Bass, Berry & Sims attorney Chris Lazarini examines a court’s two-step process to determine if personal jurisdiction exists over a non-resident defendant. The court ruled the exercise of jurisdiction (1) must be appropriate under the forum state’s long-arm statute and (2) must not violate the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution.
Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.
Whatley vs. The Ohio National Life Ins. Co., No. 1:19-cv-40 (M.D. Ala., 11/19/19)
A federal court sitting in diversity undertakes a two-step process to determine if personal jurisdiction exists over a non-resident defendant: the exercise of jurisdiction (1) must be appropriate under the forum state’s long-arm statute and (2) must not violate the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution.
Plaintiffs are associated persons of several broker-dealers who sold Ohio National variable annuities and seek recovery of trail commissions that Ohio National stopped paying in 2018. For their breach of contract claim, Plaintiffs claimed third-party beneficiary status of the Selling Agreements between Ohio National and their respective firms. Plaintiffs also sought recovery for unjust enrichment, promissory estoppel, and tortious interference with existing business relationships. Following the analysis in Browning v. Ohio Nat’l, 2019 WL 4885205 (S.D. Ohio (Oct. 2, 2019)) and Cook v. Ohio Nat’l, 2019 WL 4885500 (S.D. Ohio (Oct. 2, 2019)), the Court dismisses the breach of contract and promissory estoppel claims, finding Plaintiffs were not intended third-party beneficiaries of the Selling Agreements. The Court dismisses the unjust enrichment claim, because the Selling Agreements covered the same subject. Finally, the Court dismisses the tortious interference claim, because Ohio National’s decision to terminate the Selling Agreements was a mere “refusal to deal,” an action that does not cause liability.
Prior to reaching these conclusions, the Court addressed Ohio National’s Rule 12(b)(2) motion to dismiss the claims of two non-Alabama Plaintiffs for lack of personal jurisdiction. The Court examines whether personal jurisdiction exists by examining Alabama’s long-arm statute and the Due Process Clause of the Fourteenth Amendment to the Constitution. The Court notes the inquiries merge into a due process analysis because the Alabama statute permits the exercise of personal jurisdiction to the constitutional limits. The Court first addresses whether general jurisdiction exists over Ohio National, because its affiliation with the state is so “continuous and systematic” as to render Ohio National “at home” in Alabama. The Court answers the question in the negative, finding the marketing and sale of insurance products in Alabama on a regular and systematic basis did not constitute relocation of its principal place of business from Ohio to Alabama. Nor, the Court finds, does the appointment of agents for service of process in Alabama or the formation of an Alabama subsidiary create general jurisdiction.
The Court next addresses specific jurisdiction; whether Ohio National has contacts in Alabama related to or giving rise to the Plaintiffs’ claims, whether Ohio National, through those contacts, purposefully availed itself of Alabama’s benefits, and whether Ohio National’s contacts with Alabama are such that it should reasonably anticipate being haled into court there. The Court finds the non-resident Plaintiffs’ claims do not arise out of or relate to any of Ohio National’s contacts with Alabama, because Plaintiffs do not allege they entered into Selling Agreements with Ohio National in Alabama, solicited sales in Alabama, or suffered harm in Alabama. That the non-resident Plaintiffs suffered alleged injuries similar to the resident Plaintiffs is not sufficient to create jurisdiction, the Court states. Finding no connection between Alabama and the non-resident Plaintiffs’ claims, the Court concludes specific jurisdiction does not exist. Absent general or specific jurisdiction, the Court dismisses the claims of the non-Alabama Plaintiffs.