Ninth Circuit Holds That "Tag Jurisdiction" Does Not Apply to Corporations

HIGHLIGHTS:

• Consistent with Daimler, the Ninth Circuit holds that in-state service of process on a corporation's officer does not render the corporation "at home" in the state to create jurisdiction over the corporation.
• While a corporation's officers may "in some abstract sense be 'present' wherever its officers do business, such presence is not physical in the way contemplated" for tag jurisdiction.

Following closely on the heels of the U.S. Supreme Court's landmark personal jurisdiction decision in Daimler AG v. Bauman,¹ the U.S. Court of Appeals for the Ninth Circuit has issued a decision that further reinforces the limited circumstances in which general jurisdiction may be invoked against a corporate defendant. (See the Holland & Knight Aviation alert, "Daimler and Walden: The Supreme Court's Continued Trend on Limiting Personal Jurisdiction," March 20, 2014.) In Martinez v. Aero Caribbean,² the appellate court held that in-state service of process on a corporation's officer is not sufficient to create general personal jurisdiction over the corporation.

Plaintiffs Attempt to Serve Corporate Officer While in California

In Martinez, the French aircraft manufacturer Avions de Transport Régional (ATR) was sued in federal court in California by the heirs of a passenger on an airplane which crashed in Cuba, resulting in the deaths of everyone on board. The plaintiffs alleged that ATR's defective design and construction of the aircraft caused the crash.

The plaintiffs served copies of the summons and complaint on ATR's vice president of marketing while he was attending a conference in California on ATR's behalf.

No "Tag Jurisdiction" Over Corporations

In 1990, in Burnham v. Superior Court,³ the U.S. Supreme Court, through a plurality opinion and several concurrences, reaffirmed the historical rule that

personal service upon a physically present defendant suffice[s] to confer jurisdiction without regard to whether the defendant was only briefly in the State or whether the cause of action was related to his activities there.

This type of jurisdiction is often called "tag jurisdiction" or "transient jurisdiction."

The Martinez plaintiffs argued that, according to Burnham, the court had personal jurisdiction over ATR based on in-state service on ATR's vice president.

The Court of Appeals disagreed, holding that the District Court was correct in its assessment that it could not exercise personal jurisdiction over ATR consistent with federal due process. Citing Daimler, the court first reiterated that jurisdiction is only appropriate when the corporation's contacts with the forum state are so constant and pervasive as to render it "essentially at home" in the state. The court explained that ATR was not otherwise essentially at home in California, and "service on its corporate officer did not render it so."

Pointing out that none of the various opinions in Burnham discussed tag jurisdiction with respect to artificial persons, the court reasoned that "[w]hile a corporation may in some abstract sense be 'present' wherever its officers do business, such presence is not physical in the way contemplated by Burnham."⁴ Moreover, the court observed that, in the past, the U.S. Supreme Court has analyzed a corporation's contacts with the forum state even when tag jurisdiction, if available, would have made such analysis unnecessary.⁵

The court concluded:

ATR is not subject to personal jurisdiction in California. Burnham does not authorize tag jurisdiction over corporations, and ATR's contacts with California are insufficient to support general jurisdiction.⁶

Decision Limits Personal Jurisdiction Against Corporate Defendants

Following the lead of the U.S. Supreme Court's recent personal jurisdiction opinions, this decision further limits the instances in which personal jurisdiction may be asserted against a corporate defendant. Although it remains to be seen whether other circuits will follow suit,⁷ corporations need no longer be concerned that they are susceptible to tag jurisdiction in the Ninth Circuit. 
   

Notes

¹ 134 S. Ct. 746 (2014).

² No. 12-16043, --- F.3d ---, 2014 WL 4100585, at *1 (9th Cir. August 21, 2014).

³ 495 U.S. 604 (1990).

⁴ 2014 WL 4100585, at *5. Accord Estate of Ungar v. Palestinian Authority, 400 F. Supp. 21 541, 553 (S.D.N.Y. 2005), aff'd on other grounds, 332 F. Appx. 643 (2d Cir. 2009) ("'Tag' jurisdiction – personal service on an individual within the state – remains a valid method of acquiring personal jurisdiction over an individual, though not over a corporation through the persons of its officers.")

⁵ Citing Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952), where the court upheld jurisdiction only after deciding whether the business done in the forum state was sufficiently substantial, notwithstanding the fact that the plaintiffs had personally served the company's president in the forum state.

⁶ 2014 WL 4100585, at *8.

⁷ The decision calls into question the persuasiveness of a pre-Daimler decision by the U.S. Court of Appeals for the First Circuit, which suggested, in dicta, that in-state service on a corporate officer could confer personal jurisdiction over a foreign company. See Northern Light Tech., Inc. v. Northern Lights Club, 236 F.3d 57, 63 n.10 (1^st Cir. 2001). In a case of first impression, a court in the Northern District of Illinois had previously distinguished Northern Light in declining to find jurisdiction over a corporation. See C.S.B. Commodities, Inc. v. Urban Trend (HK) Ltd., 626 F. Supp. 2d 837, 850 (N.D. Ill. 2009) (noting that defendants in Northern Light waived the service defense and, in any event, the First Circuit may have viewed corporation as alter ego of individual defendant).

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