Opinion ID: 1803174
Heading Depth: 1
Heading Rank: 3

Heading: Whether Fidelity Has Sufficient Contacts to Subject It to Personal Jurisdiction in Alabama

Text: The parties dispute whether Fidelity has sufficient contacts to be subject to personal jurisdiction in Alabama's courts. The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), citing Kulko v. California Superior Court, 436 U.S. 84, 91, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978). Rule 4.2, Ala. R. Civ. P., Alabama's long-arm rule, extends the personal jurisdiction of Alabama courts to the limits of due process under the federal and state constitutions. Elliott v. Van Kleef, 830 So.2d 726, 729 (Ala.2002). Rule 4.2 provides: (2) Sufficient Contacts. A person has sufficient contacts with the state when that person, acting directly or by agent, is or may be legally responsible as a consequence of that person's (A) transacting any business in this State; .... (D) causing tortious injury or damage in this state by an act or omission outside this state if the person regularly does or solicits business, or engages in any other persistent course of conduct or derives substantial revenue from goods used or consumed or services rendered in this state; (E) causing injury or damage in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when the person might reasonably have expected such other person to use, consume, or be affected by the goods in this state, provided that the person also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state; .... (I) otherwise having some minimum contacts with this state and, under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action. The minimum contacts referred to in this subdivision (I) shall be deemed sufficient, notwithstanding a failure to satisfy the requirement of subdivisions (A)-(H) of this subsection (2), so long as the prosecution of the action against a person in this state is not inconsistent with the constitution of this state or the Constitution of the United States. Furthermore, there are two different classifications of contacts that form the 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. ' Elliott, 830 So.2d at 730.
Specific jurisdiction requires the existence of a clear, firm nexus between the acts of the defendant and the consequences complained of by the plaintiff. Duke v. Young, 496 So.2d 37, 39 (Ala.1986). Furthermore, the nexus must be supported by evidence indicating that `the defendant purposefully directed [his actions] toward the forum state.' Elliott, 830 So.2d at 731. Fidelity's contacts with the Alabama plaintiffs are minimal. Fidelity alleges that of the two Alabama plaintiffs, only one held an SDIRA with Fidelity; it says it has no record of an account for the other who claimed damages from investing in an SDIRA held by Fidelity. There is no clear connection between the contacts and the claims the Alabama plaintiffs assert against Fidelity in this action. Therefore, the contacts do not rise to the level that Fidelity would reasonably anticipate being haled into court in Alabama to defend against an action brought by these plaintiffs and involving these contacts. Specific jurisdiction does not exist under the facts presented; the question remains whether Fidelity can be subject to general jurisdiction in Alabama.
Austin alleges  and Fidelity does not dispute  that Fidelity has maintained separate accounts for Alabama residents over the past several years in the following amounts: 1,248 accounts for Alabama residents in 1997; 1,576 accounts for Alabama residents in 1998; 1,916 accounts for Alabama residents in 1999; 2,150 accounts for Alabama residents in 2000; 1,986 accounts for Alabama residents in 2001; 1,962 accounts for Alabama residents in 2002; and 2,118 accounts for Alabama residents in 2003. Austin also alleges  and Fidelity does not dispute  that Fidelity has extended vehicle loans to Alabama residents over the past several years in the following amounts: 515 vehicle loans to Alabama residents in 1997; 894 vehicle loans to Alabama residents in 2001; and 894 vehicle loans to Alabama residents in 2003. Fidelity maintains that those accounts and vehicle loans to Alabama residents do not constitute sufficient contacts with the State because, it says, Fidelity did not actively seek business from Alabama residents. According to Fidelity, it had relationships with automobile dealerships that referred their customers to Fidelity. Fidelity also states that independent investment consultants encouraged their Alabama clients to open bank accounts, specifically the SDIRAs held by one of the Alabama residents involved in this action. The nexus between the contacts and the claims alleged does not have to be as concrete for a finding of general jurisdiction as it does for a finding of specific jurisdiction. Ex parte Lagrone, 839 So.2d 620, 628 (Ala.2002). In Lagrone, Fisher Products, a nonresident defendant, sold products to a third party that, in turn, sold and shipped the products to Alabama residents. In holding that Fisher Products was subject to general personal jurisdiction in Alabama, this Court stated: Fisher Products conceded that it knew that the products included in the 17 transactions were being shipped to customers in Alabama. Fisher Products placed its products into the stream of commerce with not only the `expectation,' but with the actual knowledge that the products would be purchased by consumers in this State. See World-Wide Volkswagen [Corp. v. Woodson ], 444 U.S. [286] at 297-98, 100 S.Ct. 559[, 62 L.Ed.2d 490] [(1980)]. Thus, even assuming that Fisher Products was unaware that the other products it sold to Norco and shipped to Norco's warehouses were to be marketed by Norco in Alabama, Fisher products knew that those 17 shipments were being sold to Alabama customers. Thus, in light of those shipments, Fisher Products 'should reasonably [have] anticipate[d] being haled into court [in Alabama].' Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), quoting World-Wide Volkswagen Corp., 444 U.S. at 295, 100 S.Ct. 559. The acts of Fisher Products are sufficiently `continuous and systematic' to establish Alabama's general in personam jurisdiction. Helicopteros Nacionales de Colombia, S.A. [v. Hall ], 466 U.S. [408] at 414 n. 9, 104 S.Ct. 1868, 80 L.Ed.2d 404 [(1984)]. Lagrone, 839 So.2d at 627-28. Fidelity cannot hide behind its use of third parties to facilitate accounts with Alabama residents to avoid personal jurisdiction in Alabama courts. Although Fidelity may have never directly marketed its services to Alabama residents, Fidelity knew that the automobile dealerships and investment brokers frequently referred their customers to Fidelity. As a result, Fidelity has had an increasing number of customers from Alabama over the last few years. It would not be unreasonable for Fidelity, whose practice of accepting Alabama customers from third-party referrals was continuous and systematic, to anticipate facing litigation in Alabama. Therefore, Fidelity should be subject to general jurisdiction under Alabama's long-arm provision, Rule 4.2(a)(2)(I). To comply with due process under the Fourteenth Amendment, this Court must also decide whether holding Fidelity to general personal jurisdiction in Alabama is consistent with `traditional notions of fair play and substantial justice.' Lagrone, 839 So.2d at 628, citing Ex parte United Bhd. of Carpenters & Joiners of America, AFL-CIO, 688 So.2d 246, 252 (Ala.1997); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Brooks v. Inlow, 453 So.2d 349, 351 (Ala.1984); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Fidelity has not offered any argument nor is there any evidence presented in the documents before this Court that would indicate that the burden upon Fidelity of litigating this action in Alabama is of such a magnitude that its right to due process is compromised.