Williams v. Lakeview Co.

13 P.3d 280, 199 Ariz. 1, 334 Ariz. Adv. Rep. 29, 2000 Ariz. LEXIS 113

• Court: Arizona Supreme Court
• Decided: November 9, 2000
• Docket: CV-99-0364-PR
• Status: Published

Opinions

OPINION

McGREGOR, Justice.

¶ 1 We granted review to decide whether Arizona courts may exercise specific jurisdiction over a personal injury action brought by residents of Mohave County, Arizona, against a Nevada casino for damages caused by the casino’s service of liquor in Nevada to an intoxicated patron. The casino regularly and continuously advertises in Arizona, solicits Arizona tour bus trade, and employs a number of Arizona residents. For the following reasons, we hold that absent a causal connection between the casino’s Arizona contacts and the plaintiffs’ claims, specific jurisdiction does not attach.

I.

¶ 2 On February 8, 1997, Michelyn Williams and Kelly Williams (the plaintiffs) traveled to Boulder City, Nevada, with Patrick Kelsey, Jr. While in Nevada, the trio visited the Gold Strike Inn & Casino, a business located just past the Arizona border and owned by a Nevada general partnership, Lakeview Company. At the casino, Mr. Kelsey consumed a large amount of alcohol. Although the plaintiffs were concerned about Mr. Kelsey’s intoxication level, they allowed him to drive on the return trip to Arizona. Once over the state line, he lost control of the car, and the plaintiffs received serious injuries in the resulting single-car accident.

¶ 3 The plaintiffs filed suit in Arizona against Lakeview and its partners. On Lakeview’s motion, the trial court dismissed the ease for lack of personal jurisdiction. The court of appeals reversed, holding that although Lakeview had insufficient contacts with Arizona to create general jurisdiction over it and its partners, the plaintiffs’ injuries were sufficiently related to the existing contacts to permit the court to exercise specific jurisdiction.

¶ 4 We exercise jurisdiction pursuant to Arizona Constitution, article VI, section 5(3), Arizona Revised Statutes Annotated (A.R.S.) § 12-120.24, and Arizona Rule of Civil Appellate Procedure 23.

II.

¶ 5 The basic principles that govern. Arizona’s authority to exercise personal jurisdiction over a non-resident defendant are familiar and well-established, see generally, e.g., Batton v. Tennessee Farmers Mut. Ins. Co., 153 Ariz. 268, 736 P.2d 2 (1987), and we address them only briefly. The Due Process Clause limits state court jurisdiction over foreign defendants. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 2181-82, 85 L.Ed.2d 528 (1985). Because Arizona’s long-arm rule confers jurisdiction over non-resident defendants to the fullest extent permitted by the Due Process Clause, “[t]he jurisdictional issue ... hinges on federal law.” Uberti v. Leonardo, 181 Ariz. 565, 569, 892 P.2d 1354, 1358 (1995).

¶ 6 The personal jurisdiction test, set out in International Shoe Co. v. Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95 (1945), requires that the defendant have sufficient minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Personal jurisdiction may be divided into two types: (1) general jurisdiction and (2) specific jurisdiction. Under either specific or general jurisdiction, “the constitutional touchstone remains whether the defendant purposefully established ‘minimum contacts’ in the forum State.” Burger King, 471 U.S. at 474, 105 S.Ct. at 2183. A non-resident defendant is subject to general jurisdiction when the defendant’s contacts with the forum state are substantial or continuous and systematic enough that the defendant may be haled into court in the forum, even for claims unrelated to the defendant’s contacts with the forum. See Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). The level of contact required to show general jurisdiction is quite high.¹

¶ 7 When a defendant’s activities in the forum state are not so pervasive as to subject it to general jurisdiction, the court may still find specific jurisdiction if: (1) the defendant purposefully avails himself of the privilege of conducting business in the forum; (2) the claim arises out of or relates to the defendant’s contact with the forum; and (3) the exercise of jurisdiction is reasonable. See Shute v. Carnival Cruise Lines, 897 F.2d 377, 381 (9th Cir.1990), reversed on other grounds, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). Although specific jurisdiction may arise without the defendant ever setting foot in the forum state, and may arise incident to a single act directed to the forum, it does not arise from the plaintiffs or a third party’s unilateral activity or from the nonresident defendant’s mere foreseeability that a claim may arise. See World-Wide Volkswagen v. Woodson, 444 U.S. 286, 295-97, 100 S.Ct. 559, 566-67, 62 L.Ed.2d 490 (1980). Once the plaintiff establishes that minimum contacts occurred with the forum state and that the events causing the injury arose out of that contact, a rebuttable presumption arises that the forum reasonably can exercise jurisdiction. See Burger King, 471 U.S. at 476-77,105 S.Ct. at 2184.

¶8 We cannot decide the issue of personal jurisdiction, however, by applying any mechanical test or “talismanic jurisdictional formulas; ‘the facts of each case must [always] be weighed’ in determining whether personal jurisdiction would comport with ‘fair play and substantial justice.’ ” Burger Kin g, 471 U.S. at 485-86,105 S.Ct. at 2189 (quoting Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690,1696-97, 56 L.Ed.2d 132 (1978)) (alterations in original).

III.

A.

¶ 9 The Gold Strike Inn & Casino is located within a few miles of the Arizona/Nevada border. The Lakeview partnership conducts no business in Arizona, owns no property in Arizona, and does not list a telephone number in any Arizona directory. Furthermore, the Lakeview partners are all residents of the state of Nevada.

¶ 10 The plaintiffs claim that several activities involving Lakeview create the required minimum contacts with Arizona. First, the casino advertised its weekly dinner buffet in Arizona newspapers, including a small Mohave County paper that circulated once each month. Second, the casino sent a one-time offer to eleven tour bus companies that operated throughout Arizona, offering them incentives to stop at the casino on their way into Nevada. Third, the casino employed Arizona residents, and, at the time of the accident, approximately twenty-three percent of its overnight guests were Arizona residents. The plaintiffs also allege that Lake-view could foresee that some Arizona residents would become intoxicated at the casino and subsequently cause harm to themselves or others while driving on Arizona highways. The plaintiffs concede that their visit was not related to any of Lakeview’s contacts with Arizona, and that the only contact they personally had with the casino resulted from their unilateral decision to visit it.

B.

¶ 11 The requirement that a nexus exist between a defendant’s activities in the forum state and a plaintiffs cause of action provides- the key to exercising specific jurisdiction. A plaintiffs claim must result from “alleged injuries that ‘arise out of or relate to’ [the defendant’s] ... activities” in the forum state. Burger King, 471 U.S. at 472, 105 S.Ct. at 2182 (quoting Helicopteros, 466 U.S. at 414, 104 S.Ct. at 1872). This test ensures that forums will not exercise jurisdiction over non-resident defendants based solely upon random, fortuitous, or attenuated contacts, or upon the unilateral activity of another person. Instead, we must focus on the relationship between the defendant, the forum, and the litigation. See Batton, 153 Ariz. at 271, 736 P.2d at 5. The nexus requirement goes to the very heart of minimum contacts and creates the distinction between specific and general jurisdiction.

¶ 12 Federal courts have disagreed about the strength of the causal relationship that must exist between a defendant’s forum activities and a plaintiffs claim. Some courts have adopted a substantive test that requires that the defendant’s contacts with the forum serve as the proximate cause of an injury, while others have adoptéd a “but for” test, under which a nexus exists if a plaintiffs injury would not have occurred but for a defendant’s forum activities. Compare, e.g., Pizarro v. Hoteles Concorde Int’l, 907 F.2d 1256, 1260 (1st Cir.1990) (holding a defendant’s solicitation of tourist reservations in the forum state was not the proximate cause of injuries occurring in an Aruba hotel), with Shute, 897 F.2d at 386 (finding that when the plaintiff would not have taken a cruise but for defendant’s solicitations in the forum state, nexus existed). Even under the more liberal “but for” test, however, the plaintiffs here cannot establish the required nexus.

¶ 13 Unlike the plaintiff in Shute, the plaintiffs do not assert that their visit to the casino resulted from any of Lakeview’s contacts with Arizona. They did not visit the casino after seeing or in response to an advertisement, and they never traveled to Nevada on a tour bus. Their injuries did not arise out of or relate to Lakeview’s employment relationship with or hotel service to Arizona residents.² The failure to show any causal connection between Lakeview’s Arizona activity and their claim is fatal to the plaintiffs’ argument. As the court emphasized in Shute:

Under [the “but for”] ... test, a defendant cannot be haled into court for activities unrelated to the cause of action in the absence of a showing of substantial and continuous contacts sufficient to establish general jurisdiction. The “but for” test preserves the requirement that there be some nexus between the cause of action and the defendant’s activities in the forum.

Shute, 897 F.2d at 385 (citations omitted) (emphasis added). Because the plaintiffs established no nexus between their cause of action and Lakeview’s activities in Arizona, our courts cannot assert specific jurisdiction over Lakeview. The plaintiffs do not challenge the court of appeals’ conclusion that Lakeview’s contacts are not sufficient to permit Arizona to assert general jurisdiction. If we were to assert specific jurisdiction based upon those same contacts in the absence of any nexus between Lakeview’s contacts with Arizona and the plaintiffs’ claim, we would effectively obliterate the distinction between general and specific jurisdiction. The Due Process Clause does not permit us to do so.³

¶ 14 Other courts have grappled with the “arising out of or related to” nexus requirement as it relates to non-resident advertising in the forum state and have reached differing conclusions. See, e.g., Shoppers Food Warehouse v. Moreno, 746 A.2d 320, 337 (D.C. 2000) (holding that because the plaintiffs claim had a discernible relationship to the defendant’s extensive advertising in the forum, even when she did not claim to personally see the ads, the defendant could reasonably anticipate being haled into court there). But see, e.g., Wims v. Beach Terrace Motor Inn, Inc., 759 F.Supp. 264, 270 (E.D.Pa.1991) (holding that the plaintiffs injury in the defendant’s hotel was too attenuated from the defendant’s business solicitations in the forum state to confer jurisdiction, even when the plaintiff went to the hotel solely because she received the hotel’s promotional brochure); Westphal v. Mace, 671 F.Supp. 665, 667-68 (D.Ariz.1987) (rejecting the argument that the dependency of a Nevada casino on Arizona residents and its continuous advertisements in the forum state are sufficient to confer jurisdiction because there was no nexus between the injury and the contacts and because the plaintiff merely felt the effect of the injury in the forum state); Erickson v. Spore, 618 F.Supp. 1356, 1359-60 (D.Minn. 1985) (finding personal jurisdiction was lacking when the plaintiff never saw or heard any of the defendant’s advertising in the forum state and when his decision to go to the defendant’s business was not related to the advertising); Mozdy v. Lopez, 197 Mich.App. 356, 494 N.W.2d 866, 868-69 (1992) (holding that advertisements in the forum state were an insufficient basis for personal jurisdiction when the advertisements had no causal connection to the injury). We believe the better-reasoned cases are those which require a causal nexus between the defendant’s solicitation activities and the plaintiffs claims, a requirement we conclude the Due Process Clause imposes.

¶ 15 The plaintiffs also argue that we should assert jurisdiction because Lake-view should have foreseen that one of its Arizona patrons might consume alcohol to excess, cross the state line, and become involved in an accident. Foreseeability, however, does not confer jurisdiction. In Burger King, the Supreme-Court specifically rejected this argument: “Although it has been argued that foreseeability of causing injury in another State should be sufficient to establish such contacts there ..., the Court has consistently held that this kind of foreseeability is not a ‘sufficient benchmark’ for exercising personal jurisdiction.” Burger King, 471 U.S. at 474, 105 S.Ct. at 2183 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. at 295, 100 S.Ct. at 566) (emphasis in original). Foreseeability, relevant as it may be to the defendant’s liability, cannot substitute for the required causal nexus between the defendant’s contact with the forum state and an eventual injury.

C.

• ¶ 16 Although the plaintiffs do not argue that section 37 of the Restatement (Second) of Conflict of Laws provides a basis upon which Arizona courts can rely in asserting personal jurisdiction over the defendants, the dissent finds that provision persuasive. Significantly, when Arizona’s appellate courts handed down the two decisions cited by the dissent,⁴ the standards governing the exercise of specific jurisdiction by state courts were relatively unclear. After the dates of those Arizona decisions, the Supreme Court defined the appropriate analysis in decisions such as World Wide Volkswagen v. Woodson, Helicopteros Nacionales de Colombia S.A. v. Hall, and Burger King Corp. v. Rudzewicz, an analysis we necessarily adopted in Batton v. Tennessee Farmers Mut. Ins. Co.5 Had the plaintiffs filed this action in Nevada, the courts of that state might well have applied choice of law principles in a manner that would allow Arizona law to control this action. Those principles, however, determine which state’s law should apply, not whether a particular state can exercise specific jurisdiction over a particular defendant.

D.

¶ 17 Our jurisdictional analysis must focus on the relationship among Lakeview, Arizona, and the plaintiffs’ claim. In undertaking that analysis, we must bear in mind the following caution:

Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.

World-Wide Volkswagen, 444 U.S. at 294, 100 S.Ct. at 565-66.

¶ 18 The relationship among Lakeview, Arizona, and the plaintiffs’ claim does not permit Arizona to exercise specific jurisdiction.

IV.

¶ 19 For the foregoing reasons, we vacate the opinion of the court of appeals, and affirm the trial court’s judgment.

CONCURRING: FREDERICK J. MARTONE, Justice, and JOHN PELANDER, Judge. *

1 . The court of appeals held that Lakeview’s contacts with Arizona were not sufficiently continuous and systematic to permit Arizona to exercise general jurisdiction. See Williams v. Lakeview, 195 Ariz. 468, 990 P.2d 669 (App.1999). The plaintiffs did not file a cross-petition for review from that holding, so we do not address that issue.

2 . We express some doubt that Lakeview’s decision to employ or offer hotel service to Arizona residents can be regarded as actions showing that Lakeview purposefully availed itself of the privilege of conducting business in Arizona. The Supreme Court consistently has held that the unilateral act of a third party does not, alone, create a minimum contact. See Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958), see also Wims v. Beach Terrace Motor Inn, Inc., 759 F.Supp. 264, 270 (E.D.Pa.1991) (holding that the fact that approximately ten percent of defendant’s employees were residents of the forum state was “irrelevant to the issue of personal jurisdiction" when no evidence showed that the employee relationship reflected the defendant's “activities in or directed toward” the forum state). Without additional information, we cannot assume these contacts relate to Lakeview’s decision to conduct any business in Arizona. For purposes of this opinion, however, we assume sufficient contacts to meet the minimal contacts requirement of the jurisdictional test.

3 . We respectfully disagree with the dissent's assertion that general and specific jurisdiction “lie on the same broad spectrum” and simply involve "varying degrees of relationship.” Dissent, infra ¶__Once we conclude that a defendant’s contacts with the forum cannot sustain the exercise of general jurisdiction, our focus shifts from considering primarily the defendant’s contacts with the forum to considering the relationship among the defendant, the forum, and the claim asserted. See, e.g., Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) and Batton v. Tennessee Farmers Mut. Ins. Co., 153 Ariz. 268, 736 P.2d 2 (1987).

4 . See Chavez v. State of Indiana, 122 Ariz. 560, 596 P.2d 698 (App.1979) and Powder Horn Nursery, Inc. v. Soil & Plant Laboratory, Inc., 20 Ariz.App. 517, 514 P.2d 270 (1973).

5 . In Hoskinson v. State of California, 168 Ariz. 250, 812 P.2d 1068 (App.1990), the Court of Appeals rejected the plaintiffs' argument based upon sections 36 and 37 of the Restatement (Second) of Conflicts, relying instead upon the test set out in Burger King v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).