Opinion ID: 1813726
Heading Depth: 1
Heading Rank: 4

Heading: Jurisdiction Over Individual Corporate Officers.

Text: A corporate shield does not insulate an agent under all circumstances; the agent is still subject to personal jurisdiction of the court if the agent is a primary participant[ ] in an alleged wrongdoing intentionally directed at [forum-state] resident[s], and jurisdiction over [him] is proper on that basis. Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 1487, 79 L.Ed.2d 804, 813 (1984). If this were not so, a person could commit fraud with impunity by simply wrapping up in a foreign corporation. See Internal Energy Management Corp., 324 N.W.2d at 716. One authority has explained the limitation on the corporate-shield doctrine: [T]he corporation ordinarily will insulate the individuals from the court's personal jurisdiction. Thus, jurisdiction over individual officers and employees of a corporation may not be predicated on the court's jurisdiction over the corporation itself, unless the individuals are engaged in activities within their jurisdiction that would subject them to the coverage of the state's long-arm statute. Wright & Miller § 1069, at 370-72 (emphasis added). In Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984), the Supreme Court held that in a diversity case the long-arm statute of New Hampshire was properly applied to assert jurisdiction over a nonresident magazine and its employees. The Court held that the general course of conduct in circulating magazines throughout the State of New Hampshire, purposefully directed at New Hampshire, inevitably affected persons in the state. Keeton, 465 U.S. at 774, 104 S.Ct. at 1478, 79 L.Ed.2d at 797. It concluded that [s]uch regular monthly sales of thousands of magazines cannot by any stretch of the imagination be characterized as random, isolated, or fortuitous. It is, therefore, unquestionable that New Hampshire jurisdiction over a complaint based on those contacts would ordinarily satisfy the requirement of the Due Process Clause that a State's assertion of personal jurisdiction over a nonresident defendant be predicated on minimum contacts between the defendant and the State. Id. (citing World-Wide Volkswagen Corp., 444 U.S. at 297-98, 100 S.Ct. at 567-68, 62 L.Ed.2d at 500-01; International Shoe Co. v. Washington, 326 U.S. 310, 317, 66 S.Ct. 154, 158-59, 90 L.Ed. 95, 102-03 (1945)). While the corporate-shield doctrine was not directly involved in the Keeton case, the Court explained Calder v. Jones , filed the same day, as holding that the corporate-shield doctrine would not protect employees from exercise of jurisdiction based on their own activities. In discussing Calder, the Court in Keeton stated that we today reject the suggestion that employees who act in their official capacity are somehow shielded from suit in their individual capacity. But jurisdiction over an employee does not automatically follow from jurisdiction over the corporation which employs him; nor does jurisdiction over a parent corporation automatically establish jurisdiction over a wholly owned subsidiary. Each defendant's contacts with the forum State must be assessed individually. Keeton, 465 U.S. at 782 n. 13, 104 S.Ct. at 1482 n. 13, 79 L.Ed.2d at 802 n. 13 (citations omitted). In Calder a California plaintiff sued the National Enquirer and two of its employees, all residents of Florida, for damages arising out of the publication of an alleged defamatory Enquirer article. One defendant, South, was the reporter for the Enquirer who wrote the first draft of the article, and his by-line appeared on it. He lived and did most of his research in Florida, relying on phone calls to sources in California for the information contained in the article. Defendant Calder was president and editor of the Enquirer. As such, he oversee[s] just about every function of the Enquirer. Calder, 465 U.S. at 786, 104 S.Ct. at 1485, 79 L.Ed.2d at 810. Calder reviewed and approved the initial evaluation of the subject of the article and edited it in its final form. He also declined to print a retraction requested by the plaintiff. Neither South nor Calder had any other relevant contacts with the forum state. The Supreme Court held that a state court in California properly exercised personal jurisdiction over the nonresident employees as well as the corporation itself. It concluded that, while the actions causing the effects in California occurred in Florida, the article was drawn from California sources, the brunt of the harm occurred in California, and California was the focal point both of the story and of the harm it caused. Jurisdiction over [the employees] is therefore proper in California based on the `effects' of their Florida conduct in California. Calder, 465 U.S. at 789, 104 S.Ct. at 1486-87, 79 L.Ed.2d at 812 (citing World-Wide Volkswagen Corp., 444 U.S. at 297-98, 100 S.Ct. at 567-68, 62 L.Ed.2d at 501-02). In rejecting the application of the corporate-shield doctrine, the Court in Calder stated that the Enquirer 's employees are not charged with mere untargeted negligence. Rather, their intentional, and allegedly tortious, actions were expressly aimed at California. Petitioner South wrote and petitioner Calder edited an article that they knew 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 and works and in which the National Enquirer has its largest circulation. 465 U.S. at 789-90, 104 S.Ct. at 1487, 79 L.Ed.2d at 812. Further, the Court stated that [the employees] are correct that their contacts with California are not to be judged according to their employer's activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction. Each defendant's contacts with the forum State must be assessed individually. In this case, [the defendants] are primary participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over them is proper on that basis. Id. at 790, 104 S.Ct. at 1487, 79 L.Ed.2d at 813 (citations omitted). In Davis v. Metro Productions, Inc., 885 F.2d 515 (9th Cir.1989), the plaintiff sued two employees of a foreign corporation under Arizona's long-arm statute. The defendants, Smith and Miller, were the sole shareholders and officers of a corporation called Metro. They had been active participants in the corporation's solicitation of business from Arizona residents, including the plaintiff Davis. Davis, 885 F.2d at 522. The court held that the defendants' acts did not amount to untargeted negligence, but rather, [the defendants] should reasonably have known that their actions could have [an] effect on the plaintiff, ... and that the brunt of the injury caused by their actions would be felt in [the forum state]. [The individual defendants] could have reasonably foreseen that they would be haled into Arizona's courts if the investments by Allen's clients in Arizona resulted in litigation. Id. at 523 (citations omitted). The court, relying on Calder, rejected the application of the corporate-shield doctrine because the activities of the employees themselves were sufficient to subject them to the court's personal jurisdiction. Id. at 521-23. Under the argument by Grodzinsky and Grande, a nonresident could personally commit fraudulent acts in Iowa with jurisdictional immunity if that person simply wrapped up in the cloak of a corporation. They point to language in our cases, such as Aquadrill, which they claim support that position. In Aquadrill, for example, we stated that [a]ccording to the [fiduciary-shield] doctrine a nonresident corporate agent is not individually subject to the forum state's in personam jurisdiction if that individual's only contact with the state is by virtue of his acts as a fiduciary of the corporation. 558 N.W.2d at 394 (quoting Whalen, 545 N.W.2d at 295). Despite this broad language, however, the holding in Aquadrill was considerably narrower. We refused to apply the corporate-shield doctrine to a person who, while a corporate officer, acted to protect his own investment in the corporation. Aquadrill, 558 N.W.2d at 395. In our first case discussing the corporate-shield doctrine, DeCook, we made it clear that the doctrine would not be applied in facts analogous to those in the present case. In DeCook we rejected the application of the shield under circumstances similar to those in the present case. In that case, the defendants were nonresident directors of a defendant corporation. The plaintiffs contended that the directors were subject to personal jurisdiction in Iowa pursuant to our long-arm statute and that their acts in furthering an alleged improper activity of the corporation were sufficient to subject them to personal jurisdiction in Iowa. We stated: Defendants assert the corporate cloak should insulate these named individual directors from an Iowa court's personal jurisdiction. They rely on those cases stating the general rule that personal jurisdiction over nonresident individual officers, agents or employees of a foreign corporation cannot be predicated merely upon jurisdiction over the corporation itself. Noticeably, these cases focus upon the distinction between corporate affairs conducted by an officer and business conducted by an officer of a corporation in his own behalf. DeCook, 258 N.W.2d at 727 (citations omitted). We rejected the corporate-shield doctrine, stating that it is alleged these specially appearing parties caused tortious injury to corporate shareholders in this state by (1) authorizing the sale of securities in Iowa, then (2) aiding in converting resultant revenues to their own benefit or other self-serving uses. All this militates against application of the above stated general rule [the corporate-shield doctrine] dealing with in personam jurisdiction over corporate directors. In other words, the present situation is such that due process of law will not be denied by requiring these individual directors to defend in the instant Iowa actions. Id. at 728. DeCook has never been overruled, and despite the broad language in cases postdating DeCook, such as in Aquadrill, the holding in DeCook is intact. A corporate shield does not insulate a nonresident defendant from jurisdiction of an Iowa court for personal acts causing injury to residents of Iowa. See DeCook, 258 N.W.2d at 727-29; Wright & Miller § 1069, at 370-72. Any reading of our cases that would apply the corporate shield to an employee merely because of his or her association with a corporation is specifically disapproved. To immunize a defendant from jurisdiction merely because that defendant is associated with a corporation would allow the corporate shield to be used as a sword.