Donahue v. Far Eastern Air Transport Corp.
652 F.2d 1032, 209 U.S. App. D.C. 235 (1981)
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Rule of Law:
For a court to exercise general personal jurisdiction over a foreign corporation for claims arising from activities unrelated to the forum state, the corporation's connections to that state must be continuous, systematic, and so substantial that it is fair to treat them as being present. Prospective or unrealized business plans within the forum are insufficient to meet this high standard.
Facts:
- Frances A. and Richard P. Cehon were United States citizens residing temporarily in Guam.
- On July 31, 1975, while on holiday in Taiwan, the Cehons purchased tickets for a flight between two cities in Taiwan.
- The flight was operated by Far Eastern Air Transport Corporation (F.E.A.T.), a Taiwan company that owned and operated the aircraft.
- The aircraft crashed during an attempted landing in Taipei, Taiwan, killing the Cehons.
- Prior to the lawsuit, F.E.A.T. had several contacts with California, including purchasing spare parts and paying for them from a San Francisco bank account.
- F.E.A.T. also took steps to establish a Taipei-Los Angeles cargo service, which involved buying two Boeing aircraft, sending employees to California for training, and retaining a freight forwarding agent.
- This planned cargo service was never actually launched, and F.E.A.T. derived no revenue from any business operations in California or the United States.
Procedural Posture:
- The Cehons’ executors filed wrongful death actions against F.E.A.T. in five U.S. district courts (Guam, Hawaii, California, New York, and the District of Columbia).
- The Judicial Panel on Multidistrict Litigation consolidated all five actions for pretrial proceedings in the U.S. District Court for the District of Columbia.
- F.E.A.T. filed a motion to dismiss all actions for lack of personal jurisdiction.
- The district court initially granted the motion, dismissing all five cases.
- Upon plaintiffs' motion for reconsideration, the district court reversed its decision as to the California case, allowing it to proceed, while upholding the dismissal of the other four cases.
- The district court certified its ruling for an interlocutory appeal, which the U.S. Court of Appeals for the D.C. Circuit granted.
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Issue:
Does a foreign corporation's prospective, but not yet realized, business activities in a state create contacts 'so substantial and of such a nature' as to permit that state's courts to exercise general personal jurisdiction over a claim entirely unrelated to those activities?
Opinions:
Majority - Ginsburg
No. A foreign corporation's prospective business plans, which have not been realized and have not generated revenue, do not constitute the continuous and systematic contacts required to subject it to general personal jurisdiction for claims completely unrelated to those plans. The court distinguished between specific jurisdiction, which arises from a defendant's forum-related activities that give rise to the lawsuit, and general jurisdiction, which allows a defendant to be sued on any claim, even one unrelated to the forum. Here, since the accident occurred entirely within Taiwan and was unrelated to F.E.A.T.'s California contacts, only general jurisdiction could apply. The court, citing International Shoe, held that for general jurisdiction, a defendant's activities must be 'so substantial and of such a nature' as to justify a suit on a foreign cause of action. The court found that F.E.A.T.'s activities, which were merely preparatory for a business venture that never launched, did not meet this high bar and that exercising jurisdiction would offend 'traditional notions of fair play and substantial justice' by failing to respect Taiwan's sovereign interest in the dispute.
Analysis:
This decision reinforces the high threshold required to establish general personal jurisdiction, especially over a foreign-nation defendant. The court clarifies that merely planning or preparing to do business in a state is not equivalent to having the 'continuous and systematic' contacts necessary for an 'all-purpose' forum. The ruling emphasizes the critical distinction between specific jurisdiction (claims arising from forum contacts) and general jurisdiction (claims unrelated to forum contacts), signaling that courts should be hesitant to hale foreign corporations into U.S. courts for disputes that arose entirely abroad and have no connection to the local contacts.
