The World in U.S. Courts: Spring 2016 - Personal Jurisdiction/Foreign Sovereign Immunities Act (FSIA)/Forum Non Conveniens
A U.S. company contracted with a Mexican transporter, Transportes Castores de Baja S.A. de C.V. ("Castores") and another company for the transportation of agricultural equipment that was lost in separate accidents off the coast of Mexico. Plaintiff Royal & Sun Alliance Insurance PLC paid the U.S. company's insurance claim, and sued the shippers as subrogees of the U.S. company's rights. Castores moved to dismiss the complaint against it for lack of personal jurisdiction.
The Court first noted that, because California's long arm statute grants personal jurisdiction to the fullest extent consistent with the U.S. Constitution, the only question was whether exercising personal jurisdiction over Castores would be consistent with the Due Process Clause. Beginning with general personal jurisdiction, the Court observed that this form of all-purpose jurisdiction exists where a foreign corporation's contacts with the forum state are so continuous and systematic as to render the corporation essentially "at home" in the forum State. The Court said that it was appropriate in making the determination to focus on the longevity, continuity, volume and economic impact, physical presence, and integration into the forum state's regulatory or economic markets in assessing a non-U.S. corporation's contact with the forum State.
In this case, the Court noted that Castores was neither incorporated in California nor licensed to do business there. Aside from its website, there was no evidence Castores solicited business in California, and Castores had no physical presence in California. While Castores did provide a U.S. business address on its website, the Court held that this was insufficient evidence of a continuous or systematic presence in California. Therefore, the Court declined to exercise general personal jurisdiction over Castores.
In assessing whether specific personal jurisdiction existed over Castores, the Court stated that it would look to three factors: (i) whether the non-U.S. defendant "purposefully availed" itself of services of the forum State, (ii) whether the claim arose out the non-U.S. defendant's forum-related activities, and (iii) whether the exercise of specific personal jurisdiction would be reasonable, and thus consistent with the Due Process Clause of the U.S. Constitution. The Court noted that a non-U.S. defendant does not avail itself of a forum merely by contracting with a resident of the forum. Instead, courts weigh prior negotiations, contemplated future consequences, the terms of the contract, and the parties' actual course of dealing to determine if the defendant has purposefully availed itself of forum resources.
Here, the Court held that it lacked specific personal jurisdiction over Castores. While Royal & Sun alleged that Castores advertised that it did business in California, the Court noted that the advertisement was unrelated to the case at bar. Additionally, Royal & Sun failed to show that Castores purposefully availed itself of the protection of California's laws. While a check was delivered to Castores' business address in California, the Court noted that the contract did not anticipate any action by Castores in California, and indeed Castores only transported the goods in Mexico.
Lacking both general and specific personal jurisdiction over Castores, the Court dismissed Castores from the case.
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