The Dormant Commerce Clause As a Limit on Personal Jurisdiction

The Dormant Commerce Clause As a Limit on Personal Jurisdiction John F. Preis  ABSTRACT: For over 70 years, the Due Process Clause has defined the law of personal jurisdiction. This makes sense, because being forced to stand trial in a far-off state will sometimes be fundamentally unfair. What does not make sense, however, is the Dormant Commerce Clause’s apparent irrelevance to personal jurisdiction. The Dormant Commerce Clause addresses state laws affecting interstate commerce, and a plaintiff’s choice of forum is often a commercially driven choice between different state courts. So why isn’t the Dormant Commerce Clause part of personal jurisdiction doctrine? This Article makes the case for its relevance, and demonstrates how the Dormant Commerce Clause can resolve a new and vexing personal jurisdiction issue. Since the Supreme Court’s 2014 decision in Daimler AG v. Bauman —a personal jurisdiction case that significantly curtailed options for forum shoppers— plaintiffs across the country have been attempting to establish jurisdiction using a company’s registration to do business in a state, even when the suit has nothing to do with the company’s business there. Focusing solely on the Due Process Clause, courts across the country have split on the issue. The Dormant Commerce Clause, however, presents a clear answer. This Article offers the first comprehensive analysis of how the Dormant Commerce Clause impacts personal jurisdiction. It argues that jurisdiction based on a company’s registration to do business violates the Dormant Commerce Clause— but only in cases where the lawsuit has no connection to the forum. It also demonstrates how personal jurisdiction comports with the Dormant Commerce Clause in most situations deemed constitutional under the Due Process Clause. In certain general jurisdiction cases (to the extent any remain after Daimler ) and transient jurisdiction cases, however, this Article argues that the Dormant Commerce Clause renders personal jurisdiction unconstitutional.  Professor of Law, University of Richmond School of Law. Special thanks to Kevin Clermont, Brannon Denning, Jessica Erickson, Andrew McGowan, Tanya Monestier, Wendy Perdue, Greg Reilly, Rocky Rhodes, Andra Robertson, Shawn Shaunessey and Glen Staszewski. This Article was generously supported by the Hunton & Williams Summer Research Fellowship Program. 122 IOWA LAW REVIEW [Vol. 102:121 I. INTRODUCTION ............................................................................. 123 II. PERSONAL JURISDICTION AND THE NEW DEBATE OVER JURISDICTION-VIA-REGISTRATION ................................................. 126 A. P ERSONAL J URISDICTION , B EFORE AND A FTER DAIMLER ........... 126 B. T HE N EW F RONTIER OF J URISDICTION -V IA -R EGISTRATION ......... 129 1. Arguing Consent After Daimler ..................................... 129 2. Judicial and Scholarly Assessments .............................. 130 3. A Role for the Dormant Commerce Clause? .............. 132 III. JURISDICTION-VIA-REGISTRATION AND THE DORMANT COMMERCE CLAUSE ......................................................................................... 133 A. P ERSONAL J URISDICTION AS U NCONSTITUTIONAL D ISCRIMINATION ..................................................................... 134 1. What is Unconstitutional Discrimination? .................. 134 2. Jurisdiction-via-Registration Is Unconstitutionally Discriminatory ............................................................... 138 B. P ERSONAL J URISDICTION AS U NCONSTITUTIONALLY B URDENSOME .......................................................................... 144 1. What is an Unconstitutional Burden? ......................... 144 2. Jurisdiction-via-Registration Is Unconstitutionally Burdensome .................................................................. 147 i. Burden: Choice-of-Law Rules ..................................... 148 ii. Burden: Local Practice ............................................... 150 iii. Benefit: Providing a Forum for Residents or Persons Injured in the State .................................................... 153 iv. The Balance of Burdens and Benefits ......................... 154 IV. THE DORMANT COMMERCE CLAUSE APPLIED TO OTHER BASES FOR PERSONAL JURISDICTION ....................................................... 154 A. C ONSTITUTIONAL .................................................................... 154 1. Domicile ......................................................................... 155 2. Consent via Contract or Waiver ................................... 155 3. Specific Jurisdiction ...................................................... 156 B. U NCONSTITUTIONAL ............................................................... 157 1. General Jurisdiction ...................................................... 157 2. Transient Jurisdiction ................................................... 159 V. CONCLUSION ................................................................................ 163 2016] THE DORMANT COMMERCE CLAUSE 123 I. INTRODUCTION Have you ever been to a “judicial hellhole?” 1 It is a place where judges hate summary judgment, and juries love to give money to old ladies burned by hot coffee. Or at least that is what the defense bar will tell you. The plaintiffs’ bar will tell you that these dens of iniquity are actually safe havens— places where the little guy can fight a big corporation that forgot to put a safety shield in front of a spinning blade. Whether hellhole or haven, there is one issue that both sides can agree on: forum matters. Because forum matters, plaintiffs understandably search for the most advantageous forum in which to bring their suit. A major factor in forum selection is the law of personal jurisdiction, a body of law based in large part on the Fourteenth Amendment’s Due Process Clause. 2 The Due Process Clause means many things, but at a minimum, it guarantees litigants the freedom from random or irregular adjudication. 3 In the context of personal jurisdiction, this means that defendants may not be hauled into court in a faroff state simply because a plaintiff has chosen to sue them there. In the Supreme Court’s opinion, a judicial system in which a plaintiff has unfettered discretion to file suit in dozens of different states, many of them thousands of miles away, is not an orderly system of law. 4 Even though the Due Process Clause is an essential component of personal jurisdiction law, it is odd that it seems to be the only component. To the extent that a state’s personal jurisdiction law discourages companies from doing business in a state (and thus subjecting themselves to jurisdiction there), the Dormant Commerce Clause—which renders unconstitutional state laws that discourage outsiders from engaging in commerce in a particular state—should have much to say about personal jurisdiction. Indeed, in the first part of the 20th century, courts routinely applied the Dormant Commerce Clause to limit state assertions of personal jurisdiction. 5 After standing in the background for so long, it is high time for the Dormant Commerce Clause to step forward. In recent years, the Supreme 1. For a list of the leading “hellholes,” see JUDICIAL HELLHOLES, http://www.judicialhell holes.org (last visited September 16, 2016). 2. U.S. CONST. amend. XIV. 3. See Int’l Shoe Co. v. Washington , 326 U.S. 310, 316 (1945) (holding that a court’s assertion of authority over a party must comport with “traditional notions of fair play and substantial justice” (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940))). 4. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (explaining that the Due Process Clause “gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit”). 5. See, e.g. , Denver & Rio Grande W. R.R. Co. v. Terte, 284 U.S. 284, 287 (1932); Michigan Cent. R.R. Co. v. Mix, 278 U.S. 492, 495 (1929); Davis v. Farmers’ Co-Op. Equity Co., 262 U.S. 312, 315 (1923); Panstwowe Zaklady Graviozne v. Auto. Ins. Co., 36 F.2d 504, 506 (S.D.N.Y. 1928). 124 IOWA LAW REVIEW [Vol. 102:121 Court has issued a spate of major personal jurisdiction decisions. 6 These decisions have set off a wave of commentary in the legal academy, 7 but the questions raised by these new cases are not simply academic. At present, jurists across the country are wrestling with a new and vexing issue of personal jurisdiction: whether a company’s registration to do business in a state amounts to consent to personal jurisdiction in that state. 8 What no scholar or jurist has recognized, however, is that the Dormant Commerce Clause clarifies modern personal jurisdiction law in a way that the Due Process Clause, on its own, cannot. This Article offers the first comprehensive analysis 9 of how the Dormant Commerce Clause restricts state courts’ assertion of personal jurisdiction. 10 Part II provides an overview of personal jurisdiction law and a summary of the current debate over whether registration to do business can, on its own, support personal jurisdiction. Part III explores the dictates of the Dormant 6. See, e.g. , Walden v. Fiore, 134 S. Ct. 1115, 1121–22 (2014) (holding that a defendant must purposefully establish contacts with the forum state itself, not simply with a plaintiff who is a domiciliary of the forum state); Daimler AG v. Bauman, 134 S. Ct. 746, 750 (2014) (holding that general jurisdiction is unavailable in a state if such jurisdiction would “presumably be available in every other State in which [the defendant’s] sales are sizable”); Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011) (holding that general jurisdiction only exists where “affiliations with the State are so ‘continuous and systematic’ as to render [the defendant] essentially at home in the...