Clearly understanding how long-arm jurisdiction works under Georgia law is essential if you do business in Georgia but happen to live outside of the state. Simply designating your home state’s laws as the governing jurisdiction may not always protect you from being dragged into court into Georgia.
For example, in 2006, the Georgia Court of Appeals found that a Florida-based toy store that sold a car to a Georgia resident was subject to personal jurisdiction in Georgia, even though the toy store had a sales agreement designating Florida as the governing jurisdiction.[1]
Here are three essential things you need to know about Georgia’s long-arm statute in order to protect your business.
1. Georgia’s long-arm statute must be construed literally.
Subsection (1) of Georgia’s long-arm statute, O.C.G.A. §9-10-91, gives Georgia courts the power to exercise personal jurisdiction over any nonresident who does business in Georgia.[2] The Supreme Court of Georgia has held that the long-arm statute has to be construed literally. With respect to torts committed by nonresidents, this means that “an out-of-state defendant must do certain acts within the State of Georgia before he can be subjected to personal jurisdiction.“[3]
However, with respect to business affairs, the court noted that “there are no explicit legislative limiting conditions on this language.”[4] In other words, O.C.G.A. 9-10-91 “grants Georgia courts the unlimited authority to exercise personal jurisdiction over any nonresident who transacts any business in this State.”
This should be quite alarming to nonresident sellers who, for example, do business over the internet. If a Georgia resident buys a product from your company’s website, does that mean that you may have to travel all the way to Georgia to appear in court?! Before hitting the panic button and cancelling all your sales to Georgia, check out know the next crucial detail.
2. Georgia’s long-arm statute extends to the maximum limit of constitutional due process.
Before a Georgia court can declare “open season” on an out-of-state defendant, the nonresident defendant must have “fair warning” that his conduct might subject him to long-arm jurisdiction.[5] In other words, it’s not enough that the plaintiff just happens to be a Georgia resident. The defendant himself must do something to trigger Georgia’s long-arm jurisdiction; or, in other words, the defendant must have minimum contacts with Georgia.[6]
Georgia courts have distilled the “fair warning” standard of due process into a three-part test:
In evaluating whether a defendant could reasonably expect to be haled into court in a particular forum, courts examine defendant’s contacts with the state, focusing on whether (1) defendant has done some act to avail himself of the law of the forum state; (2) the claim is related to those acts; and (3) the exercise of jurisdiction is reasonable, that is, it does not violate notions of fair play and substantial justice.[7]
Part one of the three-part test is still uncomfortably vague. What exactly does it mean to “avail oneself” of the laws of Georgia, in layman’s terms? Unfortunately, this is a case-by-case inquiry that is fact-dependent. However, remember that Georgia’s long-arm statute is to be construed as broadly as possible without being unconstitutional, so it doesn’t take much to satisfy this requirement.
Nevertheless, there are some business activities that clearly fall outside of the scope of the statute, such as advertising your products in a national trade magazine that happens to be circulated in Georgia.[8] In such a case, the courts have held that the contact with Georgia is too tenuous to support long-arm jurisdiction. However, engaging in business negotiations and shipping your product to Georgia have been found to satisfy due process.
3. The nonresident bears the burden of proof to show that he has not transacted business in Georgia.
Unfortunately, a nonresident who wants to have a case in Georgia dismissed for lack of personal jurisdiction bears the burden of proof to show that he or she has not met any of the enumerated statutory criteria of O.C.G.A. 9-10-91.[9] This may mean engaging a Georgia-licensed attorney to represent you in court, even if you have never before set foot in Georgia.
Take-away
If you are served a summons and complaint from plaintiff in a Georgia court, it’s absolutely essential to know your options. If you don’t respond to the summons, you risk having a default judgment entered against you. If you do respond but fail to raise the defense of lack of personal jurisdiction or other defenses, you may be deemed to have waived that defense and be precluded from raising it later on.[10]
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[1] Aero Toy Store v. Grieves, 279 Ga. App. 515 (2006)
[2] “A court of this state may exercise personal jurisdiction over any nonresident … in the same manner as if he or she were a resident of this state, if in person or through an agent, he or she … [t]ransacts any business within this state”
[3] Gust v. Flint, 257 Ga. 129 (1987)
[4] Innovative Clinical & Consulting Services, LLC v. First Nat’l. Bank of Ames, 279 Ga. 672, 674, 620 S.E.2d 352 (2005)
[5] Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (“Due process requires that individuals have ‘fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign.’”).
[6] See Walden v. Fiore, 134 S. Ct. 1115, 188 L. Ed. 2d 12 (2014), quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (“For a State to exercise jurisdiction consistent with due process, that relationship must arise out of contacts that the ‘defendant himself’ creates with the forum.”
[7] Beasley v. Beasley, 260 Ga 419, 421, 396 S.E.2d 222, 224. See also Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515 (2006)
[8] Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515 (2006)
[9] Yukon Partners v. Lodge Keeper Group, 258 Ga. App. 1, 2, 572 S.E.2d 647 (2002)(“ A defendant moving to dismiss for lack of personal jurisdiction bears the burden of proving the absence of jurisdiction. To meet that burden, the defendant may raise matters not contained in the pleadings. However, when the outcome of the motion depends on unstipulated facts, it must be accompanied by supporting affidavits or citations to evidentiary material in the record. Further, to the extent that defendant’s evidence controverts the allegations of the complaint, plaintiff may not rely on mere allegations, but must also submit supporting affidavits or documentary evidence.”
[10] O.C.G.A. 9-11-60(d)