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“Tag” Does Not Mean “You’re It” For Corporations

“Tag” Does Not Mean “You’re It” For Corporations

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One of the first things you learn about in law school is jurisdiction, which makes sense because litigation begins and ends with jurisdiction, and jurisdiction is power: the fundamental power of states and courts over things and people.

But there are limits in both civil and criminal cases, which is why if someone wants to sue you over that bar fight that broke out while they were visiting from out of state, they have to sue you in your home state. They can’t sue you back in their home state when you’ve never even been there. If they did sue you there, the courts there would likely agree that they had no power—no personal jurisdiction—over you.

That could change, however, if you traveled to the other state, because your physical presence in a state is one of the ways you become subject to a court’s jurisdiction. That’s how, for example, a New Jersey man who was served with divorce papers while visiting his kids in California could be haled into court in California even though the divorce had nothing to do with his contacts there. See Burnham v. Superior Court, 495 U.S. 605 (1990). They call it, “tag jurisdiction,” as in, tag, you’re it.

So what happens if you want to sue an out-of-state corporation for something, but that something’s unrelated to any business the corporation does in your state, yet you manage to serve one of its executives personally while she’s vacationing there? Do you then get to sue the bastards in your state? Does the executive’s physical presence there subject the corporation to the jurisdiction of the courts?

Is there such a thing, in other words, as “tag jurisdiction” for corporations?

According to an interesting, recently-published federal case involving a deadly plane crash, the answer is no.

The lawsuit was brought by the family of a passenger on the plane, which crashed in Cuba in 2010, killing everyone aboard. The plane was originally built in 1995 by a French company, which sold it to a British airline. The plane changed hands a few times from there, and by the time of the crash, it was allegedly owned, maintained, and operated by a group of airlines in Cuba. There was no evidence it was ever owned or operated in California.

The family, who mostly lived in California, sued the French company in California and served the company at its headquarters in France. The company moved to dismiss for lack of personal jurisdiction, but while its motion was pending, the plaintiffs were able to personally serve one of its vice-presidents while he was attending a conference in California. They then argued that the company was subject to jurisdiction in the state both because of “tag” jurisdiction and because its business there was extensive enough to confer general jurisdiction over it for all purposes.

They lost on both fronts. The court held that there was no “tag” jurisdiction for corporations, only either specific (conduct-linked) jurisdiction or general (all-purposes) jurisdiction, and that general jurisdiction existed only in three places: a corporation’s state of incorporation; its principal place of business; and anywhere its contacts were “so constant and pervasive as to render it essentially at home.”

In this case, the court held that the corporation was not “essentially at home” in California. It was organized under French law, and its headquarters and principal place of business were in France. It was not licensed to do business in California, and it had no office or other form of physical presence there. At the time of the crash, its U.S. headquarters were located in Virginia, and since then, they had moved to Florida.

The plaintiffs argued that the company’s contacts with California were “substantial, continuous, and systematic,” and they pointed to five facts that they argued were enough to confer jurisdiction:

  • The company had contracts to sell planes to a California corporation
  • It bought some of its component parts from eleven suppliers in California
  • It sent representatives to California to meet with suppliers, promote its products, and attend industry conferences
  • It advertised in trade publications that were distributed in California
  • One regional airline flew its planes in California, though the airline did not buy the planes from the company

These contacts, however, did not render the French company “essentially at home” in California, so there was no general jurisdiction over the company, and the case was dismissed early on a motion for lack of personal jurisdiction.

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