LAW OF COMPUTER TECHNOLOGY FALL 2015 © 2015 MICHAEL I. SHAMOS Jurisdiction Michael I. Shamos,...

LAW OF COMPUTER TECHNOLOGY FALL 2015 © 2015 MICHAEL I. SHAMOS

Jurisdiction

Michael I. Shamos, Ph.D., J.D.Institute for Software ResearchSchool of Computer ScienceCarnegie Mellon University


Outline

• Jurisdiction: how does a court acquire the power to hear and decide a case?

• Subject matter jurisdiction

– Can the court hear this type of case?

• Personal jurisdiction

– Does the court have power over the parties?

• In rem jurisdiction: suing things

– Does the court have power over particular things?

• The court in which a case is heard is called the forum, from Latin for “town square.” Plural: fora


Subject-Matter Jurisdiction

• Does the court have the power to decide this type of case?

• Examples:– patent and copyright cases are federal only– state criminal prosecutions are heard only in state

court– contract cases between citizens of the same state

cannot be heard in federal court– Iowa can’t try crimes under the Pennsylvania

Crimes Code– A state can’t sue another state in any state court


Subject-Matter Jurisdiction• Who decides whether a court has jurisdiction?

– The court determines its own jurisdiction• This seems circular, but how else to do it?

– Can’t have one master court deciding jurisdiction for every case

– Saving grace: jurisdiction can be appealed, and if it violates the Constitution can go all the way to the U.S. Supreme Court

• Lack of subject matter jurisdiction can be asserted at any time, even after trial or appeal


Personal Jurisdiction

• Even if a court has subject mater jurisdiction, it may not have power over the particular parties to the case

• Such power is called “personal jurisdiction”• A court always has jurisdiction over the person who

brought the case because he did so voluntarily• A court always has jurisdiction over residents of the

state in which it sits• A court may not have jurisdiction over non-residents• For example, Pennsylvania courts do not

automatically have jurisdiction over residents of California


Personal Jurisdiction

• Can a French citizen sue an American in a French court?– Why or why not and when?– Does it matter what type of claim it is?

• Can a California citizen sue a Pennsylvania citizen in a Pennsylvania court?– Why or why not and when?– Does it matter what type of claim it is?

• Can a California citizen sue a Pennsylvania citizen in a California court?– Why or why not and when?


Bases for Personal Jurisdiction

• Historically, courts have based personal jurisdiction on four pillars (any one is sufficient)

• Physical presence: defendant is present in the forum and personally served – gotcha!

• Residence: defendant is habitually resident in the forum (but not necessarily present when the case is filed or heard)

• Consent: defendant consents to jurisdiction, either in advance or by not contesting jurisdiction

• Long-arm Statute: defendant commits acts bringing him within the forum’s long-arm statute

Jurisdiction By Consent• Parties cannot confer subject matter jurisdiction on a court

that does not have it• Parties can both confer and waive personal jurisdiction by

consent• Example: Google’s “Terms of Service” (as of 9/1/14)

– “The laws of California, U.S.A., excluding California’s conflict of laws rules, will apply to any disputes arising out of or relating to these terms or the Services. All claims arising out of or relating to these terms or the Services will be litigated exclusively in the federal or state courts of Santa Clara County, California, USA, and you and Google consent to personal jurisdiction in those courts.”

• There is a Federal court in Santa Clara county (San Jose, Northern District of California)

Santa Clara County

Google is inMountain View

There is a FederalCourt in San Jose

CALIFORNIA

SanFrancisco

Santa Clara County

UNITED STATES


Long-Arm Statutes

• Laws that define the circumstances under which courts located in the state can exercise jurisdiction over out-of-state Defendants

• Each state defines its own long-arm provisions– This seems self-serving. What are its limits?

• Long-arm statutes cannot exceed the “due process” boundaries of the U.S. Constitution

Pennsylvania Long-Arm Statute

• A Pa. court may exercise jurisdiction over a person who acts directly or by an agent, by:

• Transacting any business in this Commonwealth:– doing by any person in this Commonwealth of a series of

similar acts for the purpose of realizing pecuniary benefit– doing of a single act in this Commonwealth for the purpose of

thereby realizing pecuniary benefit with the intention of initiating a series of such acts.

– shipping merchandise directly or indirectly into or through Pa.– engaging in any business or profession within Pa.

• Contracting to supply services or things in Pa.• Causing harm or injury by act or omission in or out of Pa.

42 Pa. C.S. §5322


What’s a Commonwealth?

• Commonwealth means “free state,” not controlled by a king (Oliver Cromwell, 1649)– in the U.S., synonymous with “state.”

• Among the U.S. “states,” 4 are called Commonwealths:– Pennsylvania, Massachusetts, Virginia– Kentucky

• The first three were among the original 13 colonies when the U.S. was formed

• Kentucky was part of VA but split in 1792 as the 15th state• Also, “a political unit having local autonomy but voluntarily

united with the U.S.,”– e.g. Puerto Rico, Northern Marianas Islands


Special v. General Jurisdiction

• General jurisdiction means the court has power to decide ANY dispute between the parties within its subject matter jurisdiction

• Special jurisdiction means the case arose out of contacts with the state (court can only decide that case)

• The standards for special jurisdiction are lighter than for general jurisdiction

• Example: Smith travels from Arizona to Ohio to enter into a contract, then returns. He can be sued in Ohio on that contract, but generally not on other causes of action


Personal Jurisdiction• Constitutional limitations

– 5th Amendment: “No person shall be “deprived of life, liberty, or property, without due process of law.” (Applies to federal government)

– 14th Amendment: “nor shall any State deprive any person of life, liberty, or property, without due process of law.”

• What is a “person”?

– A natural person

– A “juristic person.” A partnership, corporation, limited liability company, trust, etc. An entity that can sue and be sued.


Due Process

• What is “due process”?– ‘due process’ means fundamental fairness and

substantial justice. Vaughn v. State, 3 Tenn. Crim. App. 54, 456 S.W.2d 879, 883 (1970)

– "An orderly proceeding wherein a person is served with notice, … and has an opportunity to be heard and to enforce and protect his rights before a court having power to hear and determine the case. Kazubowski v. Kazubowski, 45 Ill.2d 405, 259, N.E.2d 282, 290 (1970), cert. den. 400 U.S. 926

International Shoe Co. v. Washington, 326 U.S. 310 (1945)

• International Shoe Co.– Incorporated in Delaware– Main place of business in Missouri– 12 employees in Washington

DELAWARE

MISSOURI

WASHINGTON

Jurisdiction Over Non-Residents• Washington tried to collect unemployment compensation

contributions based on the salaries of International Shoe’s employees in Washington

• International Shoe refused to pay, saying the tax “interfered with interstate commerce” and was unconstitutional

• Washington Supreme Court ruled payment was required• U.S. Supreme Court: the “minimum contacts” rule:

– Does the party have sufficient “contacts” with the state that exercising jurisdiction will not “offend traditional notions of fair play and substantial justice”?

• In International Shoe’s case, “yes,” contacts were sufficient for SPECIAL JURISDICTION

Daimler AG v. Bauman et al.(Sp. Ct. 2014)

• Daimler AG– AG = aktiengesellschaft, German for pubic limited company – German company, owns Mercedes-Benz

• Barbara Bauman et al.– 22 residents of Argentina

• Bauman alleges that during a war in Argentina in 1976-1983 Mercedes-Benz Argentina helped security forces kidnap, torture and kill employees of Mercedes-Benz Argentina

• Daimler sells cars in California• No human rights violations took place in California• Bauman sued in U.S. District Court in the Northern District of

California (San Francisco) for human rights violations• Does California have general personal jurisdiction over Daimler?


Daimler AG v. Bauman (2014)• Daimler AG has multiple Mercedes-Benz subsidiaries around

the world.• Relevant ones are in Germany, U.S. and Argentina

DAIMLER AGHEADQUARTERS:

STUTTGART, GERMANY

●

MERCEDES-BENZ USA, LLCHEADQUARTERS: DELAWARE

●●

MERCEDES-BENZ USA, LLCPRINCIPAL PLACE OF BUSINESS:

NEW JERSEY

●

MERCEDES-BENZUSA, LLC HAS

INDEPENDENT CARDEALERS INCALIFORNIA

●22 RESIDENTSOF ARGENTINA

●

MERCEDES-BENZARGENTINA

HEADQUARTERS:BUENOS AIRES

Daimler AG v. Bauman (2014)• The Alien Tort Statute, 28 U.S.C. §1350 states:

“The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” (“tort only” means no criminal jurisdiction)

• Bauman said that California had jurisdiction because of Daimler’s contacts with California through its subsidiaries

• Mercedes-Benz has facilities in California• 2.4% of Mercedes sales worldwide occur in California• The District Court dismissed the case, finding insufficient

contacts between Daimler and California• The Ninth Circuit Court of Appeals reversed, finding sufficient

contacts based on prior Supreme Court cases• Daimler appealed to the U.S. Supreme Court


Daimler AG v. Bauman (2014)• The Supreme Court wrote: “This case concerns the authority of

a court in the United States to entertain a claim brought by foreign plaintiffs against a foreign defendant based on events occurring entirely outside the United States.”

• “The canonical opinion in this area remains International Shoe, in which we held that a State may authorize its courts to exercise personal jurisdiction over an out-of-state defendant if the defendant has ‘certain minimum contacts with [the State] such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.”

• “court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.”

• Case dismissed.


Flowchart of Jurisdiction If DefendantIs Outside the Forum and Has Not Consented

DOES THECOURT HAVE

SUBJECT MATTERJURISDICTION?

NEWCASE

NO

YESDID THE

CASE ARISEOUT OF CONTACTS

WITH THEFORUM?

YES, SPECIALPERSONALJURISDICTIONNEEDED

NO, GENERALPERSONALJURISDICTIONNEEDED

DOES ALONG-ARMSTATUTEAPPLY?

NO

YES

ISINTERNATIONAL

SHOE SATISFIED?(FAIR PLAY ANDSUBSTANTIAL

JUSTICE) COURT DOESNOT HAVE

JURISDICTION.CASE

DISMISSED

NO

ARECONTACTS

SYSTEMATIC ANDCONTINUOUS?

(DAIMLER)

YES

YES

COURT HASJURISDICTION --

CASE PROCEEDS

COURT DOESNOT HAVE

JURISDICTION.CASE

DISMISSED

NO

IF DEFENDANT IS INSIDE THE FORUM, PERSONAL JURISDICTION IS AUTOMATIC; SUBJECT MATTER JURISDICTION IS STILL NEEDED

Other Jurisdictional Considerations• Foreseeability: Would the party expect to be sued

there?• Did the party “purposefully avail himself” of the

privilege of conducting activities in the forum?• Transacting business with the forum• Visiting the forum in connection with the transaction• Acts causing injury in the forum• Contacts “numerous, purposeful, and continuous”• Not “random, isolated, or fortuitous”


Snowney v. Harrah’s Entertainment, Inc. 35 Cal. 4th 1054, 112 P.2d 28 (2005)

• Frank Snowney, a California resident, reserved a hotel room at Harrah’s in Las Vegas, Nevada from his home in California

• He was told the room would cost $50 per night• When he checked out, a $3 per night “energy surcharge” had

been added. He was not previously told of the surcharge• Snowney sued Harrah’s in California for deceptive business

practices for himself and on behalf of “persons who were charged an energy surcharge as an overnight hotel guest in one of the defendant's hotels, yet were never given notice that there was an energy surcharge and/or what such charge would be.” – a class action


Snowney v. Harrah’s Entertainment, Inc.

• Harrahs’ claimed the court had no personal jurisdiction

• Harrah’s maintained a website that could be used to reserve rooms. Snowney did not use it.

• The trial court dismissed the case• The appeals court reversed• The California Supreme Court found that Harrah’s

targeted California residents on its website and thus “purposefully availed” itself of doing business in California

• U.S. Supreme Court declined review


Response Reward Systems v. Meijer Inc. 189 F.Supp. 2d 1332 (M.D. Fla. 2002)

• Response Reward, a Florida company, owns patents on issuing electronic coupons

• Meijer, Inc. is a Michigan corporation that operates supermarkets

• Meijer operated a website that offered electronic coupons

• Response Reward alleged that Meijer was infringing its patents

• Response Reward could have sued in Michigan, where Meijer was located. Instead, it sued in Florida (more convenient, maybe friendlier)


Response Reward Systems v. Meijer Inc.

• The Florida long-arm statute permits jurisdiction over a defendant who is “engaged in substantial and not isolated activity” within Florida

• Meijer’s website was accessible from anywhere, but Meijer– was not licensed in Florida– had no offices, stores, employees or property in Florida– did not advertise in Florida– issued coupons which could not be used in Florida– BUT, some stores owned by others accepted the

coupons in Florida


Response Reward Systems v. Meijer Inc.

• The Florida long-arm statute, as interpreted by the Florida courts, permits jurisdiction over a defendant who commits an act outside Florida that causes damage within Florida, e.g. patent infringement

• Is it constitutional for Florida to exercise jurisdiction over Meijer?

• No. Meijer did not have minimum contacts with Florida.

• Think about it. Should there be jurisdiction just because the patent owner happens to be in Florida?


In Rem Jurisdiction

• Jurisdiction over things. “In rem” = “against a thing”From Latin, in (“against”) + accusative of res,

meaning “thing”• A state has power over physical items located inside

its borders• The items themselves can be sued in a proceeding to

determine rights• Often used in

law of the sea (reward for salvaged property), seizure cases (ownership of seized goods) computer law (rights to domain names)


Anticybersquatting Consumer Protection Act

“The owner of a [trade]mark may file an in rem civil action against a domain name in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located if … the domain name violates any right of the owner of a mark registered in the Patent and Trademark Office …”

15 U.S.C. §1125(d)(2)


Factors Affecting Jurisdiction

When more than one state has jurisdiction, we look at:(1) burden on the defendant(2) forum state's interest in resolving the dispute(3) the plaintiff's interest in receiving convenient and

effective relief(4) interstate judicial system's interest in obtaining the

most efficient resolution of controversies, and (5) shared interest of the several states in furthering

fundamental substantive social policies.Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)


Major Ideas

• A court must have both subject matter and personal jurisdiction to hear a case

• Subject matter jurisdiction cannot be waived• “Things” can be sued in rem• Personal jurisdiction is limited by the U.S. Constitution.

It requires “minimum contacts” with the state seeking to exercise jurisdiction.


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LAW OF COMPUTER TECHNOLOGY FALL 2015 © 2015 MICHAEL I. SHAMOS Jurisdiction Michael I. Shamos,...

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