A high-positioned federal court upheld a lower court’s dismissal of a consumer data lawsuit due to a procedural technicality—lack of personal jurisdiction. 

Personal Jurisdiction refers to a court’s power over a given party before a court. Parties who defend themselves in federal courts often lean on personal jurisdiction defense for its power to alleviate them from the burden of a high-profile lawsuit due to minor technicalities that play a major role in limiting the courts’ power over them.

A corporation usually is deemed to be a citizen of a state where it is incorporated. However, federal courts may still have power over corporations that are non-citizens if such corporations meet the “minimum contacts” with the forum state test. In the case at hand, the court analyzed whether a Canada-based corporation (the “Corporation”) expressly aimed its activities to California to avail itself to the jurisdiction of California courts.

A California resident filed a class action lawsuit against the Company that serves as a payment platform for many merchants in the United States. The resident alleged that the platform violated California privacy and protection laws by collecting sensitive information, such as consumer full names, addresses, e-mail addresses, credit card numbers, and geolocation, all while a consumer believed that they were communicating directly with a merchant.

Both, lower and reviewing courts, reasoned that subjecting an online-based platform conducting business nationwide to personal jurisdiction in every state where it is accessible would dilute the contours of personal jurisdiction requirements. Thus the court held, more facts were needed to prove that the Corporation “’expressly aimed’ its activities at the forum state.” According to the court, “what is needed is ‘something more’” than operating a website. The alleged violations were not tailored to California or its residents as the system operated similarly nationwide, and the collected consumer data was not any different for California residents than it was for residents of other states. The court noted that the resident’s injury would have remained the same in other jurisdictions. Therefore, the court held that the Corporation’s contacts with California were insufficient for a Californian court to hold the Corporation accountable. 

Beneficiaries of a major university’s retirement plan filed suit against the plan’s appointed fiduciaries alleging, among other claims, breach of fiduciary duty for entering a “prohibited transaction,” as defined under ERISA, by paying the plans' recordkeepers unreasonable compensation. 

ERISA section 406(a)(1)(C) provides that “a fiduciary shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect . . . (C) furnishing of goods, services, or facilities between the plan and a party in interest.” However, section 408 contains exemptions for otherwise prohibited transactions, including the exemption under ERISA section 408(b)(2) for agreements with a party in interest to provide “services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefor.”

Circuits are split on the pleading standard for a prohibited transaction. Some require an element of intent by the fiduciary to benefit a third-party service provider or the appearance of self-dealing. Others adopt a literal reading where essentially any transaction with a third-party could be prohibited. Although those adopting a literal reading may allow for exemptions to be used as affirmative defenses beyond the pleading stage. 

Ultimately the court decided that beyond simply alleging a fiduciary caused the plan to pay a service provider, the beneficiaries must plausibly allege that either the services were unnecessary, or the compensation was unreasonable, thereby supporting an inference of disloyalty. 

A law firm’s registered agent was served with the complaint two days before the expiration of the earlier policy. After the new policy period had already been incepted, the law firm received the summons and complaint and filed a Claim under the new policy period. The carrier denied coverage, asserting that this Claim was first made outside of the new policy period.

The policy contained a relatively broad definition of Claim, which, among other things, defines a "Claim" as:

1. Oral or written demand received by an Insured for monetary or non-monetary relief including injunctive relief;
    
2. Civil proceeding commenced by the service of a complaint or similar pleading;

The law firm argued that the Claim was made when it learned of the filing of the lawsuit, and not when the service was made. However, the court pointed that it runs contrary to the definition of Claim which deems the service of process to be the trigger in the definition of a “Claim.” Even if the Claim was made only two days outside of the policy period, it is still barred from coverage under the policy’s language.