Jack Nelson Jones Professional Association
April 22-28, 2019
Carolyn Lawson v. Simmons Sporting Goods, Inc., 2019 Ark. 84 (March 28, 2019)
This case arose on appeal from the Arkansas Court of Appeals decision regarding the appeal of decision of the Ashley County Circuit Court, Judge Honorable Don Glover presiding. The case involves the dismissal of Appellant Carolyn Lawson’s (Lawson) premises-liability suit against appellee Simmons Sporting Goods, Inc., (Simmons), for lack of personal jurisdiction. The Supreme court affirmed finding that Arkansas courts do not have jurisdiction to entertain Lawson’s claims against Simmons. This incarnation of the matter represents carrying the facts up and down the judicial ladder, from the District Court to the United States Supreme Court and back, heard again by the Court of Appeals (2018 Ark. App. 343), where the decision of the District Court was affirmed, and now heard by the Supreme Court of Arkansas, defining what constitutes personal jurisdiction in parties separated by a state line. Because the Supreme Court’s review was de novo, the decision of the Court of Appeals was vacated.
The facts remain unchanged: Simmons operated a retail-sporting-goods store in Bastrop, Louisiana. It was incorporated in Louisiana with its principal place of business in Louisiana. Simmons never operated a store in Arkansas, but it did advertise through various media in Arkansas. It contracted with an Arkansas printing company to produce its print ads. Simmons also hosted a “Big Buck Contest,” for the largest deer killed in Arkansas within 200 miles of Simmons and weighed there. Lawson did not enter the contest and wasn’t there as a result of any advertisement.
Lawson was a resident of Arkansas in August 2012, when she and her daughter came from Hamburg to Bastrop to attend Simmons’s “Annual Tent Sale.” Upon entering the store, she tripped on a rug in the foyer, fell, and broke her arm. In March 2015, Lawson filed suit against Simmons in Ashley County. Simmons moved to dismiss the case for lack of personal jurisdiction pursuant to Arkansas Rule of Civil Procedure 12(b)(2). Lawson argued that personal jurisdiction existed because Simmons (1) advertised in Arkansas; (2) held an annual “Big Buck Contest” for deer harvested in Arkansas; and (3) used an Arkansas printing company to produce advertisements for its store. Following a hearing, the circuit court found that Arkansas lacked personal jurisdiction over Simmons and dismissed the case.
Lawson appealed to the Arkansas Court of Appeals, which reversed, holding that Simmons’s contacts with Arkansas were sufficient to warrant personal jurisdiction. After the Arkansas Supreme Court denied Simmons’s petition for review, Simmons then filed a petition for writ of certiorari with the United States Supreme Court which granted the petition, vacated the judgment of the court of appeals, and remanded the case for further consideration in light of its recent decision in Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco. On remand, the Court of Appeals affirmed the circuit court’s dismissal of Lawson’s complaint for lack of personal jurisdiction. It concluded that because there was no affiliation between Arkansas and the underlying controversy (the injury), which the Bristol-Myers decision required, there was no specific personal jurisdiction over Simmons. Lawson then petitioned this the Arkansas Supreme Court for review, and it granted the petition. When the Arkansas Supreme Court (Court) grants a petition for review, the appeal is treated as though it had originally been filed in that court.
The Court noted that Rule 12(b)(2) motions to dismiss for lack of personal jurisdiction are commonly founded on the parties’ pleadings. However, a court may also consider matters outside the pleadings when ruling on a Rule 12(b)(2) motion. The Court has stated that consideration of facts beyond the pleadings converts a Rule 12(b)(2) motion to a Rule 56 motion for summary judgment, and, in those cases, the Court reviews the ruling under the summary judgment standard of review. After Bristol-Myers, however, that was incorrect and it established that Rule 12(b) does not provide for this conversion. Rule 12(b) requires that Rule 56 standards be applied to motions to dismiss for failure to state a claim under Rule 12(b)(6) when matters outside the pleading are presented to and not excluded by the court. But Rule 12 does not prescribe summary-judgment treatment of jurisdictional challenges when a factual record is developed and considered.
In addition, the Court found there are fundamental reasons for treating a Rule 12(b)(2) and a Rule 12(b)(6) motion differently. Converting a motion to dismiss on jurisdiction to summary judgment under Rule 56 has further ramifications. A court without jurisdiction has no power to enter a judgment on the merits of the case, and must dismiss the action, but it is not a final disposition on the merits and the same action may be brought in a court of competent jurisdiction. Summary judgment, however, is on the merits and purports to have preclusive effect on any later action. The Court observed this is the view taken by most federal and state courts that have considered the issue, including the Eighth Circuit, and the Court now adopted this position and overruled those Arkansas cases that have taken a contrary position. Going forward, when personal jurisdiction is raised in a Rule 12(b)(2) motion to dismiss, a circuit court must first consider whether the undisputed facts as pled establish personal jurisdiction. If the circuit court’s jurisdictional ruling is based on the complaint alone, or on the complaint supplemented by undisputed facts evidenced in the record, the Court’s review is de novo. The Court on appeal then determines whether the circuit court’s application of the law is correct and, if the decision is based on undisputed facts, whether those facts are indeed undisputed.
The Court noted that, if the circuit court resolved disputed factual issues, then the appellate court must review its findings for clear error. In the present case, the circuit court concluded that it lacked personal jurisdiction without resolving any disputed factual issues, and so stated in its ruling. Therefore, the Court determined it must review the circuit court’s decision de novo.
The Court observed that Arkansas law provides that its courts shall have personal jurisdiction to the maximum extent allowed by the Due Process Clause of the 14th Amendment to the U.S. Constitution. These requirements for personal jurisdiction are satisfied when a nonresident corporate defendant that has minimum contacts with the forum sufficient to establish that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Minimum contacts must be based on “some act by which the defendant purposefully avails” himself of the forum state “such that he should reasonably anticipate being haled into court there.”
Here, Lawson alleged specific personal jurisdiction over Simmons. Specific personal jurisdiction required an affiliation between the forum and the underlying controversy, principally, activity or an occurrence that took place in Arkansas and was therefore subject to Arkansas’ regulation. The specific-jurisdiction analysis was properly limited to looking at the connection of Simmons, the site of injury occurrence, and Arkansas.
The Court noted that, in Bristol-Myers, a group of plaintiffs, both California residents and nonresidents, brought a mass tort action against a pharmaceutical company in California. The plaintiffs asserted state-law tort claims for injuries they suffered after ingesting the drug Plavix. BMS is incorporated in Delaware, headquartered in New York, and maintained operations in New York and New Jersey. It also had five facilities in California, but it did not develop, manufacture, label, package, or work on the regulatory approval for Plavix in California. The out-of-state plaintiffs were not prescribed the drug in California, did not purchase or ingest the drug in California, and suffered no injuries in California. The California Supreme Court held that BMS was subject to personal jurisdiction in California due to its extensive contacts in the State. The U.S. Supreme Court granted certiorari and reversed. It held that specific personal jurisdiction is proper only if the defendant’s suit-related conduct took place in the forum state and created a substantial connection between the cause of action and the forum. Absent such a connection between the forum and the specific claims at issue, there was no personal jurisdiction, and under the facts of the case, California could not exercise specific personal jurisdiction over BMS. The U.S. Supreme Court established a five-factor test that a court evaluating personal jurisdiction over a defendant must consider: (1) the nature and quality of the contacts with the forum state; (2) the quantity of those contacts; (3) the relationship of those contacts with the cause of action; (4) the forum’s interest in providing a forum for its residents; and (5) the convenience of the parties.
The Arkansas Supreme Court held that, because Bristol-Myers emphasized that specific jurisdiction must arise out of or relate to the defendant’s contacts with the forum state – principally an activity or occurrence that takes place in the forum state – Arkansas may not utilize a test that implies that factor three has the same weight as the other four factors. Instead, the Court adopted the following criteria as necessary for personal specific jurisdiction: (1) the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state; (2) the cause of action must arise from or relate to the defendant’s contacts with the forum state; and (3) the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of personal jurisdiction over the defendant reasonable.
Hence, the Court found the circuit court could not exercise personal jurisdiction over Simmons in this matter. Certainly, Simmons advertised and conducted promotional activities in the state, but that alone was not sufficient for personal jurisdiction. The cause of action did not arise from or relate to Simmons’s contact with Arkansas. Here, the controversy – Lawson’s trip and fall – undisputedly occurred in Louisiana. Any alleged negligence related to this incident in Louisiana did not arise out of or relate to Simmons’s contacts with Arkansas. What was needed – and what was missing here – was a connection between the forum and the specific claims at issue. Without this fundamental connection, the Court held Arkansas could not exercise specific personal jurisdiction over Simmons in this matter, and the circuit court’s dismissal for lack of personal jurisdiction was affirmed, and the Court of Appeals, opinion was vacated.