Personal Jurisdiction in Federal Courts
Personal Jurisdiction, or in personam jurisdiction, refers to the power of a court to hear and determine a lawsuit involving a defendant by virtue of the defendant’s having some contact with the place where the court is located.
Through its personal jurisdiction, a court exercises authority to make decisions binding on the persons involved in a civil case. Every state has personal jurisdiction over persons within its territory. On the other hand, no state can exercise personal jurisdiction and authority over persons outside its territory unless such persons manifest some contact with the state.
The sovereign power of the government grants courts the authority to issue orders to persons present within its territory. The court’s authority to issue orders to person’s present within the territory, allows it to reach all residents of a state, including those who are outside the state for a short period and out-of-state residents who enter the state even for a short time.
Courts exercising jurisdiction over a state where a corporation is incorporated, shall exercise personal jurisdiction over such corporations as well. The concerned states may require corporations to file written consents to personal jurisdiction before they are allowed to conduct business within the state. States may also require the concerned corporations to designate an agent to accept legal process within the state or it can require all out-of-state corporations doing business within the state to authorize the state attorney general to accept process for them.
In 1945, a “minimum contacts” test was announced by the US Supreme court in the International Shoe Company v. Washington[i] case to establish personal jurisdiction over a corporation.
The Court held that courts could constitutionally exercise jurisdiction over a nonresident defendant if the defendant had sufficient contacts with the state. Jurisdiction shall be exercised in such a way that forcing the person to litigate in that forum did not offend the traditional notions of fair play and substantial justice. The court stated that, with the advancement of modern communication and transportation, it is usually not unfair to require a party to defend itself in a state in which it conducts some business activity.
Determination of “minimum contacts” standards vary in each case. Where the action arises out of or is related to the defendant’s contacts with the state, the quantity of contacts necessary to establish personal jurisdiction may be minimal. In such circumstances the nature and quality of the contact become the determining factors. In the case of a nonresident motorist who causes an injury in the state of the court asserting jurisdiction (forum state), the state’s interest in providing a forum for its residents and regulating its highways, coupled with the defendant purposefully entering a state, permits the state to fairly assert personal jurisdiction.
A corporation or individual not physically present in a state may also invoke personal jurisdiction. A single contact with the state by telephone, mail, or facsimile transmission may establish the requisite contact. Such transactions trigger personal jurisdiction when the defendant purposely avails itself of the privilege of conducting activities with the forum state and invokes the benefits and protection of state law.
Taking into account the “minimum contacts” rule, states enacted “long-arm statutes.” These statutes allowed states to reach out and obtain jurisdiction over anyone who is not present in the state but who transacts business within the state; and over anyone who commits a tort within the state, commits a tort outside the state that causes injury within the state, or owns, uses, or possesses real property within the state.
Personal jurisdiction in the federal courts is governed by rule 4 of the Federal Rules of Civil Procedure. Rule 4 directs every federal district court to follow the law on personal jurisdiction that is in force in the state courts where the federal court is located. Federal courts may also use state long-arm statutes to reach defendants beyond the territory of their normal jurisdiction. In cases that may be brought only in a federal court, such as lawsuits involving federal securities and antitrust laws, federal courts may exercise personal jurisdiction over a defendant regardless of where the defendant is found.
When challenging a personal jurisdiction, by an appearance before the court in the forum state, the defendant waives the right to raise any jurisdictional defects. The court will take even such a general appearance as an unqualified submission to the personal jurisdiction of the court. A defendant can request a special appearance before the court to prevent this. This is a special appearance for the limited purpose of challenging the sufficiency of the service of process or the personal jurisdiction of the court. If any other issues are raised in special appearance, the proceeding becomes a general appearance. The court must then determine whether it has jurisdiction over the defendant. If the defendant is found to be within the personal jurisdiction of the court, the issue may be appealed.