Businesses that are incorporated in foreign countries and conduct a large portion of their operations outside of the territorial jurisdiction of the United States may nevertheless cause injury to U.S. persons. For example, a foreign company might manufacture in its home country a machine that another company later distributes in the United States, ultimately resulting in an injury to a U.S. consumer. As a further example, a foreign subsidiary of a U.S. corporation might make a product that allegedly causes the death of U.S. persons traveling in a foreign country, but that subsidiary might otherwise have no significant connection to the United States. Although foreign companies may engage in actions or omissions that injure U.S. persons--or even foreign plaintiffs --such injured persons may face various procedural challenges in obtaining judicial relief from a foreign company defendant in U.S. courts. One potential obstacle to such civil lawsuits is the doctrine of personal jurisdiction. The Supreme Court has long interpreted the Due Process Clause of the Fourteenth Amendment to limit the power of state courts to render judgments affecting the personal rights of defendants who do not reside within the state's territory. And the Federal Rules of Civil Procedure give federal district courts power to assert personal jurisdiction over a defendant to the same extent that a state court in which the federal district court is located may assert that power, meaning the same limits on personal jurisdiction generally apply to federal courts. In this vein, the Court has, for instance, held that a New York company that sells a car to a New York resident is not subject to a products-liability lawsuit in Oklahoma solely because the car was involved in an accident there. Questions over personal jurisdiction are among the most frequent constitutional issues resolved by lower federal courts, and are the basis for a dismissal of complaint in a considerable number of cases lodged in both federal and state court. This report broadly traces the evolution of the doctrine of personal jurisdiction through more than a century of Supreme Court rulings. In particular, it highlights recent developments in the doctrine, which have generally given a more limited view of when a court can exercise personal jurisdiction over a given defendant. The report concludes with a brief discussion of the debate over the Court's most recent rulings in this area of law, and addresses one possible action Congress might take to address any concerns with the Court's recent decisions on personal jurisdiction: authorizing federal courts to exercise nationwide personal jurisdiction over foreign companies that have minimum contacts with the United States as a whole rather than with an individual state. In 1877, the Supreme Court decided an important case addressing the constitutional limits on state courts' exercise of personal jurisdiction over nonresident defendants. In Pennoyer v. Neff , the Court indicated that, absent a defendant's consent, a state court's jurisdiction generally extends only to persons or property within its territory. The Court grounded this "physical presence" approach in principles of federalism: each state of the union is a coequal and independent sovereign in the federal system, and thus possesses exclusive authority over persons and property within its domain. Although the Court's decision in Pennoyer addressed personal jurisdiction over natural persons, the Court's early jurisprudence following the 1877 case established that state courts could potentially exercise jurisdiction over foreign corporations doing business in the state based on the legal fiction that those corporations had implicitly consented to personal jurisdiction, or could be deemed "present" within the state, based on their in-state activities. The Pennoyer Court's "physical presence" test established the constitutional foundation for strict limits on state courts' authority to exercise in personam jurisdiction over a nonresident defendant--that is, to render judgments concerning that defendant's personal rights and obligations. Thus, for example, service upon a defendant by publishing notice of the lawsuit in a newspaper circulating in the forum state was insufficient to confer jurisdiction on a court to adjudicate the personal liability of a defendant who had left the state and did not intend to return. Nevertheless, even in the absence of a nonresident defendant's physical presence or consent, courts could still attain jurisdiction over the defendant indirectly through the attachment (i.e., seizure) of the defendant's property interests within the forum and the provision of notice to the defendant. In particular, a state court could exercise in rem jurisdiction over a nonresident defendant's property interest in the state in order to adjudicate all of the rights or claims in a piece of property. It could also exercise quasi in rem jurisdiction over a nonresident defendant by adjudicating a plaintiff's claim to the property in relation to the defendant or to satisfy the claims of its own citizens against the defendant personally. However, judgments resting upon the exercise of in rem or quasi in rem jurisdiction would not personally bind the defendant to an extent greater than the value of the property. Although Pennoyer 's physical presence test informed the Supreme Court's jurisprudence related to jurisdiction for several decades, a significant expansion of the U.S. economy in the mid-20 th century altered that focus. As commerce and travel among the states and between the states and foreign countries increased, corporations expanded the geographical scope of their activities. A more interconnected, global economy meant that a corporation's activities had greater potential to cause harm in distant jurisdictions, but also meant that businesses could more easily defend lawsuits arising from that harm in distant fora. Faced with these new realities, the Court reconsidered the nature of the due process limitations on the jurisdiction of state courts over nonresident individuals and corporations that conducted activities in the states. In the 1945 case International Shoe Co. v. Washington , the Court explained its rejection of a strict adherence to the physical presence test, holding that a state could authorize its courts to subject an out-of-state entity to in personam jurisdiction, consistent with due process, and thus require it to defend a lawsuit, if that entity had "certain minimum contacts" with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." The Court rested its holding in part on the notion that an entity conducting activities in a state benefits from the protections of state law, and thus should have to respond to legal complaints arising out of its actions in the forum even if it is not "physically present" in the state. Thus, the Supreme Court's opinions in International Shoe and subsequent cases have established a more flexible two-part test for determining when exercise of personal jurisdiction over each nonresident defendant sued by a plaintiff comports with due process: (1) the defendant has established minimum contacts with the forum state that demonstrate an intent to avail itself of the benefits and protections of state law; and (2) it is reasonable to require the defendant to defend the lawsuit in the forum. Nevertheless, as noted, the Court has confirmed that several traditional bases for the exercise of judicial power over a nonresident defendant for claims against him continue to enjoy a presumption of constitutionality without requiring an independent inquiry into the contacts among the defendant, the forum, and the litigation. Specifically, the traditional bases for jurisdiction include if: (1) the defendant is domiciled in the forum state (e.g., a defendant who is a natural person intends to establish a permanent home in the forum or a corporation intends to establish a permanent headquarters); (2) the defendant has consented to jurisdiction; or (3) a defendant who is a natural person is served with process while he is physically present--even temporarily--within the forum. The Court has also indicated that a state court may adjudicate the personal status of a plaintiff in relation to the defendant (e.g., marital status) without considering whether personal jurisdiction over the defendant is constitutionally valid. Over the years, the Supreme Court has offered three main justifications for the constitutional constraints on a court's assertion of personal jurisdiction over nonresident persons and corporations. First, each state's status as a "co-equal sovereign" in a federal system of government implies at least some limits on the power of its courts to render judgments affecting the rights of entities outside of that state's boundaries. Second, constitutional limits on personal jurisdiction attempt to address concerns about the unfairness of subjecting defendants to litigation in a distant or inconvenient forum. Finally, constitutional limits on the exercise of personal jurisdiction recognize that the Due Process Clause protects defendants from being deprived of life, liberty, or property by a tribunal without lawful power. Since its 1945 decision in International Shoe , the Supreme Court has elaborated on the nature and quality of the minimum contacts that a defendant must have with the forum in order for a court to subject him or her to personal jurisdiction in that forum consistent with due process. When determining whether a defendant has minimum contacts with the forum, the Court has distinguished the types of contacts sufficient for a court's exercise of "general" personal jurisdiction over the defendant from those contacts sufficient for its exercise, alternatively, of "specific" jurisdiction. A court's exercise of specific jurisdiction may be constitutional when the defendant has contacts with the forum that give rise to, or are related to, the plaintiff's cause of action (e.g., an act or occurrence caused by the defendant that takes place in the forum or has an impact there). However, when there is "no such connection [between the forum and the particular claims at issue], specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State." By contrast, a court's exercise of general jurisdiction over a nonresident defendant for any claim--even if all the incidents underlying the claim occurred in a different state--may be constitutional when the defendant's activities in the forum state are so substantial that it is reasonable to require it to defend a lawsuit that did not arise out of its activities in the forum state and is unrelated to those activities. Perhaps in order to ensure greater predictability for defendants attempting to discern where they may be subject to suit on claims arising anywhere in the world, in more recent years, the Court has significantly limited the types of activities or affiliations of the defendant in the forum state sufficient for general jurisdiction, holding that those contacts must be so substantial as to render the defendant "essentially at home" in the forum state. The Court has clarified that, absent exceptional circumstances, a corporate defendant is "at home" when it is incorporated in the forum state or maintains its principal place of business there. Insubstantial in-state business, in and of itself, does not suffice to permit an assertion of jurisdiction over claims that are unrelated to any activity occurring in a state. Although the Court has rarely addressed the scope of general personal jurisdiction, it has decided several cases elaborating on the quality and nature of the defendant's contacts with the forum and litigation necessary for a court's exercise of specific jurisdiction over the defendant. A common theme throughout many of these decisions is that "unilateral activity" in the forum state by a person who has some family, business, or other relationship with a nonresident defendant will not suffice to establish a defendant's minimum contacts with the forum. In other words, jurisdiction is not proper merely because the defendant could have foreseen that a third party with which it has a family or business relationship (e.g., a defendant's family member or customer of a defendant corporation) would have contacts with the forum. Rather, the defendant must "purposefully avail" itself "of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." The defendant must have reasonably anticipated being haled into court there--a standard that potentially allows a defendant to predict where it will be subject to suit and plan the geographic scope of its activities or ensure against the risk of being sued in a distant forum accordingly. The Court has also emphasized that the minimum contacts inquiry should not focus on the location of the resulting injury to the plaintiff; instead, the proper question is whether the defendant's conduct connects him to the forum in a meaningful way. Many of the Supreme Court's decisions on the minimum contacts test address specific categories of contacts between the defendant and forum, such as the alleged tortious conduct of the defendant in the forum state; a contract between the defendant and an entity in the forum state; a business relationship between the defendant and a party in the forum state; and property interests of the defendant in the forum state. For example, in cases in which the plaintiff alleged that a nonresident had committed the tort of libel causing harm in the forum state, the Court upheld the exercise of specific personal jurisdiction over a defendant that intentionally targeted the state with publication of allegedly libelous material. The Court determined that regularly publishing a widely circulated magazine with knowledge that harm could occur to the state's residents amounted to a sufficient contact between the defendant, the forum, and the litigation. As a result, the Court has recognized that, provided there is a sufficient connection between the defendant and the forum, states have a "significant interest" in permitting their courts to exercise jurisdiction over defendants in order to redress harm that occurs within state boundaries. In the past, there has been disagreement among the Supreme Court Justices, however, as to when a nonresident corporation whose product causes injury within the forum state has "purposefully availed" itself of the privilege of conducting business within the state, and should therefore be subject to personal jurisdiction in that state in a tort action for products liability. In the 1987 case Asahi Metal Industry v. Superior Court , four Justices agreed that a nonresident defendant's awareness that a product it manufactured would end up in the forum state through its intentional placement of the product in the stream of commerce outside of the forum did not by itself constitute an act directed at the forum sufficient for specific personal jurisdiction. Writing for a plurality of the Court, Justice O'Connor maintained that a tribunal lacked the authority to exercise personal jurisdiction over a defendant that had not performed additional actions in the forum state that demonstrated an intent to serve that state's market. According to her plurality opinion, because the defendant did not have clear notice that it could be subject to suit in California, it would have been unfair to subject the defendant to suit there. However, another four Justices would have held that the defendant's intentional placement of a product into the stream of commerce by itself was sufficient for personal jurisdiction because the defendant could foresee being sued in any state in which the product was regularly sold and marketed. Those Justices would have grounded this result in the benefits that defendants derive from the regular retail sale of their products in the forum and the protections of state law. This disagreement appears to remain unresolved after a 2011 case, J. McIntyre Machinery, Ltd. v. Nicastro , in which a plurality of the Court indicated that a foreign manufacturer of a product cannot be subject to the jurisdiction of a state court based on its mere expectation that the products it ships to an independent U.S. distributor might be distributed in the forum state. Instead, according to the plurality written by Justice Kennedy, the defendant must have directly targeted the individual state with its goods, thereby "purposefully availing" itself of the privilege of conducting in-state business. However, the plurality's view did not command a majority of the Court, and a narrower concurring opinion would have found jurisdiction lacking under any of the various tests for personal jurisdiction articulated in the Justices' opinions in Asahi because the shipment of products into, or their sale in, the forum state did not occur regularly, and there was no additional sales-related conduct (e.g., marketing) by the defendant in the forum. In addition to addressing cases involving a defendant's alleged tortious conduct, the Supreme Court has also addressed minimum contacts in the context of out-of-state defendants reaching out to a forum state to establish a continuing business relationship in that state. For example, the Court upheld a California court's exercise of specific personal jurisdiction over a Texas mail order insurance company that had no office or agent in California because the Texas company mailed an offer of insurance to the plaintiff's son in California. The son accepted the offer and continued to send the company premium payments through the mail to Texas from California until the son died in California. The Court noted that the suit arose from a contract that had a "substantial connection" with California, holding that the state had a significant interest in providing redress for its residents in cases in which insurance companies refuse to pay claims. Similarly, when a nonresident defendant establishes an office in a state to conduct business through agents in the state, he may have to answer a lawsuit related to those business activities when an agent is served in the forum, regardless of whether he consented to service of process through his agent. Another context in which the Supreme Court has addressed the minimum contacts test involves contractual disputes between the parties to a lawsuit. Thus, when a franchisor headquartered in Florida brought suit in a local federal court against Michigan franchisees for the alleged breach of a franchise agreement to make required payments in Florida, the Court held that specific jurisdiction over defendants was proper based on the specific circumstances surrounding the contractual relationship. The Court stated that a contract between an out-of-state party and an individual in the forum state is insufficient by itself to establish personal jurisdiction if the contract lacks a substantial connection to the state as established by, among other things, an (1) examination of the parties' prior negotiations (e.g., whether the defendant reached into the forum to negotiate the contract); (2) the terms of the contract (e.g., where payments were to be made and which state's law was to govern); and (3) the course of dealing (e.g., whether the defendant established a "substantial and continuing relationship" in the forum state). The Court has also opined on when a defendant's property interests in the forum may serve as a contact for purposes of personal jurisdiction. In Shaffer v. Heitner , the Supreme Court held that a state court could not exercise quasi in rem jurisdiction over a nonresident defendant by attaching the defendant's property interests in the state without inquiring separately into whether these property interests and any other connections between the defendant, forum, and litigation established sufficient minimum contacts to satisfy the first prong of the International Shoe test. Thus, a Delaware court could not subject nonresident officers and directors of a Delaware corporation to personal jurisdiction for the alleged breach of duties to the corporation based solely on the court's attachment of their stock and stock options in the corporation. The Court noted that jurisdiction over property must in fact have a direct effect on the interests of the defendant in that property and therefore affect its personal rights. However, the Shaffer Court also noted that in some cases, such as cases establishing title to real property, ownership of the property itself may establish sufficient contacts among the defendant, forum, and litigation. Even if a nonresident defendant has minimum contacts with the forum, the Supreme Court has, at times, considered whether a state court's exercise of personal jurisdiction over him would comport with due process by examining the reasonableness of the exercise of jurisdiction. In International Shoe and its subsequent opinions, the Court has established a multi-factor test that seeks to ensure that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." The Court has subsequently clarified that in applying this test to evaluate the reasonableness of the exercise of jurisdiction in light of the defendant's contacts with the forum and litigation, it will examine several factors, including: (1) "the burden on the defendant"; (2) "the forum State's interest in adjudicating the dispute"; (3) "the plaintiff's interest in obtaining convenient and effective relief"; (4) "the interstate judicial system's interest in obtaining the most efficient resolution of controversies"; (5) and "the shared interest of the several States in furthering fundamental substantive social policies." Although the Supreme Court has had few occasions to address the reasonableness prong of the International Shoe test for personal jurisdiction, it has provided some guidance as to when courts may deem it reasonable to subject a defendant to suit. Thus, the Justices have, for example, suggested that courts should remain cautious about exercising personal jurisdiction over corporations domiciled abroad, particularly when most of the conduct at issue occurred overseas. Courts may therefore evaluate the risks that subjecting a foreign corporation to suit in the United States for overseas conduct would have on international relations between the United States and its trading partners. In a case involving the exercise of personal jurisdiction over a foreign corporation, moreover, the policies of other nations are relevant and must be carefully considered. In addition, when considering the burden on the defendant, the Court may consider it a heavy burden for a company domiciled abroad to travel from its foreign headquarters to have a dispute with another foreign corporation litigated in U.S. courts. This concern may stem in part from the notion that the interests of the plaintiff and forum are minimal when the claim is based on overseas transactions, the plaintiff is not a resident of the United States, and the allegedly tortious conduct could be deterred by subjecting companies over which the court has lawful judicial power to suit. Recent Supreme Court rulings have limited the circumstances in which U.S. courts may exercise personal jurisdiction over certain corporate defendants. In particular, the cases have limited the availability of U.S. courts as forums for lawsuits against foreign companies for claims arising from their conduct overseas. These decisions have required substantial contacts between the foreign defendant, the U.S. forum, and the litigation. For example, a plurality of the Court held in a 2011 case that a foreign company that manufactures a machine in a foreign country cannot be subject to the specific jurisdiction of a state court based on its mere expectation that the products it ships to an independent U.S. distributor might be distributed in the forum state. Instead, according to the plurality, the defendant must have directly targeted the individual state with its goods, thereby "purposefully availing" itself of the privilege of conducting in-state business. In addition to narrowing the scope of activities that may constitute minimum contacts between the defendant and the forum sufficient for a court's exercise of specific jurisdiction, the Court has significantly limited the types of activities or affiliations of the defendant in the forum state sufficient for general jurisdiction, holding that those contacts must be so substantial as to render the defendant "essentially at home" in the forum state. The Court has clarified that, absent exceptional circumstances, a corporate defendant is "at home" when it is incorporated in the forum state or maintains its principal place of business there. For example, the Court held in BNSF Railway Co. v. Tyrrell that Montana courts could not exercise general jurisdiction over a railroad company that had over 2,000 miles of track and more than 2,000 employees in the state because the company was not incorporated or headquartered in Montana and the overall activity of the company in Montana was not "so substantial" as compared to its activities throughout all of the jurisdictions in which it conducted business so as to render the corporation "at home" in the state. The Supreme Court's recent expansion of the personal jurisdiction defense has led to considerable debate, with several commentators criticizing the decision as being too solicitous toward corporate defendants. On the other hand, other commentators have defended the recent change in the Court's decisions, asserting that it will bring more clarity and cohesion to the doctrine of personal jurisdiction and reduce unfairness to defendants. If Congress disagrees with the Court's recent jurisprudence that has generally made it more difficult for plaintiffs to sue foreign companies in U.S. courts and obtain judicial relief for their injuries, it might consider legislative options to address such concerns. One action that Congress might take to address any concerns with the Court's recent decisions on personal jurisdiction is to functionally override the Federal Rules of Civil Procedure and authorize federal courts to exercise nationwide personal jurisdiction over certain defendants, such as foreign companies, that have, in the aggregate, minimum contacts with the United States as a whole rather than with an individual state. Congress could then amend federal statutes addressing venue (i.e., the district or county where a lawsuit may be brought) to address any concerns with fairness to foreign defendants. Currently, the venue statute (28 U.S.C. SS 1391) provides as a fallback venue "any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action." Presumably, Congress would need to amend this provision if it wanted to authorize nationwide personal jurisdiction; otherwise, venue would lie in any federal judicial district. Of course, any legislation authorizing nationwide personal jurisdiction would still have to comport with the demands of constitutional due process. The Supreme Court has specifically declined to address whether the Due Process Clause of the Fifth Amendment may limit the federal courts' exercise of personal jurisdiction. Authorizing federal courts to exercise nationwide personal jurisdiction over foreign defendants who have, in the aggregate, substantial contacts with the United States might satisfy the Court's due process-related concern that a U.S. tribunal possess lawful power over a defendant. However, such a proposal may still raise concerns about unfairness to foreign defendants that may result from requiring them to defend a lawsuit in a distant forum, particularly when the lawsuit does not arise out of the defendant's activity in the United States. Such fairness concerns may be particularly important in light of suggestions from the Supreme Court that the courts should consider several specific factors when evaluating the reasonableness of subjecting a foreign defendant to suit, including the burden on the foreign defendant, the policies of other nations, and the potential effect of such lawsuits on international relations between the United States and its trading partners. In this regard, the Court's personal jurisdiction jurisprudence that generally limits the powers of states may provide insight into the limits on Congress's power to expand the personal jurisdiction of federal courts.

Summary:
Businesses that are incorporated in foreign countries and conduct a large portion of their operations outside of the territorial jurisdiction of the United States may nevertheless cause injury to U.S. persons. For example, a foreign company might manufacture in its home country a machine that another company later distributes in the United States, ultimately resulting in an injury to a U.S. consumer. Although foreign companies may engage in actions or omissions that injure U.S. persons, such injured persons may face various procedural challenges in obtaining judicial relief from a foreign company defendant in U.S. courts. One potential obstacle to such civil lawsuits is the doctrine of personal jurisdiction. The Supreme Court has long interpreted the Due Process Clause of the Fourteenth Amendment to limit the power of state courts to render judgments affecting the personal rights of defendants who do not reside within the state's territory. And the Federal Rules of Civil Procedure give federal district courts power to assert personal jurisdiction over a defendant to the same extent that a state court in which the federal district court is located may assert that power, meaning the same limits on personal jurisdiction generally apply to federal courts. The Court has offered several justifications for the constitutional constraints on a court's assertion of personal jurisdiction over nonresident persons and corporations, including concerns about state sovereignty and fairness to defendants. The Supreme Court's jurisprudence addressing the doctrine of personal jurisdiction spans a period of American history that has witnessed a significant expansion of interstate and global commerce, as well as major technological advancements in transportation and communication. These changes produced a fundamental shift in the Court's views concerning the doctrine. Although the Court initially considered the defendant's physical presence within the forum state to be the touchstone of the exercise of personal jurisdiction over him or her, it later rejected strict adherence to this rule in favor of a more flexible standard that examines a nonresident defendant's contacts with the forum state to determine whether those contacts make it reasonable to require him to respond to a lawsuit there. The Supreme Court's opinions in International Shoe Co. v. Washington and subsequent cases have established a more flexible two-part test for determining when exercise of personal jurisdiction over each nonresident defendant sued by a plaintiff comports with due process: (1) the defendant must establish minimum contacts with the forum state that demonstrate an intent to avail itself of the benefits and protections of state law; and (2) it must be reasonable to require the defendant to defend the lawsuit in the forum. Recent Supreme Court rulings have limited the circumstances in which U.S. courts may exercise personal jurisdiction. This report discusses the evolution of the doctrine of personal jurisdiction as elucidated by the Supreme Court in its opinions. It concludes by examining the implications of recent developments in the doctrine of personal jurisdiction for Congress, as well as options that Congress might have to address these developments.