Freestream Aircraft (Bermuda) v. Aero Law Group
905 F.3d 597
| 9th Cir. | 2018Background
- Freestream (Bermuda) and its founder Ittihadieh (UK/Switzerland resident) sued Washington attorney John Schmidt and Aero Law Group for defamation based on statements Schmidt made about Freestream at aviation industry events, including the NBAA convention in Las Vegas, Nevada.
- Plaintiffs allege Schmidt told potential buyers in Nevada that Freestream uses illegal/unethical “back-to-back” transactions and urged them to avoid Freestream, injuring Plaintiffs’ reputation and business.
- Defendants moved to dismiss for lack of personal jurisdiction (or transfer to Washington); the district court dismissed for lack of jurisdiction.
- The Ninth Circuit reviews jurisdiction de novo and addresses whether Nevada courts have specific jurisdiction over defendants for torts allegedly committed in Nevada.
- The panel held that Schmidt’s alleged intentional tort committed while physically present in Nevada satisfies the first two prongs of the specific-jurisdiction minimum-contacts test, and that defendants failed to show a compelling case that jurisdiction would be unreasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nevada has specific jurisdiction over defendants for alleged defamatory statements made at an event in Nevada | Schmidt committed an intentional tort in Nevada while physically present; that act establishes purposeful availment and the claim arises from forum activity | Calder/effects test controls and the statements were not expressly aimed at Nevada residents such that jurisdiction is improper | Held: Specific jurisdiction exists—an intentional tort committed in the forum satisfies the first two prongs of the minimum-contacts test (Paccar approach) |
| Whether the Calder "effects" test, rather than Paccar, governs when tortious conduct occurs in the forum | Paccar governs; when tort occurs in forum, look to purposeful availment based on in-state conduct | District court applied Calder (effects) and defendants urged Morrill and Calder-based analysis | Held: Calder is for out-of-forum conduct; Paccar is the proper starting point when the tort is committed within the forum state |
| Whether exercising jurisdiction in Nevada would offend fair play and substantial justice | Nevada has strong interest in adjudicating torts committed within its borders; burden on defendants is not compelling | Defendants would be burdened by litigating in Nevada and Washington has greater local interest | Held: Balancing seven Harris Rutsky factors, defendants failed to show that jurisdiction would be unreasonable |
| Whether the district court should have transferred rather than dismissed | Plaintiffs sought relief in Nevada and demonstrated connections to the forum; transfer unnecessary to decide once jurisdiction found | Defendants suggested Washington is an adequate alternative forum | Held: Because the Ninth Circuit found personal jurisdiction in Nevada, it did not decide whether refusal to transfer was error |
Key Cases Cited
- Int’l Shoe Co. v. Washington, 326 U.S. 310 (establishes minimum contacts due process test) (constitutional baseline for personal jurisdiction)
- Calder v. Jones, 465 U.S. 783 (effects test for purposeful direction where tortious conduct occurs outside the forum)
- Paccar Int’l, Inc. v. Commercial Bank of Kuwait, S.A.K., 757 F.2d 1058 (9th Cir. 1985) (commission of an intentional tort in the forum satisfies minimum contacts)
- Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) (purposeful availment vs. purposeful direction discussion; effects test articulated)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (forum contacts must not be random, fortuitous, or attenuated; reasonableness inquiry)
- Daimler AG v. Bauman, 134 S. Ct. 746 (general jurisdiction limits; defendant must be "at home" for general jurisdiction)
- Morrill v. Scott Fin. Corp., 873 F.3d 1136 (9th Cir. 2017) (distinguishable: out-of-forum litigation-related contacts held insufficient when physical entry was incidental to litigation)
- Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122 (9th Cir. 2003) (seven-factor reasonableness balancing test for specific jurisdiction)