IN THE SUPREME COURT OF NORTH CAROLINA
No. 321PA21
Filed 6 April 2023
DAVID SCHAEFFER
v. SINGLECARE HOLDINGS, LLC, SINGLECARE SERVICES, LLC, RXSENSE HOLDINGS, LLC, RICHARD A. BATES, and DARCEY SCHOENEBECK
On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous,
unpublished decision of the Court of Appeals, No. COA20-427, 2021 WL 2426202
(N.C. Ct. App. June 15, 2021), reversing an order entered on 22 November 2019 by
Judge Susan Bray in Superior Court, Orange County. Heard in the Supreme Court
on 7 February 2023.
Kornbluth Ginsberg Law Group, P.A., by Joseph E. Hjelt and Michael A. Kornbluth, for plaintiff-appellant.
Julia C. Ambrose, Charles B. Leuin, pro hac vice, and Mark S. Eisen for defendant-appellee.
Sam McGhee, Lauren O. Newton, Jennifer D. Spyker, and David G. Schiller for North Carolina Advocates for Justice, amicus curiae.
EARLS, Justice.
It is axiomatic that “where 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.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473–74 (1985) (quoting Kulko v. Cal. SHAEFFER V. SINGLECARE HOLDINGS, LLC
Opinion of the Court
Super. Ct., 436 U.S. 84, 96 (1978)). But when a defendant’s conduct in a forum is not
so robust as to give rise to general jurisdiction, to conclude that the defendant has
“purposefully derive[d] benefit from their interstate activities,” the defendant must
have “purposefully directed his activities at residents of the forum . . . and the
litigation [must] result[ ] from alleged injuries that arise out of or relate to those
activities.” Id. at 472–73 (cleaned up).
At its heart, this case presents the question of which of a defendant’s activities
matter. Defendants here—both corporate entities and individuals—take the position
that, in evaluating which forums’ courts may exercise specific jurisdiction with
respect to claims arising from an alleged breach of an employment agreement, only
activities that occurred prior to or at the time of the execution of the relevant
agreements bear on the analysis. However, such a position would require a court to
turn a blind eye to activities a defendant conducts in a new forum after agreements
are negotiated and executed. Because this position would “allow [defendants] to
escape having to account in other States for consequences” that arise from their own
intentional conduct, we decline to adopt this unduly narrow approach to specific
jurisdiction. Id. at 474. Determining whether specific jurisdiction exists does not—
and has never—required a court to treat a discrete, temporally-limited set of events
as dispositive to the exclusion of all other activities that occur throughout the
evolution of a relationship. Instead, we consider all of Defendants’ activities,
including those that occurred after the employment agreements were executed, and
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hold that Corporate Defendants intentionally reached out to North Carolina to
conduct business activities in the state, and the claims at issue in this litigation arise
from or are related to those activities. See Beem USA Ltd.-Liab. Ltd. P’ship v. Grax
Consulting LLC, 373 N.C. 297, 307 (2020) (rejecting Business Court’s specific
jurisdiction analysis as “requir[ing] too strict a temporal connection between” the
defendant’s forum-directed contacts and the plaintiffs’ claims).
I. Factual Background
Plaintiff David Schaeffer, a North Carolina resident, brought this action
against defendants SingleCare Holdings, LLC; SingleCare Services, LLC; RxSense
Holdings, LLC, Darcey Schoenebeck, and Richard A. Bates (collectively, Defendants).
SingleCare Holdings, SingleCare Services, and RxSense (Corporate Defendants) are
Delaware limited liability companies with their principal offices in Massachusetts.
Schoenebeck and Bates (Individual Defendants) are citizens and residents of
Minnesota and Massachusetts, respectively. Corporate Defendants provide
pharmacy benefit management and medical benefit management services. Bates is
the Chief Executive Officer of each of the Corporate Defendants and Schoenebeck is
the Executive Vice President of Business Development for SingleCare services.
Schaeffer was jointly employed by SingleCare and RxSense as the Senior Vice
President of Business Development for SingleCare from 1 May 2017 until his
termination on 22 October 2018. On 13 June 2019, Schaeffer brought this action
against Defendants, alleging various tort and contract claims arising from his
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termination. Specifically, Schaeffer alleged that Defendants revoked fully vested
shares that they promised Schaeffer during employment negotiations to incentivize
him to accept his position. Schaeffer argues that he accepted the business
development position based on Defendants’ promises that he would be granted equity
in SingleCare, a promise that Defendants reiterated throughout employment
negotiations and during Schaeffer’s employment.
Schaeffer lived in California during contract negotiations with Defendants and
for the first several months of his employment. In 2018, he sought approval from
Defendants to move to North Carolina, where he would continue to carry out his
duties remotely.1 According to Schaeffer, Defendants not only approved his request
to move to North Carolina but helped facilitate his move. For example, Defendant
Schoenebeck sent a letter to Schaeffer’s North Carolina-based mortgage lender to
confirm his authorization to work remotely.
After Schaeffer’s move, he alleges that he “substantially performed [his work
duties] in North Carolina.” In his brief to this Court, he explains that he “made efforts
to expand and further the Corporate Defendants’ business in North Carolina,”
received reimbursements for work-related travel to and from North Carolina and for
other expenses associated with his work in the state, and engaged in regular
communications from North Carolina to carry out his sales duties. As a result of these
1 Schaeffer also worked remotely during the period of his employment when he was living in California.
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activities, he argues that “Corporate Defendants derived revenue from services
rendered . . . in his capacity as Senior Vice President on their behalf in North
Carolina.”
While Schaeffer was employed by Corporate Defendants and living in North
Carolina, Corporate Defendants maintained other connections to the state. For
example, they employed at least three other individuals in North Carolina, solicited
applicants for business development positions in various cities within the state
through LinkedIn posts that highlighted SingleCare’s goal of hiring sales
representatives in “all major U.S. cities,” and provided North Carolina consumers
with pharmacy discounts. Corporate Defendants also paid Schaeffer in North
Carolina, paid state taxes based on his employment, and mailed tax documents to his
North Carolina address.
Schaeffer was officially terminated from his position on 22 October 2018. On
13 June 2019, he brought an action against Defendants, alleging fraud,
misrepresentation, and breach of contract, among other claims. On 19 August 2020,
Defendants filed Rule 12(b)(6) and Rule 12(b)(2) motions to dismiss. See N.C.G.S. §
1A-1, Rule 12(b)(2) and Rule 12(b)(6) (2021). Relevant here, the Rule 12(b)(2) motion
argued that the trial court lacked personal jurisdiction over Defendants for nine of
Schaeffer’s ten claims.2 The trial court denied the motions, and Defendants timely
2The Rule 12(b)(2) motion challenged jurisdiction only as to the first nine counts of the complaint.
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appealed the denial of the Rule 12(b)(2) motion.
The Court of Appeals unanimously reversed the trial court’s denial of
Defendants’ Rule 12(b)(2) motion in an unpublished opinion issued on 15 June 2021
and denied Schaeffer’s subsequent Petition for Rehearing. The Court of Appeals
concluded that Schaeffer’s contacts with North Carolina that were relevant to the suit
were the result of his own unilateral actions and explained that “Defendants’
acquiescence with Plaintiff’s move to North Carolina, and subsequent
communications with Defendant in North Carolina, do not create personal
jurisdiction.” Schaeffer v. SingleCare Holdings LLC, No. COA20-427, 2021 WL
2426202, at *4 (N.C. Ct. App. June 15, 2021). The court recognized that some of
Corporate Defendants’ contacts with North Carolina weighed in favor of finding
specific jurisdiction, including Corporate Defendants’ solicitation of business and
services, recruitment of employees, and operation of a third-party administrator in
the state. Schaeffer, 2021 WL 2426202, at *4. Nonetheless, the Court of Appeals
concluded that these activities “alone [were] not sufficient to establish specific
jurisdiction” and held that Schaeffer’s claims “[did] not arise out of, or even relate to,
the alleged contacts between Defendants and North Carolina.” Schaeffer, 2021 WL
2426202, at *5.
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II. Analysis
A. Standard of Review
“When the parties have submitted affidavits and other documentary evidence,
a trial court reviewing a motion to dismiss for lack of personal jurisdiction under Rule
12(b)(2) must determine whether the plaintiff has established that jurisdiction exists
by a preponderance of the evidence.” State ex rel. Stein v. E. I. du Pont de Nemours &
Co., 382 N.C. 549, 555 (2022). “As an appellate court, we consider whether the trial
court’s determination regarding personal jurisdiction is supported by competent
evidence in the record.” Id. at 556.
B. Legal Standard
It is well established that “whether a nonresident defendant is subject to
personal jurisdiction in this State’s courts involves a two-step analysis.” Id. at 556.
First, North Carolina’s long-arm statute, N.C.G.S. § 1-75.4, must authorize a court to
exercise jurisdiction. See Beem USA Ltd.-Liab. Ltd. P’ship, 373 N.C. at 302; N.C.G.S.
§ 1-75.4 (2021). This statute “make[s] available to the North Carolina courts the full
jurisdictional powers permissible under federal due process.” Dillon v. Numismatic
Funding Corp., 291 N.C. 674, 676 (1977). Thus, the second step in the inquiry
addresses the determinative issue: whether the Fourteenth Amendment’s Due
Process Clause permits a state court to exercise jurisdiction over a defendant. See
Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021).
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Due process permits a state’s courts to exercise jurisdiction over an out-of-state
defendant when the defendant has “certain minimum contacts with [the forum state]
such that the maintenance of the suit does not offend traditional notions of fair play
and substantial justice.” See Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(cleaned up). Minimum contacts are established through “some act by which the
defendant purposefully avails itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.” Beem USA Ltd.-
Liab. Ltd. P’ship, 373 N.C. at 303 (quoting Skinner v. Preferred Credit, 361 N.C. 114,
133 (2006)). “In giving content to that formulation, the [U.S. Supreme] Court has long
focused on the nature and extent of ‘the defendant’s relationship to the forum State.’
” Ford Motor Co., 141 S. Ct. at 1024 (quoting Bristol-Myers Squibb Co. v. Super. Ct.
of Cal., San Francisco Cty., 582 U.S. 255, 262 (2017)). To demonstrate this
relationship, “the plaintiff has the burden of proving that the defendant deliberately
‘reached out beyond’ its home—by, for example, ‘exploit[ing] a market’ in the forum
State or entering a contractual relationship centered there.” Mucha v. Wagner, 378
N.C. 167, 171 (2021) (alteration in original) (quoting Ford Motor Co., 141 S. Ct. at
1025).
Minimum contacts may give rise to one of two forms of jurisdiction: general or
specific jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,
919 (2011). General jurisdiction requires that a defendant’s “affiliations with the
State are so ‘continuous and systematic’ as to render them essentially at home in the
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forum State.” Id. (quoting Int’l Shoe, 326 U.S. at 317). When a defendant’s conduct in
a state is not so extensive, however, jurisdiction may still be proper if “the litigation
results from the alleged injuries that arise out of or relate to the defendant’s
activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (cleaned up).
Jurisdiction that is based on this relationship is known as specific jurisdiction.
Because Schaeffer asserts only that the trial court has specific jurisdiction over
Defendants, our analysis is limited to this kind of personal jurisdiction.
“Once it has been decided that a defendant purposefully established minimum
contacts within the forum State, these contacts may be considered in light of other
factors to determine whether the assertion of personal jurisdiction would comport
with fair play and substantial justice.” Id. at 476 (cleaned up). These factors are:
‘the burden on the defendant,’ ‘the forum State’s interest in adjudicating the dispute,’ ‘the plaintiff’s interest in obtaining convenient and effective relief,’ ‘the interstate judicial system’s interest in obtaining the most efficient resolution of controversies,’ and the ‘shared interest of the several States in furthering fundamental substantive social policies.’
Id. at 477 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292
(1980)).
The purpose of the Due Process Clause’s limitations on personal jurisdiction is
to “treat[ ] defendants fairly,” Ford Motor Co., 141 S. Ct. at 1025, by providing them
with “fair warning that a particular activity may subject them to the jurisdiction of a
foreign sovereign,” allowing them to “structure their primary conduct with some
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minimum assurance as to where that conduct will and will not render them liable to
suit.” Burger King Corp., 471 U.S. at 472 (cleaned up) (first quoting Shaffer v. Heitner,
433 U.S. 186, 218 (1977); then quoting World-Wide Volkswagen Corp., 444 U.S. at
297).
C. Discussion
Applying this framework to the facts of this case, we conclude that specific
jurisdiction exists over Corporate Defendants because they purposefully availed
themselves of the privileges of conducting various business-related activities in North
Carolina, and Schaeffer’s claims arise out of or are related to those activities. 3 We
further conclude that exercising jurisdiction in this case is constitutionally
reasonable.
The same cannot be said for Individual Defendants, however, because
Schaeffer’s evidence fails to demonstrate that their conduct directed at North
Carolina was sufficient to permit the trial court to exercise specific jurisdiction over
them in this litigation.
1. Corporate Defendants
Schaeffer urges that Defendants’ suit-related activities in North Carolina are
sufficient to enable the trial court to exercise specific jurisdiction in this litigation.
3 Note that we do not address the separate question of whether any Defendants have consented to jurisdiction in this case or whether registering to do business in North Carolina is a valid basis for personal jurisdiction under the Fourteenth Amendment.
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But in Defendants’ view, which was adopted by the Court of Appeals, Schaeffer’s
decision to move was his own unilateral choice, and “Defendants’ acquiescence with
Plaintiff’s move to North Carolina, and subsequent communications with Defendant
in North Carolina, do not create personal jurisdiction.” Schaeffer, 2021 WL 2426202,
at *4.
Defendants contend that the only relevant activities that give rise to Plaintiff’s
claims, such as the contract negotiations that took place between Schaeffer and
Defendants and the execution of Schaeffer’s employment-related agreements,
occurred in another forum, and “SingleCare’s contacts with Schaeffer after he moved
to North Carolina have no bearing on the analysis.” In short, Defendants argue that
they did not voluntarily reach out to North Carolina to conduct suit-related activities
here. Further, Defendants argue that their “contacts with North Carolina are limited
and entirely unrelated to the claims at hand,” meaning the activities “do not support
jurisdiction . . . in North Carolina for all employment-related suits.” But Defendants’
position on both points ignores the import of Corporate Defendants’ voluntary
conduct in North Carolina in response to and following Schaeffer’s move and
misstates the character of Corporate Defendants’ other North Carolina-directed
activities.
First, we address whether Corporate Defendants purposefully availed
themselves of the privileges of conducting business-related activities in North
Carolina. It is true that the “unilateral activity of another party or a third person is
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not an appropriate consideration when determining whether a defendant has
sufficient contacts with a forum State to justify an assertion of jurisdiction.”
Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 417 (1984).
Defendants assert that “SingleCare did not reach out to a citizen of North Carolina”
because Defendants recruited Schaeffer and initiated his employment when he was
a resident of California and “Schaeffer unilaterally moved to North Carolina” prior to
his termination. But there is no legal basis for hinging the whole of the analysis on
the forum in which the relationship was established (i.e. California) to the exclusion
of the forum in which Corporate Defendants perpetuated the relationship.
Corporate Defendants emphasize the idea that “SingleCare created a . . .
relationship with Schaeffer well before he moved to North Carolina” or “before
SingleCare even knew Schaeffer would move to North Carolina.” In Defendants’ view
then, there seems to be only one forum in which specific jurisdiction might exist—the
forum in which the relationship was established. Under this approach, so long as
Schaeffer’s move was his own decision, there are very few subsequent activities
Corporate Defendants could conduct in a new forum that would allow the new forum’s
courts to exercise jurisdiction over the claims at issue here. For example, Defendants
could continue to employ Schaeffer in North Carolina for the next twenty years.
Shaeffer could continue to grow Defendants’ business in the state, and
representatives of the company could visit him regularly to oversee his work. But
because Defendants initially “reach[ed] out” to Schaeffer when he was a resident of
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California, none of those details would matter, even if Schaeffer’s presence and work
in North Carolina far exceeded any of his activities in California. Though the forum
in which a contractual relationship began is certainly relevant in determining where
jurisdiction is proper, it is not the only event that is pertinent to this analysis.
Indeed, the U.S. Supreme Court “long ago rejected the notion that personal
jurisdiction might turn on ‘mechanical’ tests or on ‘conceptualistic theories of the
place of contracting or of performance.’ ” Burger King Corp., 471 U.S. at 478–79
(cleaned up) (first quoting Int’l Shoe Co., 326 U.S. at 319; then quoting Hoopeston
Canning Co. v. Cullen, 318 U.S. 313, 316 (1943)). And though “prior negotiations” and
“contemplated future consequences” are relevant “in determining whether the
defendant purposefully established minimum contacts with the forum,” so too is “the
parties’ actual course of dealing.” Id. at 479.
Burger King demonstrates that the purposeful availment inquiry is a “flexible”
one. Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 560 (4th Cir. 2014). As
the Fourth Circuit has recognized, it “depends on a number of factors” that should be
considered “on a case-by-case basis.” Id. Relevant here,
[i]n the business context, those factors include, but are not limited to, an evaluation of: (1) whether the defendant maintains offices or agents in the forum state; (2) whether the defendant owns property in the forum state; (3) whether the defendant reached into the forum state to solicit or initiate business; (4) whether the defendant deliberately engaged in significant or long-term business activities in the forum state; (5) whether the parties contractually agreed that the law of the forum state would govern disputes; (6) whether the defendant made in-person
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contact with the resident of the forum in the forum state regarding the business relationship; (7) the nature, quality and extent of the parties’ communications about the business being transacted; and (8) whether the performance of contractual duties was to occur within the forum.
Id. (emphasis added) (cleaned up). Defendants would have us forgo this flexible
analysis and establish a rigid, per se rule that touches on few of these factors. Such
an approach ignores decades of case law from both this Court and the U.S. Supreme
Court that evaluates a range of activities to determine whether a defendant
intentionally reached out to the forum state, and it would subvert the purpose of the
protections afforded by personal jurisdiction doctrine. See, e.g., Burger King Corp.,
471 U.S. at 479–82; World-Wide Volkswagen Corp., 444 U.S. at 295–98; Int’l Shoe Co.,
326 U.S. at 319–20; Mucha, 378 N.C. at 172–73; Beem USA Ltd-Liab. Ltd. P’shp, 373
N.C. at 306; Tom Togs, Inc. v. Ben Elias Indus. Corp., 318 N.C. 361, 367 (1986).
Rather, as described above, to determine whether personal jurisdiction exists,
we examine the totality of the circumstances that this case presents. In response to
Schaeffer’s decision to move, Corporate Defendants purposefully availed themselves
of the privilege of conducting business in North Carolina, voluntarily engaging in a
wide range of activities within the state.
The crux of the purposeful availment analysis is whether a defendant
“ ‘reached out beyond’ its home—by, for example, ‘exploit[ing] a market’ in the forum
State or entering a contractual relationship centered there.” Ford Motor Co., 141 S.
Ct. at 1025 (quoting Walden v. Fiore, 571 U.S. 277, 285 (2014)). The contacts cannot
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simply be “random, isolated, or fortuitous[,]” Keeton v. Hustler Mag., Inc., 465 U.S.
770, 774 (1984), and they must be such that the defendant has “fair warning that a
particular activity may subject them to the jurisdiction of a foreign sovereign.” Burger
King Corp., 471 U.S. at 472 (cleaned up). In short, the defendant’s contacts with the
forum state must be voluntary, and it must be foreseeable that the defendant could
be hailed to court in that particular forum as a consequence.
Here, Defendants first approved Schaeffer’s request to move to North Carolina
where he would continue to carry out his work remotely. After approving Schaeffer’s
request to move, Schaeffer explains in his brief that Defendants “helped him purchase
a house in North Carolina” by sending a letter to his “North Carolina mortgage lender
in order to facilitate [his] move to the state.” These activities are not, without more,
enough to conclude that Corporate Defendants purposefully availed themselves of the
North Carolina market. But they demonstrate that Corporate Defendants supported
the transition, which becomes more significant in light of their subsequent North
Carolina-targeted activities.
Once Schaeffer moved to North Carolina, Corporate Defendants paid state
taxes based upon his work here, mailed tax documents to his North Carolina address,
and paid him in the state. Defendants communicated frequently with Schaeffer
through phone calls and emails as part of his employment and reimbursed him for
expenses he incurred as a result of working in North Carolina, including for travel to
and from the state and office maintenance costs. Based on business directives
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Defendants issued, Schaeffer argues that “[he] furthered Defendants’ pharmacy
benefit management business and pharmaceutical benefit card services in North
Carolina, which were targeted at North Carolina businesses and residents.” For
example, as part of his North Carolina-focused work and operating under the
instructions of Defendants, Schaeffer sold services related to a third-party
administrator—Towers Administrators LLC—that is both licensed in North Carolina
and wholly owned by Corporate Defendants.4 Due to his efforts, “Corporate
Defendants derived revenue from services rendered by Schaeffer in his capacity as
Senior Vice President on their behalf in North Carolina.” Finally, Corporate
Defendants terminated Schaeffer with the knowledge that he was a North Carolina-
based employee.
These actions demonstrate that Corporate Defendants voluntarily and
knowingly engaged with a North Carolina-based employee to support and expand his
work in the state. Due to their own directives, Corporate Defendants reaped the
business benefits of work that Schaeffer conducted in North Carolina. This work was,
at least in part, targeted at the North Carolina market. Based on the extent of the
communications and the various forms of support Corporate Defendants voluntarily
provided Schaeffer to enable his work in North Carolina coupled with the profits and
other benefits Corporate Defendants expected to gain as a result of that support,
4 Towers Administrators LLC holds itself out as “SingleCare Administrators” and is described on SingleCare’s website as its “licensed discount medical plan organization.”
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Corporate Defendants’ activities in North Carolina were also sufficient to provide
them with ample notice that they may be subject to suit in the state.5
On top of its activities in North Carolina as a result of employing Schaeffer,
Corporate Defendants voluntarily conduct many other activities in the state that
would fairly put them on notice of the possibility that litigation might arise in the
forum. Corporate Defendants employed at least three other individuals in North
Carolina, one of whom was a sales representative, and solicited candidates from
around the state for business development roles. Schaeffer argues that the positions
Corporate Defendants advertised in North Carolina “shared the same underlying goal
and responsibility held by Schaeffer: to ‘help drive growth’ in SingleCare.” Further,
SingleCare intentionally serves North Carolina consumers by providing them “with
access to pharmacy discounts at retail locations across the state, including major
grocery stores such as Harris Teeter, CVS, Walgreens, and Walmart.”6
5 See, e.g. Burger King Corp., 471 U.S. at 473–74 (“[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.” (quoting Kulko v. Cal. Super. Ct., 436 U.S. 84, 96 (1978))). 6 In framing the California-directed activities as the only relevant events in the
purposeful availment analysis, Defendants ignore their North Carolina-directed activities, brushing them off as irrelevant because they occurred after the employment relationship initially formed. As part of this error, Defendants muddle the distinction between the purposeful availment inquiry and the relatedness inquiry. For example, as part of their purposeful availment analysis, they assert that “[w]ithout soliciting a relationship with a North Carolina resident and the forum itself, there is no connection between the contracts at issue and this forum.” At this point in the analysis, however, the task is to evaluate “the nature and extent of ‘the defendant’s relationship to the forum State.’ ” Ford Motor Co., 141 S. Ct. at 1024 (quoting Bristol-Myers Squibb Co., 582 U.S. at 262). Whether there is a
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Schaeffer’s claims further arise out of and are related to Corporate Defendants’
activities in North Carolina. See Ford Motor Co., 141 S. Ct. at 1026. Schaeffer’s claims
stem from an employment relationship that was partially carried out and allegedly
breached in North Carolina. Though the alleged promises that are the basis for the
claims were originally made in California, Schaeffer continued to act on Corporate
Defendants’ behalf in North Carolina based on those promises. The promises were
then broken in North Carolina when Corporate Defendants reclaimed the shares they
had allegedly granted Schaeffer, which is the event that gave rise to Schaeffer’s
claims. To be precise, the claims arise from, or were caused by, Corporate Defendants’
revocation of the shares. See id. at 1026 (explaining that the “arise from” language in
this standard “asks about causation”).
Additionally, other activities conducted by Corporate Defendants are related
to Schaeffer’s claims. Corporate Defendants supported Schaeffer’s employment-
related needs and business efforts in North Carolina, directed Schaeffer to carry out
certain activities directed at the North Carolina market on their behalf, and they
terminated him when he was a North Carolina resident. It is one thing for Defendants
to argue that these activities are not sufficient to conclude that Corporate Defendants
purposefully availed themselves of the benefits of doing business in North Carolina
connection between the at-issue contacts and North Carolina is a separate question that does not bear on whether the “quality and nature” of Corporate Defendants’ contacts are sufficient to trigger specific jurisdiction. Int’l Shoe Co., 326 U.S. at 319.
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so as to establish minimum contacts—an argument that we have already rejected—
but there is simply no basis in law or logic to conclude that Schaeffer’s claims are not
related to these activities.
The U.S. Supreme Court’s decision in Ford Motor Co. supports this result. Ford
Motor Co. consolidated two product liability cases that arose after Ford-manufactured
cars malfunctioned, injuring individuals in the cars when the vehicles crashed. 141
S. Ct. at 1023. The accidents occurred in the states where the suits were brought, the
victims were residents of those states, and “Ford did substantial business in” both
states. Id. at 1022. Ford sought to dismiss the suits for lack of personal jurisdiction,
arguing that the state courts “had jurisdiction only if the company’s conduct in the
State had given rise to the plaintiff’s claims. And that causal link existed . . . only if
the company had designed, manufactured, or—most likely—sold in the State the
particular vehicle involved in the accident.” Id. at 1023. The U.S. Supreme Court
rejected this argument, highlighting that jurisdiction can be established when a
plaintiff’s claims arise from or are related to a defendant’s activities in the relevant
forum. Id. at 1026. Applying this distinction, the Court held that the plaintiffs’ claims
were related to Ford’s activities in their states, meaning the “ ‘relationship among the
defendant, the forum[s], and the litigation’—[was] close enough to support specific
jurisdiction.” Id. at 1032 (first alteration in original) (quoting Walden, 571 U.S. at
284).
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Applying Ford Motor Co. to the facts of this case, just as jurisdiction there was
not limited “to where the car was designed, manufactured, or first sold,” 141 S. Ct. at
1028, jurisdiction here is not limited to where Schaeffer was first recruited or where
his contract was negotiated and executed. In Ford Motor Co., the Court recognized
that “Ford sold the specific products [that malfunctioned] in other states,” but it
explained that the plaintiffs’ claims were related to Ford’s activities anyway because
“the plaintiffs [were] residents of the forum States. They used the allegedly defective
products in the forum States. And they suffered injuries when those products
malfunctioned in the forum States.” Id. at 1031. Here, Schaeffer was a resident of
North Carolina, he carried out his employment obligations in North Carolina based
on both directives from Corporate Defendants and promises Corporate Defendants
allegedly made to him, and he claims he suffered an injury in North Carolina when
Corporate Defendants allegedly broke those promises. There is a clear connection
between Corporate Defendants’ activities in North Carolina—some of which were
conducted by Corporate Defendants themselves to accommodate and support
Shaeffer’s remote work in North Carolina while others were conducted by Schaeffer
at Corporate Defendants’ behest for their own benefit—and Schaeffer’s claims in this
litigation. This conclusion “is faithful to the United States Supreme Court’s
characterization of specific jurisdiction as being based on ‘case-linked’ contacts.” Beem
USA Ltd.-Liab. Ltd. P’ship, 373 N.C. at 307.
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To distort this straightforward analysis, Defendants again frame their
recruitment of Schaeffer and execution of his employment-related agreements—
activities that were completed in California—as their only relevant activities with
respect to Schaeffer’s claims. Through this narrow lens, Defendants assert that
“Schaeffer seeks to relitigate alleged representations made to him, and agreements
entered into, in California, and that have nothing whatsoever to do with North
Carolina or [Defendants’] alleged North Carolina contacts. The only connection
between the claims at issue and this forum is Schaeffer’s unilateral decision to
relocate to North Carolina.” This contention mischaracterizes Corporate Defendants’
activities in North Carolina as described above, and incorrectly focuses on a limited
set of events during the parties’ relationship to the exclusion of other relevant
considerations. As discussed, conduct that occurred in North Carolina following the
formation of the relationship between Schaeffer and Corporate Defendants is
pertinent to this analysis as well.
Not only have Defendants purposefully established minimum contacts in
North Carolina that arise out of and are related to Schaeffer’s claims, but personal
jurisdiction is also constitutionally reasonable in that “the assertion of personal
jurisdiction would comport with ‘fair play and substantial justice.’ ” Burger King
Corp., 471 U.S. at 476 (quoting Int’l Shoe Co., 326 U.S. at 320). Most significantly,
Corporate Defendants already independently conduct extensive activities in North
Carolina apart from any activities they conducted in the state that were related to
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Schaeffer. What is more, Defendants have not challenged the trial court’s jurisdiction
as to one of Schaeffer’s claims, so they are already subject to litigation in North
Carolina in this very matter. As a result, there is virtually no burden on Corporate
Defendants in litigating the additional claims in this state. Further, litigating all of
the claims against Corporate Defendants in North Carolina preserves judicial
resources, thereby promoting the interstate judicial system’s interest in obtaining an
efficient resolution of the case by consolidating the claims within a single court.
Finally, contrary to the Court of Appeals’ conclusion that “North Carolina has
minimal interest in a contract negotiated outside of this State, formed between non-
resident parties, and substantially performed outside of this State,” Schaeffer, 2021
WL 2426202, at *5, North Carolina has a “ ‘manifest interest’ in providing its
residents with a convenient forum for redressing injuries inflicted by out-of-state
actors.” Tom Togs, Inc. v. Ben Elias Indus. Corp., 318 N.C. 361, 367 (citing Burger
King Corp., 471 U.S. at 473). All told, Corporate Defendants have established
“minimum contacts with [North Carolina] such that the maintenance of the suit does
not offend traditional notions of fair play and substantial justice.” Int’l Shoe Co., 326
U.S. at 316 (cleaned up).
2. Individual Defendants
Importantly, foreign corporate officers, directors, or representatives are not
subjected to jurisdiction simply because their employer-corporation is subject to suit
in a particular forum. See Calder v. Jones, 465 U.S. 783, 790 (1984) (“Petitioners[’]
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. . . contacts with California are not to be judged according to their employer’s
activities there.”); see also Robbins v. Ingham, 179 N.C. App. 764, 771 (2006)
(“ ‘[P]laintiffs may not assert jurisdiction over a corporate agent without some
affirmative act committed in his individual official capacity.’ ”) (emphasis added)
(quoting Godwin v. Walls, 118 N.C. App. 341, 348, disc. review allowed, 341 N.C. 419
(1995)). Imputing a corporation’s contacts to individuals employed by the corporation
would ignore that specific jurisdiction turns on “the relationship between the
defendant, the forum, and the litigation.” Mucha v. Wagner, 378 N.C. 167, 174 (2021)
(emphasis added) (cleaned up). Nevertheless, we do not conclude that any foreign
corporate representative acting solely within their official capacity is shielded from
jurisdiction, as such a blanket rule would itself risk ignoring the forum-directed
activities of the individual defendant. But “more than mere participation in the
affairs of the corporation is required.” King v. Prodea Sys., Inc., 433 F. Supp. 3d 7, 16
(D. Mass. 2019) (cleaned up). We instead conduct the same minimum contacts test
for Individual Defendants as we have for Corporate Defendants. With respect to the
relatedness inquiry, one particularly relevant consideration is whether Individual
Defendants were “primary participants in the alleged wrongdoing intentionally
directed at a [North Carolina] resident.” Calder, 465 at 790.
Schaeffer’s pleadings and affidavit do not provide a factual basis to conclude
that Individual Defendants themselves engaged in sufficient activities giving rise to
or related to the subject matter of the claims to be subjected to jurisdiction in North
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Carolina courts. Though Schaeffer’s affidavit alleges, among other minor activities,
that Defendant Schoenebeck “participated in [his] termination” and “[he] believes
that” he was terminated “at the direction of Defendant Bates,” Schaeffer does not
make sufficiently specific allegations regarding the North Carolina-directed activities
Individual Defendants themselves engaged in or the connection between those
activities and his claims, such as by alleging their individual roles in bringing about
the injuries he suffered. For example, while it might be the case that Defendant
Schoenebeck participated in his termination, she may have had nothing to do with
the decision to terminate him and did not necessarily know that his shares were being
revoked. Without more, these general allegations are insufficient to conclude that the
exercise of personal jurisdiction is appropriate as to Individual Defendants.
III. Conclusion
Personal jurisdiction doctrine has necessarily evolved over time to account for “the
fundamental transformation of our national economy.” Chadbourn, Inc. v. Katz, 285
N.C. 700, 704 (1974). “Today[,] many commercial transactions touch two or more
States and may involve parties separated by the full continent.” Id. In the same vein,
as technological innovation flourishes, remote work has become increasingly
common. In the face of these advances, courts must balance the importance of a
foreign defendant’s “liberty interest in not being subject to the binding judgments of
a forum in which he has established no meaningful contacts, ties, or relations,” with
the reality that such contacts are more easily and more widely cultivated today. See
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Burger King Corp., 471 U.S. at 471–72 (cleaned up). Indeed, “because modern
transportation and communications have made it much less burdensome for a party
sued to defend himself in a State where he engages in economic activity, it usually
will not be unfair to subject him to the burdens of litigating in another forum for
disputes relating to such activity.” Id. at 473–74 (cleaned up).
Though our rapidly changing world has perhaps made it easier to hold foreign
defendants to account for alleged wrongdoings in a variety of forums, our decision
today breaks no new ground. It simply analyzes the whole of Schaeffer’s relationship
with Defendants, rather than focusing only on a narrow and discrete set of events.
Because Corporate Defendants purposefully availed themselves of the privileges of
conducting various business-related activities in North Carolina and those activities
arise from or relate to Schaeffer’s claims in this litigation, we hold that the trial court
may exercise personal jurisdiction over Corporate Defendants pursuant to the Due
Process Clause. Accordingly, we reverse the Court of Appeals decision in this case as
to Corporate Defendants, affirm its decision with respect to Individual Defendants,
and remand to the trial court for further proceedings consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART.
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