Minimal Contact: Reconsidering Personal Jurisdiction Over Absent Class Members

Absent class members play a protean role in the lifecycle of a lawsuit.  Parties for some purposes, but not others, [1] their status continues to vex courts in a variety of situations.[2]  That incoherence largely stems from Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985).  There, state and federal courts were permitted to exercise personal jurisdiction over absent class members who received rights of exit (opt-out), voice (notice and an opportunity to be heard), and loyalty (adequate representation).[3]  In this way, Shutts abandoned the traditional due process analysis, “hold[ing] that a forum [s]tate may exercise jurisdiction over . . . an absent class-action plaintiff, even though the plaintiff may not possess minimum contacts with the forum.”[4]

To hear Shutts tell it, in litigation, absent class members have everything to gain and nothing to lose: unlike defendants, they don’t hire counsel or appear in far off tribunals[5]; they don’t face discovery or threatened liability on counterclaims[6]; they neither pay fees or costs, nor suffer more coercive remedies.[7]  In short, “an absent class-action plaintiff is not required to do anything”—“[h]e may sit back and allow [   ] litigation to run its course, content in knowing there are safeguards provided for his protection.”[8]

Or so the story goes.  This Essay argues Shutts is unpersuasive as a descriptive and normative matter.  Descriptively, it understates the risks borne by unnamed plaintiffs, from adverse merits judgments to liability on counterclaims.  Normatively, it overstates the degree to which unnamed plaintiffs “consent” to jurisdiction by failing to opt-out.  In this respect, Shutts turns the traditional jurisdictional analysis on its head.  By reexamining Shutts, the legal academy might move towards a more coherent treatment of absent class members rooted in a more fulsome understanding of personal jurisdiction.

First, Shutts’s description of absent plaintiffs bears little resemblance to reality.  To start, a judgment—“whether favorable or not”—“bind[s] all class members not requesting exclusion,”[9]  likely “extinguish[ing] any . . . claims which were litigated.”[10]  Shutts replies, “Not to worry!  At least class members do not face damages liability or discovery costs.”[11]  But that’s cold comfort to a claimant whose chance at recovery is forever lost.  In that sense, Shutts almost certainly undervalues the importance of relief to absent plaintiffs.  And more fundamentally, unnamed class members do sometimes bear costs of litigation: over the years, absent plaintiffs have been subject to discovery and attendant sanctions,[12] as well as liability on counterclaims.[13]

To be sure, that is not the usual case.  Courts endeavor, wherever possible, to spare absent plaintiffs the burdens of litigation.[14]  But the fact they risk any exposure illustrates the problem with building a due process jurisprudence for the mine-run case.  Absent class members may well suffer less in the ordinary case than a typical defendant.  But not always.  And in any event, the Due Process Clause protects “persons,” not just “defendants.”[15]  For its part, Shutts dodged the problem altogether, leaving questions about absent plaintiffs, discovery, and counterclaims for another day.[16]

Second, Shutts turns the traditional jurisdiction analysis on its head.  Consistent with the Due Process Clause, a court may exercise personal jurisdiction over non-residents where they have “minimum contacts” with the forum state.[17]  Not so for absent plaintiffs.  For them, Shutts dispensed with the minimum contacts requirement,[18] and in its place substituted a consent theory of jurisdiction.[19]  In truth, Shutts had to find an alternate basis for jurisdiction. For all its sermonizing about the plum position of absent class members, minimum contacts can’t be bootstrapped by a plaintiff’s relative position in the litigation in question.[20]  So, consent was the only avenue in existing jurisprudence to support the exercise of personal jurisdiction over unnamed plaintiffs.

“Any plaintiff may consent to jurisdiction.”[21]  The question “is how stringent . . . [the] showing of consent [must] be.”[22]  For absent plaintiffs, it is minimal—Shutts presumes consent whenever an absent class member fails to opt out.[23]  The reason for preferring an opt-out to an opt-in rule?  Requiring plaintiffs to opt-in “‘freez[es] out the claims of people’”—who for “‘ignorance timidity, [or] unfamiliarity with business or legal matters’”—“‘will simply not take the affirmative step.’”[24]  Curious.  That description doesn’t exactly proclaim an ability to consent, much less when an absent class member takes no action at all.  If anything, such paternalism warrants a heightened showing of consent, not a presumption.

Shutts’s theory of consent is problematic in a more fundamental sense as well.  Jurisdiction is generally an ex ante inquiry.[25]  That is to say, a court’s power over an individual must precede the subject suit.[26]  No less than subject-matter, personal jurisdiction “is an essential element of the jurisdiction of” a court, without which “the court is powerless to proceed to an adjudication.”[27]

Of course, personal jurisdiction may be waived.[28]  But it seems perverse for courts to gain jurisdiction by exercising the kind of power the jurisdictional inquiry questions in the first place.  In this way, Shutts’s idea of consent—that courts have jurisdiction unless told otherwise—is not just wrong, but backwards.  And that is especially bizarre given Shutts’s repeated emphasis on unnamed plaintiffs’ literal absence in litigation;[29] consent, in contrast, implies an affirmative, voluntary connection or association.[30]  Whatever the import of a failure to opt-out, it does not constitute consent to jurisdiction.

***

Shutts “raised the [white] flag on the issue of due process” for absent class members decades ago.[31]  And for that reason, it should be abandoned.  That, however, need not end discussion about personal jurisdiction, generally, or with respect to unnamed plaintiffs, in particular.  Maybe current jurisprudence places too much emphasis on a litigant’s contacts with a forum state; maybe not.  In any case, abandoning the minimum contacts test wouldn’t be the first time the touchstone of personal jurisdiction has changed.[32]  But whether abandoned, rechristened, or maintained, the test for personal jurisdiction must be stable, principled, and rooted in an original understanding of the Due Process Clause and power of courts.

 

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[1] Devlin v. Scardelleti, 536 U.S. 1, 14 (2002) (“Nonnamed class members . . . may be parties for some purposes and not for others.”).

[2] Compare Am. Pipe & Const. Co. v. Utah, 414 U.S. 538, 554 (1974) (holding commencement of a class action tolls the statute of limitation for absent plaintiffs), and Devlin v. Scardelleti, 536 U.S. 1, 14 (2002) (holding absent plaintiffs may appeal approval of class settlements), with Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356, 363–66 (1921) (holding the presence of non-diverse absent plaintiffs does not defeat diversity jurisdiction), overruled in part on other grounds by Toucey v. New York Life Ins. Co., 314 U.S. 118 (1941). 

[3] Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811–12 (1985).

[4] Id. at 811.

[5] See id. at 809–10.

[6] See id. at 810 & n.2.

[7] See id. at 810.

[8] Id.

[9] Eisen v. Carlisle & Jacqueline, 417 U.S. 156, 173 (1974); See also Devlin, 536 U.S. at 12; id. at 18 (Scalia, J., dissenting).

[10] Shutts, 472 U.S. at 810.

[11] See id.  To be clear, this quotation does not appear in Shutts; it is a characterization of the Court’s reasoning.

[12] See, e.g., Dellums v. Powell, 566 F.2d 167, 187 (D.C. Cir. 1977) (collecting cases); Brennan v. Midwestern United Life Ins. Co., 450 F.2d 999, 1004–05 (7th Cir. 1971); City of Farmington Hills Emps. Retirement System v. Wells Fargo Bank, N.A., Civ. No. 10-4372 (DWF/JJG), 2012 WL 12898811, at *3–6 (D. Minn. July 27, 2012); Long v. Trans World Airlines, Inc., 761 F.Supp. 1320, 1326–31 (N.D. Ill. 1991); Robertson v. Nat’l Basketball Ass’n, 67 F.R.D. 691, 698–701 (S.D.N.Y. 1975).

[13] See, e.g., Davis v. S. Bell Tel. & Telegraph Co., No. 89-2839-CIV-NESBITT, 1994 WL 912242, at *34–37 (S.D. Fla. Feb. 1, 1994); In re Fin. Partners Class Action Litig., 597 F.Supp. 686, 688–89 (N.D. Ill. 1984); M. Berenson Co. v. Faneuil Hall Marketplace, Inc., 103 F.R.D. 636–37 (D. Mass. 1984); Bd. of Educ. of Twp. High Sch. v. Climatemp, Inc., No. 79 C 3144, 1981 WL 2033, at *6 (N.D. Ill. Feb. 20, 1981); Nat’l Super Spuds, Inc. v. N.Y. Mercantile Exch., 75 F.R.D. 40, 42–45 (S.D.N.Y. 1977).

[14] See, e.g., James D. Hinson Elec. Contracting Co. v. Bellsouth Telecomm’ns, Inc., No. 3:07-cv-598-J-32MCR, 2011 WL 2448911, at *1–7 (M.D. Fla. Mar. 28, 2011) Owner-Operator Indep. Drivers Ass’n v. Artic Exp., Inc., 238 F.Supp. 2d 963, 966–69 (S.D. Ohio 2003).

[15] See Shutts, 472 U.S. at 811 (“The Fourteenth Amendment does protect ‘persons,’ not ‘defendants.’”).

[16] Id. at 810 n.2 (“We are convinced that such burdens are rarely imposed upon plaintiff class members, and that the disposition of these issues is best left to a case which presents them in a more concrete way.”).

[17] Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291–92 (1980).

[18] See Shutts, 472 U.S. at 811.

[19] Id. at 812–14.

[20] See Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (holding exercise of personal jurisdiction proper when litigation arises out of contacts with a forum state).

[21] Shutts, 472 U.S. at 812.

[22]  Id.

[23] Id. at 812–14.

[24] See id. at 813 n. 4 (quoting Benjamin Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure, 81 Harv. L. Rev. 356, 397 – 98 (1967)).

[25] See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583–85 (1999).

[26] See id.

[27] Emps. Reins. Corp. v. Bryant, 299 U.S. 374, 382 (1937).

[28] Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979).

[29] See id. at 809–10.

[30] Black’s Law Dictionary 346 (9th ed. 2009) (defining “consent” as “[a]greement, approval, or permission as to some act or purpose, esp. given voluntarily by a competent person; legally effective assent”).

[31] See Ortiz v. Fibreboard Corp., 527 U.S. 815, 847 (1999).

[32] See McGee v. Int’l Life Ins. Co., 355 U.S. 220, 222 (1957) (“In a continuing process of evolution this Court accepted and then abandoned ‘consent,’ ‘doing business,’ and ‘presence’ as the standard for measuring the extent of state judicial power over such corporations.”).

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