May 06, 2011 BY Def Admin
Legislature Says No General Jurisdiction In Georgia: Court Of Appeals Not Convinced
Nonresidents sometimes are subject to suit in this state under the Georgia Long Arm Statute which establishes circumstances when personal jurisdiction exists over such nonresidents. Codified at O.C.G.A. §9-10-91, the Georgia legislature chose very specific circumstances in which it provided for nonresidents to be sued in this state's courts. Despite the language of the statute, which appears to only support specific personal jurisdiction, courts in Georgia sometimes apply notions of general personal jurisdiction in order to keep a nonresident defendant in a Georgia court. The differences between these types of jurisdiction and the importance of those differences to a nonresident defendant are discussed in an attempt to locate the source of the divergent analyses by Georgia courts.
There is a recognized distinction of two types of personal jurisdiction. One is general personal jurisdiction and the other is specific personal jurisdiction. 3Q Technologies, Ltd. v. Canfield Scientific, Inc.,2006 U.S. Dist. LEXIS 36490, *10 (N.D. Ga. 2006). Each type looks to a party's contacts with a forum state to establish personal jurisdiction; however, it is the relation of those contacts to the subject litigation that distinguishes these two principles. The U.S. District Court for the Northern District of Georgia previously found that “[g]eneral personal jurisdiction arises from a party's contacts with the forum state that are unrelated to the litigation; the test for general jurisdiction is whether the party had ‘continuous and systematic’ general business contacts with the forum state.” Id., *10-*11, (quoting Delong Equipment Co., v. Washington Mills Abrasive Co., 840 F.2d 843, 853 (11th Cir. 1988)) (emphasis added). The same court found that specificjurisdiction is applicable if “the nature of the defendant's contacts with the state are such that it may be held liable only for causes of action stemming from a particular activity” and that “[t]he cause of action must arise directly out of or be directly related to a defendant's contacts with the forum. Id. (emphasis added).
Satisfying The Long Arm Statute is the Threshold Question for Exercising Personal Jurisdiction.
"In Georgia, a due process analysis is appropriate only after it is first established that the non-resident defendant committed one of the acts described in the Long-Arm Statute.” McDonnell v. Roy E. Beatty & Associates, Inc., 203 Ga. App. 807, 808-809 (1992). If there is a basis for personal jurisdiction under the state statute, the court will next determine whether sufficient minimum contacts exist to satisfy the Due Process Clause of the Fourteenth Amendment of the United States Constitution so that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945). Both steps must be considered in succession before a federal or state court can exercise personal jurisdiction over a nonresident defendant. Id. This article focuses on the first step of such analysis and, jurisdictionally, what exactly is authorized under Georgia's Long Arm Statute. The question of which principle of personal jurisdiction exists in Georgia is important to the nonresident defendant who might transact some business in Georgia but is sued for an occurrence that did not arise out of that business.
There is a Dramatic Difference in the Result of Personal Jurisdiction for Nonresidents Based OnGeneral and Specific Personal Jurisdiction.
The following hypothetical demonstrates the interplay of general versus specific jurisdiction and the importance of that distinction to a nonresident defendant, sued in Georgia, as it relates to that defendant's contacts to Georgia. Consider a widget manufacturer, ABC, that is based only in California; ABC's widgets are utilized on certain project sites. ABC makes, sells and delivers its widgets to project sites throughout California and some other western U.S. states. ABC, on occasion, sells and delivers its widgets to project sites in Georgia. On one occasion, ABC sold and delivered its widgets to a project site in Oregon. The Oregon project results in injuries to individuals who sue every company involved on that project, including ABC, and the suit is brought in Georgia. An analysis of general personal jurisdiction over ABC in Georgia can consider ABC's selling of widgets to Georgia projects unrelated to the Oregon project whereas an analysis of specific personal jurisdiction could not. Under this hypothetical, the injuries from the Oregon project do not arise out of ABC's contacts to Georgia, and theoretically ABC would not be subject to specific personal jurisdiction. However, because of ABC's sales and deliveries to Georgia, it may be subject to general personal jurisdiction in Georgia. The question of whether general personal jurisdiction exists in Georgia is an important one to many nonresidents where they may be amenable to suit in Georgia for some claims but not others.
The Legislature Crafted Five Scenarios Which Establish Grounds for Exercising Personal Jurisdiction.
The Georgia Long Arm Statute narrowly defines five statutory grounds for exercise of personal jurisdiction by a Georgia court over a nonresident defendant, and provides for jurisdiction over "any nonresident or his executor or administrator, as to a cause of action arising from any of the acts, omissions, ownership, use, or possession enumerated in this Code section, in the same manner as if he were a resident of the state, if in person or through an agent, he: (1) transacts any business within the state; (2) commits a tortious act or omission within this state, except as to a cause of action for defamation of character arising from the act; (3) commits a tortious injury in this state caused by an act or omission outside this state if the tort-feasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state; (4) owns, uses, or possesses any real property situated within this state; or (5) with respect to proceedings for alimony, child support, or division of property in connection with an action for divorce or with respect to an independent action for support of dependants, maintains a matrimonial domicile in this state at the time of the commencement of this action or, if the defendant resided in this state preceding the commencement of the action, whether cohabitating during the time or not." O.C.G.A. §9-10-91.
A Recent Interpretation by Georgia's Supreme Court Supports a Literal Reading of the Language of the Statute, but Also Created Broad Authority to Exercise Personal Jurisdiction Over Nonresidents Under Subsection (1).
The Supreme Court of Georgia ruled that subsection (1) must be construed broadly and literally. Innovative Clinical &c. Svcs. v. First Nat. Bank of Ames, Iowa, 279 Ga. 672, 675-676 (2005). Under that literal construction, OCGA § 9-10-91 (1) grants Georgia courts the unlimited authority to exercise personal jurisdiction over any nonresident who transacts any business in this State. Because this statutory language would expand the personal jurisdiction of Georgia courts beyond that permitted by constitutional due process, the court accordingly construed subsection (1) as reaching only to the maximum extent permitted by procedural due process under the federal constitution. Id. at 675.
Some Georgia Courts Deviated From the Legislature's Language Based on the Innovative Decision.
It is this particular subsection (1) that seems to have created confusion over how a Georgia court may exercise personal jurisdiction over a nonresident defendant that is transacting business in Georgia. The phrase "transacts business" has also been broadly interpreted and can include many acts, not even requiring the physical presence of the defendant in the state. Id. The Georgia Court of Appeals relied on the interpretation of subsection (1) from Innovative as a basis to authorize the exercise of general personal jurisdiction over Mitsubishi in Mitsubishi Motors Corp. v. Colemon, 290 Ga. App. 86, 87 (Ga. Ct. App. 2008). In Mitsubishi, the plaintiff was injured while driving a Mitsubishi vehicle in a foreign country, but brought suit against Mitsubishi in Georgia under the Georgia Long Arm Statute. The court found that Mitsubishi purposely availed itself of the privilege of transacting business in Georgia, thus subjecting itself to jurisdiction under subsection (1) of the Long Arm Statute. Mitsubishi contended that the trial court could not exercise personal jurisdiction over it because the incident giving rise to this lawsuit, the car accident in a foreign country, involved a vehicle model not sold in the United States and the accident did not arise out of Mitsubishi's contacts with Georgia. The court determined that those contentions, even if true, did not eliminate the trial court's authority to exercise jurisdiction in this case. Id. Relying on the notion of general personal jurisdiction as stated in Helicopteros Nacionales de Colombia v. Hall, 466 U. S. 408, 414 (II) (104 S. Ct. 1868, 80 LE2d 404) (1984), the court in Mitsubishi stated that "[e]ven when the cause of action does not arise out of or relate to the foreign corporation's activities in the forum State, due process is not offended by a State's subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation." Id. at 89. Of note,Helicopteros did not originate from a Georgia case, and therefore the decision in that case was not analyzed under the Georgia Long Arm Statute.
The Long Arm Statute Provides for Specific Jurisdiction Over Nonresidents Only, and Is Compatible With the Innovative Decision.
Thus, the court in Mitsubishi seemed to interpret and apply the Georgia Long Arm Statute contrary to a reading of the Georgia Long Arm Statute that shows that the legislature did not intend to allow Georgia courts the ability to exercise general (as opposed to specific) personal jurisdiction over nonresident defendants. In fact, in a special concurrence, Chief Judge Beasley noted in Pratt & Whitney Canada, Inc. v. Sanders that under the Georgia Long Arm Statute, the cause of action must arise from the nonresident’s activities in Georgia in any case, so that the exercise of general jurisdiction over a nonresident defendant is unauthorized. Whitney Canada, 218 Ga. App. 1 at 5; 460 S.E.2d 94 (1995), citing Allstate Insurance Company v. Klein, 262 Ga. 599, 600 (1992). Even though the decision of the Supreme Court of Georgia in Innovative, supra, came after Whitney Canada andAllstate, those cases are not inconsistent with the court's analysis contained in Innovative. In Innovative, the Supreme Court specifically addressed the issue that the plain language of the long arm statute must be complied with and strictly construed. Innovative, 279 Ga. 672. The court further held that subsection (1) of the long arm statute reaches "to the maximum extent permitted by [federal] procedural due process" because, just as in subsection (2), it did not contain any explicit legislative limiting conditions. Id. However, the court also held that the clear language of subsection (3) does contain such limiting language, and the court could not reject the plain and unambiguous language of subsection (3) even though Georgians damaged by nonresidents are deprived of a forum in this State to the fullest extent permitted by due process. Id. at 675. (emphasissupplied). The legislature's language in the first paragraph of the long arm statute contains similar "limiting language" which necessarily must apply to each subsection. The long arm statute initially states that "[a] court of this state may exercise personal jurisdiction over any nonresident...as to a cause of action arising from any of the acts, [or] omissions...enumerated in this Code section," and therefore prohibits Georgia courts from exercising general jurisdiction over nonresident defendants simply because the statute requires that the enumerated acts give rise to the cause of action. O.C.G.A. § 9-10-91 (2010) (emphasis added).
This initial limiting language of the long arm statute was seemingly not considered by the Mitsubishicourt, and requires a court to limit its interpretation to specific rather than general jurisdiction. The limitations imposed by the first paragraph of the long arm statute do not make the analysis of subsection (1) by Innovativeincorrect. In fact, subsection (1) still establishes the authority to exercise personal jurisdiction over any nonresident who transacts any business in this state to the maximum extent permitted by procedural due process. It only extends, however, to the maximum extent permitted by procedural due process under the federal constitution in the context of specific jurisdiction.
Giving Georgians Who Are Wronged by Nonresidents a Convenient Forum to Litigate Is Not a Completely Lost Consideration by Following the Language of the Long Arm Statute.
The claim or cause of action for which a nonresident is sued must arise out of the nonresident's specific transaction of business in Georgia. Despite this reading of the language in the long arm statute, some Georgia courts, like the panel of the Court of Appeals in Mitsubishi, authorize the exercise of general personal jurisdiction over nonresident defendants whose only contacts to Georgia are entirely unrelated to and do not give rise to the particular lawsuit to which the nonresident is a party.
Consider again the fictitious California corporation ABC. It cannot reasonably anticipate when it may be subject to lawsuits in Georgia due to the disparate treatment of the plain language of the Georgia long arm statute. On one hand, a general jurisdiction analysis means ABC could always be subject to a lawsuit in Georgia, no matter where the activities giving rise to the lawsuit occurred. However, if the plain language of the long arm statute is applied, then ABC will only be subject to lawsuits in Georgia if such lawsuit arises out of ABC's contacts to Georgia. As a partial rationale for applying general personal jurisdiction, the court in Mitsubishi noted the "interest of this state, like that of every state, in providing its own citizens with a convenient forum for redressing injuries wrought by nonresidents who have sought out the state's citizens for the purpose of business gain." This is not a forgotten notion even in the ABC scenario. If ABC were to sell and deliver its widgets to an Oregon project, but the widgets were purchased for that project by a Georgia corporation, then it is possible that in the event of an alleged tort, that lawsuit may arise out of ABC's contacts to Georgia through that Georgiacorporation. Subject to the second-step due process analysis of personal jurisdiction, as stated above, Georgia citizens are still provided a convenient forum for redressing injuries wrought by nonresidents while still complying with the plain language of the long arm statute.
It is expected that the apparent dichotomy of interpretations of the long arm statute will give rise to further litigation and appeals before a more easily interpreted rule develops. Some trial judges recognized the issue and ruled that Georgia's long arm statute provided for specific jurisdiction only. As noted above, however, there is some inconsistency in appellate decisions on the point.
The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved.
H. Michael Bagley