October 10, 2017

Personal Jurisdiction And Minimum Contacts; Baylor Intermodal, Inc. v. Hood

Category: Indiana Law Review | Author: | Share:

Walton is an attorney who represented Hood in a federal wrongful termination action against Hood’s employer, Baylor. Hood was terminated in Illinois and resided in Kentucky. Baylor is an Indiana corporation which is headquartered in Indiana and does business in multiple states. Walton is a Kentucky resident who works in Kentucky, but has an Indiana bar license.

An AJL found that Hood was improperly terminated, and that finding was eventually upheld by the Administrative Review Board. Baylor sought appellate review. While the Seventh Circuit appeal was pending, Hood met with Baylor’s president, Mark Fessel in Kentucky. Without attorneys for either side present, they entered into an agreement purporting to settle the entirety of the disagreements between them. Two more meetings between Fessel and Hood were held at Baylor’s offices in Indiana in March and April 2016.

Walton learned of this agreement, and that payments would be made directly to Hood. Walton informed Baylor that this exposed it to repaying any liens, including Walton’s lien for attorney’s fees. Baylor filed an action seeking declaratory judgment in Indiana state court. Walton’s firm, CDWA, moved to dismiss for lack of personal jurisdiction. Baylor argued that CDWA had minimum contacts with Indiana, which justified the exercise of personal jurisdiction over it. But the trial court disagreed, finding that CDWA’s contacts with Indiana were not sufficient, and dismissed the case. Baylor appealed.

The Court began its analysis with the well-known rule that personal jurisdiction required that the defendant have minimum contacts with Indiana. “Minimum contacts include acts defendants themselves initiate within or without the forum state that create a substantial connection with the forum state itself.”

In this case, the contacts CDWA had with Indiana did not justify the exercise of general personal jurisdiction.

Walton’s affidavit in support of CDWA’s motion to dismiss estimated 98% of the firm’s legal matters arise in Kentucky. CDWA does not advertise nor maintain an office in Indiana. It is a Kentucky Limited Liability Company and maintains one office in Louisville, Kentucky. Baylor asks us to find from these facts that — however minimal — CDWA “does business” in the state sufficient for the firm to be sued for any matter in Indiana courts.

Such a mechanical approach to the minimum contacts test we have applied since International Shoe defeats the purpose of what the due process clause seeks to ensure — the “fair and orderly administration of law,” and the ability of out- of-state defendants to “reasonably anticipate being haled into the courts of [a] state for any matter.” CDWA’s minimal business presence in Indiana is insufficient to meet the “continuous and systematic” contacts standard required for general jurisdiction to be proper.

And the fact that Walton was licensed to practice in Indiana did not change this result. While the trial court may have general personal jurisdiction over Walton because of his license, this did not extend to his employer.

Despite three CDWA attorneys being able to practice law in Indiana, CDWA’s business with Indiana is neither extensive nor substantial, and therefore, the firm does not have sufficient minimum contacts with Indiana that establish general jurisdiction here.

Baylor fared no better when arguing that CDWA was subject to specific personal jurisdiction.

Incorporating federal clarifications into Indiana law, personal jurisdiction over CDWA requires that the firm have minimum contacts and substantial connections within the state that create or contribute to the controversy at hand. Those contacts and connections must arise from CDWA’s own conduct within or directed into Indiana.

And in this case, all of Walton (and CDWA’s) contacts in Indiana were products of his relationship with Hood and counsel for Hood’s former employer, Baylor. These kinds of contacts “do not indicate CDWA intentionally availed itself of Indiana’s jurisdiction.” And neither did Walton’s Indiana bar license.

The fact that Walton and two other CDWA attorneys maintain Indiana bar licenses is unrelated to Walton’s representation of his Kentucky client in a federal wrongful termination matter. Being haled into an Indiana court for a controversy arising from the federal matter solely based on Walton’s Indiana bar license would not have been foreseeable to CDWA.

Fundamentally, the Court found that this dispute arose from the relationship between a Kentucky lawyer and his Kentucky client, and that it should be addressed in a Kentucky court.

Lessons:

An out-of-state lawyer’s license to practice law in Indiana does not justify the exercise of personal jurisdiction over the lawyer’s firm.