Document Type

Article

Publication Date

2015

Publication Citation

48 U.C. Davis Law Review 1769 (2015)

Abstract

One of the boundaries that U.S. courts must observe as they adjudicate regulatory disputes is the limit on their own jurisdictional authority -authority that is measured at the level of the particular forum state. Confronting the expansion of U.S. business activity from the local to the national scale during the second half of the twentieth century, courts consciously broadened jurisdictional standards to address the expanded activities of nationwide corporate groups. Today, by contrast, as the economy continues to expand from the national to the transnational scale, the U.S. Supreme Court has begun a retrenchment. In cases decided during the past several years, the Court has both restricted the basis for general jurisdiction over non-resident defendants and articulated a highly localized approach for assessing the availability of specific jurisdiction. This retrenchment opens a gap between the effectiveness of global enterprises in operating within the transnational space and the effectiveness of our courts in regulating their activity.

This Article investigates whether enterprise theory can provide a way to fill that gap. In general, jurisdictional analysis follows an entity approach: personal jurisdiction over a particular company within a corporate enterprise must be predicated on that company's own contacts with the forum. Even the exceptions that courts have developed to this rule -for instance, using agency principles to attribute the contacts of one company to another, or using alter-ego principles to collapse the boundary between two companies -fit within the entity theory framework. Under an enterprise approach, by contrast, where the components of a group constitute a unitary business that operates as an integrated enterprise, the jurisdictional analysis would under certain circumstances take into account the forum contacts of the entire group.

Exactly how an enterprise-jurisdiction standard would operate remains unclear. Some gestures toward enterprise analysis can be seen in the case law, but they are typically under-explained and often confuse that analysis with more traditional entity-based approaches to jurisdictional attribution (an area that is itself widely viewed as a mess). Moreover, enterprise theory in general has been much criticized for its complexity and indeterminacy. At this point, then, many more questions have been raised than answered. Can certain enterprises - whether held together by ownership ties or other linkages -fairly be characterized as "unified," and using what criteria? Are there circumstances under which the objectives underlying jurisdictional law would be better served by an approach considering enterprise-wide contacts? Would such an approach be consistent with the due process analysis articulated in the recent Supreme Court jurisprudence?

The goal of this Article is to address these questions through an investigation of litigation involving the Big Four accounting firms. These enterprises, which operate as integrated multinational service providers but constitute networks of independently-owned offices, provide a useful case study that: (1) assesses the feasibility of making accurate and predictable determinations that particular enterprises are unified; and (2) illuminates the vagaries of current jurisdictional analysis relating to multinational enterprises. Through this study, the Article lends much needed specificity to the analysis of enterprise jurisdiction and the consideration of its prospects.

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