The Geography of a Lawsuit Part One: Personal Jurisdiction
Most people think that issues about the jurisdiction and reach of different courts across the country sounds like a dry topic, and for the most part that intuition is correct. Questions of jurisdiction tend to be more of a tactical and procedural matter for lawyers to worry over, rather than anything business litigation clients need to care too much about. However, there is one big exception to that.
The reach of courts can suddenly make a major difference to clients when cases start crossing state lines. Then, a Florida CEO can find himself dragged out to Texas or California to testify in a case. Of course, the law understands that where a lawsuit is centered can be inconvenient or even used as a weapon in the case, so it places limitations on where people or companies may be sued. Two of the most important limitations are personal jurisdiction, and venue. Each of these rules has the potential to change slightly from state to state, but they are reasonably uniform across federal courts. This post will be split in two: part one will focus on personal jurisdiction, and part two will explain venue.
Personal jurisdiction is a legal doctrine that limits the power of federal courts over specific people. For instance, a court in Alaska cannot compel a person who lives in Florida to defend themselves in a lawsuit without showing personal jurisdiction. There are three main ways that a court can show personal jurisdiction: consent, presence in the state, or a “long-arm” statute.
The simplest way for a court to gain personal jurisdiction over a person or company is through consent, which can either be given expressly or impliedly. Express consent is some sort of verbal act that demonstrates a person’s assent to submit to the court’s jurisdiction. This often happens in a business context because companies write contracts with “forum selection clauses,” which determine where litigation over the contract would take place. Implied consent is a much less common route, and usually only comes into play when a party chooses not to contest whether a court has personal jurisdiction over them.
Another common way courts gain personal jurisdiction is through presence of the person in the state. However, there is more to that requirement than the name suggests. First, the requirement of presence can be satisfied if the person is officially served with notice of the lawsuit while they are in the court’s territory. Second, courts have personal jurisdiction of people “domiciled” in their state. Domicile is a legal test that determines which state a person or corporation resides in. For people, the test is where they have a permanent home to which they intend to return. By contrast, a company is domiciled in both the state it is incorporated in and the state in which its headquarters sits. Finally, people or companies can be “present” in a state if they regularly, systematically, and continuously do business in the state to the point where they are “at home” in the state.
The final way that a court can get personal jurisdiction is through a “long-arm” statute. Generally speaking, these statutes give courts jurisdiction over a defendant if they performed an act in the state that the lawsuit arises from.
There are also some small constitutional concerns related to personal jurisdiction that ensure that defendants are not being pulled across the country unduly. In order to have personal jurisdiction under one of the above methods, the defendant must also have enough contact with the court’s territory that it would not be unfair to expect them to defend themselves there, a test usually described as “minimum contacts.”
Where a lawsuit is filed can have a major impact on the expense and time for both parties, and can ultimately impact the outcome of a case. If you are currently involved in a legal dispute, and want to learn more about your options for keeping the suit close to home, contact a West Palm Beach business litigation attorney at Pike & Lustig, LLP today.