Questions to think about in connection with McGee

1)  Can you figure out how Int'l Life Ins. Co. responded to McGee's suit against it in California state court? Was this a wise move?

2)  Look at McGee from the perspective of Int'l Shoe, with particular attention paid to the level of activity giving rise to jurisdiction and to the extent to which the suit is related to this activity. What Shoe category would it fall under?

3) Consider the following passage from McGee:

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. 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 distant State in order to hold it legally accountable. When claims were small or moderate individual claimants freguently 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.

How is the reasoning here different from that in Int'l Shoe and Perkins? Is McGee yet another sea-change in theories of PJ?

4) D is incorporated in Oregon, does all its manufactoring in Oregon, and has all its offices there. P reads D's advertisement in a newspaper in California. P places an order by a phone call; that P makes to Oregon. D ships the good to California. PJ over D in California for a suit concerning the defectiveness of the product?

5) Assume P calls D merely after having read D's website, which includes D's phone number in Oregon. PJ over D in California for a suit concerning the defectiveness of the product?

6) Assume P calls D merely after having heard about D from a friend who bought D's products in Oregon. PJ over D in California for a suit concerning the defectiveness of the product?

7) D hires a national recruiting service (located in New York) to hire an engineer to work for a year in Oregon. P, who lives in California, is contacted by the service and agrees to work in Oregon. There he is injured on the job. After returning to California, he sues D in California state court for his injuries. PJ?

8) Consider Andrews University v. Robert Bell Industries, Ltd., 685 F.Supp. 1015 (W.D. Mich. 1988). Michigan P goes to Ontario D to buy boiler. Ontario D agrees, ships the boiler FOB Ontario. D has sold only three other boilers to companies in Michigan. Boiler is defective. P sues for breach in Michigan state court. PJ

Here is what the court said:

Bell argues that the unsolicited sale of three boilers in Michigan between 1972 and 1982 does not constitute sufficient “minimum contacts” to create a “substantial connection” between Bell and Michigan so as to confer general personal jurisdiction upon this Court. Moreover, Bell argues that three sporadic, unsolicited sales do not rise to the level of “systematic and continuous” business activity in Michigan. Bell argues that any contacts with Michigan which occurred after the alleged problems arose should not be considered in the “minimum contacts” calculus.

In sum, Bell argues that it is undisputed that Bell 1) has never registered to do business in Michigan; 2) has never had any offices, agents, or employees in Michigan; 3) does not own or maintain any assets, accounts, or property in Michigan; 4) has never advertised in Michigan publications or disseminated advertising of any kind in Michigan; 5) has never solicited business in Michigan or had a marketing system to promote its products in Michigan; 6) has never maintained a system for distributing its products in Michigan or sold its products through distributors who have agreed to act as agents in Michigan; and 7) has in the last fifteen years sold only three boilers directly to customers in Michigan. See Defendant Bell's Brief in Support of Motion to Dismiss at 8-9.

Bell further asserts that the alleged “tortious acts” took place, if at all, in Canada, not in Michigan, and emphasizes that the complaint alleges that the boiler was negligently designed and manufactured and does not allege any injury to person or property, but merely argues that the boiler is not usable in Michigan....
Proof alone that a non-resident caused an effect in Michigan that was foreseeable does not establish a relationship to Michigan such as to make it fair and reasonable to subject the non-resident to jurisdiction. (citation omitted)

Unless products of the manufacturer are distributed in this statute pursuant to its marketing system in such a manner and to such an extent that it can properly be said that the manufacturer has ‘purposefully avail[ed] itself of the privilege of conducting activities' within the state, it does not ordinarily have ‘substantial connection’ or requisite minimum contacts with the state justifying the exercise of long arm jurisdiction.

Would the case have come out differently if the shipment had not been FOB Ontario? What does FOB mean?

10) Now consider Chung v. NANA Development Corp., 783 F.2d 1124 (4th Cir. 1986). A Va. P goes to Alaska to buy reindeer horns from an Alaska D. P wants the horns to remain frozen. He requests that the D ship some of them to him in Va. When they arrive in Va. they are melted. P sues D in federal court in Va. PJ? Here is what the court said:

The contact between NANA and Virginia in this case was hardly so purposeful that litigation in Virginia could have been reasonably foreseen. NANA's ties with Virginia are virtually nonexistent; entirely so, apart from this single transaction. Although it is true that a single contractual relationship may furnish a basis for jurisdiction, [cites McGee], the Court has expressly denied that an individual's contract with an out-of-state party can alone automatically establish sufficient minimum contacts. It is essential that the contract relied upon have a “substantial connection” with the forum state. [Cites McGee] ...

The contract for reindeer antlers between Chung and NANA was finalized in Alaska, and though its essential terms were negotiated by telephone between Alaska and Virginia, those communications were initiated by Chung. NANA made no purposeful effort of its own to develop a market for its product in Virginia. It merely responded to Chung's unilateral inquiries. Payment for the antlers was tendered in Alaska at the time of sale. The parties entered into no agreements for a continuing business relationship beyond this single transaction in Alaska. Nothing in the parties' contract or course of dealing put NANA on notice that it might be haled into court in Virginia. NANA appears to have done everything possible to confine its United States business to its home state of Alaska during this transaction, and never had any other dealings with Virginia whatsoever. It only shipped goods to Virginia on this isolated occasion for the convenience of Chung...

It is immaterial, in this context, that NANA knew of the ultimate destination of the shipment, since the foreseeability of injury in a distant forum is not the touchstone of minimum contacts. While it is only fair that a corporation seeking to create interstate business by its own endeavors be subject to suit wherever it extends its reach, as the “contacts proximately result from actions by the defendant himself,” it is equally necessary to protect an enterprise such as NANA which has not made such efforts, but only sells its product to direct purchasers in its home state. Predictability in structuring business dealings would otherwise be impaired, and fair notice give way to the whims of purchasers, leaving jurisdiction to rest on “random, isolated or fortuitous” circumstances. NANA has simply not sent its goods into the stream of interstate commerce with the minimal regularity due process demands.

...This circuit has previously admitted that a single shipment of goods into the forum state may sometimes establish a jurisdictional basis. In other cases, such a single shipment has been held inadequate for “minimum contacts” purposes. See Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502, 507 (4th Cir.1956). Reasonableness and fairness are concepts inherently incapable of more precise definition, and, particularly in this area, “the shades are innumerable.” Examining with care all of the facts and circumstances here presented, we are not persuaded that it would be just to subject NANA to the jurisdiction of courts in Virginia, where its connections to the forum are not sufficiently purposeful but of an isolated and unsolicited character.

11) Now consider Thompson v. Chrysler Motors Corp., 755 F.2d 1162 (5th Cir. 1985). Miss. P goes to Ala. to buy car from Ala. D. Returns with car to Miss. Car has problems, P makes many phone calls to Ala. and returns a number of times to Ala. for repair. Finally D ships a master cylinder to P in Miss. for use in repair there. Cylinder is defective and accident occurs. P sues D in Miss. state court. PJ?

Here is what the court says:

But for Crimson's sale and shipment of the master cylinder to Buster's for placement in the Heaths' automobile, we might be persuaded that the Heaths' telephone calls to Crimson and their trips to the Alabama dealership for servicing of their vehicle, as well as the sale itself, merely constituted unilateral activity on the part of the Heaths insufficient to support an assertion of jurisdiction over Crimson. ...Telephone calls made from the forum state to the nonresident defendant represent an insufficient basis for the forum's assertion of jurisdiction over the nonresident. Further, the sale of an automobile by a dealer who operated in a state contiguous to the forum state and who knew that the purchaser would take the car to the forum state has been held insufficient to support an exercise of jurisdiction over the defendant even when a defect in the vehicle is alleged to have caused the accident giving rise to the suit.

Nevertheless, because the case ... involves an allegation of specific jurisdiction, we must examine the relationship among Crimson, the state of Mississippi, and this particular litigation. In this context, the problematic contact is clearly Crimson's sale and shipment of the master cylinder to Buster's, the Mississippi dealer, for installation in the Heaths' Dodge Magnum. Even a single purposeful contact is sufficient to satisfy the due process requirement of “minimum contacts” when the cause of action arises from the contact. [Cites McGee]  In Brown v. Flowers Industries, Inc., we held that due process permitted the assertion of jurisdiction over a nonresident whose sole contact with the forum state was the making of a single defamatory telephone call to a person in that state. ...The sale and shipment of the master cylinder into Mississippi represented an affirmative act by Crimson to introduce its product into Mississippi for use in that state. By this shipment, Crimson purposefully availed itself of the privilege of conducting activities in Mississippi and its connection with the forum is such that it should reasonably anticipate being haled into court there when the accident giving rise to the suit was caused by an alleged defect in the product sold and shipped to the forum. Moreover, while the other asserted contacts between Crimson and Mississippi might not have been sufficient of themselves to support jurisdiction, they weigh in favor of our conclusion when viewed in the aggregate with the master cylinder contact.

12) Consider Bensusan Restaurant Corp., v. King, 937 F.Supp. 295 (S.D.N.Y.1996). Bensusan, the operator of a New York jazz club sued the operator of a Missouri jazz club for trademark infringement. The Missori club's internet web site at issue contained general information about the defendant's club, a calendar of events and ticket information. The site was not interactive. If a user wanted to go to the club, she would have to call or visit a ticket outlet and then pick up tickets at the club on the night of the show. PJ over the Mo club in NY?