Long Essay Question on Midterm with Model Answer

P (a domiciliary of Vermont) has brought a suit against the D1 Corp and D2 in the Federal District Court for the District of Vermont. P’s suit is for damages that she received from a defective toaster. The D1 Corp, incorporated in Massachusetts, owns and runs a chain of 100 hardware stores, with 40 stores (and 40% of its employees) in Massachusetts, 10 stores (and 10% of its employees) in New Hampshire, and 50 stores (and 50% of its employees) in Vermont. Its headquarters are in Massachusetts. It advertises in states where it has hardware stores. D2 is an individual domiciled in New Hampshire. In New Hampshire, D2, remembering a D1 Corp advertisement he saw there, entered a D1 Corp hardware store and bought a toaster. D2 took it with him to Vermont, as a gift to P. When P used the toaster, it malfunctioned, severely injuring her. P asks for $100,000 in damages from the D1 Corp and D2, who she alleges are jointly liable. The D1 Corp and D2 each bring motions to dismiss for lack of subject matter jurisdiction, personal jurisdiction, and venue.

Briefly:

Should their motions to dismiss for lack of subject matter jurisdiction succeed and why or why not? (6 points)

Should their motion to dismiss for lack of personal jurisdiction succeed and why or why not? (14 points)

Should their motion to dismiss for improper venue succeed and why or why not? (10 points)

The following would be an ideal answer. Numbers in brackets indicate points that would be assigned for each element (they can sometimes exceed the possible number of points). I have also included some comments in brackets that offer further explanation that would not have to be in an exam answer.

Their motions to dismiss for lack of subject matter jurisdiction should fail because the case has diversity jurisdiction under 1332(a)(1). There is complete diversity: P is a citizen of Vermont, D2 is a citizen of New Hampshire and the D1 Corp is a citizen of its state of incorporation (Massachusetts) [1]. In addition, the D1 Corp is a citizen of the state of its principal place of business, which is Massachusetts—the location of its headquarters—according to the nerve-center test adopted by the Supreme Court in Hertz [4]. The amount is controversy is also satisfied. It is not legally certain that P will get $75,000 or less from  either D1 or D2 from a “severe injury” [1].

Their motions to dismiss for lack of personal jurisdiction should fail. Under FRCP 4(k)(1)(A), a federal court in Vermont can get personal jurisdiction over a defendant if a state court in Vermont could do so [1]. Assuming that Vermont’s long-arm statute or some other Vermont state law isn’t a problem [1], D2’s motion should obviously fail because there is specific personal jurisdiction under the 14^th Amendment over D2 in Vermont. D2 intentionally reached out to Vermont by bringing the toaster there and the cause of action is directly related to that contact [4]. The McGee factors are also clearly satisfied: Witnesses will be in Vermont, Vermont has an interest in providing a forum for litigating a Vermont toaster accident, the burdens on D1 and D2 of going to Vermont are not greater than the burdens on P to go to Massachusetts or New Hampshire [1].

D1’s motion to dismiss for lack of personal jurisdiction should also probably fail. True, there is no specific personal jurisdiction over D1 in Vermont. Although D1 intentionally reached out to Vermont in many ways (advertising there, having stores selling toasters there), the cause of action is not related to these contacts. The cause of action arose from an ad in New Hampshire and a sale by a store in New Hampshire. The product made it to Vermont because a customer (D2) brought it there and gave it to P [2]. [Note: That a toaster sold in New Hampshire would make its way to Vermont is an even more attenuated contact with the forum state than in World Wide Volkswagen, where a car sold in New York made its way to Oklahoma. After all, toasters don’t have wheels. Many of you concluded from the fact that advertising in the forum state is a clear example of reaching out to the forum state under O'Connor's approach to stream of commerce cases in Asahi that there would clearly be specific personal jurisdiction in this case. The problem is that this is not a stream of commerce case. The product made it to the forum state through a customer.] To point to ads and sales of toasters in Vermont as the ground for a personal jurisdiction over D1 for a cause of action concerning a toaster sold in New Hampshire is what Prof. Green would call “category jurisdiction,” which the Supreme Court rejected in Bristol-Myers Squibb [2].

But there is probably general personal jurisdiction over D1. A corporation is subject to general personal jurisdiction where it is “at home” [2]. Only in exceptional circumstances will this include more states than the corporation’s state of incorporation and the state of its principal place of business (Daimler). But Hertz is not relevant to general personal jurisdiction — one is free to argue that the state where D1 has the most activity (Vermont) is its principal place of business for general personal jurisdiction purposes, even though its “nerve-center” is in Massachusetts [3].

The motion to dismiss for lack of venue should fail. A substantial part of the events or omissions giving rise to the claim (namely the toaster accident) occurred within the District of Vermont, so there is venue under 1391(b)(2) [6]. The only problem would be if the federal court in Vermont adopted the (wrong-headed) 8^th Circuit view that transactional venue requires the defendant to have been responsible for the forum-related event and the event to be a point of dispute between the parties. Here the toaster accident will surely be a point of dispute, but D1 is not responsible for the forum-related event - it is not responsible for the toaster getting to Vermont [4].