Opinion ID: 1745820
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Heading: Jurisdiction Over Corporate Defendants.

Text: A state may exercise jurisdiction over nonresident defendants under the due process clause of the fourteenth amendment only if the defendant has certain minimum contacts with the forum state. See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The defendants must have sufficient contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Id. at 316, 66 S.Ct. at 158, 90 L.Ed. at 102. In Smalley, this court indicated that under International Shoe and World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the jurisdictional inquiry centers on five factors: 1. the quantity of the contacts; 2. the nature and quality of those contacts; 3. the source and connection of the cause of action with those contacts; 4. the interest of the forum state; and 5. the convenience of the parties. Smalley, 379 N.W.2d at 924, see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The first three factors of this test are the most important, Smalley, 379 N.W.2d at 924; however, this court has held that the test is not susceptible of mechanical application; rather, the facts of each case must be weighed to determined whether the requisite `affiliating circumstances' are present. Id. (quoting Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1697, 56 L.Ed.2d 132, 141 (1978)). The attorney general argues that defendants' conduct and connections with the State of Iowa are such that they can reasonably anticipate being haled into court here. This argument is tailored to World-Wide Volkswagen Corp., where the Court stated: [I]f the sale of a product of a manufacturer or distributor ... is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its products in other States, it is not unreasonable to subject it to suit in one of those States.... Id. at 297-98, 100 S.Ct. at 567, 62 L.Ed.2d 490 (emphasis added). The attorney general argues that defendants' numerous advertisements in Iowa, and the fact that their businesses are located in a market area which contains parts of Iowa, show that they have made efforts to directly serve the Iowa market. Therefore, it is reasonable, he asserts, to subject them to the jurisdiction of Iowa courts and they can reasonably anticipate being haled into court in Iowa. The attorney general also relies heavily on Svendsen v. Questor Corp., 304 N.W.2d 428 (Iowa 1981), a case involving a Missouri pool table manufacturer sued by an Iowa resident injured in Iowa when her pool table, purchased from an Omaha retailer, collapsed. This court found that the foreign defendant was subject to the personal jurisdiction of the court, and stated that the question before the court was whether the nonresident manufacturer, who indirectly through others served or sought to serve the Iowa market, was subject to the jurisdiction of Iowa courts. Relying on World-Wide Volkswagen 's language regarding the efforts of a manufacturer to directly or indirectly serve a market, we concluded in Svendsen that the allegations in plaintiff's petition satisfactorily demonstrated that the Missouri defendant, through its action in marketing its product via the Omaha retailer, sought to serve the Iowa market and was, therefore, subject to the jurisdiction of Iowa courts. 304 N.W.2d at 431. This holding was reached even though the record in the case did not disclose the marketing territory of the foreign defendant. We stated that it was reasonable to infer that the defendant's commercial transactions resulted in more than insubstantial use and consumption in Iowa. Id. We relied in part in our Svendsen holding on the close proximity of the defendant's location in Missouri to the State of Iowa and on the fact that the pool table had been sold to the Iowa consumer in Omaha, Nebraska, in finding that it was foreseeable to the defendant that it would be haled into an Iowa court. Id. The attorney general argues that the analysis in Svendsen dictates a similar result in the present case because the defendants here sought to serve the Iowa market through its newspaper advertisements, television advertisements, and yellow pages listings and advertisements. Moreover, he argues that, because defendants conduct their businesses in a major metropolitan area that encompasses cities in two states, and because they advertise in media that directly serves the area in both states, it is reasonable to infer that their commercial transactions result in more than insubstantial use and consumption in Iowa. The attorney general notes that, although the defendants are not manufacturers, they can foresee that the motor vehicles which they sell will be purchased by Iowans and used within this state. The defendants argue that the State's reliance on Svendsen and its foreseeability analysis is inappropriate because it was decided prior to the Smalley decision. Defendants contend that in Smalley this court substantially modified the stream of commerce theory applied in Edmundson v. Miley Trailer Co., 211 N.W.2d 269 (Iowa 1973). 379 N.W.2d at 924-25. They urge that Svendsen, like Edmundson, involved the question of foreseeability as to whether a Missouri manufacturer could have reasonably anticipated being haled in Iowa court. Because World-Wide Volkswagen and our Smalley holding have retreated from that doctrine, defendants contend that Svendsen is no longer appropriate authority. We conclude that our Smalley holding in fact reaffirmed the Svendsen holding, stating the manufacturer in Svendsen was indirectly, through others, seeking to secure a market in Iowa. 379 N.W.2d at 925. We find both Svendsen and Smalley to be consistent with the reasoning in World-Wide Volkswagen. In Smalley and Edmundson, foreseeability concerned the foreseeability to defendants that their products would eventually cause harm in foreign states, hundreds of miles from their market area. The defendants in these cases did not advertise in the forum state. In the present case, the claim is that the advertisements themselves are the unlawful act giving rise to the cause of action. Consequently, the foreseeability issue is foreseeability that the advertisements would be distributed in the Iowa market area. That such distribution would occur was a virtual certainty. The attorney general argues that in deciding issues of in personam jurisdiction fewer contacts by a defendant with the forum state are required where the cause of action arises from the defendant's activities within that state. This argument finds considerable support in the International Shoe case, where the court recognized that certain single or occasional acts in a state will suffice because of their nature and quality and the circumstances of their commission, to subject the defendant to the jurisdiction of the state as to causes of action arising out of the act. International Shoe, 326 U.S. at 318-20, 66 S.Ct. at 159-60, 90 L.Ed. at 103-05. This principle was reaffirmed in McGee v. International Life Insurance Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223, 226 (1957). More recently, in Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8, 9, 104 S.Ct. 1868, 1872 nn. 8, 9, 80 L.Ed.2d 404, 411 nn. 8, 9 (1984), the Supreme Court drew a distinction between general and specific jurisdiction based on the nature of the contacts with the forum state. This view was sharpened in Burger King where the court observed [w]here a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, this `fair warning' requirement is satisfied if the defendant has `purposefully directed' his activities at residents of the forum, and the litigation results from alleged injuries that `arise out of or relate to' those activities. Id. 471 U.S. at 472, 105 S.Ct. at 2182, 85 L.Ed.2d at 540-41 (citations omitted) (footnote omitted). To this observation, the Court added [a] State generally has a `manifest interest' in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors.... [I]t may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities.... Id. at 473-75, 105 S.Ct. at 2182-83, 85 L.Ed.2d at 541-42 (citations omitted). We find the principles espoused in Burger King to be equally applicable to efforts by the state itself to enjoin activities within the forum which contravene its laws. We believe that the contacts which exist between the corporate defendants and the State of Iowa are clearly insufficient to subject them to suit in the Iowa courts on any cause of action to the same extent as Iowa domiciliaries. Their acts in advertising within this state are sufficient, however, to render them amenable to suit here in an action which seeks to halt that advertising on the ground that it is unlawful. The acts of advertising also establish in personam jurisdiction over these defendants for that portion of the attorney general's action which seeks to invoke the other sanctions which are provided in the relevant regulatory statutes for injuries which flow directly from the alleged unlawful advertising. Basing in personam jurisdiction on the allegedly unlawful advertising carried on in the forum state does not differ significantly in a constitutional sense from the single act tort jurisdiction which has been recognized in this state since the enactment of Iowa Code section 617.3 in 1963. See 1963 Iowa Acts ch. 325, § 1. This jurisdictional nexus not only finds support in International Shoe, McGee, and Burger King, but also in those decisions recognizing extended in personam jurisdiction in actions directed at activities which a state subjects to special regulation. See, e.g., Travelers Health Ass'n v. Virginia ex rel. State Corp. Comm'n, 339 U.S. 643, 648-50, 70 S.Ct. 927, 930-31, 94 L.Ed. 1154, 1161-62 (1950) (upholding jurisdiction of Virginia court to issue cease and desist order against Nebraska company doing mail order insuring business in Virginia); Henry L. Doherty & Co. v. Goodman, 294 U.S. 623, 627-28, 55 S.Ct. 553, 554, 79 L.Ed. 1097, 1099 (1935) (suit in Iowa to vindicate Iowa's interest in regulating sale of securities by New York resident).