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Affirmative defense -- lack of personal jurisdiction

Authored by Paul Tennison, Summer Associate, Cole Law Group.

Disclaimer: This blog post is not legal advice. This post is intended to give a bit of background information about the affirmative defense of lack of personal jurisdiction in the State of Tennessee. Each case is different and there are tactical considerations about when to assert defenses. For legal advice applicable to your specific situation, always contact an attorney licensed in your state.

Introduction

Defending a lawsuit by arguing the court does not have jurisdiction over the defendant's person or the subject matter of the litigation can be an extremely useful defense. One particular advantage to this approach is that arguing lack of jurisdiction can be a threshold argument or an argument in the alternative. In most cases, this is a low-risk argument for a defendant with a possible high reward of winning the case without arguing the merits of the plaintiff's claim. This may allow the defendant to escape from the lawsuit without proceeding through more costly litigation including expensive discovery, depositions, summary judgment, and trial. Tennessee rule of civil procedure 12.02(2) allows defendants to assert a defense based on lack of jurisdiction over the person.

Jurisdiction is a fundamental requirement for courts to exercise authority over a dispute. Black's Law Dictionary defines jurisdiction as "government's general power to exercise authority over all persons and things within its territory...A court's power to decide a case or issue a decree..." Black's Law Dictionary (10th ed. 2014). There are two major arguments defendants can make that the defendant should be dismissed from the lawsuit for lack of subject matter jurisdiction or lack of personal jurisdiction. Personal jurisdiction is a "court's power to bring a person into its adjudicative process; jurisdiction over a defendant's personal rights." Black's Law Dictionary (10th ed. 2014). Subject matter jurisdiction is "Jurisdiction over the nature of the case and the type of relief sought." Id. Recently, the Tennessee Supreme Court adopted a definition of a prima facie case of personal jurisdiction stating: "Under Tennessee law, the factual allegations in the plaintiff's complaint must establish sufficient contacts between the defendant and this state with reasonable particularity." First Cmty. Bank, N.A. v. First Tennessee Bank, N.A., 489 S.W.3d 369, 383 (Tenn. 2015).

Tennessee's Long-Arm Statute

The Tennessee General Assembly has passed long-arm statutes that expand the jurisdictional limits of Tennessee courts to the maximum extent constitutionally permissible. T.C.A. § 20-2-225 ("A court of this state may exercise jurisdiction: (2) On any basis not inconsistent with the constitution of this state or of the United States"); First Cmty. Bank, N.A., 489 S.W.3d at 384. The Tennessee Supreme Court has "interpreted the due process protections in the Constitution of Tennessee as being co-extensive with those of the United States Constitution." State v. NV Sumatra Tobacco Trading Co., 403 S.W.3d 726, 741 (Tenn. 2013). "Therefore, the reach of Tennessee's long-arm statutes cannot extend beyond the limits set by the Due Process Clause of the Fourteenth Amendment to the United States Constitution." Id.

Personal Jurisdiction over an Individual

Citizens of the State of Tennessee are subject to personal jurisdiction by state and federal courts in Tennessee. Tennessee Code Annotated Title 20 is titled Civil Procedure and Chapter 2 discusses Process; § 20-2-214 is titled Personal service; unavailability; jurisdiction. The section states with broad encompassing language that nonresidents of Tennessee and residents of Tennessee who are outside of the state are subject to jurisdiction of courts of the State of Tennessee as to any action or claim arising from business within the state, tortious acts or omissions within the state, property located within the state, contract located within the state at the time of contracting, contracting to provide services within the state, "Any basis not inconsistent with the Constitution of this state or of the United States". T.C.A. § 20-2-214. Thus, a nonresident of Tennessee will be subject to the personal jurisdiction within Tennessee, when sued over any activities that occurred within Tennessee. "When the issue of personal jurisdiction arises, due process obligates the courts to ascertain whether it is fair and substantially just to both parties to have the case tried in the state where the plaintiff has chosen to bring the action." Gordon v. Greenview Hosp., Inc., 300 S.W.3d 635, 646 (Tenn. 2009).

Often, a lawyer can quickly read the Complaint to determine if the facts are such that personal jurisdiction is disputable in a given case. Areas which are litigable today are when the alleged tortious behavior was conducted online such as Twitter or Facebook postings. If they were not made within Tennessee, then the tortuous behavior would not meet the definitions in the above-described statute. In the context of letters or faxes sent to the plaintiff in the State of Tennessee by a defendant out of state in the commission of a tort, the Sixth Circuit has ruled that these communications sent into Tennessee directed at residents of Tennessee can be enough to confer minimum contacts with the state to serve as the basis for personal jurisdiction. Neal v. Janssen, 270 F.3d 328, 332 (6th Cir.2001)("[M]aking phone calls and sending facsimiles into the forum, standing alone, may be sufficient to confer jurisdiction on the foreign defendant where the phone calls and faxes form the bases for the action.").

Because of these laws in Tennessee, the best argument that a non-resident can make that he or she is not subject to personal jurisdiction is that he or she has no contacts with Tennessee, has never lived in Tennessee, has never been to Tennessee, and has never conducted business in Tennessee. If the plaintiff can prove the defendant has sufficient minimum contacts with the State of Tennessee, the defendant will not be dismissed due to lack of personal jurisdiction.

Personal Jurisdiction over a Corporation or Business

The analysis for personal jurisdiction over a corporation or business is similar to the analysis that applies to an individual. Tennessee statutes apply different standards to foreign corporations, unincorporated associations and partnerships, and other business entities. See T.C.A. §§ 20-2-201, 20-2-202. If the defendant company has filed documents to conduct business within the State of Tennessee, such as articles of incorporation with the Secretary of State, this is evidence that the defendant conducts business within the State of Tennessee and has minimum contacts with Tennessee. Courts have developed the law of personal jurisdiction into two categories, specific and general. "Specific jurisdiction exists when a defendant has minimum contacts with the forum state and the cause of action arises out of those contacts. General jurisdiction, on the other hand, may be proper even when the cause of action does not arise out of the defendant's activities in the forum state." State v. NV Sumatra Tobacco Trading Co., 403 S.W.3d 726, 744 (Tenn. 2013).

In NV Sumatra Tobacco Trading Co., the Tennessee Supreme Court discusses at great length the law regarding personal jurisdiction based on the United States Supreme Court precedent and Tennessee precedent. 403 S.W.3d at 740-766. The Tennessee Supreme Court held that the defendant Indonesian cigarette manufacturing company did not have sufficient minimum contacts with the State of Tennessee based on the manufacturer's national contracts and sales of 11.5 million cigarettes in Tennessee over a three-year period under the Due Process clause for Tennessee courts to exercise specific personal jurisdiction over the defendant manufacture. Id. at 764-766. In conclusion, the Tennessee Supreme Court stated: "The courts of Tennessee lack personal jurisdiction over NV Sumatra because the State of Tennessee has failed to establish, by a preponderance of the evidence, that NV Sumatra purposely availed itself of the privilege of doing business in Tennessee." Id. at 765.

Based on the Tennessee Supreme Court's analysis in NV Sumatra, it seems likely that businesses that do not target Tennessee specifically, but place products in the stream of international commerce are not likely to be subject to personal jurisdiction in Tennessee. Facts that would make a company subject to jurisdiction in Tennessee include advertising in the Tennessee market, contracts executed in Tennessee or with individuals or businesses located in Tennessee, and having customers located in Tennessee.

Related Defenses

In addition to arguing that a court does not have jurisdiction over the defendant, a defendant could also argue the venue is improper, binding arbitration prevents the dispute from being adjudicated in the court, the defendant was not served with process, or the plaintiff has failed to state a claim upon which relief can be granted. Most lawyers are familiar with these arguments and are able to quickly identify which of these may be successful in any given case.

Conclusion

Courts must have jurisdiction over the person of the defendant in order to adjudicate a case. In certain circumstances, out of state defendants may be able to argue that they are not subject to the personal jurisdiction of a Tennessee court. Tennessee's long arm statute is as broad as permissible under the due process clause of the Fourteenth Amendment. There are several defenses similar to that of lack of personal jurisdiction that defendants may raise in a lawsuit. Most lawyers are familiar with these arguments and will raise them in litigation on behalf of their clients.

About the Author:

Paul Tennison is a rising 3rd-year law student at Vanderbilt University with over seven years of management, human resources, and leadership experience in the United States Army. Paul continues to serve our country in the Tennessee Army National Guard. Before law school, Paul served on active duty for five years as a Field Artillery officer including time overseas in South Korea and Germany. Paul is a 2010 West Point graduate. At West Point, Paul was on the Color Guard as the American flag bearer and executive officer. Paul studied Engineering, Psychology, and Systems Engineering at West Point. Paul is eager to continue learning about the law and working with the attorneys and clients at Cole Law Group.

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