Personal Jurisdiction

International Shoe Co. v. Washington326 U.S. 310 (1945)

Procedure: An employee of the appellant in the state of Washington was personally served with a notice of

assessment for the years in question, and a copy of the notice was mailed by registered mail to appellant’s address in St. Louis, Missouri. Appellant appeared before the office of unemployment and moved to set aside the order and notice of assessment by special appearance, on the grounds that the service upon appellant’s employee was not proper service upon appellant; that appellant was not a corporation of the state of Washington and wasn’t doing business within the state; that it had no agent within the state upon whom service could be made; and that appellant is not an employer and doesn’t furnish employment within the meaning of the statute.

Facts: Appellant allegedly violated Washington’s Unemployment Compensation Act, which set up a

comprehensive scheme of unemployment compensation, the costs of which are defrayed by contributions required to be made by employers to a state unemployment compensation fund. The contributions are a specified percentage of the wages payable annually by each employer for his employees’ services within the state. Appellant is a Delaware corporation with its principal place of business in St. Louis, Missouri. Appellant’s corporation maintains places of business in several states excluding Washington. Appellant’s corporation manufactures its product in several states and the merchandise is distributed through several sales units or branches located outside the state of Washington. Appellant doesn’t have an office in Washington and makes no contracts for sale or purchase of merchandise there. Appellant maintains no stock of merchandise in that state and makes no deliveries of goods in interstate commerce. During the years in question appellant employed eleven to thirteen salesmen under direct supervision and control of sales managers located in St. Louis. These salesmen resided in Washington; their principal activities were confined to that state; and they were compensated by commissions based upon the amount of their sales. The authority of the salesmen was limited to exhibiting their samples and soliciting orders from perspective buyers, at prices and on terms fixed by appellant. The orders were sent to the appellant’s office in St. Louis for acceptance or rejection, and when accepted the merchandise for filling the orders was shipped f.o.b. from areas outside Washington to purchasers within the state. No salesman had authority to enter into contracts or to make collections. Appellant claimed that the activities within the state weren’t sufficient to confer jurisdiction and that since he wasn’t present within the state, it is a denial of due process to subject appellant to taxation or other money exaction. Thus, denying the power of the state to lay taxation or to subject appellant to a suit for the collection of taxation.

Issue: By its activities within the state, was appellant subject to in personam jurisdiction?

Law: Due process requires that in order to subject a nonresident defendant to in personam

jurisdiction, there must be “certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.”

Whether due process has been satisfied depends upon the quality and nature of the activity in relation to the fair and orderly administration of the laws, which it was the purpose of the due process clause to insure.

To subject a nonresident defendant to in personam jurisdiction, there must be “certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Reciprocity is the basis of the minimum contacts standard.

o A state cannot make a binding judgment in personam against an individual or corporate defendant with, which the state has no contacts, ties, or relations.

Reasoning:

Personal Jurisdiction

Appellant rendered itself amenable to suit upon obligations arising out of the activities of its salesmen in Washington, and the state is entitled to present suit in personam to collect the tax laid upon the exercise of the privilege of employing appellant’s salesmen within the state.

The terms presence and present are used to symbolize the activities of the corporation’s agent within the state, which courts will deem to be sufficient to satisfy the demands of due process.

The court introduced the concept of specific jurisdiction stating that appellant’s presence within the state was not only continuous and systematic but also give rise to the liabilities sued upon.

The court introduced the concept of general jurisdiction, stating that continuous corporate activities in a state can be so substantial and of such a nature as to justify jurisdiction where a suit arises from dealings entirely distinct from the activities.

Also, jurisdiction exists when corporate activities rise to the level sufficient to satisfy due process. The nature and quality and circumstances of the corporation may be deemed sufficient to render the corporation liable to suit.

It is also relevant to note the approx. estimate of the inconveniences, which would result to the corporation from a trial away from its “home” or principle place of business.

The court also noted that by a corporations taking advantage of the privileges of conducting activities within a state, it is not unreasonable for the state to impose a reciprocity clause for the corporation taking advantage of those privileges, thus obligated the corporation to appear.

The more closely related the defendant’s contacts are to the claim, the fewer contacts are required to comport with substantial justice and fair play.

Holding: Affirmed.