Summary
The U.S. Fifth Circuit's recent decision in Savoie v. Pritchard, 122 F.4th 185 (5th Cir. 2024), has given new life to the "fiduciary shield" doctrine ' an exception to a U.S. court's personal jurisdiction over certain corporate officers and employees. Courts have historically invoked this doctrine to bar jurisdiction over an individual corporate officer or employee defendant who resides outside the forum state, but whose jurisdictional contacts with the forum were created solely in their corporate capacity. However, the doctrine has steadily fallen out of favor since the mid-1980s. Indeed, the plaintiff in Savoie had argued that the doctrine was effectively dead. Yet, the Fifth Circuit disagreed, and, in the first federal appellate decision since 1985 to withhold jurisdiction under the doctrine, held that it barred a Louisiana federal court from exercising personal jurisdiction over a non-resident corporate officer. Despite leaving various questions unanswered, Savoie confirms that the fiduciary shield doctrine is still available and that multi-state and -national businesses should be taking steps to obtain its protection.
The Fiduciary Shield Doctrine ' Brief History
The fiduciary shield doctrine holds that "a nonresident corporate agent generally is not individually subject to a court's jurisdiction based on acts undertaken on behalf of the corporation."1 The doctrine originated in New York in the mid-1960s2 but became more widely adopted by the mid-1980s.3
In 1984, in Calder v. Jones, the Supreme Court allowed the assertion of personal jurisdiction against an out-of-state tort defendant based on the "effects" of the defendant's conduct in the forum state.4 In doing so, the Supreme Court rejected an argument resembling the fiduciary shield doctrine, holding that, as a matter of federal due process, a defendant's "status as [an] employee does not somehow insulate him from jurisdiction."5
After Calder, some decisions have applied the fiduciary shield doctrine as a matter of state law, rather than federal due process.6 The reasoning from those decisions is sometimes unclear, especially when the forum state's long-arm statute (i.e., the state's law governing personal jurisdiction) authorizes the exercise of jurisdiction over a non-resident defendant to the same extent as federal due process ' which does not itself contain a fiduciary shield exception, according to Calder.7
More commonly, however, decisions post-Calder have rejected the fiduciary shield doctrine as a matter of state law.8 Indeed, even New York, the jurisdiction in which the doctrine was first adopted, has since eliminated it altogether.9 Other courts have even suggested that the doctrine is either a dead letter or, to the extent it does exist, highly suspect.[[N: See, e.g., Sanders v. Allenbrooke Nursing and Rehab. Ctr., LLC, 2020 WL 5651675, at *11 (W.D. Tenn. Sept. 22, 2020) (observing that "[t]he Sixth Circuit has, as a practical matter, read the fiduciary shield doctrine out of existence for purposes of personal jurisdiction"); Low v. OMNI Life Science, Inc., 2019 WL 3242726, at *5 (W.D. Okla. Jul. 17, 2019) ("The fiduciary shield doctrine, never much more than a weed in the judicial garden in the first place, was interred, at least for jurisdictions that exert long-arm jurisdiction to the full extent permitted by the Due Process Clause, by Judge Rehnquist, writing for a unanimous Court in Calder." (citation and internal quotation marks omitted)); Kukui Gardens Corp. v. Holco Capital Grp., Inc., 664 F. Supp. 2d 1103, 1111 (D. Haw. 2008) ("In Calder, the Supreme Court effectively abolished the fiduciary shield doctrine ...."); Intermatic, Inc. v. Tay-Mac Corp., 815 F. Supp. 290, 294-95 (S.D. Ind. 1993) (explaining the "questionable origins of the doctrine, the lack of articulation and analysis accompanying application of the doctrine, the fact that the doctrine served to obfuscate application of traditional due process analysis, and the fact that the doctrine allowed for easy but seemingly incorrect answers to jurisdiction questions, eventually caused commentators to suggest that the doctrine be abolished.").]]
The Fiduciary Shield in the Fifth Circuit
The Fifth Circuit has generally been more receptive to the fiduciary shield doctrine as compared to other circuits. In 1985, in Stuart v. Spademan, the Fifth Circuit invoked the doctrine to bar the exercise of personal jurisdiction in Texas over a non-resident employee of a California corporation.10 While Stuart acknowledged that the long-arm statute in the forum state (Texas) extended personal jurisdiction to the limits of due process, it did not meaningfully address the then-recent Calder decision, nor the source for the fiduciary shield doctrine in light of Calder. Since Stuart, the Fifth Circuit's fiduciary shield cases have generally declined to apply the doctrine, but not because of Calder or any doubts as to the doctrine's continued validity, and instead under exceptions to the doctrine, including where personal jurisdiction is based on the individual defendant's own tortious conduct independent of his corporate status.11
Apart from adhering to Stuart, the Fifth Circuit's hesitation to repudiate the fiduciary shield doctrine may have otherwise followed from some post-Calder decisions issued by state courts within its geographic jurisdiction (mainly Texas and Louisiana; Mississippi has minimal case law in this area) that continue to adhere to the doctrine on state law grounds.12 Although notably, both Texas and Louisiana have long arm statutes authorizing personal jurisdiction to the full extent of due process13 ' neither the Texas nor Louisiana Supreme Courts have weighed in on how that authorization squares with the fiduciary shield doctrine.14
In any event, following Stuart, federal courts within the Fifth Circuit have occasionally invoked the fiduciary shield doctrine as a limit on personal jurisdiction.15
The Savoie Decision
The November 2024 Savoie v. Pritchard decision resoundingly confirms that the fiduciary shield doctrine is still available as a limit on personal jurisdiction, at least within the Fifth Circuit.16 The case involved claims for breach of contract and violations of the Louisiana Wage Payment Act brought by an individual against his former employer for allegedly unpaid commissions.17 However, the plaintiff also sued the employer company's CEO and alleged that the CEO separately breached the contract by "engaging in fraudulent and deceitful conduct" in connection with informing the plaintiff that he was not entitled to the requested commissions.18 The CEO moved to dismiss himself for lack of personal jurisdiction, and the district court granted the motion.19
On appeal, the Fifth Circuit affirmed, holding that the fiduciary shield doctrine barred the district court from exercising personal jurisdiction. In an opinion by Judge Engelhardt, the court expressly rejected the plaintiff's argument that Calder (and its companion decision Keeton) were the doctrine's "death knell."20 According to the court, those decisions established only that the Due Process Clause does not require application of the doctrine; however, "a state may still choose to adopt such a limitation as a matter of its own law."21 Thus, the "dispositive question then is whether Louisiana [the forum state at issue] adopts the shield as a matter of its own law."22 Under Savoie ' which quotes in a footnote Monty Python's "Spamalot" ' the doctrine is "not dead yet."23
Turning to Louisiana law, the court recognized that although the Louisiana Supreme Court had not expressly adopted the fiduciary shield doctrine, it "appears to assume its existence" by having adopted the reasoning of a lower appellate court decision that had previously defined the doctrine and its exceptions.24 Thus, the Savoie court, "proceed[ing] cautiously," applied the doctrine as implicitly recognized by the lower Louisiana appellate decision.25
Because in Savoie the plaintiff had "concede[ed] that all of [the defendant's] suit-related contacts were made in his corporate capacity," the court determined that the plaintiff had to establish an exception to the fiduciary shield as recognized by the lower Louisiana appellate decision, namely a "veil-piercing"...
