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February 5, 2001

Samuel Myers v. The Bennett Law Offices, et al. (9th Cir. 2001) 238 F.3d 1068

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A Utah law firm that ordered a credit report on Nevada residents had sufficient contacts to warrant personal jurisdiction in Nevada

Bennett Law Offices (“Bennett”) filed a lawsuit in state court against ARS, owned and operated by Timothy and Samuel Myers, (“Myers”) for unlawful debt collection practices.  In the course of the lawsuit, a paralegal utilized one of Bennett’s order forms and sought a credit report on ARS and Myers.

Myers brought two lawsuits in U.S. District Court in Nevada, alleging Bennett violated the Fair Credit Report Act (“FCRA”).  The district court dismissed both cases for lack of personal jurisdiction.

The Ninth Circuit, applying F.R.C.P. 4(R)(1)(A) analyzed Nevada’s long-arm statute to determine whether jurisdiction was authorized.  The Court employed a three-part test: (1) Some action must be taken whereby a defendant purposefully avails itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protection of the forum’s law; (2) The claim must arise out of a defendant’s forum-related activities; and (3) The exercise of jurisdiction must be reasonable.

Establishing a prima facie showing that the defendant expressly aimed to and did cause injury to plaintiff in the forum state satisfies the “purposeful availment” prong.  Mere foreseeability does not give rise to specific jurisdiction; the defendant must have engaged in wrongful conduct targeted at a plaintiff whom the defendant knew to be a resident of the forum state.

Bennett’s conduct was “expressly aimed” at Nevada when it sought a credit report on Nevada residents.  The mental distress injury caused by improper reporting or disclosure of a credit report can only be felt where plaintiffs reside.  Thus, Nevada was the focal point of the harm suffered by the Myers.  “But for” Bennett’s inquiry, plaintiffs would not have suffered any harm.

In determining whether jurisdiction is reasonable, seven factors are considered: (1) the extent of defendant’s purposeful interjection into the affairs of the forum state; (2) the burden of defending in the forum; (3) the extent of conflict with the sovereignty of defendant’s home state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to plaintiffs’ interests in convenient and effective relief; and (7) the existence of an alternative forum.

Since Bennett purposefully directed its activities at plaintiffs in Nevada, the burden was on Bennett to present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.  Bennett provided no justification to support its claim that the exercise of jurisdiction would be unreasonable under the circumstances.

The court also considered venue under 28 USC § 1391(b).  Venue is proper in a judicial district if “a substantial part of the events or omissions giving rise to the claim occurred” in that district.  Since Myers’ mental distress was felt in Nevada, the court was satisfied that the “substantial part of the events” test was met.

Comment: Attorneys conducting activities in their home state which affect out-of-state residents could find themselves defending their actions in a distant forum.

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