Casino v. Beach

• Decision Date: 24 March 2011
• Docket Number: No. 2009–SC–000634–DG.,2009–SC–000634–DG.
• Citation: 336 S.W.3d 51
• Parties: CAESARS RIVERBOAT CASINO, LLC and Harrah's Entertainment, Inc., Appellantsv.Carla BEACH, Appellee.
• Court: United States State Supreme Court — District of Kentucky

336 S.W.3d 51

CAESARS RIVERBOAT CASINO, LLC and Harrah's Entertainment, Inc., Appellants

v.Carla BEACH, Appellee.

No. 2009–SC–000634–DG.

Supreme Court of Kentucky.

March 24, 2011.

James Louis Fischer, Jr., Tyson P. Schroeder, Boehl, Stopher & Graves, LLP, New Albany, IN, Counsel for Appellants.Donald Matthew Kannady, Terry Eugene Goodspeed, Winters & Yonker, PSC, Louisville, KY, Counsel for Appellee.Opinion of the Court by Justice VENTERS.

Appellants, Caesars Riverboat Casino, LLC, an Indiana limited liability company, and Harrah's Entertainment, Inc., a Delaware corporation, neither of which is domiciled in Kentucky, appeal from an opinion of the Court of Appeals subjecting them to personal jurisdiction in Kentucky in a slip and fall lawsuit brought by Appellee, Carla Beach, a Kentucky resident. The Court of Appeals determined that Appellants' contacts with this state satisfied our long-arm statute, KRS 454.210, and the federal due process requirements as described in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and its progeny, thereby authorizing Kentucky courts to exercise personal jurisdiction over Appellants in relation to the incident.

Upon review, we conclude that personal jurisdiction over Appellants is not permitted under KRS 454.210 because Appellee's claim does not arise from any of the activities, contacts, or circumstances identified in our long-arm statute as an essential predicate for Kentucky's exercise of in personam jurisdiction over a nonresident. Accordingly, we reverse the decision of the Court of Appeals, and reinstate the order of the Shelby Circuit Court dismissing the complaint.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants, Caesars Riverboat Casino and Harrah's Entertainment, Inc., jointly operate a casino gambling boat docked on the northern shore of the Ohio River in Elizabeth, Indiana, near Louisville. The boat's facilities include a casino, hotel, retail stores, and several restaurants. They maintain no office or business facilities in Kentucky.¹

At the time of the incident, Appellee was a resident of Shelby County, Kentucky. She also was a frequent patron of the casino boat and a holder of a “Total Rewards Gold Card,” a program sponsored by Appellants to promote player participation and loyalty to the casino and related premises. In order to encourage Kentucky residents to visit their casino, Appellants engage in extensive in-state radio, television, and billboard advertisement. They engage in direct mail advertising, especially to the regular customers on their mailing list. They also engage in charitable and civic activities in Kentucky, including a substantial sponsorship of the Kentucky Derby Festival. As a result, and in combination with their location just across the state line, approximately fifty percent of Appellants' revenue is derived from Kentucky residents.

Appellee filed a Complaint against Appellants in Shelby Circuit Court alleging that, “[w]hile in line for the [casino] buffet, suddenly and without warning, [she] slipped on butter that had been allowed to remain on the floor and fell violently to the floor, causing [her] to sustain serious injuries and damages.” Specifically, she alleged that Appellants “as owners and operators of a retail establishment, negligently: (a) failed to maintain the floor of the eating establishment in a reasonably safe condition; (b) allowed butter to come into contact with and remain on the floor of the eating establishment when [Appellants] knew, or in the exercise of reasonable care, should have known that the substance created an unreasonable risk of harm to customers in the store [sic]; (c) failed to warn [Appellee] of the danger presented by the presence of butter on the floor; and (d) failed to otherwise exercise due care with respect to the matter alleged in this complaint.”

Appellants moved to dismiss the claim under CR 12.02, arguing that the Shelby Circuit Court lacked personal jurisdiction over them because neither Caesars nor Harrah's owned or maintained property in Kentucky, nor had they any employees or agents who were located in or conducted business in Kentucky, and that Appellee's injury and Appellants' alleged negligence occurred in Indiana. Appellee argued in response that Appellants had sufficient contacts with Kentucky for the court to exercise personal jurisdiction over them as to her cause of action.

The circuit court found that it lacked personal jurisdiction over Appellants, holding that while there was “a strong argument to be made” that Appellants purposefully availed themselves of the forum state, Appellee's cause of action “did not arise from the direct mailings she received, the advertisements [Appellants] directs toward Kentucky consumers, or any other contacts between [Appellants] and Kentucky.”

On appeal, the Court of Appeals, relying heavily upon Ford v. RDI/Caesars Riverboat Casino, LLC, 503 F.Supp.2d 839 (W.D.Ky.2007), determined that the “operative facts underlying [Appellee's] cause of action are clearly related to Caesars' contact within the state of Kentucky,” and that there “can simply be no dispute that Caesars transacts substantial business in Kentucky and also maintains continuous and systematic contacts within Kentucky especially through the promotions, solicitations and inducement of Kentucky residents to utilize its facilities located a few feet from Kentucky's border.” Based upon these contacts, the Court of Appeals stated:

We believe these are precisely the type of contacts contemplated under Kentucky's long-arm statute to trigger personal jurisdiction. To conclude otherwise would mean that in personam jurisdiction in Kentucky under KRS 454.210 would not extend to the outer limits of the due process clause of the Fifth and Fourteenth Amendments to the United States Constitution in this case or in any similar factual situation, but rather be limited to the banks ... of the Ohio River. Accordingly, the assertion of personal jurisdiction over [A]ppellees in this case does not violate constitutional due process and is otherwise reasonable.

We granted Appellants' motion for discretionary review to examine the limitations placed by our long-arm statute upon the exercise of personal jurisdiction over an out-of-state defendant for an out-of-state tort, and to evaluate the ongoing viability of this Court's statements in prior cases to the effect that our long-arm statute extends to the limits of, and thereby merges into, the limits of federal due process. Because the question of whether Kentucky may exercise jurisdiction over Appellants under our long-arm statute and federal due process is an issue of law, our review is de novo. Appalachian Regional Healthcare, Inc. v. Coleman, 239 S.W.3d 49, 53–54 (Ky.2007) (“The question of jurisdiction is ordinarily one of law, meaning that the standard of review to be applied is de novo.”).

KRS 454.210—LONG–ARM STATUTE

The purpose of Kentucky's long-arm statute, KRS 454.210, “is to permit Kentucky courts to exercise personal jurisdiction over nonresident defendants while complying with federal constitutional due process.” Cummings v. Pitman, 239 S.W.3d 77, 84 (Ky.2007). Because KRS 454.210(2)(a) ² is fundamental to our review in this case, we begin our analysis by setting out the relevant provisions of the statute in full:

(2) (a) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a claim arising from the person's:

1. Transacting any business in this Commonwealth;

2. Contracting to supply services or goods in this Commonwealth;

3. Causing tortious injury by an act or omission in this Commonwealth; 4. Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this Commonwealth, provided that the tortious injury occurring in this Commonwealth arises out of the doing or soliciting of business or a persistent course of conduct or derivation of substantial revenue within the Commonwealth;

5. Causing injury in this Commonwealth to any person by breach of warranty expressly or impliedly made in the sale of goods outside this Commonwealth when the seller knew such person would use, consume, or be affected by, the goods in this Commonwealth, if he also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this Commonwealth;

6. Having an interest in, using, or possessing real property in this Commonwealth, providing the claim arises from the interest in, use of, or possession of the real property, provided, however, that such in personam jurisdiction shall not be imposed on a nonresident who did not himself voluntarily institute the relationship, and did not knowingly perform, or fail to perform, the act or acts upon which jurisdiction is predicated;

7. Contracting to insure any person, property, or risk located within this Commonwealth at the time of contracting;

8. Committing sexual intercourse in this state which intercourse causes the birth of a child when:

a. The father or mother or both are domiciled in this state;

b. There is a repeated pattern of intercourse between the father and mother in this state; or

c. Said intercourse is a tort or a crime in this state; or

9. Making a telephone solicitation, as defined in KRS 367.46951, into the Commonwealth.

(b) When jurisdiction over a person is based solely upon this section, only a claim arising from acts enumerated in this section may be asserted against him.

As a point of emphasis, even though the statute identifies nine particular instances of conduct upon which personal jurisdiction over a nonresident may be predicated, the first sentence of subsection 2(a) imposes a...