San Francisco Daily Journal

February 18, 1999



The court declined to disturb a decision giving a California court personal jurisdiction over Edward B. Rust Jr., the chairman and chief executive officer of State Farm Mutual Auto Insurance, in a malicious prosecution case.

Rust, a resident of Illinois, was sued by a group of attorneys who contend that Rust did not prevent State Farm from pursuing a 1996 suit contending that the attorneys and their clients had defrauded the insurance company out of $30 million in settlement of a 1989 suit.

Attorneys for Rust moved to quash service of process on the ground that Rust had been in California only 4 times since 1996 for about 15 days total and left litigation decisions to State Farm's general counsel. In response, the plaintiffs introduced evidence that Rust had numerous written, telephonic and electronic communications with California agents and, if he disagreed with the filing of the 1996, he could have blocked it.

Los Angeles Superior Court Judge Arnold Gold quashed the service of process. But last Nov. 30, the Court of Appeal in Los Angeles reversed in an unpublished opinion, finding that Rust was "indisputably" one of the policymakers who permitted others to file the 1996 suit and had sufficient minimum contacts for California courts to assert jurisdiction over him.

In seeking review, Rust's attorney, Shirley Hufstedler of Morrison & Foerster, argued that failing to take action is not enough to assert personal jurisdiction. She also suggested that the appeal court deliberately issued an unpublished opinion to avoid a conflict with other decisions and to avoid Supreme Court scrutiny. Attorneys for the plaintiffs replied that there was nothing sinister going on because the appeal court broke no new legal ground regarding personal jurisdiction.

None of the justices voted to hear Rust's petition in Hindin v. Rust, B124816

-Philip Carrizosa