Leave to File Petition for Rehearing Denied April 16, 1979.
See 441 U.S. 918.
On petition for writ of certiorari to the United States Court of
Appeals for the Second Circuit.
The petition for a writ of certiorari is denied.
Mr. Justice POWELL, with whom Mr. Justice BLACKMUN joins,
dissenting.
This case presents the question whether the Due Process Clause
permits a tort plaintiff to obtain jurisdiction in New York over a
defendant whose sole contact with the State arises from the
defendant's contract for indemnity with a company that does
business in New York. [
Footnote
1] The case presents an issue of considerable importance, with
troublesome ramifications in the spacious arena of personal injury
litigation. Moreover, it seems to me that the rationale of our
recent decision in Shaffer v. Heitner,
433 U.S. 186 (1977), is
at odds with the decision of the Court of Appeals here. I therefore
would grant certiorari and set the case for argument.
Page 439 U.S.
1034 , 1035
The petitioners are residents of Virginia. While working for
petitioner Lee-Hy Paving Corp. (Lee-Hy) in Virginia, the
respondent's decedent (a New York resident) was killed when
Lee-Hy's grader, operated by petitioner Clem, struck him near
Richmond, Va. The respondent instituted this suit in the District
Court for the Eastern District of New York as executrix for her
husband's estate, claiming damages for the wrongful death of her
husband. In order to obtain jurisdiction over the petitioners, who
are conceded to have no other connection with New York, the
respondent sought and obtained under New York law an order
attaching the contractual obligations of two insurance companies
doing business in New York to defend and indemnify Lee-Hy. The
District Court denied petitioners' motion to vacate the attachment
and dismiss the suit. Acknowledging that there was a "substantial
ground for difference of opinion" on the question of law, and that
the issue was an important one, the District Court certified an
appeal to the Court of Appeals under 28 U. S.C. 1292(b).
The Second Circuit affirmed.
579 F.2d
194 (1978). The court based its ruling on the theory of quasi
in rem jurisdiction adopted by the New York Court of Appeals in
Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312
(1966). In Seider, personal jurisdiction was predicated on the
fiction that the insurance company's obligation to indemnify the
policyholder was a "debt" that the plaintiff in a negligence suit
could attach as a "res." In Minichiello v. Rosenberg,
410 F.2d
106 (1968), the Second Circuit affirmed the constitutionality
of Seider jurisdiction, reasoning that the New York Court of
Appeals had created judicially a direct-action law similar to the
Louisiana statute held constitutional in Watson v. Employers
Liability Assurance Corp.,
348 U.S. 66 (1954). The
Minichiello court recognized that the Seider doctrine differed in
one important respect from the Louisiana direct- action statute of
Watson. Under Seider, there was no requirement that the tort
for
Page 439 U.S.
1034 , 1036
which redress was sought occur in the State asserting
jurisdiction. Despite the Court's emphasis in Watson on the
location of the tort, the Second Circuit in Minichiello ruled that
New York's interest in protecting its residents and providing them
with a ready means of suing foreign tortfeasors was sufficient to
justify Seider jurisdiction under the Due Process Clause. [
Footnote 2]
In the case at bar, the petitioners unsuccessfully urged
reconsideration of Minichiello on the ground that the Seider
doctrine had been undermined by Shaffer v. Heitner, supra. The
Court of Appeals viewed the "overriding teaching of Shaffer " as
requiring courts to look to the " realities" of the asserted
grounds for jurisdiction. As far as the insurance companies were
concerned, the court found no unfairness in their being subject to
the jurisdiction of New York courts, as they do business in New
York. The court thought that this was true even though often it is
more expensive (and therefore more costly to insurers) to defend a
lawsuit brought several hundred miles from the site of the
accident, the residence of the defendants, and the location of the
witnesses. The court reached a similar conclusion concerning the
fairness of a suit brought in New York against "the nominal
defendants" (the petitioners here). The court thought it ironical
that they should complain even though they "will not pay the
judgment, nor manage the defense." 579 F.2d, at 201.3
Page 439 U.S.
1034 , 1037
I find the Court of Appeals' decision disturbing. Although the
insurance companies' contact with New York is important in
determining whether it is fair for the New York courts to assert
their jurisdiction, our decision in Watson indicated that the
difficulties of defending a negligence case far from the place of
the injury should be taken into account under the Due Process
Clause. See Watson v. Employers Liability Assurance Corp., supra,
at 72. Often these difficulties are substantial. It is routine
procedure for the judge and jury 4 to view the scene of the
accident, often more than once. Jurors drawn from the venue of the
accident may be better able to understand testimony pertaining to
local conditions and geography. In short, many of the factors
traditionally considered under the doctrine of forum non conveniens
- itself a doctrine based on fairness-may also pertain to the
fairness of a court hundreds of miles from the location of an
accident exercising its jurisdiction over the parties to the
resulting tort suit. [
Footnote
5]
Moreover, the Court of Appeals' reference to the petitioners as
" nominal defendants" disregards many of the "realities" that bear
upon whether an alleged tortfeasor, sued in a jurisdiction remote
from his home and the location of the accident, is denied the
fairness required by the Due Process Clause. It is novel doctrine,
at least for me, to refer to the interest of defendants in
negligence actions as "nominal" merely because they have insurance.
In this case, for example, petitioners will be summoned to appear
in a court in New York, and will be required to participate in the
defense of the suit in essentially the same manner as if it had
been brought in Virginia. They are required to do this 300 miles
from their residences and place of business, confronted with all of
the uncertainties caused by delays that often stretch a trial over
several days or even weeks.
Page 439 U.S.
1034 , 1038
In addition to the problems posed for both the insurer and the
insured by litigation located hundreds of miles from the scene of
the tort, there is the ever-present possibility of a second suit in
the jurisdiction where the accident occurred. The opinion of the
Court of Appeals seems to assume, by its reference to petitioners
as nominal defendants, that the only real parties in interest are
the insurance companies. To be sure, a judgment against the
petitioners in the New York courts cannot exceed the amount of
indemnification provided under the insurance policies. But
judgments for civil damages, especially in recent years, often have
exceeded insured limits. In this case, for example, if respondent
wins a judgment that exhausts the obligation of the insurers, the
respondent will be free to sue petitioners in Virginia where they
would be forced to go through a second trial-possibly without the
benefit of lawyers supplied by the insurance companies. Moreover,
as every litigation lawyer knows, the hazards of a second trial may
exceed those of the first; witnesses seldom tell their story
precisely the same way twice, and often new evidence is introduced.
To say that the legal rights of insured defendants are not being
adjudicated, despite their substantial role in the defense of the
suit and despite the potential loss of their right to the insurance
company's legal representation, begs the question: To what extent
must an individual be involved in the litigation before the
fundamental-fairness requirements of International Shoe Co. v.
Washington,
326 U.S.
310, 66 S. Ct. 154 (1945), are applicable?
In sum, the judicially created Seider doctrine raises serious
questions of due process. To me it does not appear consonant with
the standards of fairness enunciated in International Shoe v.
Washington, and strongly reiterated in Shaffer v. Heitner. The
issues presented are of concern to insurers and insureds in every
State, as well as to state legislators responsible for the fairness
of long-arm statutes. The case merits plenary consideration by this
Court.
Footnotes
Footnote 1 Along with this
case, the Court of Appeals decided two other cases with respect to
which certiorari is sought: Gillespie v. Schwartz, No. 78- 268, and
Boston Hospital for Women v. Schwartz, No. 78-361. In each of these
cases, residents of other States were sued in New York for torts
occurring outside of New York. The sole basis for jurisdiction in
each is the insurance policy of the defendant, issued by a company
doing business in New York. Although I write only with respect to
this case, the reasons stated in my opinion here would support the
granting of certiorari in all three cases.
Footnote 2 In his persuasive
dissent in Minichiello, Judge Anderson argued that Watson was based
primarily on a State's strong interest in having jurisdiction with
respect to tortious activity within the State's borders. See
Minichiello, 410 F.2d, at 113-117. Thus, Judge Anderson concluded
that "statutes asserting jurisdiction of the state where the
accident occurred qualify as due process, whereas the assertion of
jurisdiction by the state of the plaintiff's residence does not."
Id., at 116 (footnote omitted).
Footnote 3 The court did
note that no "other state could constitutionally give collateral
estoppel effect to a Seider judgment." Although I agree that no
such effect should be allowed, the court's opinion in this regard
is dictum that may or may not be followed in other
jurisdictions.
Footnote 4 See E. Cleary,
McCormick on Evidence 216 (2d ed. 1972).
Footnote 5 See Gulf Oil
Corp. v. Gilbert,
330
U.S. 501, 507-509 (1947).
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