Can I Even Be Sued Here? The Basics of Personal Jurisdiction in U.S. Courts

In order for a court to hear a dispute between parties, it must have what’s called “personal jurisdiction” over the party being sued.  This is to ensure that a defendant can fairly be brought before a court under the Due Process Clause of the Fourteenth Amendment.  In other words, you can’t just sue any company in any court. 

It’s reasonable to assume that operating a business in one place would mean your company is subject to jurisdiction there—and, conversely, that the lack of an office would exempt your business from being sued there.  However, the reality is often far more nuanced.

In the recent case Bell Geospace, Inc. v. Xcalibur Geophysics Spain, SL, No. 4-22-cv-01164 (S.D. Tex. Jan. 3, 2023), a federal judge in Texas found that a global company with an office and 12 employees in Houston was—perhaps surprisingly—not subject to personal jurisdiction in Texas.  This meant that the court couldn’t hear the case, and, as a result, dismissed the complaint entirely.  Why did that court reach this result?  To help answer that question, let’s consider the two kinds of personal jurisdiction: general and specific jurisdiction. 

General Personal Jurisdiction

General jurisdiction is found in the location where the company was incorporated, has its principal place of business, or where its contacts with the forum are so “substantial, continuous, and systemic” as to render it “at home” there.  One way a company can be “at home” in a forum is by having an office and employees and doing a substantial amount of business there.  In the Bell Geospace case, however, the court found that the office with 12 employees—11% of the company’s global workforce—wasn’t enough for general jurisdiction without more evidence of how the company’s Texas-based operations factored into its overall business.  Would the court have exercised jurisdiction had it been shown that 90% of the company’s business came through Texas?  Probably, but these are the types of fact-specific questions courts consider when deciding whether a company is truly “at home” for the purposes of establishing general personal jurisdiction. 

Specific Personal Jurisdiction

Even if a court can’t exercise general jurisdiction over a company, it may still be able to hear a dispute involving that company if “specific” personal jurisdiction can be established.  Unlike general jurisdiction, under which a court could hear any dispute involving the party, specific jurisdiction is based on the facts of each case.  In other words, a court could have jurisdiction over a company in one case but not in other cases.  The plaintiff in Bell Geospace didn’t argue that the defendant should be subject to specific jurisdiction, but plaintiffs often do, particularly where it’d be a stretch to argue that the other party is “at home” in the forum.  To determine specific jurisdiction, courts look to what’s called a “long-arm statute”—each state has one—to see what types of cases a court can hear involving a defendant who wouldn’t otherwise be subject to general jurisdiction.  New York’s long arm statute, for example, extends to out-of-state defendants who commit torts in New York—such as someone who visits from Chicago and injures someone in Manhattan.  As you might expect, courts in New York also have specific personal jurisdiction to hear cases where the basis for the lawsuit arises from a business transaction in the state.  What counts as a “business transaction” for specific personal jurisdiction is not always obvious, though, and also depends on the facts of each case.  “Transacting business” in New York, for example, has been defined as “some act by which the defendant purposefully avails itself of the privilege of conducting activities” within the state.  This definition is vague enough for parties to argue over (and for courts to frequently opine on) whether certain acts do or don’t meet this standard.  One court in New York, for instance, found that an out-of-state defendant who called into a live auction in New York had transacted business and was subject to specific jurisdiction, while another court held that out-of-state defendants who faxed executed contracts to New York weren’t subject to jurisdiction. 

The contours of when a defendant is subject to personal jurisdiction can therefore depend on the facts of a particular case, as well as the case law precedent from the court where the case was filed.  As a result, it’s always a good idea for a company to consider jurisdiction before initiating or responding to a lawsuit.