Have you ever been sitting in a courtroom and wondered why you were there? We don’t mean that in a metaphysical sense, though that probably happens sometimes, too. No, we are thinking of the situation where you realize that neither the plaintiff nor the defendant are citizens/residents of the jurisdiction, and that the events in issue did not occur there either. Why are we here? This sort of thing happens to us a lot in courtrooms in New Jersey and Pennsylvania. Of course, there is an answer to the question: that is where the plaintiff filed the lawsuit. That choice of forum, so we are told by many authorities, is entitled to some respect. Okay, but how much? Forum-shopping is not one of the glories of American jurisprudence. It is a form of lawsuit arbitrage that inflicts inappropriate costs on parties and court systems. (Of course, some courts have unashamedly promoted themselves as litigation-tourist destinations.) When a plaintiff goes forum-shopping, what is being purchased? It could be plaintiff-friendly judges, jurors, laws, or procedures. It is ineluctably unseemly. Plaintiffs, being plaintiffs, sometimes push things a bit far, Forum shopping starts to look like forum-shoplifting.
If we had represented the defendant in the recent case of Kuennen v. Stryker Corp., 2013 U.S. Dist. LEXIS 1555571 (W.D. Va. Oct. 30, 2013), we would have wondered why we were in the place where the case was originally filed, the District of Columbia. The plaintiff, a resident of Virginia, underwent arthroscopic shoulder surgery in Virginia. The plaintiff received a pain pump made and sold by the defendants, to infuse a local anesthetic into the shoulder joint space. Now the plaintiff was alleging that the pain pump caused her to lose cartilage in her right shoulder joint. The defendants were both Stryker entities, which we will call “Corp.” and “Sales.” Neither was a citizen of D.C. The pain pump was not designed, manufactured, or sold in D.C. and the alleged injury occurred in Virginia. The defendants did not simply wonder why they were being hauled into a D.C. court; they successfully moved under section 1404 to transfer the case to the place where it should have been filed, Virginia. End of forum-shopping, right?
Maybe. Yeah. But not without a tussle. The defendants moved for summary judgment based on the statute of limitations. The defendants contended that the plaintiffs’ claims were barred by the Virginia two-year statute of limitations. In opposition, the plaintiffs asserted that the D.C. statute of limitations should apply with its favorable discovery role as to the accrual of the cause of action. The parties agreed that if the Virginia statute of limitations applied, the case would be dismissed, and if the D.C. statute applied, the case would continue, at least for a while. Why is it even an issue? The case is in Virginia, right? Not so fast. When an action is transferred under section 1404(a) from one district court to a district court in another state, the transferee court must apply the same law as the transferor court would have applied. The forum-shopping effect lingers.
An exception to the requirement of applying the law of the original (transferor) court, is where the transferor court did not have personal jurisdiction over the defendant at the time of transfer. If that is true, then the transferee court (here, the Virginia federal court) will apply the law of its state, rather than that of the transferor state. At this point in reading the case, we were not very optimistic, because we dimly recalled from law school that personal jurisdiction, based on contacts with the forum, is usually pretty easily established, especially with respect to corporations. Isn’t it simply due process? And isn’t that almost infinitely elastic? But here is the bit that we didn’t remember learning in law school: when the personal jurisdiction analysis pertains to a forum where the cause of action did not arise (for example, the causes of action in Kuennen no-way-no-how arose in D.C.), the requirement of forum contacts is more rigorous.
Let’s start with the Sales entity. It has a business certificate and an appointed agent in D.C. It has employees who solicit sales in D.C, although none of them work there exclusively. Sales also has a small government affairs office in D.C that houses one employee. Sales certainly sells the product in D.C., but those sales make up less than one-half of one percent of the corporation’s overall sales. Sales advertised in D.C. and attended at least one trade show there. But no evidence shows that any of Sales’ marketing communications were tailored to D.C. As a contact “advertising is significant only when it is pervasive or when the cause of action arises in the forum.” Kuennen, 2013 U.S. Dist. LEXIS 155571 at *13. Moreover, D.C. does not appear to have a special interest in the dispute.
If anything the analysis is easier for Corp. It does not have continuous and systematic contacts with D.C. Corp. is not registered to conduct business in D.C, and “has no business office or manufacturing facilities there. It has no sales or tax liability there.” Id. at *14. Corp.’s only connection to D.C. is one employee out of 4,999 employees nationwide. Goodbye Nation’s Capital, hello Shenandoah Valley. (The plaintiff also argued that the contacts of Sales should be imputed to Corp. because the two companies are alter egos of each other, but since Sales lacked adequate contacts, it was much alter ego about nothing.)
Not surprisingly, the plaintiffs tried to keep D.C. law (and, thus, the case) in play by asking for jurisdictional discovery. The Virginia court denied that request. Jurisdictional discovery is “not warranted when the discovery will not change the jurisdictional analysis.” Id. at *16.
That is a solid analysis by the Virginia federal court. It’s so good, it’s the kind we might even shop for someday. You know, if we weren’t above that sort of thing.