Opinion ID: 57421
Heading Depth: 3
Heading Rank: 3

Heading: Reasonableness of Personal Jurisdiction

Text: The third element of the due process inquiry, assessing the reasonableness of a court's exercise of personal jurisdiction, includes five factors: (1) the burden upon the nonresident defendant to litigate in that forum; (2) the forum state's interests in the matter; (3) the plaintiffs interest in securing relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the several states' shared interest in furthering substantive social policies. See Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 113, 107 S.Ct. 1026, 1033, 94 L.Ed.2d 92 (1987); Felch v. Transportes Lar-Mex SA De CV, 92 F.3d 320, 324 (5th Cir.1996). Allowing the Southern District of Texas to assert jurisdiction over the Commissioner creates the possibility that the Commissioner will have to defend her attempt to enforce Arizona laws in courts throughout the nation. When a state defends its laws in a faraway forum, it loses the benefit of having the laws examined by local state or federal courtscourts that have special expertise interpreting its laws. See, e.g., Leroy v. Great W. United Corp., 443 U.S. 173, 186, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979), ([F]ederal judges sitting in Idaho are better qualified to construe Idaho law, and to assess the character of Idaho's probable enforcement of that law, than are judges sitting elsewhere.). Conversely, although a Texas court certainly has an interest in determining the legitimacy of Texas statutes, states have little interest in adjudicating disputes over other states' statutes. PTI, Inc. v. Philip Morris, Inc., 100 F.Supp.2d 1179, 1189 n. 8 (C.D.Cal.2000). At the same time, Arizona, as a sovereign, has a strong interest in not having an out-of-state court evaluate the validity of its laws. [11] Although Stroman has an interest in a convenient forum to pursue litigation, especially when it alleges harm from a constitutional violation, and Texas has an interest in providing a forum to redress the grievances of its citizens, subjecting the Commissioner to suit in the Southern District of Texas could lead to a multiplicity of inconsistent verdicts on a significant constitutional issue. If, as is likely, these courts reside in different federal circuits, only the Supreme Court could sort out the confusion. But if the cause of action is litigated in Arizona federal court, judicial efficiency and uniformity prevail. Important questions of federalism are present here, and thus, for this case, the shared interest of the several states is the most significant reasonableness consideration outlined by the Supreme Court. Federalism and state sovereignty are an essential part of the constraints that due process imposes upon personal jurisdiction. Those constraints do more than protect[ ] the defendant against the burdens of litigating in a distant or inconvenient forum; they also `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. World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. 559. The sovereignty of each State implies] a limitation on the sovereignty of all of its sister Statesa limitation express or implicit in both the original scheme of the Constitution and the Fourteenth Amendment. Id. at 293, 100 S.Ct. 559. Accordingly, the reasonableness of asserting jurisdiction over [a] defendant must be assessed in the context of our federal system of government. Id. (citation omitted). In that way, due process act[s] as an instrument of interstate federalism. Id. at 294, 100 S.Ct. 559. The effect of holding that a federal district court in the Southern District of Texas had personal jurisdiction over a nonresident state official would create an avenue for challenging the validity of one state's laws in courts located in another state. This practice would, greatly diminish the independence of the states. In World-Wide Volkswagen, the Supreme Court cited increasing interstate commerce to justify relaxed personal jurisdiction standards. In spite of this conclusion, however, the Court emphasized that we have never accepted the proposition that state lines are irrelevant for jurisdictional purposes, nor could we, and remain faithful to the principles of interstate federalism embodied in the Constitution. Id. at 293, 100 S.Ct. 559. We agree, and hold that it would be unreasonable to subject the Commissioner to suit in the Southern District of Texas. This analysis would be incomplete without addressing this court's decision in Great W. United Corp. v. Kidwell, supra , a Fifth Circuit opinion barely mentioned in the briefs. Kidwell expressly found no due process violation in a Texas court's exercise of personal jurisdiction over an Idaho official who sought to enforce an Idaho corporate takeover statute against a Texas company. This result, we conclude, has been overturned by later Supreme Court decisions. Nevertheless, Kidwell exposes the novelty of Stroman's maneuver in this case. Kidwell itself was reversed by the Supreme Court on a finding of improper venue. [12] The Court expressly declined, under its then-existing precedent, [13] to reach the due process issues surrounding personal jurisdiction. If Kidwell's assumption of personal jurisdiction remained viable, this court would be bound notwithstanding the Supreme Court's reversal of the decision on other grounds. See Cent. Pines Land Co. v. United States, 274 F.3d 881, 894 (5th Cir.2001) (stating that Fifth Circuit cases overruled on other grounds by the Supreme Court remain binding authority). Kidwell, however, stretched the law of minimum contacts in its own day, as a vigorous dissenting opinion explained, [14] and has become irreconcilable with subsequent Supreme Court decisions whose net result is to limit effectsbased personal jurisdiction and insist upon tangible minimum contacts between a defendant and the forum state. In Kidwell, the majority concluded the [m]inimum contacts . . . need not arise from actual physical activity in the forum state; activities in other forums with foreseeable effects in the forum state will suffice. 577 F.2d at 1266-67. Hence, Idaho officials, by purporting to enforce Idaho law against a hostile takeover of an Idaho company by a Texas company, foreseeably restrained the Texas company from carrying out its plans. Id. at 1267. The court distinguished Kulko and minimized the significance of Hanson's requirement that a defendant purposefully avail itself of the privilege of doing business in a forum state. Id. at 1267-68. Finally, the court found a Texas court's assumption of jurisdiction reasonable in the due-process context because Idaho's officials, who cast a regulatory net for corporate transactions over the entire United States, could fairly expect to have to defend their policy in other states, and their regulation of Texasbased activities provides the necessary contact[ ] with Texas. Id. at 1270. Each of the components of Kidwell has been overtaken by later decisions. Effects-based jurisdiction was significantly cut back in Calder, and the requirement for active minimum contacts with the forum state has been emphasized, contrary to Kidwell, in the Supreme Court's decision in World-Wide Volkswagen. Finally, despite its rough justice in exposing extraterritorial regulation by state officials to scrutiny in other affected states' courts, the Kidwell majority's reasonableness analysis confuses fairness with the merits of the case. See Kidwell 577 F.2d at 1296 (Godbold, J., dissenting). And both Burger King and Asahi later outlined the factors to determine whether a court's exercise of jurisdiction is reasonable, providing a more exacting test than this court applied in Kidwell. In the absence of minimum contacts, and in the presence of significant state sovereignty concerns, the ultimate fairness of the forum should not turn on who ought to prevail. The more nuanced approach toward fairness described in Burger King and Asahi is controlling.