In a unanimous decision, the US Supreme Court recently held that a court could not assert personal jurisdiction over a non-resident defendant, whose conduct took place entirely outside the forum, where the claim of jurisdiction was based solely on the fact that the allegedly wrongful conduct may have injured the plaintiffs who lived in the forum.  See Walden v. Fiore, No. 12-574, 2014 WL 700098 (US 25 February 2014).  The case, which marks another fairly recent decision from the Supreme Court that limits the reach of personal jurisdiction over foreign defendants (see e.g. Daimler AG v. Bauman), (re)emphasises the principle that it is the defendant’s actions and forum contacts, not plaintiffs’, that drive the jurisdictional inquiry.

Background

In Walden, the plaintiffs were professional gamblers living in Las Vegas, Nevada.  Returning from a gambling trip in Puerto Rico, the two were carrying large sums of cash, representing their gambling stake and winnings.  During a layover in Atlanta, Georgia, while awaiting a flight back to Nevada, the plaintiffs’ cash was seized by the defendant, a Georgia-based drug enforcement agent, on the belief that the funds were connected to illegal activity.  The plaintiffs were permitted to return home to Nevada, and promptly sought release of the funds.  Federal authorities elected not to pursue forfeiture proceedings, and returned the money to plaintiffs.  Nevertheless, the plaintiffs sued the Georgia agent in federal court in Nevada, claiming that his actions in seizing the cash, and in later submitting, to Georgia authorities, what they charged was a false affidavit supporting the seizure, violated their constitutional rights.

The federal district court in Nevada dismissed the suit for lack of personal jurisdiction, finding that even if the Georgia defendant allegedly caused harm to the plaintiffs who lived in Nevada, that alone was not enough to confer jurisdiction.  A sharply divided Ninth Circuit Court of Appeals reversed, finding personal jurisdiction appropriate because when the defendant prepared his (purportedly false) affidavit, he knew that plaintiffs had “significant connections” to Nevada.  The dissent cautioned that the Ninth Circuit’s majority decision could substantially, and improperly, expand personal jurisdiction by focusing, not on defendant’s forum contacts, but on whether it was foreseeable that the defendant’s actions could possibly have an effect in the plaintiffs’ home state.

The US Supreme Court’s Unanimous Decision

Applying “[w]ell-established principles of personal jurisdiction,” the Supreme Court reined back this would-be expansion.  At issue was whether the defendant had “minimum contacts” with the forum (Nevada) to create specific personal jurisdiction.  (Specific jurisdiction may exist where the claims arise out of the defendant’s forum contacts, while general jurisdiction arises from the defendant’s continuous and systematic contacts with the forum regardless of the plaintiff’s claim.)  The proper focus of the “minimum contacts” inquiry is “the relationship among the defendant, the forum and the litigation,” and not on the defendant’s contacts with persons who may reside in the forum. 

Applying this standard, the Court found that the Georgia-based defendant was not properly subject to personal jurisdiction in Nevada because none of the alleged conduct occurred in Nevada and none of his actions otherwise connected him to the state.  Relevant to this case, the defendant never travelled to, conducted activities within, contacted anyone in, or sent anything to Nevada.  The Supreme Court has previously held that physical presence in the forum is not a prerequisite to jurisdiction, and has affirmed the assertion of specific jurisdiction over defendants who have purposefully reached out beyond their state (or national) borders and into the forum state by, as an example, entering into a contractual relationship that envisioned contacts with the forum or otherwise accessing the forum state’s market.  These holdings remain undisturbed.  In Walden, however, the defendant did not purposefully direct any activities to the forum.  Rather, the only connection with Nevada was that plaintiffs resided there.  Thus, the Court found, “when viewed through the proper lens–whether defendant’sactions connect him to the forum–[defendant] formed no jurisdictionally relevant contacts with Nevada.”

To support their “injury-based” jurisdictional argument, plaintiffs relied on Calder v Jones, a 1984 US Supreme Court decision finding jurisdiction, in a libel action, over non-resident defendants who had various forum contacts, including causing reputational injury in the forum by publishing the allegedly libellous article there.  However, as the Supreme Court emphasised in Walden, the holding in Calder made clear that mere injury to a forum resident is not, by itself, a sufficient basis for jurisdiction.  Rather, regardless of where a plaintiff resides, “an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum.”  To hold otherwise, noted the Court, would lead to a situation where, as in this case, the effect of defendant’s conduct would be felt in any forum where the plaintiffs happened to travel and “found themselves wanting more money than they had.”  In other words, because the effects of the defendant’s conduct were not connected to Nevada in any jurisdictionally significant way, those effects were not a proper basis for personal jurisdiction.

In so holding, the Court expressly rejected the Ninth Circuit’s attempt to shift the analytical focus from defendant’s contact with the forum to his contacts with the plaintiffs.  For the circuit court, the fact that defendant knew plaintiffs had “strong forum connections,” combined with its view that plaintiffs suffered foreseeable harm in Nevada, satisfied the minimum contacts inquiry.  This approach, the Supreme Court found, impermissibly allowed the plaintiff’s contacts (with the forum and the defendant) “to drive the jurisdictional analysis,” and “improperly attribute[d] a plaintiff’s forum connections to the defendant and makes those connections ‘decisive’ in the jurisdictional analysis.”

Conclusion

The Supreme Court’s decision in Walden does not depart from settled jurisdictional precedent that a defendant’s actions outside the forum can be sufficient for personal jurisdiction to the extent those actions are purposefully directed to the forum state.  Via Walden, however, the Supreme Court has reaffirmed that no matter how strong the plaintiff’s contacts with the forum, the jurisdictional inquiry ultimately rests on the defendant’s forum contacts.  If none exist, then personal jurisdictional shouldn’t either.