McGee, a California citizen,
purchased insurance from an International, which was an Arizona-based
company.
International had actually
reached out and solicited the business from McGee (they sent him some advertising
or something).
International was bought out
by a Texas company. McGee began sending premiums to Texas and then he
died.
International refused to pay
the death benefits. McGee's beneficiaries sued International in
California.
International argued that
they only ever had one policy in California, and therefore did not
participate in continuous and systematic activity in California. Therefore the California Court
did not have jurisdiction.
The US Supreme Court found
that International Life could be sued in California.
The US Supreme Court found
that even one policy was sufficient to establish a substantial
connection.
Compare this case to the
similar Hanson v. Denckla (357
U.S. 235 (1958)). The US Supreme Court distinguished that case by saying
that International actually went to McGee in California and solicited
business there, while in Hanson, the company (which was in Delaware), didn't solicit interstate
business, the customer had come to them. It was the interstate solicitation that was the important factor in
deciding whether there was a substantial connection or not.
Basically, if you are a
company and you cross State lines to get some business, you are giving
that State jurisdiction over you. But if a customer comes into your
State and asks for your product, you are less likely to have a court in
the customer's State find they have jurisdiction over you.
