The Case against Vicarious Jurisdiction

Abstract

Most of the time, in measuring the breadth of judicial power under modern personal jurisdictional doctrine all that is required is to take into account the direct acts (or omissions) of a defendant in relation to the forum. That is, we frequently need look no further than to see whether the defendant's own conduct makes her amenable to suit. The courts have recognized, however, that jurisdiction may also be triggered not by the defendant's direct contacts with the forum but also by the contacts or forum nexus of another. Of course, to make this jurisdictional leap a valid basis is needed for treating another person or entity's jurisdictionally sufficient contacts as though they were the defendant's. That is, there must be some substantive legal rule that permits the court to disregard a juridical entity's otherwise separate legal existence. As it turns out, the attribution of contacts of one person or entity to another for jurisdictional purposes is a frequently-seen and often invoked form of traditional jurisdictional argument. Yet, even if there may be valid reasons for turning to substantive law for jurisdictional purposes, its incorporation into the measure of adjudicatory jurisdiction can also be highly problematic. While there may be sound and necessary reasons for relying on agency law to identify a non-natural entity's relevant forum contacts, agency law and other substantive law doctrines, such as respondent superior, civil and criminal conspiracy and, especially, the corporate law doctrine of veil piercing, may also be misused in a manner that produces jurisdictional determinations that are neither sound nor necessary. Veil piercing and agency law are the most frequently invoked areas of substantive law to justify the exercise of vicarious jurisdiction; as a result, this article concentrates on the intersection of these two doctrines of substantive law with the law of judicial jurisdiction. The use of veil piercing law for jurisdictional purposes occurs frequently in our modern case law, yet its origins may be traced to a convergence of paths that occurred more than three quarters of a century ago in Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333 (1925). And, although much has changed since 1925 the questions that bedeviled the Court then remain just as relevant and perplexing to us now. How should the substantive law treat persons who act through the corporate form? To what extent does limited liability shield owners from suit? Even before reaching these substantive questions, there was and still is the a priori matter of determining the breadth of state court territorial authority to bind corporations and corporate actors not present in the forum. To be sure, the modalities of the doctrinal debates regarding both corporate and jurisdictional law have shifted and evolved over the last seventy-five years; but the issues that were joined in the Cannon case at the end of the first quarter of the twentieth century remain challenging at the start of the next. The conventional academic view has not challenged the use of veil piercing or other substantive law doctrines for jurisdictional purposes. In this article, the author argues that the use of substantive law (and veil piercing in particular) for jurisdictional purposes is unwarranted as a matter of precedent and unwise as a matter of policy. The author revisits the Cannon case based on original historical research. The author also argues that, even if we leave the proper interpretation of Cannon to one side, there are doctrinal and pragmatic arguments to be made against the misuse of substantive law for jurisdictional purposes.