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Personal Jurisdiction in Nevada

Posted by: on Wed, Feb 18, 2015

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LEGAL STANDARD TO DETERMINE PERSONAL JURISDICTION

On a motion to dismiss, the plaintiff bears the burden of establishing personal jurisdiction is proper.  College Source, Inc. v. Academy One, Inc., 653 F. 3d 1066, 1073 (9th
Cir. 2011).  A court may not assume the truth of allegations in a pleading that are contradicted by affidavit.  Id.

 

This Court has recently explained the legal standard used when considering a motion to dismiss for lack of personal jurisdiction in Corbello v. DeVito, 844 F. Supp. 2d 1136 (D. Nev. 2012). Personal jurisdiction exists only if exercise of personal jurisdiction complies with Nevada’s “long-arm” statute and federal due process standards.  Nevada’s “long-arm” statute provides for personal jurisdiction to the full extent of federal due process.
Therefore, the Court need only apply federal due process standards to
determine personal jurisdiction.  Id. at 1148.

 

There are two categories of personal jurisdiction: general jurisdiction and specific jurisdiction.
General jurisdiction exists over a defendant who has “substantial” or “continuous and systematic” contacts with the forum State such that the assertion of personal
jurisdiction over him is constitutionally fair even where the claims are unrelated
to those contacts.

Id. at 1148-49 (citations omitted).

 

Even where there is no general jurisdiction over a defendant, specific jurisdiction exists when there are sufficient minimal contacts with the forum such that the assertion of personal jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.’ ”  . . . See Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283
(1958)
(“[I]t 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.” (citing Int’l Shoe Co., 326 U.S. at 319, 66 S.Ct. 154) (emphasis added)); World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (“[T]he foreseeability
that is critical to due process analysis is not the mere likelihood that a
product will find its way into the forum State. Rather, it is that the
defendant’s conduct and connection with the forum State are such that he should
reasonably anticipate being haled into court there.” (citing Kulko v. Superior Court of Cal., 436 U.S. 84, 97–98, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978)) (emphasis added). From
these cases and others, the Ninth Circuit has developed a three-part test for
specific jurisdiction:

 

(1) The non-resident defendant must purposefully
direct his activities or consummate some transaction with the forum or resident
thereof; or perform some act by which he purposefully avails himself of the
privilege of conducting activities in the forum, thereby invoking the benefits
and protections of its laws;

 

(2) the claim must be one which arises out of or
relates to the defendant’s forum-related activities; and

 

(3) the exercise of jurisdiction must comport with
fair play and substantial justice, i.e. it must be reasonable.

Boschetto, 539 F.3d at 1016 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir.2004)).

The plaintiff bears the burden on the first two
prongs. If the plaintiff establishes both prongs one and two, the defendant
must come forward with a “compelling case” that the exercise of jurisdiction
would not be reasonable. But if the plaintiff fails at the first step, the
jurisdictional inquiry ends and the case must be dismissed.

 

Id. at 1149.

  1. II.
    LEGAL ANALYSIS

 

It appears Plaintiffs are attempting to establish specific jurisdiction over R.
R does not have substantial, continuous and systematic contacts with
Nevada necessary to establish general jurisdiction.  The standard for establishing general
jurisdiction is fairly high and requires the defendant to have contacts that
approximate physical presence in the forum.  Young v. Actions Semiconductor
Co., Ltd.,
386 Fed. Appx. 623, 626 (9th Cir. 2010).

 

The inquiry discussed above regarding specific jurisdiction has been succinctly described
as turning on a trio of criteria:  (1) purposeful availment (or minimum contacts), (2) relatedness and (3) reasonableness.  Autogenomics, Inc. v. Oxford Gene Technology Lmt., 556 F. 3d 1012, 1024 (Fed. Cir. 2009).  Plaintiffs in this case cannot meet any of
these criteria.  Most significantly, R has no minimum contacts with Nevada sufficient to confer personal jurisdiction and the inquiry should end there.  The claim for fraud is not related to the miniscule and attenuated contact R had with Nevada.  Lacking minimum
contacts and relatedness, this Court’s exercise of personal jurisdiction would
violate due process.

 

  1. A.       R has no minimum contacts sufficient
    to establish jurisdiction in Nevada.

The very recent case of Walden v. Fiore, 134 S. Ct. 1115 (2014), is directly on point.
In Walden, the Supreme Court decided that a defendant’s actions in Georgia could not establish personal jurisdiction in Nevada even though the defendant’s actions caused damages in
Nevada.  The plaintiffs in Walden were professional gamblers and
Nevada residents.  Id. at 1119-1120.  When returning from a gambling trip to Puerto Rico, they were stopped by a DEA agent at Atlanta’s airport and the DEA agent confiscated $97,000 in cash on suspicion that the money was drug related. Id.  The DEA agent knew that the plaintiffs were Nevada residents at the time he seized the money. Id.  Plaintiffs maintained
that the money was from gambling and the DEA eventually returned the $97,000. Id.
The plaintiffs sued the DEA agent in Nevada for monetary damages.  Id.

 

Walden addresses the minimum contacts necessary to create personal jurisdiction.  Id. at 1121.  Because Walden is directly on point, R will quote from it extensively.  In explaining the minimum contacts analysis, the Supreme Court emphasized that it must be the defendant who creates the contact with the forum state:

 

First, the relationship must arise out of contacts that the “defendant himself” creates with the forum State. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105
S.Ct. 2174, 85 L.Ed.2d 528 (1985)
. Due process limits on the State’s adjudicative authority
principally protect the liberty of the nonresident defendant—not the
convenience of plaintiffs or third parties. See World–Wide Volkswagen
Corp., supra,
at 291–292, 100 S.Ct. 559.
We have consistently
rejected attempts to satisfy the defendant-focused “minimum contacts” inquiry
by demonstrating contacts between the plaintiff (or third parties) and the
forum State. See Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 417, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)
(“[The] unilateral activity of another party or a third person is not an appropriate consideration when determining whether a
defendant has sufficient contacts with a forum State to justify an assertion of
jurisdiction”). . . Put simply, however significant the plaintiff’s contacts with the forum may be, those contacts cannot be “decisive in determining whether the defendant’s due process rights are violated.” Rush, 444 U.S., at 332, 100 S.Ct. 571.

 

Id. at 1122-23 (emphasis supplied).

 

Second, a “minimum contacts” analysis looks to the defendant’s contacts with the forum state itself, not the defendant’s contacts with persons who reside there.  Id.

 

But the plaintiff cannot be the only link between the defendant and the forum.
Rather, it is the defendant’s conduct that must form the necessary connection
with the forum State that is the basis for its jurisdiction over him.
See Burger King, supra, at 478, 105 S.Ct. 2174 (“If the question is whether an individual’s
contact with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party’s home forum, we believe the answer clearly is that it cannot”); Kulko v. Superior Court of Cal., City and County of San Francisco, 436 U.S. 84, 93, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978) (declining to “find personal jurisdiction in a
State … merely because [the plaintiff in a child support action] was residing
there”). To be sure, a defendant’s contacts with the forum State may be
intertwined with his transactions or interactions with the plaintiff or other
parties. But a defendant’s relationship with a plaintiff or third party,
standing alone, is an insufficient basis for jurisdiction. See Rush, supra, at 332, 100 S.Ct. 571 (“Naturally, the parties’ relationships with
each other may be significant in evaluating their ties to the forum. The
requirements of International Shoe, however, must be met as to each
defendant over whom a state court exercises jurisdiction”). Due process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the “random, fortuitous, or attenuated” contacts he makes by
interacting with other persons affiliated with the State.
Burger King, 471 U.S., at 475, 105 S.Ct. 2174 (internal quotation marks omitted).

 

These same principles apply when intentional
torts are involved. In that context, it is likewise insufficient to rely on a
defendant’s “random, fortuitous, or attenuated contacts” or on the “unilateral
activity” of a plaintiff. Ibid. (same). A forum State’s exercise of
jurisdiction over an out-of-state intentional tortfeasor must be based on
intentional conduct by the defendant that creates the necessary contacts with
the forum.

 

Id. at 1122-23.
(emphasis supplied)

 

Applying the foregoing principles the Supreme Court in Walden concluded that the
defendant lacked the “minimal contacts” with Nevada that are prerequisite to
the exercise of jurisdiction.  Id. at 1124Like Reina, no part of the
defendant’s alleged conduct in Walden occurred in Nevada. The DEA agent seized the cash at issue in the Atlanta airport.  R allegedly made fraudulent misrepresentations from Florida to H and C when they lived in Oregon.  The DEA agent never traveled to,
conducted activities within, contacted anyone in, or sent anything or anyone to
Nevada.  R has only been to Nevada one time for a wedding.  “In short, when
viewed through the proper lens—whether the defendant’s actions connect
him to the forum—petitioner formed no jurisdictionally relevant contacts
with Nevada.”  Id.  Like the DEA agent in Walden, R has no contacts (or
purposeful availment) with Nevada.

 

Third, the Supreme Court in Walden also rejected any argument to establish personal
jurisdiction based on an effects test, i.e. damages sustained in Nevada.  In
reversing the Ninth Circuit, the Supreme Court stated:

 

The Court of Appeals reached a contrary
conclusion [finding jurisdiction] by shifting the analytical focus from
petitioner’s contacts with the forum to his contacts with respondents. Rather
than assessing petitioner’s own contacts with Nevada, the Court of Appeals
looked to petitioner’s knowledge of respondents’ “strong forum connections.” In
the court’s view, that knowledge, combined with its conclusion that respondents
suffered foreseeable harm in Nevada, satisfied the “minimum contacts” inquiry.

 

This approach to the “minimum contacts” analysis impermissibly
allows a plaintiff’s contacts with the defendant and forum to drive the
jurisdictional analysis. Petitioner’s actions in Georgia did not create sufficient
contacts with Nevada simply because he allegedly directed his conduct at
plaintiffs whom he knew had Nevada connections. Such reasoning improperly
attributes a plaintiff’s forum connections to the defendant and makes those
connections “decisive” in the jurisdictional analysis. It also obscures the
reality that none of petitioner’s challenged conduct had anything to do with
Nevada itself.

 

*  *  *

Respondents’ claimed injury does not evince a connection between petitioner and Nevada. Even if we consider the continuation of the seizure in Georgia to be a distinct injury, it is not the sort of effect that is tethered to Nevada in any meaningful way. Respondents (and only respondents) lacked access to their funds in Nevada not because anything independently occurred there, but because Nevada is where respondents chose to be at a time when they desired to use the funds seized by petitioner. Respondents would have experienced this same lack of access in California, Mississippi, or wherever else they might have traveled and found themselves wanting more money than they had.

 

*  *  *

Well-established principles of personal jurisdiction are sufficient to decide this case. The proper focus of the “minimum contacts” inquiry in intentional-tort cases is “ ‘the relationship
among the defendant, the forum, and the litigation.’ ” And it is the defendant,
not the plaintiff or third parties, who must create contacts with the forum
State. In this case, the application of those principles is clear: Petitioner’s
relevant conduct occurred entirely in Georgia, and the mere fact that his
conduct affected plaintiffs with connections to the forum State does not
suffice to authorize jurisdiction.

 

Id. at 1125-26 (citations omitted and emphasis supplied).

 

This case is even weaker than Walden because at least in Walden the
plaintiffs were residents of Nevada at the time of the alleged tort.  In this case, the purported conduct relevant to the alleged fraud occurred between a Florida resident, R, and Oregon
residents.   Media did not even exist in 2010.

 

H and C moving to Nevada and forming a Nevada corporation to act as a TF Associate after the alleged fraudulent misrepresentations occurred is unilateral activity on their part.  Plaintiffs’ move to Nevada and formation of Media are the kinds of random, fortuitous and attenuated contacts that the Supreme Court stated were not sufficient to establish personal jurisdiction in Walden.  These after the fact, unilateral events are not a contact with Nevada created by R and cannot be viewed as R purposely availing himself of some right associated with Nevada.

 

That Plaintiffs allegedly experienced damages in Nevada does not establish that R created
contacts with Nevada.  The Supreme Court in Walden squarely rejected the
argument that damages incurred in Nevada can create personal jurisdiction in
Nevada.  See also, Sage Computer Tech. v. P-Code Dist. Comp., 576 F. Supp.
1194, 1196 (D. Nev. 1983)(“More impact or effects caused within the State from
outside activities is not sufficient to support the exercise of
jurisdiction.”).

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