US high court questions limits of personal jurisdiction

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WASHINGTON — The justices of the U.S. Supreme Court verbally jousted with attorneys Monday in an effort to nail down just how much contact a defendant must have with a particular jurisdiction before he can be hauled into court there.

The court heard arguments in Walden v. Fiore, No. 12-574, the second personal jurisdiction case it has taken up in the early weeks of the term.

The case involves Gina Fiore and Keith Gipson, professional gamblers who were traveling home from Puerto Rico to Las Vegas when they were stopped at a Transportation Security Administration checkpoint in San Juan and subjected to heightened scrutiny.

Upon the discovery of nearly $100,000 in cash in their bags, TSA officials alerted the Drug Enforcement Administration and Fiore and Gipson were questioned as to whether the money was drug related. They ultimately were allowed to board the plane after telling officers that the money was gambling winnings.

During a stop in Atlanta, Fiore and Gipson again were questioned by DEA officers, and the luggage containing the cash was seized after a drug-detection dog signaled toward it.

Fiore and Gipson continued to Las Vegas without their bags.

Once home, they submitted tax records verifying their gambling earnings. An assistant U.S. attorney ultimately concluded that the government lacked probable cause to forfeit the cash, and it was returned about seven months after it was seized.

Fiore and Gipson filed a Bivens action in Nevada against the the DEA agent who seized the cash in Georgia, alleging Fourth Amendment violations. A trial court granted the agent’s motion to dismiss for lack of personal jurisdiction in Nevada, but the 9th U.S. Circuit Court of Appeals reversed, holding that the harm caused in Nevada by the improper seizure was foreseeable.

The U.S. Supreme Court granted the agent’s petition for certiorari.

Personal jurisdiction

Jeffrey Bucholtz, a partner in the Washington office of King & Spalding LLP representing the agent, urged the court during oral arguments to reject the 9th Circuit’s “plaintiff-centered approach” that the agent’s targeting of the travelers and knowledge of their connection to Nevada was enough to establish personal jurisdiction.

“[This] court has emphasized that random, attenuated, and fortuitous contacts with the forum state are insufficient,” Bucholtz said, “and that in particular contacts between the defendant and the forum state that are created by the unilateral activity of the plaintiff are not sufficient.”

Justice Anthony Kennedy wondered if the facts were particularly problematic for the agent.

“In this case, it was known or should have been known that these were gamblers [in] Nevada. That’s where a lot of their gambling takes place. They were residents of Nevada,” Kennedy said. “So in that sense [the] defendant arguably knew or should have known that that’s where its major impact would be.”

Bucholtz pointed out that Fiore and Gipson showed the agents California-issued licenses, although they did say they resided both in California and Nevada. But most importantly, he said, all the action involved in the suit happened in Georgia.

“The cash was in Atlanta. The plaintiffs brought the cash to Atlanta,” Bucholtz said. “Officer Walden didn’t seek them out knowing that they had any connection to Nevada. He didn’t go to Nevada.”

Melissa Arbus Sherry, assistant to the U.S. solicitor general arguing as amicus in support of the agent, argued that the 9th Circuit ruling opens up DEA agents to potential liability in any state.

“This is a really problematic decision,” Sherry said, “because [agents] interact with travelers from all 50 states and beyond on a daily basis.”

Thomas Goldstein, a partner in the Washington office of Goldstein & Russell PC, argued on the gamblers’ behalf that the narrow approach urged by the agent is unworkable in a mobile and digital age where harm can easily and foreseeably be inflicted by parties in distant jurisdictions.

Such perpetrators “sit at their computer and they steal money [from a] bank account,” Goldstein said. “They take the person’s ID. They use their credit cards and the like.”

Justice Antonin Scalia pointed out that “these people were in Georgia when the injury occurred.”

Goldstein disagreed.

“When [the] officer creates a false affidavit to start the forfeiture process, we are not in Georgia,” Goldstein said. We have no ongoing contacts with Georgia. And we are losing access to the money only in Nevada.”

International limits

Fiore is one of two cases the court so far has heard this term examining the exercise of jurisdiction over a defendant in a distant forum. In Daimler AG v. Bauman, No. 11-965, the justices considered whether a court has jurisdiction over a foreign corporation based on the existence of subsidiary firms within the forum state acting on the parent company’s behalf. That case involves an Alien Tort Act claim filed in California but alleging violations of the Torture Victims Protection Act in Argentina.

During oral arguments Oct. 15, the justices expressed skepticism that the alleged wrongdoing by Daimler in Argentina was within the reach of a California court.

“So if a Mercedes Benz vehicle overturned in Poland and injured the Polish driver and passenger, suit for the design defect could be brought in California?” Justice Ruth Bader Ginsburg asked Kevin Russell, a partner at Goldstein & Russell in Washington representing the plaintiffs.

Russell indicated that was correct and argued that the broad contacts Daimler has within California given its auto sales via subsidiaries are enough to establish general jurisdiction.

“Wouldn’t it be arbitrary,” Ginsburg asked, “to exercise personal jurisdiction [when] the case involves foreign plaintiffs injured abroad?”

“We don’t think so,” Russell said. “I think you would have to take into account this case has been in litigation for eight years already. I think that’s a substantial reason for the court to want to allow the case to continue.”

Rulings in both cases are expected later this term.

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