongalia county. succession and distribution of his personal estate. Before referring to the facts
proved in this cause, we shall endeavor to determine what in law is meant by
Action by William L. White and others against Emrod Tennant, administrator, and “domicile.” Dr. Wharton says: “‘Domicile’ is a residence acquired as a final abode.
another, to set aside a certain settlement and distribution. From a decree dismissing To constitute it there must be (1) residence, actual or inchoate; (2) the non-
the bill, plaintiffs appeal. existence of any intention to make a domicile elsewhere.”Whart. Confl. Law, §
21.“‘Domicile’ is that place or country, either (1) in which a person in fact resides
West Headnotes with an intention of residence,-animus manendi; or (2) in which, having so resided,
he continues actually to reside, though no longer retaining the intention of
Descent and Distribution 124 5 residence,-animus manendi; or (3) with regard to which, having so resided there, he
retains the intention of residence,-animus manendi,-though he in fact no longer
124 Descent and Distribution resides there.”Dicey, Dom. 44. Two things must concur to establish domicile,-the
124I Nature and Course in General fact of residence, and the intention of remaining. These two must exist, or must
124k2 What Law Governs have existed, in combination. There must have been an actual residence. The
124k5 k. Personal Property. Most Cited Cases character of the residence is of no importance; and, if domicile has once existed,
The laws of the state in which the domicile of a decedent is at the time of his death mere temporary absence will not destroy it, however long continued.Munro v.
control and govern the distribution of his personal estate, although he may die in Munro, 7 Clark & F. 842. The original domicile continues until it is fairly changed for
another state. another. It is a legal maxim that every person must have a domicile somewhere;
and he can have but one at a time for the same purpose. From this it follows that
Domicile 135 4(2) one domicile cannot be lost or extinguished until another is acquired.Baird v. Byrne,
3 Wall. Jr. 1. When one domicile is definitely abandoned, and a new one selected
135 Domicile and entered upon, length of time is not important; one day will be sufficient,
135k4 Domicile of Choice and Change of Domicile provided the animus exists. Even when the point of destination is not reached,
135k4(2) k. Intent. Most Cited Cases domicile may shift in itinere, if the abandonment of the old domicile, and the setting
Where a person abandons his residence in one state, with no intention of resuming it, out for the new, are plainly shown.Munroe v. Douglas, 5 Madd. 405. Thus a
and goes with his family to a residence which he has rented in another state, with the constructive residence seems to be sufficient to give domicile, though an actual
intention of making the latter his residence for an indefinite time, the latter state is his residence may not have begun. Whart. Confl. Law, § 58. A change of domicile does
domicile, notwithstanding that after he and his family arrive at the new residence, not depend so much upon the intention to remain in the new place for a definite or
which is only about a half a mile from the state line, they go on the same day on a an indefinite period, as upon its being without an intention to return. An intention to
visit to spend the night with a neighbor in the former state, intending to return in the return, however, at a remote or indefinite period, to the former place of actual
residence, will not control, if the other facts which constitute domicile all give the
CONFLICT OF LAWS 3D 1/08-09 Page 24 of 97 Atty. Jose A. Bernas
new residence the character of a permanent home or place of abode. The intention
and actual fact of residence must concur, where such residence is not in its nature
temporary. Hallet v. Bassett, 100 Mass. 170, 171; Long v. Ryan, 30 Grat. 718. In
Bradley v. Lowry, 1 Speer, Eq. 1, it is held that “change of domicile is consummated
when one leaves the state where he has hitherto resided, avowing his intention not to
return, and enters another state intending to permanently settle there.”A domicile
once acquired remains until a new one is acquired elsewhere, facto et animo. Story,
Confl. Law, § 47; Hart v. Lindsey, 17 N. H. 235. Where a person removes from one
state to another and establishes a fixed residence in the latter, it will become his
domicile, although there may be a floating intention to return to his former place of
abode at some future period. Ringgold v. Barley, 5 Md. 186.“If a man intending to
remove with his family visits the place of removal beforehand, to make arrangements,
or even sleeps there occasionally for convenience, and then transfers his family, the
change of domicile takes effect from the time of removing with the family; but if he has
definitely changed his residence, and taken up his abode permanently in a new place,
the fact that his family remains behind until he can remove them conveniently, and
that he visits them occasionally, will not prevent the new place being his
domicile.”Guier v. O'Daniel, 1 Amer. Lead. Cas. (753,) 902; Cambridge v.
Charlestown, 13 Mass. 501.
*598 The material facts in the case at bar are as follows: Joseph S. White, the father
of the plaintiffs and Michael White, died intestate in Monongalia county, seised of a
tract of about 240 acres of land, of which about 40 acres lay in Greene county, Pa.,
but the whole constituted but one tract or farm. The mansion-house in which the
father resided was located on the West Virginia side of the farm, and there was also a
dwelling-house generally occupied by tenants on the Pennsylvania part of the
farm. After the death of the father, his widow and the plaintiffs remained together and
occupied the home farm, residing in the mansion-house in West Virginia. Michael
White, several years before his death, married the defendant Lucinda White, a
daughter of the defendant Emrod Tennant, and about that time purchased a farm on
Day's Run, in Monongalia county, some 15 miles distant from the home place, to
which he moved, and at which he and his wife resided. It is conceded that Michael
was born and had his domicile in West Virginia all his life, until about April 1, 1885. In
the winter of 1884-85, Michael sold his Day's Run farm, and then rented or made an
arrangement with his mother and brothers and sisters, the plaintiffs, to occupy the 40
acres of the home farm, in which he still had an undivided interest, and to live in the
house on said 40 acres in Greene county, Pa. He was to give to the purchaser the
possession of his Day's Run farm on April 1, 1885, and to have possession of the
Pennsylvania house and 40 acres at the same time. In March, 1885, he moved part
of his household goods into the Pennsylvania house, and put them into one of the
rooms by permission of the tenant who then occupied it, and who did not vacate it
until between the middle and last of March, 1885. About the same time he moved an
organ and some grain to the old homestead, until he could get possession of the
Pennsylvania house. On the morning of April 2, 1885, he finally left the Day's Run
house with the remainder of his goods and his wife, he having no children, with the
declared intent and purpose of making the Pennsylvania house his home that
evening. He, with his team, wife, and goods, and live-stock, passed into the state of
Pennsylvania several miles before he reached said house, and continued in said
state thence to said Pennnsylvania house, where they arrived that evening about
sundown, and then and there unloaded their goods, and put them in the house,
setting up one bed, and turning the fowls and other live-stock loose at the house. The
CONFLICT OF LAWS 3D 1/08-09 Page 25 of 97
said house had been vacated for several days. It was a damp, cool day, and the
house was found to be damp and uncomfortable. The wife was complaining of
feeling unwell, and in consequence of that fact and the uncomfortable condition of
the house, on the invitation of her brother-in-law and others of the family who then
resided at the mansion-house, but a short distance therefrom, the said Michael and
his wife went to the mansion-house in West Virginia to stay all night and return in
the morning. Before leaving the Pennsylvania house the wife had gotten out of the
buggy at the house, and the said Michael, after putting into it his household goods,
locked the door, and took the key with him. On the following morning, the wife still
feeling unwell, and the brother, who was to return the team which they had used in
moving their goods, having taken sick, the wife, after going to the Pennsylvania
house to milk, returned to the mansion-house, and Michael took the team back to
Day's Run. On the return of Michael from this trip he found his wife so sick with
typhoid fever that it was impossible to move her, in consequence of which both he
and she remained at the mansion-house,-she because she was unable to get away,
and he to wait on her,-but he went daily over to the Pennsylvania house to look after
it, and to feed his stock there, calling it his “home.” In 10 or 15 days, and before the
wife had sufficiently recovered to leave her bed, Michael was attacked with typhoid
fever, and about 10 days thereafter died intestate in the same house. The wife
recovered, and the defendant Emrod Tennant, her father, administered on the
estate of Michael, taking out letters of administration in Monongalia county *599 W.
Va. The administrator settled his accounts before a commissioner of said county,
and distributed the estate according to the laws of West Virginia; that is, by paying
over to the widow the whole personal estate remaining after the payment of the
debts of the decedent. It is admitted that if the distribution had been according to the
laws of the state of Pennsylvania the wife would have been entitled to the one-half
only of said estate, and the plaintiffs would have been entitled to the other half. As
the law of the state in which the decedent had his domicile at the time of his death
must govern the distribution of his estate, the important question is, where,
according to the foregoing facts, was the domicile of Michael at the time of his
death? It is unquestionable that prior to the 2d day of April, 1885, his domicile was
and had always been in the state of West Virginia. Did he on that day, or at any
subsequent day, change his domicile to the state of Pennsylvania? According to the
authorities hereinbefore cited, if it is shown that a person has entirely abandoned his
former domicile in one state with the intention of making his home at a fixed place in
another state, with no intention of returning to his former domicile, and then
establishes a residence in the new place for any period of time, however brief, that
will be in law a change of domicile, and the latter will remain his domicile until
changed in like manner. The facts in this case conclusively prove that Michael
White, the decedent, abandoned his residence in West Virginia with the intention
and purpose not only of not returning to it, but for the expressed purpose of making
a fixed place in the state of Pennsylvania his home for an indefinite time. This fact is
shown by all the circumstances, as well as by his declarations and acts. He had
sold his residence in West Virginia, and surrendered its possession to the
purchaser, and thereby made it impossible for him to return to it and make it his
home. He rented a dwelling in Pennsylvania, for which he had no use except to live
in, and make it his home. In addition to all this, he had moved a part of his
household goods into this house, and then, on the 2d of April, 1885, he, with his
family and the remainder of his goods and stock, finally left his former home, and
the state of West Virginia, and moved into the state of Pennsylvania, to his house in
that state, and there put his goods in the house, and turned his stock loose on the
Atty. Jose A. Bernas
premises. At the time he left his former home on that morning, and while he was on
the way to his new home, his declared purpose and intention were to make that his
home from that very day, and to occupy it that night. He arrived in Pennsylvania and
at his new home with that intention; and it was only after he arrived there, and for
reasons not before known, and which had no effect to change his purpose of making
that his future home, that he failed to remain there from that time. There was no
change in his purpose except that after he arrived at his new home, and unloaded
and left his property there, he concluded, on account of the condition of the house
and the illness of his wife, that it would be better to go with his wife to remain one
night with his relatives, and return the next morning. When he left his former home,
without any intention of returning, and in pursuance of that intention did in fact move
with his family and effects to his new home with the intention of making it his
residence for an indefinite time, it is my opinion that when he and his wife arrived at
his new home it became eo instanti his domicile, and that his leaving there, under the
circumstances he did, with the intention of returning the next day, did not change the
fact. By the concurrence of his intention to make the Pennsylvania house his
permanent residence with the fact that he had actually abandoned his former
residence, and moved to and put his goods in the new one, made the latter his
domicile. He, according to the authorities hereinbefore referred to must of necessity
have a domicile somewhere. If he did not have one in Pennsylvania, where did he
have one? His leaving the Pennsylvania house after he had moved to it with his
family and goods, to spend the night, did not revive his domicile at his former
residence on Day's Run, because he had *600 sold that, and left it without any
purpose of returning there. By going from his new home to the house of his relatives
to spend the night he certainly did not make the house thus visited his domicile;
therefore, unless the Pennsylvania house was, on the evening of April 2, 1885, his
domicile, he was in the anomalous position of being without a domicile anywhere,
which, as we have seen, is a legal impossibility; and that house having become his
domicile, there is nothing in this case to show that he ever did in fact change or intend
to change it, or to establish a domicile elsewhere.

It follows, therefore, that that house remained his domicile up to and at the time of his
death; and, that house being in the state of Pennsylvania, the laws of that state must
control the distribution of his personal estate, notwithstanding the fact that he died in
the state of West Virginia. For these reasons the decree of the circuit court must be
reversed, and the cause must be remanded to that court to be there further
proceeded in according to the principles announced in this opinion, and the rules of
courts of equity.

JOHNSON, P., and GREEN and WOODS, JJ., concurred.

W.Va. 1888.
White v. Tennant
31 W.Va. 790, 8 S.E. 596, 13 Am.St.Rep. 896

END OF DOCUMENT

CONFLICT OF LAWS 3D 1/08-09 Page 26 of 97 Atty. Jose A. Bernas

Yamada Corp. v. Yasuda Insurance Co., Ltd., No. 2-98-1073
2nd District, 4 June 1999
JUSTICE COLWELL delivered the opinion of the court:
Defendants, Yasuda Fire & Marine Insurance Company, Ltd. (Yasuda Fire), and The
Yasuda Claims Service, Inc. (Yasuda Claims) (collectively, defendants), appeal from
an order of the circuit court of Kane County granting summary judgment in favor of
plaintiffs, Yamada Corporation (Yamada) and Yamada America, Inc. (Yamada
America) (collectively, plaintiffs), on count I of plaintiffs' first amended complaint. On
appeal, defendants contend that the trial court erroneously refused to enforce a
forum-selection clause, a choice-of-law clause, and a pollution exclusion clause and
erroneously struck portions of two of defendants' affidavits. We reverse and remand
with directions based on the forum-selection clause.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On October 25, 1994, an air-operated diaphragm pump, manufactured by Yamada
and purchased by CWC Fluids, Inc., d/b/a Culligan Water Conditioning (CWC), to
pump acid and caustic solutions from two separate tanks to regenerate spent water
purification systems, failed. The pump's failure resulted in the release of acid and
caustic solutions that destroyed the metallic parts of the regeneration system
enclosed within a concrete retention wall. In addition, the release produced an acid
vapor that traveled through the interior of CWC's building, damaging electrical,
mechanical, metallic, and other structures. When the retention wall developed a
crack, the acid also spilled onto the main plant floor and into the drain to the city
sewer system.
On October 1, 1996, CWC filed a complaint in the circuit court of Cook County
against plaintiffs, among others, alleging strict product liability, breach of the implied
warranty of merchantability, and negligence. CWC sought damages for property
damage and business interruption.
Plaintiffs tendered their defense to Yasuda Fire pursuant to a general liability claims-
made policy covering the period from January 5, 1995, to January 5, 1996, issued by
Yasuda Fire to Yamada. Yasuda Fire rejected the tender.
Yamada was the named insured under the policy, and Yamada America, a distributor
of Yamada's pumps, was listed as an additional insured. In addition, the policy
included more than 200 other distributors as additional insureds, including distributors
in 38 of the states in the United States, Puerto Rico, Canada, Mexico, Central
America, South America, Europe, Australia, New Zealand, Asia, and the Pacific Rim.
An endorsement to the policy specifically covered the pump at issue in addition to 11
other air-operated diaphragm pumps. In addition, endorsement No. 10 to the policy
contained a forum-selection clause, entitled "Jurisdiction Clause," that provided: "It is
agreed that coverage disputes arising out of this insurance shall be subject to
Japanese law and forum." The print size on endorsement No. 10 was the same size
as the print size in the rest of the endorsements.
The policy was negotiated, underwritten, executed, and delivered in Japan, and
Yamada made premium payments in yen to Yasuda Fire in Japan. Yamada
CONFLICT OF LAWS 3D 1/08-09 Page 27 of 97
America's president admitted in his deposition that he had never purchased any
general liability or products liability insurance on behalf of Yamada America,
although he had purchased other types of insurance on Yamada America's behalf.
Instead, Yamada purchased general liability and products liability insurance for
Yamada America.
Yamada was a Japanese corporation with its principal place of business in Tokyo,
Japan. Yamada America was a subsidiary of Yamada and an Illinois corporation
with its principal place of business in Elgin, Illinois. Yasuda Fire was a Japanese
insurance company with its principal place of business in Tokyo, Japan. Yasuda
Claims was Yasuda Fire's wholly owned subsidiary incorporated in California, and
its principal place of business was in Los Angeles, California. Yasuda Claims
handled claims for Yasuda Fire in the United States.
On December 12, 1996, plaintiffs filed a complaint for declaratory judgment and
other relief against defendants, and defendants filed a section 2--619 (735 ILCS
5/2--619 (West 1996)) motion to dismiss, relying primarily on the forum-selection
clause. Defendants also subsequently filed a declaratory judgment action against
plaintiffs in the Tokyo District Court in Japan. The Tokyo District Court accepted
jurisdiction over the parties and the subject matter of the suit.
Plaintiffs then filed a motion to enjoin defendants from proceeding further in Japan,
and Judge Melvin Dunn granted the motion, stating that defendants were "enjoined
temporarily from proceeding in Tokyo, Japan with their declaratory judgment action
pending further order and proceedings" in the circuit court of Kane County.
Defendants later filed an interlocutory appeal (see 166 Ill. 2d R. 307(a)(1)). We
affirmed the trial court's grant of a preliminary injunction. See Yamada Corp. v.
Yasuda Fire & Marine Insurance, Ltd., No. 2--97--0506 (1997) (unpublished order
under Supreme Court Rule 23).
While the preliminary injunction was pending on appeal, Judge Dunn granted
defendants' section 2--619 motion to dismiss pursuant to the forum-selection
clause. In response, plaintiffs filed a motion to reconsider. On June 25, 1997, Judge
Dunn granted plaintiffs' motion to reconsider.
Defendants subsequently filed a motion to clarify the trial court's order. On July 21,
1997, Judge Dunn entered an order stating the basis for his ruling:
"2. Enforcement of the forum selection clause would require the plaintiffs to proceed
in Japan and under Japanese law which would thereby create enormous
inconvenience and expense for the plaintiffs.
3. Illinois public policy requires that forum selection clause [sic] be deemed
unenforceable in that persons and entities living and doing business in Illinois would
be required to proceed in Japan and under Japanese law where costs and attorney
fees incurred would not be compensable.
4. Illinois is an appropriate forum for resolving all disputes between the parties
regarding coverage under the Policy of Insurance."
The trial court also granted plaintiffs leave to file a first amended complaint. In their
first amended complaint, plaintiffs sought a determination regarding defendants'
duty to defend and duty to indemnify in counts I and II. Plaintiffs also brought
causes of action for breach of contract in counts III and IV and causes of action
Atty. Jose A. Bernas
under section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 1996)) and
the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act)
(815 ILCS 505/1 et seq. (West 1996)) in counts V and VI.
Thereafter, defendants filed a motion to reconsider the trial court's June 25, 1997,
and July 21, 1997, orders and alternatively sought certification to appeal. Judge Dunn
denied the motion.
Defendants then filed their answers and affirmative defenses to plaintiffs' first
amended complaint. Plaintiffs later filed a motion for summary judgment on count I of
their first amended complaint, and defendants sought summary judgment on all
counts of the first amended complaint.
On March 4, 1998, Judge Dixon requested that the parties further brief the forum-
selection clause issue. After the parties briefed the issue, this court denied a petition
for leave to appeal the forum-selection clause issue, and Judge Dixon indicated that
he would consider the issue as part of the motions for summary judgment. Judge
Dixon then granted plaintiffs' motion. Regarding the forum-selection clause, Judge
Dixon stated that Judge Dunn had previously ruled that the clause was unenforceable
and that this court had declined to review the issue on an interlocutory basis.
Defendants appealed.
STANDARD OF REVIEW
The disposition of a summary judgment motion is not discretionary and the standard
of review is de novo. Flint v. Court Appointed Special Advocates of Du Page County,
Inc., 285 Ill. App. 3d 152, 162 (1996). In addition, an appeal from a final judgment
draws into issue all prior nonfinal orders that produced the final judgment. United
States Fire Insurance Co. v. Aetna Life & Casualty, 291 Ill. App. 3d 991, 996 (1997).
ANALYSIS
A forum-selection clause in a contract is prima facie valid and should be enforced
unless the opposing party shows that enforcement would contravene the strong
public policy of the state in which the case is brought (Maher & Associates, Inc. v.
Quality Cabinets, 267 Ill. App. 3d 69, 74 (1994)), or that the chosen forum would be
so seriously inconvenient for trial that the opposing party would be deprived of his or
her day in court. M.S. Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 15, 18, 32 L.
Ed. 513, 520, 523, 525, 92 S. Ct. 1907, 1913, 1916, 1917 (1972); Calanca v. D & S
Manufacturing Co., 157 Ill. App. 3d 85, 87-88 (1987).
I. MANDATORY FORUM-SELECTION CLAUSE
The first issue is whether the clause is mandatory or permissive. The clause at issue
provides that "coverage disputes arising out of this insurance shall be subject to
Japanese law and forum." The word "shall" indicates that Japan is the exclusive
forum. See Calanca, 157 Ill. App. 3d at 85 (stating that word "shall" in forum-selection
clause means the stated forum is exclusive).
II. INCONVENIENCE
A party to the contract may not successfully argue inconvenience as a reason for
rendering a forum-selection clause unenforceable if both parties freely entered into
the agreement contemplating such inconvenience should there be a dispute. Maher,
267 Ill. App. 3d at 74-75; see also M.S. Bremen, 407 U.S. at 16-18, 32 L. Ed. at 524-
CONFLICT OF LAWS 3D 1/08-09 Page 28 of 97
25, 92 S. Ct. at 1916-17; Calanca, 157 Ill. App. 3d at 88. Furthermore, a forum-
selection clause made during an arms-length negotiation between experienced and
sophisticated businesspeople should be honored and enforced absent some
"compelling and countervailing reason" otherwise. Maher, 267 Ill. App. 3d at 75; see
also M.S. Bremen, 407 U.S. at 12, 32 L. Ed. at 521, 92 S. Ct. at 1914; Calanca, 157
Ill. App. 3d at 88.
Neither Judge Dunn nor Judge Dixon ruled that plaintiffs would be so seriously
inconvenienced that they would be deprived of their day in court if this action
proceeded in Japan. Judge Dunn, however, apparently believed that Japan would
be inconvenient when he ruled that "[e]nforcement of the forum selection clause
would require the plaintiffs to proceed in Japan and under Japanese law which
would thereby create enormous inconvenience and expense for the plaintiffs."
To determine whether a forum-selection clause is unreasonable, this court should
consider the following factors: (1) which law governs the formation and construction
of the contract; (2) the residency of the parties involved; (3) the place of execution
and/or performance of the contract; (4) the location of the parties and witnesses
participating in the litigation; (5) the inconvenience to the parties of any particular
location; and (6) whether the clause was equally bargained for. Calanca, 157 Ill.
App. 3d at 88. By applying these six factors to the present case, it is apparent that
plaintiffs did not meet their burden of proving that the forum-selection clause was so
seriously unreasonable that they would be deprived of their day in court.
1. Formation and Construction
The policy contains an express choice-of-law provision designating Japanese law
as the controlling law. In addition, absent an express choice-of-law provision,
insurance policy provisions are generally " 'governed by the location of the subject
matter, the place of delivery of the contract, the domicile of the insured or of the
insurer, the place of the last act to give rise to a valid contract, the place of
performance, or other place bearing a rational relationship to the general contract.' "
Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520, 526-
27 (1995), quoting Hofeld v. Nationwide Life Insurance Co., 59 Ill. 2d 522, 528
(1975).
In the present case, the policy covered air-powered diaphragm pumps distributed
around the world. The policy was negotiated, executed, delivered, and paid for in
Japan. The insurer, Yasuda Fire, was a Japanese corporation, and Yamada, the
named insured, was a Japanese corporation. The policy, however, also covered
more than 200 additional insureds around the world. Illinois' only connection to the
policy is the fact that 3 of the more than 200 additional insureds, including Yamada
America, were located in Illinois, and the pump at issue in the CWC complaint
allegedly failed in Illinois. As a result, we believe that Japanese law should govern
the formation and construction of the contract to "obtain a consistent interpretation"
of the policies (see Lapham-Hickey, 166 Ill. 2d at 527). A contrary result would open
up these policies to possibly hundreds of different views of the law, depending on
the site of the risk.
2. Residency
A corporation is a resident of the state or country under whose laws it was
organized. LeBlanc v. G.D. Searle & Co., 178 Ill. App. 3d 236, 238 (1988).
Consequently, Yamada is a resident of Japan, Yamada America is a resident of
Atty. Jose A. Bernas
Illinois, Yasuda Fire is a resident of Japan, and Yasuda Claims is a resident of
California. Again, Illinois' only tie is through Yamada America, an additional insured
under the policy.
3. Execution and Performance
The policy was executed in Japan. Performance, on the other hand, was to occur all
over the world.
4. Location of Parties and Witnesses
Two of the parties participating in the litigation are located in Japan, one is located in
California, and one is located in Illinois. In addition, no witnesses are necessary.
The entire complaint rests on count I regarding defendants' duty to defend. Without a
duty to defend, there is no duty to indemnify. Crum & Forster Managers Corp. v.
Resolution Trust Corp., 156 Ill. 2d 384, 398 (1993). Similarly, without a duty to
defend, there can be no breach of contract or violation of the Consumer Fraud Act or
section 155 of the Illinois Insurance Code.
To determine whether an insurer has a duty to defend an insured, the court must
compare the allegations of the underlying complaint to the policy language, and if the
court determines that these allegations fall within or potentially within the policy's
coverage, the insurer has a duty to defend. Cincinnati Cos. v. West American
Insurance Co., 183 Ill. 2d 317, 323 (1998). Thus, the determination of the duty to
defend in this case is a legal question that requires no witnesses.
5. Inconvenience of Location
Regarding inconvenience, Illinois is inconvenient for Yasuda Fire. Japan, however, is
not inconvenient to Yamada, Yasuda Fire, or Yasuda Claims. Additionally, Yamada
America's directors reside in Japan and hold meetings at Yamada's headquarters in
Japan. Moreover, Yamada America was not responsible for purchasing general
liability insurance; rather, Yamada purchased the general liability insurance policy on
Yamada America's behalf. Furthermore, the clause provides Yamada with the
assurance that its products distributed around the world will be covered under one
uniform law leading to certainty, consistency, and convenience.
6. Bargaining Power
There is no evidence in the record that the policy was not equally bargained for.
Based on the number of products covered, the complexity of those products, the
number of additional insureds, and the location of distributors worldwide, it is safe to
presume that Yamada is a sophisticated insured.
Based on the factors enumerated in Calanca, there is little evidence that enforcement
of the forum-selection clause would be unreasonable. Furthermore, there is no
evidence in the record that would demonstrate that plaintiffs would be denied their
day in court.
III. PUBLIC POLICY
Plaintiffs also argue that the forum-selection clause violates Illinois public policy.
According to plaintiffs, "[t]he fundamental public policy at stake in the present action is
to protect insureds and injured third parties in an effort to make sure that there is
coverage available for a given claim," citing DC Electronics, Inc. v. Employers
CONFLICT OF LAWS 3D 1/08-09 Page 29 of 97
Modern Life Co., 90 Ill. App. 3d 342 (1980), and Walrus Manufacturing Co. v. New
Amsterdam Casualty Co., 184 F. Supp. 214 (S. D. Ill. 1960).
DC Electronics, however, does not stand for this proposition. The only reference to
public policy in DC Electronics is the following: "Any attempt by [the insurance
company] to dilute or diminish statutory provisions applicable to its contract of
insurance is contrary to public policy, and any conflict between statutory and policy
provisions will be resolved in favor of the statutory provisions." DC Electronics, 90
Ill. App. 3d at 348. Plaintiffs in the present case do not argue that Yasuda Fire's
policy provisions dilute or diminish any statutory provisions in the Illinois Insurance
Code. In contrast, in DC Electronics, the insurance company argued that the policy
language requiring a renewal premium to have been paid within 31 days of an
expiration date applied even though the applicable section of the Illinois Insurance
Code extended the period of payment to six months. DC Electronics, 90 Ill. App. 3d
at 348.
Likewise, Walrus Manufacturing does not stand for the above-stated proposition.
Besides the pronouncement that "[t]he public policy of Illinois places domestic
corporations and foreign corporations on the same basis" (Walrus Manufacturing,
184 F. Supp. at 224), the Walrus Manufacturing court did not address Illinois public
policy. That case, however, does contain a quote from American Central Insurance
Co. v. Simpson, 43 Ill. App. 98 (1890), regarding an unidentified statute in which
the court stated:
" 'The object and purpose of that legislation is that persons in this State holding
insurance by foreign companies shall not be compelled to resort to other
jurisdictions and travel long distances from the place where the fire occurs, and be
at expense in procuring his witnesses to travel long distances; that the protection of
a citizen in this State ought not to be destroyed by implication; and the same
reason, that a party cannot be compelled to go away from the State to be subjected
to an examination, should preclude the company from requiring that one insured
should go out of the State for the purpose of arbitration and to submit his proofs. A
clause in a policy that required such an act as a condition precedent to a right of
recovery would be against public policy and void.' " Walrus Manufacturing, 184 F.
Supp. at 219, quoting American Central, 43 Ill. App. at 104.
This quotation, however, does not address the alleged public policy of protecting
insureds and injured third parties to ensure insurance coverage.
In fact, there is no public policy in Illinois ensuring that there is insurance coverage
for insureds and injured third parties. Admittedly, Illinois courts liberally construe the
insurance policy and the underlying complaint in favor of the insured when
determining the duty to defend. Federated Mutual Insurance Co. v. State Farm
Mutual Automobile Insurance Co., 282 Ill. App. 3d 716, 725 (1996). Similarly, Illinois
courts liberally construe any doubts as to coverage in favor of the insured,
especially when the insurer seeks to avoid coverage based on an exclusion in the
policy. Oakley Transport, Inc. v. Zurich Insurance Co., 271 Ill. App. 3d 716, 722
(1995). Conversely, courts should not torture the language of a policy to find
coverage where none clearly exists. Cohen Furniture Co. v. St. Paul Insurance Co.
of Illinois, 214 Ill. App. 3d 408, 411 (1991). An Illinois court simply cannot find
insurance coverage where no insurance coverage exists; as a result, there is no
public policy in Illinois ensuring insurance coverage.
Atty. Jose A. Bernas
Additionally, there is no public policy in Illinois disfavoring forum-selection clauses.
See Dace International, Inc. v. Apple Computer, Inc., 275 Ill. App. 3d 234, 239 (1995).
Likewise, there is no public policy in Illinois against the pollution exclusion in
insurance policies.
Plaintiffs further argue that the enforcement of the forum-selection clause would
violate public policy because no Japanese court has ever interpreted a pollution
exclusion clause. Plaintiffs cite no authority for the proposition that a public policy
exists in Illinois to ensure that insurance contract provisions are interpreted by courts
experienced in construing the clause at issue. Arguments without citation to authority
do not merit consideration on appeal. People ex rel. Aldworth v. Dutkanych, 112 Ill. 2d
505, 511 (1986). In addition, Illinois does not have a public policy that dictates that
only courts with experience may rule upon issues of law. In fact, Illinois courts
address issues of first impression all the time.
Plaintiffs also argue that "the protection of insureds is a fundamental Illinois public
policy [] manifest[ed] in caselaw [sic] and statute" and state that "Illinois[] has a
comprehensive statutory scheme for insurers under the Illinois Insurance Code,"
citing Emerson v. American Bankers Insurance Co., 223 Ill. App. 3d 929 (1992).
Emerson, however, does not even mention Illinois public policy. Additionally,
Emerson does not contain the statement of law contained in plaintiffs' brief. The only
connection Emerson has to the Illinois Insurance Code is the fact that the plaintiffs
therein sought damages under section 155 of the Code. See Emerson, 223 Ill. App.
3d at 932.
Plaintiffs additionally state that "the Illinois common law has a strong public policy to
protect insureds and injured parties, who have claims for which coverage had been
intended." Plaintiffs cite no authority in support of this statement. As we previously
stated, arguments without citation to authority do not merit consideration on appeal.
People ex rel. Aldworth, 112 Ill. 2d at 511.
Finally, plaintiffs assert that the forum-selection clause should not be enforced
because Japanese law allegedly does not provide for certain remedies found under
Illinois law. For instance, Japanese law allegedly does not provide for fees, costs, and
exemplary damages as provided for under section 155 of the Illinois Insurance Code.
In addition, Japanese law allegedly does not have remedies similar to the statutory
remedies available to consumers under the Consumer Fraud Act. Plaintiffs then
argue that, as a result, Japanese law does not afford the same protections to plaintiffs
as Illinois' law. On July 21, 1997, Judge Dunn agreed with this argument when he
ruled that "Illinois public policy requires that forum selection clause [sic] be deemed
unenforceable in that persons and entities living and doing business in Illinois would
be required to proceed in Japan and under Japanese law where costs and attorney
fees incurred would not be compensable."
The fact that an international transaction may be subject to laws and remedies
different from or less favorable than those of the United States is not alone a valid
basis to deny the enforcement of forum-selection clauses. Bonny v. Society of
Lloyd's, 3 F.3d 156, 162 (7th Cir. 1993). The seventh circuit also stated:
" 'It defies reason to suggest that a plaintiff may circumvent forum selection ... merely
by stating claims under laws not recognized by the forum selected in the agreement.
A plaintiff would simply have to allege violations of his country's tort law or his
country's statutory law or his country's property law in order to render nugatory any
CONFLICT OF LAWS 3D 1/08-09 Page 30 of 97
forum selection clause that implicitly or explicitly required the application of the law
of another jurisdiction. We refuse to allow a party's solemn promise to be defeated
by artful pleading.' " (Emphasis omitted.) Hugel v. Corporation of Lloyd's, 999 F.2d
206, 211 (7th Cir. 1993), quoting Roby v. Corporation of Lloyd's, 996 F.2d 1353,
1360 (2d Cir. 1993).
In Hoes of America, Inc. v. Hoes, 493 F. Supp. 1205 (C.D. Ill. 1979), the United
States District Court for the Central District of Illinois found that the plaintiff in that
action, an Illinois corporation that filed suit in the federal court in Illinois, accepted a
trial without a jury and no punitive damages in Germany when it entered into a
contract that contained a forum-selection clause designating Bremen, Germany, as
the forum. Based on the foregoing, we find that the enforcement of the forum-
selection clause in this case would not violate Illinois public policy.
We also reject plaintiffs' reliance on Maher and Associates, Inc. v. Quality Cabinets,
267 Ill. App. 3d 69 (1994), to argue that we may void the forum-selection clause if it
violated fundamental Illinois public policy. While we agree that plaintiffs' statement is
a correct statement of the law, we find Maher distinguishable. In Maher, the plaintiff
relied on the Sales Representative Act (820 ILCS 120/0.01 et seq. (West 1992)),
and section 2 of that act provided that "[a]ny provision in any contract between a
sales representative and principal purporting to waive any of the provisions of this
Act shall be void" (820 ILCS 120/2 (West 1992)). Based on this provision, the court
found that the legislature was announcing fundamental public policy protecting sales
representatives. In the present case, plaintiffs do not direct us to a similar provision
in the Illinois Insurance Code, and we were unable to locate a similar provision
ourselves.
We note that plaintiffs also argue that defendants' reliance on federal case law is
inappropriate because the cited federal cases follow the strictly federal common-law
test for applying forum-selection clauses, a test that plaintiffs describe as a more
onerous standard. One of the cases plaintiffs cite for this proposition is the M.S.
Bremen case. Illinois courts, however, adopted the analysis in that case long ago
and have since relied on federal case law when interpreting forum-selection
clauses. See, e.g., Calanca, 157 Ill. App. 3d 85. Thus, we reject plaintiffs' argument
that the defendants' reliance on federal case law is inappropriate.
Plaintiffs further argue that defendants should be estopped from relying on the
forum-selection clause because defendants allegedly failed to reserve their rights or
seek a declaratory judgment. Where a complaint presents a case of potential
coverage, the insurer must defend under a reservation of right or seek a declaratory
judgment. John Burns Construction Co. v. Indiana Insurance Co., 299 Ill. App. 3d
169, 175 (1998). An insurer that fails to exercise either of these two options will be
estopped from later raising any policy defenses. John Burns Construction Co., 299
Ill. App. 3d at 175. The forum-selection clause, however, is not a policy defense. As
a result, we reject this argument.
Based upon the foregoing, we reverse the judgment of the circuit court of Kane
County granting summary judgment in plaintiffs' favor on count I of the first
amended complaint and remand this matter to the circuit court with directions to
dismiss this matter pursuant to the forum-selection clause.
Reversed and remanded with directions.
GEIGER and THOMAS, JJ., concur.
Atty. Jose A. Bernas
 United States District Court, S.D. New York.
In re UNION CARBIDE CORPORATION GAS PLANT DISASTER AT BHOPAL,
INDIA IN DECEMBER, 1984.
Misc. No. 21-38 (JFK).
May 12, 1986.
As Amended June 10, 1986.
Numerous actions were brought in various United States district courts for injuries
and damages sustained as result of gas leak at chemical plant at Bhopal, India. The
Judicial Panel on Multidistrict Litigation, 601 F.Supp. 1035, joined all actions and
assigned them to Southern District of New York. Corporate owner of plant moved to
dismiss consolidated action on grounds of forum non conveniens. The District Court,
Keenan, J., held that better ability of Indian legal system to determine cause of
accident and fix liability, presence in India of overwhelming majority of witnesses and
evidence, as well as claimants, and substantial interest of India in accident and
outcome of litigation required that consolidated case be dismissed on forum non
conveniens grounds in favor of Indian forum.
Dismissed with conditions.
West Headnotes
[1] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Doctrine of forum non conveniens allows court to decline jurisdiction, even when
jurisdiction is authorized by general venue statute.
[2] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Foreign plaintiffs' choice of United States forum deserves less deference than would
be accorded United States citizen's choice; presumption in favor of plaintiff's choice of
forum will be applied with less than maximum force.
[3] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Court engaged in inquiry regarding existence and adequacy of alternative forum in
connection with motion to dismiss action on grounds of forum non conveniens must at
least consider effect on plaintiffs of change in law upon transfer, though its decision
CONFLICT OF LAWS 3D 1/08-09 Page 31 of 97
should not hinge on unfavorable change in law; court may conclude that no
adequate alternative exists at point where possible change in law would provide “no
remedy at all” to plaintiffs.
[4] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Legal system of India provided adequate alternative forum for action for injuries and
damages sustained as result of gas leak at chemical plant at Bhopal, as preliminary
consideration in determining whether to grant motion of corporation which owned
plant to dismiss action on forum non conveniens grounds, provided owner
consented to submit to jurisdiction of courts of India, to be subject to discovery
under model of United States Federal Rules of Civil Procedure after appropriate
demand, and to satisfy any judgment rendered by Indian court, notwithstanding
challenges by injured and damaged parties to lack of innovation in Indian judicial
system, delays and backlog of Indian courts, ability of Indian practitioners, lack of
codified tort law, and lack of various procedural devices.
[5] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Private interest factors, including sources of proof, access to witnesses, and
possibility of view of plant, weighed greatly in favor of dismissing action for injuries
and damages resulting from gas leak at chemical plant at Bhopal on forum non
conveniens grounds in favor of forum in India, in light of records concerning design
of plant, safety procedures, training of employees, and start-up of plant, all relevant
to question of liability, being practically all in India, certain records being in
languages other than English, number of witnesses residing in India, inability to
compel nonparty witnesses to appear in United States, cost of transporting
witnesses to United States, inability of some potential witnesses to speak English,
and possibility that viewing of plant might be relevant.
[6] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Public interest concerns, including administrative difficulties, public interest of India
and United States in litigation, and law applicable to action, weighed in favor of
dismissing action for injuries and damages sustained as a result of gas leak in
chemical plant at Bhopal on grounds of forum non conveniens in favor of forum in
India, in light of additional burden action would impose on already heavily burdened
federal district court, less tenuous contacts that corporation owning plant would
Atty. Jose A. Bernas
have with Indian forum, additional time required for language translation if action
remained in United States, interest of Indian government in creation, operation,
licensing and regulation, and investigation of plant, and in creating standards of care,
enforcing them, and protecting citizens, and law of India applying to action under
governmental interest analysis, lex loci delicti analysis, or most significant relationship
test, notwithstanding India's opposing dismissal.
[7] Federal Courts 170B 45
170B Federal Courts
170BI Jurisdiction and Powers in General
170BI(B) Right to Decline Jurisdiction; Abstention Doctrine
170Bk45 k. Forum Non Conveniens. Most Cited Cases
Better ability of Indian legal system to determine cause of gas leak at chemical plant
in Bhopal and to thereby fix liability, Indian court's greater access to information
needed to arrive at appropriate compensation, presence in India of overwhelming
majority of witnesses and evidence as well as claimants, and significant interest of
India in accident and its aftermath, required that multidistrict litigation for injuries and
damages resulting from leak be dismissed on grounds of forum non conveniens
subject to conditions that plant owner consented to submit to jurisdiction of courts of
India and continued to waive defenses based upon statute of limitations, that it
agreed to satisfy any judgment rendered in Indian court, and that it be subject to
discovery under model of United States Federal Rules of Civil Procedure after
appropriate demand.
*843 Robins, Zelle, Larson & Kaplan, Minneapolis, Michael V. Ciresi, Bruce A.
Finzen, Roberta B. Walburn, D.S. Sastri of counsel. Barrett, Smith, Schapiro, Simon
& Armstrong, New York City, Gerald A. Novack, of counsel, for the Union of India.
Waite, Schneider, Bayless & Chesley Co., L.P.A., Cincinnati, Ohio, Stanley M.
Chesley, Phillip B. Allen, Jan Levien, of counsel, Bailey & Broder, New York City, F.
Lee Bailey, Michael C. Zwal, of counsel, for individual plaintiffs.
Hoffinger, Friedland, Dobrish, Bernfeld & Hasen, New York City, Jack S. Hoffinger, of
counsel, Liaison Counsel.
Kelley Drye & Warren, New York City, Bud G. Holman, William A. Krohley, Lisa E.
Cleary, of counsel, for defendant.
Christic Institute, Washington, D.C., Rob Hager, Shelley D. Hayes, of counsel, for
Amicus Curiae.
*844 OPINION AND ORDER
KEENAN, District Judge:
FACTUAL BACKGROUND
On the night of December 2-3, 1984 the most tragic industrial disaster in history
occurred in the city of Bhopal, state of Madhya Pradesh, Union of India. Located there
was a chemical plant owned and operated by Union Carbide India Limited (“UCIL”).
The plant, situated in the northern sector of the city, had numerous hutments adjacent
to it on its southern side which were occupied by impoverished squatters. UCIL
manufactured the pesticides Sevin and Temik at the Bhopal plant at the request of,
CONFLICT OF LAWS 3D 1/08-09 Page 32 of 97
and with the approval of, the Government of India. (Affidavit of John MacDonald
(“MacDonald Aff.”) at 2). UCIL was incorporated under Indian law in 1934. 50.9% of
its stock is owned by the defendant, Union Carbide Corporation, a New York
corporation. (MacDonald Aff. at 1). Methyl isocyanate (MIC), a highly toxic gas, is an
ingredient in the production of both Sevin and Temik. On the night of the tragedy
MIC leaked from the plant in substantial quantities for reasons not yet determined.
The prevailing winds on the early morning of December 3, 1984 were from
Northwest to Southeast. They blew the deadly gas into the overpopulated hutments
adjacent to the plant and into the most densely occupied parts of the city. The
results were horrendous. Estimates of deaths directly attributable to the leak range
as high as 2,100. No one is sure exactly how many perished. Over 200,000 people
suffered injuries-some serious and permanent-some mild and temporary. Livestock
were killed and crops damaged. Businesses were interrupted.
On December 7, 1984 the first lawsuit was filed by American lawyers in the United
States on behalf of thousands of Indians. Dawani et al. v. Union Carbide Corp.,
S.D.W.Va. (84-2479). Since then 144 additional actions have been commenced in
federal courts in the United States. The actions have all been joined and assigned
by the Judicial Panel on Multidistrict Litigation to the Southern District of New York
by order of February 6, 1985, 601 F.Supp. 1035.
The individual federal court complaints have been superseded by a consolidated
complaint filed on June 28, 1985.
The Indian Government on March 29, 1985 enacted legislation, the Bhopal Gas
Leak Disaster (Processing of Claims) Act (21 of 1985) (“Bhopal Act”), providing that
the Government of India has the exclusive right to represent Indian plaintiffs in India
and elsewhere in connection with the tragedy. Pursuant to the Bhopal Act, the
Union of India, on April 8, 1985, filed a complaint with this Court setting forth claims
for relief similar to those in the consolidated complaint of June 28, 1985.
By order of April 25, 1985 this Court established a Plaintiffs' Executive Committee,
comprised of F. Lee Bailey and Stanley M. Chesley, Esqs., who represented
individual plaintiffs and Michael V. Ciresi, Esq., whose firm represents the Union of
India. Jack S. Hoffinger, Esq., who represents individual plaintiffs, was appointed
liaison counsel for the Plaintiffs' Executive Committee.FN1
FN1. All counsel on the Plaintiffs' Executive Committee were most
professional and helpful to the Court in this case. Mr. Hoffinger agreed to
proceed pro bono in this case, and waived any possible fee. The Court has
been informed that neither Mr. Hoffinger, nor anyone else on the Plaintiffs'
Executive Committee, nor anyone in their law firms went to India on the
days immediately following the tragedy to “sign up” Indian plaintiffs. The
behavior of many American lawyers who went to Bhopal, India during
December 1984 and January 1985 is not before this Court on this motion.
Suffice it to say that those members of the American bar who travelled the
8,200 miles to Bhopal in those months did little to better the American
image in the Third World-or anywhere else. None of them were on the
Plaintiffs' Executive Committee.
Atty. Jose A. Bernas
On September 24, 1985, pursuant to the Bhopal Act, the Central Government of India
framed a “scheme” for the Registration and Processing of Claims arising out of the
disaster. According to the Union of India's *845 counsel, over 487,000 claims have
been filed in India pursuant to the “scheme.”
There presently are 145 actions filed in the United States District Court for the
Southern District of New York under the Judicial Panel for Multidistrict Litigation's
order of February 6, 1985, involving approximately 200,000 plaintiffs.
Before this Court is a motion by the defendant Union Carbide Corporation (“Union
Carbide”) to dismiss the consolidated action on the grounds of forum non conveniens.
DISCUSSION
[1] The doctrine of forum non conveniens allows a court to decline jurisdiction, even
when jurisdiction is authorized by a general venue statute. In support of its position
that the consolidated action before the Court should be transferred to a more
convenient forum within the Union of India pursuant to this doctrine, Union Carbide
relies on the United States Supreme Court's decisions in Gulf Oil Corp. v. Gilbert, 330
U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947) and Piper Aircraft Co. v. Reyno, 454
U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). The plaintiffs cite numerous other
lower United States federal court cases in their briefs and seek to distinguish the
Supreme Court's decisions from this case. Of course, Gilbert and Piper are the
touchstones in sorting out and examining the contentions of both sides to this motion
on the various factors bearing on convenience.
Piper teaches a straightforward formulation of the doctrine of forum non conveniens.
A district court is advised to determine first whether the proposed alternative forum is
“adequate.” This inquiry should proceed in the order followed below. Then, as a
matter within its “sound discretion,” Piper at 257, 102 S.Ct. at 266, the district court
should consider relevant public and private interest factors, and reasonably balance
those factors, in order to determine whether dismissal is favored. This Court will
approach the various concerns in the same direct manner in which Piper and Gilbert
set them out.
At this juncture, it would be appropriate to discuss the presumptions on a forum non
conveniens motion. In Piper, the Court discussed its earlier finding in Koster v.
Lumbermens Mutual Casualty Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067 (1947) ,
which suggested that a plaintiff's choice of forum was entitled to great deference
when the forum chosen was the home of the plaintiff. This presumption was based on
the fact that the choice of the home forum indicated a reasonable assumption that the
choice was convenient. Koster at 524, 67 S.Ct. at 831. Conversely, the Piper Court
found:
When the plaintiff is foreign, however, this assumption is much less reasonable.
Because the central purpose of any forum non conveniens inquiry is to ensure that
the trial is convenient, a foreign plaintiff's choice deserves less deference.
Piper 454 U.S. at 256, 102 S.Ct. at 266 (footnote omitted).
[2] In the case now before the Court, in which the plaintiffs, including the Union of
CONFLICT OF LAWS 3D 1/08-09 Page 33 of 97
India, are foreign, and share a home forum which is not the instant forum, the
assumption that this forum is convenient is not completely reasonable. The foreign
plaintiffs' choice of the United States forum “deserves less deference” than would be
accorded a United States citizen's choice. This Court will apply the presumption in
favor of plaintiffs' choice of forum with “less than maximum force.” Piper at 261,
102 S.Ct. at 268. See note 23 at 864, infra.
1. Preliminary Considerations.
“At the outset of any forum non conveniens inquiry, the court must determine
whether there exists an alternative forum.” Piper at 254, n. 22, 102 S.Ct. at 265, n.
22. The elements of that inquiry are set forth in Piper. First, the Court said,
“[o]rdinarily, this requirement will be satisfied when the defendant is ‘amenable to
process' in the other jurisdiction.” Piper at 254, n. 22,*846 102 S.Ct. at 265, n. 22,
quoting Gilbert 330 U.S. at 506-507, 67 S.Ct. at 842. Gilbert states that the
doctrine of forum non conveniens“presupposes at least two forums in which the
defendant is amenable to process.”
[3] Extending the limited inquiry of Gilbert, the Piper Court delved into the relevance
of the substantive and procedural differences in law which would be applied in the
event a case was transferred on the grounds of forum non conveniens. The Piper
Court determined that it was theoretically inconsistent with the underlying doctrine of
forum non conveniens, as well as grossly impractical, to consider the impact of the
putative transferee forum's law on the plaintiff in its decision on a forum non
conveniens motion: “[I]f conclusive or substantial weight were given to the possibility
of a change in law, the forum non conveniens doctrine would become virtually
useless.” Piper 454 U.S. at 250, 102 S.Ct. at 263.FN2
FN2. The Court found a theoretical flaw in the opposite rule, as set forth by
the Third Circuit. Noting that a plaintiff would choose the forum with the
most favorable choice of law rules in the first instance, “if the possibility of
an unfavorable change in substantive law is given weight in the forum non
conveniens inquiry, dismissal would rarely be proper.” Piper at 250, 102
S.Ct. at 263.
The Court listed numerous practical considerations which led to its conclusion that
an unfavorable change in law for plaintiff was not a relevant factor in the forum
analysis. First, the Court observed that if the chance of a change in law were given
substantial weight, choice of law questions would “become extremely important.”
Piper at 251, 102 S.Ct. at 263. U.S. courts would “have to compare the rights,
remedies, and procedures available” within the two proposed alternative forums, to
determine whether a disadvantageous change in law would occur upon transfer. Id.
Since “[t]he doctrine of forum non conveniens, however, is designed in part to help
courts avoid conducting complex exercises in comparative law,” the change in law
analysis would subvert the doctrine itself. Id. Thus, a court engaged in the inquiry
regarding the existence and adequacy of an alternative forum should not hinge its
decision on an unfavorable change in law.FN3
FN3. Similarly, the Court determined that “the possibility of a change in law
favorable to defendant should not be considered.” Piper at 252, n. 19,
102 S.Ct. at 264, n. 19.
Atty. Jose A. Bernas

Another practical concern relating to the “change in law” inquiry was discussed by the
Piper court. Based on the liberality of United States federal law as compared to much
foreign law with respect to availability of strict liability for tort, malleable and diverse
choice of law rules among the 50 states, availability of jury trials, contingent fee
arrangements and extensive discovery provisions, the Court observed that a change
of forum might frequently involve an unfavorable change of law for foreign plaintiffs
suing American defendants. Piper at 252, n. 18, 102 S.Ct. at 264, n. 18.
Consequently, if the unfavorable change in law were a major factor in the analysis:
[T]he American courts, which are already extremely attractive to foreign plaintiffs,
would become even more attractive. The flow of litigation into the United States would
increase and further congest already crowded courts.
Piper at 252, 102 S.Ct. at 264 (footnotes omitted).
At the point, however, where the possible change in law would provide “no remedy at
all” to plaintiff, a court may conclude that no adequate alternative exists. As the Piper
Court observed, it did not hold that:
[T]he possibility of an unfavorable change in law should never be a relevant
consideration in a forum non conveniens inquiry. Of course, if the remedy provided by
the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at
all, the unfavorable change in law may be given substantial weight; the district court
may conclude that dismissal would not be in the interests of justice.
Piper at 254, 102 S.Ct. at 265 (emphasis in original) (footnote omitted). Thus, while it
*847 is not a “major factor” in the analysis, a court must at least consider the effect on
plaintiffs of a change in law upon transfer.
[4] To a great extent, the plaintiffs in this case argue that Indian courts do not offer an
adequate forum for this litigation by virtue of the relative “procedural and discovery
deficiencies [which] would thwart the victims' quest for” justice. (Memorandum in
Opposition by Plaintiffs' Executive Committee (“Memo in Opp.”) at 2). The defendant
disputes this contention.
Plaintiffs' preliminary concern, regarding defendant's amenability to process in the
alternative forum, is more than sufficiently met in the instant case. Union Carbide has
unequivocally acknowledged that it is subject to the jurisdiction of the courts of India
(Defendant's Memorandum in Reply filed December 20, 1985 (“Reply Memo”) at 8);
(oral argument January 3, 1986, transcript at 29, comment of Bud Holman, counsel
for Union Carbide). Union Carbide is definitely amenable to process in India.
Beyond this initial test, plaintiffs and amicus curiae FN4 argue that the Indian legal
system is inadequate to handle the Bhopal litigation. In support of this position,
plaintiffs have submitted the affidavit of Professor Marc S. Galanter of the University
of Wisconsin Law School. Professor Galanter's credentials are impressive; he was a
Fulbright Scholar at the Faculty of Law of Delhi University and specializes in South
Asian Studies at the University of Wisconsin Law School. He is not, however,
admitted to practice in India and the Court views his opinions concerning the Indian
legal system, its judiciary and bar as far less persuasive than those of N.A. Palkhivala
CONFLICT OF LAWS 3D 1/08-09 Page 34 of 97
and J.B. Dadachanji, each of whom has been admitted to practice in India for over
40 years. Both are Senior Advocates before the Supreme Court of India. Mr.
Palkhivala served as Indian Ambassador to the United States from 1977 to 1979,
and has represented the Indian government on three occasions before international
tribunals.
FN4. Rob Hager, Esq. for Citizens Commission on Bhopal, National
Council of Churches, United Church of Christ Commission for Racial
Justice, et al.
Although the outcome of this analysis, given the rule of Piper regarding change in
law, seems self-evident, the Court will review plaintiffs' argument on the inadequacy
of the Indian forum out of deference to the plaintiffs.
A. Innovation in the Indian Judicial System.
Professor Galanter describes the Indian common law legal system, inherited from
the British, in terms of its similarity to that of other common law systems. He
compares the system favorably to that of the United States or Great Britain in terms
of the appellate structure, the rule of stare decisis, the role of the judiciary as
“guardian of [India's] democratic structure and protector of citizens' rights.”
(Galanter Aff., at 6-12) before pointing to its ostensible deficiencies. According to
Professor Galanter, India's legal system “was imposed on it” during the period of
colonial rule. (Galanter Aff. at 11). Galanter argues that “Indian legal institutions still
reflect their colonial origins,” (Galanter Aff. at 12), in terms of the lack of broad-
based legislative activity, inaccessibility of legal information and legal services,
burdensome court filing fees and limited innovativeness with reference to legal
practice and education. (Galanter Aff. at 12).
On the question of innovativeness, Mr. Palkhivala responds with numerous
examples of novel treatment of complex legal issues by the Indian Judiciary.FN5 In
the words of the former ambassador of India to the United States, “a legal system is
not *848 a structure of fossils but is a living organism which grows through the
judicial process and statutory enactments.” (Palkhavala Aff. at 3). The examples
cited by defendant's experts suggest a developed and independent judiciary.
Plaintiffs present no evidence to bolster their contention that the Indian legal system
has not sufficiently emerged from its colonial heritage to display the innovativeness
which the Bhopal litigation would demand. Their claim in this regard is not
compelling.
FN5. For example, Mr. Palkhivala describes four cases in which the Indian
Supreme Court crafted new and “courageous” remedies in situations
relating to abridgements of fundamental rights. (Palkhivala Aff. at 6-7). Mr.
Dadachanji describes similar decisions in which he participated as an
advocate, in his affidavit. (Dadachanji Aff. at 2-3). The Court recognizes
the innovativeness of the Indian Courts, while refraining from an
exhaustive survey of Indian case law.
B. Endemic Delays in the Indian Legal System.
Galanter discusses the problems of delay and backlog in Indian courts. Indeed, it
Atty. Jose A. Bernas
appears that India has approximately one-tenth the number of judges, per citizen, as
the United States,FN6 and that postponements and high caseloads are widespread.
Galanter urges that the backlog is a result of Indian procedural law, which allows for
adjournments in mid-hearing, and for multiple interlocutory and final appeals.
Numerous appeals and “[c]onsiderable delay [are] caused by the tendency of courts
to avoid the decision of all the matters in issue in a suit, on the ground that the suit
could be disposed of on a preliminary point.” (Galanter Aff. at 17; 18-20, 21, quoting
Indian Law Commission, 54th Report (1973) pp. 12-13).
FN6. India allegedly has 10.5 judges per million population, as compared to
107 judges per million in the United States (Galanter Aff. at 15).
This Court acknowledges that delays and backlog exist in Indian courts, but United
States courts are subject to delays and backlog, too. See Remarks of Honorable
Warren E. Burger, Chief Justice, Supreme Court of the United States, 100 F.R.D.
499, 534 (1983).
However, as Mr. Palkhivala states, while delays in the Indian legal system are a fact
of judicial life in the proposed alternative forum, there is no reason to assume that the
Bhopal litigation will be treated in ordinary fashion.
The Bhopal tragedy has already been approached with imagination in India.
Demonstrating the creativity and flexibility of the Indian system, the Parliament of
India has passed the Bhopal Act in order to deal with the cases arising from the sad
events of December 3, 1984. The Bhopal Act permits the cases to be treated
“speedily, effectively, equitably and to the best advantage of the claimants.”
(Palkhivala Aff. at 11).
Mr. Dadachanji refers to another Indian case which arose from a gas leak in New
Delhi. The Chief Justice and another Justice of the Supreme Court of India ordered
the presiding court to expedite adjudication of claims. MC Mehta v. Union of India.
(Dadachanji Aff. at 11 and Annexure A thereto). In another instance, the Indian
Supreme Court directed the High Court to hear a given matter on a daily basis, and
set a deadline for delivering judgment (Dadachanji Aff. at 11 and Annexure B thereto).
Other means of coping with delay are appointment of special tribunals by the
Government of India (Dadachanji Aff. at 12 and Annexure C thereto), and assignment
of daily hearing duties to a single special judge, otherwise unburdened, to hear a
special matter. (Dadachanji Aff. at 11). This Court is persuaded, by the example of
the Bhopal Act itself and other cases where special measures to expedite were taken
by the Indian judiciary, that the most significant, urgent and extensive litigation ever to
arise from a single event could be handled through special judicial accommodation in
India, if required.
C. Procedural and Practical Capacity of Indian Courts.
Plaintiffs contend that the Indian legal system lacks the wherewithal to allow it “to deal
effectively and expeditiously” with the issues raised in this lawsuit. (Memo in Opp. p.
53).
Plaintiffs urge that Indian practitioners emphasize oral skills rather than written briefs.
They allegedly lack specialization, practical investigative techniques and coordination
CONFLICT OF LAWS 3D 1/08-09 Page 35 of 97
into partnerships. These factors, *849 it is argued, limit the Indian bar's ability to
handle the Bhopal litigation. As Mr. Dadachanji indicates, Indian lawyers have
competently dealt with complex technology transfers, suggesting capability within
the technological and scientific areas of legal practice, if not “specialization.”
(Dadachanji Aff. at 8). Moreover, Indian attorneys use experts, when necessary. As
to investigative ability, Mr. Dadachanji persuasively points out that the Central
Bureau of Investigation (“CBI”) of the Union of India is well equipped to handle
factual inquiry, as is the Commission of Enquiry constituted by the state of Madhya
Pradesh. (Dadachanji Aff. at 8). While Indian attorneys may not customarily join into
large law firms, and as Mr. Palkhivala states, are limited by present Indian law to
partnerships of no more than twenty, this alone or even in concert with other factors
does not establish the inadequacy of the Indian legal system. (Palkhivala Aff. at 8).
There is no reason the Indian legislature could not provide for the expansion of law-
firms, if such a choice is required. In any event, this Court is not convinced that the
size of a law firm has that much to do with the quality of legal service provided.
Many small firms in this country perform work at least on a par with the largest firms.
Bigger is not necessarily better.
Moreover, since the Union of India purports to represent all the claimants, it is likely
that if the case were transferred to India, the Attorney General or Solicitor General
of India and the Advocate General of Madhya Pradesh, with attendant staffs, would
represent the claimants. The Indian bar appears more than capable of shouldering
the litigation if it should be transferred to India. (Palkhivala Aff. at 9).
Next, plaintiffs and Professor Galanter argue that the substantive tort law of India is
not sufficiently developed to accommodate the Bhopal claims. Plaintiffs trace the
lack of sophistication in Indian tort law to the presence of court fees for litigants as
inhibiting the filing of civil suits. Though the filing fees may have had historical
significance, they are irrelevant here. Professor Galanter acknowledges that court
fees may be waived for “poor parties or for specific classes of litigants.” (Galanter
Aff. at 28). In fact, filing fees have been waived for claimants in India in the Bhopal
litigation already begun there.
Professor Galanter asserts that India lacks codified tort law, has little reported case
law in the tort field to serve as precedent, and has no tort law relating to disputes
arising out of complex product or design liability. (Galanter Aff. at 30-36). As an
illustration of the paucity of Indian tort law, Professor Galanter states that a search
through the All-India Reports for the span from 1914 to 1965 revealed only 613 tort
cases reported. (Galanter Aff. at 32). Mr. Dadachanji responds that tort law is
sparsely reported in India due to frequent settlement of such cases, lack of appeal
to higher courts, and the publication of tort cases in specialized journals other than
the All-India Reports. (Dadachanji Aff. at 16-17; Palkhivala Aff. at 10). In addition,
tort law has been codified in numerous Indian statutes. (Dadachanji Aff. at 16-17).
As Professor Galanter himself states, “the major categories of tort, their elements,
the [theories] of liability, defenses, respondeat superior, the theories of damages-
are all familiar.” (Galanter Aff. at 37). What is different, Galanter asserts, is the
complete absence of tort law relating to high technology or complex manufacturing
processes. This is of no moment with respect to the adequacy of the Indian courts.
With the groundwork of tort doctrine adopted from the common law and the
precedential weight awarded British cases, as well as Indian ones, it is obvious that
Atty. Jose A. Bernas
a well-developed base of tort doctrine exists to provide a guide to Indian courts
presiding over the Bhopal litigation. In any event, much tort law applied in American
cases involving complex technology has its source in legal principles first enunciated
in Victorian England. See, e.g., Rylands v. Fletcher, 1868, L.R. 3 H.L. 330. As Mr.
Palkhivala stated in his affidavit:
*850 The plant itself was the product of highly complex technology, but complexity of
the technology cannot be equated with complexity of legal issues. The principles of
liability and damages involved in the Bhopal cases are all well established in India.
The complexity is not in the nature or determination of legal issues but in the
application of the law to the events which took place in Bhopal. Well settled law is to
be applied to an unusual occurrence.
(Palkhivala Aff. at 7).
Plaintiffs next assert that India lacks certain procedural devices which are essential to
the adjudication of complex cases, the absence of which prevent India from providing
an adequate alternative forum. They urge that Indian pre-trial discovery is inadequate
and that therefore India is an inadequate alternative forum. Professor Galanter states
that the only forms of discovery available in India are written interrogatories,
inspection of documents, and requests for admissions. Parties alone are subject to
discovery. Third-party witnesses need not submit to discovery. Discovery may be
directed to admissible evidence only, not material likely to lead to relevant or
admissible material, as in the courts of the United States. Parties are not compelled to
provide what will be actual proof at trial as part of discovery.
These limits on discovery are adopted from the British system. Similar discovery tools
are used in Great Britain today. This Court finds that their application would perhaps,
however, limit the victims' access to sources of proof. Therefore, pursuant to its
equitable powers, the Court directs that the defendant consent to submit to the broad
discovery afforded by the United States Federal Rules of Civil Procedure if or when
an Indian court sits in judgment or presides over pretrial proceedings in the Bhopal
litigation.FN7 Any dismissal of the action now before this Court is thus conditioned on
defendant's consent to submit to discovery on the American model, even after
transfer to another jurisdiction.
FN7. A federal court has the power to condition transfer under the doctrine
of forum non conveniens upon “the condition that defendant corporations
agree to provide the records relevant to the plaintiff's claims.” Piper at 257,
n. 25, 102 S.Ct. 267, n. 25. While the Court feels that it would be fair to bind
the plaintiffs to American discovery rules, too, it has no authority to do so.
The ostensible lack of devices for third-party impleader or for organizing complex
cases under the law of the state of Madhya Pradesh are two other procedural
deficiencies which plaintiffs assert preclude a finding that India offers an adequate
alternative forum. Assuming for the moment that, upon appropriate transfer, the
Bhopal litigation would be adjudicated by the local district court in Bhopal, and that
the law of Madhya Pradesh would be applied, this Court is still not moved by plaintiffs'
argument regarding impleader or complex litigation.
Although no specific provision in the Indian Code of Civil Procedure permits the
CONFLICT OF LAWS 3D 1/08-09 Page 36 of 97
impleading of third-parties from whom contribution is sought, other provisions in the
Code do provide for impleader. As both parties to this motion state, Order 1, Rule
10(2) of the Indian Code of Civil Procedure “allows the court to add additional
parties if the presence of those parties is ‘necessary in order to enable the Court
effectively and completely to adjudicate upon and settle all questions involved in the
suit.’ ” (Galanter Aff. at 60; Dadachanji Aff. at 18). Professor Galanter posits that a
joint tortfeasor would not be considered a necessary party, and would not be joined.
Defendant's expert, conversely, asserts that a party can be added to prevent
multiplicity of suits and conflicts of decisions. Thus, Mr. Dadachanji argues,
defendants would be able to seek contribution from third-parties if joinder would
prevent repetitive litigation or inconsistency. Moreover, the broad provision of
inherent powers to aid the ends of justice, as codified at Section 151 of the Indian
Code of Civil Procedure would prevent an ultimate miscarriage of *851 justice in the
area of impleader. (Dadachanji Aff. at 19).FN8
FN8. The Court observes that the alleged problem would appear to act to
the detriment of defendant, not plaintiffs. It is Union Carbide which urges
that third-party defendants are necessary. (Memo in Support at 27-28).
Defendant discounts the supposed unavailability of third-party impleader,
while the plaintiffs find its lack objectionable. These postures lead the
Court to the conclusion that this argument is not compelling in either
direction. The lack of specific third-party practice will not concern the Court
if it does not concern Union Carbide.
The absence of procedures or mechanisms within the Indian judiciary to handle
complex litigation is presented as support for plaintiffs' position regarding the non-
existence of an adequate alternative forum. Professor Galanter asserts, for
example, that Indian judges do not promote settlements. The point is wholly
irrelevant to the question of whether an adequate alternative forum exists. In any
event, this Court has labored hard and long to promote settlement between the
parties for over a year, to no avail. It would appear that settlement, although
desirable for many reasons, including conservation of attorneys' fees and costs of
litigation, preservation of judicial resources, and speed of resolution, is unlikely
regardless of the level of activism of the presiding judge.
Plaintiffs' next contention is that since no class action procedure exists in India
expeditious litigation of the Bhopal suits would be impossible. As with all of plaintiffs'
other arguments, this purported deficiency does not constitute “no remedy” at all.
Professor Galanter himself acknowledges that Order 1, Rule 8 of the Indian Code of
Civil Procedure provides a mechanism for “representative” suits, “where there are
numerous persons having the same interest in one suit.” (Galanter Aff. at 54). Even
if the current state of Indian law regarding “representative” suits involves application
of the mechanism to pre-existing groups such as religious sects or associations,
there is no reason to conclude that the Indian legislature, capable of enacting the
Bhopal Act, would not see its way to enacting a specific law for class actions. In
addition, it does not appear on the face of Order 1, Rule 8 that the “representative”
suit is expressly limited to pre-existing groups. The Indian district court could adopt
the rule for use in a newly created class of injured, whose members all have “the
same interest” in establishing the liability of the defendant. An Indian court has law
available to create a representative class, or perhaps a few different representative
classes. The “scheme” for registration and processing of claims, see supra, at 4,
Atty. Jose A. Bernas
could perform the task of evaluating the specific amounts of claims. Moreover, Mr.
Dadachanji gives at least three examples where Indian courts have consolidated suits
pursuant to their inherent power under Section 151 of the Indian Code of Civil
Procedure. In at least one case, such consolidation allegedly occurred without
consent of the parties. (Dadachanji Aff. at 9). The absence of a rule for class actions
which is identical to the American rule does not lead to the conclusion that India is not
an adequate alternative forum.
Final points regarding the asserted inadequacies of Indian procedure involve
unavailability of juries or contingent fee arrangements in India. Plaintiffs do not press
these arguments, but Mr. Palkhivala touches upon them. They are easily disposed of.
The absence of juries in civil cases is a feature of many civil law jurisdictions, and of
the United Kingdom. Piper at 252, n. 18, 102 S.Ct. at 264, n. 18 and citations
therein. Furthermore, contingency fees are not found in most foreign jurisdictions.
Piper at 252, n. 18, 102 S.Ct. at 264, n. 18. In any event, the lack of contingency fees
is not an insurmountable barrier to filing claims in India, as demonstrated by the fact
that more than 4,000 suits have been filed by victims of the Bhopal gas leak in India,
already. According to Mr. Palkhivala, moreover, well-known lawyers have been
known to serve clients without charging any fees. (Palkhivala Aff. at 8).
Plaintiffs' final contention as to the inadequacy of the Indian forum is that a judgment
rendered by an Indian court cannot be enforced in the United States without *852
resort to further extensive litigation. Conversely, plaintiffs assert, Indian law provides
res judicata effect to foreign judgments, and precludes plaintiffs from bringing a suit
on the same cause of action in India. (Galanter Aff. at 63-65). Mr. Dadachanji
disputes this description of the Indian law of res judicata. He asserts that the
pendency, or even final disposition, of an action in a foreign court does not prevent
plaintiffs from suing in India upon the original cause of action. Plaintiffs would not be
limited, Mr. Dadanchanji argues, to an Indian action to enforce the foreign judgment.
(Dadachanji Aff. at 19-20). In addition, he states that an Indian court, before ordering
that a foreign judgment be given effect, would seek to establish whether the foreign
court had failed to apply Indian law, or misapplied Indian law. (Dadachanji Aff. at 20).
The possibility of non-enforcement of a foreign judgment by courts of either country
leads this Court to conclude that the issue must be addressed at this time. Since it is
defendant Union Carbide which, perhaps ironically, argues for the sophistication of
the Indian legal system in seeking a dismissal on grounds of forum non conveniens,
and plaintiffs, including the Indian Government, which state a strong preference for
the American legal system, it would appear that both parties have indicated a
willingness to abide by a judgment of the foreign nation whose forum each seeks to
visit. Thus, this Court conditions the grant of a dismissal on forum non conveniens
grounds on Union Carbide's agreement to be bound by the judgment of its preferred
tribunal, located in India, and to satisfy any judgment rendered by the Indian court,
and affirmed on appeal in India. Absent such consent to abide by and to “make good”
on a foreign judgment, without challenge except for concerns relating to minimal due
process, the motion to dismiss now under consideration will not be granted. The
preference of both parties to play ball on a distant field will be taken to its limit, with
each party being ordered to be bound by the decision of the respective foreign
referees.
To sum up the discussion to this point, the Court determines that the Indian legal
CONFLICT OF LAWS 3D 1/08-09 Page 37 of 97
system provides an adequate alternative forum for the Bhopal litigation. Far from
exhibiting a tendency to be so “inadequate or unsatisfactory” as to provide “no
remedy at all,” the courts of India appear to be well up to the task of handling this
case. Any unfavorable change in law for plaintiffs which might be suffered upon
transfer to the Indian courts, will, by the rule of Piper, not be given “substantial
weight.” Differences between the two legal systems, even if they inure to plaintiffs'
detriment, do not suggest that India is not an adequate alternative forum. As Mr.
Palkhivala asserts with some dignity, “[w]hile it is true to say that the Indian system
today is different in some respects from the American system, it is wholly untrue to
say that it is deficient or inadequate. Difference is not to be equated with
deficiency.” (Palkhivala Aff. at 4). Piper at 254, 102 S.Ct. at 265. The inquiry now
turns to a weighing of the public and private interest factors.
2. Private Interest Concerns.
[5] The Gilbert Court set forth a list of considerations which affect the interests of the
specific litigants to an action, and which should be weighed in making a forum non
conveniens determination. The so-called private interest factors, along with public
interest factors discussed below, were not intended to be rigidly applied. As the
Court stated in Piper,
“[E]ach case turns on its facts.” If central emphasis were placed on any one factor,
the forum non conveniens doctrine would lose much of the flexibility that makes it so
valuable.
Piper at 249-50, 102 S.Ct. at 263. Recognizing that “[p]articularly with respect to
the question of relative ease of access to sources of proof,”“the private interests
point in both directions,” the Supreme Court nevertheless upheld a district court's
decision to dismiss a case in favor of the relative convenience of a forum in
Scotland. Piper at 257, 102 S.Ct. at 267. By contrast, this Court finds that the
private interests*853 point strongly one way. As in Piper, it appears that the
burdensome effect of a trial in this forum supports a finding that the private interest
factors in this case weigh strongly in favor of dismissal.
A. Sources of Proof.
The first example of a private interest consideration discussed in Gilbert is “relative
ease of access to sources of proof.” As stated, the analysis of this issue must hinge
on the facts. Limited discovery on the issue of forum non conveniens has taken
place, pursuant to the Court's order of August 14, 1985.FN9 The Court can therefore
proceed to discuss this question.
FN9. Discovery was ably managed by Magistrate Michael H. Dolinger, of
the Southern District of New York.
Union Carbide argues that virtually all of the evidence which will be relevant at a trial
in this case is located in India. Union Carbide's position is that almost all records
relating to liability, and without exception, all records relevant to damages, are to be
found in and around Bhopal. On the liability question Union Carbide asserts that the
Bhopal plant was managed and operated entirely by Indian nationals, who were
employed by UCIL. (Affidavit of Warren J. Woomer, formerly Works Manager of the
Atty. Jose A. Bernas
Bhopal plant (“Woomer Aff.”) at 2). Defendant asserts that the Bhopal plant is part of
UCIL's Agricultural Products Division, which has been a separate division of UCIL for
at least 15 years, and that the plant had “limited contact” with UCIL's Bombay
headquarters, and almost no contact with the United States. (Woomer Aff. at 4, 32).
Woomer claims to have been the last American employed by UCIL. He departed from
Bhopal in 1982. (Woomer Aff. at 2).
Woomer describes the structure and organization of the Bhopal facility at the time of
the accident. The plant had seven operating units, each headed by a manager or
department head, each an Indian national.FN10 The managers or department heads
each reported either directly to the plant's General Works Manager, or to one of three
Assistant Works Managers. (Woomer Aff. at 6). Each of these is also an Indian
national. Three of the operating units which at this very early stage of inquiry into
liability appear to have been potentially involved in the MIC leak are the Carbon
Monoxide, MIC/Phosgene and Carbamoylation units. (Woomer Aff. at 7-10). The
Carbon Monoxide and MIC/Phosgene units together employed 63 employees, all
Indian nationals. (Woomer Aff. at 9). The Carbamoylation unit employed 99 Indian
nationals. (Woomer Aff. at 10). Mr. Woomer states that an inquiry into the cause of
the accident would require interviews with at least those employees who were on duty
at the Bhopal facility “immediately prior or after the accident;” Mr. Woomer asserts
that there are 193 employees, all Indians, who must be interviewed. (Woomer Aff. at
58).FN11
FN10. The seven operating units included Carbon Monoxide,
MIC/Phosgene, Carbamoylation, Alpha Naphthol, Aldicarb, Utilities and
Formulations.
FN11. Mr. Woomer states that a post-accident technical team sought to
interview these 193 employees. According to Mr. Woomer, the Indian CBI,
which had stepped into the plant following the tragedy, advised the technical
team that interviews could be conducted only of the General Works Manager
and MIC Production Manager, neither of whom was present at the time of
the leak. (Woomer Aff. at 57-58).
In addition to the seven operating units, the Bhopal plant contained seven functional
departments which serviced operations.FN12 The seven heads of the units reported
within the plant much as the department heads did.
FN12. The seven functional units were Maintenance, Quality Control, Stores,
Purchasing, Safety/Medical, Industrial Relations and Works Office. (Woomer
Aff. at 6).
The maintenance unit was apparently subdivided into departments including
Instrumentation, Mechanical Maintenance, both part of the Agricultural Chemical
Maintenance unit, which employed 171 people in total, and Plant Engineering and
Formulation Maintenance, which employed 46 people. (Woomer Aff. at 11-12). In
*854 addition, the Utilities and Electrical department employed 195 people. (Woomer
Aff. at 13). According to Mr. Woomer, the various maintenance organizations
performed repairs on equipment, provided engineering support, fabricated certain
equipment, salvaged other portions, and controlled utilities, temperatures and
pressures throughout the plant. (Woomer Aff. at 11-14).
CONFLICT OF LAWS 3D 1/08-09 Page 38 of 97
Moreover, according to Mr. Woomer, these UCIL departments also kept daily,
weekly and monthly records of plant operations, many of which were purportedly
seized by the CBI and selected for copying by CBI immediately after the
accident.FN13 The records and reports of the various maintenance units would likely
be relevant to the question of liability at trial.
FN13. Mr. Bud Holman, counsel for Union Carbide, states in his second
affidavit that over 36,000 of the 78,000 pages of documents seized by the
CBI represent plant operation records. (Holman Aff. # 2 at 5). He asserts
that 1,700 pages deal with maintenance work performed in 1983 and 1984.
(Holman Aff. # 2 at 8).
Of the additional functional units, it is possible that Quality Control, with 54
employees, Purchasing, with 53, or Stores may have been directly involved in the
disaster by virtue of their participation in analyzing plant output, procuring raw
materials for the chemical processes of the plant, and maintaining spare parts and
certain chemicals. (Woomer Aff. at 14-19). Thus, the records and reports of these
three departments may be necessary to an investigation of liability. While
examination of members of the Works Office department and Industrial Relations
department would likely be less directly useful, information regarding plant budgets
and employee histories might be of relevance. Of great importance are the records
and reports of the Safety/Medical department, which was responsible for daily
auditing of safety performance in all departments, training and testing on safety
rules, maintaining safety statistics and planning and implementing safety drills.
(Woomer Aff. at 22-23). The 31 Indian employees of this department worked with
the Central Safety Committee of the plant, whose members were drawn from plant
management, and the Departmental Safety Committees. Operating units were
required to monitor plant safety mechanisms weekly, and to keep monthly
checklists. (Holman Aff. # 2 at 9). The Central Safety Committee met monthly, as
did the Departmental Safety Committees. (Woomer Aff. at 39). The MIC Unit held
monthly safety committee meetings, for example, and issued monthly reports.
(Woomer Aff. at 41). Quarterly “Measures of Performance” reviews also covered
safety issues, and were required of each operating unit. (Woomer Aff. at 40).
Certainly, interviews of the plant personnel involved in safety reports and audits
would be particularly relevant to the investigation of the disaster.
Plaintiffs refer to three occasions upon which Union Carbide, not UCIL, employees
conducted safety audits at the Bhopal plant. As defendant correctly argues, these
three events constitute a very small fraction of the thousands of safety audits
conducted at the Bhopal facility. The three audits, moreover, were conducted in
1979, the fall of 1980 and in May of 1982, many years prior to the accident which is
the subject of this lawsuit. (Plaintiffs' Memo in Opp. at 25).FN14
FN14. The 1982 “Operational Safety Survey” was apparently fairly
extensive. It was conducted by three United States employees of Union
Carbide, and led to a report which discussed “major” concerns and
possibility of “serious personnel exposure.” (Memo in Opp. at 25). Mr.
Woomer asserts, and plaintiffs do not refute, that this Survey was not
intended to “serve a policing function,” but was performed at the specific
request of UCIL. In addition, follow-up responsibility “rested exclusively
Atty. Jose A. Bernas
 with UCIL plant management.” (Woomer Aff. at 37-38).
Moreover, Union Carbide states that the Union of India, itself, conducted
similar safety audits and made recommendations. (Affidavit of Ranjit K.
Dutta, Business Manager of Union Carbide Agricultural Products
Company (“Dutta Aff.”) at 58-64).
Two accidents which occurred previously at the Bhopal plant might also be of
relevance to the liability inquiry in this litigation. On December 24, 1981, a phosgene
gas leak killed a UCIL maintenance worker.*855 Reports of the fatality were sent to
Union Carbide management in the United States. (Woomer Deposition, Exs. 30 and
31). Plaintiffs assert that the accident report called for increased training in Bhopal by
United States employees of Union Carbide's Institute, West Virginia, plant. Defendant
states that the responsibility for remedying problems in the Bhopal plant rested with
the plant itself, and that Union Carbide did not make any recommendations, and was
involved only to the extent of receiving a copy of the report which called for its
involvement in further training. (Woomer Aff. at 41).
The second accident at Bhopal prior to the disaster of December, 1984 took place on
February 9, 1982, when a pump seal, perhaps improperly used, failed. (Memo in Opp.
at 24; Woomer Aff. at 41). Many employees were injured, and at least 25 were
hospitalized. Plaintiffs discuss the fact that Robert Oldford, president of Union
Carbide Agricultural Products Company (“UCAPC”) a wholly-owned subsidiary of
Union Carbide headquartered in the United States, was in Bhopal at the time of the
February 1982 leak. (Memo in Opp. at 24). Union Carbide asserts that Mr. Oldford
was visiting UCIL's Research and Development Centre, located several miles from
the Bhopal plant for an unrelated purpose, and was only coincidentally in Bhopal
when the leak occurred. To the extent that this presence in India in 1982 has any
significance, Mr. Oldford, and any other United States employees of Union Carbide
who conducted safety audits in Bhopal or were present when accidents occurred
there, may be flown to Bhopal for testimony or discovery.
In addition to safety data, two other types of proof may be relevant to a trial of this
case on the merits. Information regarding plant design, commissioning and start-up
may bear upon the liability question. Information pertinent to employee training should
also have significance.
Leaving aside the question of whether the Government of India or UCIL chose the
site and product of the Bhopal plant, the Court will evaluate the facts which bear on
the issue of relevant records. The findings below concern the location of proof only,
and bear solely upon the forum non conveniens motion. The Court expressly declines
to make findings as to actual liability at this stage of the litigation.
Plaintiffs and defendant agree that in 1973 Union Carbide entered into two
agreements with UCIL which were entitled “Design Transfer Agreement” and
“Technical Service Agreement.” According to plaintiffs, Union Carbide, pursuant to
the Design Transfer Agreement, provided a process design to UCIL, the “detailing [of
which] was undertaken in India.” (Memo in Opp. at 17). The process design package
consisted of the basic plan of the factory, which was to be fleshed out in the detailing
phase. Plaintiffs state that at least nine Union Carbide technicians travelled to India to
monitor the progress of the project. Union Carbide also allegedly assigned a “key
CONFLICT OF LAWS 3D 1/08-09 Page 39 of 97
engineer,” John Couvaras, to serve as UCIL Bhopal project manager. Mr. Couvaras
allegedly “assumed responsibility for virtually every aspect of the detailing of the
process design,” and approved detail reports of “not only UCIL but also independent
contractors, including Humphreys & Glasgow Consultants Private Ltd. and Power
Gas Limited” of Bombay, India. (Memo in Opp. at 17-20).FN15
FN15. Plaintiffs assert that Mr. Couvaras exemplifies Union Carbide's
“international employee” whose mobility throughout the Union Carbide
affiliates causes “[a]ny notion of discrete corporate identities [to] blur [ ].”
(Memo in Opp. at 18-19).
Plaintiffs also claim that “[n]o change of any substance was made from Union
Carbide's design during the detailing phase.” Plaintiffs note that only “one portion”
of the process design work provided to UCIL by Union Carbide was not used.
(Memo in Opp. at 20). In effect, plaintiffs seek to establish that Union Carbide was
the creator of the design used in the Bhopal plant, and directed UCIL's relatively
minor detailing program. They urge that for the most *856 part relevant proof on this
point is located in the United States.
Defendant seeks to refute this contention, with notable success. Turning first to the
affidavit of Robert C. Brown, who describes himself as “chief negotiator for Union
Carbide Corporation in connection with the two agreements it entered into with ...
UCIL in November, 1973,” the Court is struck by the assertion that the two
agreements were negotiated at “arms-length” pursuant to Union Carbide corporate
policy, and that the Union of India mandated that the Government retain “specific
control over the terms of any agreements UCIL made with foreign companies such
as Union Carbide Corporation.” (Brown Aff. at 3-4).FN16
FN16. As support, Mr. Brown points to the Union Carbide Corporate Policy
Manual, Section 1.10 which states:
The “arms-length principle” is a central consideration in transfer and
pricing of all technology transactions with affiliates.
“Arms length” is defined as:
The principle whereby inter-company transactions between Union
Carbide and its affiliates, or between affiliates, will reflect the cost to
unrelated parties of the same or similar technology under similar
circumstances.
(Plaintiffs' Exhibit 3). Thus, Mr. Brown argues that Union Carbide related
with UCIL much as it would have with an unaffiliated, or even competing
company.
Mr. Brown alleges that the Letter of Intent issued by the Union of India in March
1972, pursuant to which construction and design of the plant were allowed to ensue
provided, inter alia, that:
(2) [F]oreign collaboration and import of equipment be settled to the satisfaction of
the Government.
Atty. Jose A. Bernas

Mr. Brown claims, on personal information, that UCIL told him that Union Carbide
would not be allowed to be involved in the Bhopal project beyond the provision of
process design packages. (Brown Aff. at 5). The Design Transfer Agreement
indicates that Union Carbide's duty under the Agreement was to provide process
design packages, and that UCIL, not Union Carbide, would be responsible to “detail
design, erect and commission the plant.” (Defendant's Ex. 4, § 4.1). Union Carbide,
accordingly, issued limiting warranties with respect to the design packages, detailing
of which it would not be involved with. (Brown Aff. at 7, Ex. 4, §§ 4.1, 12.3).
The nature of UCIL's detail design work is discussed in the affidavit of Ranjit K. Dutta,
who has held various positions at UCIL and UCAPC. From 1973 through 1976, Mr.
Dutta was employed as General Manager of the Agricultural Products Division of
UCIL. (Dutta Aff. at 2).
Mr. Dutta asserts that the Bhopal facility was built by UCIL over the eight years from
1972 to 1980. (Dutta Aff. at 8). He asserts that Union Carbide's role in the project was
“narrow”, and limited to providing “certain process design packages for certain parts
of the plant.” (Dutta Aff. at 9). He continues, stating:
Once it did that, it had no further design or engineering role,
and that:
[T]he process design packages which Union Carbide Corporation provided are
nothing more than summary design starting points.... They set forth only the general
parameters.... A plant cannot be constructed from a process design package. The
detail design comprises approximately 80 percent of the sum of the man hours
involved in the design of any project and transposes the general process design
parameters into an actual design which can be used for purchasing equipment and
actual construction.
(Dutta Aff. at 9-12). (emphasis omitted).
According to Mr. Dutta, during the five years between the date upon which Union
Carbide submitted process designs, and the date upon which the plant started-up,
there were only four visits to Bhopal by Union Carbide process design engineers.
(Dutta Aff. at 14). In contrast, he asserts that ten to fifteen UCIL engineers, working
primarily out of Bombay, were involved in design detailing. (Dutta Aff. at 16). These
UCIL engineers oversaw the 55 to 60 Indian engineers*857 employed by the Bombay
engineering firm which performed the detail design work. This firm, Humphreys and
Glasgow, submitted designs and drawings to the UCIL engineers for approval.
Corrected drawings were returned by UCIL to Humphreys and Glasgow for changes,
and sent back to UCIL for final approval. (Dutta Aff. at 19-24).FN17 Mr. Dutta alleges
that “at no time were Union Carbide Corporation engineering personnel from the
United States involved in approving the detail design or drawings prepared upon
which construction was based. Nor did they receive notices of changes made.”
(Dutta Aff. at 24).
FN17. Humphreys and Glasgow was allegedly responsible for the following:
Among other things, developing final equipment and unit layouts and plot
CONFLICT OF LAWS 3D 1/08-09 Page 40 of 97
plans, including equipment layout drawings, detailed piping arrangement
drawings, layout of electrical equipment; the steel structure, including
detail design and working drawings for the buildings and foundation;
mechanical equipment design including specification of all proprietary
and fabricated equipment; review and certification of vendor's drawings
and documents, preparation of orthographic piping drawings for all
portions of the plant, preparation of isometric piping drawings,
preparation of preliminary and final bills of materials for pipes, valves,
gaskets, instrument associated hardware, electrical conduit; electrical
engineering work, instrument engineering, including drawings on
instrument hook ups, lists of instruments, review of instrument
specification and data sheets; definition of material and make calculation
to size insulation, preparation of insulation lists, preparation of material
take off and inquiry specification packages, procurement assistance
including assisting in evaluation of bids and selection of vendors,
inspection of certain equipment and materials to ensure proper
workmanship and compliance with specifications and codes, and
coordinating where Indian law required inspection or certification by
governmental inspections; preparation of a project schedule, project
reports and costs control reports at least once per month, construction
supervision including supervision of mechanical testing of installed
equipment, assistance in commissioning.
(Dutta Aff. at 19-20).
Mr. Dutta expressly states that the MIC storage tank and monitoring instrumentation
were fabricated or supplied by two named Indian sub-contractors. The vent gas
scrubber is alleged to have been fabricated in the Bhopal plant shop. (Dutta Aff. at
25).
Of the 12,000 pages of documents purportedly seized by the CBI regarding design
and construction of the Bhopal plant, an asserted 2,000 are design reports of
Humphreys and Glasgow, UCIL or other contractors. Defendant claims that
blueprints and calculations comprise another 1,700 pages of documents held by the
CBI. Five thousand pages of contractors' files, including specifications and contracts
are asserted to be in India. In addition, Union Carbide claims that blueprints and
diagrams may not reflect final design changes as incorporated into the actual plant,
and that the detail design engineers' testimony will be needed to determine the
configuration of the actual plant.FN18 (Holman Aff. # 2 at 15-16).
FN18. Mr. Couvaras, whom plaintiffs assert was a “key engineer” for the
project, and enjoyed mobility between Union Carbide and UCIL, is
described by Mr. Dutta as primarily a UCIL employee. The “international
employee” status he carried is explained as a pension accounting
mechanism. (Dutta Aff. at 27).
One final point bearing on the information regarding liability is contained in the
affidavit of Edward Munoz, at a relevant time the General Manager of UCIL's
Agricultural Products Division. He later acted as Managing Director of UCIL. Mr.
Munoz has submitted an affidavit in which he states that Union Carbide decided to
store MIC in large quantities at the Bhopal plant, despite Mr. Munoz' warnings that
Atty. Jose A. Bernas
MIC should be stored only in small amounts because of safety. (Memo in Opp. at 15-
16; Munoz Aff.). Mr. Dutta, for defendant, asserts that there was never any issue of
token storage of MIC at Bhopal, as Mr. Munoz states, and that there is no truth to Mr.
Munoz' assertion that he was involved in the storage issue. (Dutta Aff. at 30).FN19
*858 The Court cannot make any determination as to the conflicting affidavits before
it. This question, which involves credibility concerns, is left for later in the litigation. To
the extent that this particular matter bears upon the relative ease of access to sources
of proof, Mr. Munoz and Mr. Dutta both may be called to testify at trial or discovery.
Mr. Dutta's home is in Bhopal. (Dutta Aff. at 1). The Court is not aware of the
whereabouts of Mr. Munoz at this time. Either of the two could travel to either
alternative forum.
FN19. Mr. Dutta asserts that Mr. Munoz was a paid consultant to a member
of Plaintiffs' Executive Committee at the time the affidavit was made. No
documentary proof of this assertion has been submitted. (Dutta Aff. at 31;
Holman Aff. # 2 at 18). Moreover, two affidavits submitted on behalf of
defendant state that Mr. Munoz was removed from his position as Union
Carbide Corporation Division President in 1978, and is “extremely bitter as a
result of the removal.” (Dutta Aff. at 31; Holman Aff. # 2 at 18).
In addition to design and safety records, material regarding training of Bhopal
personnel is likely to be relevant to the question of liability. Plaintiffs state that Warren
Woomer supervised the training of UCIL personnel at Union Carbide's Institute, West
Virginia plant. According to plaintiffs, 40 UCIL employees were transported to
Institute's MIC facility for lengthy training. (Memo in Opp. at 22). Mr. Woomer states in
reply that the 40 employees thus trained represented a fraction of the over 1,000
employees who were trained exclusively in Bhopal. (Woomer Aff. at 43). In addition,
Mr. Woomer asserts that the training at Institute was pursuant to an arms-length
agreement, that UCIL selected the parties to be trained, and that UCIL paid Union
Carbide for the training. (Woomer Aff. at 43). Moreover, Mr. Woomer's description of
the training provided at Bhopal suggests that each of the plant's employees had
lengthy cumulative training, of which the Institute training was but a very small
portion. (Woomer Aff. at 46). Personnel records, in any event, are located in Bhopal.
(Holman Aff. # 2 at 4).
The briefs and affidavits contain considerable discussion on the matter of
commissioning and start-up of the Bhopal plant. The Court need not resolve the
question of who was responsible for these aspects of plant operation. However, the
Court determines that the manual regarding start-up was prepared by Indian nationals
employed by UCIL. (Woomer Aff. at 48).
In the aggregate, it appears to the Court that most of the documentary evidence
concerning design, training, safety and start-up, in other words, matters bearing on
liability, is to be found in India. Much of the material may be held by the Indian CBI.
Material located in this country, such as process design packages and training
records of the 40 UCIL employees trained at Institute, constitutes a smaller portion of
the bulk of the pertinent data than that found in India. Moreover, while records in this
country are in English, a language understood in the courts of India, certain of the
records in India are in Hindi or other Indian languages, as well as in English. (Holman
Aff. # 2 at 12). The Indian language documents would have to be translated to be of
use in the United States. The reverse is not true. It is evident to the Court that records
CONFLICT OF LAWS 3D 1/08-09 Page 41 of 97
concerning the design, manufacture and operation of the Bhopal plant are relatively
more accessible in India than in the United States, and that fewer translation
problems would face an Indian court than an American court. Since Union Carbide
has been directed to submit to discovery in India pursuant to the liberal grant of the
American Federal Rules of Civil Procedure, and this opinion is conditioned upon
such submission, any records sought by plaintiffs must be made available to them in
India. The private interest factor of relative ease of access to sources of proof
bearing on liability favors dismissal of the consolidated case.FN20 The Indian *859
Government is asserted to have been involved in safety, licensing and other matters
relating to liability. Records relating thereto are located in India, as are the records
seized by the CBI. Although plaintiffs state that all such records could and would be
made available to this Court, it would be easier to review them in India. Transmittal
and translation problems would thereby be avoided.
FN20. Union Carbide asserts throughout its briefs and affidavits that
evidence relevant to the question of damages is located in India, as well.
Certainly the victims themselves, and, for the most part, their medical
records, are found in or near Bhopal. However, as plaintiffs argue, a “head
count” of witnesses is not dispositive of a forum non conveniens motion.
(Memo in Opp. at 74-79). Not all of the victims would need to be
transported to the United States to describe their injuries. The Bhopal
“scheme” provides a mechanism for evaluating each individual's claim.
Only representative plaintiffs need testify as to damages. This Court would
not countenance the impractical and time-consuming process of calling
each of the approximately 200,000 victims at a trial in this country.
Evidence on damages, as well as liability, is found in India, but not to the
overwhelming extent contended by defendant. Moreover, the Court is
concerned with the policy effect of allowing the number of foreign victims to
affect directly the forum non conveniens determination. If carried to the
extreme, this “head count” doctrine would mean that the more people hurt,
the less likely a suit in this country would be.
B. Access to Witnesses.
Gilbert teaches a second important consideration under the heading of private
interests, the “availability of compulsory process for attendance of willing, and the
cost of obtaining attendance of unwilling, witnesses.” Gilbert, 330 U.S. at 508, 67
S.Ct. at 843. As discussed in detail above, most witnesses whose testimony would
relate to questions of causation and liability are in India. Engineers from UCIL and
Humphreys and Glasgow and other subcontractors, of whom there are hundreds,
are located in India. Shift employees from the possibly malfunctioning units, safety
monitoring personnel, those responsible for training, safety auditing, procurement,
compliance with regulations and other operations might be required to testify. More
than likely, many of these potential witnesses do not speak English, and would
require translators. Many of the witnesses are not parties to this litigation. Therefore,
as the Court of Appeals for the Second Circuit has stated in the context of a forum
non conveniens motion:
In fact, the plaintiffs' cases on liability will depend in large measure upon the
knowledge and activities of such witnesses as the employees of [companies] who
are not parties to this litigation, but who directly participated in the events which
Atty. Jose A. Bernas
gave rise to it. The United States District Court in New York, however, has no power
to subpoena any of these witnesses. It is unlikely that many would be willing to travel
to New York to testify; and the cost, in any event, would be prohibitively great.
Fitzgerald v. Texaco, 521 F.2d 448, 451-52 (2d Cir.1975), cert. denied, 423 U.S.
1052, 96 S.Ct. 781, 46 L.Ed.2d 641 (1976) (footnote omitted). In contrast, the
relatively few witnesses who reside in the United States are primarily employed by
Union Carbide. As employees of a party they would probably be subject to the
subpoena power of Indian courts. Transportation costs would also be lower, since
fewer people would have to make the journey to testify.
The presence of the Indian Government in this action is also of critical importance on
this motion. Plaintiffs assert that “all necessary officials and employees of the Central
Government will voluntarily comply with requests to attend trial.” (Memo in Opp. at
70; Answer to No. 124 of Defendant's First Requests for Admission, Exhibit 55). This
statement does not provide for attendance by officials of Madhya Pradesh or the
Bhopal municipality, whom Union Carbide indicates might be impleaded as third-party
defendants. As witnesses only, these officials would not be subject to this Court's
subpoena power. As third-party defendants, they might be immune from suit in the
United States by the terms of the Foreign Sovereign Immunities Act, 28 U.S.C. §
1602et seq. State and city officials might also lack sufficient contacts with this district
to allow this Court to exercise personal jurisdiction over them.
While Union Carbide might be deprived of testimony of witnesses or even potential
third-parties if this action were to proceed in this forum, no such problem would exist if
litigation went forward in India.
The unavailability of compulsory process for Indian non-party witnesses, of whom
*860 there are many, such as would ensure their presence at a trial in this country,
the high cost of transporting the large number of Indian nationals to the United States,
as well as the need to translate their testimony should they appear, all support the
argument favoring dismissal of this action on forum non conveniens grounds. The
private interest concerns regarding witnesses emphasize the logic of defendant's
position. Relatively fewer witnesses reside in the United States than in India. Almost
all of the witnesses located in this country are employees of defendant, and would be
subject to compulsory process in India as a result. Transportation costs for the
relative few would not compare to the alternate costs of transporting hundreds of
Indian witnesses. Since English is widely spoken in India, less translation would be
required for foreign witnesses in India than in the converse situation. Should this case
be tried in India, fewer obstacles to calling state and local officials as witnesses or
parties would face the defendant. The Court determines that this private interest
factor weighs in favor of dismissal.
C. Possibility of View.
The third private interest factor articulated in Gilbert is the ease of arranging for a
view of the premises around which the litigation centers. Plaintiffs assert that the
notion that a jury view of the plant and environs is necessary is “simply
preposterous.” (Memo in Opp. at 71). Plaintiffs note that a viewing of the premises is
rarely conducted in products liability cases, since videotapes, pictures, diagrams,
schematics and models are more instructive than an actual view. (Memo in Opp. at
CONFLICT OF LAWS 3D 1/08-09 Page 42 of 97
71). A viewing of the plant and hutments would probably not be of utmost
importance in determining liability, and this consideration is not afforded great
weight on this motion.
However, the instant case is not identical to the product design defect case cited by
plaintiffs, in which a district court judge determined that “the present appearance of
the defendants' facilities may or may not be relevant to production which occurred”
in the period in which the allegedly violative manufacture occurred. Hodson v. A.H.
Robins Co., Inc., 528 F.Supp. 809, 822 (E.D.Va.1981), aff'd, 715 F.2d 142 (4th
Cir.1983). In the instant case, the site of the accident was sealed after the leak, and
the present condition of the plant might be relevant to a finding of liability. A viewing
may not be necessary, but conceivably could be called for later in the litigation. An
Indian court is in a far better position than this Court to direct and supervise such a
viewing should one ever be required. This consideration, though minor, also weighs
in favor of dismissal.
In summary, then, the private interest factors weigh greatly in favor of dismissal on
grounds of forum non conveniens. Since the “balance is strongly in favor of the
defendant” and foreign plaintiffs' choice of a foreign forum is given less than
maximum deference, the Court determines that dismissal is favored at this point in
the inquiry. Gilbert 330 U.S. at 508, 67 S.Ct. at 843.
3. Public Interest Concerns.
[6] The Gilbert Court articulated certain factors which affected the interests of non-
parties to a litigation to be considered in the context of the doctrine of forum non
conveniens. These public interest concerns were held to be relevant to a court's
determination of whether to dismiss on these grounds. The Supreme Court
expressly identified a few factors:
Administrative difficulties follow for courts when litigation is piled up in congested
centers instead of being handled at its origin. Jury duty is a burden that ought not to
be imposed upon the people of a community which has no relation to the litigation.
In cases which touch the affairs of many persons, there is reason for holding the
trial in their view and reach rather than in remote parts of the country where they
can learn of it by report only. There is a local interest in having localized
controversies decided at home. There is an appropriateness, too, in having the trial
of a diversity case in a forum that is at home with the state law that must govern the
case, rather than *861 having a court in some other forum untangle problems in
conflict of laws, and in law foreign to itself.
Gilbert at 508-09, 67 S.Ct. at 843. The Court will consider these various factors in
turn, as well as others discussed by the parties and amicus curiae.
A. Administrative Difficulties.
As is evident from the discussion thus far, the mere size of the Bhopal case, with its
multitude of witnesses and documents to be transported and translated, obviously
creates administrative problems.
There can be no doubt that the Bhopal litigation will take its toll on any court which
Atty. Jose A. Bernas
sits in judgment on it. This Court sits in one of the busiest districts in the country, and
finds, as a matter within its experience, that this is a “congested center” of litigation as
described in Gilbert at 508. The burden which would be imposed should litigation
continue here was aptly described by the Court of Appeals for the Second Circuit in
Schertenlieb v. Traum, 589 F.2d 1156 (2d Cir.1978). Reviewing a district judge's
ruling for dismissal on the grounds of forum non conveniens, the Second Circuit
observed that “were it not for the somewhat unusual fact that it is the forum resident
who seeks dismissal, we would have to say very little regarding the exercise of Judge
Metzner's discretion in dismissing this case.” Schertenlieb at 1164. In affirming the
ruling for dismissal, the Court of Appeals asked the rhetorical question:
If litigation is in a clearly inconvenient forum, why should defendant and the court be
burdened with its continuing there, if an alternative forum now exists so that plaintiff
will not be without a remedy?
Schertenlieb at 1163.
This Court has already determined that because of the location of the preponderance
of the evidence in India, and the difficulty of transporting documents and witnesses to
this forum, this district is clearly an inconvenient forum for the litigation. An alternative
forum is seen to exist in India. This Court feels that the answer to the Schertenlieb
question is clear.
A district judge in this district, in Domingo v. States Marine Lines, 340 F.Supp. 811
(S.D.N.Y.1972) evaluated the administrative concerns of the Southern District of New
York, relevant to this Court today, a full fourteen years later. The Domingo court
stated:
It is scarcely necessary to dwell on the fact that this Court is the most heavily
burdened Federal District Court in the country. The Civil Calendar grows more
congested all the time. The priority now properly given to the disposition of criminal
cases tends to increase this congestion.
I see no reason why this Court, with its heavy burdens and responsibilities, should be
burdened with cases like these which, from every point of view, should be tried in the
courts of the nation where all the relevant events occurred and whose citizens are
primarily involved. Certainly, this district and the Metropolitan area in which it is
situated have no conceivable relation to this litigation except for the fact that the
defendant happens to be doing business here.
Domingo at 816.
The defendant in this case, involved as it appears to have been in the process design
phase of the plant's construction, may have a slightly less tenuous connection to this
forum than a corporation which is merely doing business here. Certain business
conducted in New York, or in corporate headquarters in Danbury, Connecticut, may
have been directly related to development or operation of the UCIL facility in Bhopal.
However, almost “all the relevant events” leading to and following from the accident
occurred in India. Indian citizens are primarily involved in the case, both as witnesses
and claimants. The substantial administrative weight of this case should be centered
on a court with the most significant contacts with the event. Thus, a court in Bhopal,
CONFLICT OF LAWS 3D 1/08-09 Page 43 of 97
rather than New York, should bear the load.
*862 In addition to the burden on the court system, continuation of this litigation in
this forum would tax the time and resources of citizens directly. Trial in this case will
no doubt be lengthy. An assigned jury would be compelled to sit for many months of
proof. Because of the large number of Indian language-speaking witnesses, the
jurors would be required to endure continual translations which would double the
length of trial. The burden on the jurors themselves, and on their families, employers
and communities would be considerable. The need for translation would be avoided
if trial were to be held in Bhopal.
Clearly, the administrative costs of this litigation are astounding and significant.
Despite its deep concern for the victims of the tragedy, this Court is persuaded by a
recent relevant decision of the New York State Court of Appeals. In the opinion in
Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478 N.Y.S.2d 597, 467 N.E.2d
245 (1984), cert. denied,-- U.S. --, 105 S.Ct. 783, 83 L.Ed.2d 778 (1985), with
reference to a decision discussing actions brought in New York by the Iranian
Government against the Shah and his wife, the Court of Appeals stated that:
[T]he taxpayers of this State should not be compelled to assume the heavy financial
burden attributable to the cost of administering the litigation contemplated when
their interest in the suit and the connection of its subject matter ... is so ephemeral.
Islamic Republic at 483, 478 N.Y.S.2d 597, 467 N.E.2d 245 (citations omitted).
Administrative concerns weigh against retention of this case.
B. The Interests of India and the United States.
Plaintiffs, and especially amicus curiae emphasize this point of argument in
opposition to the motion to dismiss. Concerned with the asserted possibility of
developing a “double-standard” of liability for multinational corporations, plaintiffs
urge that American courts should administer justice to the victims of the Bhopal
disaster as they would to potential American victims of industrial accidents. The
public interest is served, plaintiffs and amicus argue, when United States
corporations assume responsibility for accidents occurring on foreign soil. “To
abandon that responsibility,” amicus asserts, “would both injure our standing in the
world community and betray the spirit of fairness inherent in the American
character.” (Amicus Brief at 4). The specific American interests allegedly to be
served by this Court's retention of the case include the opportunity of creating
precedent which will “bind all American multinationals henceforward,” (Amicus Brief
at 20); promotion of “international cooperation,” (Amicus Brief at 22-23); avoidance
of an asserted “double standard” of liability, and the prevention of “economic
blackmail of hazardous industries which would extract concessions on health and
environmental standards as the price of continuing operations in the United States.”
(Amicus Brief at 20). An additional American public interest ostensibly to be served
by retention of the litigation in this forum is advanced by plaintiffs themselves. They
assert that the deterrent effect of this case can be distinguished from the situation in
Piper, where the Court rejected the argument that “American citizens have an
interest in ensuring that American manufacturers are deterred from producing
defective products, and that additional deterrence might be obtained if Piper and [its
co-defendant] were tried in the United States, where they could be sued on the
Atty. Jose A. Bernas
basis of both negligence and strict liability.” Piper 454 U.S. at 260, 102 S.Ct. at 268.
The Court stated that:
[T]he incremental deterrence that would be gained if this trial were held in an
American court is likely to be insignificant. The American interest in this accident is
simply not sufficient to justify the enormous commitment of judicial time and
resources that would inevitably be required if the case were to be tried here.
Piper at 260-61, 102 S.Ct. at 268. According to plaintiffs, the potential for greater
deterrence in this case is “self-evident.”
*863 The opposing interest of India is argued to be ill-served by sending this litigation
to India. Pointing to the fact that the Union of India chose this forum, plaintiffs state
that there can be “no question as to the public interest of India.” (Memo in Opp. at
91). Union Carbide's statements regarding the interests of India in this litigation are
summarily dismissed by the plaintiffs, who state that “Union Carbide, whose actions
caused the suffering of an entire city, has no standing to assert this belated concern
for the welfare of the Indian populace.” (Memo in Opp. at 91).
Union Carbide, not surprisingly, argues that the public interest of the United States in
this litigation is very slight, and that India's interest is great. In the main, the Court
agrees with the defendant.
As noted, Robert C. Brown states in his affidavit on behalf of Union Carbide that the
Indian Government preserved the right to approve foreign collaboration and import of
equipment to be used in connection with the plant. See supra at 856. In addition, Mr.
Brown quoted excerpts from the 1972 Letter of Intent entered into by the Union of
India and UCIL, one term of which required that “the purchase of only such design
and consultancy services from abroad as are not available within the country” would
be allowed. (Brown Aff. at 6). Ranjit K. Dutta states that the Indian Government, in a
process of “Indianization,” restricted the amount of foreign materials and foreign
consultants' time which could be contributed to the project, and mandated the use of
Indian materials and experts whenever possible. (Dutta Aff. at 35). In an alleged
ongoing attempt to minimize foreign exchange losses through imports, the Union of
India insisted on approving equipment to be purchased abroad, through the
mechanism of a “capital goods license.” (Dutta Aff. at 48-50).
The Indian Government, through its Ministry of Petroleum and Chemicals, allegedly
required information from UCIL regarding all aspects of the Bhopal facility during
construction in 1972 and 1973, including “information on toxicity” of chemicals. (Dutta
Aff. at 44). The Ministry required progress reports throughout the course of the
construction project. These reports were required by the Secretariat for Industrial
Approvals, the Director General of Technical Development and the Director of
Industries of Madhya Pradesh. (Dutta Aff. at 45). Moreover, UCIL was ultimately
required to obtain numerous licenses during development, construction and operation
of the facility. (Dutta Aff. at 46). The list of licenses obtained fills five pages.FN21
FN21. Indian federal and municipal officials also allegedly conducted on-site
inspections resulting in approvals for portions of the construction, including
approvals for the flare tower, MIC layout and storage, unit refrigeration and
MIC/Phosgene structure. (Dutta Aff. at 46-47; Exs. 102-104).
CONFLICT OF LAWS 3D 1/08-09 Page 44 of 97
The Indian Government regulated the Bhopal plant indirectly under a series of
environmental laws, enforced by numerous agencies, much as the Occupational
Safety and Health Administration, the Environmental Protection Agency and state
and local agencies regulate the chemical industry in the United States. (Dutta Aff. at
53-56). Emissions from the facility were monitored by a state water pollution board,
for example. (Dutta Aff. at 64). In addition, state officials periodically inspected the
fully-constructed plant.FN22 (Dutta Aff. at 56). A detailed inquiry into the plant's
operations was conducted by the Indian Government in the aftermath of the
December, 1981 fatality at the MIC unit and the February, 1982 incident involving a
pump seal. (Dutta Aff. at 58-62). Numerous federal, state and local commissions,
obviously, investigated the most tragic incident of all, the MIC leak of December,
1984.
FN22. One such regular inspection appears to have taken place
approximately two weeks before the MIC disaster. (Dutta Aff. at 56; Ex.
116).
The recital above demonstrates the immense interest of various Indian
governmental agencies in the creation, operation, *864 licensing and regulation, and
investigation of the plant. Thus, regardless of the extent of Union Carbide's own
involvement in the UCIL plant in Bhopal, or even of its asserted “control” over the
plant, the facility was within the sphere of regulation of Indian laws and agencies, at
all levels. The comments of the Court of Appeals for the Sixth Circuit with respect to
its decision to dismiss a products liability action on forum non conveniens grounds
seem particularly apposite. In In re Richardson-Merrell, Inc., 545 F.Supp. 1130
(S.D.Ohio 1982), modified sub. nom. Dowling v. Richardson-Merrell Inc., 727 F.2d
608 (6th Cir.1984), the court reviewed a dismissal involving an action brought by a
number of plaintiffs, all of whom were citizens of Great Britain.FN23 Defendant in the
action was a drug company which had developed and tested a drug in the United
States which was manufactured and marketed in England. The suit was brought
against the American parent, not the British subsidiary, for injuries allegedly
resulting from ingestion of the offending drug in England and Scotland. The district
court, in dismissing the case, stated that:
FN23. Only a small number of plaintiffs in the Bhopal litigation are United
States citizens. Of the 200,000 plaintiffs, approximately nine are American.
They have filed the complaints numbered 85 Civ. 0447, 85 Civ. 1096 and
85 Civ. 2098. This is of relative insignificance on this motion to dismiss.
“The federal courts have not felt constrained to retain jurisdiction over
predominantly foreign cases involving American plaintiffs where an
examination of the Gilbert factors demonstrated that the action is more
appropriately brought in a foreign forum.... [T]he presence of a handful of
American plaintiffs does not preclude such dismissal.” Nai-Chao v.
Boeing Co., 555 F.Supp. 9, 21 (N.D.Cal.1982), aff'd sub. nom., Cheng v.
Boeing Co., 708 F.2d 1406 (9th Cir.1983).
This action involves the safety of drugs manufactured in the United Kingdom and
sold to its citizens pursuant to licenses issued by that government. The interest of
the United Kingdom is overwhelmingly apparent. New York, and Ohio [the United
States forums] for that matter, have a minimal interest in the safety of products
Atty. Jose A. Bernas
which are manufactured, regulated and sold abroad by foreign entities, even though
development or testing occurred in this country.
In re Richardson-Merrell, Inc., 545 F.Supp. at 1135 (footnote omitted). The Sixth
Circuit confirmed this view of the public interests, stating:
The interest of the United Kingdom in this litigation is great. The drug was
manufactured under a British license by British companies and was marketed and
prescribed in the United Kingdom. The alleged injuries took place in England and
Scotland and the plaintiffs are citizens and residents of those countries. When a
regulated industry, such as pharmaceuticals in this case and passenger aircraft
operations in Piper Aircraft, is involved, the country where the injury occurs has a
particularly strong interest in product liability litigation.... Though no single factor
should be determinative in ruling on a forum non conveniens motion, the nature of the
product and its status as regulated or not must be considered.
Dowling, 727 F.2d at 616.
The Indian government, which regulated the Bhopal facility, has an extensive and
deep interest in ensuring that its standards for safety are complied with. As
regulators, the Indian government and individual citizens even have an interest in
knowing whether extant regulations are adequate. This Court, sitting in a foreign
country, has considered the extent of regulation by Indian agencies of the Bhopal
plant. It finds that this is not the appropriate tribunal to determine whether the Indian
regulations were breached, or whether the laws themselves were sufficient to protect
Indian citizens from harm. It would be sadly paternalistic, if not misguided, of this
Court to attempt to evaluate the regulations and standards imposed in a foreign
country. As another district court stated in the context of a drug product liability action
brought by foreign plaintiffs in this country,
*865 Each government must weigh the merits of permitting the drug's use.... Each
makes its own determination as to the standards of degree of safety and duty of
care.... This balancing of the overall benefits to be derived from a product's use with
the risk of harm associated with that use is peculiarly suited to a forum of the country
in which the product is to be used.... The United States should not impose its own
view of the safety, warning, and duty of care required of drugs sold in the United
States upon a foreign country when those same drugs are sold in that country.
Harrison v. Wyeth Laboratories, 510 F.Supp. 1, 4 (E.D.Pa.1980), aff'd mem., 676
F.2d 685 (3d Cir.1982). India no doubt evaluated its need for a pesticide plant against
the risks inherent in such development. Its conclusions regarding “[q]uestions as to
the safety of [products] marketed” or manufactured in India were “properly the
concern of that country.” Harrison at 4 (emphasis omitted). This is particularly true
where, as here, the interests of the regulators were possibly drastically different from
concerns of American regulators. The Court is well aware of the moral danger of
creating the “double-standard” feared by plaintiffs and amicus curiae. However,
when an industry is as regulated as the chemical industry is in India, the failure to
acknowledge inherent differences in the aims and concerns of Indian, as compared to
American citizens would be naive, and unfair to defendant. The district court in
Harrison considered the hypothetical instance in which a products liability action
arising out of an Indian accident would be brought in the United States. The court
speculated as follows:
CONFLICT OF LAWS 3D 1/08-09 Page 45 of 97
The impropriety of [applying American standards of product safety and care] would
be even more clearly seen if the foreign country involved was, for example, India, a
country with a vastly different standard of living, wealth, resources, level of health
care and services, values, morals and beliefs than our own. Most significantly, our
two societies must deal with entirely different and highly complex problems of
population growth and control. Faced with different needs, problems and resources
in our example India may, in balancing the pros and cons ... give different weight to
various factors than would our society.... Should we impose our standards upon
them in spite of such differences? We think not.
Harrison at 4-5. This Court, too, thinks that it should avoid imposing
characteristically American values on Indian concerns.
The Indian interest in creating standards of care, enforcing them or even extending
them, and of protecting its citizens from ill-use is significantly stronger than the local
interest in deterring multinationals from exporting allegedly dangerous technology.
The supposed “blackmail” effect of dismissal by which plaintiffs are troubled is not a
significant interest of the American population, either. Surely, there will be no
relaxing of regulatory standards by the responsible legislators of the United States
as a response to lower standards abroad.FN24 Other concerns than bald fear of
potential liability, such as convenience or tax benefits, bear on decisions regarding
where to locate a plant. Moreover, the purported public interest of seizing this
chance to create new law is no real interest at all. This Court would exceed its
authority were it to rule otherwise when restraint was in order.
FN24. In any event, plaintiffs' “deterrence” and “blackmail” arguments
presuppose that Union Carbide would be held more accountable by an
American than by an Indian tribunal. Certainly, there is a real possibility of
a substantial Indian judgment against defendant, which would serve an
identical deterrent function, and prevent a rush of multinationals to foreign
locations.
The Court concludes that the public interest of India in this litigation far outweighs
the public interest of the United States. This litigation offers a developing nation the
opportunity to vindicate the suffering of its own people within the framework of *866
a legitimate legal system. This interest is of paramount importance.FN25
FN25. While the accident is more than a “local controversy,” given the
interests of the Indian populace, it is certainly a national controversy which
should be “decided at home.” Gilbert at 508-09. No doubt Indian citizens,
many of whom barely are acquainted with their American lawyers, will find
the case more accessible if it is tried “in their view” in India.
C. The Applicable Law.
Gilbert and Piper explicitly acknowledge that the need of an American court to apply
foreign law is an appropriate concern on a forum non conveniens motion, and can in
fact point toward dismissal. Gilbert, 330 U.S. at 509, 67 S.Ct. at 843; Piper, 454
U.S. at 260, 102 S.Ct. at 268. Especially when, as here, all other factors favor
dismissal, the need to apply foreign law is a significant consideration on this type of
motion. Piper at 260, n. 29, 102 S.Ct. at 268, n. 29 . A federal court is bound to
Atty. Jose A. Bernas
apply the choice of law rules of the state in which an action was originally brought;
even upon transfer to a different district, “the transferee district court must be
obligated to apply the state law that would have been applied if there had been no
change of venue.” Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 821, 11
L.Ed.2d 945 (1964). Thus, this Court, sitting over a multidistrict litigation, must apply
the various choice of law rules of the states in which the actions now consolidated
before it were brought.FN26 Rather than undertake the task of evaluating the choice of
law rules of each state separately, the Court will treat the choice of law doctrine in
toto. The “governmental interest” analysis, employed by many jurisdictions, requires
a court to look to the question of which state has the most compelling interest in the
outcome of the case. India's interest in the outcome of the litigation exceeds
America's, see supra at 44-58. The lex loci delicti analysis used in other jurisdictions
indicates that the law of the state where the tort occurred should be applied. The
place in which the tort occurred was, to a very great extent, India. Other states apply
the “most significant relationship” test, or “weight of contacts” test, which evaluate in
which state most of the events constituting the tort occurred. The contacts with India
with respect to all phases of plant construction, operation, malfunction and
subsequent injuries are greater in number than those with the United States. Thus,
under any one of these three doctrines, it is likely that Indian law will emerge as the
operative law. An Indian court, therefore, would be better able to apply the controlling
law than would this United States Court, or a jury working with it. This public interest
factor also weighs in favor of dismissal on the grounds of forum non conveniens.
FN26. Upon a cursory review of the individual complaints comprising this
action, the Court notes that suits were brought in California, Connecticut, the
District of Columbia, Florida, Illinois, Louisiana, Maryland, New Jersey, New
York, Pennsylvania, Tennessee, Texas and West Virginia, at a minimum.
CONCLUSION
[7] It is difficult to imagine how a greater tragedy could occur to a peacetime
population than the deadly gas leak in Bhopal on the night of December 2-3, 1984.
The survivors of the dead victims, the injured and others who suffered, or may in the
future suffer due to the disaster, are entitled to compensation. This Court is firmly
convinced that the Indian legal system is in a far better position than the American
courts to determine the cause of the tragic event and thereby fix liability. Further, the
Indian courts have greater access to all the information needed to arrive at the
amount of the compensation to be awarded the victims.
The presence in India of the overwhelming majority of the witnesses and evidence,
both documentary and real, would by itself suggest that India is the most convenient
forum for this consolidated case. The additional presence in India of all but the less
than handful of claimants underscores the convenience of holding trial in India. All of
the private interest factors described in Piper and Gilbert weigh heavily toward *867
dismissal of this case on the grounds of forum non conveniens.
The public interest factors set forth in Piper and Gilbert also favor dismissal. The
administrative burden of this immense litigation would unfairly tax this or any
American tribunal. The cost to American taxpayers of supporting the litigation in the
United States would be excessive. When another, adequate and more convenient
forum so clearly exists, there is no reason to press the United States judiciary to the
CONFLICT OF LAWS 3D 1/08-09 Page 46 of 97
limits of its capacity. No American interest in the outcome of this litigation outweighs
the interest of India in applying Indian law and Indian values to the task of resolving
this case.
The Bhopal plant was regulated by Indian agencies. The Union of India has a very
strong interest in the aftermath of the accident which affected its citizens on its own
soil. Perhaps Indian regulations were ignored or contravened. India may wish to
determine whether the regulations imposed on the chemical industry within its
boundaries were sufficiently stringent. The Indian interests far outweigh the interests
of citizens of the United States in the litigation.
Plaintiffs, including the Union of India, have argued that the courts of India are not
up to the task of conducting the Bhopal litigation. They assert that the Indian
judiciary has yet to reach full maturity due to the restraints placed upon it by British
colonial rulers who shaped the Indian legal system to meet their own ends. Plaintiffs
allege that the Indian justice system has not yet cast off the burden of colonialism to
meet the emerging needs of a democratic people.
The Court thus finds itself faced with a paradox. In the Court's view, to retain the
litigation in this forum, as plaintiffs request, would be yet another example of
imperialism, another situation in which an established sovereign inflicted its rules, its
standards and values on a developing nation. This Court declines to play such a
role. The Union of India is a world power in 1986, and its courts have the proven
capacity to mete out fair and equal justice. To deprive the Indian judiciary of this
opportunity to stand tall before the world and to pass judgment on behalf of its own
people would be to revive a history of subservience and subjugation from which
India has emerged. India and its people can and must vindicate their claims before
the independent and legitimate judiciary created there since the Independence of
1947.
This Court defers to the adequacy and ability of the courts of India. Their interest in
the sad events of December 2-3, 1984 at the UCIL plant in the City of Bhopal, State
of Madhya Pradesh, Union of India, is not subject to question or challenge. The
availability of the probative, relevant, material and necessary evidence to Indian
courts is obvious and has been demonstrated in this opinion.
Therefore, the consolidated case is dismissed on the grounds of forum non
conveniens under the following conditions:
1. Union Carbide shall consent to submit to the jurisdiction of the courts of India,
and shall continue to waive defenses based upon the statute of limitations;
2. Union Carbide shall agree to satisfy any judgment rendered against it by an
Indian court, and if applicable, upheld by an appellate court in that country, where
such judgment and affirmance comport with the minimal requirements of due
process;
3. Union Carbide shall be subject to discovery under the model of the United States
Federal Rules of Civil Procedure after appropriate demand by plaintiffs.
SO ORDERED.
Atty. Jose A. Bernas

National Equipment Rental, Ltd., Plaintiff-Appellant, v. Steve Szukhent and Robert Szukhent,
Defendants-Appellees., 311 F.2d 79 (2nd Cir. 1962)
Wilbur G. Silverman, Jamaica, N.Y., for plaintiff-appellant.
Harry R. Schwartz, Brooklyn, N.Y., for defendants-appellees.
Before CLARK, MOORE and SMITH, Circuit Judges.
J. JOSEPH SMITH, Circuit Judge.
Defendants, residents of Michigan, obtained farm equipment in Michigan on a lease
from plaintiff, a Delaware Corporation with its principal place of business in New York.
Claiming default, plaintiff sued for payments under the lease in the Eastern District of
New York, the marshal delivering two copies of the summons and complaint to one
Florence Weinberg as agent designated in the lease for the purpose of accepting
process for defendants in the State of New York. The copies were promptly forwarded
by Weinberg to defendants by mail with a covering letter under an agreement
between Weinberg and plaintiff to perform this service without compensation. Nothing
in the lease required notice to defendants. Plaintiff also notified defendants by mail
promptly on the purported service of the process. The United States District Court for
the Eastern District of New York, John F. Dooling, Jr., D. J., held the service invalid
and quashed the service. Plaintiff appeals. We agree with the District Court that no
valid agency of Weinberg for defendants was created by the instrument in suit and
affirm the order.
The lease contract here was on a printed form provided by plaintiff. There is no
requirement in the purported appointment of the agent for any notice to defendants. A
provision for notice would be essential to the validity of a state statute providing for
substituted service on a statutory 'agent'. Wuchter v. Pizzutti, 276 U.S. 13, 48 S.Ct.
259, 72 L.Ed. 446 (1928). There is no such requirement when individuals freely
contract for a method of substituted service. Lack of such a provision in a contract of
adhesion, here involved, may, however, be considered in determining the meaning
and effect of the provisions of the contract. There is no provision in the lease for any
undertaking by the purported agent to act for, or give notice to her purported principal.
Normally, an agency exists only if there has been a manifestation by the principal to
the agent that the agent may act on his account, and consent by the agent so to act,
Restatement Agency 15, and the agent is subject to control by the principal,
Restatement Agency 1. Plaintiff's affidavits demonstrate that Weinberg was acting
under an agreement with and supervision of the plaintiff, having undertaken no
obligations to defendants, to whom she was unknown. Defendants never dealt with
her and had no indication of any undertaking on her part to act as their agent until
receipt of the process many months later. The court properly held such a purported
appointment unreal and ineffective to create a genuine agency of Weinberg for
defendants.
Plaintiff might have provided, with defendants' agreement, that service or notice be
waived or that notice be given by plaintiff. See Bowles v. J. J. Schmitt & Co., 170 F.2d
617, 622 (2 Cir. 1948), Gilbert v. Burnstine, 255 N.Y. 348, 174 N.E. 706, 73 A.L.R.
1453 (1931). This would, however, have required defendants' consent, which might or
might not have been forthcoming. The illusory purported agency provision, however,
CONFLICT OF LAWS 3D 1/08-09
is properly held ineffective to subject defendants to suit in New York.
Affirmed.
LEONARD P. MOORE, Circuit Judge (dissenting).
The question here presented goes so much beyond the facts of this particular case
that I believe my contrary view should be stated. After all, it may be said, who
(except this plaintiff, of course) cares whether a Michigan farmer pays for machinery
he has leased in New York? However, the federal jurisdiction problem presented
here is of the greatest commercial importance to merchants and consumers who
engage in interstate business transactions. Furthermore, the opinion of the majority
would appear to be in conflict with Kenny Construction Co. v. Allen, 101 U.S.
App.D.C. 334, 248 F.2d 656 (1957) and Green Mountain College v. Levine, 120 Vt.
332, 139 A.2d 882 (1958).
Plaintiff, a Delaware corporation with its principal place of business in New York, is
in the business of purchasing equipment on its customers' orders for leasing to the
customers on terms and conditions set forth in an instrument denominated a lease.
Defendants, residents of Michigan, obtained farm equipment from plaintiff pursuant
to such a lease, the last operative clause of which read:
'* * * and the Lessee hereby designates Florence Weinberg, 47-21 Forty-First
Street, Long Island City, New York, as agent for the purpose of accepting service of
any process within the State of New York.'
Plaintiff, alleging default under the lease, commenced this action in the Eastern
District of New York. The Marshal delivered two copies of the summons and
complaint to defendants' designated agent, Florence Weinberg, who promptly
mailed them to defendants with a covering letter, explaining that they had been
served upon her as the defendants' agent in accordance with the provisions of the
lease. On the same day, plaintiff itself notified defendants by certified mail of service
of process on Florence Weinberg. Twenty-two days after this service, counsel for
defendants notified plaintiff's attorney that he was appearing specially to set aside
the service of the summons and complaint. The District Court held the service
invalid and quashed it.
The clause appointing the agent was no fine print clause buried in an oppressively
long and complex instrument. The entire contract is only 1 1/4 pages long and the
agency provision is in the last paragraph appearing directly above defendants'
signatures. The clause was included in the contract for the purpose of subjecting
defendants to suit in the courts1 in New York and for no other purpose. Without
such a clause plaintiff might well have refused to make the contract. To carry a New
York obtained judgment to the other forty-nine States for enforcement is quite a
different matter than trying lawsuits and engaging counsel for this purpose in these
other States.
The trial court found that it was plaintiff's established practice to assure that prompt
notice was sent to defendants of any action it brought against them. That citizens of
different states may agree in advance that any disputes arising out of a commercial
transaction between them shall be subject to the jurisdiction of the courts of a
designated state is well established. United States v. Balanovski, 236 F.2d 298 (2d
Cir. 1956); Kenny Construction Co. v. Allen, 101 U.S.App.D.C. 334, 248 F.2d 656
(1957); Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502 (4th Cir. 1956);
Page 47 of 97 Atty. Jose A. Bernas
Bowles v. J. J. Schmitt & Co., Inc., 170 F.2d 617 (2d Cir. 1948); Gilbert v. Burnstine,
255 N.Y. 348, 174 N.E. 706, 73 A.L.R. 1453 (1931); Restatement, Conflicts 81;
Restatement, Judgments 18; cf. Adams v. Saenger, 303 U.S. 59, 58 S.Ct. 454, 82
L.Ed. 649 (1938).
The only question presented by this appeal2 therefore is whether the service made
on Florence Weinberg is service on 'an agent authorized by appointment * * * to
receive service of process' within the meaning of Rule 4(d)(1) of the Federal Rules of
Civil Procedure.3 The majority's strained search for the contract's 'meaning' and
'effect', and their invocation of Wuchter v. Pizzutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed.
446 (1928) to provide the unexpressed intendment of the parties do not obliterate the
federal nature4 of the question being here decided. Although my colleagues do not
expressly evince a desire to remove Rule 4(d)(1) from the books entirely, they not
only substantially rewrite the Rule but also write for the parties a contract into which
they probably never would have entered.
The majority initially concede that the constitutionally dictated requirements of
Wuchter v. Pizzutti, supra, do not apply to contracts entered into by individuals. Then,
in the guise of construing the contract in question, they read those same
requirements into Rule 4(d)(1). That this is the effect of their decision is made clear by
their concern that 'there is no provision in the lease for any undertaking by the
purported agent to * * * give notice to her purported principal.' In Wuchter, the
Supreme Court held invalid the non-resident motorist statute in question because 'the
statute of New Jersey * * * does not make provision for communication to the
proposed defendant.' Rule 4(d)(1) is now construed to mean that any agency
arrangement that does not impose upon the designated agent a contractually
unassailable duty to send notice is not sufficient to subject the appointing party to the
personal jurisdiction of the courts of the designated state. The fact that notice was
actually given is held to be of no consequence.
The Supreme Court, in Wuchter, declared that in those situations in which a State
may subject a non-resident individual to the jurisdiction of its courts other than
through personal service within the State, due process requires that the statutory
scheme provide a means of service reasonably calculated to apprise the defendant of
the proceedings against him. Compare Wuchter, supra, with Hess v. Pawlowski, 274
U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927). See McGee v. International Life
Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). In that
case the Court was dealing with the limitations on the coercive powers of the States
imposed by the due process clause of the Fourteenth Amendment, and not with
arrangements for service of process voluntarily agreed to by individuals. As Cardozo,
J., said in related context, 'The distinction is between a true consent and an imputed
or implied consent, between a fact and a fiction.' Bagdon v. Philadelphia & Reading
Coal & Iron Co., 217 N.Y. 432, 437, 111 N.E. 1075, 1076, L.R.A.1916F, 407 (1916).
See L. Hand, D.J., in Smolik v. Philadelphia & Reading Coal & Iron Co., 222 F. 148
(S.D.N.Y.1915). The demise of the implied consent theory serves only to accentuate
that distinction, namely, between a voluntary and a forced subjection to the
jurisdiction of the courts of a state.
Actual notice by an agent authorized by appointment to receive service of process
should be dispositive. The reasoning of Justices Brandeis' and Holmes' dissent in
Wuchter is, in the context of Rule 4(d)(1), compelling:
CONFLICT OF LAWS 3D 1/08-09 Page 48 of 97
'Notice was in fact given. And it was admitted at the bar that the defendant had, at
all times, actual knowledge and the opportunity to defend. The cases cited by the
Court as holding that he could deliberately disregard that notice and opportunity and
yet insist upon a defect in the statute as drawn, although he was in no way
prejudiced thereby, seem hardly reconcilable with a long line of authorities.' 276
U.S. at page 28, 48 S.Ct. at page 264.
To allow a defendant to insist upon what the majority here holds to be a defect in
this privately drafted and voluntarily agreed to agency appointment, even though he
has in no way been prejudiced thereby, is the essence of formalism. The purpose of
service of process is to apprise the defendant that suit has been brought against
him and to give him an opportunity to defend. International Shoe Co. v. Washington,
326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Wuchter v. Pizzutti, supra; Grooms
v. Greyhound Corp., 287 F.2d 95 (6th Cir. 1961); Tarbox v. Walters, 192 F.Supp.
816 (E.D.Pa.1961); American Football League v. National Football League, 27
F.R.D. 264 (D.Md.1961). Once it is found that that purpose has been served, the
inquiry should come to an end.
I do not reach the question whether actual receipt of notice by the defendant is
always required because here notice was received. If the agent is the nominee of
the defendant, plausible argument has been made that service of process is valid
even though notice is not forwarded to the defendant. Kenny Construction Co. v.
Allen, 101 U.S.App. D.C. 334, 248 F.2d 656 (1957); Green Mountain College v.
Levine, 120 Vt. 332, 139 A.2d 822 (1958).
In considering this question, the Vermont court said:
'The capacity of the Secretary of State to accept the appointment and the danger
that he might not forward notice to the defendants were risks which they took in
appointing him. Restatement, Agency, 21.' 120 Vt. at page 336, 139 A.2d at page
825.
Also appropos here are the words of the Supreme Court in the landmark case of
Pennoyer v. Neff, 95 U.S. 714 , 735, 24 L.Ed. 565 (1877):
'It is not contrary to natural justice that a man who has agreed to receive a particular
mode of notification of legal proceedings should be bound by a judgment in which
that particular mode of notification has been followed, even though he may not have
actual notice of them.'
The rationale of the majority opinion would, however, extend even to the case
posited. They require that the authorization to receive service of process intrinsically
provide that the agent be bound to forward notice to the defendant. If, for example,
defendants in the present action had selected Florence Weinberg themselves but
no consideration ran to her or some other contractual infirmity existed, they would
hold that service on her was invalid because she was under no obligation, no
binding undertaking, to forward notice. And yet they actually go so far as to concede
that a contract providing for no notice at all would have been permissible. Also
implicit in the majority opinion is the thought that an appointed agent must be
presumed to be faithless to his obligation and that some compensation must be paid
by the principal for the services. If these are to be the legal consequences, then
precautionary steps should be taken to require that the contract provide for a
certificate from the agent in substance as follows: 'I, Florence Weinberg, hereby
agree for good and valuable consideration by me received from the Lessee,
Atty. Jose A. Bernas
faithfully to perform my agency duties and to forward forthwith by registered mail any
papers served on me.'
At the heart of the majority opinion there seems to lie a mistrust of the agency
provision in question because it might be construed to permit the entry of a default
judgment with no notice being provided the defendants.5 Hard cases may make bad
law but easy cases, misconceived to be hard ones, make even worse law because in
the latter there is not even the seeming justification attendant the former.
Defendants here received all they were entitled to. They agreed to submit to the
jurisdiction of the courts in New York and that is all plaintiff required them to do. No
default judgment is contemplated; they received adequate notice of the suit pending
against them and were afforded ample opportunity to defend. In order to relieve them
of this obligation which they voluntarily incurred, the majority throws in doubt the
validity of countless provisions of a similar nature and throws the law into a state of
confusion and uncertainty. If, as the majority seem to fear, this agency provision can
be used as a vehicle of oppression and overreaching, I suggest that we wait until
such a case is presented to us. The same Federal Rules that provide for service of
process upon an agent authorized to receive such service also contain provision for
the setting aside of default judgments, Rule 55(c), and for relieving a party from a final
judgment, Rule 60 (b). I cannot bring myself to believe that the federal courts would
not, in such a case, use the above rules to good advantage.
I would require the parties to abide by their contract and would reverse the district
court.

CONFLICT OF LAWS 3D 1/08-09 Page 49 of 97 Atty. Jose A. Bernas

INTERNATIONAL SHOE CO. V. WASHINGTON, 326 U.S. 310 (1945)
Appeal from the Supreme Court of the State of Washington. [326 U.S. 310, 311] Mr.
Henry C. Lowenhaupt, of St. Louis Mo., for appellant.
Mr. George W. Wilkins, of Olympia, Wash., for appellees.
Mr. Chief Justice STONE delivered the opinion of the Court.
The questions for decision are (1) whether, within the limitations of the due process
clause of the Fourteenth Amendment, appellant, a Delaware corporation, has by its
activities in the State of Washington rendered itself amenable to proceedings in the
courts of that state to recover unpaid contributions to the state unemployment
compensation fund exacted by state statutes, Washington Unemployment
Compensation Act, Washington Revised Statutes, 9998-103a through 9998-123a,
1941 Supp., and (2) whether the state can exact those contributions consistently with
the due process clause of the Fourteenth Amendment.
The statutes in question set up a comprehensive scheme of unemployment
compensation, the costs of which are defrayed by contributions required to be made
by employers to a state unemployment compensation fund. [326 U.S. 310, 312] The
contributions are a specified percentage of the wages payable annually by each
employer for his employees' services in the state. The assessment and collection of
the contributions and the fund are administered by respondents. Section 14(c) of the
Act, Wash.Rev.Stat. 1941 Supp., 9998- 114c, authorizes respondent Commissioner
to issue an order and notice of assessment of delinquent contributions upon
prescribed personal service of the notice upon the employer if found within the state,
or, if not so found, by mailing the notice to the employer by registered mail at his last
known address. That section also authorizes the Commissioner to collect the
assessment by distraint if it is not paid within ten days after service of the notice. By
14(e) and 6(b) the order of assessment may be administratively reviewed by an
appeal tribunal within the office of unemployment upon petition of the employer, and
this determination is by 6(i) made subject to judicial review on questions of law by the
state Superior Court, with further right of appeal in the state Supreme Court as in
other civil cases.
In this case notice of assessment for the years in question was personally served
upon a sales solicitor employed by appellant in the State of Washington, and a copy
of the notice was mailed by registered mail to appellant at its address in St. Louis,
Missouri. Appellant appeared specially before the office of unemployment and moved
to set aside the order and notice of assessment on the ground that the service upon
appellant's salesman was not proper service upon appellant; that appellant was not a
corporation of the State of Washington and was not doing business within the state;
that it had no agent within the state upon whom service could be made; and that
appellant is not an employer and does not furnish employment within the meaning of
the statute.
The motion was heard on evidence and a stipulation of facts by the appeal tribunal
which denied the motion [326 U.S. 310, 313] and ruled that respondent
Commissioner was entitled to recover the unpaid contributions. That action was
affirmed by the Commissioner; both the Superior Court and the Supreme Court
affirmed. 154 P.2d 801. Appellant in each of these courts assailed the statute as
CONFLICT OF LAWS 3D 1/08-09 Page 50 of 97
applied, as a violation of the due process clause of the Fourteenth Amendment, and
as imposing a constitutionally prohibited burden on interstate commerce. The cause
comes here on appeal under 237(a) of the Judicial Code, 28 U.S.C. 344(a), 28
U.S.C.A. 344(a), appellant assigning as error that the challenged statutes as applied
infringe the due process clause of the Fourteenth Amendment and the commerce
clause.
The facts as found by the appeal tribunal and accepted by the state Superior Court
and Supreme Court, are not in dispute. Appellant is a Delaware corporation, having
its principal place of business in St. Louis, Missouri, and is engaged in the
manufacture and sale of shoes and other footwear. It maintains places of business
in several states, other than Washington, at which its manufacturing is carried on
and from which its merchandise is distributed interstate through several sales units
or branches located outside the State of Washington.
Appellant has no office in Washington and makes no contracts either for sale or
purchase of merchandise there. It maintains no stock of merchandise in that state
and makes there no deliveries of goods in intrastate commerce. During the years
from 1937 to 1940, now in question, appellant employed eleven to thirteen
salesmen under direct supervision and control of sales managers located in St.
Louis. These salesmen resided in Washington; their principal activities were
confined to that state; and they were compensated by commissions based upon the
amount of their sales. The commissions for each year totaled more than $31,000.
Appellant supplies its salesmen with a line of samples, each consisting of one shoe
of a pair, which [326 U.S. 310, 314] they display to prospective purchasers. On
occasion they rent permanent sample rooms, for exhibiting samples, in business
buildings, or rent rooms in hotels or business buildings temporarily for that purpose.
The cost of such rentals is reimbursed by appellant.
The authority of the salesmen is limited to exhibiting their samples and soliciting
orders from prospective buyers, at prices and on terms fixed by appellant. The
salesmen transmit the orders to appellant's office in St. Louis for acceptance or
rejection, and when accepted the merchandise for filling the orders is shipped f.o.b.
from points outside Washington to the purchasers within the state. All the
merchandise shipped into Washington is invoiced at the place of shipment from
which collections are made. No salesman has authority to enter into contracts or to
make collections.
The Supreme Court of Washington was of opinion that the regular and systematic
solicitation of orders in the state by appellant's salesmen, resulting in a continuous
flow of appellant's product into the state, was sufficient to constitute doing business
in the state so as to make appellant amenable to suit in its courts. But it was also of
opinion that there were sufficient additional activities shown to bring the case within
the rule frequently stated, that solicitation within a state by the agents of a foreign
corporation plus some additional activities there are sufficient to render the
corporation amenable to suit brought in the courts of the state to enforce an
obligation arising out of its activities there. International Harvester Co. v. Kentucky,
234 U.S. 579, 587 , 34 S.Ct. 944, 946; People's Tobacco Co. v. American Tobacco
Co., 246 U.S. 79, 87 , 38 S.Ct. 233, 235, Ann.Cas.1918C, 537; Frene v. Louisville
Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 516, 146 A.L.R. 926. The court
found such additional activities in the salesmen's display of samples sometimes in
permanent display rooms, and the salesmen's residence within the state, continued
Atty. Jose A. Bernas
over a period of years, all resulting in a [326 U.S. 310, 315] substantial volume of upon as though it were a fact, Klein v. Board of Tax Supervisors, 282 U.S. 19, 24 ,
merchandise regularly shipped by appellant to purchasers within the state. The court 51 S.Ct. 15, 16, 73 A.L.R. 679, it is clear that unlike an individual its 'presence'
also held that the statute as applied did not invade the constitutional power of without, as well as within, the state of its origin can be manifested only by activities
Congress to regulate interstate commerce and did not impose a prohibited burden on carried on in its behalf by those who are authorized to act for it. To say that the
such commerce. corporation is so far 'present' there as to satisfy due process requirements, for
purposes of taxation or the maintenance of suits against it in the courts of the state,
Appellant's argument, renewed here, that the statute imposes an unconstitutional is to beg the question to be decided. For the terms 'present' or 'presence' are [326
burden on interstate commerce need not detain us. For 53 Stat. 1391, 26 U.S.C. U.S. 310, 317] used merely to symbolize those activities of the corporation's agent
1606(a), 26 U.S.C.A. Int.Rev.Code, 1606(a), provides that 'No person required under within the state which courts will deem to be sufficient to satisfy the demands of due
a State law to make payments to an unemployment fund shall be relieved from process. L. Hand, J., in Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139, 141.
compliance therewith on the ground that he is engaged in interstate or foreign Those demands may be met by such contacts of the corporation with the state of
commerce, or that the State law does not distinguish between employees engaged in the forum as make it reasonable, in the context of our federal system of
interstate or foreign commerce and those engaged in intrastate commerce.' It is no government, to require the corporation to defend the particular suit which is brought
longer debatable that Congress, in the exercise of the commerce power, may there. An 'estimate of the inconveniences' which would result to the corporation from
authorize the states, in specified ways, to regulate interstate commerce or impose a trial away from its 'home' or principal place of business is relevant in this
burdens upon it. Kentucky Whip & Collar Co. v. Illinois Central R. Co., 299 U.S. 334 , connection. Hutchinson v. Chase & Gilbert, supra, 45 F.2d 141.
57 S.Ct. 277; Perkins v. Pennsylvania, 314 U.S. 586 , 62 S.Ct. 484; Standard
Dredging Corp. v. Murphy, 319 U.S. 306, 308 , 63 S.Ct. 1067, 1068; Hooven & Allison'Presence' in the state in this sense has never been doubted when the activities of the
v. Evatt, 324 U.S. 652, 679 , 65 S.Ct. 870, 883; Southern Pacific Co. v. Arizona, 325 corporation there have not only been continuous and systematic, but also give rise
U.S. 761, 769 , 65 S.Ct. 1515, 1520 to the liabilities sued on, even though no consent to be sued or authorization to an
agent to accept service of process has been given. St. Clair v. Cox, 106 U.S. 350,
Appellant also insists that its activities within the state were not sufficient to manifest 355 , 1 S.Ct. 354, 359; Connecticut Mutual Life Ins. Co. v. Spratley, 172 U.S. 602,
its 'presence' there and that in its absence the state courts were without jurisdiction, 610 , 611 S., 19 S.Ct. 308, 311, 312; Pennsylvania Lumbermen's Mut. Fire Ins. Co.
that consequently it was a denial of due process for the state to subject appellant to v. Meyer, 197 U.S. 407, 414 , 415 S., 25 S.Ct. 483, 484, 485; Commercial Mutual
suit. It refers to those cases in which it was said that the mere solicitation of orders for Accident Co. v. Davis, 213 U.S. 245, 255 , 256 S., 29 S.Ct. 445, 448; International
the purchase of goods within a state, to be accepted without the state and filled by Harvester Co. v. Kentucky, supra; cf. St. Louis S.W.R. Co. v. Alexander, 227 U.S.
shipment of the purchased goods interstate, does not render the corporation seller 218 , 33 S.Ct. 245, Ann.Cas.1915B, 77. Conversely it has been generally
amenable to suit within the state. See Green v. Chicago, Burlington & Quincy R. Co., recognized that the casual presence of the corporate agent or even his conduct of
205 U.S. 530, 533 , 27 S.Ct. 595, 596; International Harvester Co. v. Kentucky, supra, single or isolated items of activities in a state in the corporation's behalf are not
234 U.S. 586, 587 , 34 S.Ct. 946; Philadelphia [326 U.S. 310, 316] & Reading R. Co. enough to subject it to suit on causes of action unconnected with the activities there.
v. McKibbin, 243 U.S. 264, 268 , 37 S.Ct. 280; People's Tobacco Co. v. American St. Clair v. Cox, supra, 106 U.S. 359, 360 , 1 S.Ct. 362, 363; Old Wayne Mut. Life
Tobacco Co., supra, 246 U.S. 87 , 38 S.Ct. 235, Ann.Cas.1918C, 537. And appellant Ass'n v. McDonough, 204 U.S. 8, 21 , 27 S.Ct. 236, 240; Frene v. Louisville Cement
further argues that since it was not present within the state, it is a denial of due Co., supra, 77 U.S.App.D.C. 133, 134 F.2d 515, 146 A.L.R. 926, and cases cited.
process to subject it to taxation or other money exaction. It thus denies the power of To require the corporation in such circumstances to defend the suit away from its
the state to lay the tax or to subject appellant to a suit for its collection. home or other jurisdiction where it carries on more substantial activities has been
Historically the jurisdiction of courts to render judgment in personam is grounded on thought to lay too great and unreasonable a burden on the corporation to comport
their de facto power over the defendant's person. Hence his presence within the with due process. [326 U.S. 310, 318] While it has been held in cases on which
territorial jurisdiction of court was prerequisite to its rendition of a judgment personally appellant relies that continuous activity of some sorts within a state is not enough to
binding him. Pennoyer v. Neff, 95 U.S. 714 , 733. But now that the capias ad support the demand that the corporation be amenable to suits unrelated to that
respondendum has given way to personal service of summons or other form of activity, Old Wayne Mut. Life Ass'n v. McDonough, supra; Green v. Chicago,
notice, due process requires only that in order to subject a defendant to a judgment in Burlington & Quincy R. Co., supra; Simon v. Southern R. Co., 236 U.S. 115 , 35
personam, if he be not present within the territory of the forum, he have certain S.Ct. 255; People's Tobacco Co. v. American Tobacco Co., supra; cf. Davis v.
minimum contacts with it such that the maintenance of the suit does not offend Farmers' Co-operative Equity Co., 262 U.S. 312, 317 , 43 S.Ct. 556, 558, there
'traditional notions of fair play and substantial justice.' Milliken v. Meyer, 311 U.S. 457, have been instances in which the continuous corporate operations within a state
463 , 61 S.Ct. 339, 343, 132 A.L.R. 1357. See Holmes, J., in McDonald v. Mabee, were thought so substantial and of such a nature as to justify suit against it on
243 U.S. 90, 91 , 37 S.Ct. 343, L.R.A.1917F, 458. Compare Hoopeston Canning Co. causes of action arising from dealings entirely distinct from those activities. See
v. Cullen, 318 U.S. 313, 316 , 319 S., 63 S.Ct. 602, 604, 606, 145 A.L.R. 1113. See Missouri, K. & T.R. Co. v. Reynolds, 255 U.S. 565 , 41 S.Ct. 446; Tauza v.
Blackmer v. United States, 284 U.S. 421 , 52 S.Ct. 252; Hess v. Pawloski, 274 U.S. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St. Louis S.W.R. Co. v.
352 , 47 S.Ct. 632; Young v. Masci, 289 U.S. 253 , 53 S.Ct. 599, 88 A.L.R. 170. Alexander, supra.

Since the corporate personality is a fiction, although a fiction intended to be acted Finally, although the commission of some single or occasional acts of the corporate

CONFLICT OF LAWS 3D 1/08-09 Page 51 of 97 Atty. Jose A. Bernas

agent in a state sufficient to impose an obligation or liability on the corporation has not
been thought to confer upon the state authority to enforce it, Rosenberg Bros. & Co.
v. Curtis Brown Co., 260 U.S. 516 , 43 S.Ct. 170, other such acts, because of their
nature and quality and the circumstances of their commission, may be deemed
sufficient to render the corporation liable to suit. Cf. Kane v. New Jersey, 242 U.S.
160 , 37 S.Ct. 30; Hess v. Pawloski, supra; Young v. Masci, supra. True, some of the
decisions holding the corporation amenable to suit have been supported by resort to
the legal fiction that it has given its consent to service and suit, consent being implied
from its presence in the state through the acts of its authorized agents. Lafayette
Insurance Co. v. French, 18 How. 404, 407; St. Clair v. Cox, supra, 106 U.S. 356 , 1
S.Ct. 359; Commercial Mutual Accident Co. v. Davis, supra, 213 U.S. 254 , 29 S.Ct.
447; State of Washington v. Superior Court, 289 U.S. 361, 364 , 365 S., 53 S.Ct. 624,
626, 627, 89 A.L.R. 653. But more realistically it may be said that those authorized
acts were of such a nature as to justify the fiction. Smolik v. Philadelphia & [326 U.S.
310, 319] R.C. & I. Co., D.C., 222 F. 148, 151. Henderson, The Position of Foreign
Corporations in American Constitutional Law, 94, 95.
It is evident that the criteria by which we mark the boundary line between those
activities which justify the subjection of a corporation to suit, and those which do not,
cannot be simply mechanical or quantitative. The test is not merely, as has
sometimes been suggested, whether the activity, which the corporation has seen fit to
procure through its agents in another state, is a little more or a little less. St. Louis
S.W.R. Co. v. Alexander, supra, 227 U.S. 228 , 33 S.Ct. 248, Ann.Cas. 1915B, 77;
International Harvestor Co. v. Kentucky, supra, 234 U.S. 587 , 34 S.Ct. 946. Whether
due process is satisfied must depend rather upon the quality and nature of the activity
in relation to the fair and orderly administration of the laws which it was the purpose of
the due process clause to insure. That clause does not contemplate that a state may
make binding a judgment in personam against an individual or corporate defendant
with which the state has no contacts, ties, or relations. Cf. Pennoyer v. Neff, supra;
Minnesota Commercial Men's Ass'n v. Benn, 261 U.S. 140 , 43 S.Ct. 293.
But to the extent that a corporation exercises the privilege of conducting activities
within a state, it enjoys the benefits and protection of the laws of that state. The
exercise of that privilege may give rise to obligations; and, so far as those obligations
arise out of or are connected with the activities within the state, a procedure which
requires the corporation to respond to a suit brought to enforce them can, in most
instances, hardly be said to be undue. Compare International Harvester Co. v.
Kentucky, supra, with Green v. Chicago, Burlington & Quincy R. Co., supra, and
People's Tobacco Co. v. American Tobacco Co., supra. Compare Connecticut Mutual
Life Ins. Co. v. Spratley, supra, 172 U.S. 619, 620 , 19 S.Ct. 314, 315, and
Commercial Mutual Accident Co. v. Davis, supra, with Old Wayne Mut. Life Ass'n v.
McDonough, supra. See 29 Columbia Law Review, 187-195. [326 U.S. 310, 320]
Applying these standards, the activities carried on in behalf of appellant in the State of
Washington were neither irregular nor casual. They were systematic and continuous
throughout the years in question. They resulted in a large volume of interstate
business, in the course of which appellant received the benefits and protection of the
laws of the state, including the right to resort to the courts for the enforcement of its
rights. The obligation which is here sued upon arose out of those very activities. It is
evident that these operations establish sufficient contacts or ties with the state of the
forum to make it reasonable and just according to our traditional conception of fair
play and substantial justice to permit the state to enforce the obligations which
CONFLICT OF LAWS 3D 1/08-09 Page 52 of 97
appellant has incurred there. Hence we cannot say that the maintenance of the
present suit in the State of Washington involves an unreasonable or undue
procedure.
We are likewise unable to conclude that the service of the process within the state
upon an agent whose activities establish appellant's 'presence' there was not
sufficient notice of the suit, or that the suit was so unrelated to those activities as to
make the agent an inappropriate vehicle for communicating the notice. It is enough
that appellant has established such contacts with the state that the particular form of
substituted service adopted there gives reasonable assurance that the notice will be
actual. Connecticut Mutual Life Ins. Co. v. Spratley, supra, 172 U.S. 618, 619 , 19
S.Ct. 314, 315; Board of Trade v. Hammond Elevator Co., 198 U.S. 424, 437 , 438
S., 25 S.Ct. 740, 743, 744; Commercial Mutual Accident Co. v. Davis, supra, 213
U.S. 254, 255 , 29 S.Ct. 447, 448. Cf. Riverside & Dan River Cotton Mills v.
Menefee, 237 U.S. 189, 194 , 195 S., 35 S.Ct. 579, 580, 581; see Knowles v.
Gaslight & Coke Co., 19 Wall. 58, 61; McDonald v. Mabee, supra; Milliken v. Meyer,
supra. Nor can we say that the mailing of the notice of suit to appellant by registered
mail at its home office was not reasonably calculated to apprise appellant of the suit.
Compare Hess v. Pawloski, supra, with McDonald v. Mabee, supra, 243 U.S. [326
U.S. 310, 321] 92, 37 S.Ct. 344, L.R.A.1917F, 458, and Wuchter v. Pizzutti, 276
U.S. 13, 19 , 24 S., 48 S.Ct. 259, 260, 262, 57 A.L.R. 1230; cf. Bequet v.
MacCarthy, 2 B. & Ad. 951; Maubourquet v. Wyse, 1 Ir.Rep.C.L. 471. See State of
Washington v. Superior Court, supra, 289 U.S. 365 , 53 S. Ct. 626, 89 A.L.R. 653.
Only a word need be said of appellant's liability for the demanded contributions of
the state unemployment fund. The Supreme Court of Washington, construing and
applying the statute, has held that it imposes a tax on the privilege of employing
appellant's salesmen within the state measured by a percentage of the wages, here
the commissions payable to the salesmen. This construction we accept for
purposes of determining the constitutional validity of the statute. The right to employ
labor has been deemed an appropriate subject of taxation in this country and
England, both before and since the adoption of the Constitution. Steward Machine
Co. v. Davis, 301 U.S. 548 , 579 et seq., 57 S.Ct. 883, 887 et seq., 109 A.L.R. 1293.
And such a tax imposed upon the employer for unemployment benefits is within the
constitutional power of the states. Carmichael v. Southern Coal & Coke Co., 301
U.S. 495 , 508 et seq., 57 S.Ct. 868, 871 et seq., 109 A.L.R. 1327.
Appellant having rendered itself amenable to suit upon obligations arising out of the
activities of its salesmen in Washington, the state may maintain the present suit in
personam to collect the tax laid upon the exercise of the privilege of employing
appellant's salesmen within the state. For Washington has made one of those
activities, which taken together establish appellant's 'presence' there for purposes of
suit, the taxable event by which the state brings appellant within the reach of its
taxing power. The state thus has constitutional power to lay the tax and to subject
appellant to a suit to recover it. The activities which establish its 'presence' subject it
alike to taxation by the state and to suit to recover the tax. Equitable Life Assur.
Society v. Pennsylvania, 238 U.S. 143, 146 , 35 S.Ct. 829, 830; cf. International
Harvester Co. v. Wisconsin Department of Taxation, 322 U.S. 435 , 442 et seq., 64
S.Ct. 1060, 1064 et seq.; Hoopeston Canning Co. v. Cullen, [326 U.S. 310, 322]
supra, 318 U.S. 316 -319, 63 S.Ct. 604-606, 145 A.L.R. 113; see General Trading
Co. v. State Tax Com., 322 U.S. 335, 349 , 64 S.Ct. 1028, 1030, 1319.
Atty. Jose A. Bernas
AFFIRMED.
Mr. Justice JACKSON took no part in the consideration or decision of this case.
Mr. Justice BLACK delivered the following opinion.
Congress, pursuant to its constitutional power to regulate commerce, has expressly
provided that a State shall not be prohibited from levying the kind of unemployment
compensation tax here challenged. 26 U.S.C. 1606, 26 U.S.C.A. Int.Rev.Code, 1606.
We have twice decided that this Congressional consent is an adequate answer to a
claim that imposition of the tax violates the Commerce Clause. Perkins v.
Pennsylvania, 314 U.S. 586 , 62 S.Ct. 484, affirming 342 Pa. 529, 21 A.2d 45;
Standard Dredging Corp. v. Murphy, 319 U.S. 306, 308 , 63 S.Ct. 1067, 1068. Two
determinations by this Court of an issue so palpably without merit are sufficient.
Consequently that part of this appeal which again seeks to raise the question seems
so patently frivolous as to make the case a fit candidate for dismissal. Fay v. Crozer,
217 U.S. 455 , 30 S. Ct. 568. Nor is the further ground advanced on this appeal, that
the State of Washington has denied appellant due process of law, any less devoid of
substance. It is my view, therefore, that we should dismiss the appeal as
unsubstantial,1 Seaboard Air Line R. Co. v. Watson, 287 U.S. 86, 90 , 92 S., 53 S.Ct.
32, 34, 35, 86 A.L.R. 174; and decline the invitation to formulate broad rules as to the
meaning of due process, which here would amount to deciding a constitutional
question 'in advance of the necessity for its decision.' Alabama State Federation of
Labor v. McAdory, 325 U.S. 450, 461 , 65 S.Ct. 1384, 1389, 1734. [326 U.S. 310,
323] Certainly appellant can not in the light of our past decisions meritoriously claim
that notice by registered mail and by personal service on its sales solicitors in
Washington did not meet the requirements of procedural due process. And the due
process clause is not brought in issue any more by appellant's further conceptualistic
contention that Washington could not levy a tax or bring suit against the corporation
because it did not honor that State with its mystical 'presence.' For it is unthinkable
that the vague due process clause was ever intended to prohibit a State from
regulating or taxing a business carried on within its boundaries simply because this is
done by agents of a corporation organized and having its headquarters elsewhere. To
read this into the due process clause would in fact result in depriving a State's
citizens of due process by taking from the State the power to protect them in their
business dealings within its boundaries with representatives of a foreign corporation.
Nothing could be more irrational or more designed to defeat the function of our
federative system of government. Certainly a State, at the very least, has power to tax
and sue those dealing with its citizens within its boundaries, as we have held before.
Hoopeston Canning Co. v. Cullen, 318 U.S. 313 , 63 S.Ct. 602, 145 A.L.R. 1113.
Were the Court to follow this principle, it would provide a workable standard for cases
where, as here, no other questions are involved. The Court has not chosen to do so,
but instead has engaged in an unnecessary discussion in the course of which it has
announced vague Constitutional criteria applied for the first time to the issue before
us. It has thus introduced uncertain elements confusing the simple pattern and
tending to curtail the exercise of State powers to an extent not justified by the
Constitution.
The criteria adopted insofar as they can be identified read as follows: Due process
does permit State courts to 'enforce the obligations which appellant has incurred' if
[326 U.S. 310, 324] it be found 'reasonable and just according to our traditional
CONFLICT OF LAWS 3D 1/08-09 Page 53 of 97
conception of fair play and substantial justice.' And this in turn means that we will
'permit' the State to act if upon 'an 'estimate of the inconveniences' which would
result to the corporation from a trial away from its 'home' or principal place of
business', we conclude that it is 'reasonable' to subject it to suit in a State where it is
doing business.
It is true that this Court did use the terms 'fair play' and 'substantial justice' in
explaining the philosophy underlying the holding that it could not be 'due process of
law' to render a personal judgment against a defendant without notice to and an
opportunity to be heard by him. Milliken v. Meyer, 311 U.S. 457 , 61 S.Ct. 339, 132
A.L. R. 1357. In McDonald v. Mabee, 243 U.S. 90, 91 , 37 S.Ct. 343, L.R.A.1917F,
458, cited in the Milliken case, Mr. Justice Holmes speaking for the Court warned
against judicial curtailment of this opportunity to be heard and referred to such a
curtailment as a denial of 'fair play', which even the common law would have
deemed 'contrary to natural justice.' And previous cases had indicated that the
ancient rule against judgments without notice had stemmed from 'natural justice'
concepts. These cases, while giving additional reasons why notice under particular
circumstances is inadequate, did not mean thereby that all legislative enactments
which this Court might deem to be contrary to natural justice ought to be held invalid
under the due process clause. None of the cases purport to support or could
support a holding that a State can tax and sue corporations only if its action
comports with this Court's notions of 'natural justice.' I should have thought the
Tenth Amendment settled that.
I believe that the Federal Constitution leaves to each State, without any 'ifs' or 'buts',
a power to tax and to open the doors of its courts for its citizens to sue corporations
whose agents do business in those States. Believing that the Constitution gave the
States that power, I think it a judicial deprivation to condition its exercise upon this
[326 U.S. 310, 325] Court's notion of 'fairplay', however appealing that term may
be. Nor can I stretch the meaning of due process so far as to authorize this Court to
deprive a State of the right to afford judicial protection to its citizens on the ground
that it would be more 'convenient' for the corporation to be sued somewhere else.
There is a strong emotional appeal in the words 'fair play', 'justice', and
'reasonableness.' But they were not chosen by those who wrote the original
Constitution or the Fourteenth Amendment as a measuring rod for this Court to use
in invalidating State or Federal laws passed by elected legislative representatives.
No one, not even those who most feared a democratic government, ever formally
proposed that courts should be given power to invalidate legislation under any such
elastic standards. Express prohibitions against certain types of legislation are found
in the Constitution, and under the long settled practice, courts invalidate laws found
to conflict with them. This requires interpretation, and interpretation, it is true, may
result in extension of the Constitution's purpose. But that is no reason for reading
the due process clause so as to restrict a State's power to tax and sue those whose
activities affect persons and businesses within the State, provided proper service
can be had. Superimposing the natural justice concept on the Constitution's specific
prohibitions could operate as a drastic abridgment of democratic safeguards they
embody, such as freedom of speech, press and religion,2 and the right to counsel.
This [326 U.S. 310, 326] has already happened. Betts v. Brady, 316 U.S. 455 , 62
S.Ct. 1252. Compare Feldman v. United States, 322 U.S. 487 , 494-503, 64 S.Ct.
1082, 1085-1089, 154 A.L.R. 982. For application of this natural law concept,
whether under the terms 'reasonableness', 'justice', or 'fair play', makes judges the
Atty. Jose A. Bernas
 supreme arbiters of the country's laws and practices. Polk Co. v. Glover, 305 U.S. 5 ,
17-18, 59 S.Ct. 15, 20, 21; Federal Power Commission v. Natural Gas Pipeline Co.,
315 U.S. 575, 600 , 62 S.Ct. 736, 750, note 4. This result, I believe, alters the form of
government our Constitution provides. I cannot agree.
True, the State's power is here upheld. But the rule announced means that
tomorrow's judgment may strike down a State or Federal enactment on the ground
that it does not conform to this Court's idea of natural justice. I therefore find myself
moved by the same fears that caused Mr. Justice Holmes to say in 1930:
'I have not yet adequately expressed the more than anxiety that I feel at the ever increasing
scope given to the Fourteenth Amendment in cutting down what I believe to be the
constitutional rights of the States. As the decisions now stand, I see hardly any limit
but the sky to the invalidating of those rights if they happen to strike a majority of this
Court as for any reason undesirable.' Baldwin v. Missouri, 281 U.S. 586, 595 , 50
S.Ct. 436, 439, 72 A.L.R. 1303.

CONFLICT OF LAWS 3D 1/08-09 Page 54 of 97 Atty. Jose A. Bernas

Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952)
CERTIORARI TO THE SUPREME COURT OF OHIO
Syllabus
A foreign corporation, owning gold and silver mines in the Philippine Islands,
temporarily carried on in Ohio (during the Japanese occupation of the Philippines) a
continuous and systematic, but limited, part of its general business -- consisting of
directors' meetings, business correspondence, banking, stock transfers, payment of
salaries, purchasing of machinery, etc. While engaged in doing such business in
Ohio, its president was served with summons in an action in personam against the
corporation filed in an Ohio state court by a nonresident of Ohio. The cause of action
did not arise in Ohio, and did not relate to the corporation's activities there. A
judgment sustaining a motion to quash the service was affirmed by the State
Supreme Court.
Held:
1. The Federal Constitution does not compel Ohio to open its courts to such a case --
even though Ohio permits a complainant to maintain a proceeding in personam in its
courts against a properly served nonresident natural person to enforce a cause of
action which does not arise out of anything done within the State. Pp. 342 U. S. 440-
441.
2. The Due Process Clause of the Fourteenth Amendment also does not prohibit Ohio
from granting such relief against a foreign corporation. Old Wayne Life Assn. v.
McDonough, 204 U. S. 8, and Simon v. Southern R. Co., 236 U. S. 115,
distinguished. Pp. 342 U. S. 441-447.
3. As a matter of federal due process, the business done by the corporation in Ohio
was sufficiently substantial and of such a nature as to permit Ohio to entertain the
cause of action against it, though the cause of action arose from activities entirely
distinct from its activities in Ohio. Pp. 342 U. S. 447-449.
4. It not clearly appearing, under the Ohio practice as to the effect of the syllabus,
whether the Supreme Court of Ohio rested its decision on Ohio law or on the
Fourteenth Amendment, the cause is remanded to that court for further proceedings
in the light of the opinion of this Court. Pp. 342 U. S. 441-449.
155 Ohio St. 116, 98 N.E.2d 33, vacated and remanded.
Page 342 U. S. 438
In two actions in an Ohio state court, the trial court sustained a motion to quash the
service on the respondent foreign corporation. The Court of Appeals of Ohio affirmed,
88 Ohio App. 118, 95 N.E.2d 5, as did the State Supreme Court, 155 Ohio St. 116, 98
N.E.2d 33. This Court granted certiorari. 342 U.S. 808. Judgment vacated and cause
remanded, p. 342 U. S. 449.
MR. JUSTICE BURTON delivered the opinion of the Court.
This case calls for an answer to the question whether the Due Process Clause of the
Fourteenth Amendment to the Constitution of the United States precludes Ohio from
subjecting a foreign corporation to the jurisdiction of its courts in this action in
CONFLICT OF LAWS 3D 1/08-09 Page 55 of 97
personam. The corporation has been carrying on in Ohio a continuous and
systematic, but limited, part of its general business. Its president, while engaged in
doing such business in Ohio, has been served with summons in this proceeding.
The cause of action sued upon did not arise in Ohio and does not relate to the
corporation's activities there. For the reasons hereafter stated, we hold that the
Fourteenth Amendment leaves Ohio free to take or decline jurisdiction over the
corporation.
After extended litigation elsewhere, [Footnote 1] petitioner, Idonah Slade Perkins, a
nonresident of Ohio, filed two actions in personam in the Court of Common Pleas of
Clermont
Page 342 U. S. 439
County, Ohio, against the several respondents. Among those sued is the Benguet
Consolidated Mining Company, here called the mining company. It is styled a
"sociedad anonima" under the laws of the Philippine Islands, where it owns and has
operated profitable gold and silver mines. In one action, petitioner seeks
approximately $68,400 in dividends claimed to be due her as a stockholder. In the
other, she claims $2,500,000 damages, largely because of the company's failure to
issue to her certificates for 120,000 shares of its stock.
In each case, the trial court sustained a motion to quash the service of summons on
the mining company. Ohio Com.Pl., 99 N.E.2d 515. The Court of Appeals of Ohio
affirmed that decision, 88 Ohio App. 118, 95 N.E.2d 5, as did the Supreme Court of
Ohio, 155 Ohio St. 116, 98 N.E.2d 33. The cases were consolidated, and we
granted certiorari in order to pass upon the conclusion voiced within the court below
that federal due process required the result there reached. 342 U.S. 808.
We start with the holding of the Supreme Court of Ohio, not contested here, that,
under Ohio law, the mining company is to be treated as a foreign corporation.
[Footnote 2] Actual notice of the proceeding was given to the corporation
Page 342 U. S. 440
in the instant case through regular service of summons upon its president while he
was in Ohio acting in that capacity. Accordingly, there can be no jurisdictional
objection based upon a lack of notice to a responsible representative of the
corporation.
The answer to the question of whether the state courts of Ohio are open to a
proceeding in personam, against an amply notified foreign corporation, to enforce a
cause of action not arising in Ohio and not related to the business or activities of the
corporation in that State rests entirely upon the law of Ohio, unless the Due Process
Clause of the Fourteenth Amendment compels a decision either way.
The suggestion that federal due process compels the State to open its courts to
such a case has no substance.
"Provisions for making foreign corporations subject to service in the state is a matter
of legislative discretion, and a failure to provide for such service is not a denial of
due process. Still less is it incumbent upon a state in furnishing such process to
make the jurisdiction over the foreign corporation wide enough to include the
adjudication of transitory actions not arising in the state."
Atty. Jose A. Bernas
Missouri P. R. Co. v. Clarendon Co., 257 U. S. 533, 257 U. S. 535.
Page 342 U. S. 441
Also without merit is the argument that, merely because Ohio permits a complainant
to maintain a proceeding in personam in its courts against a properly served
nonresident natural person to enforce a cause of action which does not arise out of
anything done in Ohio, therefore the Constitution of the United States compels Ohio
to provide like relief against a foreign corporation.
A more serious question is presented by the claim that the Due Process Clause of the
Fourteenth Amendment prohibits Ohio from granting such relief against a foreign
corporation. The syllabus in the report of the case below, while denying the relief
sought, does not indicate whether the Supreme Court of Ohio rested its decision on
Ohio law or on the Fourteenth Amendment. The first paragraph of that syllabus is as
follows:
"1. The doing of business in this state by a foreign corporation, which has not
appointed a statutory agent upon whom service of process against the corporation
can be made in this state or otherwise consented to service of summons upon it in
actions brought in this state, will not make the corporation subject to service of
summons in an action in personam brought in the courts of this state to enforce a
cause of action not arising in this state, and in no way related to the business or
activities of the corporation in this state."
155 Ohio St. 116, 117, 98 N.E.2d 33, 34.
If the above statement stood alone, it might mean that the decision rested solely upon
the law of Ohio. In support of that possibility, we are told that, under the rules and
practice of the Supreme Court of Ohio, only the syllabus necessarily carries the
approval of that court. [Footnote 3] As
Page 342 U. S. 442
we understand the Ohio practice, the syllabus of its Supreme Court constitutes the
official opinion of that court, but it must be read in the light of the facts and issues of
the case.
Page 342 U. S. 443
The only opinion accompanying the syllabus of the court below places the
concurrence of its author unequivocally upon the ground that the Due Process Clause
of the Fourteenth Amendment prohibits the Ohio courts from exercising jurisdiction
over the respondent corporation in this proceeding. [Footnote 4] That opinion is an
official part of the report of the case. The report, however, does not disclose to what
extent, if any, the other members of the court may have shared the view expressed in
that opinion. Accordingly, for us to allow the judgment to stand as it is would risk an
affirmance of a decision which might have been decided differently if the court below
had felt free under our decisions to do so.
The cases primarily relied on by the author of the opinion accompanying the syllabus
below are Old Wayne Life Assn. v. McDonough, 204 U. S. 8, and Simon v. Southern
R. Co., 236 U. S. 115. Unlike the case at bar, no actual notice of the proceedings was
received in those cases by a
CONFLICT OF LAWS 3D 1/08-09
Page 342 U. S. 444
responsible representative of the foreign corporation. In each case, the public
official who was served with process in an attempt to bind the foreign corporation
was held to lack the necessary authority to accept service so as to bind it in a
proceeding to enforce a cause of action arising outside of the state of the forum.
See 204 U.S. at 204 U. S. 22-23, and 236 U.S. at 236 U. S. 130. The necessary
result was a finding of inadequate service in each case and a conclusion that the
foreign corporation was not bound by it. The same would be true today in a like
proceeding where the only service had and the only notice given was that directed
to a public official who had no authority, by statute or otherwise, to accept it in that
kind of a proceeding. At the time of rendering the above decisions, this Court was
aided, in reaching its conclusion as to the limited scope of the statutory authority of
the public officials, by this Court's conception that the Due Process Clause of the
Fourteenth Amendment precluded a state from giving its public officials authority to
accept service in terms broad enough to bind a foreign corporation in proceedings
against it to enforce an obligation arising outside of the state of the forum. That
conception now has been modified by the rationale adopted in later decisions, and
particularly in International Shoe Co. v. Washington, 326 U. S. 310.
Today, if an authorized representative of a foreign corporation be physically present
in the state of the forum and be there engaged in activities appropriate to accepting
service or receiving notice on its behalf, we recognize that there is no unfairness in
subjecting that corporation to the jurisdiction of the courts of that state through such
service of process upon that representative. This has been squarely held to be so in
a proceeding in personam against such a corporation, at least in relation to a cause
of action
Page 342 U. S. 445
arising out of the corporation's activities within the state of the forum. [Footnote 5]
The essence of the issue here, at the constitutional level, is a like one of general
fairness to the corporation. Appropriate tests for that are discussed in International
Shoe Co. v. Washington, supra, at 326 U. S. 317-320. The amount and kind of
activities which must be carried on by the foreign corporation in the state of the
forum so as to make it reasonable and just to subject the corporation to the
jurisdiction of that state are to be determined in each case. The corporate activities
of a foreign corporation which, under state statute, make it necessary for it to secure
a license and to designate a statutory agent upon whom process may be served
provide a helpful, but not a conclusive, test. For example, the state of the forum may
by statute require a foreign mining corporation to secure a license in order lawfully
to carry on there such functional intrastate operations as those of mining or refining
ore. On the other hand, if the same corporation carries on, in that state, other
continuous and systematic corporate activities as it did here -- consisting of
directors' meetings, business correspondence, banking, stock transfers, payment of
salaries, purchasing of machinery, etc. -- those activities are enough to make it fair
and reasonable to subject that corporation to proceedings in personam in that state,
at least insofar as the proceedings in personam seek to enforce
Page 342 U. S. 446
causes of action relating to those very activities or to other activities of the
corporation within the state.
Page 56 of 97 Atty. Jose A. Bernas
The instant case takes us one step further to a proceeding in personam to enforce a carrying substantial balances of company funds. A bank in Hamilton County, Ohio,
cause of action not arising out of the corporation's activities in the state of the forum. acted as transfer agent for the stock of the company. Several directors' meetings
Using the tests mentioned above, we find no requirement of federal due process that were held at his office or home in Clermont County. From that office, he supervised
either prohibits Ohio from opening its courts to the cause of action here presented or policies dealing with the rehabilitation of the corporation's properties in the
compels Ohio to do so. This conforms to the realistic reasoning in International Shoe Philippines, and he dispatched funds to cover purchases of machinery for such
Co. v. Washington, supra, at 326 U. S. 318-319: rehabilitation. Thus, he carried on in Ohio a continuous and systematic supervision
of the necessarily limited wartime activities of the company. He there discharged his
". . . there have been instances in which the continuous corporate operations within a duties as president and general manager, both during the occupation of the
state were thought so substantial and of such a nature as to justify suit against it on company's properties by the Japanese and immediately thereafter. While no mining
causes of action arising from dealings entirely distinct from those activities. See properties in Ohio were owned or operated by the company, many of its wartime
Missouri, K. & T. R. Co. v. Reynolds, 255 U.S. 565; [Footnote 6] Tauza v. activities were directed from Ohio and were being given the personal attention of its
Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. 227 U. S. Louis S.W. R. Co. president in that State at the time he was served with summons. Consideration of
v. Alexander, supra, [227 U.S. 218]." the circumstances which, under the law of Ohio, ultimately will determine whether
". . . some of the decisions holding the corporation amenable to suit have been the courts of that State will choose to take jurisdiction over the corporation is
supported by resort to the legal fiction that it has given its consent to service and suit, reserved for the courts of that State. Without reaching that issue of state policy, we
consent being implied from its presence in the state through the acts of its authorized conclude that, under the circumstances above recited, it would not violate federal
agents. 59 U. S. 407; 106 U. S. 356; 213 U. S. 254; Washington v. Superior Court, due process for Ohio either to take or decline jurisdiction of the corporation in this
289 U. S. 361, 289 U. S. 364-365. But, more realistically, it may be said that those proceeding. This relieves the Ohio courts of the restriction relied upon in the opinion
authorized acts were of such a nature as to justify the fiction. Smolik v. Philadelphia & Page 342 U. S. 449
Reading Co.,@ 222 F.1d 8, 151. Henderson, The Position of Foreign Corporations in
American Constitutional Law 94, 95." accompanying the syllabus below, and which may have influenced the judgment of
the court below.
". . . Whether due process is satisfied must depend, rather, upon the quality and
nature of the activity in relation to the fair and orderly administration of the laws which Accordingly, the judgment of the Supreme Court of Ohio is vacated, and the cause
it was the purpose of the due process clause to insure. That clause does not is remanded to that court for further proceedings in the light of this opinion.
contemplate that a state may make binding a judgment in personam against an [Footnote 7]
individual or corporate defendant with which the state has no contacts, ties, or
relations. Cf. 95 U. S. Neff, supra, [95 U.S. 714]; Minnesota Commercial Assn. v. It is so ordered.
Benn, 261 U. S. 140." MR. JUSTICE BLACK concurs in the result.
It remains only to consider in more detail the issue of whether, as a matter of federal
due process, the business done in Ohio by the respondent mining company was
sufficiently substantial and of such a nature as to permit Ohio to entertain a cause of
action against a foreign corporation where the cause of action arose from activities
entirely distinct from its activities in Ohio. See International Shoe Co. v. Washington,
supra, at 326 U. S. 318.
The Ohio Court of Appeals summarized the evidence on the subject. 88 Ohio App. at
119-125, 95 N.E.2d at 6-9. From that summary, the following facts are substantially
beyond controversy: the company's mining properties were in the Philippine Islands.
Its operations there were completely halted during the occupation of the Islands by
the Japanese. During that interim, the president, who was also the general manager
and principal stockholder of the company, returned to his home in Clermont County,
Ohio. There, he maintained an office in
Page 342 U. S. 448
which he conducted his personal affairs and did many things on behalf of the
company. He kept there office files of the company. He carried on there
correspondence relating to the business of the company and to its employees. He
drew and distributed there salary checks on behalf of the company, both in his own
favor as president and in favor of two company secretaries who worked there with
him. He used and maintained in Clermont County, Ohio, two active bank accounts
CONFLICT OF LAWS 3D 1/08-09 Page 57 of 97 Atty. Jose A. Bernas
MCGEE V. INTERNATIONAL LIFE INS. CO., 355 U.S. 220 (1957)
Petitioner's son, a resident of California, bought a life insurance policy from an
Arizona corporation, naming petitioner as beneficiary. Later, respondent, a Texas
corporation, agreed to assume the insurance obligations of the Arizona corporation
and mailed a reinsurance certificate to petitioner's son in California, offering to insure
him in accordance with his policy. He accepted this offer and paid premiums by mail
from his California home to respondent's office in Texas. Neither corporation has ever
had any office or agent in California or done any other business in that State.
Petitioner sent proofs of her son's death to respondent, but it refused to pay the claim.
Under a California statute subjecting foreign corporations to suit in California on
insurance contracts with residents of California, even though such corporations
cannot be served with process within the State, petitioner sued respondent and
obtained judgment in a California court, process being served only by registered mail
to respondent's principal place of business in Texas. Held:
1. The Due Process Clause of the Fourteenth Amendment did not preclude the
California court from entering a judgment binding on respondent, since the suit was
based on a contract which had a substantial connection with California. Pp. 223-224.
2. Respondent's insurance contract was not unconstitutionally impaired by the fact
that the California statute here involved did not become effective until after
respondent had assumed the obligation of the insurance policy. P. 224.
288 S. W. 2d 579, reversed and remanded.
Arthur J. Mandell argued the cause and filed a brief for petitioner.
Stanley Hornsby argued the cause and filed a brief for respondent. [355 U.S. 220,
221]
Opinion of the Court by MR. JUSTICE BLACK, announced by MR. JUSTICE
DOUGLAS.
Petitioner, Lulu B. McGee, recovered a judgment in a California state court against
respondent, International Life Insurance Company, on a contract of insurance.
Respondent was not served with process in California but by registered mail at its
principal place of business in Texas. The California court based its jurisdiction on a
state statute which subjects foreign corporations to suit in California on insurance
contracts with residents of that State even though such corporations cannot be
served with process within its borders. 1
Unable to collect the judgment in California petitioner went to Texas where she filed
suit on the judgment in a Texas court. But the Texas courts refused to enforce her
judgment holding it was void under the Fourteenth Amendment because service of
process outside California could not give the courts of that State jurisdiction over
respondent. 288 S. W. 2d 579. Since the case raised important questions, not only to
California but to other States which have similar laws, we granted certiorari. 352 U.S.
924 . It is not controverted that if the California court properly exercised jurisdiction
over respondent the Texas courts erred in refusing to give its judgment full faith and
CONFLICT OF LAWS 3D 1/08-09 Page 58 of 97
credit. 28 U.S.C. 1738.
The material facts are relatively simple. In 1944, Lowell Franklin, a resident of
California, purchased a life insurance policy from the Empire Mutual Insurance
Company, an Arizona corporation. In 1948 the respondent agreed with Empire
Mutual to assume its insurance obligations. Respondent then mailed a reinsurance
certificate to Franklin in California offering to insure him in accordance with the
terms of the policy he held with Empire Mutual. He accepted this offer and from that
[355 U.S. 220, 222] time until his death in 1950 paid premiums by mail from his
California home to respondent's Texas office. Petitioner, Franklin's mother, was the
beneficiary under the policy. She sent proofs of his death to the respondent but it
refused to pay claiming that he had committed suicide. It appears that neither
Empire Mutual nor respondent has ever had any office or agent in California. And so
far as the record before us shows, respondent has never solicited or done any
insurance business in California apart from the policy involved here.
Since Pennoyer v. Neff, 95 U.S. 714 , this Court has held that the Due Process
Clause of the Fourteenth Amendment places some limit on the power of state courts
to enter binding judgments against persons not served with process within their
boundaries. But just where this line of limitation falls has been the subject of prolific
controversy, particularly with respect to foreign corporations. In a continuing process
of evolution this Court accepted and then abandoned "consent," "doing business,"
and "presence" as the standard for measuring the extent of state judicial power over
such corporations. See Henderson, The Position of Foreign Corporations in
American Constitutional Law, c. V. More recently in International Shoe Co. v.
Washington, 326 U.S. 310 , the Court decided that "due process requires only that
in order to subject a defendant to a judgment in personam, if he be not present
within the territory of the forum, he have certain minimum contacts with it such that
the maintenance of the suit does not offend `traditional notions of fair play and
substantial justice.'" Id., at 316.
Looking back over this long history of litigation a trend is clearly discernible toward
expanding the permissible scope of state jurisdiction over foreign corporations and
other nonresidents. In part this is attributable to the fundamental transformation of
our national economy over the years. Today many commercial transactions [355
U.S. 220, 223] touch two or more States and may involve parties separated by the
full continent. With this increasing nationalization of commerce has come a great
increase in the amount of business conducted by mail across state lines. At the
same time modern transportation and communication have made it much less
burdensome for a party sued to defend himself in a State where he engages in
economic activity.
Turning to this case we think it apparent that the Due Process Clause did not
preclude the California court from entering a judgment binding on respondent. It is
sufficient for purposes of due process that the suit was based on a contract which
had substantial connection with that State. Cf. Hess v. Pawloski, 274 U.S. 352 ;
Henry L. Doherty & Co. v. Goodman, 294 U.S. 623 ; Pennoyer v. Neff, 95 U.S. 714,
735 . 2 The contract was delivered in California, the premiums were mailed from
there and the insured was a resident of that State when he died. It cannot be denied
that California has a manifest interest in providing effective means of redress for its
residents when their insurers refuse to pay claims. These residents would be at a
severe disadvantage if they were forced to follow the insurance company to a
Atty. Jose A. Bernas
distant State in order to hold it legally accountable. When claims were small or
moderate individual claimants frequently could not afford the cost of bringing an
action in a foreign forum - thus in effect making the company judgment proof. Often
the crucial witnesses - as here on the company's defense of suicide - will be found in
the insured's locality. [355 U.S. 220, 224] Of course there may be inconvenience to
the insurer if it is held amenable to suit in California where it had this contract but
certainly nothing which amounts to a denial of due process. Cf. Travelers Health
Assn. v. Virginia ex rel. State Corporation Comm'n, 339 U.S. 643 . There is no
contention that respondent did not have adequate notice of the suit or sufficient time
to prepare its defenses and appear.
The California statute became law in 1949, after respondent had entered into the
agreement with Franklin to assume Empire Mutual's obligation to him. Respondent
contends that application of the statute to this existing contract improperly impairs the
obligation of the contract. We believe that contention is devoid of merit. The statute
was remedial, in the purest sense of that term, and neither enlarged nor impaired
respondent's substantive rights or obligations under the contract. It did nothing more
than to provide petitioner with a California forum to enforce whatever substantive
rights she might have against respondent. At the same time respondent was given a
reasonable time to appear and defend on the merits after being notified of the suit.
Under such circumstances it had no vested right not to be sued in California. Cf.
Bernheimer v. Converse, 206 U.S. 516 ; National Surety Co. v. Architectural
Decorating Co., 226 U.S. 276 ; Funkhouser v. J. B. Preston Co., 290 U.S. 163 .
The judgment is reversed and the cause is remanded to the Court of Civil Appeals of
the State of Texas, First Supreme Judicial District, for further proceedings not
inconsistent with this opinion.

It is so ordered.

THE CHIEF JUSTICE took no part in the consideration or decision of this case.

CONFLICT OF LAWS 3D 1/08-09 Page 59 of 97 Atty. Jose A. Bernas

World-Wide Volkwagen Corp. v. Woodson, 444 U.S. 286 (1980)
CERTIORARI TO THE SUPREME COURT OF OKLAHOMA
Syllabus
A products liability action was instituted in an Oklahoma st,ate court by respondents
husband and wife to recover for personal injuries sustained in Oklahoma in an
accident involving an automobile that had been purchased by them in New York while
they were New York residents and that was being driven through Oklahoma at the
time of the accident. The defendants included the automobile retailer and its
wholesaler (petitioners), New York corporations that did no business in Oklahoma.
Petitioners entered special appearances, claiming that Oklahoma's exercise of
jurisdiction over them would offend limitations on the State's jurisdiction imposed by
the Due Process Clause of the Fourteenth Amendment. The trial court rejected
petitioners' claims, and they then sought, but were denied, a writ of prohibition in the
Oklahoma Supreme Court to restrain respondent trial judge from exercising in
personam jurisdiction over them.
Held: Consistently with the Due Process Clause, the Oklahoma trial court may not
exercise in personam jurisdiction over petitioners. Pp. 444 U. S. 291-299.
(a) A state court may exercise personal jurisdiction over a nonresident defendant only
so long as there exist "minimum contacts" between the defendant and the forum
State. International Shoe Co. v. Washington, 326 U. S. 310. The defendant's contacts
with the forum State must be such that maintenance of the suit does not offend
traditional notions of fair play and substantial justice, id. at 326 U. S. 316, and the
relationship between the defendant and the forum must be such that it is
"reasonable . . . to require the corporation to defend the particular suit which is
brought there," id. at 326 U. S. 317. The Due Process Clause
"does not contemplate that a state may make binding a judgment in personam
against an individual or corporate defendant with which the state has no contacts,
ties, or relations."
Id. at 326 U. S. 319. Pp. 444 U. S. 291-294.
(b) Here, there is a total absence in the record of those affiliating circumstances that
are a necessary predicate to any exercise of state court jurisdiction. Petitioners carry
on no activity whatsoever in Oklahoma; they close no sales and perform no services
there, avail
Page 444 U. S. 287
themselves of none of the benefits of Oklahoma law, and solicit no business there
either through salespersons or through advertising reasonably calculated to reach
that State. Nor does the record show that they regularly sell cars to Oklahoma
residents, or that they indirectly, through others, serve or seek to serve the Oklahoma
market. Although it is foreseeable that automobiles sold by petitioners would travel to
Oklahoma and that the automobile here might cause injury in Oklahoma,
"foreseeability" alone is not a sufficient benchmark for personal jurisdiction under the
Due Process Clause. The foreseeability that is critical to due process analysis is not
the mere likelihood that a product will find its way into the forum State, but rather is
that the defendant's conduct and connection with the forum are such that he should
reasonably anticipate being haled into court there. Nor can jurisdiction be supported
CONFLICT OF LAWS 3D 1/08-09 Page 60 of 97
on the theory that petitioners earn substantial revenue from goods used in
Oklahoma. Pp. 444 U. S. 295-299.
585 P.2d 351, reversed.
WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and
STEWART, POWELL, REHNQUIST, and STEVENS, JJ., joined. BRENNAN, J.,
filed a dissenting opinion, post, p. 444 U. S. 299. MARSHALL, J., filed a dissenting
opinion, in which BLACKMUN, J., joined, post, p. 444 U. S. 313. BLACKMUN, J.,
filed a dissenting opinion, post, p. 444 U. S. 317.
MR. JUSTICE WHITE delivered the opinion of the Court.
The issue before us is whether, consistently with the Due Process Clause of the
Fourteenth Amendment, an Oklahoma court may exercise in personam jurisdiction
over a nonresident automobile retailer and its wholesale distributor in a products
liability action, when the defendants' only connection with Oklahoma is the fact that
an automobile sold in New York to New York residents became involved in an
accident in Oklahoma.
Page 444 U. S. 288
I
Respondents Harry and Kay Robinson purchased a new Audi automobile from
petitioner Seaway Volkswagen, Inc. (Seaway), in Massena, N.Y. in 1976. The
following year, the Robinson family, who resided in New York, left that State for a
new home in Arizona. As they passed through the State of Oklahoma, another car
struck their Audi in the rear, causing a fire which severely burned Kay Robinson and
her two children. [Footnote 1]
The Robinsons [Footnote 2] subsequently brought a products liability action in the
District Court for Creek County, Okla., claiming that their injuries resulted from
defective design and placement of the Audi's gas tank and fuel system. They joined
as defendants the automobile's manufacturer, Audi NSU Auto Union
Aktiengesellschaft (Audi); its importer, Volkswagen of America, Inc. (Volkswagen);
its regional distributor, petitioner World-Wide Volkswagen Corp. (World-Wide); and
its retail dealer, petitioner Seaway. Seaway and World-Wide entered special
appearances, [Footnote 3] claiming that Oklahoma's exercise of jurisdiction over
them would offend the limitations on the State's jurisdiction imposed by the Due
Process Clause of the Fourteenth Amendment. [Footnote 4]
The facts presented to the District Court showed that World-Wide is incorporated
and has its business office in New
Page 444 U. S. 289
York. It distributes vehicles, parts, and accessories, under contract with
Volkswagen, to retail dealers in New York, New Jersey, and Connecticut. Seaway,
one of these retail dealers, is incorporated and has its place of business in New
York. Insofar as the record reveals, Seaway and World-Wide are fully independent
Atty. Jose A. Bernas
corporations whose relations with each other and with Volkswagen and Audi are
contractual only. Respondents adduced no evidence that either World-Wide or
Seaway does any business in Oklahoma, ships or sells any products to or in that
State, has an agent to receive process there, or purchases advertisements in any
media calculated to reach Oklahoma. In fact, as respondents' counsel conceded at
oral argument, Tr. of Oral Arg 32, there was no showing that any automobile sold by
World-Wide or Seaway has ever entered Oklahoma, with the single exception of the
vehicle involved in the present case.
Despite the apparent paucity of contacts between petitioners and Oklahoma, the
District Court rejected their constitutional claim and reaffirmed that ruling in denying
petitioners' motion for reconsideration. [Footnote 5] Petitioners then sought a writ of
prohibition in the Supreme Court of Oklahoma to restrain the District Judge,
respondent Charles S. Woodson, from exercising in personam jurisdiction over them.
They renewed their contention that, because they had no "minimal contacts," App. 32,
with the State of Oklahoma, the actions of the District Judge were in violation of their
rights under the Due Process Clause.
The Supreme Court of Oklahoma denied the writ, 585 P.2d 351 (1978), [Footnote 6]
holding that personal jurisdiction over petitioners was authorized by Oklahoma's
"long-arm" statute,
Page 444 U. S. 290
Okla.Stat., Tit. 12, § 1701.03(a)(4) (1971). [Footnote 7] Although the court noted that
the proper approach was to test jurisdiction against both statutory and constitutional
standards, its analysis did not distinguish these questions, probably because §
1701.03(a)(4) has been interpreted as conferring jurisdiction to the limits permitted by
the United States Constitution. [Footnote 8] The court's rationale was contained in the
following paragraph, 585 P.2d at 354:
"In the case before us, the product being sold and distributed by the petitioners is, by
its very design and purpose, so mobile that petitioners can foresee its possible use in
Oklahoma. This is especially true of the distributor, who has the exclusive right to
distribute such automobile in New York, New Jersey and Connecticut. The evidence
presented below demonstrated that goods sold and distributed by the petitioners were
used in the State of Oklahoma, and, under the facts, we believe it reasonable to infer,
given the retail value of the automobile, that the petitioners derive substantial income
from automobiles which from time to time are used in the State of Oklahoma. This
being the case, we hold that, under the facts presented, the trial court was justified in
concluding
Page 444 U. S. 291
that the petitioners derive substantial revenue from goods used or consumed in this
State."
We granted certiorari, 440 U.S. 907 (1979), to consider an important constitutional
question with respect to state court jurisdiction and to resolve a conflict between the
Supreme Court of Oklahoma and the highest courts of at least four other States.
[Footnote 9] We reverse.
II
CONFLICT OF LAWS 3D 1/08-09 Page 61 of 97
The Due Process Clause of the Fourteenth Amendment limits the power of a state
court to render a valid personal judgment against a nonresident defendant. Kulko v.
California Superior Court, 436 U. S. 84, 436 U. S. 91 (1978). A judgment rendered
in violation of due process is void in the rendering State and is not entitled to full
faith and credit elsewhere. Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 732-733 (1878).
Due process requires that the defendant be given adequate notice of the suit,
Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 313-314 (1950), and
be subject to the personal jurisdiction of the court, International Shoe Co. v.
Washington, 326 U. S. 310 (1945). In the present case, it is not contended that
notice was inadequate; the only question is whether these particular petitioners
were subject to the jurisdiction of the Oklahoma courts.
As has long been settled, and as we reaffirm today, a state court may exercise
personal jurisdiction over a nonresident defendant only so long as there exist
"minimum contacts" between the defendant and the forum State. International Shoe
Co. v. Washington, supra at 326 U. S. 316. The concept of minimum contacts, in
turn, can be seen to perform two related, but
Page 444 U. S. 292
distinguishable, functions. It protects the defendant against the burdens of litigating
in a distant or inconvenient forum. And it acts to ensure that the States, through
their courts, do not reach out beyond the limits imposed on them by their status as
coequal sovereigns in a federal system.
The protection against inconvenient litigation is typically described in terms of
"reasonableness" or "fairness." We have said that the defendant's contacts with the
forum State must be such that maintenance of the suit "does not offend traditional
notions of fair play and substantial justice.'" International Shoe Co. v. Washington,
supra at 326 U. S. 316, quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463
(1940). The relationship between the defendant and the forum must be such that it
is "reasonable . . . to require the corporation to defend the particular suit which is
brought there." 326 U.S. at 326 U. S. 317. Implicit in this emphasis on
reasonableness is the understanding that the burden on the defendant, while
always a primary concern, will in an appropriate case be considered in light of other
relevant factors, including the forum State's interest in adjudicating the dispute, see
McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223 (1957); the
plaintiff's interest in obtaining convenient and effective relief, see Kulko v. California
Superior Court, supra at 436 U. S. 92, at least when that interest is not adequately
protected by the plaintiff's power to choose the forum, cf. Shaffer v. Heitner, 433 U.
S. 186, 433 U. S. 211, n. 37 (1977); the interstate judicial system's interest in
obtaining the most efficient resolution of controversies; and the shared interest of
the several States in furthering fundamental substantive social policies, see Kulko v.
California Superior Court, supra at 436 U. S. 93, 436 U. S. 98.
The limits imposed on state jurisdiction by the Due Process Clause, in its role as a
guarantor against inconvenient litigation, have been substantially relaxed over the
years. As we noted in McGee v. International Life Ins. Co., supra at 355 U. S. 222-
223,
Page 444 U. S. 293
Atty. Jose A. Bernas
this trend is largely attributable to a fundamental transformation in the American
economy:
"Today many commercial transactions touch two or more States, and may involve
parties separated by the full continent. With this increasing nationalization of
commerce has come a great increase in the amount of business conducted by mail
across state lines. At the same time, modern transportation and communication have
made it much less burdensome for a party sued to defend himself in a State where he
engages in economic activity."
The historical developments noted in McGee, of course, have only accelerated in the
generation since that case was decided.
Nevertheless, we have never accepted the proposition that state lines are irrelevant
for jurisdictional purposes, nor could we and remain faithful to the principles of
interstate federalism embodied in the Constitution. The economic interdependence of
the States was foreseen and desired by the Framers. In the Commerce Clause, they
provided that the Nation was to be a common market, a "free trade unit" in which the
States are debarred from acting as separable economic entities. H. P. Hood Sons,
Inc. v. Du Mond, 336 U. S. 525, 336 U. S. 538 (1949). But the Framers also intended
that the States retain many essential attributes of sovereignty, including, in particular,
the sovereign power to try causes in their courts. The sovereignty of each State, in
turn, implied a limitation on the sovereignty of all of its sister States -- a limitation
express or implicit in both the original scheme of the Constitution and the Fourteenth
Amendment.
Hence, even while abandoning the shibboleth that "[t]he authority of every tribunal is
necessarily restricted by the territorial limits of the State in which it is established,"
Pennoyer v. Neff, supra, at 95 U. S. 720, we emphasized that the reasonableness of
asserting jurisdiction over the defendant must be assessed "in the context of our
federal system of government,"
Page 444 U. S. 294
International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 317, and stressed that
the Due Process Clause ensures not only fairness, but also the "orderly
administration of the laws," id. at 326 U. S. 319. As we noted in Hanson v. Denckla,
357 U. S. 235, 357 U. S. 250-251 (1958):
"As technological progress has increased the flow of commerce between the States,
the need for jurisdiction over nonresidents has undergone a similar increase. At the
same time, progress in communications and transportation has made the defense of
a suit in a foreign tribunal less burdensome. In response to these changes, the
requirements for personal jurisdiction over nonresidents have evolved from the rigid
rule of Pennoyer v. Neff, 95 U. S. 714, to the flexible standard of International Shoe
Co. v. Washington, 326 U. S. 310. But it is a mistake to assume that this trend
heralds the eventual demise of all restrictions on the personal jurisdiction of state
courts. [Citation omitted.] Those restrictions are more than a guarantee of immunity
from inconvenient or distant litigation. They are a consequence of territorial limitations
on the power of the respective States."
Thus, the Due Process Clause
"does not contemplate that a state may make binding a judgment in personam
CONFLICT OF LAWS 3D 1/08-09 Page 62 of 97
against an individual or corporate defendant with which the state has no contacts,
ties, or relations."
International Shoe Co. v. Washington, supra at 326 U. S. 319. Even if the defendant
would suffer minimal or no inconvenience from being forced to litigate before the
tribunals of another State; even if the forum State has a strong interest in applying
its law to the controversy; even if the forum State is the most convenient location for
litigation, the Due Process Clause, acting as an instrument of interstate federalism,
may sometimes act to divest the State of its power to render a valid judgment.
Hanson v. Denckla, supra at 357 U. S. 251, 357 U. S. 254.
Page 444 U. S. 295
III
Applying these principles to the case at hand, [Footnote 10] we find in the record
before us a total absence of those affiliating circumstances that are a necessary
predicate to any exercise of state court jurisdiction. Petitioners carry on no activity
whatsoever in Oklahoma. They close no sales and perform no services there. They
avail themselves of none of the privileges and benefits of Oklahoma law. They
solicit no business there either through salespersons or through advertising
reasonably calculated to reach the State. Nor does the record show that they
regularly sell cars at wholesale or retail to Oklahoma customers or residents, or that
they indirectly, through others, serve or seek to serve the Oklahoma market. In
short, respondents seek to base jurisdiction on one, isolated occurrence and
whatever inferences can be drawn therefrom: the fortuitous circumstance that a
single Audi automobile, sold in New York to New York residents, happened to suffer
an accident while passing through Oklahoma.
It is argued, however, that, because an automobile is mobile by its very design and
purpose, it was "foreseeable" that the Robinsons' Audi would cause injury in
Oklahoma. Yet "foreseeability" alone has never been a sufficient benchmark for
personal jurisdiction under the Due Process Clause. In Hanson v. Denckla, supra, it
was no doubt foreseeable that the settlor of a Delaware trust would subsequently
move to Florida and seek to exercise a power of appointment there; yet we held that
Florida courts could not constitutionally
Page 444 U. S. 296
exercise jurisdiction over a Delaware trustee that had no other contacts with the
forum State. In Kulko v. California Superior Court, 436 U. S. 84 (1978), it was surely
"foreseeable" that a divorced wife would move to California from New York, the
domicile of the marriage, and that a minor daughter would live with the mother. Yet
we held that California could not exercise jurisdiction in a child support action over
the former husband, who had remained in New York.
If foreseeability were the criterion, a local California tire retailer could be forced to
defend in Pennsylvania when a blowout occurs there, see Erlanger Mills, Inc. v.
Cohoes Fibre Mills, Inc., 239 F.2d 502, 507 (CA4 1956); a Wisconsin seller of a
defective automobile jack could be haled before a distant court for damage caused
in New Jersey, Reilly v. Phil Tolkan Pontiac, Inc., 372 F.Supp. 1205 (NJ 1974); or a
Atty. Jose A. Bernas
Florida soft-drink concessionaire could be summoned to Alaska to account for injuries
happening there, see Uppgren v. Executive Aviation Services, Inc., 304 F.Supp. 165,
170-171 (Minn.1969). Every seller of chattels would, in effect, appoint the chattel his
agent for service of process. His amenability to suit would travel with the chattel. We
recently abandoned the outworn rule of Harris v. Balk, 198 U. S. 215 (1905), that the
interest of a creditor in a debt could be extinguished or otherwise affected by any
State having transitory jurisdiction over the debtor. Shaffer v. Heitner, 433 U. S. 186
(1977). Having interred the mechanical rule that a creditor's amenability to a quasi in
rem action travels with his debtor, we are unwilling to endorse an analogous principle
in the present case. [Footnote 11]
Page 444 U. S. 297
This is not to say, of course, that foreseeability is wholly irrelevant. But the
foreseeability that is critical to due process analysis is not the mere likelihood that a
product will find its way into the forum State. Rather, it is that the defendant's conduct
and connection with the forum State are such that he should reasonably anticipate
being haled into court there. See Kulko v. California Superior Court, supra at 436 U.
S. 97-98; Shaffer v. Heitner, 433 U.S. at 433 U. S. 216; and see id. at 433 U. S. 217-
219 (STEVENS, J., concurring in judgment). The Due Process Clause, by ensuring
the "orderly administration of the laws," International Shoe Co. v. Washington, 326
U.S. at 326 U. S. 319, gives a degree of predictability to the legal system that allows
potential defendants to structure their primary conduct with some minimum assurance
as to where that conduct will and will not render them liable to suit.
When a corporation "purposefully avails itself of the privilege of conducting activities
within the forum State," Hanson v. Denckla, 357 U.S. at 357 U. S. 253, it has clear
notice that it is subject to suit there, and can act to alleviate the risk of burdensome
litigation by procuring insurance, passing the expected costs on to customers, or, if
the risks are too great, severing its connection with the State. Hence if the sale of a
product of a manufacturer or distributor such as Audi or Volkswagen is not simply an
isolated occurrence, but arises from the efforts of the manufacturer or distributor to
serve, directly or indirectly, the market for its product in other States, it is not
unreasonable to subject it to suit in one of those States if its allegedly defective
merchandise has there been the source of injury to its owner or to others. The forum
State does not
Page 444 U. S. 298
exceed its powers under the Due Process Clause if it asserts personal jurisdiction
over a corporation that delivers its products into the stream of commerce with the
expectation that they will be purchased by consumers in the forum State. Cf. Gray v.
American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961).
But there is no such or similar basis for Oklahoma jurisdiction over World-Wide or
Seaway in this case. Seaway's sales are made in Massena, N. Y. World-Wide's
market, although substantially larger, is limited to dealers in New York, New Jersey,
and Connecticut. There is no evidence of record that any automobiles distributed by
World-Wide are sold to retail customers outside this tristate area. It is foreseeable that
the purchasers of automobiles sold by World-Wide and Seaway may take them to
Oklahoma. But the mere "unilateral activity of those who claim some relationship with
a nonresident defendant cannot satisfy the requirement of contact with the forum
CONFLICT OF LAWS 3D 1/08-09 Page 63 of 97
State." Hanson v. Denckla, supra, at 357 U. S. 253.
In a variant on the previous argument, it is contended that jurisdiction can be
supported by the fact that petitioners earn substantial revenue from goods used in
Oklahoma. The Oklahoma Supreme Court so found, 585 P.2d at 354-355, drawing
the inference that, because one automobile sold by petitioners had been used in
Oklahoma, others might have been used there also. While this inference seems less
than compelling on the facts of the instant case, we need not question the court's
factual findings in order to reject its reasoning.
This argument seems to make the point that the purchase of automobiles in New
York, from which the petitioners earn substantial revenue, would not occur but for
the fact that the automobiles are capable of use in distant States like Oklahoma.
Respondents observe that the very purpose of an automobile is to travel, and that
travel of automobiles sold by petitioners is facilitated by an extensive chain of
Volkswagen service centers throughout the country, including some in Oklahoma.
[Footnote 12]
Page 444 U. S. 299
However, financial benefits accruing to the defendant from a collateral relation to the
forum State will not support jurisdiction if they do not stem from a constitutionally
cognizable contact with that State. See Kulko v. California Superior Court, 436 U.S.
at 436 U. S. 94-95. In our view, whatever marginal revenues petitioners may receive
by virtue of the fact that their products are capable of use in Oklahoma is far too
attenuated a contact to justify that State's exercise of in personam jurisdiction over
them.
Because we find that petitioners have no "contacts, ties, or relations" with the State
of Oklahoma, International Shoe Co. v. Washington, supra, at 326 U. S. 319, the
judgment of the Supreme Court of Oklahoma is
Reversed.
MR. JUSTICE BRENNAN, dissenting. *
The Court holds that the Due Process Clause of the Fourteenth Amendment bars
the States from asserting jurisdiction over the defendants in these two cases. In
each case, the Court so decides because it fails to find the "minimum contacts" that
have been required since International Shoe Co. v. Washington, 326 U. S. 310, 326
U. S. 316 (1945). Because I believe that the Court reads International Shoe and its
progeny too narrowly, and because I believe that the standards enunciated by those
cases may already be obsolete as constitutional boundaries, I dissent.
I
The Court's opinions focus tightly on the existence of contacts between the forum
and the defendant. In so doing, they accord too little weight to the strength of the
forum State's interest in the case, and fail to explore whether there
Page 444 U. S. 300
would be any actual inconvenience to the defendant. The essential inquiry in
Atty. Jose A. Bernas
locating the constitutional limits on state court jurisdiction over absent defendants is
whether the particular exercise of jurisdiction offends "traditional notions of fair play
and substantial justice.'" International Shoe, supra at 326 U. S. 316, quoting Milliken
v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940). The clear focus in International Shoe
was on fairness and reasonableness. Kulko v. California Superior Court, 436 U. S.
84, 436 U. S. 92 (1978). The Court specifically declined to establish a mechanical
test based on the quantum of contacts between a State and the defendant:
"Whether due process is satisfied must depend, rather, upon the quality and nature of
the activity in relation to the fair and orderly administration of the laws which it was
the purpose of the due process clause to insure. That clause does not contemplate
that a state may make binding a judgment in personam against an individual or
corporate defendant with which the state has no contacts, ties, or relations."
326 U.S. at 326 U. S. 319 (emphasis added). The existence of contacts, so long as
there were some, was merely one way of giving content to the determination of
fairness and reasonableness.
Surely International Shoe contemplated that the significance of the contacts
necessary to support jurisdiction would diminish if some other consideration helped
establish that jurisdiction would be fair and reasonable. The interests of the State and
other parties in proceeding with the case in a particular forum are such
considerations. McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223
(1957), for instance, accorded great importance to a State's "manifest interest in
providing effective means of redress" for its citizens. See also Kulko v. California
Superior Court, supra at 436 U. S. 92; Shaffer v. Heitner, 433 U. S. 186, 433 U. S.
208 (1977); Mullane v. Central Hanover Trust Co., 339 U. S. 306, 339 U. S. 313
(1950).
Another consideration is the actual burden a defendant
Page 444 U. S. 301
must bear in defending the suit in the forum. McGee, supra. Because lesser burdens
reduce the unfairness to the defendant, jurisdiction may be justified despite less
significant contacts. The burden, of course, must be of constitutional dimension. Due
process limits on jurisdiction do not protect a defendant from all inconvenience of
travel, McGee, supra at 355 U. S. 224, and it would not be sensible to make the
constitutional rule turn solely on the number of miles the defendant must travel to the
courtroom. [Footnote 2/1] Instead, the constitutionally significant "burden" to be
analyzed relates to the mobility of the defendant's defense. For instance, if having to
travel to a foreign forum would hamper the defense because witnesses or evidence or
the defendant himself were immobile, or if there were a disproportionately large
number of witnesses or amount of evidence that would have to be transported at the
defendant's expense, or if being away from home for the duration of the trial would
work some special hardship on the defendant, then the Constitution would require
special consideration for the defendant's interests.
That considerations other than contacts between the forum and the defendant are
relevant necessarily means that the Constitution does not require that trial be held in
the State which has the "best contacts" with the defendant. See Shaffer v. Heitner,
supra at 433 U. S. 228 (BRENNAN, J., dissenting). The defendant has no
constitutional entitlement to the best forum or, for that matter, to any particular forum.
Under even the most restrictive view of International Shoe, several States could have
CONFLICT OF LAWS 3D 1/08-09 Page 64 of 97
jurisdiction over a particular cause of action. We need only determine whether the
forum States in these cases satisfy the constitutional minimum. [Footnote 2/2]
Page 444 U. S. 302
II
In each of these cases, I would find that the forum State has an interest in permitting
the litigation to go forward, the litigation is connected to the forum, the defendant is
linked to the forum, and the burden of defending is not unreasonable. Accordingly, I
would hold that it is neither unfair nor unreasonable to require these defendants to
defend in the forum State.
A
In No. 78-952, a number of considerations suggest that Minnesota is an interested
and convenient forum. The action was filed by a bona fide resident of the forum.
[Footnote 2/3] Consequently, Minnesota's interests are similar to, even if lesser
than, the interests of California in McGee, supra, "in providing a forum for its
residents and in regulating the activities of insurance companies" doing business in
the State. [Footnote 2/4] Post at 444 U. S. 332. Moreover, Minnesota has
"attempted to assert [its] particularized interest in trying such cases in its courts
by . . . enacting a special jurisdictional statute." Kulko, supra at 436 U. S. 98;
McGee, supra at 355 U. S. 221, 355 U. S. 224. As in McGee, a resident forced to
travel to a distant State to prosecute an action
Page 444 U. S. 303
against someone who has injured him could, for lack of funds, be entirely unable to
bring the cause of action. The plaintiff's residence in the State makes the State one
of a very few convenient fora for a personal injury case (the others usually being the
defendant's home State and the State where the accident occurred). [Footnote 2/5]
In addition, the burden on the defendant is slight. As Judge Friendly has recognized,
Shaffer emphasizes the importance of identifying the real impact of the lawsuit.
O'Connor v. Lee-Hy Paving Corp., 579 F.2d 194, 00 (CA2 1978) (upholding the
constitutionality of jurisdiction in a very similar case under New York's law after
Shaffer). Here the real impact is on the defendant's insurer, which is concededly
amenable to suit in the forum State. The defendant is carefully protected from
financial liability because the action limits the prayer for damages to the insurance
policy's liability limit. [Footnote 2/6] The insurer will handle the case for the
defendant. The defendant is only a nominal party who need be no more active in the
case than the cooperation clause of his policy requires. Because of the ease of
airline transportation, he need not lose significantly more time than if the case were
at home. Consequently, if the suit went forward
Page 444 U. S. 304
in Minnesota, the defendant would bear almost no burden or expense beyond what
he would face if the suit were in his home State. The real impact on the named
Atty. Jose A. Bernas
defendant is the same as it is in a direct action against the insurer, which would be
constitutionally permissible. Watson v. Employers Liability Assurance Corp., 348 U. S.
66 (1954); Minichiello v. Rosenberg, 410 F.2d 106, 109-110 (CA2 1968). The only
distinction is the formal, "analytica[l] prerequisite," post at 444 U. S. 331, of making
the insured a named party. Surely the mere addition of appellant's name to the
complaint does not suffice to create a due process violation. [Footnote 2/7]
Finally, even were the relevant inquiry whether there are sufficient contacts between
the forum and the named defendant, I would find that such contacts exist. The
insurer's presence in Minnesota is an advantage to the defendant that may well have
been a consideration in his selecting the policy he did. An insurer with offices in many
States makes it easier for the insured to make claims or conduct other business that
may become necessary while traveling. It is simply not true that "State Farm's
decision to do business in Minnesota was completely adventitious as far as Rush was
concerned." Post at 444 U. S. 328-329. By buying a State Farm policy, the defendant
availed himself of the benefits he might derive from having an insurance agent in
Minnesota who could, among other things, facilitate a suit for appellant against a
Minnesota resident. It seems unreasonable to read the Constitution as permitting one
to take advantage of his nationwide insurance network but not to be burdened by it.
In sum, I would hold that appellant is not deprived of due process by being required to
submit to trial in Minnesota, first because Minnesota has a sufficient interest in and
connection
Page 444 U. S. 305
to this litigation and to the real and nominal defendants, and second because the
burden on the nominal defendant is sufficiently slight.
B goods predictably are used in the forum State. [Footnote 2/12]
In No. 78-1078, the interest of the forum State and its connection to the litigation is
strong. The automobile accident underlying the litigation occurred in Oklahoma. The
plaintiffs were hospitalized in Oklahoma when they brought suit. Essential witnesses
and evidence were in Oklahoma. See Shaffer v. Heitner, 433 U.S. at 433 U. S. 208.
The State has a legitimate interest in enforcing its laws designed to keep its highway
system safe, and the trial can proceed at least as efficiently in Oklahoma as
anywhere else.
The petitioners are not unconnected with the forum. Although both sell automobiles
within limited sales territories, each sold the automobile which, in fact, was driven to
Oklahoma, where it was involved in an accident. [Footnote 2/8] It may be true, as the
Court suggests, that each sincerely intended to limit its commercial impact to the
limited territory, and that each intended to accept the benefits and protection of the
laws only of those States within the territory. But obviously these were unrealistic
hopes that cannot be treated as an automatic constitutional shield. [Footnote 2/9]
Page 444 U. S. 306
An automobile simply is not a stationary item or one designed to be used in one
place. An automobile is intended to be moved around. Someone in the business of
selling large numbers of automobiles can hardly plead ignorance of their mobility, or
pretend that the automobiles stay put after they are sold. It is not merely that a dealer
CONFLICT OF LAWS 3D 1/08-09 Page 65 of 97
in automobiles foresees that they will move. Ante at 444 U. S. 295. The dealer
actually intends that the purchasers will use the automobiles to travel to distant
States where the dealer does not directly "do business." The sale of an automobile
does purposefully inject the vehicle into the stream of interstate commerce so that it
can travel to distant States. See Kulko, 436 U.S. at 436 U. S. 94; Hanson v.
Denckla, 357 U. S. 235, 357 U. S. 253 (1958).
This case is similar to Ohio v. Wyandotte Chemicals Corp., 401 U. S. 493 (1971).
There we indicated, in the course of denying leave to file an original jurisdiction
case, that corporations having no direct contact with Ohio could constitutionally be
brought to trial in Ohio because they dumped pollutants into streams outside Ohio's
limits which ultimately, through the action of the water, reached Lake Erie and
affected Ohio. No corporate acts, only their consequences, occurred in Ohio. The
stream of commerce is just as natural a force as a stream of water, and it was
equally predictable that the cars petitioners released would reach distant states.
[Footnote 2/10]
The Court accepts that a State may exercise jurisdiction over a distributor which
"serves" that State "indirectly" by "deliver[ing] its products into the stream of
commerce with the expectation that they will be purchased by consumers in the
forum State." Ante at 444 U. S. 297-298. It is difficult to see why the Constitution
should distinguish between a case involving
Page 444 U. S. 307
goods which reach a distant State through a chain of distribution and a case
involving goods which reach the same State because a consumer, using them as
the dealer knew the customer would, took them there. [Footnote 2/11] In each case,
the seller purposefully injects the goods into the stream of commerce, and those
Furthermore, an automobile seller derives substantial benefits from States other
than its own. A large part of the value of automobiles is the extensive, nationwide
network of highways. Significant portions of that network have been constructed by,
and are maintained by, the individual States, including Oklahoma. The States,
through their highway programs, contribute in a very direct and important way to the
value of petitioners' businesses. Additionally, a network of other related dealerships
with their service departments operates throughout the country under the protection
of the laws of the various States, including Oklahoma, and enhances the value of
petitioners' businesses by facilitating their customers' traveling.
Thus, the Court errs in its conclusion, ante at 444 U. S. 299 (emphasis added), that
"petitioners have no contacts, ties, or relations'" with Oklahoma. There obviously
are contacts, and, given Oklahoma's connection to the litigation, the contacts are
sufficiently significant to make it fair and reasonable for the petitioners to submit to
Oklahoma's jurisdiction.
III
It may be that affirmance of the judgments in these cases would approach the outer
limits of International Shoe's jurisdictional
Atty. Jose A. Bernas
Page 444 U. S. 308
principle. But that principle, with its almost exclusive focus on the rights of
defendants, may be outdated. As MR. JUSTICE MARSHALL wrote in Shaffer v.
Heitner, 433 U.S. at 433 U. S. 212:
"'[T]raditional notions of fair play and substantial justice' can be as readily offended by
the perpetuation of ancient forms that are no longer justified as by the adoption of
new procedures. . . ."
International Shoe inherited its defendant focus from Pennoyer v. Neff, 95 U. S. 714
(1878), and represented the last major step this Court has taken in the long process
of liberalizing the doctrine of personal jurisdiction. Though its flexible approach
represented a major advance, the structure of our society has changed in many
significant ways since International Shoe was decided in 1945. Mr. Justice Black,
writing for the Court in McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S.
222 (1957), recognized that "a trend is clearly discernible toward expanding the
permissible scope of state jurisdiction over foreign corporations and other
nonresidents." He explained the trend as follows:
"In part, this is attributable to the fundamental transformation of our national economy
over the years. Today, many commercial transactions touch two or more States, and
may involve parties separated by the full continent. With this increasing
nationalization of commerce has come a great increase in the amount of business
conducted by mail across state lines. At the same time, modern transportation and
communication have made it much less burdensome for a party sued to defend
himself in a State where he engages in economic activity."
Id. at 355 U. S. 222-223. As the Court acknowledges, ante at 444 U. S. 292-293, both
the nationalization of commerce and the ease of transportation and communication
have accelerated in the generation since 1957. [Footnote 2/13]
Page 444 U. S. 309
The model of society on which the International Shoe Court based its opinion is no
longer accurate. Business people, no matter how local their businesses, cannot
assume that goods remain in the business' locality. Customers and goods can be
anywhere else in the country, usually in a matter of hours and always in a matter of a
very few days.
In answering the question whether or not it is fair and reasonable to allow a particular
forum to hold a trial binding on a particular defendant, the interests of the forum State
and other parties loom large in today's world, and surely are entitled to as much
weight as are the interests of the defendant. The "orderly administration of the laws"
provides a firm basis for according some protection to the interests of plaintiffs and
States as well as of defendants. [Footnote 2/14] Certainly, I cannot see how a
defendant's right to due process is violated if the defendant suffers no inconvenience.
See ante at 444 U. S. 294.
The conclusion I draw is that constitutional concepts of fairness no longer require the
extreme concern for defendants that was once necessary. Rather, as I wrote in
dissent from Shaffer v. Heitner, supra, at 433 U. S. 220 (emphasis added), minimum
Page 444 U. S. 310
CONFLICT OF LAWS 3D 1/08-09
contacts must exist "among the parties, the contested transaction, and the forum
State." [Footnote 2/15] The contacts between any two of these should not be
determinative.
"[W]hen a suitor seeks to lodge a suit in a State with a substantial interest in seeing
its own law applied to the transaction in question, we could wisely act to minimize
conflicts, confusion, and uncertainty by adopting a liberal view of jurisdiction, unless
considerations of fairness or efficiency strongly point in the opposite direction.
[Footnote 2/16]"
433 U.S. at 433 U. S. 225-226. Mr. Justice Black, dissenting in Hanson v. Denckla,
357 U.S. at 357 U. S. 258-250, expressed similar concerns by suggesting that a
State should have jurisdiction over a case growing out of a transaction significantly
related to that State
"unless litigation there would impose such a heavy and disproportionate burden on
a nonresident defendant that it would offend what this Court has referred to as
'traditional notions of fair play and substantial justice.' [Footnote 2/17]"
Assuming
Page 444 U. S. 311
that a State gives a nonresident defendant adequate notice and opportunity to
defend, I do not think the Due Process Clause is offended merely because the
defendant has to board a plane to get to the site of the trial.
The Court's opinion in No. 78-1078 suggests that the defendant ought to be subject
to a State's jurisdiction only if he has contacts with the State "such that he should
reasonably anticipate being haled into court there." [Footnote 2/18] Ante at 444 U.
S. 297. There is nothing unreasonable or unfair, however, about recognizing
commercial reality. Given the tremendous mobility of goods and people, and the
inability of businessmen to control where goods are taken by customers (or
retailers), I do not think that the defendant should be in complete control of the
geographical stretch of his amenability to suit. Jurisdiction is no longer premised on
the notion that nonresident defendants have somehow impliedly consented to suit.
People should understand that they are held responsible for the consequences of
their actions, and that, in our society, most actions have consequences affecting
many States. When an action in fact causes injury in another State, the actor should
be prepared to answer for it there unless defending in that State would be unfair for
some reason other than that a state boundary must be crossed. [Footnote 2/19]
In effect, the Court is allowing defendants to assert the sovereign
Page 444 U. S. 312
rights of their home States. The expressed fear is that, otherwise, all limits on
personal jurisdiction would disappear. But the argument's premise is wrong. I would
not abolish limits on jurisdiction or strip state boundaries of all significance, see
Hanson, supra at 357 U. S. 260 (Black, J., dissenting); I would still require the
plaintiff to demonstrate sufficient contacts among the parties, the forum, and the
litigation to make the forum a reasonable State in which to hold the trial. [Footnote
2/20]
I would also, however, strip the defendant of an unjustified veto power over certain
Page 66 of 97 Atty. Jose A. Bernas
very appropriate fora -- a power the defendant justifiably enjoyed long ago when
communication and travel over long distances were slow and unpredictable and when
notions of state sovereignty were impractical and exaggerated. But I repeat that that
is not today's world. If a plaintiff can show that his chosen forum State has a sufficient
interest in the litigation (or sufficient contacts with the defendant), then the defendant
who cannot show some real injury to a constitutionally protected interest, see
O'Connor v. Lee-Hy Paving Corp., 579 F.2d 201, should have no constitutional
excuse not to appear. [Footnote 2/21]
The plaintiffs in each of these cases brought suit in a forum with which they had
significant contacts and which had significant contacts with the litigation. I am not
convinced that the defendants would suffer any "heavy and disproportionate burden"
in defending the suits. Accordingly, I would hold
Page 444 U. S. 313
that the Constitution should not shield the defendants from appearing and defending
in the plaintiffs' chosen fora.
* [This opinion applies also to No. 7952, Rush et al. v. Savchuk, post, p. 444 U. S.
320]
MR. JUSTICE MARSHALL, with whom MR. JUSTICE BLACKMUN joins, dissenting.
For over 30 years, the standard by which to measure the constitutionally permissible
reach of state court jurisdiction has been well established:
"[D]ue process requires only that in order to subject a defendant to a judgment in
personam, if he be not present within the territory of the forum, he have certain
minimum contacts with it such that the maintenance of the suit does not offend
'traditional notions of fair play and substantial justice.'"
International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945), quoting
Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940).
The corollary, that the Due Process Clause forbids the assertion of jurisdiction over a
defendant "with which the state has no contacts, ties, or relations," 326 U.S. at 326 U.
S. 319, is equally clear. The concepts of fairness and substantial justice as applied to
an evaluation of "the quality and nature of the [defendant's] activity," ibid., are not
readily susceptible of further definition, however, and it is not surprising that the
constitutional standard is easier to state than to apply.
This is a difficult case, and reasonable minds may differ as to whether respondents
have alleged a sufficient "relationship among the defendant[s], the forum, and the
litigation," Shaffer v. Heitner, 433 U. S. 186, 433 U. S. 204 (1977), to satisfy the
requirements of International Shoe. I am concerned, however, that the majority has
reached its result by taking an unnecessarily narrow view of petitioners' forum-related
conduct. The majority asserts that
"respondents seek to base jurisdiction on one, isolated occurrence and whatever
inferences can be drawn therefrom: the fortuitous circumstance that a single Audi
automobile, sold in New York to New York
Page 444 U. S. 314
residents, happened to suffer an accident while passing through Oklahoma."
CONFLICT OF LAWS 3D 1/08-09 Page 67 of 97
Ante at 444 U. S. 295. If that were the case, I would readily agree that the minimum
contacts necessary to sustain jurisdiction are not present. But the basis for the
assertion of jurisdiction is not the happenstance that an individual over whom
petitioners had no control made a unilateral decision to take a chattel with him to a
distant State. Rather, jurisdiction is premised on the deliberate and purposeful
actions of the defendants themselves in choosing to become part of a nationwide,
indeed a global, network for marketing and servicing automobiles.
Petitioners are sellers of a product whose utility derives from its mobility. The unique
importance of the automobile in today's society, which is discussed in MR. JUSTICE
BLACKMUN's dissenting opinion, post at 444 U. S. 318, needs no further
elaboration. Petitioners know that their customers buy cars not only to make short
trips, but also to travel long distances. In fact, the nationwide service network with
which they are affiliated was designed to facilitate and encourage such travel.
Seaway would be unlikely to sell many cars if authorized service were available only
in Massena, N.Y. Moreover, local dealers normally derive a substantial portion of
their revenues from their service operations, and thereby obtain a further economic
benefit from the opportunity to service cars which were sold in other States. It is
apparent that petitioners have not attempted to minimize the chance that their
activities will have effects in other States; on the contrary, they have chosen to do
business in a way that increases that chance, because it is to their economic
advantage to do so.
To be sure, petitioners could not know in advance that this particular automobile
would be driven to Oklahoma. They must have anticipated, however, that a
substantial portion of the cars they sold would travel out of New York. Seaway, a
local dealer in the second most populous State, and World-Wide,
Page 444 U. S. 315
one of only seven regional Audi distributors in the entire country, see Brief for
Respondents 2, would scarcely have been surprised to learn that a car sold by then
had been driven in Oklahoma on Interstate 44, a heavily traveled transcontinental
highway. In the case of the distributor, in particular, the probability that some of the
cars it sells will be driven in every one of the contiguous States must amount to a
virtual certainty. This knowledge should alert a reasonable businessman to the
likelihood that a defect in the product might manifest itself in the forum State -- not
because of some unpredictable, aberrant, unilateral action by a single buyer, but in
the normal course of the operation of the vehicles for their intended purpose.
It is misleading for the majority to characterize the argument in favor of jurisdiction
as one of "foreseeability' alone." Ante at 444 U. S. 295. As economic entities,
petitioners reach out from New York, knowingly causing effects in other States and
receiving economic advantage both from the ability to cause such effects
themselves and from the activities of dealers and distributors in other States. While
they did not receive revenue from making direct sales in Oklahoma, they
intentionally became part of an interstate economic network, which included
dealerships in Oklahoma, for pecuniary gain. In light of this purposeful conduct, I do
not believe it can be said that petitioners "had no reason to expect to be haled
before a[n Oklahoma] court." Shaffer v. Heitner, supra at 433 U. S. 216; see ante at
444 U. S. 297, and Kulko v. California Superior Court, 436 U. S. 84, 436 U. S. 97-98
(1978).
Atty. Jose A. Bernas
The majority apparently acknowledges that, if a product is purchased in the forum
State by a consumer, that State may assert jurisdiction over everyone in the chain of
distribution. See ante at 444 U. S. 297-298. With this I agree. But I cannot agree that
jurisdiction is necessarily lacking if the product enters the State not through the
channels of distribution but in the course of its intended use by the consumer. We
have recognized
Page 444 U. S. 316
the role played by the automobile in the expansion of our notions of personal
jurisdiction. See Shaffer v. Heitner, supra at 433 U. S. 204; Hess v. Pawloski, 274 U.
S. 352 (1927). Unlike most other chattels, which may find their way into States far
from where they were purchased because their owner takes them there, the intended
use of the automobile is precisely as a means of traveling from one place to another.
In such a case, it is highly artificial to restrict the concept of the "stream of commerce"
to the chain of distribution from the manufacturer to the ultimate consumer.
I sympathize with the majority's concern that persons ought to be able to structure
their conduct so as not to be subject to suit in distant forums. But that may not always
be possible. Some activities, by their very nature, may foreclose the option of
conducting them in such a way as to avoid subjecting oneself to jurisdiction in multiple
forums. This is by no means to say that all sellers of automobiles should be subject to
suit everywhere; but a distributor of automobiles to a multistate market and a local
automobile dealer who makes himself part of a nationwide network of dealerships can
fairly expect that the cars they sell may cause injury in distant States and that they
may be called on to defend a resulting lawsuit there.
In light of the quality and nature of petitioners' activity, the majority's reliance on Kulko
v. California Superior Court, supra, is misplaced. Kulko involved the assertion of state
court jurisdiction over a nonresident individual in connection with an action to modify
his child custody rights and support obligations. His only contact with the forum State
was that he gave his minor child permission to live there with her mother. In holding
that the exercise of jurisdiction violated the Due Process Clause, we emphasized that
the cause of action, as well as the defendant's actions in relation to the forum State,
arose "not from the defendant's commercial transactions in interstate commerce, but
rather from his personal,
Page 444 U. S. 317
domestic relations," 436 U.S. at 436 U. S. 97 (emphasis supplied), contrasting Kulko's
actions with those of the insurance company in McGee v. International Life Ins. Co.,
355 U. S. 220 (1957), which were undertaken for commercial benefit.*
Manifestly, the "quality and nature" of commercial activity is different, for purposes of
the International Shoe test, from actions from which a defendant obtains no economic
advantage. Commercial activity is more likely to cause effects in a larger sphere, and
the actor derives an economic benefit from the activity that makes it fair to require him
to answer for his conduct where its effects are felt. The profits may be used to pay the
costs of suit, and, knowing that the activity is likely to have effects in other States, the
defendant can readily insure against the costs of those effects, thereby sparing
himself much of the inconvenience of defending in a distant forum.
Of course, the Constitution forbids the exercise of jurisdiction if the defendant had no
judicially cognizable contacts with the forum. But as the majority acknowledges, if
CONFLICT OF LAWS 3D 1/08-09 Page 68 of 97
such contacts are present, the jurisdictional inquiry requires a balancing of various
interests and policies. See ante at 444 U. S. 292; Rush v. Savchuk, post at 444 U.
S. 332. I believe such contacts are to be found here, and that, considering all of the
interests and policies at stake, requiring petitioners to defend this action in
Oklahoma is not beyond the bounds of the Constitution. Accordingly, I dissent.
* Similarly, I believe the Court in Hanson v. Denckla, 357 U. S. 235 (1958), was
influenced by the fact that trust administration has traditionally been considered a
peculiarly local activity.
MR JUSTICE BLACKMUN, dissenting.
I confess that I am somewhat puzzled why the plaintiffs in this litigation are so
insistent that the regional distributor and the retail dealer, the petitioners here, who
handled the ill-fated Audi automobile involved in this litigation, be named
defendants. It would appear that the manufacturer and the
Page 444 U. S. 318
importer, whose subjectability to Oklahoma jurisdiction is not challenged before this
Court, ought not to be judgment-proof. It may, of course, ultimately amount to a
contest between insurance companies that, once begun, is not easily brought to a
termination. Having made this much of an observation, I pursue it no further.
For me, a critical factor in the disposition of the litigation is the nature of the
instrumentality under consideration. It has been said that we are a nation on wheels.
What we are concerned with here is the automobile and its peripatetic character.
One need only examine our national network of interstate highways, or make an
appearance on one of them, or observe the variety of license plates present not only
on those highways but in any metropolitan area, to realize that any automobile is
likely to wander far from its place of licensure or from its place of distribution and
retail sale. Miles per gallon on the highway (as well as in the city) and mileage per
tankful are familiar allegations in manufacturers' advertisements today. To expect
that any new automobile will remain in the vicinity of its retail sale -- like the 1914
electric car driven by the proverbial "little old lady" -- is to blink at reality. The
automobile is intended for distance, as well as for transportation within a limited
area.
It therefore seems to me not unreasonable -- and certainly not unconstitutional and
beyond the reach of the principles laid down in International Shoe Co. v.
Washington, 326 U. S. 310 (1945), and its progeny -- to uphold Oklahoma
jurisdiction over this New York distributor and this New York dealer when the
accident happened in Oklahoma. I see nothing more unfair for them than for the
manufacturer and the importer. All are in the business of providing vehicles that
spread out over the highways of our several States. It is not too much to anticipate,
at the time of distribution and at the time of retail sale, that this Audi would be in
Oklahoma. Moreover, in assessing "minimum contacts," foreseeable use in another
State seems to me to be little different from foreseeable resale
Page 444 U. S. 319
in another State: yet the Court declares this distinction determinative. Ante at 444 U.
S. 297-299.
MR. JUSTICE BRENNAN points out in his dissent, ante at 444 U. S. 307, that an
Atty. Jose A. Bernas
automobile dealer derives substantial benefits from States other than its own. The
same is true of the regional distributor. Oklahoma does its best to provide safe roads.
Its police investigate accidents. It regulates driving within the State. It provides aid to
the victim, and thereby, it is hoped, lessens damages. Accident reports are prepared
and made available. All this contributes to and enhances the business of those
engaged professionally in the distribution and sale of automobiles. All this also may
benefit defendants in the very lawsuits over which the State asserts jurisdiction.
My position need not now take me beyond the automobile and the professional who
does business by way of distributing and retailing automobiles. Cases concerning
other instrumentalities will be dealt with as they arise, and in their own contexts.
I would affirm the judgment of the Supreme Court of Oklahoma. Because the Court
reverses that judgment, it will now be about parsing every variant in the myriad of
motor vehicle fact situations that present themselves. Some will justify jurisdiction and
others will not. All will depend on the "contact" that the Court sees fit to perceive in
the individual case.

CONFLICT OF LAWS 3D 1/08-09 Page 69 of 97 Atty. Jose A. Bernas

CALDER V. JONES, 465 U.S. 783 (1984)
Respondent, a professional entertainer who lives and works in California and whose
television career was centered there, brought suit in California Superior Court,
claiming that she had been libeled in an article written and edited by petitioners in
Florida and published in the National Enquirer, a national magazine having its largest
circulation in California. Petitioners, both residents of Florida, were served with
process by mail in Florida, and, on special appearances, moved to quash the service
of process for lack of personal jurisdiction. The Superior Court granted the motion on
the ground that First Amendment concerns weighed against an assertion of
jurisdiction otherwise proper under the Due Process Clause of the Fourteenth
Amendment. The California Court of Appeal reversed, holding that a valid basis for
jurisdiction existed on the theory that petitioners intended to, and did, cause tortious
injury to respondent in California.
Held:
1. Jurisdiction by appeal does not lie in this Court, but under 28 U.S.C. 2103 the
jurisdictional statement will be treated as a petition for certiorari, which is hereby
granted. Pp. 787-788.
2. Jurisdiction over petitioners in California is proper because of their intentional
conduct in Florida allegedly calculated to cause injury to respondent in California. Pp.
788-791.
(a) The Due Process Clause permits personal jurisdiction over a defendant in any
State with which the defendant has "certain minimum contacts . . . such that the
maintenance of the suit does not offend `traditional notions of fair play and substantial
justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 . In judging
minimum contacts, a court properly focuses on "the relationship among the
defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U.S. 186, 204 . P.
788.
(b) Here, California is the focal point both of the allegedly libelous article and of the
harm suffered. Jurisdiction over petitioners is therefore proper in California based on
the "effects" of their Florida conduct in California. Pp. 788-789.
(c) Petitioners are not charged with mere untargeted negligence, but rather their
intentional, and allegedly tortious, actions were expressly aimed at California. They
wrote and edited an article that they [465 U.S. 783, 784] knew would have a
potentially devastating impact upon respondent, and they knew that the brunt of that
injury would be felt by respondent in the State in which she lives and works and in
which the magazine has its largest circulation. Under these circumstances, petitioners
must "reasonably anticipate being haled into court there" to answer for the truth of the
CONFLICT OF LAWS 3D 1/08-09 Page 70 of 97
statements made in the article. Pp. 789-790.
(d) While petitioners' contacts with California are not to be judged according to their
employer's activities there, their status as employees does not insulate them from
jurisdiction, since each defendant's contact with the forum State must be assessed
individually. P. 790.
(e) First Amendment concerns do not enter into the jurisdictional analysis. Such
concerns would needlessly complicate an already imprecise inquiry. Moreover, the
potential chill on protected First Amendment activity stemming from defamation
actions is already taken into account in the constitutional limitations on the
substantive law governing such actions. Pp. 790-791.
138 Cal. App. 3d 128, 187 Cal. Rptr. 825, affirmed.
REHNQUIST, J., delivered the opinion for a unanimous Court.
John G. Kester argued the cause for petitioners. With him on the briefs was Aubrey
M. Daniel III.
Paul S. Ablon argued the cause for respondent. With him on the brief were Stephen
S. Monroe and Richard P. Towne. *
[ Footnote * ] Briefs of amici curiae urging reversal were filed for the Association of
American Publishers, Inc., by R. Bruce Rich; for the Authors League of America,
Inc., by Irwin Karp; and for the Reporters Committee for Freedom of the Press et al.
by George R. Clark, Peter C. Gould, Barry D. Umansky, Harvey Lipton, Robert C.
Lobdell, W. Terry Maguire, Robert D. Sack, Bruce W. Sanford, J. Laurent Scharff,
and Richard M. Schmidt, Jr.
JUSTICE REHNQUIST delivered the opinion of the Court.
Respondent Shirley Jones brought suit in California Superior Court claiming that
she had been libeled in an article written and edited by petitioners in Florida. The
article was published in a national magazine with a large circulation in California.
Petitioners were served with process by mail in Florida and caused special
appearances to be entered on their behalf, moving to quash the service of process
for lack of personal [465 U.S. 783, 785] jurisdiction. The Superior Court granted
the motion on the ground that First Amendment concerns weighed against an
assertion of jurisdiction otherwise proper under the Due Process Clause. The
California Court of Appeal reversed, rejecting the suggestion that First Amendment
considerations enter into the jurisdictional analysis. We now affirm.
Respondent lives and works in California. She and her husband brought this suit
against the National Enquirer, Inc., its local distributing company, and petitioners for
libel, invasion of privacy, and intentional infliction of emotional harm. 1 The Enquirer
is a Florida corporation with its principal place of business in Florida. It publishes a
national weekly newspaper with a total circulation of over 5 million. About 600,000
of those copies, almost twice the level of the next highest State, are sold in
Atty. Jose A. Bernas
California. 2 Respondent's and her husband's claims were based on an article that
appeared in the Enquirer's October 9, 1979, issue. Both the Enquirer and the
distributing company answered the complaint and made no objection to the
jurisdiction of the California court.
Petitioner South is a reporter employed by the Enquirer. He is a resident of Florida,
though he frequently travels to California on business. 3 South wrote the first draft of
the challenged article, and his byline appeared on it. He did most of his research in
Florida, relying on phone calls to sources in California for the information contained in
the article. 4 Shortly before publication, South called respondent's [465 U.S. 783, 786]
home and read to her husband a draft of the article so as to elicit his comments
upon it. Aside from his frequent trips and phone calls, South has no other relevant
contacts with California.
Petitioner Calder is also a Florida resident. He has been to California only twice -
once, on a pleasure trip, prior to the publication of the article and once after to testify
in an unrelated trial. Calder is president and editor of the Enquirer. He "oversee[s] just
about every function of the Enquirer." App. 24. He reviewed and approved the initial
evaluation of the subject of the article and edited it in its final form. He also declined
to print a retraction requested by respondent. Calder has no other relevant contacts
with California.
In considering petitioners' motion to quash service of process, the Superior Court
surmised that the actions of petitioners in Florida, causing injury to respondent in
California, would ordinarily be sufficient to support an assertion of jurisdiction over
them in California. 5 But the court felt that special solicitude was necessary because
of the potential "chilling effect" on reporters and editors which would result from
requiring them to appear in remote jurisdictions to answer for the content of articles
upon which they worked. The court also noted that respondent's rights could be "fully
satisfied" in her suit against the publisher without requiring petitioners to appear as
parties. The Superior Court, therefore, granted the motion.
The California Court of Appeal reversed. 138 Cal. App. 3d 128, 187 Cal. Rptr. 825
(1982). The court agreed that neither petitioner's contacts with California would be
sufficient [465 U.S. 783, 787] for an assertion of jurisdiction on a cause of action
unrelated to those contacts. See Perkins v. Benguet Mining Co., 342 U.S. 437 (1952)
(permitting general jurisdiction where defendant's contacts with the forum were
"continuous and systematic"). But the court concluded that a valid basis for
jurisdiction existed on the theory that petitioners intended to, and did, cause tortious
injury to respondent in California. The fact that the actions causing the effects in
California were performed outside the State did not prevent the State from asserting
jurisdiction over a cause of action arising out of those effects. 6 The court rejected the
Superior Court's conclusion that First Amendment considerations must be weighed in
the scale against jurisdiction.
A timely petition for hearing was denied by the Supreme Court of California. App. 122.
On petitioners' appeal to this Court, probable jurisdiction was postponed. 460 U.S.
1080 (1983). We conclude that jurisdiction by appeal does not lie. Kulko v. California
Superior Court, 436 U.S. 84, 90 , and n. 4 (1978). 7 Treating the jurisdictional
statement as [465 U.S. 783, 788] a petition for writ of certiorari, as we are authorized
to do, 28 U.S.C. 2103, we hereby grant the petition. 8
The Due Process Clause of the Fourteenth Amendment to the United States
CONFLICT OF LAWS 3D 1/08-09 Page 71 of 97
Constitution permits personal jurisdiction over a defendant in any State with which
the defendant has "certain minimum contacts . . . such that the maintenance of the
suit does not offend `traditional notions of fair play and substantial justice.' Milliken
v. Meyer, 311 U.S. 457, 463 ." International Shoe Co. v. Washington, 326 U.S. 310,
316 (1945). In judging minimum contacts, a court properly focuses on "the
relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner,
433 U.S. 186, 204 (1977). See also Rush v. Savchuk, 444 U.S. 320, 332 (1980).
The plaintiff's lack of "contacts" will not defeat otherwise proper jurisdiction, see
Keeton v. Hustler Magazine, Inc., ante, at 779-781, but they may be so manifold as
to permit jurisdiction when it would not exist in their absence. Here, the plaintiff is
the focus of the activities of the defendants out of which the suit arises. See McGee
v. International Life Ins. Co., 355 U.S. 220 (1957).
The allegedly libelous story concerned the California activities of a California
resident. It impugned the professionalism of an entertainer whose television career
was centered in California. 9 The article was drawn from California sources, [465
U.S. 783, 789] and the brunt of the harm, in terms both of respondent's emotional
distress and the injury to her professional reputation, was suffered in California. In
sum, California is the focal point both of the story and of the harm suffered.
Jurisdiction over petitioners is therefore proper in California based on the "effects" of
their Florida conduct in California. World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 297 -298 (1980); Restatement (Second) of Conflict of Laws 37 (1971).
Petitioners argue that they are not responsible for the circulation of the article in
California. A reporter and an editor, they claim, have no direct economic stake in
their employer's sales in a distant State. Nor are ordinary employees able to control
their employer's marketing activity. The mere fact that they can "foresee" that the
article will be circulated and have an effect in California is not sufficient for an
assertion of jurisdiction. World-Wide Volkswagen Corp. v. Woodson, supra, at 295;
Rush v. Savchuk, supra, at 328-329. They do not "in effect appoint the [article their]
agent for service of process." World-Wide Volkswagen Corp. v. Woodson, supra, at
296. Petitioners liken themselves to a welder employed in Florida who works on a
boiler which subsequently explodes in California. Cases which hold that jurisdiction
will be proper over the manufacturer, Buckeye Boiler Co. v. Superior Court, 71 Cal.
2d 893, 458 P.2d 57 (1969); Gray v. American Radiator & Standard Sanitary Corp.,
22 Ill. 2d 432, 176 N. E. 2d 761 (1961), should not be applied to the welder who has
no control over and derives no direct benefit from his employer's sales in that distant
State.
Petitioners' analogy does not wash. Whatever the status of their hypothetical
welder, petitioners are not charged with mere untargeted negligence. Rather, their
intentional, and allegedly tortious, actions were expressly aimed at California.
Petitioner South wrote and petitioner Calder edited an article that they knew would
have a potentially devastating impact upon respondent. And they knew that the
brunt of [465 U.S. 783, 790] that injury would be felt by respondent in the State in
which she lives and works and in which the National Enquirer has its largest
circulation. Under the circumstances, petitioners must "reasonably anticipate being
haled into court there" to answer for the truth of the statements made in their article.
World-Wide Volkswagen Corp. v. Woodson, supra, at 297; Kulko v. California
Superior Court, supra, at 97-98; Shaffer v. Heitner, supra, at 216. An individual
injured in California need not go to Florida to seek redress from persons who,
though remaining in Florida, knowingly cause the injury in California.
Atty. Jose A. Bernas
Petitioners are correct that their contacts with California are not to be judged
according to their employer's activities there. On the other hand, their status as
employees does not somehow insulate them from jurisdiction. Each defendant's
contacts with the forum State must be assessed individually. See Rush v. Savchuk,
supra, at 332 ("The requirements of International Shoe . . . must be met as to each
defendant over whom a state court exercises jurisdiction"). In this case, petitioners
are primary participants in an alleged wrongdoing intentionally directed at a California
resident, and jurisdiction over them is proper on that basis.
We also reject the suggestion that First Amendment concerns enter into the
jurisdictional analysis. The infusion of such considerations would needlessly
complicate an already imprecise inquiry. Estin v. Estin, 334 U.S. 541, 545 (1948).
Morever, the potential chill on protected First Amendment activity stemming from libel
and defamation actions is already taken into account in the constitutional limitations
on the substantive law governing such suits. See New York Times Co. v. Sullivan,
376 U.S. 254 (1964); Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974). To
reintroduce those concerns at the jurisdictional stage would be a form of double
counting. We have already declined in other contexts to grant special procedural
protections to defendants in libel and defamation actions in addition to the
constitutional protections [465 U.S. 783, 791] embodied in the substantive laws.
See, e. g., Herbert v. Lando, 441 U.S. 153 (1979) (no First Amendment privilege bars
inquiry into editorial process). See also Hutchinson v. Proxmire, 443 U.S. 111, 120 ,
n. 9 (1979) (implying that no special rules apply for summary judgment).
We hold that jurisdiction over petitioners in California is proper because of their
intentional conduct in Florida calculated to cause injury to respondent in California.
The judgment of the California Court of Appeal is

Affirmed.

CONFLICT OF LAWS 3D 1/08-09 Page 72 of 97 Atty. Jose A. Bernas

Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (1984)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FIRST CIRCUIT
Syllabus
Petitioner, a resident of New York, brought a libel suit against respondent magazine
publisher (hereafter respondent), an Ohio corporation, in Federal District Court in
New Hampshire, alleging jurisdiction by reason of diversity of citizenship. Petitioner's
only connection with New Hampshire is the circulation there of a magazine that she
assists in producing. Respondent's contacts with New Hampshire consist of monthly
sales of some 10,000 to 15,000 copies of its nationally published magazine. The
District Court dismissed the suit on the ground that the Due Process Clause of the
Fourteenth Amendment forbade application of New Hampshire's long-arm statute in
order to acquire personal jurisdiction over respondent. The Court of Appeals affirmed,
holding that petitioner's lack of contact with New Hampshire rendered that State's
interest in redressing the tort of libel to petitioner too attenuated for an assertion of
personal jurisdiction over respondent, and that, in view of the "single publication rule,"
which would require an award of damages caused in all States, as well as New
Hampshire's unusually long (6-year) limitation period for libel actions, it would be
"unfair" to assert jurisdiction over respondent.
Held: Respondent's regular circulation of magazines in the forum State is sufficient to
support an assertion of jurisdiction in a libel action based on the contents of the
magazine. Pp. 465 U. S. 773-781.
(a) New Hampshire jurisdiction over a complaint based on this circulation of
magazines satisfies the Due Process Clause's requirement that a State's assertion of
personal jurisdiction over a nonresident defendant be predicated on "minimum
contacts" between the defendant and the State. Pp. 465 U. S. 774-775.
(b) In judging minimum contacts, a court properly focuses on "the relationship among
the defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U. S. 186, 433 U.
S. 204. Thus, it is relevant to the jurisdictional inquiry here that petitioner is seeking to
recover damages suffered in all States in one suit. The contacts between respondent
and the forum must be judged in light of that claim, rather than a claim only for
damages sustained in New Hampshire. P. 465 U. S. 775.
(c) The combination of New Hampshire's interest in redressing injuries that occur
within the State and its interest in cooperating with other States in applying the "single
publication rule" demonstrates the propriety
Page 465 U. S. 771
of requiring respondent to answer a multistate libel action in New Hampshire. Pp. 465
U. S. 775-778.
(d) Any potential unfairness in applying New Hampshire's statute of limitations to all
aspects of this nationwide suit has nothing to do with jurisdiction to adjudicate the
claim. And the chance duration of statutes of limitations of nonforum States has
nothing to do with the contacts among respondent, New Hampshire, and the suit. Pp.
465 U. S. 778-779.
(e) The fact that petitioner has very limited contacts with New Hampshire does not
CONFLICT OF LAWS 3D 1/08-09
defeat jurisdiction, since a plaintiff is not required to have "minimum contacts" with
the forum State before that State is permitted to assert personal jurisdiction over a
nonresident defendant. A plaintiff's residence in the forum State is not a separate
jurisdictional requirement, and lack of residence will not defeat jurisdiction
established on the basis of the defendant's contacts. The victim of a libel, like the
victim of any other tort, may choose to bring suit in any forum with which the
defendant has
"certain minimum contacts . . . such that the maintenance of the suit does not offend
'traditional notions of fair play and substantial justice.'"
International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316. Pp. 465 U. S.
779-781.
(f) Here, where respondent has continuously and deliberately exploited the New
Hampshire market, it must reasonably anticipate being haled into court there in a
libel action based on the contents of its magazine. And, since respondent can be
charged with knowledge of the "single publication rule," it must anticipate that such
a suit will seek nationwide damages. There is no unfairness in calling respondent to
answer for the contents of its national publication wherever a substantial number of
copies are regularly sold and distributed. P. 465 U. S. 781.
682 F.2d 33, reversed and remanded.
REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and
WHITE, MARSHALL, BLACKMUN, POWELL, STEVENS, and O'CONNOR, JJ.,
joined. BRENNAN, J., filed an opinion concurring in the judgment,post, p. 465 U. S.
782.
Page 465 U. S. 772
JUSTICE REHNQUIST delivered the opinion of the Court.
Petitioner Kathy Keeton sued respondent Hustler Magazine, Inc., and other
defendants in the United States District Court for the District of New Hampshire,
alleging jurisdiction over her libel complaint by reason of diversity of citizenship. The
District Court dismissed her suit because it believed that the Due Process Clause of
the Fourteenth Amendment to the United States Constitution forbade the application
of New Hampshire's long-arm statute in order to acquire personal jurisdiction over
respondent. The Court of Appeals for the First Circuit affirmed, 682 F.2d 33 (1982),
summarizing its concerns with the statement that "the New Hampshire tail is too
small to wag so large an out-of-state dog." Id. at 36. We granted certiorari, 459 U.S.
1169 (1983), and we now reverse.
Petitioner Keeton is a resident of New York. Her only connection with New
Hampshire is the circulation there of copies of a magazine that she assists in
producing. The magazine bears petitioner's name in several places crediting her
with editorial and other work. Respondent Hustler Magazine, Inc., is an Ohio
corporation, with its principal place of business in California. Respondent's contacts
with New Hampshire consist of the sale of some 10,000 to 15,000 copies of Hustler
Magazine in that State each month. See App. 81a-86a. Petitioner claims to have
been libeled in five separate issues of respondent's magazine published between
September, 1975 and May, 1976. [Footnote 1]
Page 73 of 97 Atty. Jose A. Bernas
Page 465 U. S. 773
The Court of Appeals, in its opinion affirming the District Court's dismissal of
petitioner's complaint, held that petitioner's lack of contacts with New Hampshire
rendered the State's interest in redressing the tort of libel to petitioner too attenuated
for an assertion of personal jurisdiction over respondent. The Court of Appeals
observed that the "single publication rule" ordinarily applicable in multistate libel
cases would require it to award petitioner "damages caused in all states" should she
prevail in her suit, even though the bulk of petitioner's alleged injuries had been
sustained outside New Hampshire. 682 F.2d 35. [Footnote 2] The court also stressed
New Hampshire's unusually long (6-year) limitations period for libel actions. New
Hampshire was the only State where petitioner's suit would not have been time-
barred when it was filed. Under these circumstances, the Court of Appeals concluded
that it would be "unfair" to assert jurisdiction over respondent. New Hampshire has a
minimal interest in applying its unusual statute of limitations to, and awarding
damages for, injuries to a nonresident occurring outside the State, particularly since
petitioner suffered such a small proportion of her total claimed injury within the State.
Id. at 35-36.
We conclude that the Court of Appeals erred when it affirmed the dismissal of
petitioner's suit for lack of personal jurisdiction. Respondent's regular circulation of
magazines in the forum State is sufficient to support an assertion of jurisdiction
Page 465 U. S. 774
in a libel action based on the contents of the magazine. This is so even if New
Hampshire courts, and thus the District Court, under Klaxon Co. v. Stentor Co., 313
U. S. 487 (1941), would apply the so-called "single publication rule" to enable
petitioner to recover in the New Hampshire action her damages from "publications" of
the alleged libel throughout the United States. [Footnote 3]
The District Court found that
"[t]he general course of conduct in circulating magazines throughout the state was
purposefully directed at New Hampshire, and inevitably affected persons in the state."
App. to Pet. for Cert. 5a. Such regular monthly sales of thousands of magazines
cannot by any stretch of the imagination be characterized as random, isolated, or
fortuitous. It is, therefore, unquestionable that New Hampshire jurisdiction over a
complaint based on those contacts would ordinarily satisfy the requirement of the Due
Process Clause that a State's assertion of personal jurisdiction over a nonresident
defendant be predicated on "minimum contacts" between the defendant and the
State. See World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 444 U. S. 297-
298 (1980); International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 317
(1945). And, as the Court of Appeals acknowledged, New Hampshire has adopted a
"long-arm" statute authorizing service of process on nonresident corporations
whenever permitted by the Due Process Clause. 682 F.2d 33. [Footnote 4] Thus, all
the requisites for personal jurisdiction
Page 465 U. S. 775
over Hustler Magazine, Inc., in New Hampshire are present.
CONFLICT OF LAWS 3D 1/08-09 Page 74 of 97
We think that the three concerns advanced by the Court of Appeals, whether
considered singly or together, are not sufficiently weighty to merit a different result.
The "single publication rule," New Hampshire's unusually long statute of limitations,
and plaintiff's lack of contacts with the forum State do not defeat jurisdiction
otherwise proper under both New Hampshire law and the Due Process Clause.
In judging minimum contacts, a court properly focuses on "the relationship among
the defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U. S. 186, 433
U. S. 204 (1977). See also Rush v. Savchuk, 444 U. S. 320, 444 U. S. 332 (1980).
Thus, it is certainly relevant to the jurisdictional inquiry that petitioner is seeking to
recover damages suffered in all States in this one suit. The contacts between
respondent and the forum must be judged in the light of that claim, rather than a
claim only for damages sustained in New Hampshire. That is, the contacts between
respondent and New Hampshire must be such that it is "fair" to compel respondent
to defend a multistate lawsuit in New Hampshire seeking nationwide damages for all
copies of the five issues in question, even though only a small portion of those
copies were distributed in New Hampshire.
The Court of Appeals expressed the view that New Hampshire's "interest" in
asserting jurisdiction over plaintiff's multistate claim was minimal. We agree that the
"fairness" of
Page 465 U. S. 776
haling respondent into a New Hampshire court depends to some extent on whether
respondent's activities relating to New Hampshire are such as to give that State a
legitimate interest in holding respondent answerable on a claim related to those
activities. See World-Wide Volkswagen Corp. v. Woodson, supra, at 444 U. S. 292;
McGee v. International Life Ins. Co., 355 U. S. 220, 355 U. S. 223 (1957). But
insofar as the State's "interest" in adjudicating the dispute is a part of the Fourteenth
Amendment due process equation, as a surrogate for some of the factors already
mentioned, see Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee,
456 U. S. 694, 456 U. S. 702-703, n. 10 (1982), we think the interest is sufficient.
The Court of Appeals acknowledged that petitioner was suing, at least in part, for
damages suffered in New Hampshire. 682 F.2d 34. And it is beyond dispute that
New Hampshire has a significant interest in redressing injuries that actually occur
within the State.
"'A state has an especial interest in exercising judicial jurisdiction over those who
commit torts within its territory. This is because torts involve wrongful conduct which
a state seeks to deter, and against which it attempts to afford protection, by
providing that a tortfeasor shall be liable for damages which are the proximate result
of his tort.'"
Leeper v. Leeper, 114 N.H. 294, 298, 319 A.2d 626, 629 (1974) (quoting
Restatement (Second) of Conflict of Laws § 36, Comment c (1971)). This interest
extends to libel actions brought by nonresidents. False statements of fact harm both
the subject of the falsehood and the readers of the statement. New Hampshire may
rightly employ its libel laws to discourage the deception of its citizens. There is "no
constitutional value in false statements of fact." Gertz v. Robert Welch, Inc., 418 U.
S. 323, 418 U. S. 340 (1974).
New Hampshire may also extend its concern to the injury that in-state libel causes
Atty. Jose A. Bernas
within New Hampshire to a nonresident.
Page 465 U. S. 777
The tort of libel is generally held to occur wherever the offending material is
circulated. Restatement (Second) of Torts § 577A, Comment a (1977). The reputation
of the libel victim may suffer harm even in a State in which he has hitherto been
anonymous. [Footnote 5] The communication of the libel may create a negative
reputation among the residents of a jurisdiction where the plaintiff's previous
reputation was, however small, at least unblemished.
New Hampshire has clearly expressed its interest in protecting such persons from
libel, as well as in safeguarding its populace from falsehoods. Its criminal defamation
statute bears no restriction to libels of which residents are the victim. [Footnote 6]
Moreover, in 1971, New Hampshire specifically deleted from its long-arm statute the
requirement that a tort be committed "against a resident of New Hampshire."
[Footnote 7]
New Hampshire also has a substantial interest in cooperating with other States,
through the "single publication rule," to provide a forum for efficiently litigating all
issues and damages claims arising out of a libel in a unitary proceeding. [Footnote 8]
This rule reduces the potential serious drain of libel cases on judicial resources. It
also serves to protect defendants from harassment resulting from multiple suits.
Restatement (Second) of Torts § 577A, Comment f (1977). In sum, the combination
of New Hampshire's interest in redressing injuries that occur within the State and its
interest in cooperating
Page 465 U. S. 778
with other States in the application of the "single publication rule" demonstrates the
propriety of requiring respondent to answer to a multistate libel action in New
Hampshire. [Footnote 9]
The Court of Appeals also thought that there was an element of due process
"unfairness" arising from the fact that the statutes of limitations in every jurisdiction
except New Hampshire had run on the plaintiff's claim in this case. [Footnote 10]
Strictly speaking, however, any potential unfairness in applying New Hampshire's
statute of limitations to all aspects of this nationwide suit has nothing to do with the
jurisdiction of the court to adjudicate the claims. "The issue is personal jurisdiction,
not choice of law." Hanson v. Denckla, 357 U. S. 235, 357 U. S. 254 (1958). The
question of the applicability of New Hampshire's statute of limitations to claims for out-
of-state damages presents itself in the course of litigation only after jurisdiction over
respondent is established, and we do not think that such choice of law concerns
should complicate or distort the jurisdictional inquiry.
Page 465 U. S. 779
The chance duration of statutes of limitations in nonforum jurisdictions has nothing to
do with the contacts among respondent, New Hampshire, and this multistate libel
action. Whether Ohio's limitations period is six months or six years does not alter the
jurisdictional calculus in New Hampshire. Petitioner's successful search for a State
with a lengthy statute of limitations is no different from the litigation strategy of
countless plaintiffs who seek a forum with favorable substantive or procedural rules or
CONFLICT OF LAWS 3D 1/08-09 Page 75 of 97
sympathetic local populations. Certainly Hustler Magazine, Inc., which chose to
enter the New Hampshire market, can be charged with knowledge of its laws, and
no doubt would have claimed the benefit of them if it had a complaint against a
subscriber, distributor, or other commercial partner.
Finally, implicit in the Court of Appeals' analysis of New Hampshire's interest is an
emphasis on the extremely limited contacts of the plaintiff with New Hampshire. But
we have not to date required a plaintiff to have "minimum contacts" with the forum
State before permitting that State to assert personal jurisdiction over a nonresident
defendant. On the contrary, we have upheld the assertion of jurisdiction where such
contacts were entirely lacking. In Perkins v. Benguet Mining Co., 342 U. S. 437
(1952), none of the parties was a resident of the forum State; indeed, neither the
plaintiff nor the subject matter of his action had any relation to that State.
Jurisdiction was based solely on the fact that the defendant corporation had been
carrying on in the forum "a continuous and systematic, but limited, part of its general
business." Id. at 342 U. S. 438. In the instant case, respondent's activities in the
forum may not be so substantial as to support jurisdiction over a cause of action
unrelated to those activities. [Footnote 11] But
Page 465 U. S. 780
respondent is carrying on a "part of its general business" in New Hampshire, and
that is sufficient to support jurisdiction when the cause of action arises out of the
very activity being conducted, in part, in New Hampshire.
The plaintiff's residence is not, of course, completely irrelevant to the jurisdictional
inquiry. As noted, that inquiry focuses on the relations among the defendant, the
forum, and the litigation. Plaintiff's residence may well play an important role in
determining the propriety of entertaining a suit against the defendant in the forum.
That is, plaintiff's residence in the forum may, because of defendant's relationship
with the plaintiff, enhance defendant's contacts with the forum. Plaintiff's residence
may be the focus of the activities of the defendant out of which the suit arises. See
Calder v. Jones, post at 465 U. S. 788-789; McGee v. International Life Ins. Co.,
355 U. S. 220 (1957). But plaintiff's residence in the forum State is not a separate
requirement, and lack of residence will not defeat jurisdiction established on the
basis of defendant's contacts.
It is undoubtedly true that the bulk of the harm done to petitioner occurred outside
New Hampshire. But that will be true in almost every libel action brought
somewhere other than the plaintiff's domicile. There is no justification for restricting
libel actions to the plaintiff's home forum. [Footnote 12] The victim of a libel, like the
victim of any other tort, may choose to bring suit in any forum with which the
defendant has
"certain minimum contacts . . . such that the maintenance of the suit does not offend
'traditional notions of fair play and substantial
Page 465 U. S. 781
justice.' Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 [(1940)]."
International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 316.
Where, as in this case, respondent Hustler Magazine, Inc., has continuously and
deliberately exploited the New Hampshire market, it must reasonably anticipate
Atty. Jose A. Bernas
being haled into court there in a libel action based on the contents of its magazine.
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. at 444 U. S. 297-298. And,
since respondent can be charged with knowledge of the "single publication rule," it
must anticipate that such a suit will seek nationwide damages. Respondent produces
a national publication aimed at a nationwide audience. There is no unfairness in
calling it to answer for the contents of that publication wherever a substantial number
of copies are regularly sold and distributed.
The judgment of the Court of Appeals is reversed, [Footnote 13] and the cause is
remanded for proceedings consistent with this opinion.
It is so ordered.
Page 465 U. S. 782

JUSTICE BRENNAN, concurring in the judgment.

I agree with the Court that
"[r]espondent's regular circulation of magazines in the forum State is sufficient to
support an assertion of jurisdiction in a libel action based on the contents of the
magazine."
Ante at 465 U. S. 773-774. These contacts between the respondent and the forum
State are sufficiently important and sufficiently related to the underlying cause of
action to foreclose any concern that the constitutional limits of the Due Process
Clause are being violated. This is so, moreover, irrespective of the State's interest in
enforcing its substantive libel laws or its unique statute of limitations. Indeed, as we
recently explained in Insurance Corp. of Ireland v. Compagnie des Bauxites de
Guinee, 456 U. S. 694 (1982), these interests of the State should be relevant only to
the extent that they bear upon the liberty interests of the respondent that are
protected by the Fourteenth Amendment.
"The restriction on state sovereign power described in World-Wide Volkswagen Corp.
[v. Woodson, 444 U. S. 286, 444 U. S. 291-292 (1980)] must be seen as ultimately a
function of the individual liberty interest preserved by the Due Process Clause. That
Clause is the only source of the personal jurisdiction requirement and the Clause
itself makes no mention of federalism concerns."
Id. at 456 U. S. 702-703, n. 10.

CONFLICT OF LAWS 3D 1/08-09 Page 76 of 97 Atty. Jose A. Bernas

U.S. Supreme Court
Asahi Metal Indus. v. Superior Court, 480 U.S. 102 (1987)
Asahi Metal Indus. Co., Ltd. v. Superior Ct. of California
No. 85-693
Argued November 5, 1986
Decided February 24, 1987
480 U.S. 102
CERTIORARI TO THE SUPREME COURT OF CALIFORNIA
Syllabus
Petitioner manufactures tire valve assemblies in Japan and sells them to several tire
manufacturers, including Cheng Shin Rubber Industrial Co. (Cheng Shin). The sales
to Cheng Shin, which amounted to at least 100,000 assemblies annually from 1978 to
1982, took place in Taiwan, to which the assemblies were shipped from Japan.
Cheng Shin incorporates the assemblies into its finished tires, which it sells
throughout the world, including the United States, where 20 percent of its sales take
place in California. Affidavits indicated that petitioner was aware that tires
incorporating its assemblies would end up in California, but, on the other hand, that it
never contemplated that its sales to Cheng Shin in Taiwan would subject it to lawsuits
in California. Nevertheless, in 1979, a product liability suit was brought in California
Superior Court arising from a motorcycle accident allegedly caused by defects in a
tire manufactured by Cheng Shin, which in turn filed a cross-complaint seeking
indemnification from petitioner. Although the main suit was eventually settled and
dismissed, the Superior Court denied petitioner's motion to quash the summons
issued against it. The State Court of Appeal then ordered that the summons be
quashed, but the State Supreme Court reversed, finding that petitioner's intentional
act of placing its assemblies into the stream of commerce by delivering them to
Cheng Shin in Taiwan, coupled with its awareness that some of them would
eventually reach California, were sufficient to support state court jurisdiction under the
Due Process Clause.
Held: The judgment is reversed, and the case is remanded.
39 Cal.3d 35, 702 P.2d 543, reversed and remanded.
JUSTICE O'CONNOR delivered the opinion of the Court as to Parts I and II-B,
concluding that the state court's exercise of personal jurisdiction over petitioner would
be unreasonable and unfair, in violation of the Due Process Clause. Pp. 480 U. S.
113-116.
(a) The burden imposed on petitioner by the exercise of state court jurisdiction would
be severe, since petitioner would be required not only to traverse the distance
between Japan and California, but also to submit
Page 480 U. S. 103
its dispute with Cheng Shin to a foreign judicial system. Such unique burdens should
CONFLICT OF LAWS 3D 1/08-09 Page 77 of 97
have significant weight in assessing the reasonableness of extending personal
jurisdiction over national borders. Pp. 480 U. S. 113-114.
(b) The interests of Cheng Shin and the forum State in the exercise of jurisdiction
over petitioner would be slight, and would be insufficient to justify the heavy burdens
placed on petitioner. The only surviving question is whether a Japanese corporation
should indemnify a Taiwanese corporation on the bases of a sale made in Taiwan
and a shipment of goods from Japan to Taiwan. The facts do not demonstrate that it
would be more convenient for Cheng Shin to litigate its claim in California, rather
than in Taiwan or Japan, while California's interests are diminished by Cheng Shin's
lack of a California residence and by the fact that the dispute is primarily about
indemnity, rather than the safety of consumers. While the possibility of being sued in
California might create an additional deterrent to petitioner's manufacture of unsafe
assemblies, the same effect would result from pressures placed on petitioner by
Cheng Shin, whose California sales would subject it to state tort law. Pp. 480 U. S.
114-115.
(c) The procedural and substantive policies of other nations whose interests are
affected by the forum State's assertion of jurisdiction over an alien defendant must
be taken into account, and great care must be exercised when considering personal
jurisdiction in the international context. Although other nations' interests will differ
from case to case, those interests, as well as the Federal Government's interest in
its foreign relations policies, will always be best served by a careful inquiry into the
reasonableness of the particular assertion of jurisdiction, and an unwillingness to
find an alien defendant's serious burdens outweighed where, as here, the interests
of the plaintiff and the forum State are minimal. P. 480 U. S. 115.
JUSTICE O'CONNOR, joined by THE CHIEF JUSTICE, JUSTICE POWELL, and
JUSTICE SCALIA, concluded in Parts II-A and III that, even assuming, arguendo,
that petitioner was aware that some of the assemblies it sold to Cheng Shin would
be incorporated into tires sold in California, the facts do not establish minimum
contacts sufficient to render the State's exercise of personal jurisdiction consistent
with fair play and substantial justice, as required by the Due Process Clause. Since
petitioner does not do business, have an office, agents, employees, or property, or
advertise or solicit business in California, and since it did not create, control, or
employ the distribution system that brought its assemblies to, or design them in
anticipation of sales in, California, it did not engage in any action to purposely avail
itself of the California market. The "substantial connection" between a defendant
and the forum State necessary for a finding of minimum contacts must derive from
an action purposely directed toward the forum State, and the mere placement of a
product
Page 480 U. S. 104
into the stream of commerce is not such an act, even if done with an awareness that
the stream will sweep the product into the forum State absent additional conduct
indicating an intent to serve the forum state market. Pp. 480 U. S. 108-113, 116.
JUSTICE BRENNAN, joined by JUSTICE WHITE, JUSTICE MARSHALL, and
JUSTICE BLACKMUN, agreed with the Court's conclusion in Part II-B that the
exercise of jurisdiction over petitioner would not comport with "fair play and
substantial justice," but disagreed with Part II-A's interpretation of the stream-of-
commerce theory, and with the conclusion that petitioner did not purposely avail
Atty. Jose A. Bernas
itself of the California market. As long as a defendant is aware that the final product is
being marketed in the forum State, jurisdiction premised on the placement of a
product into the stream of commerce is consistent with the Due Process Clause, and
no showing of additional conduct is required. Here, even though petitioner did not
design or control the distribution system that carried its assemblies into California, its
regular and extensive sales to a manufacturer it knew was making regular sales of
the final product in California were sufficient to establish minimum contacts with
California. Pp. 480 U. S. 116-121.
JUSTICE STEVENS, joined by JUSTICE WHITE and JUSTICE BLACKMUN, agreed
that the California Supreme Court's judgment should be reversed for the reasons
stated in Part II-B of the Court's opinion, but did not join Part II-A, for the reasons that
(1) the Court's holding that the State's exercise of jurisdiction over petitioner would be
"unreasonable and unfair" alone requires reversal, and renders any examination of
minimum contacts unnecessary; and (2) even assuming that the "purposeful
availment" test should be formulated here, Part II-A misapplies it to the facts of this
case, since, in its dealings with Cheng Shin, petitioner has arguably engaged in a
higher quantum of conduct than the mere placement of a product into the stream of
commerce. Pp. 480 U. S. 121-122.
O'CONNOR, J., announced the judgment of the Court and delivered the opinion for a
unanimous Court with respect to Part I, the opinion of the Court with respect to Part II-
B, in which REHNQUIST, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN,
POWELL, and STEVENS, JJ., joined, and an opinion with respect to Parts II-A and
III, in which REHNQUIST, C.J., and POWELL and SCALIA, JJ., joined. BRENNAN,
J., filed an opinion concurring in part and concurring in the judgment, in which
WHITE, MARSHALL, and BLACKMUN, JJ., joined, post, p. 480 U. S. 116.
STEVENS, J., filed an opinion concurring in part and concurring in the judgment, in
which WHITE and BLACKMUN, JJ., joined, post, p. 480 U. S. 121.
Page 480 U. S. 105
JUSTICE O'CONNOR announced the judgment of the Court and delivered the
unanimous opinion of the Court with respect to Part I, the opinion of the Court with
respect to Part II-B, in which THE CHIEF JUSTICE, JUSTICE BRENNAN, JUSTICE
WHITE, JUSTICE MARSHALL, JUSTICE BLACKMUN, JUSTICE POWELL, and
JUSTICE STEVENS join, and an opinion with respect to Parts II-A and III, in which
THE CHIEF JUSTICE, JUSTICE POWELL, and JUSTICE SCALIA join.
This case presents the question whether the mere awareness on the part of a foreign
defendant that the components it manufactured, sold, and delivered outside the
United States would reach the forum State in the stream of commerce constitutes
"minimum contacts" between the defendant and the forum State such that the
exercise of jurisdiction "does not offend traditional notions of fair play and substantial
justice.'" International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945),
quoting Milliken v. Meyer, 311 U. S. 457, 311 U. S. 463 (1940).
I Shin whose duties included the purchasing of component parts stated:
CONFLICT OF LAWS 3D 1/08-09 Page 78 of 97
On September 23, 1978, on Interstate Highway 80 in Solano County, California,
Gary Zurcher lost control of his Honda motorcycle and collided with a tractor.
Zurcher was severely injured, and his passenger and wife, Ruth Ann Moreno, was
killed. In September 1979, Zurcher filed a product liability action in the Superior
Court of the State of
Page 480 U. S. 106
California in and for the County of Solano. Zurcher alleged that the 1978 accident
was caused by a sudden loss of air and an explosion in the rear tire of the
motorcycle, and alleged that the motorcycle tire, tube, and sealant were defective.
Zurcher's complaint named, inter alia, Cheng Shin Rubber Industrial Co., Ltd.
(Cheng Shin), the Taiwanese manufacturer of the tube. Cheng Shin in turn filed a
cross-complaint seeking indemnification from its codefendants and from petitioner,
Asahi Metal Industry Co., Ltd. (Asahi), the manufacturer of the tube's valve
assembly. Zurcher's claims against Cheng Shin and the other defendants were
eventually settled and dismissed, leaving only Cheng Shin's indemnity action
against Asahi.
California's long-arm statute authorizes the exercise of jurisdiction "on any basis not
inconsistent with the Constitution of this state or of the United States."
Cal.Civ.Proc.Code Ann. § 410.10 (West 1973). Asahi moved to quash Cheng Shin's
service of summons, arguing the State could not exert jurisdiction over it consistent
with the Due Process Clause of the Fourteenth Amendment.
In relation to the motion, the following information was submitted by Asahi and
Cheng Shin. Asahi is a Japanese corporation. It manufactures tire valve assemblies
in Japan and sells the assemblies to Cheng Shin, and to several other tire
manufacturers, for use as components in finished tire tubes. Asahi's sales to Cheng
Shin took place in Taiwan. The shipments from Asahi to Cheng Shin were sent from
Japan to Taiwan. Cheng Shin bought and incorporated into its tire tubes 150,000
Asahi valve assemblies in 1978; 500,000 in 1979; 500,000 in 1980;100,000 in 1981;
and 100,000 in 1982. Sales to Cheng Shin accounted for 1.24 percent of Asahi's
income in 1981 and 0.44 percent in 1982. Cheng Shin alleged that approximately 20
percent of its sales in the United States are in California. Cheng Shin purchases
valve assemblies from other suppliers as well, and sells finished tubes throughout
the world.
Page 480 U. S. 107
In 1983, an attorney for Cheng Shin conducted an informal examination of the valve
stems of the tire tubes sold in one cycle store in Solano County. The attorney
declared that, of the approximately 115 tire tubes in the store, 97 were purportedly
manufactured in Japan or Taiwan, and of those 97, 21 valve stems were marked
with the circled letter "A", apparently Asahi's trademark. Of the 21 Asahi valve
stems, 12 were incorporated into Cheng Shin tire tubes. The store contained 41
other Cheng Shin tubes that incorporated the valve assemblies of other
manufacturers. Declaration of Kenneth B. Shepard in Opposition to Motion to Quash
Subpoena, App. to Brief for Respondent 5-6. An affidavit of a manager of Cheng
"In discussions with Asahi regarding the purchase of valve stem assemblies, the
Atty. Jose A. Bernas
fact that my Company sells tubes throughout the world and specifically the United
States has been discussed. I am informed and believe that Asahi was fully aware that
valve stem assemblies sold to my Company and to others would end up throughout
the United States and in California."
39 Cal.3d 35, 48, n. 4, 702 P.2d 543, 549-550, n. 4 (1985). An affidavit of the
president of Asahi, on the other hand, declared that Asahi "has never contemplated
that its limited sales of tire valves to Cheng Shin in Taiwan would subject it to lawsuits
in California." Ibid. The record does not include any contract between Cheng Shin
and Asahi. Tr. of Oral Arg. 24.
Primarily on the basis of the above information, the Superior Court denied the motion
to quash summons, stating:
"Asahi obviously does business on an international scale. It is not unreasonable that
they defend claims of defect in their product on an international scale."
Order Denying Motion to Quash Summons, Zurcher v. Dunlop Tire & Rubber Co., No.
76180 (Super. Ct., Solano County, Cal., Apr. 20, 1983).
The Court of Appeal of the State of California issued a peremptory writ of mandate
commanding the Superior Court to quash service of summons. The court concluded
that
"it
Page 480 U. S. 108
would be unreasonable to require Asahi to respond in California solely on the basis of
ultimately realized foreseeability that the product into which its component was
embodied would be sold all over the world, including California."
App. to Pet. for Cert. B5-B6.
The Supreme Court of the State of California reversed and discharged the writ issued
by the Court of Appeal. 39 Cal.3d 35, 702 P.2d 543 (1985). The court observed:
"Asahi has no offices, property or agents in California. It solicits no business in
California, and has made no direct sales [in California]."
Id. at 48, 702 P.2d at 549. Moreover, "Asahi did not design or control the system of
distribution that carried its valve assemblies into California." Id. at 49, 702 P.2d at
549. Nevertheless, the court found the exercise of jurisdiction over Asahi to be
consistent with the Due Process Clause. It concluded that Asahi knew that some of
the valve assemblies sold to Cheng Shin would be incorporated into tire tubes sold in
California, and that Asahi benefited indirectly from the sale in California of products
incorporating its components. The court considered Asahi's intentional act of placing
its components into the stream of commerce -- that is, by delivering the components
to Cheng Shin in Taiwan -- coupled with Asahi's awareness that some of the
components would eventually find their way into California, sufficient to form the basis
for state court jurisdiction under the Due Process Clause.
We granted certiorari, 475 U.S. 1044 (1986), and now reverse.
II
CONFLICT OF LAWS 3D 1/08-09
B
The Due Process Clause of the Fourteenth Amendment limits the power of a state
court to exert personal jurisdiction over a nonresident defendant. "[T]he
constitutional touchstone" of the determination whether an exercise of personal
jurisdiction comports with due process "remains whether the defendant purposefully
established minimum contacts' in the
Page 480 U. S. 109
forum State." Burger King Corp. v. Rudzewicz, 471 U. S. 462, 471 U. S. 474 (1985),
quoting International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 316. Most
recently, we have reaffirmed the oft-quoted reasoning of Hanson v. Denckla, 357 U.
S. 235, 357 U. S. 253 (1958), that minimum contacts must have a basis in
"some act by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the benefits and
protections of its laws."
Burger King, 471 U.S. at 471 U. S. 475.
"Jurisdiction is proper . . . where the contacts proximately result from actions by the
defendant himself that create a 'substantial connection' with the forum State."
Ibid., quoting McGee v. International Life Insurance Co., 355 U. S. 220, 355 U. S.
223 (1957) (emphasis in original).
Applying the principle that minimum contacts must be based on an act of the
defendant, the Court in World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286
(1980), rejected the assertion that a consumer's unilateral act of bringing the
defendant's product into the forum State was a sufficient constitutional basis for
personal jurisdiction over the defendant. It had been argued in World-Wide
Volkswagen that, because an automobile retailer and its wholesale distributor sold a
product mobile by design and purpose, they could foresee being haled into court in
the distant States into which their customers might drive. The Court rejected this
concept of foreseeability as an insufficient basis for jurisdiction under the Due
Process Clause. Id. at 444 U. S. 295-296. The Court disclaimed, however, the idea
that "foreseeability is wholly irrelevant" to personal jurisdiction, concluding that
"[t]he forum State does not exceed its powers under the Due Process Clause if it
asserts personal jurisdiction over a corporation that delivers its products into the
stream of commerce with the expectation that they will be purchased by consumers
in the forum State."
Id. at 444 U. S. 297-298 (citation omitted). The Court reasoned:
Page 480 U. S. 110
"When a corporation 'purposefully avails itself of the privilege of conducting activities
within the forum State,' @ 357 U. S. 253 [(1958)], it has clear notice that it is subject
to suit there, and can act to alleviate the risk of burdensome litigation by procuring
insurance, passing the expected costs on to customers, or, if the risks are too great,
severing its connection with the State. Hence, if the sale of a product of a
Page 79 of 97 Atty. Jose A. Bernas
manufacturer or distributor . . . is not simply an isolated occurrence, but arises from
the efforts of the manufacturer or distributor to serve, directly or indirectly, the market
for its product in other States, it is not unreasonable to subject it to suit in one of those
States if its allegedly defective merchandise has there been the source of injury to its
owners or to others."
Id. at 444 U. S. 297.
In World-Wide Volkswagen itself, the state court sought to base jurisdiction not on
any act of the defendant, but on the foreseeable unilateral actions of the consumer.
Since World-Wide Volkswagen, lower courts have been confronted with cases in
which the defendant acted by placing a product in the stream of commerce, and the
stream eventually swept defendant's product into the forum State, but the defendant
did nothing else to purposefully avail itself of the market in the forum State. Some
courts have understood the Due Process Clause, as interpreted in World-Wide
Volkswagen, to allow an exercise of personal jurisdiction to be based on no more
than the defendant's act of placing the product in the stream of commerce. Other
courts have understood the Due Process Clause and the above-quoted language in
World-Wide Volkswagen to require the action of the defendant to be more
purposefully directed at the forum State than the mere act of placing a product in the
stream of commerce.
The reasoning of the Supreme Court of California in the present case illustrates the
former interpretation of World-Wide Volkswagen. The Supreme Court of California
held that, because the stream of commerce eventually brought
Page 480 U. S. 111
some valves Asahi sold Cheng Shin into California, Asahi's awareness that its valves
would be sold in California was sufficient to permit California to exercise jurisdiction
over Asahi consistent with the requirements of the Due Process Clause. The
Supreme Court of California's position was consistent with those courts that have
held that mere foreseeability or awareness was a constitutionally sufficient basis for
personal jurisdiction if the defendant's product made its way into the forum State
while still in the stream of commerce. See Bean Dredging Corp. v. Dredge
Technology Corp., 744 F.2d 1081 (CA5 1984); Hedrick v. Daiko Shoji Co., 715 F.2d
1355 (CA9 1983).
Other courts, however, have understood the Due Process Clause to require
something more than that the defendant was aware of its product's entry into the
forum State through the stream of commerce in order for the State to exert jurisdiction
over the defendant. In the present case, for example, the State Court of Appeal did
not read the Due Process Clause, as interpreted by World-Wide Volkswagen, to allow
"mere foreseeability that the product will enter the forum state [to] be enough by itself
to establish jurisdiction over the distributor and retailer."
App. to Pet. for Cert. B5. In Humble v. Toyota Motor Co., 727 F.2d 709 (CA8 1984),
an injured car passenger brought suit against Arakawa Auto Body Company, a
Japanese corporation that manufactured car seats for Toyota. Arakawa did no
business in the United States; it had no office, affiliate, subsidiary, or agent in the
United States; it manufactured its component parts outside the United States and
delivered them to Toyota Motor Company in Japan. The Court of Appeals, adopting
the reasoning of the District Court in that case, noted that, although it "does not doubt
CONFLICT OF LAWS 3D 1/08-09 Page 80 of 97
that Arakawa could have foreseen that its product would find its way into the United
States," it would be "manifestly unjust" to require Arakawa to defend itself in the
United States. Id. at 710-711, quoting 578 F.Supp. 530, 533 (ND Iowa 1982). See
also Hutson v. Fehr Bros.,
Page 480 U. S. 112
Inc., 584 F.2d 833 (CA8 1978); see generally Max Daetwyler Corp. v. R. Meyer, 762
F.2d 290, 299 (CA3 1985) (collecting "stream of commerce" cases in which the
"manufacturers involved had made deliberate decisions to market their products in
the forum state").
We now find this latter position to be consonant with the requirements of due
process. The "substantial connection," Burger King, 471 U.S. at 471 U. S. 475;
McGee, 355 U.S. at 355 U. S. 223, between the defendant and the forum State
necessary for a finding of minimum contacts must come about by an action of the
defendant purposefully directed toward the forum State. Burger King, supra, at 471
U. S. 476; Keeton v. Hustler Magazine, Inc., 465 U. S. 770, 465 U. S. 774 (1984).
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.
Assuming, arguendo, that respondents have established Asahi's awareness that
some of the valves sold to Cheng Shin would be incorporated into tire tubes sold in
California, respondents have not demonstrated any action by Asahi to purposefully
avail itself of the California market. Asahi does not do business in California. It has
no office, agents, employees, or property in California. It does not advertise or
otherwise solicit business in California. It did not create, control, or employ the
distribution system that brought its valves to California. Cf. Hicks v. Kawasaki
Heavy Industries,
Page 480 U. S. 113
452 F.Supp. 130 (MD Pa. 1978). There is no evidence that Asahi designed its
product in anticipation of sales in California. Cf. Rockwell International Corp. v.
Costruzioni Aeronautiche Giovanni Agusta, 553 F.Supp. 328 (ED Pa. 1982). On the
basis of these facts, the exertion of personal jurisdiction over Asahi by the Superior
Court of California 480 U. S.
B
The strictures of the Due Process Clause forbid a state court to exercise personal
jurisdiction over Asahi under circumstances that would offend "traditional notions of
fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. at
326 U. S. 316, quoting Milliken v. Meyer, 311 U.S. at 311 U. S. 463.
We have previously explained that the determination of the reasonableness of the
Atty. Jose A. Bernas
exercise of jurisdiction in each case will depend on an evaluation of several factors. A
court must consider the burden on the defendant, the interests of the forum State,
and the plaintiff's interest in obtaining relief. It must also weigh in its determination
"the interstate judicial system's interest in obtaining the most efficient resolution of
controversies; and the shared interest of the several States in furthering fundamental
substantive social policies."
World-Wide Volkswagen, 444 U.S. at 444 U. S. 292 (citations omitted).
Page 480 U. S. 114
A consideration of these factors in the present case clearly reveals the
unreasonableness of the assertion of jurisdiction over Asahi, even apart from the
question of the placement of goods in the stream of commerce.
Certainly the burden on the defendant in this case is severe. Asahi has been
commanded by the Supreme Court of California not only to traverse the distance
between Asahi's headquarters in Japan and the Superior Court of California in and for
the County of Solano, but also to submit its dispute with Cheng Shin to a foreign
nation's judicial system. The unique burdens placed upon one who must defend
oneself in a foreign legal system should have significant weight in assessing the
reasonableness of stretching the long arm of personal jurisdiction over national
borders.
When minimum contacts have been established, often the interests of the plaintiff and
the forum in the exercise of jurisdiction will justify even the serious burdens placed on
the alien defendant. In the present case, however, the interests of the plaintiff and the
forum in California's assertion of jurisdiction over Asahi are slight. All that remains is a
claim for indemnification asserted by Cheng Shin, a Tawainese corporation, against
Asahi. The transaction on which the indemnification claim is based took place in
Taiwan; Asahi's components were shipped from Japan to Taiwan. Cheng Shin has
not demonstrated that it is more convenient for it to litigate its indemnification claim
against Asahi in California, rather than in Taiwan or Japan.
Because the plaintiff is not a California resident, California's legitimate interests in the
dispute have considerably diminished. The Supreme Court of California argued that
the State had an interest in "protecting its consumers by ensuring that foreign
manufacturers comply with the state's safety standards." 39 Cal.3d at 49, 702 P.2d at
550. The State Supreme Court's definition of California's interest, however, was
overly broad. The dispute between Cheng Shin and Asahi is primarily about
indemnification, rather than safety
Page 480 U. S. 115
standards. Moreover, it is not at all clear at this point that California law should govern
the question whether a Japanese corporation should indemnify a Taiwanese
corporation on the basis of a sale made in Taiwan and a shipment of goods from
Japan to Taiwan. Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 472 U. S. 821-822
(1985); Allstate Insurance Co. v. Hague, 449 U. S. 302, 449 U. S. 312-313 (1981).
The possibility of being haled into a California court as a result of an accident
involving Asahi's components undoubtedly creates an additional deterrent to the
manufacture of unsafe components; however, similar pressures will be placed on
CONFLICT OF LAWS 3D 1/08-09 Page 81 of 97
Asahi by the purchasers of its components as long as those who use Asahi
components in their final products, and sell those products in California, are subject
to the application of California tort law.
World-Wide Volkswagen also admonished courts to take into consideration the
interests of the "several States," in addition to the forum State, in the efficient
judicial resolution of the dispute and the advancement of substantive policies. In the
present case, this advice calls for a court to consider the procedural and substantive
policies of other nations whose interests are affected by the assertion of jurisdiction
by the California court. The procedural and substantive interests of other nations in
a state court's assertion of jurisdiction over an alien defendant will differ from case
to case. In every case, however, those interests, as well as the Federal
Government's interest in its foreign relations policies, will be best served by a
careful inquiry into the reasonableness of the assertion of jurisdiction in the
particular case, and an unwillingness to find the serious burdens on an alien
defendant outweighed by minimal interests on the part of the plaintiff or the forum
State. "Great care and reserve should be exercised when extending our notions of
personal jurisdiction into the international field." United States v. First National City
Bank, 379 U. S. 378, 379 U. S. 404 (1965) (Harlan, J., dissenting). See Born,
Reflections on Judicial Jurisdiction in International Cases, to be published in 17
Ga.J.Int'l & Comp.L. 1 (1987).
Page 480 U. S. 116
Considering the international context, the heavy burden on the alien defendant, and
the slight interests of the plaintiff and the forum State, the exercise of personal
jurisdiction by a California court over Asahi in this instance would be unreasonable
and unfair.
III
Because the facts of this case do not establish minimum contacts such that the
exercise of personal jurisdiction is consistent with fair play and substantial justice,
the judgment of the Supreme Court of California is reversed, and the case is
remanded for further proceedings not inconsistent with this opinion.
It is so ordered.
* We have no occasion here to determine whether Congress could, consistent with
the Due Process Clause of the Fifth Amendment, authorize federal court personal
jurisdiction over alien defendants based on the aggregate of national contacts,
rather than on the contacts between the defendant and the State in which the
federal court sits. See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293-295
(CA3 1985); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 283 (CA3
1981); see also Born, Reflections on Judicial Jurisdiction in International Cases, to
be published in 17 Ga. J. Int'l & Comp. L. 1 (1987); Lilly, Jurisdiction Over Domestic
and Alien Defendants, 69 Va.L.Rev. 85, 127-145 (1983).
JUSTICE BRENNAN, with whom JUSTICE WHITE, JUSTICE MARSHALL, and
Atty. Jose A. Bernas
JUSTICE BLACKMUN join, concurring in part and concurring in the judgment.
I do not agree with the interpretation in Part II-A of the stream-of-commerce theory,
nor with the conclusion that Asahi did not "purposely avail itself of the California
market." Ante at 480 U. S. 112. I do agree, however, with the Court's conclusion in
Part II-B that the exercise of personal jurisdiction over Asahi in this case would not
comport with "fair play and substantial justice," International Shoe Co. v. Washington,
326 U. S. 310, 326 U. S. 320 (1945). This is one of those rare cases in which
"minimum requirements inherent in the concept of 'fair play and substantial justice' . . .
defeat the reasonableness of jurisdiction even [though] the defendant has
purposefully engaged in forum activities."
Burger King Corp. v. Rudzewicz, 471 U. S. 462, 471 U. S. 477-478 (1985). I therefore
join Parts I and II-B of the Court's opinion, and write separately to explain my
disagreement with Part II-A.
Part II-A states that
"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
Page 480 U. S. 117
the forum State."
Ante at 480 U. S. 112. Under this view, a plaintiff would be required to show
"[a]dditional conduct" directed toward the forum before finding the exercise of
jurisdiction over the defendant to be consistent with the Due Process Clause. Ibid. I
see no need for such a showing, however. The stream of commerce refers not to
unpredictable currents or eddies, but to the regular and anticipated flow of products
from manufacture to distribution to retail sale. As long as a participant in this process
is aware that the final product is being marketed in the forum State, the possibility of a
lawsuit there cannot come as a surprise. Nor will the litigation present a burden for
which there is no corresponding benefit. A defendant who has placed goods in the
stream of commerce benefits economically from the retail sale of the final product in
the forum State, and indirectly benefits from the State's laws that regulate and
facilitate commercial activity. These benefits accrue regardless of whether that
participant directly conducts business in the forum State, or engages in additional
conduct directed toward that State. Accordingly, most courts and commentators have
found that jurisdiction premised on the placement of a product into the stream of
commerce is consistent with the Due Process Clause, and have not required a
showing of additional conduct. [Footnote 1]
Page 480 U. S. 118
The endorsement in Part II-A of what appears to be the minority view among Federal
Courts of Appeals [Footnote 2] represents a marked retreat from the analysis in
World-Wide Volkswagen v. Woodson, 444 U. S. 286 (1980). In that case,
"respondents [sought] to base jurisdiction on one isolated occurrence and whatever
inferences can be drawn therefrom: the fortuitous circumstance that a single Audi
automobile, sold in New York to New York residents, happened to suffer an accident
CONFLICT OF LAWS 3D 1/08-09 Page 82 of 97
while passing through Oklahoma."
Id. at 444 U. S. 295. The Court held that the possibility of an accident in Oklahoma,
while to some extent foreseeable in light of the inherent mobility of the automobile,
was not enough to establish
Page 480 U. S. 119
minimum contacts between the forum State and the retailer or distributor. Id. at 444
U. S. 295-296. The Court then carefully explained:
"[T]his is not to say, of course, that foreseeability is wholly irrelevant. But the
foreseeability that is critical to due process analysis is not the mere likelihood that a
product will find its way into the forum State. Rather, it is that the defendant's
conduct and connection with the forum State are such that he should reasonably
anticipate being haled into Court there."
Id. at 444 U. S. 297. The Court reasoned that, when a corporation may reasonably
anticipate litigation in a particular forum, it cannot claim that such litigation is unjust
or unfair, because it
"can act to alleviate the risk of burdensome litigation by procuring insurance,
passing the expected costs on to consumers, or, if the risks are too great, severing
its connection with the State."
Ibid.
To illustrate the point, the Court contrasted the foreseeability of litigation in a State
to which a consumer fortuitously transports a defendant's product (insufficient
contacts) with the foreseeability of litigation in a State where the defendant's product
was regularly sold (sufficient contacts). The Court stated:
"Hence, if the sale of a product of a manufacturer or distributor such as Audi or
Volkswagen is not simply an isolated occurrence, but arises from the efforts of the
manufacturer or distributor to serve, directly or indirectly, the market for its product
in other States, it is not unreasonable to subject it to suit in one of those States if its
allegedly defective merchandise has there been the source of injury to its owner or
to others. The forum State does not exceed its powers under the Due Process
Clause if it asserts personal jurisdiction over a corporation that delivers its products
into the stream of commerce with the expectation that they will be purchased
Page 480 U. S. 120
by consumers in the forum State."
Id. at 444 U. S. 297-298 (emphasis added). The Court concluded its illustration by
referring to Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176
N.E.2d 761 (1961), a well known stream-of-commerce case in which the Illinois
Supreme Court applied the theory to assert jurisdiction over a component parts
manufacturer that sold no components directly in Illinois, but did sell them to a
manufacturer who incorporated them into a final product that was sold in Illinois. 444
U.S. at 444 U. S. 297-298.
The Court in World-Wide Volkswagen thus took great care to distinguish
"between a case involving goods which reach a distant State through a chain of
distribution and a case involving goods which reach the same State because a
Atty. Jose A. Bernas
consumer . . . took them there."
Id. at 444 U. S. 306-307 (BRENNAN, J., dissenting). [Footnote 3] The California
Supreme Court took note of this distinction, and correctly concluded that our holding
in World-Wide Volkswagen preserved the stream-of-commerce theory. See App. to
Pet. for Cert. C-9, and n. 3, C-13-C-15; cf. Comment, Federalism, Due Process, and
Minimum Contacts: World-Wide Volkswagen Corp v. Woodson, 80 Colum.L.Rev.
1341, 1359-1361, and nn. 140-146 (1980).
Page 480 U. S. 121

In this case, the facts found by the California Supreme Court support its finding of
minimum contacts. The court found that,
"[a]lthough Asahi did not design or control the system of distribution that carried its
valve assemblies into California, Asahi was aware of the distribution system's
operation, and it knew that it would benefit economically from the sale in California of
products incorporating its components."
App. to Pet. for Cert. C-11. [Footnote 4] Accordingly, I cannot join the determination in
Part II-A that Asahi's regular and extensive sales of component parts to a
manufacturer it knew was making regular sales of the final product in California is
insufficient to establish minimum contacts with California.

CONFLICT OF LAWS 3D 1/08-09 Page 83 of 97 Atty. Jose A. Bernas

BENSUSAN RESTAURANT CORPORATION, Plaintiff,
v.
RICHARD B. KING, individually and d/b/a THE BLUE NOTE, Defendant.
96 Civ. 3992 (SHS)
September 9, 1996
OPINION AND ORDER
SIDNEY H. STEIN, District Judge:
Plaintiff Bensusan Restaurant Corp. ("Bensusan") brought this action against
defendant Richard King, individually and doing business as The Blue Note, alleging
that King is infringing on Bensusan's rights in its trademark "The Blue Note." King has
moved to dismiss the complaint for lack of personal jurisdiction pursuant to
Fed.R.Civ.P. 12(b)(2). The issue raised by that motion is whether the existence of a
"site" on the World Wide Web of the Internet, without anything more, is sufficient to
vest this Court with personal jurisdiction over defendant pursuant to New York's long-
arm statute and the Due Process Clause of the United States Constitution. For the
reasons that follow, the motion to dismiss the complaint is granted.
I. BACKGROUND
Bensusan, a New York corporation, is the creator of a jazz club in New York City
known as "The Blue Note." It also operates other jazz clubs around the world.
Bensusan owns all rights, title and interest in and to the federally registered mark
"The Blue Note." (Complaint, paragraphs 1, 5.) King is an individual who lives in
Columbia, Missouri and he owns and operates a "small club" in that city which is also
called "The Blue Note." (Complaint, paragraphs 2,6.)
In April of 1996, King posted a "site" on the World Wide Web of the Internet to
promote his club.[1] This Web site, which is located on a computer server in Missouri,
allegedly contains "a fanciful logo which is substantially similar to the logo utilized by
[Bensusan]." (Complaint paragraph 11.) The Web site is a general access site, which
means that it requires no authentication or access code for entry, and is accessible to
anyone around the world who has access to the Internet. (Meltzer Aff. paragraph 2.) It
contains general information about the club in Missouri as well as a calendar of
events and ticketing information. (Id., paragraphs 2 - 3; Exhs. A & B.) The ticketing
information includes the names and addresses of ticket outlets in Columbia and a
telephone number for charge-by-phone ticket orders, which are available for pick-up
on the night of the show at the Blue Note box office in Columbia. (Id., Exh. B.)
At the time this action was brought, the first page of the Web site contained the
following disclaimer: "The Blue Note's Cyberspot should not be confused with one of
the world's finest jazz club[s] [the] Blue Note, located in the heart of New York's
Greenwich Village. If you should find yourself in the big apple give them a visit.
(Complaint, paragraph 9.) Furthermore, the reference to Bensusan's club in the
disclaimer contained a "hyperlink"[2] which permits Internet users to connect directly
to Bensusan's Web site by "clicking" on the link. (Id. at paragraph 10.) After Bensusan
objected to the Web site, King dropped the sentence "If you should find yourself in the
big apple give them a visit" from the disclaimer and removed the hyperlink. (King Aff.,
paragraph 14.)
CONFLICT OF LAWS 3D 1/08-09
Bensusan brought this action asserting claims for trademark infringement,
trademark dilution and unfair competition. King has now moved to dismiss the action
for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).
II. DISCUSSION
At this stage of the litigation-- prior to an evidentiary hearing or discovery--
Bensusan may defeat a motion to dismiss the complaint for lack of personal
jurisdiction by making merely a prima facie showing of jurisdiction. See A.I. Trade
Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993); Hoffritz for Cutlery,
Inc. v. Amaiac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985); Rothschild v. Paramount
Distiller, Inc., 923 F.Supp. 433, 435 (S.D.N.Y. 1996); PI, Inc. v. Quality Prods. Inc.,
907 F.Supp. 752, 758 (S.D.N.Y. 1995); Dave Guardala Mouthpieces, Inc. v. Sugal
Mouthpieces, Inc., 779 F.Supp. 335, 336 - 37 (S.D.N.Y. 1991).
In that regard, Bensusan is entitled to have its complaint and affidavits interpreted,
and any doubts resolved, in the light most favorable to it. See Landoil Resources
Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d 1039, 1043 (2d Cir. 1991);
Hoffritz for Cutlery, 763 F.2d at 57; Linzer v. EMI Black wood Music, Inc., 904
F.Supp. 207, 211 (S.D.N.Y. 1995); Editorial Musical Latino Americana, S.A. v. Mar
Int'l Records, Inc., 829 F.Supp. 62, 64 (S.D.N.Y. 1993). This burden is satisfied
even when the moving party makes contrary allegations that place in dispute the
factual basis of plaintiff's prima facie case. See A.I. Trade Finance, 989 F.2d at 79 -
80; Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981);
Lancaster v. Zufle, 165 F.R.D. 38, 40 (S.D.N.Y. 1996); National Cathode Corp. v.
Mexus Co., 855 F.Supp. 644, 646 (S.D.N.Y. 1994).
Furthermore, where, as in this case, discovery has not commenced on this issue or
any other, plaintiff is entitled to rely on mere factual allegations to make its prima
facie showing of jurisdiction. See Ball v. Metallurgie Hoboken-Overpelt, S.A., 902
F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112 L.Ed.2d 116
(1990); Rothschild, 923 F.Supp. at 436; Executive Telecard, Ltd. v. Engelman, No.
95 Civ. 9505, 1996 WL 191967, at *2 (S.D.N.Y. Apr. 19, 1996); Pilates, Inc. v.
Pilates Inst., Inc., 891 F.Supp. 175, 177 (S.D.N.Y. 1995); Palmieri v. Estefan, 793
F.Supp. 1182, 1186 (S.D.N.Y. 1992); Kinetic Instruments, Inc. v. Lares, 802 F.Supp.
976, 981 (S.D.N.Y. 1992). Matters outside the pleadings, however, may also be
considered in resolving a motion to dismiss for lack of personal jurisdiction pursuant
to Fed.R.Civ.P. 12(b)(2) without converting it into one for summary judgment. See
Visual Sciences, Inc. v. Integrated Communications, Inc., 660 F.2d 56, 58 (2d Cir
1981); Rothschild, 923 F.Supp. at 436; John Hancock Property and Casualty Ins.
Co. v. Universale Reinsurance Co., Ltd., No. 91 Civ. 3644, 1992 WL 26765, at *6
(S.D.N.Y. Feb. 5, 1992).
Knowing that personal jurisdiction over a defendant is measured by the law of the
jurisdiction in which the federal court sits, see Rothschild, 923 F.Supp. at 436 (citing
Pilates, 891 F.Supp. at 179), Editorial Musical Latino Americana, 829 F.Supp. at 64,
Bensusan relies on subdivisions (a)(2) and (a)(3)(ii) of N.Y.C.P.L.R. Section 302,
New York's long-arm statute, to support its position that personal jurisdiction exists
over King in this action. Each provision will be addressed in turn.
A. C.P.L.R. Section 302(a)(2)
C.P.L.R. Section 302(a)(2) permits a court to exercise personal jurisdiction over any
non-domiciliary who "commits a tortious act within the state" as long as the cause of
Page 84 of 97 Atty. Jose A. Bernas
action asserted arises from the tortious act. See Pilates, 891 F.Supp. at 180; Exovir,
Inc. v. Mandel, No. 94 Civ. 3546, 1995 WL 413256, at *6 (S.D.N.Y. July 12, 1995);
Dave Guradala Mouthpieces, 779 F.Supp. at 337; Business Trends Analysis v.
Freedonia Group, Inc., 650 F.Supp. 1452, 1456 (S.D.N.Y. 1987). In Vanity Fair Mills,
Inc. v. T. Eaton Co., 234 F.2d 633, 639 (2d Cir.), cert denied, 352 U.S. 871, 77 S.Ct.
96, 1 L.Ed.2d 76 (1956), the United States Court of Appeals for the Second Circuit
held that trademark infringement occurs "where the passing off occurs, i.e., where the
deceived customer buys the defendant' product in the belief that he is buying the
plaintiff's." Under this standard, courts have found that an offering for sale of even
one copy of an infringing product in New York, even if no sale results, is sufficient to
vest a court with jurisdiction over the alleged infringer. See Editorial Musical Latino
Americana, 829 F.Supp. at 645; German Educational Television Network, Ltd. v.
Oregon Public Broadcasting Co., 569 F.Supp. 1529 (S.D.N.Y. 1983); Hertz Sys., Inc.
v. Hervis Corp., 549 F.Supp. 796, 797-98 (S.D.N.Y. 1982); Honda Assocs., Inc. v.
Nozawa Trading Inc., 374 F.Supp. 886 (S.D.N.Y. 1974). Accordingly, the issue that
arises in this action is whether the creation of a Web site, which exists either in
Missouri or in cyberspace-- i.e., anywhere the Internet exists-- with a telephone
number to order the allegedly infringing product, is an offer to sell the product in New
York.
Even after construing all allegations in the light most favorable to Bensusan, its
allegations are insufficient to support a finding of long-arm jurisdiction over plaintiff. A
New York resident with Internet access and either knowledge of King's Web site
location or a "search engine" capable of finding it could gain access to the Web site
and view information concerning the Blue Note in Missouri.
It takes several affirmative steps by the, New York resident, however, to obtain
access to the Web site and utilize the information there. First, the New York resident
has to access the Web site using his or her computer hardware and software. See
Shea, 930 F.Supp. at 930. Then, if the user wished to attend a show in defendant's
club, he or she would have to telephone the box office in Missouri and reserve tickets.
Finally, that user would need to pick up the tickets in Missouri because King does not
mail or otherwise transmit tickets to the user. Even assuming that the user was
confused about the relationship of the Missouri club to the one in New York, such an
act of infringement would have occurred in Missouri, not New York. The mere fact
that a person can gain information on the allegedly infringing product is not the
equivalent of a person advertising, promoting, selling or otherwise making an effort to
target its product in New York. See Hertz, 549 F.Supp. at 797. Here, there is simply
no allegation or proof that any infringing goods were shipped into New York or that
any other infringing activity was directed at New York or caused by King occur here.
Cf. People v. Concert Connection Ltd. 211 A.D.2d 310, 314, 629 N.Y.S.2d 254, 257
(2d Dep't 1995), appeal dismissed 86 N.Y.2d 837, 634 N.Y.S.2d 445, 658 N.E.2d
445, 658 N.E.2d 223 (1995).
Accordingly, C.P.L.R. Section 302(a)(2) does not authorize this Court to exercise
jurisdiction over King.
B. C.P.L.R. Section 302(a)(3)(ii)
Bensusan also contends that personal jurisdiction is established pursuant to C.P.L.R.
Section 302(a)(3)(ii), which permits a court to exercise personal jurisdiction over any
non-domiciliary for tortious acts committed outside the state that cause injury in the
state if the non-domiciliary "expects or should reasonably expect the act to have
CONFLICT OF LAWS 3D 1/08-09
consequences in the state and derives substantial revenue from interstate or
international commerce." See American Eutectic Welding Alloys Sales Co. v. Dytron
Alloys Corp., 439 F.2d 428, 432-35 (2d Cir. 1971); In re Houbigart Inc., 914 F.Supp.
964, 979 (S.D.N.Y. 1995): Time Prods. Plc. v. J. Tires Classic Handbags, Inc., 93
Civ. 7856, 1994 WL 363930, at *7 (S.D.N.Y. July 13, 1994); Car-Fresher Corp. v.
Broadway Mfg, Co., 337 F.Supp. 618, 619 (S.D.N.Y. 1971); see also Sybron Corp.
v. Wetzel, 46 N.Y.2d 197, 204-05, 413 N.Y.S. 127, 130 - 31, 385 N.E.2d 331 (1978).
As an initial matter, Bensusan does not allege that King derives substantial revenue
from interstate or international commerce. Instead, it relies on arguments that King
participates in interstate commerce by hiring and showcasing bands of national
stature. Section 302(a)(3)(ii), however, explicitly states that substantial "revenue" is
required from interstate commerce, not mere participation in it. King has submitted
an affidavit stating that 99% of his patronage and revenue is derived from local
residents of Columbia, Missouri (primarily students from the University of Missouri)
and that most of the few out-of-state customers have either an existing or a prior
connection to the area, such as graduates of the University of Missouri. (King Decl.
paragraphs 4, 8.)
Moreover, Bensusan's allegations of foreseeability which are based solely on the
fact that King knew that Bensusan's club is located in New York, is insufficient to
satisfy the requirement that a defendant "expects or should reasonably expect the
act to have consequences in the state." That prong of the statute requires that a
defendant make "a discernable effort ... to serve, directly or indirectly, a market in
the forum state." Darienzo v. Wise Shoe Stores, Inc., 74 A.D.2d 342, 346, 427
N.Y.S.2d 831, 834 (2d Dep't 1980).
Finally, Bensusan's conclusory allegation of a loss in New York is nothing more that
an allegation of an "indirect financial loss resulting from the fact that the injured
person resides or is domiciled in New York," which is not the allegation of a
"significant economic injury" required by section 302(a)(3). See ICC Primex Plastics
Corp. v. LA/ES Laminati Estrusi Termoplastici S.P.A., 775 F.Supp. 650, 656
(S.D.N.Y. 1991); Arbitron Co. v. E.W. Scripps, Inc., 559 F.Supp. 400, 404 (S.D.N.Y.
1983); Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 326 - 27, 425
N.Y.2d 783, 787, 402 N.E.2d 122 (1980); Sybron, 46 N.Y.2d at 205, 413 N.Y.S.2d
at 131.
Accordingly, C.P.L.R. Section 302(a)(3) does not authorize this Court to exercise
jurisdiction over King.
Bensusan's primary argument in support of both statutory bases for personal
jurisdiction is that, because defendant's Web site is accessible in New York,
defendant could have foreseen that the site was able to be viewed in New York and
taken steps to restrict access to his site only to users in a certain geographic region,
presumably Missouri. Regardless of the technical feasibility of such a procedure,
see Shea, 930 F.Supp. at 929-30, 933-34, mere foreseeability of an in-site
consequence and a failure to avert that consequence is not sufficient to establish
personal jurisdiction. See Fox v. Boucher, 794 F.2d 34. 37 (2d Cir. 1986); Taurus
Int'l Inc. v. Titan Wheel Int'l Inc., 892 F.Supp. 79, 82 (S.D.N.Y. 1995).
C. Due Process
Furthermore, even if jurisdiction were proper under New York's arm statute,
asserting personal jurisdiction over King in this forum would violate the Due Process
Page 85 of 97 Atty. Jose A. Bernas
Clause of the United States Constitution. See e.g., Burger King Corp. v. Rudzewicz, For the reasons set forth above, defendant's motion to dismiss the complaint
471 U.S. 462, 475-76, 105 S.Ct. 2174, 2183 - 84, 85 L.Ed.2d 528 (1985); World-Wide pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction is granted and the
Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d complaint is dismissed.
490 (1980); see also Richard S. Zembek, Comment, Jurisdiction and the Internet:
Fundamental Fairness in the Networked World of Cyperspace, 6 Alb. L.J. Sci & Tech .
339, 367-80 (1996). Due process requires "that the non-resident defendant has
purposefully established minimum contacts with the forum state such that the
maintenance of the suit does not offend "traditional notions of fair play and substantial
justice.'"' Darby v. Compagnie Nationale Air France, 769 F.Supp. 1255, 1262
(S.D.N.Y. 1991) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316,
66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)).
The following factors are relevant to this determination: "(1) whether the defendant
purposefully availed himself of the benefits of the forum state; (2) whether the
defendant's conduct and connection with the forum state are such that he should
reasonably anticipate being haled into court there; and (3) whether the defendant
carries on a continuous and systematic part of its general business within for forum
state." Independent Nat'l Distributors, Inc. v. Black Rain Communications, Inc., No. 94
Civ. 8464, 1995 WL 571449, at *5-6 (S.D.N.Y. Sept. 28, 1995).
As set forth above, King has done nothing to purposefully avail himself of the benefits
of New York. King, like numerous others, simply created a Web site and permitted
anyone who could find it to access it. Creating a site, like placing a product into the
stream of commerce, may be felt nationwide-- or even worldwide-- but, without more,
it is not an act purposefully directed towards the forum state. See Asahi Metal Indus.
Co. v. Superior Court, 480 U.S. 102, 112, 107 S.Ct. 1026, 1032, 94 L.Ed.2d 92 (1992)
(plurality opinion). There are no allegations that King actively sought to encourage
New Yorkers to access his site, or that he conducted any business-- let alone a
continuous and systematic part of its business-- in New York. There is in fact no
suggestion that King has any presence of any kind in New York other than the Web
site that can be accessed worldwide. Bensusan's argument that King should have
foreseen that users could access the site in New York and be confused as to the
relationship of the two Blue Note clubs is insufficient to satisfy due process. See Fox,
794 F.2d at 37; Beckett v. Prudential Ins. Co. of Am., 893 F.Supp. 234, 239 (S.D.N.Y.
1995).
Although CompuServe v. Patterson, 89 F.3d 1257 (6th Cir. 1996), a recent decision
of the United States Court of Appeals for the Sixth Circuit, reached a different result, it
was based on vastly different facts. In that case, the Sixth Circuit found personal
jurisdiction proper in Ohio over an Internet user from Texas who subscribed to a
network service based in Ohio. The user, however, specifically targeted Ohio by
subscribing to the service and entering into a separate agreement with the service to
sell his software over the Internet. Furthermore, he advertised his software through
the service and repeatedly sent his software to the service in Ohio. Id. at 1264-65.
This led that court to conclude that the Internet user "reached out" from Texas to Ohio
and "originated and maintained" contacts with Ohio. Id. at 1266.[3] This action, on the
other hand, contains no allegations that King in any way directed any contact to, or
had any contact with, New York or intended to avail itself of any New York's benefits.
Accordingly, the exercise of personal jurisdiction over King in this case would violate
the protections of the Due Process Clause.
III. CONCLUSION
CONFLICT OF LAWS 3D 1/08-09 Page 86 of 97 Atty. Jose A. Bernas
COMPUSERVE, INC. v. PATTERSON, 89 F.3d 1257 (6th Cir. 1996)
Before: BROWN, KENNEDY, and WELLFORD, Circuit Judges.
BAILEY BROWN, Circuit Judge.
[1] In a case that requires us to consider the scope of the federal courts' jurisdictional
powers in a new context, a computer network giant, CompuServe, appeals the
dismissal, for lack of personal jurisdiction, of its complaint in which it sought a
declaratory judgment that it had not infringed on the defendants' common law
copyrights or otherwise engaged in unfair competition. The district court held that the
electronic links between the defendant Patterson, who is a Texan,[n1] and Ohio, where
CompuServe is headquartered, were "too tenuous to support the exercise of personal
jurisdiction." The district court also denied CompuServe's motion for reconsideration.
Because we believe that CompuServe made a prima facie showing that the
defendant's contacts with Ohio were sufficient to support the exercise of personal
jurisdiction, we REVERSE the district court's dismissal and REMAND this case for
further proceedings consistent with this opinion.
[2] I. BACKGROUND
[3] CompuServe is a computer information service headquartered in Columbus, Ohio.
It contracts with individual subscribers, such as the defendant, to provide, inter alia,
access to computing and information services via the Internet, and it is the second
largest such provider currently operating on the so-called "information
superhighway."[n2] A CompuServe subscriber may use the service to gain electronic
access to more than 1700 information services.[n3]
[4] CompuServe also operates as an electronic conduit to provide its subscribers
computer software products, which may originate either from CompuServe itself or
from other parties. Computer software generated and distributed in this manner is,
according to CompuServe, often referred to as "shareware." Shareware makes
money only through the voluntary compliance of an "end user," that is, another
CompuServe subscriber who may or may not pay the creator's suggested licensing
fee if she uses the software beyond a specified trial period. The "end user" pays that
fee directly to CompuServe in Ohio, and CompuServe takes a 15% fee for its trouble
before remitting the balance to the shareware's creator.[n4]
[5] Defendant, Richard Patterson, is an attorney and a resident of Houston, Texas
who claims never to have visited Ohio. Patterson also does business as FlashPoint
Development. He subscribed to CompuServe, and he also placed items of
"shareware" on the CompuServe system for others to use and purchase. When he
became a shareware "provider," Patterson entered into a "Shareware Registration
Agreement" ("SRA") with CompuServe. Under the SRA, CompuServe provides its
subscribers with access to the software, or shareware, that Patterson creates. The
SRA purports to create an independent contractor relationship between Patterson
and CompuServe, whereby Patterson may place software of his creation on
CompuServe's system. The SRA does not mention Patterson's software by name; in
fact, it leaves the content and identification of that software to Patterson.
[6] The SRA incorporates by reference two other documents: the CompuServe
CONFLICT OF LAWS 3D 1/08-09 Page 87 of 97
Service Agreement ("Service Agreement") and the Rules of Operation, both of
which are published on the CompuServe Information Service. Both the SRA and the
Service Agreement expressly provide that they are entered into in Ohio, and the
Service Agreement further provides that it is to "be governed by and construed in
accordance with" Ohio law. These documents appear to be standardized and
entirely the product of CompuServe. It bears noting, however, that the SRA asks a
new shareware "provider" like Patterson to type "AGREE" at various points in the
document, "[i]n recognition of your online agreement to all the above terms and
conditions." Thus, Patterson's assent to the SRA was first manifested at his own
computer in Texas, then transmitted to the CompuServe computer system in Ohio.
[7] From 1991 through 1994, Patterson electronically transmitted 32 master
software files to CompuServe. These files were stored in CompuServe's system in
Ohio, and they were displayed in different services for CompuServe subscribers,
who could "download" them into their own computers and, if they chose to do so,
pay for them. Patterson also advertised his software on the CompuServe system,
and he indicated a price term in at least one of his advertisements. CompuServe
asserts that Patterson marketed his software exclusively on its system. Patterson,
for his part, stated that he has sold less than $650 worth of his software to only 12
Ohio residents via CompuServe.
[8] Patterson's software product was, apparently, a program designed to help
people navigate their way around the larger Internet network. CompuServe began to
market a similar product, however, with markings and names that Patterson took to
be too similar to his own. Thus, in December of 1993, Patterson notified
CompuServe (appropriately via an electronic mail or "E-mail" message[n5]) that the
terms "WinNAV," "Windows Navigator," and "FlashPoint Windows Navigator" were
common law trademarks which he and his company owned. Patterson stated that
CompuServe's marketing of its product infringed these trademarks, and otherwise
constituted deceptive trade practices. CompuServe changed the name of its
program, but Patterson continued to complain. CompuServe asserts that, if
Patterson's allegations of trademark infringement are correct, they threaten
CompuServe's software sales revenue with a loss of approximately $10.8 million.
[9] After Patterson demanded at least $100,000 to settle his potential claims,
CompuServe filed this declaratory judgment action in the federal district court for the
Southern District of Ohio, relying on the court's diversity subject matter jurisdiction.
CompuServe sought, among other things, a declaration that it had not infringed any
common law trademarks of Patterson or FlashPoint Development, and that it was
not otherwise guilty of unfair or deceptive trade practices. Patterson responded pro
se with a consolidated motion to dismiss on several grounds, including lack of
personal jurisdiction. Patterson also submitted a supporting affidavit, in which he
denied many jurisdictional facts, including his having ever visited Ohio.
CompuServe then filed a memorandum in opposition to Patterson's consolidated
motion, along with several supporting exhibits.
[10] The district court, considering only these pleadings and papers, granted
Patterson's motion to dismiss for lack of personal jurisdiction in a thorough and
thoughtful opinion.[n6] At various points in its consideration of the case, however, the
district court expressly relied on Patterson's affidavit. Joint Appendix at 97, 98, 99.
The court below then denied CompuServe's motion for a rehearing, which it
construed as a motion for reconsideration under Federal Rule of Civil Procedure
Atty. Jose A. Bernas
59(e). CompuServe timely appealed. Patterson, however, filed no appellate brief, and
he did not appear at oral argument.
[11] II. ANALYSIS
[12] A. Standards of Review.
[13] We conduct a plenary review of personal jurisdiction issues. E.g., Reynolds v.
International Amateur Athletic Fed'n, 23 F.3d 1110, 1117 (6th Cir.) (citing Conti v.
Pneumatic Prods., 977 F.2d 978, 985 (6th Cir. 1992)), cert. denied, 115 S.Ct. 423
(1994). CompuServe, as the party seeking assertion of in personam jurisdiction,
bears the burden of showing that such jurisdiction exists. E.g., Theunissen v.
Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). When, however, a district court rules
on a jurisdictional motion to dismiss made pursuant to Federal Rule of Civil Procedure
12(b)(2) without conducting an evidentiary hearing, the court must consider the
pleadings and affidavits in a light most favorable to the plaintiff - here, CompuServe.
Id. at 1458-59. To defeat such a motion, a party in CompuServe's position need only
make a prima facie showing of jurisdiction. Id.
[14] Furthermore, a "court disposing of a 12(b)(2) motion does not weigh the
controverting assertions of the party seeking dismissal," Patterson in this case,
because we want "to prevent non-resident defendants from regularly avoiding
personal jurisdiction simply by filing an affidavit denying all jurisdictional facts." Id. at
1459 (emphasis added). Dismissal in this procedural posture is proper only if all the
specific facts which the plaintiff (CompuServe) alleges collectively fail to state a prima
facie case for jurisdiction. Id.
[15] B. Personal Jurisdiction.
[16] This case presents a novel question of first impression: Did CompuServe make a
prima facie showing that Patterson's contacts with Ohio, which have been almost
entirely electronic in nature, are sufficient, under the Due Process Clause, to support
the district court's exercise of personal jurisdiction over him? The Supreme Court has
noted, on more than one occasion, the confluence of the "increasing nationalization of
commerce" and "modern transportation and communication," and the resulting
relaxation of the limits that the Due Process Clause imposes on courts' jurisdiction.
E.g., World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293 (1980) (quoting
McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957)). Simply stated, there
is less perceived need today for the federal constitution to protect defendants from
"inconvenient litigation," because all but the most remote forums are easily accessible
for the pursuit of both business and litigation. Id. The Court has also, however,
reminded us that the due process rights of a defendant should be the courts' primary
concern where personal jurisdiction is at issue. Insurance Corp. v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 702 n. 10 (1982).
[17] The Internet represents perhaps the latest and greatest manifestation of these
historical, globe-shrinking trends. It enables anyone with the right equipment and
knowledge - that is, people like Patterson - to operate an international business
cheaply, and from a desktop. That business operator, however, remains entitled to
the protection of the Due Process Clause, which mandates that potential defendants
be able "to structure their primary conduct with some minimum assurance as to where
the conduct will and will not render them liable to suit." World-Wide Volkswagen, 444
U.S. at 297. Thus, this case presents a situation where we must reconsider the scope
of our jurisdictional reach.
CONFLICT OF LAWS 3D 1/08-09
[18] To determine whether personal jurisdiction exists over a defendant, federal
courts apply the law of the forum state, subject to the limits of the Due Process
Clause of the Fourteenth Amendment. Reynolds, 23 F.3d at 1115. "[T]he defendant
must be amenable to suit under the forum state's long-arm statute and the due
process requirements of the Constitution must be met." Id. (citing In-Flight Devices
Corp. v. Van Dusen Air, Inc., 466 F.2d 220, 224 (6th Cir. 1972)).
[19] The Ohio long-arm statute allows an Ohio court to exercise personal jurisdiction
over nonresidents of Ohio on claims arising from, inter alia, the nonresident's
transacting any business in Ohio. Ohio Rev. Code Ann. Section(s) 2307.382(A)
(Anderson 1995). It is settled Ohio law, moreover, that the "transacting business"
clause of that statute was meant to extend to the federal constitutional limits of due
process, and that as a result Ohio personal jurisdiction cases require an
examination of those limits. Reynolds, 23 F.3d at 1116 (quoting Creech v. Roberts,
908 F.2d 75, 79 (6th Cir. 1990), cert. denied, 499 U.S. 975 (1991)); R.L. Lipton
Distrib. Co. v. Dribeck Importers, Inc., 811 F.2d 967, 969 (6th Cir. 1987).
[20] Further, personal jurisdiction may be either general or specific in nature,
depending on the nature of the contacts in a given case. E.g., Reynolds, 23 F.3d at
1116 (citing Third Nat'l Bank v. WEDGE Group Inc., 882 F.2d 1087, 1089 (6th Cir.
1989), cert. denied, 493 U.S. 1058 (1990)). In the instant case, because
CompuServe bases its action on Patterson's act of sending his computer software
to Ohio for sale on its service, CompuServe seeks to establish such specific
personal jurisdiction over Patterson. Id.
[21] As always in this context, the crucial federal constitutional inquiry is whether,
given the facts of the case, the nonresident defendant has sufficient contacts with
the forum state that the district court's exercise of jurisdiction would comport with
"traditional notions of fair play and substantial justice." International Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457,
463 (1940)); Reynolds, 23 F.3d at 1116; Theunissen, 935 F.2d at 1459. This court
has repeatedly employed three criteria to make this determination:
[22] First, the defendant must purposefully avail himself of the privilege of acting in
the forum state or causing a consequence in the forum state. Second, the cause of
action must arise from the defendant's activities there. Finally, the acts of the
defendant or consequences caused by the defendant must have a substantial
enough connection with the forum to make the exercise of jurisdiction over the
defendant reasonable.
[23] Reynolds, 23 F.3d at 1116 (quoting In-Flight Devices, 466 F.2d at 226); see
also Southern Mach. Co. v. Mohasco Indus., 401 F.2d 374, 381 (6th Cir. 1968)
(adopting the above test for "determining the present outerlimits of in personam
jurisdiction based on a single act").
[24] We conclude that Patterson has knowingly made an effort - and, in fact,
purposefully contracted - to market a product in other states, with Ohio-based
CompuServe operating, in effect, as his distribution center. Thus, it is reasonable to
subject Patterson to suit in Ohio, the state which is home to the computer network
service he chose to employ.
[25] To support this conclusion, we will address each of the above three criteria
seriatim, bearing in mind that (1) CompuServe need only make a prima facie case
of personal jurisdiction, and (2) we cannot weigh Patterson's affidavit in the
Page 88 of 97 Atty. Jose A. Bernas
analysis, given that the district court addressed his motion to dismiss without holding
an evidentiary hearing.[n7] Theunissen, 935 F.2d at 1459.
[26] 1. The "purposeful availment" requirement.
[27] This court has stated that the question of whether a defendant has purposefully
availed itself of the privilege of doing business in the forum state is "the sine qua non
for in personam jurisdiction." Mohasco Indus., 401 F.2d at 381-82. The "purposeful
availment" requirement is satisfied when the defendant's contacts with the forum state
"proximately result from actions by the defendant himself that create a `substantial
connection' with the forum State," and when the defendant's conduct and connection
with the forum are such that he "should reasonably anticipate being haled into court
there." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985) (quoting World-
Wide Volkswagen, 444 U.S. at 297); Reynolds, 23 F.3d at 1116. Courts require
purposeful availment to insure that "random," "fortuitous," or "attenuated" contacts do
not cause a defendant to be haled into a jurisdiction. Burger King Corp., 471 U.S. at
475 (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)).
[28] This requirement does not, however, mean that a defendant must be physically
present in the forum state. As the Burger King Corp. Court stated, "So long as a
commercial actor's efforts are `purposefully directed' toward residents of another
State, we have consistently rejected the notion that an absence of physical contacts
can defeat personal jurisdiction there." Id. at 476. Further, as this court noted long
ago,
Physical presence of an agent is not necessary . . . for the transaction of business in
a state. The soliciting of insurance by mail, the transmission of radio broadcasts into a
state, and the sending of magazines and newspapers into a state to be sold there by
independent contractors are all accomplished without the physical presence of an
agent; yet all have been held to constitute the transaction of business in a state.
[29] Mohasco Indus., 401 F.2d at 382 (footnotes omitted).
[30] There is no question that Patterson himself took actions that created a
connection with Ohio in the instant case. He subscribed to CompuServe, and then he
entered into the Shareware Registration Agreement when he loaded his software
onto the CompuServe system for others to use and, perhaps, purchase. Once
Patterson had done those two things, he was on notice that he had made contracts,
to be governed by Ohio law, with an Ohio-based company. Then, he repeatedly sent
his computer software, via electronic links, to the CompuServe system in Ohio, and
he advertised that software on the CompuServe system. Moreover, he initiated the
events that led to the filing of this suit by making demands of CompuServe via
electronic and regular mail messages.
[31] The real question is whether these connections with Ohio are "substantial"
enough that Patterson should reasonably have anticipated being haled into an Ohio
court. The district court did not think so. It looked to "cases involving interstate
business negotiations and relationships" and held that the relationship between
CompuServe and Patterson, because it was marked by a "minimal course of dealing,"
was insufficient to satisfy the purposeful availment test. Compare Reynolds, 23 F.3d
at 1118-21 (holding that the contacts between an England-based association and an
Ohio plaintiff in a contract case were "superficial" where, although mail and telephone
communications had taken place, the parties had engaged in no prior negotiations
and expected no future consequences) and Health Communications, Inc. v. Mariner
CONFLICT OF LAWS 3D 1/08-09 Page 89 of 97
Corp., 860 F.2d 460, 463-65 (D.C. Cir. 1988) (finding no jurisdiction over a
nonresident purchaser who had bought services from a corporation in the forum
state) with Burger King Corp., 471 U.S. at 479-82 (finding significant the defendant's
reaching beyond Michigan to negotiate with a Florida corporation for the purchase
of a long-term franchise). The district court deemed this case closer to Reynolds
and Health Communications than to Burger King Corp., and thus it found no
purposeful availment on the part of Patterson.
[32] We disagree. The contract cases upon which the district court relied are both
distinguishable in important ways. Patterson, unlike the nonresident defendant in
Reynolds, entered into a written contract with CompuServe which provided for the
application of Ohio law, and he then purposefully perpetuated the relationship with
CompuServe via repeated communications with its system in Ohio. And, unlike the
nonresident defendant in Health Communications, Patterson was far more than a
purchaser of services; he was a third-party provider of software who used
CompuServe, which is located in Columbus, to market his wares in Ohio and
elsewhere.
[33] In fact, it is Patterson's relationship with CompuServe as a software provider
and marketer that is crucial to this case. The district court's analysis misses the
mark because it disregards the most salient facts of that relationship: that Patterson
chose to transmit his software from Texas to CompuServe's system in Ohio, that
myriad others gained access to Patterson's software via that system, and that
Patterson advertised and sold his product through that system. Though all this
happened with a distinct paucity of tangible, physical evidence, there can be no
doubt that Patterson purposefully transacted business in Ohio. See Plus System,
Inc. v. New England Network, Inc., 804 F.Supp. 111, 118-19 (D.Colo. 1992) (finding
personal jurisdiction over a nonresident computer network defendant because, inter
alia, that defendant benefitted from the intangible computer services provided by the
plaintiff's own computer network system); cf. United States v. Thomas, 74 F.3d 701,
706-07 (6th Cir. 1996) (upholding a conviction under federal obscenity laws where
the defendants transmitted computer-generated images across state lines, despite
the defendants' argument that the images were intangible), petition for cert. filed, 64
U.S.L.W. 3839 (U.S. June 10, 1996) (No. 95-1992).
[34] Moreover, this was a relationship intended to be ongoing in nature; it was not a
"one-shot affair." Mohasco Indus., 401 F.2d at 385. Patterson sent software to
CompuServe repeatedly for some three years, and the record indicates that he
intended to continue marketing his software on CompuServe. As this court has often
stated,
[B]usiness is transacted in a state when obligations created by the defendant or
business operations set in motion by the defendant have a realistic impact on the
commerce of that state; and the defendant has purposefully availed himself of the
opportunity of acting there if he should have reasonably foreseen that the
transaction would have consequences in that state.
[35] Mohasco Indus., 401 F.2d at 382-83 (footnote omitted). Patterson deliberately
set in motion an ongoing marketing relationship with CompuServe, and he should
have reasonably foreseen that doing so would have consequences in Ohio.
[36] Admittedly, merely entering into a contract with CompuServe would not, without
more, establish that Patterson had minimum contacts with Ohio. Burger King Corp.,
Atty. Jose A. Bernas
471 U.S. at 478. By the same token, Patterson's injection of his software product into
the stream of commerce, without more, would be at best a dubious ground for
jurisdiction. Compare Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112
(1987) (O'Connor, J.) (plurality op.) ("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.") with id. at 117 (Brennan, J., concurring in part) (rejecting the
plurality's position on the stream of commerce theory). Because Patterson
deliberately did both of those things, however, and because of the other factors that
we discuss herein, we believe that ample contacts exist to support the assertion of
jurisdiction in this case, and certainly an assertion of jurisdiction by the state where
the computer network service in question is headquartered.
[37] We find support for our conclusion in the Ohio Supreme Court case of U.S.
Sprint Communications Co. Limited Partnership v. Mr. K's Foods, Inc., 624 N.E.2d
1048, 1052-54 (Ohio 1994). In that case, the court held that a foreign corporation
"transacted business" in Ohio, and thus was subject to personal jurisdiction, where it
frequently made long-distance telephone calls to Ohio to sell its products, had
distribution facilities in Ohio for its products, and shipped goods to Ohio for ultimate
sale. Similarly, Patterson frequently contacted Ohio to sell his computer software over
CompuServe's Ohio-based system. Patterson repeatedly sent his "goods" to
CompuServe in Ohio for their ultimate sale. CompuServe, in effect, acted as
Patterson's distributor, albeit electronically and not physically.
[38] Further, we must reject the district court's reliance on the de minimis amount of
software sales which Patterson claims he enjoyed in Ohio. As this court recently
stated, "It is the `quality' of [the] contacts," and not their number or status, that
determines whether they amount to purposeful availment. Reynolds, 23 F.3d at 1119
(emphasis added) (quoting LAK, Inc. v. Deer Creek Enters., 885 F.2d 1293, 1301 (6th
Cir. 1989), cert. denied, 494 U.S. 1056 (1990)). Patterson's contacts with
CompuServe here were deliberate and repeated, even if they yielded little revenue
from Ohio itself.
[39] Moreover, we should not focus solely on the sales that Patterson made in Ohio,
because that ignores the sales Patterson may have made through CompuServe to
others elsewhere. Patterson sought to make those sales from Texas by way of
CompuServe's system in Ohio, and the sales then involved the passage of funds
through Ohio to Patterson in Texas. This case is thus analogous to the Mohasco
Industries case, 401 F.2d at 383-86, where this court held that jurisdiction was proper
where a nonresident defendant both (a) entered a licensing contract for the plaintiff to
manufacture and sell equipment in the forum state, and (b) contemplated the ongoing
marketing of that equipment in the forum state and elsewhere.
[40] We also find instructive the Supreme Court case of McGee v. International Life
Insurance Co., 355 U.S. 220 (1957), which held that due process did not prohibit
California from asserting jurisdiction over a Texas insurance company based upon its
issuance of a single insurance contract in California and the receipt of premium
payments mailed from California. The McGee Court reasoned that (1) the company
had consciously sought the contract with the California insured, and (2) "the suit was
based on a contract which had substantial connection with that State." Id. at 223.
[41] Similarly, in the instant case, Patterson consciously reached out from Texas to
Ohio to subscribe to CompuServe, and to use its service to market his computer
software on the Internet. He entered into a contract which expressly stated that it
CONFLICT OF LAWS 3D 1/08-09 Page 90 of 97
would be governed by and construed in light of Ohio law. Ohio has written and
interpreted its long-arm statute, and particularly its "transacting business"
subsection, with the intent of reaching as far as the Due Process Clause will allow,
and it certainly has an interest "in providing effective means of redress for its
residents." Id. As the Burger King Corp. Court noted, the purposeful direction of
one's activities toward a state has always been significant in personal jurisdiction
cases, particularly where individuals purposefully derive benefits from interstate
activities. Burger King Corp., 471 U.S. at 472-73. Moreover, the Court continued, it
could be unfair to allow individuals who purposefully engage in interstate activities
for profit to escape having to account in other states for the proximate
consequences of those activities. Id. (citing Kulko v. Superior Court, 436 U.S. 84, 96
(1978)).
[42] Finally, we note this court's own finding of purposeful availment based (in part)
on analogous litigation threats in American Greetings Corp. v. Cohn, 839 F.2d 1164,
1170 (6th Cir. 1988). The American Greetings Corp. case involved an Ohio
corporation's suit, in Ohio, against a California shareholder who had threatened to
file a lawsuit to invalidate an amendment to the company's articles of incorporation.
Id. at 1165. The district court dismissed the case, without conducting an evidentiary
hearing, for lack of personal jurisdiction, finding that the defendant merely owned
stock in an Ohio company and expressed strong reservations about a matter of
shareholder interest. Id. at 1166. This court reversed, finding purposeful availment
because of the defendant's letters and telephone calls to Ohio, in which he had
threatened suit and had sought money to release his claim. Thus, this court stated,
the defendant himself had "originated and maintained the required contacts with
Ohio." Id. at 1170.
[43] In the instant case, the record demonstrates that Patterson not only
purposefully availed himself of CompuServe's Ohio-based services to market his
software, but that he also "originated and maintained" contacts with Ohio when he
believed that CompuServe's competing product unlawfully infringed on his own
software. Patterson repeatedly sent both electronic and regular mail messages to
CompuServe about his claim, and he posted a message on one of CompuServe's
electronic forums, which outlined his case against CompuServe for anyone who
wished to read it. Moreover, the record shows that Patterson demanded at least
$100,000 to settle the matter.
[44] Thus, we believe that the facts which CompuServe has alleged, viewed in the
light most favorable to CompuServe, support a finding that Patterson purposefully
availed himself of the privilege of doing business in Ohio. He knowingly reached out
to CompuServe's Ohio home, and he benefitted from CompuServe's handling of his
software and the fees that it generated.
[45] 2. The requirement that the cause of action arises from Patterson's
activities in Ohio.
[46] Even though we have found that Patterson purposefully availed himself of Ohio
privileges, we must also find that CompuServe's claims against him arise out of his
activities in Ohio if we are to find the exercise of jurisdiction proper. Reynolds, 23
F.3d at 1116-17. If a defendant's contacts with the forum state are related to the
operative facts of the controversy, then an action will be deemed to have arisen
from those contacts. Id. at 1119 (quoting Creech, 908 F.2d at 80).
Atty. Jose A. Bernas
[47] The district court viewed the presence of Patterson's software on the
CompuServe system in Ohio as "entirely incidental to the alleged dispute between the
parties." In the district court's opinion, Patterson could have claimed trademark or
trade name protection for his software against CompuServe even if he had placed his
software on another computer network altogether, or in a retail store. Patterson's
discovery of the similarity in program names may have come to his attention through
the CompuServe system, the court below noted, but it concluded that "the way in
which the parties discovered they might have a clash of legal interests is not relevant
to the issue of jurisdiction." Again, we must disagree with the district court's holding.
The cause of action in the instant case concerns allegations of trademark or trade
name infringement and unfair competition. Patterson's contacts with Ohio are
certainly related to the operative facts of that controversy. He placed his software on
CompuServe's Ohio-based system. He used that system to advertise his software
and sell it. The proceeds of those sales flowed to him through Ohio. According to
CompuServe's allegations, Patterson has marketed his product exclusively on their
system.
[48] As the district court points out, Patterson could have placed his software
anywhere and had the same result. Nevertheless, it is uncontroverted that Patterson
placed, marketed, and sold his software only on Ohio-based CompuServe. Thus, any
common law trademark or trade name which Patterson might have in his product
would arguably have been created in Ohio, and any violation of those alleged
trademarks or trade names by CompuServe would have occurred, at least in part, in
Ohio. See United States v. Steffens, 100 U.S. 82, 94 (1879) (stating that trademark
rights, under the common law, are appropriated only through actual prior use in
commerce); Dakota Indus. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1388 (8th Cir.
1991) (stating that the tort of trademark infringement is considered to have occurred
where the passing off of the allegedly infringing goods occurred); Tally-Ho, Inc. v.
Coast Community College Dist., 889 F.2d 1018, 1022 (11th Cir. 1989) (stating that
where, as here, neither party has registered a disputed trademark with the federal
government, the parties must look to common law and state statutes to determine
what protection they have); Younker v. Nationwide Mut. Ins. Co., 191 N.E.2d 145,
148-49 (Ohio 1963) (defining trade name and trademark and stating that only the
actual use of those devices in connection with a business gives rise to legal rights);
Yocono's Restaurant, Inc. v. Yocono, 651 N.E.2d 1347, 1350-51 (Ohio Ct. App. 1994)
(discussing the intersection of Ohio's Deceptive Trade Practices Act, the common
law, and the federal Lanham Act).
[49] Moreover, as noted heretofore with regard to the purposeful availment test,
CompuServe's declaratory judgment action arose in part because Patterson
threatened, via regular and electronic mail, to seek an injunction against
CompuServe's sales of its software product, or to seek damages at law if
CompuServe did not pay to settle his purported claim. Thus, Patterson's threats -
which were contacts with Ohio - gave rise to the case before us, as did the threats in
the American Greetings Corp. case, 893 F.2d at 1170.
[50] 3. The reasonableness requirement.
[51] Lastly, we consider whether exercising personal jurisdiction over Patterson would
be reasonable, i.e., whether it would "comport with `traditional notions of fair play and
substantial justice.'" Reynolds, 23 F.3d at 1117 (quoting Asahi Metal Indus., 480 U.S.
at 113). We note that, if we find, as we do, the first two elements of a prima facie case
CONFLICT OF LAWS 3D 1/08-09 Page 91 of 97
- purposeful availment and a cause of action arising from the defendant's contacts
with the forum state - then an inference arises that this third factor is also present.
American Greetings Corp., 839 F.2d at 1170 (citing First Nat'l Bank v. J.W. Brewer
Tire Co., 680 F.2d 1123, 1126 (6th Cir. 1982)); Mohasco Indus., 401 F.2d at 384 &
n. 30.
[52] A court must consider several factors in this context, including "the burden on
the defendant, the interest of the forum state, the plaintiff's interest in obtaining
relief, and the interest of other states in securing the most efficient resolution of
controversies." American Greetings Corp., 839 F.2d at 1169-70 (citing Asahi Metal
Indus., 480 U.S. at 113).
[53] The district court analogized the instant case to a standard consumer suit in
which CompuServe might have brought suit in Ohio "to collect a small amount of
user fees from a Texas resident who, while seated at his computer terminal,
became a member of the CompuServe network." That is not, however, the case at
bar. Here, we have an entrepreneur who purposefully employed CompuServe to
market his computer software product. It may be burdensome for Patterson to
defend a suit in Ohio, but he knew when he entered into the Shareware Registration
Agreement with CompuServe that he was making a connection with Ohio, and
presumably he hoped that connection would work to his benefit. Further, Ohio has a
strong interest in resolving a dispute involving an Ohio company, which will involve
the Ohio law on common law trademarks and trade names.[n8] CompuServe alleges
that more than $10 million could be at stake in this case, and it also contends that
this case will have a profound impact on its relationships with other "shareware"
providers like Patterson, who also directed their activities toward Ohio-based
CompuServe. We have no reason to believe otherwise.
[54] Again, considering the pleadings and affidavits in a light most favorable to
CompuServe (as we must), we find that, on these facts, there is a substantial
enough connection between Patterson and Ohio to make it reasonable for an Ohio
court to assert personal jurisdiction over him.[n9] Someone like Patterson who
employs a computer network service like CompuServe to market a product can
reasonably expect disputes with that service to yield lawsuits in the service's home
state.
[55] Finally, because of the unique nature of this case, we deem it important to note
what we do not hold. We need not and do not hold that Patterson would be subject
to suit in any state where his software was purchased or used; that is not the case
before us. See World-Wide Volkswagen, 444 U.S. at 296 (rejecting the idea that a
seller of chattels could "appoint the chattel his agent for service of process"). We
also do not have before us an attempt by another party from a third state to sue
Patterson in Ohio for, say, a "computer virus" caused by his software, and thus we
need not address whether personal jurisdiction could be found on those facts.
Finally, we need not and do not hold that CompuServe may, as the district court
posited, sue any regular subscriber to its service for nonpayment in Ohio, even if the
subscriber is a native Alaskan who has never left home. Each of those cases may
well arise someday, but they are not before us now.
[56] III. CONCLUSION
[57] Because we believe that Patterson had sufficient contacts with Ohio to support
the exercise of personal jurisdiction over him, we REVERSE the district court's
Atty. Jose A. Bernas
dismissal and REMAND this case for further proceedings consistent with this opinion.

1. Although CompuServe sued Patterson and FlashPoint Development as though

they were two legal entities, it is clear that, in fact, we are dealing with Patterson d/b/a
FlashPoint Development. Thus, we will henceforth refer to a singular defendant.
2. "Computer networks are systems of interconnected computers that allow the
exchange of information between the connected computers. The Internet is the
world's largest computer network, often described as a `network of networks.'" United
States v. Baker, 890 F.Supp. 1375, 1379 n. 1 (E.D.Mich. 1995) (citing Edward A.
Cavazos & Gavino Morin, Cyberspace and the Law: Your Rights and Duties in the
On-line World 2-11 (1994)). See generally American Civil Liberties Union v. Reno,
Nos. CIV. A. 96-963 and CIV. A. 96-1458, 1996 WL 311865, at **4-13 (E.D.Pa. June
11, 1996) (describing the Internet, as well as how individuals gain access to it and
communicate on it).
3. See, e.g., id., 1996 WL 311865, at *7 (describing CompuServe and other national
commercial services as providing "extensive and well organized content within their
own proprietary networks" and "allow[ing] subscribers to link to the much larger
resources of the Internet").
4. See ProCD, Inc. v. Zeidenberg, No. 96-1139, 1996 WL 339807, at *4 (7th Cir. June
20, 1996) ("Much software is ordered over the Internet by purchasers who have never
seen a box. Increasingly software arrives by wire. There is . . . only a stream of
electrons."); Cavazos & Morin, supra note 1, at 63-64 (discussing shareware in the
context of copyright laws).
5. "E-mail allows computer network users to send messages to each other which are
received at an `electronic mailbox' identified by the recipient's unique user name and
address." Baker, 890 F.Supp. at 1379 n. 1. See also, e.g., American Civil Liberties
Union v. Reno, 1996 WL 311865, at *8 (explaining electronic mail).
6. Because the district court held that it lacked personal jurisdiction, it did not reach
the other grounds upon which Patterson had sought dismissal.
7. The district court clearly erred in considering Patterson's affidavit. Because we hold
that personal jurisdiction exists, we will not belabor that matter. Even were we to
consider the affidavit, however, the result would not change.
8. Texas also, of course, has an interest in this dispute involving one of its citizens. It
also bears noting that, as Patterson pointed out in the court below, CompuServe is a
subsidiary of H&R Block, and both of those entities have divisions which are located
in Texas.
9. Our conclusion on the jurisdictional issue moots the issue of the district court's
denial of CompuServe's motion for reconsideration.

CONFLICT OF LAWS 3D 1/08-09 Page 92 of 97 Atty. Jose A. Bernas

Rush v. Savchuk, 444 U.S. 320 (1980)
APPEAL FROM THE SUPREME COURT OF MINNESOTA
Syllabus
While a resident of Indiana, appellee was injured in an accident in Indiana while riding
as a passenger in a car driven by appellant Rush, also an Indiana resident. After
moving to Minnesota, appellee commenced this action against Rush in a Minnesota
state court, alleging negligence and seeking damages. As Rush had no contacts with
Minnesota that would support in personam jurisdiction, appellee attempted to obtain
quasi in rem jurisdiction by garnishing the contractual obligation of State Farm Mutual
Automobile Insurance Co. (State Farm) to defend and indemnify Rush in connection
with such a suit. State Farm, which does business in Minnesota, had insured the car,
owned by Rush's father, under a liability insurance policy issued in Indiana. Rush was
personally served in Indiana, and after State Farm's response to the garnishment
summons asserted that it owed the defendant nothing, appellee moved the trial court
for permission to file a supplemental complaint making the garnishee, State Farm, a
party to the action. Rush and State Farm moved to dismiss the complaint for lack of
jurisdiction over the defendant. The trial court denied the motion to dismiss and
granted the motion for leave to file the supplemental complaint. The Minnesota
Supreme Court affirmed, ultimately holding that the assertion of quasi in rem
jurisdiction under the Minnesota garnishment statute complied with the due process
standards enunciated in Shaffer v. Heitner, 433 U. S. 186.
Held: A State may not constitutionally exercise quasi in rem jurisdiction over a
defendant who has no forum contacts by attaching the contractual obligation of an
insurer licensed to do business in the State to defend and indemnify him in
connection with the suit. Pp. 444 U. S. 327-333.
(a) A State may exercise jurisdiction over an absent defendant only if the defendant
has certain minimum contacts with the forum such that the maintenance of the suit
does not offend traditional notions of fair play and substantial justice. International
Shoe Co. v. Washington, 326 U. S. 310. In determining whether a particular exercise
of state court jurisdiction is consistent with due process, the inquiry must focus on
"the relationship among the defendant, the forum, and the litigation." Shaffer v.
Heitner, supra at 433 U. S. 204. P. 327.
(b) Here, the only affiliating circumstance offered to show a relationship among Rush,
Minnesota, and this lawsuit is that Rush's insurance
Page 444 U. S. 321
company does business in the State. However, the fictional presence in Minnesota of
State Farm's policy obligation to defend and indemnify Rush -- derived from
combining the legal fiction that assigns a situs to a debt, for garnishment purposes,
wherever the debtor is found with the legal fiction that a corporation is "present," for
jurisdictional purposes, wherever it does business -- cannot be deemed to give the
State the power to determine Rush's liability for the out-of-state accident. The mere
presence of property in a State does not establish a sufficient relationship between
the owner of the property and the State to support the exercise of jurisdiction over an
unrelated cause of action, and it cannot be said that the defendant engaged in any
CONFLICT OF LAWS 3D 1/08-09 Page 93 of 97
purposeful activity related to the forum that would make the exercise of jurisdiction
fair, just, or reasonable merely because his insurer does business there. Nor does
the policy provide significant contacts between the litigation and the forum, for the
policy obligations pertain only to the conduct, not the substance, of the litigation. Pp.
444 U. S. 327-330.
(c) Moreover, the requisite minimum contacts with the forum cannot be established
under an alternative approach attributing the insurer's forum contacts to the
defendant by treating the attachment procedure as the functional equivalent of a
direct action against the insurer, and considering the insured a "nominal defendant"
in order to obtain jurisdiction over the insurer. The State's ability to exert its power
over the "nominal defendant" is analytically prerequisite to the insurer's entry into
the case as a garnishee, and if the Constitution forbids the assertion of jurisdiction
over the insured based on the policy, then there is no conceptual basis for bringing
the "garnishee" into the action. Nor may the Minnesota court attribute State Farm's
contacts to Rush by considering the "defending parties" together and aggregating
their forum contacts in determining whether it has jurisdiction. The parties'
relationships with each other may be significant in evaluating their ties to the forum,
but the requirements of International Shoe must be met as to each defendant over
whom a state court exercises jurisdiction. Pp. 444 U. S. 330-332.
272 N.W.2d 888, reversed.
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and
STEWART, WHITE, BLACKMUN, POWELL, and REHNQUIST, JJ., joined.
BRENNAN, J., ante p. 444 U. S. 299, and STEVENS, J., post, p. 444 U. S. 333,
filed dissenting opinions.
Page 444 U. S. 322
MR. JUSTICE MARSHALL delivered the opinion of the Court.
This appeal presents the question whether a State may constitutionally exercise
quasi in rem jurisdiction over a defendant who has no forum contacts by attaching
the contractual obligation of an insurer licensed to do business in the State to
defend and indemnify him in connection with the suit.
I
On January 13, 1972, two Indiana residents were involved in a single-car accident
in Elkhart, Ind. Appellee Savchuk, who was a passenger in the car driven by
appellant Rush, was injured. The car, owned by Rush's father, was insured by
appellant State Farm Mutual Automobile Insurance Co. (State Farm) under a liability
insurance policy issued in Indiana. Indiana's guest statute would have barred a
claim by Savchuk. Ind.Code § 9-3-3-1 (1976).
Savchuk moved with his parents to Minnesota in June, 1973. [Footnote 1] On May
28, 1974, he commenced an action against Rush in the Minnesota state courts.
[Footnote 2] As Rush had no contacts with Minnesota that would support in
personam jurisdiction, Savchuk attempted to obtain quasi in rem jurisdiction by
Atty. Jose A. Bernas
garnishing State Farm's obligation under the insurance policy to defend and
indemnify Rush in connection with such a suit. [Footnote 3] State Farm does business
in Minnesota. [Footnote 4] Rush was
Page 444 U. S. 323
personally served in Indiana. The complaint alleged negligence and sought $125,000
in damages. [Footnote 5]
As provided by the state garnishment statute, Savchuk moved the trial court for
permission to file a supplemental complaint making the garnishee, State Farm, a
party to the action after State Farm's response to the garnishment summons asserted
that it owed the defendant nothing. [Footnote 6] Rush and State
Page 444 U. S. 324
Farm moved to dismiss the complaint for lack of jurisdiction over the defendant.
[Footnote 7] The trial court denied the motion to dismiss and granted the motion for
leave to file the supplemental complaint.
On appeal, the Minnesota Supreme Court affirmed the trial court's decision. 311
Minn. 480, 245 N.W.2d 624 (1976) (Savchuk I). It held, first, that the obligation of an
insurance company to defend and indemnify a nonresident insured under an
automobile liability insurance policy is a garnishable res in Minnesota for the purpose
of obtaining quasi in rem jurisdiction when the incident giving rise to the action occurs
outside Minnesota but the plaintiff is a Minnesota resident when the suit is filed.
Second, the court held that the assertion of jurisdiction over Rush was constitutional
because he had notice of the suit and an opportunity to defend, his liability was
limited to the amount of the policy, and the garnishment procedure may be used only
by Minnesota residents. The court expressly recognized that Rush had engaged in no
voluntary activity that would justify the exercise of in personam jurisdiction. The court
found, however, that considerations of fairness supported the exercise of quasi in
rem jurisdiction because in accident litigation the insurer controls the defense of the
case, State Farm does business in and is regulated by the State, and the State has
an interest in protecting its residents and providing them with a forum in which to
litigate their claims.
Rush appealed to this Court. We vacated the judgment and remanded the cause for
further consideration in light of
Page 444 U. S. 325
Shaffer v. Heitner, 433 U. S. 186 (1977). 433 U.S. 902 (1977).
On remand, the Minnesota Supreme Court held that the assertion of quasi in rem
jurisdiction through garnishment of an insurer's obligation to an insured complied with
the due process standards enunciated in Shaffer. 272 N.W.2d 888 (1978) (Savchuk
II). The court found that the garnishment statute differed from the Delaware stock
sequestration procedure held unconstitutional in Shaffer because the garnished
property was intimately related to the litigation and the garnishment procedure
paralleled the asserted state interest in "facilitating recoveries for resident plaintiffs."
272 N.W.2d at 891. [Footnote 8] This appeal followed.
II
CONFLICT OF LAWS 3D 1/08-09
The Minnesota Supreme Court held that the Minnesota garnishment statute
embodies the rule stated in Seider v. Roth, 17 N.Y.2d 111, 216 N.E.2d 312 (1966),
that the contractual obligation of an insurance company to its insured under a
liability insurance policy is a debt subject to attachment under state law if the insurer
does business in the State. [Footnote 9] Seider jurisdiction was upheld against a
due process challenge in Simpson v. Loehmann, 21 N.Y.2d 305, 234 N.E.2d 669
(1967), reargument denied, 21 N.Y.2d 990, 238 N.E.2d 319 (1968). The New York
court relied on Harris v. Balk, 198 U. S. 215 (1905), in holding that the presence of
the debt
Page 444 U. S. 326
in the State was sufficient to permit quasi in rem jurisdiction over the absent
defendant. The court also concluded that the exercise of jurisdiction was
permissible under the Due Process Clause because, "[v]iewed realistically, the
insurer in a case such as the present is in full control of the litigation" and,
"where the plaintiff is a resident of the forum state and the insurer is present in and
regulated by it, the State has a substantial and continuing relation with the
controversy."
Simpson v. Loehmann, supra at 311, 234 N.E.2d at 672.
The United States Court of Appeals for the Second Circuit gave its approval to
Seider in Minichiello v. Rosenberg, 410 F.2d 106, adhered to en banc, 410 F.2d 117
(1968), cert. denied, 396 U.S. 844 (1969), although on a slightly different rationale.
Judge Friendly construed Seider as,
"in effect, a judicially created direct action statute. The insurer doing business in
New York is considered the real party in interest, and the nonresident insured is
viewed simply as a conduit, who has to be named as a defendant in order to provide
a conceptual basis for getting at the insurer."
410 F.2d 109; see Donawitz v. Danek, 42 N.Y.2d 138, 142, 366 N.E.2d 253, 255
(1977). The court held that New York could constitutionally enact a direct action
statute, and that the restriction of liability to the amount of the policy coverage made
the policyholder's personal stake in the litigation so slight that the exercise of
jurisdiction did not offend due process.
New York has continued to adhere to Seider. [Footnote 10] New Hampshire has
followed Seider if the defendant resides in a Seider jurisdiction, [Footnote 11] but
not in other cases. [Footnote 12] Minnesota is the only
Page 444 U. S. 327
other State that has adopted Seider-type jurisdiction. [Footnote 13] The Second
Circuit recently reaffirmed its conclusion that Seider does not violate due process
after reconsidering the doctrine in light of Shaffer v. Heitner. O'Conner v. Lee-Hy
Paving Corp., 579 F.2d 194, cert. denied, 439 U. S. 1034 (1978).
III
Page 94 of 97 Atty. Jose A. Bernas
In Shaffer v. Heitner, we held that "all assertions of state court jurisdiction must be
evaluated according to the standards set forth in International Shoe and its progeny."
433 U.S. at 433 U. S. 212. That is, a State may exercise jurisdiction over an absent
defendant only if the defendant has
"certain minimum contacts with [the forum] such that the maintenance of the suit does
not offend 'traditional notions' of fair play and substantial justice."
International Shoe Co. v. Washington, 326 U. S. 310, 326 U. S. 316 (1945). In
determining whether a particular exercise of state court jurisdiction is consistent with
due process, the inquiry must focus on "the relationship among the defendant, the
forum, and the litigation." Shaffer v. Heitner, supra, at 433 U. S. 204.
It is conceded that Rush has never had any contacts with Minnesota, and that the
auto accident that is the subject of
Page 444 U. S. 328
this action occurred in Indiana and also had no connection to Minnesota. The only
affiliating circumstance offered to show a relationship among Rush, Minnesota, and
this lawsuit is that Rush's insurance company does business in the State. Seider
constructed an ingenious jurisdictional theory to permit a State to command a
defendant to appear in its courts on the basis of this factor alone. State Farm's
contractual obligation to defend and indemnify Rush in connection with liability claims
is treated as a debt owed by State Farm to Rush. The legal fiction that assigns a situs
to a debt, for garnishment purposes, wherever the debtor is found is combined with
the legal fiction that a corporation is "present," for jurisdictional purposes, wherever it
does business to yield the conclusion that the obligation to defend and indemnify is
located in the forum for purposes of the garnishment statute. The fictional presence of
the policy obligation is deemed to give the State the power to determine the
policyholder's liability for the out-of-state accident. [Footnote 14]
We held in Shaffer that the mere presence of property in a State does not establish a
sufficient relationship between the owner of the property and the State to support the
exercise of jurisdiction over an unrelated cause of action. The ownership of property
in the State is a contact between the defendant and the forum, and it may suggest the
presence of other ties. 433 U.S. at 433 U. S. 209. Jurisdiction is lacking, however,
unless there are sufficient contacts to satisfy the fairness standard of International
Shoe.
Here, the fact that the defendant's insurer does business in the forum State suggests
no further contacts between the defendant and the forum, and the record supplies no
evidence of any. State Farm's decision to do business in Minnesota
Page 444 U. S. 329
was completely adventitious as far as Rush was concerned. He had no control over
that decision, and it is unlikely that he would have expected that, by buying insurance
in Indiana, he had subjected himself to suit in any State to which a potential future
plaintiff might decide to move. In short, it cannot be said that the defendant engaged
in any purposeful activity related to the forum that would make the exercise of
jurisdiction fair, just, or reasonable, see Kulko v. California Superior Court, 436 U. S.
84, 436 U. S. 93-94 (1978); Hanson v. Denckla, 357 U. S. 235, 357 U. S. 253 (1958),
merely because his insurer does business there.
CONFLICT OF LAWS 3D 1/08-09 Page 95 of 97
Nor are there significant contacts between the litigation and the forum. The
Minnesota Supreme Court was of the view that the insurance policy was so
important to the litigation that it provided contacts sufficient to satisfy due process.
[Footnote 15] The insurance policy is not the subject matter of the case, however,
nor is it related to the operative facts of the negligence action. The contractual
arrangements between the defendant and the insurer pertain only to the conduct,
not the substance, of the litigation, and accordingly do not affect the court's
jurisdiction unless they demonstrate ties between the defendant and the forum.
In fact, the fictitious presence of the insurer's obligation in Minnesota does not,
without more, provide a basis for concluding that there is any contact in the
International Shoe sense
Page 444 U. S. 330
between Minnesota and the insured. To say that "a debt follows the debtor" is
simply to say that intangible property has no actual situs, and a debt may be sued
on wherever there is jurisdiction over the debtor. State Farm is "found," in the sense
of doing business, in all 50 States and the District of Columbia. Under appellee's
theory, the "debt" owed to Rush would be "present" in each of those jurisdictions
simultaneously. It is apparent that such a "contact" can have no jurisdictional
significance.
An alternative approach for finding minimum contacts in Seider-type cases, referred
to with approval by the Minnesota Supreme Court, [Footnote 16] is to attribute the
insurer's forum contacts to the defendant by treating the attachment procedure as
the functional equivalent of a direct action against the insurer. This approach views
Seider jurisdiction as fair both to the insurer, whose forum contacts would support in
personam jurisdiction even for an unrelated cause of action, and to the "nominal
defendant." Because liability is limited to the policy amount, the defendant incurs no
personal liability, [Footnote 17] and the judgment is satisfied from the policy
proceeds which are not available to the insured for any purpose other than paying
accident claims, the insured is said to have such a slight stake in the litigation as a
practical matter that it is not unfair to make him a "nominal defendant" in order to
obtain jurisdiction over the insurance company.
Seider actions are not equivalent to direct actions, however. [Footnote 18] The
State's ability to exert its power over the "nominal
Page 444 U. S. 331
defendant" is analytically prerequisite to the insurer's entry into the case as a
garnishee. If the Constitution forbids the assertion of jurisdiction over the insured
based on the policy, then there is no conceptual basis for bringing the "garnishee"
into the action. Because the party with forum contacts can only be reached through
the out-of-state party, the question of jurisdiction over the nonresident cannot be
ignored. [Footnote 19] Moreover, the assumption that the defendant has no real
stake in the litigation is far from self-evident. [Footnote 20]
The Minnesota court also attempted to attribute State Farm's contacts to Rush by
considering the "defending parties" together and aggregating their forum contacts in
determining whether it had jurisdiction. [Footnote 21] The result was the
Page 444 U. S. 332
Atty. Jose A. Bernas
assertion of jurisdiction over Rush based solely on the activities of State Farm. Such
a result is plainly unconstitutional. Naturally, the parties' relationships with each other
may be significant in evaluating their ties to the forum. The requirements of
International Shoe, however, must be met as to each defendant over whom a state
court exercises jurisdiction.
The justifications offered in support of Seider jurisdiction share a common
characteristic: they shift the focus of the inquiry from the relationship among the
defendant, the forum, and the litigation to that among the plaintiff, the forum, the
insurer, and the litigation. The insurer's contacts with the forum are attributed to the
defendant because the policy was taken out in anticipation of such litigation. The
State's interests in providing a forum for its residents and in regulating the activities of
insurance companies are substituted for its contacts with the defendant and the
cause of action. This subtle shift in focus from the defendant to the plaintiff is most
evident in the decisions limiting Seider jurisdiction to actions by forum residents on
the ground that permitting nonresidents to avail themselves of the procedure would
be unconstitutional. [Footnote 22] In other words, the plaintiff's contacts with the
forum are decisive in determining whether the defendant's due process rights are
violated.
Such an approach is forbidden by International Shoe and its progeny. If a defendant
has certain judicially cognizable ties with a State, a variety of factors relating to the
particular cause of action may be relevant to the determination whether the exercise
of jurisdiction would comport with "traditional notions of fair play and substantial
justice." See McGee v. International Life Ins. Co., 355 U. S. 220 (1957); cf. Kulko v.
California Superior Court, 436 U.S. at 436 U. S. 98-101. Here, however, the
defendant has no contacts with the forum, and the
Page 444 U. S. 333
Due Process Clause
"does not contemplate that a state may make binding a judgment . . . against an
individual or corporate defendant with which the state has no contacts, ties, or
relations."
International Shoe Co. v. Washington, 326 U.S. at 326 U. S. 319. The judgment of the
Minnesota Supreme Court is, therefore,
Reversed.
[For dissenting opinion of MR. JUSTICE BRENNAN, see ante p. 444 U. S. 299.]
MR. JUSTICE STEVENS, J., dissenting.
As the Court notes, appellant Rush had no contact with Minnesota that would support
personal jurisdiction over him in that State. Ante at 444 U. S. 322. Moreover, Shaffer
v. Heitner, 433 U. S. 186, precludes the assertion of quasi in rem jurisdiction over his
property in that forum if the intangible property attached is unrelated to the action. It
does not follow, however, that the plaintiff may not obtain quasi in rem jurisdiction
over appellant's insurance policy, since his carrier does business in Minnesota and
since it has also specifically contracted in the policy attached to defend the very
litigation that plaintiff has instituted in Minnesota.
In this kind of case, the Minnesota statute authorizing jurisdiction is correctly
CONFLICT OF LAWS 3D 1/08-09 Page 96 of 97
characterized as the "functional equivalent" of a so-called direct action statute. The
impact of the judgment is against the insurer. 444 U. S. 72, even if the accident
giving rise to the action did not occur in the forum State, see Minichiello v.
Rosenberg,
Page 444 U. S. 334
410 F.2d 106 (CA2 1968), cert. denied, 396 U.S. 844, so long as it is understood
that the forum may exercise no power whatsoever over the individual defendant. As
so understood, it makes no difference whether the insurance company is sued in its
own name or, as Minnesota law provides, in the guise of a suit against the individual
defendant.
In this case, although appellant Rush may have a contractual obligation to his
insurer to appear in court to testify and generally to cooperate in the defense of the
lawsuit, it is my understanding that Minnesota law does not compel him to do so
through the contempt power or otherwise. Moreover, any judgment formally entered
against the individual defendant may only be executed against the proceeds of his
insurance policy. In my opinion, it would violate the Due Process Clause to make
any use of such a judgment against that individual -- for example, by giving the
judgment collateral estoppel effect in a later action against him arising from the
same accident. Accord, Minichiello v. Rosenberg, supra, at 112; Note, The
Constitutionality of Seider v. Roth after Shaffer v. Heitner, 78 Colum.L.Rev. 409,
418-419 (1978). But we are not now faced with any problem concerning use of a
quasi in rem judgment against an individual defendant personally. I am therefore led
to the conclusion that the Federal Constitution does not require the Minnesota
courts to dismiss this action.
• It seems to me that the possible impact of a default judgment on the reputation
of an individual, see ante at 444 U. S. 331, n. 20, who has no contacts whatever
with the forum State is far too remote to affect the analysis of the constitutional
issue in this case.
Atty. Jose A. Bernas
CONFLICT OF LAWS 3D 1/08-09 Page 97 of 97 Atty. Jose A. Bernas