Opinion ID: 852959
Heading Depth: 4
Heading Rank: 3

Heading: Due Process Limitations

Text: The manufacturers and distributors are all located outside the City, and indeed outside Indiana. They argue that the relief sought by the City's lawsuit would violate the Due Process Clause by imposing extraterritorial regulation and imposing sanctions on conduct outside the City and outside Indiana. It is well established that a state may assert jurisdiction over activity that is conducted outside the state, but has its effects within the jurisdiction. Int'l Shoe Co. v. Washington, 326 U.S. 310, 315, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The defendant's challenge is not lack of personal jurisdiction, but rather that the form of relief the City seeks amounts to an attempt to control activity in another state through Indiana state tort law. BMW of N. Am. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), addressed that issue. In that case an Alabama state court had awarded punitive damages based on the nationwide activities of the defendant. Id. at 565, 116 S.Ct. 1589. The Supreme Court held that due process precluded a single state from seeking to change a tortfeasor's conduct in other states. Id. at 572, 116 S.Ct. 1589. At the same time, the Supreme Court observed that [n]o one doubts that a State may protect its citizens by prohibiting deceptive trade practices.... But the States need not, and in fact do not, provide such protection in a uniform manner. Id. 568-69, 116 S.Ct. 1589. The Court went on to observe that both statutory schemes and judicially recognized tort principles are appropriate means to these ends. Id. at 569, 116 S.Ct. 1589. As the Supreme Court put the principles established in BMW in a nutshell: Alabama may insist that BMW adhere to a particular disclosure policy in that State. Alabama does not have the power, however, to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents. Nor may Alabama impose sanctions on BMW in order to deter conduct that is lawful in other jurisdictions. Id. at 572-73, 116 S.Ct. 1589. The City here seeks none of the things BMW prohibited. It alleges among other things that the manufacturers engage in deceptive advertising aimed at Gary residents. The City also claims that the defendant's conduct produces ongoing and severe impacts on Gary and its residents that take the form of injuries to its citizens and harm to the City both in terms of public safety and in financial terms. Nor does the City seek damages for effects outside the City of Gary. To the contrary, the harms it alleges are all within its boundaries. Finally, the defendants contend that the only available relief would effect changes in nationwide distribution systems and therefore the City's remedy would both regulate conduct outside the state and seek to deter activity in jurisdictions other than Indiana. The City contends that remedies are available for the harm it alleges in Gary without unduly burdening activity elsewhere. At this stage of the lawsuit this issue is easily resolved. The availability of an appropriate remedy turns on factual assertions by both sides that are resolved in favor of the plaintiff on this motion to dismiss.