Territorial Jurisdiction - Constitutional Limits

Constitutional Limits

The Supreme Court of the United States has held that constitutional requirements of due process limit the exercise of subject or personal jurisdiction beyond territorial limits. The same outer territorial boundaries for subject jurisdiction apply in both state courts and federal courts. Moreover, because of Rule 4 of the Federal Rules of Civil Procedure (FRCP 4), a federal court ordinarily applies the personal jurisdiction statutes (e.g., long-arm statutes) of the state in which it sits, even when the state has not extended personal jurisdiction to its territorial limits. (Some states, such as California, have long-arm statutes that give their courts personal jurisdiction to the extent constitutionally permitted.) In some exceptional circumstances, FRCP 4 grants a federal court personal jurisdiction when the law of the state in which it sits would not.

Territorial jurisdiction problems are acute in cases involving business transactions conducted across state lines, where the defendant may not have set foot in the other state, but still conducted affairs with the other state's residents through correspondence, the shipment of goods, or indirect agents. Even more difficult, and more unsettled, territorial jurisdiction issues arise in stream of commerce cases. In the quintessential stream of commerce case, a defendant in one state sells a widget to a manufacturer in the same state, which incorporates the widget into a retail product and sells it to a consumer in another state, who then sues claiming injury from the widget. The leading Supreme Court stream of commerce case resulted in a split, failing to clarify the issue.

Internet cases raise several troublesome territorial jurisdiction problems. For example, a website may be viewed anywhere in the world, though it is hosted in Anguilla and operated by a California citizen. Courts must decide in which locations, under what circumstances, the exercise of territorial jurisdiction over the citizen for claims arising from the website comports with traditional notions of fair play and substantial justice. For more, see Personal jurisdiction in internet cases.