Kannon Shanmugam: Welcome to “Court Briefs,” a podcast from Paul, Weiss. I'm your host, Kannon Shanmugam, the chair of the firm’s Supreme Court and Appellate Litigation Practice and co-chair of our Litigation Department. In this podcast, we analyze Supreme Court decisions of interest to the business community.
Today, I'm coming to you from the Aspen Ideas Festival in Aspen, Colorado, and the idea we're going to discuss today is personal jurisdiction, specifically the Supreme Court's recent decision in Fuld v. PLO, in which the court addressed questions about the contours of that doctrine.
Joining me to discuss the decision in Fuld is my partner, Will Marks. So, Will, maybe it makes sense to start with a bit of a primer on personal jurisdiction. What is this concept?
Will Marks: Sure. So personal jurisdiction is the concept that courts only have certain limited territorial authority to hail a defendant into court. And so we traditionally think of this in terms of a foreign defendant. So if you have a lawsuit in State A and a defendant in State B, there's a question of whether State A is allowed to adjudicate a claim against the defendant who's located in another state.
We normally think about this doctrine in terms of the Fourteenth Amendment. The Supreme Court has located the limitations on the territorial exercise of jurisdiction by courts, generally in the Fourteenth Amendment, and in particular in the due process clause. And this is the traditional International Shoe framework that people learn about in law school, where you have to have minimum contacts, you have to have a connection between those contacts and the relevant cause of action. And then the assertion of jurisdiction over the foreign defendant has to be reasonable.
But there's always been this lingering question about what happens when you have a federal statute that governs personal jurisdiction. And the reason that matters is because the Fourteenth Amendment applies to states and not the federal government. With respect to due process, it's the Fifth Amendment that applies to the federal government.
And so there's been this question of when Congress enacts a statute that regulates personal jurisdiction only in the federal courts, what are the limitations there? That really had been an open question until the Supreme Court's decision in this case.
Kannon Shanmugam: So Will, tell us a little bit about the federal statute that was at issue here and the litigation that gave rise to the Supreme Court proceeding.
Will Marks: So this case concerned a statute known as the Promoting Security and Justice for Victims of Terrorism Act. It was enacted in 2019 and it was designed to make it easier for United States victims of terrorism to sue the Palestine Liberation Organization, which I'll call the PLO, and the Palestinian Authority, which I'll call the PA, for damages under a federal statute known as the Anti-Terrorism Act. And under this statute, the PLO and PA were deemed to have consented to jurisdiction in the United States in federal courts for claims under the Anti-Terrorism Act, if one of two prongs were satisfied.
The first one was essentially about incentive payments, where the PLO or PA made payments to either the family members or designees of convicted or deceased terrorists, because those individuals had engaged in terrorist activity that was deemed to give rise to U.S. jurisdiction.
The second prong is if the PLO or PA was found to have a physical presence in the United States, then they would be deemed to have consented to jurisdiction for these Anti-Terrorism Act claims.
Now, in this case, the district court concluded that the PLO and PA satisfied the payments prong of the 2019 act, but then the court proceeded to conclude that the act was unconstitutional because under the traditional rules of personal jurisdiction in the Fourteenth Amendment International Shoe line of cases, a finding that the PLO and PA had engaged in incentive payments wouldn't be enough ordinarily for a court to exercise jurisdiction over those foreign entities.
When the case went up on appeal, the Second Circuit relied on the same reasoning. It concluded that the analysis under the Fifth Amendment and the Fourteenth Amendment were effectively the same, and that under that analysis, the statute was unconstitutional because it would subject the PLO and PA to jurisdiction in the United States when it otherwise wouldn't be permissible.
Kannon Shanmugam: But here the Supreme Court took a decidedly different approach. What did the Supreme Court do?
Will Marks: Well, that's exactly right. The Supreme Court reversed the Second Circuit's decision, and it first held that the standard for assessing the validity of a federal personal jurisdiction statute under the Fifth Amendment is not the same as the standard under the Fourteenth Amendment. They're separate standards because they come from separate doctrinal bases.
In particular, the Fourteenth Amendment is focused on the territorial limitations on state power, and essentially the concept that if you have states exercising power beyond their borders, that's infringing on the sovereignty of co-equal states in our federal constitutional system.
But in that same system, with respect to the federal government, there are no territorial limitations in the constitution on Congress's ability to act. If Congress wants to enact a nationwide law, it can do so. If Congress wants to act an extraterritorial law, it can do so.
And so the Court concluded that the standard under the Fifth Amendment for assessing personal jurisdiction was just not the same as the standard under the Fourteenth Amendment. The court didn't actually decide what standard would apply across the board in a challenge to a federal statute like this under the Fifth Amendment. In their view, under any appropriate standard for assessing a personal jurisdiction statute under the Fifth Amendment, the 2019 act that Congress had passed related to the PLO and PA was sufficient.
Kannon Shanmugam: So one wouldn't ordinarily think that a case involving the PLO is going to be a case of interest to the business community, but it turns out this decision actually has some pretty broad implications. Will, tell us a little bit about why this matters and why this matters to business defendants who might be raising personal jurisdiction objections.
Will Marks: So, I think this case is of interest to the business community in two particular ways. The first one is that although we now know that there's a difference between the Fourteenth Amendment standard for personal jurisdiction and the Fifth Amendment standard, we don't actually know what the Fifth Amendment standard is. The court simply determined that this 2019 statute would satisfy any proper standard under the Fifth Amendment without saying what the actual test is. So, there's going to be more litigation on this going forward.
But I think what we do know is that the court seems to view personal jurisdiction under the Fifth Amendment as far broader than personal jurisdiction under the Fourteenth Amendment, meaning that the Supreme Court and lower courts are more likely to defer to Congress when Congress exercises a broad jurisdictional statute.
The second thing I would say is that the opinion was clear, however, about the foundation for personal jurisdiction under the Fourteenth Amendment. And what the court made clear is that jurisdiction under the Fourteenth Amendment really focuses on the question of state sovereignty and the interaction of states in our federal system.
And so, the foundational principle is that states generally are limited to asserting authority within their territory and within their respective borders, and that when we're thinking about questions of personal jurisdiction and whether courts should be able to bring a particular defendant into court, we're thinking about how doing so would affect the broader federal system and whether that exercise of jurisdiction is somehow impinging on the sovereignty of other states.
And so, I think this foundational framework will be very helpful in moving forward because businesses are frequently litigating questions of personal jurisdiction. And on the margins where there are hard questions, I think these principles of state sovereignty will help give structure to the arguments about whether a court can or can't exercise jurisdiction.
Kannon Shanmugam: And given how frequently defendants assert personal jurisdiction objections, I think we can certainly expect further development in the law in this area in relatively short order. So, well, Will, thank you very much for that very lucid summary of this arcane corner of the law. And if you have any questions about the court's decision in full, please feel free to reach out either to Will or to me.
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