Ex parte Pope Chevrolet, Inc.

• Decision Date: 01 December 1989
• Citation: 555 So.2d 109
• Parties: Ex parte POPE CHEVROLET, INC. (Re Emmie WALLACE v. POPE CHEVROLET, INC., et al.) 88-1107.
• Court: Alabama Supreme Court

Page 109

555 So.2d 109

Ex parte POPE CHEVROLET, INC. (Re Emmie WALLACE v. POPE CHEVROLET, INC., et al.)

88-1107.

Supreme Court of Alabama.

Dec. 1, 1989.

H.C. Ireland III of Porterfield, Bainbridge, Mims, Harper & Mills, Birmingham, for petitioner.

Thomas J. Knight and Daniel E. Morris, Anniston, for respondent.

ALMON, Justice.

This petition for writ of mandamus raises a question of in personam jurisdiction over a Georgia automobile dealership, Pope Chevrolet, Inc. Emmie Wallace, an Alabama resident who bought a pick-up truck from Pope Chevrolet at its premises in Stone Mountain, Georgia, brought an action against Pope Chevrolet in the Circuit Court of Calhoun County, Alabama, alleging fraud and breach of contract. The circuit court denied Pope Chevrolet's motion to dismiss, and Pope Chevrolet filed this petition for a writ of mandamus ordering the circuit court to dismiss the action.

Wallace stated in her affidavit in opposition to the motion to dismiss that she had received television and newspaper advertisements at her home in Alabama in which Pope Chevrolet offered to sell motor vehicles "at a very low and favorable rate to buyers." She stated further that Pope Chevrolet knew that she would use the vehicle she was buying "primarily near her home in Alabama," and that Pope Chevrolet made a copy of her Alabama driver's license. Pope Chevrolet responded by saying that it aimed its advertising at the Atlanta market, placing ads in the Atlanta and Gwinnett County, Georgia, newspapers and with Atlanta television stations. Pope Chevrolet also stated that less than one-tenth of one per cent of its sales were to Alabama residents.

Rule 4.2(a)(1), Ala.R.Civ.P., provides that "Appropriate basis exists for service of process outside of this state upon a person in any action in this state when ... the person has sufficient contacts with this state, as set forth in subdivision (a)(2) of this rule, so that the prosecution of the action against the person in this state is not inconsistent with the Constitution of this state or the Constitution of the United States." Rule 4.2(a)(2), in provisions (A) through (H), lists specific activities that constitute sufficient contacts, and, in provision (I), it adds that a person has sufficient contacts by "otherwise having some minimum contacts with this state and, under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action."

These provisions have been held to make the "long-arm" jurisdiction of this state "as broad as the permissible limits of due process." Alabama Power Co. v. VSL Corp., 448 So.2d 327 (Ala.1984). In International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), the Court held:

"[D]ue process requires only that in order to subject a defendant to jurisdiction in personam, if he be 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.' "

Quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342-43, 85 L.Ed. 278 (1940).

Recent cases have reiterated and refined the International Shoe "minimum contacts" test. In World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the Court held that two corporations, a New York retailer of Audi and Volkswagen automobiles and a distributor of such vehicles for New York, New Jersey, and Connecticut, could not be subjected to suit in Oklahoma based on damage suffered there in a collision involving a car sold by the defendant retailer to New York residents who, in the course of moving to Arizona, suffered the accident in Oklahoma. The Court relied on the following circumstances in finding a lack of the minimum contacts necessary for Oklahoma to exercise jurisdiction over those defendants:

"Petitioners carry on no activity whatsoever in Oklahoma. They close no sales and perform no services there. They avail themselves of none of the privileges and benefits of Oklahoma law. They solicit no business there either through salespersons or through advertising reasonably calculated to reach the State. Nor does the record show that they regularly sell cars at wholesale or retail to Oklahoma customers or residents or that they indirectly, through others, serve or seek to serve the Oklahoma market."

Id., at 295, 100 S.Ct. at 566.

The Court has articulated what may be called the "purposeful availment" and "stream of commerce" tests in applying the minimum contacts rule. An example of both tests may be seen in the following passage from World-Wide Volkswagen, supra:

"When a corporation 'purposefully avails itself of the privilege of conducting activities within the forum State,' Hanson v. Denckla, 357 U.S. [235 (1958) ], at 253, [78 S.Ct. 1228, at 1239-40, 2 L.Ed.2d 1283], it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. Cf. Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961).

"But there is no such or similar basis for Oklahoma jurisdiction over World-Wide or Seaway in this case. Seaway's sales are made in Massena, N.Y. World-Wide's market, although substantially larger, is limited to dealers in New York, New Jersey, and Connecticut. There is no evidence of record that any automobiles distributed by World-Wide are sold to retail customers outside this tristate area. It is foreseeable that the purchasers of automobiles sold by World-Wide and Seaway may take them to Oklahoma. But the mere 'unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.' Hanson v. Denckla, supra, at 253 ."

Id., 444 U.S. at 297-98, 100 S.Ct. at 567.

The Court relied extensively on the "purposeful availment" test in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), holding that a Michigan franchisee who negotiated and contracted with a Florida corporation for a long-term franchise that "envisioned continuing and wide-reaching contacts with Burger King in Florida," id., at 479-80, 105 S.Ct. at 2185-86, could constitutionally be subjected to the jurisdiction of the Florida courts. The following quotations exemplify the analysis:

"[W]here individuals 'purposefully derive benefit' from their interstate activities, it may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities; the Due Process Clause may not readily be wielded as a territorial shield to avoid interstate obligations that have been voluntarily assumed."

Id., at 473-74, 105 S.Ct. at 2183 (citation omitted).

"This 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts, or of the 'unilateral activity of another party or a third person.' Jurisdiction is proper, however, where the contacts proximately result from action by the defendant himself that create a 'substantial connection' with the forum State. Thus where the defendant 'deliberately' has engaged in significant activities within a State, or has created 'continuing obligations' between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by 'the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well."

Id., at 475-76, 105 S.Ct. at 2183-84 (citations omitted; emphasis in original). "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."

Id., at 476, 105 S.Ct. at 2184 (citations omitted).

The Court in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), held unanimously that it would not meet the "fundamental fairness and substantial justice" prong of the International Shoe test ¹ to subject a Japanese manufacturer of valves to the jurisdiction of the California courts when the only claim remaining in the action was a third-party claim filed by the defendant Taiwanese tube manufacturer against Asahi, the manufacturer of the valve installed in the motorcycle tire tube that allegedly caused the plaintiff's injuries. The Court split on the question of minimum contacts, however; although Justice O'Connor, in writing the lead opinion, expressed the conclusion that minimum contacts did not exist, it appears that five of the Justices concluded, or would have concluded had they reached the issue, that minimum contacts did exist. See opinion of Justice...