Opinion ID: 1684767
Heading Depth: 2
Heading Rank: 2

Heading: Specific Jurisdiction the Blue-Sky Filing

Text: The respondents allege that Dill prepared and performed an erroneous securities filing in the State of Alabama, and they contend that jurisdiction arises, both generally and specifically, out of this filing. Respondents' Brief, at 59. Both species of jurisdiction are authorized by Rule 4.2(a)(2)(I), the catch-all provision of Alabama's long-arm rule. See Jerome Hoffman & Sandra Guin, Alabama Civil Procedure § 2.48 (1990). Subsection (I) extends the jurisdiction of this state's courts to the permissible limits of due process. Martin v. Robbins, 628 So.2d 614, 617 (Ala.1993). We first consider whether the one-time filing of a Form-D notice with the Alabama Securities Commission in connection with the Southwestern bond offeringthe sole contact material to our analysisforms a basis for the exercise of specific jurisdiction. If it does not, then, a fortiori, it does not give rise to general jurisdiction. The respondents argue that Alabama has specific jurisdiction over Dill and Matsukage under the effects test set forth in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), and adopted by this Court. See Keelean v. Central Bank of the South, 544 So.2d 153, 157 (Ala.1989), overruled on other grounds, Professional Ins. Corp. v. Sutherland, 700 So.2d 347 (Ala.1997); Alabama Waterproofing Co. v. Hanby, 431 So.2d 141 (1983). According to Nichols's affidavit, the blue-sky filings indicated [that] the bonds were exempt securities, which [was not the case, because] the bonds [were] not exempt securities and required additional and different filings.  (Emphasis added.) Elsewhere, the respondents state that Dill and Matsukage prepared and performed an erroneous securities filing in the State of Alabama. Respondents' Brief, at 59 (emphasis added). The respondents state: [H]ad [Dill and Matsukage] gone through the proper registration process, the bonds would not have been allowed to be sold in Alabama since they could not have met the registration requirements. Id. at 39. When specific jurisdiction is the basis for adjudication of claims against an out-of-state defendant, due process requires a clear, firm nexus between the acts of the defendant and the consequences complained of in order to establish the necessary contacts. Duke v. Young, 496 So.2d 37, 39 (Ala.1986) (applying the effects test). Discussing Calder, Duke explained: There the plaintiff was a resident of California. The defendants were residents of Florida. The defendants were employed as a writer and as an editor for National Enquirer, Inc., a Florida corporation having its principal place of business in Florida. The defendants were alleged to have authored and edited an article injurious to plaintiff, that article having been disseminated in, among other places, California. The Court did not find it necessary to look for physical contacts between the defendants and the forum state. It was the nature of the defendant's activities rather than the place of their occurrence that the Court considered: `[P]etitioners are not charged with mere untargeted negligence. Rather, their intentional, and allegedly tortious, actions were expressly aimed at California.... [T]hey knew [the article] would have a potentially devastating impact upon respondent. And they knew that the brunt of that injury would be felt by respondent in the State in which she lives....' [ Calder v. Jones ], 465 U.S. [783] at 789-90, 104 S.Ct. at 1487, 79 L.Ed.2d at 812 [(1984)]. ... [T]he Supreme Court concluded, `[P]etitioners are primary participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over them is proper on that basis.' Id., 465 U.S. at 790, 104 S.Ct. at 1487, 79 L.Ed.2d at 813. 496 So.2d at 39 (emphasis added). We disagree with the respondents' contention that the evidence here satisfies the effects test. That test is particularly relevant to the purposeful-availment requirement of due process. United States v. Swiss American Bank, Ltd., 274 F.3d 610, 624 (1st Cir.2001). It presupposes a foreseeable injury to an identified, or identifiable, plaintiff. Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1088 (9th Cir.2000) (The presence of individualized targeting is what separates these cases from others in which we have found the effects test unsatisfied.). Here, the alleged negligence is considerably less targeted than was the wrongdoing in Calder. There, [t]he allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. 465 U.S. at 788, 104 S.Ct. 1482 (footnote omitted). [8] The article was drawn from California sources, and the brunt of the harm, in terms both of respondent's emotional distress and the injury to her professional reputation, was suffered in California. In sum, California [was] the focal point both of the story and of the harm suffered. Id. at 788-89, 104 S.Ct. 1482. At the time of the alleged wrongdoing in Calder, there was an identifiable plaintiff, whose injury was foreseeable and directly traceable to the defendants' conduct. At the time of the alleged erroneous securities filing in this case, the individual plaintiffs were unidentified and unidentifiable. Unlike Calder, here there was no foreseeable harm to any particular plaintiff. Moreover, similar filings were sent to the securities commissions of at least 18 other states, whose residents are also involved in this litigation. Indeed, according to the unrefuted allegations, Dill filed the Form-D notice only in states to which it was directed by those of the respondents who were also Developers, that is, in those states in which the Developers proposed to sell the Southwestern bonds. Moreover, it was not Dill or Matsukage, but the respondents, or some of them, who sold the securities in Alabama. Thus, to the extent Alabama was targeted, it was targeted by the respondent-Developersnot by Dill or Matsukage. However, personal jurisdiction must rest on the purposeful conduct of the defendant, not on the unilateral activity of the plaintiff or third parties. Elliott v. Van Kleef, 830 So.2d at 731; see also Burger King Corp. v. Rudzewicz, 471 U.S. at 475, 105 S.Ct. 2174; Ex parte Kamilewicz, 700 So.2d 340, 343 (Ala.1997). Because the blue-sky filings were not precipitated by Dill or Matsukage or directed specifically at identified, or identifiable, Alabama residents, the purposeful-availment requirement of due process is absent, and the Calder effects test is not satisfied. In this connection, we also reject the respondents' assertion that Dill is registered with the Alabama Securities Commission as [an] agent for process of service of Southwestern. Respondents' Brief, at 48. In so stating, the respondents mischaracterize the substance of the consent form. The consent form actually designates, pursuant to Ala.Code 1975, § 8-6-12(e)(1), [9] the secretary of state, not Dill, as the agent for process. Dill merely requested an informational  copy of any notice, process or pleading served [thereunder]. In short, we conclude that, based on this one, isolated contact with Alabama at the instance of the respondents-Developers  Dill and Matsukage could not `reasonably anticipate being haled into court [here].' Dillon Equities v. Palmer & Cay, Inc., 501 So.2d at 462. Because the exercise of specific personal jurisdiction over these out-of-state defendants, pursuant to Rule 4.2(a)(2)(I), would offend due process, we pretermit discussion of the respondents' arguments based on Rule 4.2(a)(2)(A)-(D). This conclusion is not inconsistent with Gilford Partners v. Pizitz, 630 So.2d 404 (Ala.1993), on which the respondents place considerable reliance. That case involved an action by Richard Pizitz, Merritt Pizitz, Jill Pizitz, Richard Pizitz, Jr., Susan Pizitz Bosshard, and the Pizitz Family Investment Partnership IX against out-of-state defendants Gilford Partners, H. Robert Holmes, Holmes-Gilford General Partners, and Gilbrooke Associates, Inc. Id. at 405. The action arose out of the sale in Alabama by Gilford Partners of an unregistered security to the ... Pizitz Family Investment Partnership IX. Id. The plaintiffs alleged: (1) that the defendants had failed to register the limited partnership interest in Gilford Partners, in violation of § 8-6-4[, Ala.Code 1975]; (2) that Holmes and Holmes-Gilford had failed to register as agent and dealer, respectively, in violation of § 8-6-3; and (3) that the defendants had made misrepresentations and omissions in information sent to the plaintiffs, in violation of § 8-6-17. 630 So.2d at 405. The trial court denied the defendants' motion to dismiss for lack of in personam jurisdiction and granted a partial summary judgment against Gilford Partners. The trial court concluded that nonresident defendants who unlawfully sell unregistered securities in the forum state subject themselves to personal jurisdiction in the state in actions to enforce statutory remedies for such unlawful sales. Id. Gilford Partners appealed. This Court affirmed the judgment of the trial court, holding that jurisdiction was proper, under Rule 4.2(a)(2)(C) (causing tortious injury or damage by an act or omission in this state). The act or omission was, of course, the sale in Alabama by Gilford Partners of the unregistered security. The Court explained: The court in Florendo v. Pan Hemisphere Transport, Inc., 419 F.Supp. 16 (N.D.Ill.1976), found that the defendants in that case, who had failed to register the security sold to the plaintiff, `[had] subjected themselves to the jurisdiction of [the Illinois] court. Because the injury... took place in Illinois, that state was the situs of the tortious act.' 419 F.Supp. at 18. The court further stated that exercising jurisdiction did not offend the `traditional notions of fair play and substantial justice,' because the defendants should have foreseen the possibility of being sued in the Illinois forum. Id. at 18-19. The district court held that an action such as that against the defendants was foreseeable because `[the] defendants [had] sold an interest in a limited partnership to a specifically identified purchaser residing in Illinois.' The court added that `[i]t [was] certainly fair under the circumstances to require them to litigate a controversy concerning that sale in Illinois.' Id. at 19. 630 So.2d at 406 (emphasis added). Pizitz is distinguishable in at least two fundamental respects. There, the out-of-state defendant had sold the unregistered securities to a specifically identified purchaser. Pizitz would be on point with this case if Dill or Matsukage had sold any of the Southwestern bonds, but they did not. A fortiori, Dill and Matsukage made no sales to any specifically identified purchaser. Here, the issuers and the sellers are plaintiffs, who are suing Dill and Matsukage for, among other things, professional malpractice arising out of services performed entirely from Colorado. Cf. Porter v. Berall, 142 F.Supp.2d at 1147 (the clearly compelling body of law regarding lawyer malpractice confines personal jurisdiction to the situs of the acts and omissions complained of). Pizitz does not, therefore, aid the respondents. Finally, the respondents devote considerable discussion to the securities lawyers' role in securities offerings. Respondents' Brief, at 27-35. This discussion, however, merely confuses personal jurisdiction with potential liability. This distinction was succinctly illustrated in Sher v. Johnson, 911 F.2d at 1365: Liability and jurisdiction are independent. Liability depends on the relationship between the plaintiff and the defendants and between the individual defendants; jurisdiction depends only upon each defendant's relationship with the forum.