Personal Jurisdiction: Lesson Learned, Don't Do Business in Russia
First-year law students struggle through civil procedure because it's a necessary evil. No one actually cares about general jurisdiction, personal jurisdiction, Pennoyer v. Neff, or International Shoe. Civ Pro, in essence, is the broccoli on the aspiring lawyer's educational plate.
Things change, however, when we graduate from the halls of academia to the real world. Suddenly, jurisdiction is interesting because it can make or break a case -- and the amount a lawyer ultimately bills -- as it did in today's Sixth Circuit Court of Appeals opinion.
The most important lesson from today's case: If you're afraid of the Russian legal system (as perhaps you should be), don't do business in Russia.
That's Sixth Circuit Chief Judge Alice Batchelder's advice to plaintiff Richard Conn, who lost his appeal to establish personal jurisdiction over a Russian businessman in a contract dispute.
Conn claims he came to an agreement with Vladimir Zakharov, in which Conn would gain a 15 percent share of a proposed venture by Zakharov's company. Conn moved to Russia to perform on the agreement. Zakharov repudiated the agreement. Conn returned to the United States, and sued.
Zakharov, a Russian citizen, earned an MBA from Case Western University in Ohio in 2002, and owns vehicles and residential real estate in Ohio. In 2007, he spent 40 days in the state. Between 2008 and 2009, he spent a total of 17 days in Ohio. And somehow, Conn managed to locate documents indicating that Zakharov spent $10,000 on Christmas decorations for his Pepper Pike residence in 2008.
The district court dismissed Conn's claim, finding that the court did not have personal jurisdiction over Zakharov because he was not an Ohio resident, and he was not served with process in a manner that automatically conferred personal jurisdiction. The court further ruled that Ohio law did not recognize general jurisdiction over non-residents like Zakharov, and that Ohio's long-arm statute did not confer personal jurisdiction in the case. The Sixth Circuit Court of Appeals affirmed that decision.
For an Ohio court to have jurisdiction over a non-resident defendant, the defendant must be subject to Ohio's long-arm statute and jurisdiction must accord with Due Process. Ohio law establishes nine bases for jurisdiction under its long-arm statute; Zakharov did not fall within any of the nine bases.
Conn tried asserting three alternative theories to establish personal jurisdiction: Zakharov owns a home in Ohio, Zakharov was "personally served" in the state, and Zakharov's contacts are sufficiently continuous and systematic to satisfy general jurisdiction requirements. Again, the Sixth Circuit Court of Appeals found that Conn's arguments were not persuasive. (Ohio does not confer jurisdiction based on home ownership, Zakharov's housekeeper received the process when Zakharov was not in the U.S., and Ohio doesn't recognize general jurisdiction over non-resident defendants.)
It's not easy to get personal jurisdiction over a foreign defendant in Ohio. If you represent a client in a similar situation, you may want to consider suing in another state with a more liberal long-arm statute.
- Conn v. Zakharov (FindLaw's CaseLaw)
- Ninth Cir. Serves Specific Jurisdiction With Side of Black Eyed Peas (FindLaw's Ninth Circuit blog)
- Personal Jurisdiction (LawBrain)
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