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The Case Against Vicarious Jurisdiction

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The Case Against Vicarious Jurisdiction University of Pennsylvania Law Review FOUNDED 1852 Formerly American Law Register VOL. 152 JANUARY2004 No. 3 ARTICLES THE CASE AGAINST VICARIOUS JURISDICTION LONNY SHEINKOPF HOFFMANt INTRODUCTION The law of adjudicatory jurisdiction, or personal jurisdiction as it is more commonly called, concerns a court's power to renderjudgments enforceable in the forum and by other sovereign states. For U.S. courts, both state and federal, judicial jurisdiction is as essential to t Assistant Professor of Law, University of Houston Law Center. For their valuable input, I owe a debt of thanks to Stephen Bainbridge, Joseph Bauer, Philip Blumberg, Lea Brilmayer, Stephen Burbank, Graeme Dinwoodie, Jill Fisch, Doug Michaels, Doug Moll, Edward Purcell, Robert Ragazzo, Charles Rhodes, Michael Solimine, Kent Syverud, and Robert Thompson; and to the faculty participants at the University of Cincinnati College of Law Summer Scholarship Series and the Southeastern Confer- ence AALS Annual Meeting Program, in Kiawah Island, South Carolina. Excellent re- search assistance was provided by Mark Geller and Robert Reckers. Finally, I am grate- ful to David Warrington at the Harvard Law School Library and to Rebecca Bertoloni Meli at the Indiana University School of Law Library for their assistance with the Louis D. Brandeis archival materials. The University of Houston Foundation provided finan- cial support for this project. (1023) 1024 UNIVERSITY OFPENSYLVANIA LAWREVIEW [Vol. 152:1023 institutional existence as oxygen is to human beings. Without it, courts are unable to render binding judgments; without it, they are paper tigers. Measuring the breadth of judicial power under modern jurisdic- tional doctrine is not a formulaic undertaking, to be sure, but most of the time all that is required is to take into account the acts or omis- sions of a single defendant in relation to the forum. That is, we fre- quently need look no further than to see whether the defendant's own conduct makes her amenable to suit. If I travel to collect a debt from one who has taken up residency in a distant state and, in the collec- tion process, inflict physical injury on the debtor, there is little ques- tion that I must be prepared to defend myself in that forum against a civil suit, under penalty of default if I do not appear. Even when a defendant does not personally commit any acts in or directed at the forum, modern statutes and constitutional doctrine render the ab- sent actor amenable to suit. Following the procedural revolution of International Shoe Co. v. Washington,' defendants are no longer able to evade the jurisdictional grasp of a court merely by taking the expedient step of retreating from the forum before being served or, for that matter, not setting foot within the state at all but instead act- ing from a safe distance. Thus, I cannot avoid being subject to suit by hiring someone else and instructing her to use all means necessary to collect the debt in the forum state on my behalf. Upon a close ex- amination of modem jurisdictional doctrine, we may discover two dif- ferent rationales to explain why the exercise ofjurisdiction would be upheld. Jurisdiction may be predicated on the actions I personally took in hiring someone to find and arrest the debtor in the forum state. For jurisdictional purposes, my actions have both statutory and consti- tutional relevance. These were purposeful acts that were directed to cause injury in the forum. 2 I personally retained someone to act on my behalf and either knew or should have known that if kneecaps were broken the injury would be felt (painfully) by the debtor in the forum. The Supreme Court has recognized that in these 326 U.S. 310 (1945). 2 See, e.g., N.Y. C.P.L.R. 302(a) (McKinney 2001) ("As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdic- tion over any non-domiciliary, or his executor or administrator, who [acted] in person or through an agent ... "). 2004] AGAINST VICARIOUSJURISDICTION 1025 circumstances the forum state may exercise jurisdiction without violat- ing due process. 3 In the situation in which one hires someone else to collect a debt, the first explanation for the exercise of state court power over her is similar to the rationale that justifies jurisdictional amenability when she personally travels to the forum: in both instances, jurisdiction is triggered by her own actions. While we may conceive ofjurisdiction as based on the personal conduct of the named defendant, a second, al- ternative rationale may justify the exercise of judicial jurisdiction by the forum court over a nonresident. Unlike the prior basis, which fo- cuses exclusively on what one personally did in the forum or on what actions she personally took outside of the forum that she knew or should have known would cause injury within the state, it is also possi- ble to base the exercise of state court power on the attribution of her agent's forum contacts to her. Under this second formulation, juris- diction may be understood as triggered not by one's own contacts with the forum, but by the jurisdictionally sufficient contacts or forum nexus of another. Of course, to make this jurisdictional leap, a valid basis is needed for treating another person or entity's jurisdictionally sufficient contacts as though they were the defendant's. That is, there must be some substantive legal rule that permits the court to disregard ajuridical entity's otherwise separate legal existence. In the example above, agency law may be called upon tojustify the imputation of contacts. When one, a principal, hires and instructs another, an agent, to act on her behalf by traveling to the forum to collect a debt, she creates an agency relationship between them.4 When the agent carries out the job, she is acting within the course and scope of her agency; that is, she is acting as the principal intended her to act. If the principal is liable for any injuries the agent causes in the forum as a matter of substantive law, then it may be argued 3 See, e.g., Hanson v. Denckla, 357 U.S. 235, 253 (1958) ("[lIt is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws."). 4 See RESTATEMENT (SECOND) OFAGENCY§ 1 cmt. b (1958) (observing that agency requires a showing of (1) "the manifestation by the principal that the agent shall act for him," (2) "the agent's acceptance of the undertaking," and (3) the parties' under- standing "that the principal is to be in control of the undertaking"); see also RE- STATEMENT (THIRD) OF AGENCY § 1.01 (Tentative Draft No. 2, 2001) ("Agency is the fiduciary relationship that arises when one person (a 'principal') manifests assent to another person (an 'agent') that the agent shall act on the principal's behalf and sub- ject to the principal's control, and the agent manifests assent or otherwise consents so to act."). 1026 UNIVERSITY OFPENNSYLVANIA LAWREVIEW [Vol. 152: 1023 correspondingly that, as an a priori matter, under modem jurisdic- tional doctrine the principal is amenable to any suit in the forum state arising out of those injuries. There is nothing especially remarkable about this second explana- tion for why the forum court would be able to exercise jurisdiction over the principal for having instructed an agent to collect the debt on her behalf. The attribution of contacts of one person or entity to another for jurisdictional purposes is a frequently seen and often in- voked form of traditional jurisdictional argument. Indeed, this ra- tionale is necessary for engaging in jurisdictional analysis for any case involving nonnatural entities, such as corporations, which cannot act except through others. In International Shoe, which rejected the old "presence" theory of jurisdiction, Justice Harlan Stone noted, in one of the most important passages of the opinion, that to ask whether the corporation is present in the forum so as to satisfy due process "is to beg the question to be decided."' Corporate presence, he observed, "can be manifested only by activities carried on in its behalf by those who are authorized to act for it."6 We measure jurisdiction over a cor- poration by the extent and kind of activities "of the corporation's agent within the state which courts will deem to be sufficient to satisfy the demands of due process."' Justice Felix Frankfurter made a simi- lar point three years later in his concurring opinion in United States v. Scophony Corp. of America.8 In upholding service of process and the ex- ercise ofjurisdiction over a foreign corporate parent based on in-state service on its domestic affiliate, he wrote: "What was done in the Southern District of New York on behalf of [the parent] ... estab- lishes that the corporation was there transacting business and was found there in the only sense in which a corporation ever 'transacts business' or is 'found."' 9 Even though the use of vicarious jurisdiction for nonnatural entities is a recognized and unremarkable application of jurisdiction, the incorporation of substantive law into the measure of adjudicatory jurisdiction can be problematic. ,While reliance on such law may be useful to identify forum contacts, agency law, and other similar substantive law doctrines-such as respondeat superior, civil and criminal conspiracy, and especially, the corporate law doctrine of veil 5 326 U.S. at 316. 6 Id. 7 Id. at 317. 8 333 U.S. 795 (1948). Id. at 819 (Frankfurter, J., concurring).
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