This short essay is about personal jurisdiction. Would you please read through it and comment on if I should change anything or if I have not applied rules and laws properly? Thank you!

Background and Issue

Sovereign Insurance Company is a Texas-based company that advertises in California. Sovereign has only one client in California, Richard Nance. Nance, a life-long resident of California. He bought a life insurance policy from Sovereign and named his mother, Lulu Keane, as the beneficiary. Keane is also a life-long resident of California. After Nance died, Sovereign refused to pay Keane the proceeds from Nance's life insurance policy. Keane sued Sovereign in a California state court. Sovereign argued that a California state court lacked jurisdiction over them.

The main issue at hand is can a California state court constitutionally exercise "personal jurisdiction" over Sovereign consistent with the Due Process Clause? While exploring personal jurisdiction, other questions must be asked. Does having only one client in California meet the "minimal contact" threshold for Texas-based Sovereign? Does Sovereign have "substantial connections" to the State of California and to Nance? Has Sovereign "purposefully availed" itself? Can Sovereign "challenge jurisdiction" in California because its home is in Texas? The answer to these questions can be found within the Federal Rules of Civil Procedure, case law, and opinions. After reviewing and analysing the standards, a conclusion based on the same will reveal the answer.

Rules, Case Law, and Opinions

Federal Rules of Civil Procedure - Rule 4. (k)(2)(B)

(k) Territorial Limits of Effective Service.

(2) Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:

(B) exercising jurisdiction is consistent with the United States Constitution and laws.

Int'l Shoe Co. v. Washington 326 U.S. 310, 66 S. Ct. 154 (1945)

In Int'l Shoe Co. v. Washington 326 U.S. 310, 66 S. Ct. 154 (1945), the Court stated, "Due process requires only that in order to subject a defendant to a judgment in personam, if he is not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice'."

E. Drake v. Murphy Austin Adams Schoenfeld, et al, No. 18-20064 (5th Cir. 2018)

In E. Drake v. Murphy Austin Adams Schoenfeld, et al, No. 18-20064 (5th Cir. 2018), the Court affirmed the district court's ruling and stated, "Following International Shoe, courts have generally applied a three-part test in evaluating minimum contacts sufficient for jurisdiction: (1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections[;] (2) the claim must be one which arises out of or results from the defendant's forum-related activities[; and] (3) exercise of jurisdiction must be reasonable."

Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987)

In her opinion in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), Justice O' Connor stated, "The 'substantial connection' between a defendant and the forum State necessary for a finding of minimum contacts must derive from an action purposely directed toward the forum State, and the mere placement of a product into the stream of commerce is not such an act, even if done with an awareness that the stream will sweep the product into the forum State absent additional conduct indicating an intent to serve the forum state market."

Benefit Assn. Internat., Inc. v. Superior Court (Drach) (1996)

In Benefit Assn. Internat., Inc. v. Superior Court (Drach) (1996) 46 Cal. App. 4th 827, 54 Cal. Rptr. 2d 165, Judge J. Parrilli wrote in his opinion, "In deciding the 'minimum contacts' issue, the important question is whether the nonresident defendant has 'purposefully availed' itself of the benefits of an economic market in the forum state. (Southeastern Express Systems v. Southern Guaranty Ins. Co. (1995) 34 Cal. App. 4th 1, 10 [40 Cal. Rptr. 2d 216] (Southeastern Express)). 'Purposeful availment' means 'an action of the defendant purposefully directed toward the forum State.' But 'purposeful availment' may be established even if the nonresident defendant maintains no offices, property, or employees in the forum. '[I]f a foreign corporation purposefully avails itself of the benefits of an economic market in the forum State, it may subject itself to the State's in personam jurisdiction even if it has no physical presence in the State.' A nonresident defendant who has purposefully directed its activities toward the forum state may not defeat personal jurisdiction absent compelling evidence that jurisdiction would be unreasonable."

McGee v. International Life Ins. Co., 355 U.S. 220 (1957)

In his opinion in McGee v. International Life Ins. Co., 355 U.S. 220 (1957) Justice Black stated, "The contract was delivered in California, the premiums were mailed from there, and the insured was a resident of that State when he died. It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. These residents would be at a severe disadvantage if they were forced to follow the insurance company to a distant State in order to hold it legally accountable."

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)

In Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), Justice Brennan stated in his opinion, "So long as a commercial actor's efforts are 'purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there."

Federal Rules of Civil Procedure - Rule 12(b)(2)

(b) How To Present Defenses. Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion:

(2) lack of personal jurisdiction;

Analysis

The Due Process Clause examines if adequate minimum contacts have been formed with the forum State to determine that the exercise of personal jurisdiction over the defendant is fair. "The Shoe Court suggested that a corporation that chooses to conduct activities within a state accepts (implicitly, of course) a reciprocal duty to answer for its in-state activities in the local courts." Sovereign can be sued in the State of California, irrespective of Nance being their only client within the state. Every large customer base starts with one customer, and every customer is a valid contact for the company.

Sovereign purposefully availed itself and benefited from actively advertising to California residents. Therefore, California is constitutionally able to claim personal jurisdiction over Sovereign. Further, Sovereign executed a contract with Nance knowing he was a California resident. Since the contract was executed in the state of California, a substantial connection exists between the issue at hand and the state of California. A mutual relationship has been clearly established.

A California state court's power to exercise jurisdiction derives from the Sovereign's voluntary connection to California. "A defendant should understand that her activities within the state will have an impact there, that those activities may lead to controversies and lawsuits there, and that the state has a right to enforce the orderly conduct of affairs within its borders by adjudicating disputes that arise from such in-state activities." The State of California also has an interest in protecting its citizens from unlawful actions of out-of-state companies. Additionally, it is not unreasonable, unfair, nor does it provide any severe disadvantage to Sovereign by Sovereign traveling to California to defend itself.

Sovereign's best course of action is to respond promptly to the complaint, attend the court hearing, and challenge the jurisdiction as required by Federal Rules of Civil Procedure - Rule 12. (b)(2). From there, Sovereign will be able to claim other defenses as it sees fit, should the court deny Sovereign's claim of lack of personal jurisdiction.

Conclusion

Keane is able to show contact, relation, and fairness. Based on case law and the Federal Rules of Civil Procedure, along with the support of judges and Supreme Court Justice opinions, the California state court may exercise personal jurisdiction consistent with the Due Process Clause over Sovereign.