Opinion ID: 4425534
Heading Depth: 2
Heading Rank: 2

Heading: The Effects Test Analysis

Text: of Minimum Contacts ¶ 47 In their briefing, the parties rely, quite understandably, on the way we framed the inquiry in ClearOne, Inc. v. Revolabs, 2016 UT 16, 369 P.3d 1269. Notably, both parties employ a minimum contact analysis known as the “effects” test, which we adopted in Pohl, Inc. of America v. Webelhuth, 2008 UT 89, ¶¶ 23–27, 201 P.3d 944, and later narrowed in ClearOne, 2016 UT 16, ¶ 23. 14 ¶ 48 In ClearOne, we noted that the “‘effects test . . . has three prongs: ‘the defendant must have (1) committed an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.’” ClearOne, 2016 UT 16, ¶ 11 (citation omitted). In ClearOne, we reasoned that “[u]nder Walden, the proper application of the ‘effects’ test looks beyond both the plaintiff’s connections to the forum state and the plaintiff’s injury to whether the defendant has ‘create[d] a substantial connection with the forum State.’” Id. ¶ 22 (second alteration in original) (quoting Walden, 571 U.S. at 284). And we noted that Walden “clarified that the effects of an alleged tort must be felt by more than just a plaintiff with significant contacts with the forum state—they must be felt in some broader sense by the forum state itself.” Id. _____________________________________________________________ 14The district court also, again quite understandably, based its analysis on the effects test we outlined in ClearOne. . 16 Cite as: 2019 UT 44 Opinion of the Court ¶ 49 ClearOne represents our effort to reconcile Pohl’s version of the effects test with the Supreme Court’s guidance in Walden. 15 The parties’ briefing suggests that we need to underscore what we said in ClearOne. This is because a myopic focus on the effects test’s language, at the expense of Walden’s explanation, creates the potential to distort the jurisdictional inquiry. ¶ 50 In ClearOne, we explained that “the ‘express aiming’ prong of the ‘effects’ test could not be satisfied simply by showing that the defendant targeted an entity known to be a resident of the forum.” _____________________________________________________________ 15 Other courts have similarly wrestled with how Walden may have impacted the effects test. For example, the Ninth Circuit Court of Appeals applied the effects test in a copyright infringement claim, but acknowledged that “[f]ollowing Walden, . . . while a theory of individualized targeting may remain relevant to the minimum contacts inquiry, it will not, on its own, support the exercise of specific jurisdiction, absent compliance with what Walden requires.” Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1066, 1070 (9th Cir. 2017). Other courts have grappled with the reach of the effects test. The Eleventh Circuit Court of Appeals explained that “[t]he Calder effects test is satisfied when the defendant commits an intentional tort expressly aimed at the forum that causes a reasonably foreseeable injury in the forum,” but noted that “[t]he ‘effects test’ applies only in intentional tort cases.” Aviation One of Fla., Inc. v. Airborne Ins. Consultants (PTY), Ltd., 722 Fed. App’x 870, 882 (11th Cir. 2018) (citation omitted). The Tenth Circuit Court of Appeals has examined Walden and questioned the reach of the effects test, opining that “the [United States] Supreme Court has recently suggested that the Calder effects test does not extend beyond the defamation context.” Old Republic Ins. Co. v. Cont’l Motors, Inc., 877 F.3d 895, 916 n.34 (10th Cir. 2017) (citing Walden, 571 U.S. at 287). But other courts do not read Walden to have narrowed the test so significantly. See Biliack v. Paul Revere Life Ins. Co., 265 F. Supp. 3d 1003, 1006–09 (D. Ariz. 2017) (applying the effects test in the context of claims for breach of contract, breach of the obligation of good faith and fair dealing, and the tort of insurance bad faith); Christie v. Nat’l Inst. for Newman Studies, 258 F. Supp. 3d 494 (D.N.J. 2017) (applying the effects test in the context of tort claims alleging violations of the Computer Fraud and Abuse Act, Invasion of Privacy, and violation of New Jersey’s Computer Related Offense Act). 17 RASER v. MORGAN STANLEY Opinion of the Court ClearOne, 2016 UT 16, ¶ 20. And we noted that the Supreme Court had instructed that “[t]he proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant’s conduct connects him to the forum in a meaningful way.” Id. ¶ 21 (alteration in original) (quoting Walden, 571 U.S. at 290). This connection must “arise[] out of contacts that the ‘defendant himself’ creates . . . with the forum State,” in relation to the claims or litigation. Id. ¶ 17 (citation omitted) (internal quotation marks omitted). The Walden court suggested that the type of contacts that would meet this standard would include “entering a contractual relationship that ‘envisioned continuing and wide-reaching contacts’ in the forum State” and “physical entry into the State—either by the defendant in person, or through an agent, goods, mail, or some other means.” Walden, 571 U.S. at. 285 (citation omitted). ¶ 51 And with regards to the “brunt of the injury” prong, in ClearOne we noted that Walden explained that “an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed a contact with the forum State.” 2016 UT 16, ¶ 21. (citation omitted). Therefore, we emphasize that allegations of outof-state conduct that happen to have effects that ripple into Utah cannot, by themselves, establish specific jurisdiction. ¶ 52 We also address our statement that Walden “clarified that the effects of an alleged tort must be felt by more than just a plaintiff with significant contacts with the forum state—they must be felt in some broader sense by the forum state itself.” ClearOne, 2016 UT 16, ¶ 22. For the reasons discussed in footnote 13, we think this overstates Walden’s holding. Walden focuses the inquiry on the defendant and the litigation-related contacts she makes with the forum. Even if the effects are felt by just the plaintiff in the state, if those effects are the product of a defendant purposefully reaching into the state, specific jurisdiction may exist.