Opinion ID: 2492601
Heading Depth: 3
Heading Rank: 2

Heading: Application of Fundamental Principles of In Personam Jurisdiction.

Text: Application of established principles governing the assertion of jurisdiction by Alabama courts over out-of-state defendants begins with an acknowledgment of Alabama's long-arm rule: The extent of an Alabama court's personal jurisdiction over a person or corporation is governed by Rule 4.2, Ala. R. Civ. P., Alabama's `long-arm rule,' bounded by the limits of due process under the federal and state constitutions. Sieber v. Campbell, 810 So.2d 641 (Ala.2001). Rule 4.2(b), as amended in 2004, states: `(b) Basis for Out-of-State Service. An appropriate basis exists for service of process outside of this state upon a person or entity in any action in this state when the person or entity has such contacts with this state that the prosecution of the action against the person or entity in this state is not inconsistent with the constitution of this state or the Constitution of the United States....' In accordance with the plain language of Rule 4.2, both before and after the 2004 amendment, Alabama's long-arm rule consistently has been interpreted by this Court to extend the jurisdiction of Alabama courts to the permissible limits of due process. Duke v. Young, 496 So.2d 37 (Ala.1986); DeSotacho, Inc. v. Valnit Indus., Inc., 350 So.2d 447 (Ala.1977). As this Court reiterated in Ex parte McInnis, 820 So.2d 795, 802 (Ala.2001) (quoting Sudduth v. Howard, 646 So.2d 664, 667 (Ala.1994)), and even more recently in Hiller Investments Inc. v. Insultech Group, Inc., 957 So.2d 1111, 1115 (Ala.2006): ` Rule 4.2, Ala. R. Civ. P., extends the personal jurisdiction of the Alabama courts to the limit of due process under the federal and state constitutions. ' (Emphasis added.) Ex parte DBI, Inc., 23 So.3d 635, 643 (Ala.2009). In the oft-cited cases of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), the United States Supreme Court laid out fundamental principles upon which a decision as to in personam jurisdiction over a nonresident defendant must rest. It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. The test is not merely, as has sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in another state, is a little more or a little less. St. Louis S.W.R. Co. v. Alexander, supra, 227 U.S. [218,] 228 [33 S.Ct. 245, 57 L.Ed. 486 (1912)], Ann. Cas.1915B, 77; International Harvestor [ Harvester ] Co. v. Kentucky, supra, 234 U.S. [579,] 587 [34 S.Ct. 944, 58 L.Ed. 1479 (1914)]. Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. ' International Shoe, 326 U.S. at 319, 66 S.Ct. 154 (emphasis added). As has long been settled, and as we reaffirm today, a state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist `minimum contacts' between the defendant and the forum State. International Shoe Co. v. Washington, [326 U.S. 310] at 316[ (1945)]. The concept of minimum contacts, in turn, can be seen to perform two related, but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.  The protection against inconvenient litigation is typically described in terms of `reasonableness' or `fairness.' We have said that the defendant's contacts with the forum State must be such that maintenance of the suit `does not offend traditional notions of fair play and substantial justice.' International Shoe Co. v. Washington, supra, at 316, quoting Milliken v. Meyer, 311 U.S. 457, 463 [61 S.Ct. 339, 85 L.Ed. 278] (1940). The relationship between the defendant and the forum must be such that it is `reasonable ... to require the corporation to defend the particular suit which is brought there.' 326 U.S., at 317. Implicit in this emphasis on reasonableness is the understanding that the burden on the defendant, while always a primary concern, will in an appropriate case be considered in light of other relevant factors, including the forum State's interest in adjudicating the dispute, see McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957); the plaintiff's interest in obtaining convenient and effective relief, see Kulko v. California Superior Court, supra, 436 U.S.[ 84], at 92 [98 S.Ct. 1690, 56 L.Ed.2d 132 (1978)], ...; the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies, see Kulko v. California Superior Court, supra, 436 U.S., at 93, 98. World-Wide Volkswagen Corp., 444 U.S. at 291-92, 100 S.Ct. 559 (emphasis added). The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful `contacts, ties, or relations.' International Shoe Co. v. Washington, 326 U.S.[ 310], at 319[ (1945)]. By requiring that individuals have `fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign,' Shaffer v. Heitner, 433 U.S. 186, 218 [97 S.Ct. 2569, 53 L.Ed.2d 683] (1977) (Stevens, J., concurring in judgment), the Due Process Clause `gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit,' World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). .... ... Jurisdiction is proper, ... where the contacts proximately result from actions by the defendant himself that create a ` substantial connection' with the forum State.  Burger King Corp., 471 U.S. at 471-75, 105 S.Ct. 2174 (final emphasis added; footnotes omitted). In Elliott v. Van Kleef, 830 So.2d 726, 730-31 (Ala.2002), this Court further discussed the fundamental principles outlined in the foregoing cases: The Due Process Clause of the Fourteenth Amendment permits a forum state to subject a nonresident defendant to its courts only when that defendant has sufficient `minimum contacts' with the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The critical question with regard to the nonresident defendant's contacts is whether the contacts are such that the nonresident defendant `should reasonably anticipate being haled into court' in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). The sufficiency of a party's contacts are assessed as follows: `Two types of contacts can form a basis for personal jurisdiction: general contacts and specific contacts. General contacts, which give rise to general personal jurisdiction, consist of the defendant's contacts with the forum state that are unrelated to the cause of action and that are both continuous and systematic. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 9, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); [citations omitted]. Specific contacts, which give rise to specific jurisdiction, consist of the defendant's contacts with the forum state that are related to the cause of action. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-75, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Although the related contacts need not be continuous and systematic, they must rise to such a level as to cause the defendant to anticipate being haled into court in the forum state. Id. '  Ex parte Phase III Constr., Inc., 723 So.2d 1263, 1266 (Ala. 1998) (Lyons, J., concurring in the result). Furthermore, this Court has held that, for specific in personam jurisdiction, there must exist `a clear, firm nexus between the acts of the defendant and the consequences complained of.' Duke v. Young, 496 So.2d 37, 39 (Ala.1986). See also Ex parte Kamilewicz, 700 So.2d 340, 345 n. 2 (Ala.1997). In the case of either general in personam jurisdiction or specific in personam jurisdiction, `[t]he substantial connection between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State.' Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). This purposeful-availment requirement assures that a defendant will not be haled into a jurisdiction as a result of `the unilateral activity of another person or a third person.' Burger King, 471 U.S. at 475, 105 S.Ct. 2174, 85 L.Ed.2d 528, quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Elliott v. Van Kleef, 830 So.2d 726, 730-31 (Ala.2002) (emphasis omitted). Once it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with `fair play and substantial justice.' International Shoe Co. v. Washington, 326 U.S.[ 310], at 320[ (1945)]. Thus, courts in `appropriate case[s]' may evaluate `the burden on the defendant,' `the forum State's interest in adjudicating the dispute,' `the plaintiff's interest in obtaining convenient and effective relief,' `the interstate judicial system's interest in obtaining the most efficient resolution of controversies,' and the `shared interest of the several States in furthering fundamental substantive social policies.' World-Wide Volkswagen Corp. v. Woodson, supra, 444 U.S.[ 286], at 292[ (1980)]. These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. See, e.g., Keeton v. Hustler Magazine, Inc., supra, 465 U.S.[ 770], at 780[ (1984)]; Calder v. Jones, supra, 465 U.S.[ 783], at 788-789[ (1984)]; McGee v. International Life Insurance Co., supra, 355 U.S.[ 220], at 223-224[ (1957)]. Burger King Corp., 471 U.S. at 476-77, 105 S.Ct. 2174. With respect to the question whether the defendants in this case have purposefully established minimum contacts within the forum state, Burger King Corp., 471 U.S. at 476, 105 S.Ct. 2174, the defendants repeatedly emphasize that none of the plaintiffs, and only one of the defendantsRonald Brunoreside in Alabama. The defendants' effort to limit our focus only to the places of residence of the plaintiffs who have allegedly been injured by the acts of the defendants, and the places of residence of the defendants themselves, is misplaced. [7] Rule 4.2, Ala. R. Civ. P., extends the personal jurisdiction of Alabama courts to the limit of due process under the federal and state constitutions. Sieber [v. Campbell, 810 So.2d 641 (Ala.2001)]. See also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); Duke [v. Young, 496 So.2d 37 (Ala.1986)]; Brooks v. Inlow, 453 So.2d 349 (Ala. 1984); and Alabama Waterproofing Co. v. Hanby, 431 So.2d 141, 144-146 (Ala. 1983). ` A physical presence in Alabama is not a prerequisite to personal jurisdiction over a nonresident.' Sieber, 810 So.2d at 644. See also Sudduth [ v. Howard ], 646 So.2d [664,] 667 [(Ala. 1994)]. ``What is required is that the out-of-state resident have some minimum contacts with this state [so that], under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action.  Rule 4.2(a)(2)(I), Ala. R. Civ. P. [(Emphasis added.)] ```[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'' McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Alabama's long-arm statute (Rule 4.2, Ala. R. Civ. P.) has been interpreted by this Court to extend the jurisdiction of Alabama courts to the permissible limits of due process. DeSotacho, Inc. v. Valnit Industries, Inc., 350 So.2d 447 (Ala.1977); Duke v. Young, 496 So.2d 37 (Ala.1986). ``Alabama's long-arm procedure for service of process is not limited to rigid transactional categories or subject to a mechanical formula. Alabama Waterproofing Co. v. Hanby, 431 So.2d 141 (Ala.1983). Instead, the relevant facts and attendant circumstances must be examined and the relationship among the defendant, the forum, and the litigation analyzed to determine if the defendant has sufficient minimum contacts so that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.' International Shoe Co. v. Washington . ' [(Emphasis added.)] `A relevant factor in a due process analysis is whether the defendant should have reasonably anticipated that he would be sued in the forum state. [(Emphasis added.)] In Dillon Equities [v. Palmer & Cay, Inc., 501 So.2d 459, 462 (Ala.1986)], this Court, quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), noted: ``The foreseeability that is critical to due process analysis ... is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.  (Citations omitted.) [(Emphasis added.)]''  Sudduth, 646 So.2d at 667 (quoting Knowles v. Modglin, 553 So.2d 563, 565-66 (Ala.1989)). Ex parte McInnis, 820 So.2d at 795, 802-03 (2001). The gravamen of the plaintiffs' allegations is that the defendants misrepresented the financial condition of Bruno's in connection with the acquisition of that company and the financing of that acquisition. Although many of the activities at issue did not take place in Alabama and the purchasers of the notes do not reside here, the entire focus of the defendants' actions was the leveraged recapitalization of Bruno's and the associated acquisition of Bruno's. Bruno's was an Alabama corporation, and a corporation with substantial physical assets and business operations throughout Alabama. In addition, physical contacts the defendants had with this forumincluding attending meetings in Alabama to discuss the possible acquisition of Bruno's, having KKR's agents investigate Bruno's in Alabama, causing Bruno's to issue the notes to help finance the leveraged recapitalization, and participating in meetings of Bruno's board of directors specifically relate to the plaintiffs' cause of action. Given these circumstances and the relationship among the defendant[s], the forum, and the litigation analyzed, Ex parte McInnis, 820 So.2d at 802, we must conclude that it is appropriate for the courts of this State to exercise in personam jurisdiction over the defendants. Among other things, we cannot avoid the conclusion that the defendants' actions were purposefully directed toward the State of Alabama in a manner that created a substantial connection between the defendants and this State. Further, there exists a firm nexus between the defendants' actions and Alabama. Accordingly, the defendants have purposefully establish[ed] minimum contacts with the forum state such that the defendants reasonably could have anticipated being haled into court here. We also are clear to the conclusion that the assertion of jurisdiction over the defendants based on their connection with the State of Alabama comports with traditional notions of fair play and substantial justice. International Shoe, 326 U.S. at 316, 66 S.Ct. 154. As noted above, factors that may be considered in this regard include the forum state's interest in adjudicating the dispute and the burden on the defendants of litigating this matter in the forum state. Burger King, 471 U.S. at 476-77, 105 S.Ct. 2174 (quoting World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. 559). The defendants contend that they will be unduly burdened by being forced to litigate in Alabama because [t]he cost and complexity of defending against Plaintiffs' claims will be severely increased if this case is tried in Alabama given that: (i) all but one of the parties (Mr. Ronald Bruno) are non-Alabama residents; (ii) an overwhelming amount of the documents and witnesses are located outside Alabama; (iii) Defendants' ability to call trial witnesses will be severely restricted given that Alabama may not have personal jurisdiction over critical defense witnesses, such as Deloitte and the underwriters of the Bruno's Notes; and (iv) Defendants will have to travel hundreds of miles for court hearings and trial, and will be required to be away from home and work for an extended period of time given the expected length of any trial. The factors the defendants raise, however, would be little different in any other forum, given the fact that the defendants and other witnesses reside in multiple states throughout the country. [8] The defendants have had a substantial presence in Alabama given their acquisition of an Alabama corporation and the individual defendants' involvement as directors of that corporation. Moreover, as the plaintiffs observe, Alabama has an obvious and substantial interest in an action involving the acquisition of an Alabama corporation such as Bruno's and misconduct of the nature alleged here in relation to that acquisition. Thus, traditional notions of fair play and substantial justice weigh in favor of the circuit court's exercise of personal jurisdiction over the defendants in this case.