A minority shareholder in Greyhound attempted to sue Greyhound in Delaware by sequestration of stocks which were situated in Delaware under statute. The sequestrator “seized” these stocks by placing a stop transfer order on them and the suit proceeded. 21 defendants, none of whom were in Delaware, entered special appearance to quash jurisdiction. Trial court rejected the motion and the Delaware Supreme Court affirmed. Defendants appealed to SCOTUS.
Questions of law
Where does the line fall for quasi in rem jurisdiction and the attachment of property for the purposes of recognizing jurisdiction?
SCOTUS reasoned to abandon the in rem policy from Pennoyer, choosing instead to move toward the test of “fair play and substantial justice” from International Shoe. This is not a total abandonment of in rem because, as they say, “when claims to the property itself are the source of the underlying controversy…it would be unusual for the State where the property is located to not have jurisdiction.” They found that pulling someone into a jurisdiction merely because of property, without a controversy touching that property, presented a fairness problem. “We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.”
Foreign plaintiffs, Argentinian nationals, attempted to sue foreign defendant Daimler, as owner of its Argentinian subsidiary, for war crime participation by that subsidiary. They brought suit in California by service on the US subsidiary, which was incorporated in Delaware but had substantial business contacts and properties in California. The trial court dismissed for lack of jurisdiction, but the Ninth Circuit reversed on grounds substantially similar to a purposeful availment theory. Appealed to SCOTUS.
Questions of law
When does a corporation’s contacts with a forum rise to a level granting personal jurisdiction over matters unrelated to those contacts?
Ginsburg, writing for the majority, argued that the Ninth Circuit had erred both in permitting to allow the US subsidiary to stand as agent for defendant and in extending general jurisdiction over events and plaintiffs not only outside the forum state, but on an entirely different continent. The subsidiary’s contacts with the forum would have been sufficient to establish specific jurisdiction, but were not enough to show that it was “at home” in the state.
Defendants agreed to purchase a food truck business, with equipment, from plaintiff. They reached a verbal agreement and defendants paid $10,000 cash while waiting on a bank loan for the remaining $140,000. They took possession and operated the food truck for a season while the title remained in the plaintiff’s name. Thereafter, they attempted to return it and claimed no contract existed. They said the $10,000 was a fee to operate while they explored purchasing, but the bank did in fact grant them the loan. The trial court found for defendants; plaintiff appealed.
Rules of law
Under the UCC, a goods contract may be made in any way that shows agreement, including the conduct of the parties. A contract may issue even if the moment of its making is undetermined. Even if terms are left uncertain, intent and reasonable certainty of remedy govern.
The defendants argued that the business was not a “good” under the UCC and argued that the supposed oral contract was too vague to be enforceable. The plaintiff argued that the essential terms were agreed upon and the only remaining elements were performance, and did not timely return the business.
The court found that there was a contract, that there was more than just an agreement to agree, and that the defendants breached. Reversed.
Plaintiff Dohrmann sued the defendant Swaney, executor of the estate of his neighbor Mrs. Rogers, for damages under a purported contract. Mrs. Rogers had, in the contract, agreed to give him her apartment and $4 million for “past and future services” and in exchange for “incorporating” her last name into the names of his children. The trial court granted summary judgment against plaintiff, who appealed.
Rules of law
A contract requires consideration, and the question of whether consideration is sufficient is a matter of law. Where the amount of consideration is so grossly inadequate as to shock the conscience of the court, the contract will fail. When there is a gross inadequacy of consideration, the relative fairness of the contract and circumstances of unequal bargaining power may be considered in determining whether to set aside the contract.
Plaintiff asserted that perpetuating Mrs. Rogers’ name by adding it to those of his children was bargained-for and sought consideration. He also said that the court did not have grounds to examine the relative value of consideration, only to determine whether it exists. The Estate argued that the contract was entered into fraudulently and that because the name was not added as a surname, it did not meet the goal of perpetuating her name.
The court affirmed, finding that not only was the consideration grossly inadequate, but it was in a sense nonexistent, since the only supposed benefit, changing the children’s names, was not enforceable against them since they could freely change their names in the future. There was also substantial unfairness associated with the formation of the contract and had to be set aside.
Defendants engaged in the construction of a reservoir employed contractors who failed to use proper care and skill, and accordingly water broke out of the reservoir and damaged plaintiff’s property.
Question of law
Does a lack of knowledge or intent indemnify a defendant from liability for harm done by their actions? What if the fault lies with their agents? “What is the obligation which the law casts on a person who lawfully brings on his land something which, harmless whilst it remain there, will naturally do mischief if it escape out of his hand?”
The court held that as the plaintiff’s rights had been infringed as a result of actions which would have been unlawful if they had been done intentionally, the defendants ought to be held liable. They knew the mine workings could extend in any direction and therefore they acted at their own peril.
“We think that the true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape.”
A defendant, attempting to break up a fight between his dog and the plaintiff’s, swung a stick behind him and struck the plaintiff in the eye. The jury found for the plaintiff after the trial judge’s instructions that the defendant would be liable if his actions were unnecessary and he had not exercised “extraordinary” care.
Questions of law
What is the basis of action for negligence in tort law? How did negligence arise from intentional torts? Shall a defendant be liable if his intention was not unlawful and the injury was unavoidable?
The court explored the concept of “ordinary care” as a common binder of negligence. An “inevitable accident” is an accident which could not have been avoided by the exercise of ordinary care necessary to the context. The judge found that if the act of hitting the plaintiff was unintentional and was done in pursuit of a lawful act, then the defendant would not be liable unless he had not met a standard of ordinary care.
Plaintiff Robert Nicastro sustained injury in New Jersey while using machinery manufactured by J. McIntyre Machinery, a British company. The machinery had been sold into via a scrap recycling vendor operating independent of J. McIntyre. The NJ Supreme Court held that jurisdiction was proper; J. McIntyre appealed to SCOTUS.
Questions of law
Where is the line between the “stream of commerce” argument (see Asahi and World Wide Volkswagen) and the requirement of purposeful availment established in Hanson?
Do a defendant’s actions or a defendant’s expectations control whether purposeful availment has been met?
The court overturned the New Jersey court finding, with Justice Kennedy writing for the majority opinion. The court stated that while the stream of commerce argument may provide sufficient contacts within a forum, it does not itself “amend the general rule” of personal jurisdiction. It states, “The principal inquiry in cases of this sort is whether the defendant’s activities manifest an intention to submit to the power of a sovereign.” It was not enough, the court said, that the defendant might have predicted its goods would reach a forum state.
A defendant’s actions, not expectations, control. It is also stated explicitly that these provisions apply to domestic producers. The defendant did not engage in conduct purposefully directed at New Jersey, despite agreeing that its products would end up within the United States generally and promoting distribution generally within the United States.
“None of our precedents find that a single isolated sale, even if accompanied by the kind of sales effort indicated here, is sufficient.”
Several plaintiff employees of a company brought suit against the company on the basis of a promise that they would be paid a salary for life, consisting of one half of their former salary at retirement. The only condition for receiving continued pay was to come and pick up a check. The arrangement, though without reference to duration, was made on paper as of the date of their retirement, and proceeded for some years before being unilaterally terminated. The general manager denied promising an unlimited duration, though all employees said otherwise.
Rules of law
To be contractually enforceable, a promise must be supported by consideration. The consideration must be an immediate or future benefit; past or executed consideration cannot be bargained for and is self-contradictory. A mere condition for acceptance of a gift does not constitute consideration.
Even on the interpretation of the facts most favorable to the plaintiffs, there was no valid consideration for the promise and therefore there was no contract. The court held “appreciation of past services or pleasure afforded the employer thereby is not a sufficient consideration.”
At a young age, the plaintiff had been given a promissory note for $3,000.00 by his aunt, who wished to help take care of him. At her death, the plaintiff sued her estate for the funds. The jury said that there was consideration and the trial judge set aside the verdict and dismissed. The appellate court reversed on the basis that the note was sufficient evidence of consideration.
Rules of law
To be contractually enforceable, a promise must be supported by a bargained-for consideration that is sought by the promisor in exchange for the promise.
The estate argued that there was no consideration and therefore no contract. The nephew claimed the note and accompanying recitations provided evidence of consideration. The estate argued that mere recitation does not produce consideration.
The court held that there was no contract and entered a judgment accordingly. The mere recitation of consideration does not alter the requirement for a bargained-for consideration, and the aunt in this case was merely conferring a bounty, not paying for anything of value.
Burger King brought suit against John Rudzewicz, a franchisee of the brand, under federal diversity jurisdiction for breach of contract. The suit was brought in a federal court in Florida, where Burger King’s corporate headquarters rested, but Rudzewicz and the franchise location were in Michigan. Rudzewicz challenged jurisdiction, and the district court applied Florida’s long-arm statute to permit. Rudzewicz appealed to the Federal Court of Appeals, which reversed on the fairness doctrine. Appealed to SCOTUS.
Questions of law
What is the appropriate doctrine for determining jurisdiction and the validity of long-arm statutes concerning the fulfillment of contractual obligations within a state? Does “fair warning” apply?
The court stated that the Due Process Clause could not be “wielded as a territorial shield” to “avoid interstate obligations that have been voluntarily assumed.” It stated that the minimum contacts and purposeful availment of a non-consenting party must be the result of action by that party.
Purposeful establishment of minimum contacts was described as a first step, after which the “fair play and substantial justice” test would be applied. It found broadly that holding Rudzewicz accountable in Florida did not offend the sense of fair play and substantial justice, as Rudzewicz had purposefully entered into a long-term contractual relationship with the Florida Burger King corporate office.
SCOTUS reversed the appellate decision but stated it shared the appellate court’s concern about talismanic jurisdictional formulas.