2004 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-13-2004

In Re Automotive

Precedential or Non-Precedential: Precedential

Docket No. 02-4272

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"In Re Automotive " (2004). 2004 Decisions. Paper 954.

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PRECEDENTIAL

IN THE UNITED STATES COURT OF

APPEALS

FOR THE THIRD CIRCUIT

____________

No. 02-4272

____________

IN RE: AUTOMOTIVE REFINISHING

PAINT ANTITRUST LITIGATION

BASF AG and BASF COATINGS AG,

 Appellants

____________

Appeal from the United States District

Court

For the Eastern District of Pennsylvania

D.C. No.: MDL 1426

District Judge: Honorable R. Barclay

Surrick

____________

Argued: December 15, 2003

Before: ROTH, McKEE, and ROSENN,

Circuit Judges

(Filed February 13, 2004 )

Stephen Fishbein (Argued)

Shearman & Sterling

599 Lexington Avenue

New York, NY 10022

Edward W. Madeira, Jr.

Matthew J. Hamilton

Pepper Hamilton

18th & Arch Streets

3000 Two Logan Square

Philadelphia, PA 19103

Raymond A. Just

Shearman & Sterling

55 California Street

20th Floor

San Francisco, CA 94104

Counsel for Appellant

Geoffrey C. Hazard, Jr. (Argued)

University of Pennsylvania

The Law School

3400 Chestnut Street

Philadelphia, PA 19104-6204

Gerald J. Rodos

Barrack, Rodos & Bacine

2001 Market Street

3300 Two Commerce Square

Philadelphia, PA 19103

Warren Rubin

Law Offices of Bernard M. Gross

1515 Locust Street, Suite 200

Philadelphia, PA 19102

Joseph C. Kohn

Robert J. LaRocca

Kohn, Swift & Graf

One South Broad Street, Suite 2100

Philadelphia, PA 19107

Howard I. Langer

Columb, Honik & Langer

121 South Broad Street, 9th Floor

Philadelphia, PA 19107

Counsel for Appellees

William T. Hangley

Hangley, Aronchick, Segal & Pudlin

One Logan Square, 27th Floor

Philadelphia, PA 19103

Counsel for Amicus-Appellant

Fedr. German Ind.
2

James J. Rodgers

Dilworth Paxson

1735 Market Street

3200 The Mellon Bank Center

Philadelphia, PA 19103

Counsel for Amicus-Appellant

Fed. Republic Germany

____________

OPINION OF THE COURT

____________

ROSENN, Circuit Judge.

This certified interlocutory

appeal, arising out of alleged unlawful

price-fixing by both domestic and

foreign corporations, raises questions of

considerable importance in antitrust

litigation involving foreign nationals. 

Three of the issues are of first impression

to this Court. The first issue is whether

worldwide service of process authorized

under Section 12 of the Clayton Act, 15

U.S.C. § 22, upon foreign corporations is

independent of the specific venue

provision contained in that statute. The

second issue is whether a federal court’s

personal jurisdiction over a foreign

corporation in antitrust litigation may be

predicated on the foreign corporation’s

contacts with the United States as a

whole (national contacts analysis), rather

than with the specific forum in which the

court sits (local contacts analysis). The

final issue is whether jurisdictional

discovery from foreign nationals may

proceed under the Federal Rules of Civil

Procedure without first resorting to the

Hague Convention on the Taking of

Evidence Abroad in Civil or Commercial

Matters (Hague Convention or

Convention). 23 U.S.T. 2555, reprinted

in 28 U.S.C. § 1781 Note. 

The District Court denied the

motions to dismiss for lack of personal

jurisdiction and the joint motion for a

protective order filed by two German

corporations, BASF Aktiengesellschaft

(BASF AG) and BASF Coatings

Aktiengesellschaft (BASF Coatings)

(collectively “appellants”), defendants in

the underlying antitrust litigation. The

District Court construed Section 12 of

the Clayton Act as authorizing

worldwide service of process

independently of the specific venue

provision contained in that statute. The

Court also held that personal jurisdiction

over the foreign corporations would be

measured on their contacts with the

United States as a whole, rather than with

the forum state. The Court finally

rejected a rule favoring first resort to

Hague Convention procedures for

jurisdictional discovery of foreign

defendants. BASF AG and BASF

Coatings timely appealed. We affirm.

I.

The underlying federal antitrust

class litigation involves sixty-three

actions filed in five states, Pennsylvania,

New Jersey, Ohio, Kentucky, and

Delaware, by private parties. Those

actions were transferred to, and

consolidated in, the United States District

Court for the Eastern District of

Pennsylvania for pre-trial purposes by

the Judicial Panel on Multidistrict

Litigation.1 The class action complaint

1

 The defendants, in addition to the two

appellants here, are: PPG Industries, Inc.;

E.I. DuPont de Nemours and Company;

DuPont Performance Coatings, Inc.;

Sherwin-William, Co.; Sherwin-William

Automotive Finishes Corporation; Akzo

Nobel Car Refinishers B.V., a Dutch

company; Akzo Nobel Coatings, Inc., a
3

alleges that from 1993 to at least

December 31, 2000, the foreign and

domestic defendants conspired to raise

and maintain the prices of automotive

refinish paint throughout the United

States. All defendants, except the

appellants, have stipulated to

certification of a national class consisting

of all direct purchasers of automotive

refinishes from the defendants.

The appellants filed motions to

dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(2) for lack of personal

jurisdiction. In support of their motions

to dismiss, the appellants submitted

affidavits stating that they did not have

presence in the state of Pennsylvania and

never sold any automotive refinish paint

to any customers in Pennsylvania. The

plaintiffs replied that the appropriate

forum for measuring the appellants’

contacts for purposes of personal

jurisdiction is the United States as a

whole, rather than the forum state of

Pennsylvania. The plaintiffs opposed the

motions to dismiss and also served

jurisdictional discovery requests pursuant

to the Federal Rules of Civil Procedure,

seeking production of documents

concerning the appellants’ contacts with

the United States as a whole. 

The plaintiffs submitted publicly

available information to show a threshold

case of personal jurisdiction based on the

appellants’ contacts with the United

States and support their request for

jurisdictional discovery.2 In response to

the plaintiffs’ request for jurisdictional

discovery, the appellants filed a joint

motion for a protective order, contending

that the plaintiffs’ discovery request was

overly broad and burdensome. They

argued also that any jurisdictional

discovery should proceed first under the

Hague Convention, of which the United

States and Germany are signatories. 

The reasons proffered by the

appellants’ expert, Martin Reufels, were

that Germany, unlike the United States,

viewed the gathering of evidence as a

judicial, rather than private, function. 

Therefore, Germany had a sovereign

U.S. corporation; and BASF

Corporation, a U.S. corporation based in

New Jersey, which is part of the BASF

Group, a global network of corporations

that include the two German

corporations, which are the only

appellants in this interlocutory appeal.

2

 The District Court noted the following

facts submitted by the plaintiffs: the

appellants are the holders of numerous

patents in the United States; in its

publicly released documents, such as the

forms filed with the Securities and

Exchange Commission and annual

reports, and its web site, BASF AG

presents itself as part of a globally

integrated group, BASF or BASF Group,

consisting of BASF AG, the parent

corporation in the group and its 153

consolidated subsidiaries; BASF AG

owns 100 percent of the shares of BASF

Corporation, a domestic corporation

located in New Jersey; BASF AG’s

publicly released documents show that it

sold approximately $1.5 billion in goods

to its wholly owned subsidiary, BASF

Corporation, in 2000; according to

BASF’s website, BASF Coatings has a

“significant market position[ ] in North

America”; BASF Coatings maintains an

office in Michigan; and according to

BASF AG’s 2001 annual report, the

BASF Group explicitly endorses the

“exchange of staff among BASF Group

companies” as being “critical” in

achieving its worldwide corporate goals. 
4

interest in keeping discovery conducted

within its borders in conformity with its

laws. According to Reufels, compelling

the appellants to produce documents

pursuant to the Federal Rules of Civil

Procedures would offend Germany’s

sovereign interests. 

In its order and careful

accompanying opinion, the District

Court, Surrick, J., denied without

prejudice the appellants’ motions to

dismiss. Rejecting the appellants’

contrary arguments, the Court construed

Section 12 of the Clayton Act as

authorizing worldwide service of process

independently of the specific venue

provision contained in that statute. The

Court held that the relevant forum for

purposes of proof of personal jurisdiction

was the United States as a whole, rather

than the forum state of Pennsylvania. 

The Court concluded that the plaintiffs

had made a threshold showing of

personal jurisdiction that warranted

jurisdictional discovery.3 In a separate

order and accompanying opinion, the

Court denied the appellants’ joint motion

for a protective order requiring the

plaintiffs to conduct their jurisdictional

discovery first under the Hague

Convention procedures, rather than the

Federal Rules of Civil Procedure. 

Both the District Court and this

Court granted the appellants’ petition for

interlocutory appeal pursuant to 28

U.S.C. § 1292(b). The appellants raise

two issues for review on this

interlocutory appeal. The first issue is

whether a plaintiff may invoke the

worldwide service of process provision

contained in Section 12 of the Clayton

Act and, thus, national contacts analysis,

without satisfying the specific venue

provision also contained in that statute. 

The second issue is whether a plaintiff

may be permitted to seek jurisdictional

discovery from foreign defendants under

the Federal Rules of Civil Procedure

without first resorting to the Hague

Convention. We agree with the District

Court and answer both in the

affirmative.4

II.

The first issue raised by the

3

 The appellants have not appealed from

the Court’s ruling that the plaintiffs have

shown a prima facie case of personal

jurisdiction. Accordingly, we do not

review that ruling. “Prior to discovery, a

plaintiff may defeat a motion to dismiss

based on legally sufficient allegations of

jurisdiction.” In re Magnetic Audiotape

Antitrust Litig., 334 F.3d 204, 206 (2d

Cir. 2003). The District Court rejected

the plaintiffs’ arguments that the

jurisdictional contacts of BASF

Corporation, the wholly owned domestic

subsidiary of BASF AG, should be

imputed to BASF AG and that the

jurisdictional contacts of the appellants’

alleged co-conspirators should be

imputed to the appellants.

4

 The District Court has original federal

question subject matter jurisdiction under

28 U.S.C. § 1331 over this class action

brought under 15 U.S.C. § 1 (section 1 of

the Sherman Act) and 15 U.S.C. §§ 15

and 26 (sections 4 and 16 of the Clayton

Act). We have appellate jurisdiction

under 28 U.S.C. § 1292(b) over this

interlocutory appeal. Because the

certified issues on appeal involve pure

questions of law, we review the District

Court’s rulings de novo. Bowers v.

National Collegiate Athletic Ass’n, 346

F.3d 402, 410 (3d Cir. 2003).
5

appellants involves two conceptually

distinct, though intertwined, sub-issues. 

One is whether the District Court erred in

ruling that the service of process

provision contained in Section 12 of the

Clayton Act is independent of the venue

provision also contained in that statute. 

Two is whether the Court erred in ruling

that in federal antitrust litigation,

personal jurisdiction should be assessed

on the basis of the appellants’ contacts

with the United States as a whole

(national contacts analysis), rather than

with the forum state (local contacts

analysis). The two sub-issues are

intertwined because if there is no specific

venue limitation in federal antitrust

litigation involving a foreign corporate

defendant, the defendant can be sued in

any federal district court based on its

aggregate contacts with the United States

as a whole. Because they are intertwined

and because the appellants present them

as a single integrated issue, we discuss

them together.5

A.

Section 12 of the Clayton Act

provides:

Any suit, action, or proceeding

under the antitrust laws against a

corporation may be brought not

only in the judicial district

whereof it is an inhabitant, but

also in any district wherein it may

be found or transacts business;

and all process in such cases may

be served in the district of which

it is an inhabitant, or wherever it

may be found. 

15 U.S.C. § 22 (emphasis added).6

5

 The Committee to Support the Antitrust

Laws, a nonprofit corporation based in

the District of Columbia, has submitted

an amicus curiae brief in support of the

plaintiffs’ position on the two certified

issues. The amicus curiae briefs in

support of the appellants’ position,

submitted by the Federal Republic of

Germany and the Federation of German

Industries, do not address the first

certified issue.

6

 Section 12 permits venue in any federal

district in which a corporation is an

“inhabitant,” may be “found,” or

“transacts business.” Those terms are

defined as follows:

Being an “inhabitant” is held to

mean incorporated under the laws

of that jurisdiction. E.g., Aro

Manufacturing Co. v. Automobile

Body Research Corp., 352 F.2d

400, 404 (1st Cir. 1965), cert.

denied, 383 U.S. 947, 86 S. Ct.

1199, 16 L. Ed. 2d 210 (1966). 

Being “found” in a district is

generally equated with “doing

business” there, and requires

greater contacts than does

“transacting business.” E.g.,

Wood v. Santa Barbara Chamber

of Commerce, Inc., 507 F. Supp.

1128 (D. Nev. 1980); Grappone,

Inc. v. Subaru of America, Inc.,

403 F. Supp. 123 (D.N.H. 1975);

Friends of Animals Inc. v.

American Veterinary Medical

Ass’n, 310 F. Supp. 620

(S.D.N.Y. 1970).

Gen. Elec. Co. v. Bucyrus-Erie Co., 550

F. Supp. 1037, 1041 n.5 (S.D.N.Y.

1982). A corporation is “found” where it

has “presence” and “continuous local

activities” in the district. Caribe Trailer

Systems, Inc. v. Puerto Rico Maritime

Shipping Auth., 475 F. Supp. 711. 716
6

Section 12, a long sentence, consists of

two separate clauses, the first relating to

venue and the second concerning service

of process and, therefore, personal

jurisdiction. It is undisputed that the

second clause authorizes nationwide,

indeed worldwide, service of process on

a defendant corporation in federal

antitrust litigation. The clause provides

that the defendant may be served

“wherever it may be found,” that is,

wherever it is “doing business.” See,

e.g., Go-Video, Inc. v. Akai Elec. Co.,

Ltd., 885 F.2d 1406, 1413 (9th Cir. 1989)

(Section 12 “authorizes worldwide

service of process”).

The parties dispute whether the

two clauses of Section 12 should be read

as an integrated whole or independently

of each other. Specifically, they dispute

whether the venue provision contained in

the first clause of Section 12 must be

satisfied before the plaintiffs could avail

themselves of the authorization of

worldwide service of process contained

in the second clause. As explained by

one court:

[t]he dispute centers on whether

the jurisdiction provision

operates independently from the

venue provision, specifically,

whether “in such cases” in the

second clause refers to “any suit,

action, or proceeding under the

antitrust laws against a

corporation” or only to antitrust

actions against corporations

brought in a judicial district in

which the corporation is either an

“inhabitant,” “may be found” or

“transacts business.” If the first

interpretation is adopted, plaintiffs

can rely on 28 U.S.C. § 1391(d)

[the Alien Venue Statute] which

provides for venue in antitrust

actions against foreign

corporations “in any district” and

on the second clause of Section 12

for personal jurisdiction over

defendants based on a minimum

contacts analysis considering their

contacts with the United States as

a whole. If the second

interpretation prevails the service

provision is only effective when,

pursuant to Section 12’s first

clause, the action is brought in a

district where the defendant

resides, is found or transacts

business.

In re Magnetic Audiotape Antitrust

Litig., 171 F. Supp. 2d 179, 184

(S.D.N.Y. 2001), vacated sub nom. on

other grounds, Texas Int’l Magnetics,

Inc. v. BASF Aktiengesellschaft, 31 Fed.

Appx. 738, 2002 WL 385569 (2d Cir.

March 12, 2002). The plaintiffs dispute

whether the present litigation can only be

brought in a federal district where the

appellants are “residents,” may be

“found,” or “transact[ ] business” based

on their contacts with the forum district

or state. They contend that it may be

brought in any federal district based on

the appellant’s “minimum contacts” with

the United States as a whole.

Currently, two sister Courts of

Appeals differ as to the construction of

Section 12. The plaintiff-appellees rely

on the decision in Go-Video, Inc. v. Akai

Elec. Co., Ltd., 885 F.2d 1406 (9th Cir.

1989), and a majority of recent District

Courts’ opinions to support their

argument that the service or process

provision is independent of the specific

venue provision. On the other hand,

appellants rely on the decision in GTE

(D.D.C. 1979) (quoting Fox-Keller, Inc.

v. Toyota Motor Sales, U. S. A., Inc.,

338 F. Supp. 812, 815 (E.D. Pa. 1972)). 
7

New Media Services Inc. v. Bellsouth

Corp., 199 F.3d 1343 (D.C. Cir. 2000),

where the Court wrote:

The language of the statute is

plain, and its meaning seems

clear: The clause before the semicolon relates to a supplemental

basis for venue in actions under

the Clayton Act; the clause after

the semi-colon relates to

nationwide service of process in

antitrust cases; and invocation of

the nationwide service clause

rests on satisfying the venue

provision.

Id. at 1350. 

The GTE court “aligned” itself

with the position taken by the Second

Circuit forty years ago in Goldlawr, Inc.

v. Heiman, 288 F.2d 579, 581 (2d Cir.

1961) (holding in dicta that the expansive

service of process provisions was

contingent on satisfaction of the specific

venue provision), rev’d on other grounds,

369 U.S. 463 (1962).7 The GTE court

claimed that its construction of Section

12 of the Clayton Act was the result of a

“plain” or “unadorned” reading of the

language of the statute, and implied that

the Go-Video court’s construction was

the result of “literal convolutions.” GTE,

at 1351.

The Go-Video court did not find

the language of Section 12 to be clear or

unambiguous. Go-Video, 885 F.2d at

1412 (quoting Judge Stewart’s linguistic

analysis of the syntactic structure of

Section 12 in Gen. Elec. Co. v. BucyrusErie Co., 550 F. Supp. 1037, 1042, 1042

n.7 (S.D.N.Y. 1982), without necessarily

endorsing his analysis).8 Instead of

7

 The Goldlawr court concluded that

Section 12

specifies where suit against a

corporation under the antitrust

laws may be brought, namely, in a

district where it is an inhabitant

and also where “it may be found

or transacts business.” 

Conversely, it should follow that

if a corporation is not an

inhabitant of, is not found in, and

does not transact business in, the

district, suit may not be so

brought. By statutory grant if suit

is brought as prescribed in this

section ‘all process in such cases

may be served in the district of

which it (the corporation) is an

inhabitant, or wherever it may be

found.” Thus, ‘in such cases,’

Congress has seen fit to enlarge

the limits of the otherwise

restricted territorial areas of

process. In other words, the

extraterritorial service privilege is

given only when the other

requirements are satisfied.

Goldlawr, 288 F.2d at 581.

8

 Judge Stewart wrote that “the usual

rules of syntax” would favor the

construction of Section 12 that the

service of process clause is independent

of the venue clause:

The word “such” means “the

aforementioned,” Webster’s Third

International Dictionary (unabr.

ed. 1963). Thus, when “such”

precedes a noun it is assumed to

refer to a particular antecedent

noun and any dependent adjective

or adjectival clauses modifying

that noun, but not to any other part

of the preceding clause or
8

relying on its own way of reading of the

language of Section 12, as the GTE court

did, the Go-Video court found it

necessary to “interpret a passage in

which antecedents and consequents are

unclear by reference to the context and

purpose of the statute as a whole.” Id.

The Go-Video court did not find the

sparse legislative history of the Clayton

Act conclusive on the issue. 885 F.2d at

1410. There was evidence, however, that

“Congress viewed the questions of venue

and service of process separately, with

the latter issue of subsidiary importance.” 

Id. 

The Go-Video court found it

more helpful to rely on the general

interpretation that courts have given

Section 12. Id. “[C]ourts have viewed

the section’s main contribution to be its

expansion of the bounds of venue.” Id.

(citing United States v. Scophony Corp.

of Am., 333 U.S. 795, 806-808 (1948) (

Section 12 substituted broad, practicallyfounded venue tests for the older, “hairsplitting legal technicalities” of the

Sherman Act); 15 Wright & Miller,

Federal Practice and Procedure, § 3818,

at 109-10 (1976) (venue provisions of

Clayton Act were “clearly broadening in

[their] effect”)).9 See also Paper

Systems, Inc. v. Mitsubishi Corp., 967 F.

Supp. 364, 368 (E.D. Wis. 1997) (“In the

case of the antitrust laws, it makes no

sense to tie a district court’s jurisdiction

to the state in which it sits; it neither

promotes the enforcement of the antitrust

laws nor the management of litigation.”);

Prof’l Adjusting Systems of America,

Inc. v. Gen. Adjustment Bureau, Inc.,

352 F. Supp. 648, 651 (E.D. Pa. 1972)

(“The reason for the broad scope of the

Clayton Act venue provisions was to

give plaintiff the widest possible

selection of venue for his benefit, to

promote a ‘private attorney general’ type

policy for exposing and policing

combinations in restraint of trade.”). In

light of the above authority and

comment, the Go-Video court found

itself “reluctant to adopt a construction

of section 12 which would, by limiting

the availability of the valued tool of

worldwide service of process, recast its

venue provision as a restrictive, rather

than a broadening, provision and might

prevent plaintiffs from pursuing

sentence. Applying this

rule to section 12, “in such

cases” would refer to “any

suit, action, or proceeding

under the antitrust laws

against a corporation,” and

not to anything else in

section 12’s first clause.

Bucyrus-Erie, 550 F. Supp. at 1042 n.7.

9

 As the Supreme Court noted in United

States v. Scophony Corp., 333 U. S. 795,

808 (1948), the third and final prong of

“transact[ing] business” in Section 12

was enacted by Congress with the

remedial purpose of enlarging the venue

jurisdiction of the federal courts by

substituting “practical, business

conceptions for the previous hairsplitting

legal technicalities encrusted on the

‘found’-‘present’-‘carrying-on-business’

sequence. . . .” Id. The Court noted that

the Congressional enactment “relieve[s]

persons injured through corporate

violations of the antitrust laws from the

‘often insuperable obstacle’ of resorting

to distant forums for redress of wrongs

done in the places of their business

residence. A foreign corporation no

longer could come to a district,

perpetuate there the injuries outlawed,

and then by retreating or even without

retreating to its headquarters defeat or

delay the retribution due.” Id.
9

legitimate claims under the antitrust

laws.” 885 F.2d at 1410-11.

The Go-Video court also relied

on the Supreme Court’s case law

regarding the relationship between

federal venue statutes of general

application and specific venue provisions

contained in individual statutes to

support its holding that the provision for

worldwide service of process is

independent of the specific venue

provision in Section 12 of the Clayton

Act. “[A]s a general matter, courts have

interpreted special venue provisions to

supplement, rather than preempt, general

venue statutes.” Id. at 1409 (citing 15

Wright & Miller, supra, at 108-109)

(“Supreme Court has held that special

venue statutes are supplemented by, and

are to be read in light of, liberalizing

provisions of the general venue statutes”)

(citing Pure Oil v. Suarez, 384 U.S. 202

(1966)).

Of particular relevance to the GoVideo court was the Supreme Court’s

discussion of the relationship between

the Alien Venue Statute, 28 U.S.C. §

1391(d), a venue provision of general

applicability, and the specific venue

provision, 28 U.S.C. § 1400(b),

concerning actions for patent

infringement, in Brunette Mach. Works,

Ltd. v. Kockum Indus., Inc., 406 U.S.

706 (1972). The Supreme Court held

that the specific venue provision did not

bar the suit under which venue had been

satisfied under Section 1391(d), the

Alien Venue Statute, even though the

Court had previously held that the same

patent venue statute did preclude the

application of the general corporate

venue provision of § 1391(c). Brunette,

at 713-14 (distinguishing Fourco Glass

Co. v. Transmirra Prods. Corp., 353 U.S.

222 (1957)). 

Section 1391(d) is not like other

general venue provisions. Brunette held

that “Section 1391(d) is not derived from

the general venue statutes that [a special

venue provision might otherwise be read

as] intended to replace.” Id. at 713. 

Rather, Section 1391(d) derives from a

tradition going “back to the beginning of

the Republic” under which “suits against

aliens were left unrestricted, and could

be tried in any district, subject only to the

requirement of service of process.” Id. at

708. “The Brunette court interpreted §

1391(d) to state ‘a principle of broad and

overriding application’ which prevented

an alien defendant from using a narrower

venue provision in another statute as a

‘shield against suit.’” Go-Video,885

F.2d at 1409-10 (citing Brunette, at 714). 

“Absent some express congressional

intent to the contrary, a special venue

provision should not, under the clear

language of Brunette be deemed

exclusively controlling when the

defendant involved is an alien. The

principle that an alien may be sued in any

district is simply too deeply rooted to

assume otherwise.” Bucyrus-Erie, 550 F.

Supp. at 1040 (citing Brunette, at 714);

see also Go-Video, at 1410.

The approach of the Go-Video

and Bucyrus-Erie courts is convincing

and well reasoned in their construction of

Section 12 of the Clayton Act.10 We, 

10 We are not persuaded by the

conclusions drawn by the GTE and

Goldlawr courts for the reasons

discussed by the Go-Video and BucyrusErie courts. First, because we do not

find the language of Section 12 to be

clear and unambiguous, we are not

persuaded by the “plain” or “unadorned”

reading of the statutory language by the

GTE court. We, therefore, believe that it

is necessary to consider the overall
10

therefore, hold that the service of process

provision on foreign corporations is

independent of, and does not require

satisfaction of, the specific venue

provision under Section 12 of the

Clayton Act. 

B.

We also reject the appellants’

argument that the District Court does not

have personal jurisdiction over them

because they do not have contacts with

the State of Pennsylvania. In this

instance, Pennsylvania is the forum state

because the underlying class actions have

been transferred and consolidated for

pretrial purposes.11 At least two sister

Courts of Appeals have held that when

purpose of the statute in construing the

statutory language. Second, we agree

with the analysis made in several District

Courts’ decisions that the conclusions of

GTE and Goldlawr are not persuasive

because the defendant corporations in

those two cases were not alien

corporations and were, instead, out-ofstate corporations. The distinction is

crucial. “The general venue provision of

[28 U.S.C. § 1391(c)] governing such

domestic corporations is, in contrast to [§

1391(d)] governing alien corporations,

more difficult to satisfy than the

[S]ection 12 venue requirements.” 

Bucyrus-Erie, 550 F. Supp. at 1041 (first

two emphases added, the last emphasis in

original). That is because the added

prong of “transacting business” in

Section 12 is easier to satisfy than the

traditional prongs of being an

“inhabitant” or “doing business.” Id. at

1041 n.5 (“‘doing business’ . . . requires

greater contacts then does ‘transacting

business’”). Because Goldlawr did not

involve an alien corporation, the

Goldlawr court, not surprisingly, did not

need to consider the impact of the

general venue provision of § 1391(d). 

As the Go-Video court observed, the

Goldlawr court’s conclusion is

unpersuasive regarding the relationship

of venue and jurisdiction under Section

12 for two reasons. “First, [Goldlawr’s

conclusion in this regard] is dictum,

unrelated to the actual holdings of the

case. Second, and more important,

Goldlawr was decided before the

Supreme Court’s decisions in Pure Oil

and Brunette, decisions in which the

Supreme Court clarified the relationship

between specific statutory venue

provisions and the general federal venue

statutes [for alien corporations]. . . .” 

Go-Video, 885 F.2d at 1411. For the

same reasons, the GTE holding, which

involved only out-of-state domestic

corporations, is unpersuasive. 

11 Underlying the appellants’ argument

for the local contacts analysis is an

assumption that the court’s personal

jurisdiction is limited to the state to

which the class action has been

transferred. That assumption is

unwarranted. Consolidation of the

underlying class action in Pennsylvania

is only for pretrial purposes pursuant to

28 U.S.C. § 1407. As correctly

concluded by the District Court, the

transferee court can exercise personal

jurisdiction to the same extent that the

transferor court could. See In re Agent

Orange Prod. Liability Litig., 818 F.2d

145, 163 (2d Cir. 1987); In re

Telectronics Pacing Systems Inc., 953 F.

Supp. 909 (S.D. Ohio 1997). Even under

the local contacts analysis, personal

jurisdiction should be assessed at least

based on the appellants’ contacts with the

five states where the individual actions

were brought, New Jersey, Ohio,

Delaware, Kentucky, and Pennsylvania. 
11

personal jurisdiction is invoked under the

Clayton Act, jurisdiction is based on the

defendants’ contacts with the United

States as a whole. Access Telecom, Inc.

v. MCI Telecomm. Corp., 197 F.3d 694,

718 (5th Cir. 1999), cert. denied, 531

U.S. 917 (2000) (“When jurisdiction is

invoked under the Clayton Act, the court

examines the defendant’s contacts with

the United States as a whole to determine

whether the requirements of due process

have been met.”) (citing Go-Video); GoVideo, 885 F.2d at 1415 (affirming the

District Court’s holding that “worldwide

service provision of § 12 justifies its

conclusion that personal jurisdiction may

be established in any district, given the

existence of sufficient national

contacts”). 

We find support for our

construction of Section 12 of the Clayton

Act in the courts’ construction of Section

27 of the Securities Exchange Act of

1934. This section, modeled after

Section 12 of the Clayton Act, provides

in relevant part:

Any suit or action to enforce any

liability or duty created by this

chapter or rules and regulations

thereunder, or to enjoin any

violation of such chapter or rules

and regulations, may be brought

in any such district or in the

district wherein the defendant is

found or is an inhabitant or

transacts business, and process in

such cases may be served in any

other district of which the

defendant is an inhabitant or

wherever the defendant may be

found. 

15 U.S.C. § 78aa (emphasis added). The

two sections are remarkably similar in

their provisions for venue and service of

process.12 

In the context of construing

Section 27, this Court has held broadly

that “a federal court’s personal

jurisdiction may be assessed on the basis

of the defendant’s national contacts when

the plaintiff’s claim rests on a federal

statute authorizing nationwide service of

process.” Pinker v. Roche Holdings Ltd.,

292 F.3d 361, 369 (3d Cir. 2002). Then

Chief Judge Becker wrote in Pinker: 

Where Congress has spoken by

authorizing nationwide service of

process, . . . as it has in the

Securities Act, the jurisdiction of

a federal court need not be

confined by the defendant’s

contacts with the state in which

the federal court sits. See

DeJames v. Magnificence

Carriers, Inc., 654 F.2d 280, 284

(3d Cir. 1981). Following this

reasoning, the district courts

within this Circuit have repeatedly

held that a “national contacts

analysis” is appropriate “when

appraising personal jurisdiction in

a case arising under a federal

statute that contains a nationwide

service of process provision.” 

12 See, e.g., Go Video, 855 F.2d at 1414;

Leasco Data Processing Equip. Corp. v.

Maxwell, 468 F.2d 1326, 1340 n.10 (2d

Cir. 1972); Bucyrus-Erie, 550 F. Supp. at

1043. Construing Section 27 of the

Securities Exchange Act, Judge Friendly,

writing for the court, concluded that the

phrase “in such cases” in that statute is

independent of the venue provision and

“speaks expressly only to service of

process.” Leasco, at 1340 (citing United

States v. Scophony Corp., 333 U.S. 795

(1948)). 
12

AlliedSignal, Inc. v. Blue Cross

of Calif., 924 F. Supp. 34, 36

(D.N.J. 1996); see also Green v.

William Mason & Co., 996 F.

Supp. 394, 396 (D.N.J.1998)

(“[A]n assessment of personal

jurisdiction under [a statutory

provision authorizing nationwide

service of process] necessitates

an inquiry into the defendant’s

contacts with the national

forum.”). We too are persuaded

by the reasoning of our prior

opinions on the subject, and,

consistent with several of our

sister courts of appeals, hold that

a federal court’s personal

jurisdiction may be assessed on

the basis of the defendant’s

national contacts when the

plaintiff’s claim rests on a federal

statute authorizing nationwide

service of process. 

Pinker, at 369-70 (emphasis in

original).13 See also Dardana Ltd. v.

A.O. Yuganskneftegaz, 317 F.3d 202,

207 (2d Cir. 2003) (when personal

jurisdiction over a foreign corporation is

based in essence on the federal long-arm

statute, due process analysis involves

contacts with the United States as a

whole); United States v. Swiss Am.

Bank, Ltd., 191 F.3d 30, 36 (1st Cir.

1999) (same); Fitzsimmons v. Barton,

589 F.2d 330, 333 n.4 (7th Cir. 1979);

Mariash v. Morrill, 496 F.2d 1138, 1142-

43 (2d Cir. 1974) (service of process

under § 27 of Securities Exchange Act

requires examination of defendant’s

contacts with the United States as a

whole).

We agree with the holdings of our

foregoing sister Courts of Appeals and

the rationale of our decision in Pinker

that have construed the similarly worded

Section 27 of the Securities Exchange

Act. We hold that personal jurisdiction

in federal antitrust litigation is assessed

on the basis of a defendant’s aggregate

contacts with the United States as a

whole. Our holding in Pinker and on this

appeal is consistent with the Federal Rule

of Civil Procedure 4(k)(2).14 Personal 13 Pinker, 292 F.3d at 369-70 (citing

Republic of Panama v. BCCI Holdings

(Luxembourg) S.A., 119 F.3d 935, 946-

47 (11th Cir. 1997); Busch v. Buchman,

Buchman & O’Brien Law Firm, 11 F.3d

1255, 1258 (5th Cir. 1994); United

Liberty Life Ins. Co. v. Ryan, 985 F.2d

1320, 1330 (6th Cir. 1993); United Elec.,

Radio & Mach. Workers of Am. v. 163

Pleasant St. Corp., 960 F.2d 1080, 1085

(1st Cir. 1992); Sec. Investor Protection

Corp. v. Vigman, 764 F.2d 1309, 1316

(9th Cir. 1985), rev’d on other grounds,

Holmes v. Sec. Investor Protection

Corp., 503 U.S. 258 (1992); Autoscribe

Corp. v. Goldman & Steinberg, Inc.,

1995 WL 56662, at *3 (4th Cir. Feb. 3,

1995) (per curiam) (not precedential)

(citing Hogue v. Milodon Engineering,

Inc., 736 F.2d 989, 991 (4th Cir. 1984)).

14 Federal Rule of Civil Procedure 4(k)(2)

provides:

If the exercise of jurisdiction is

consistent with the Constitution

and laws of the United States,

serving a summons or filing a

waiver of service is also effective,

with respect to claims arising

under federal law, to establish

personal jurisdiction over the

person of any defendant who is

not subject to the jurisdiction of

the courts of general jurisdiction

of any state.
13

jurisdiction therein is not limited to the

defendant’s contacts with a particular

federal judicial district or the forum state. 

We hold further that personal jurisdiction

under Section 12 of the Clayton Act is as

broad as the limits of due process under

the Fifth Amendment. See Go-Video,

885 F.2d at 1415 (“Under the due

process component of the Fifth

Amendment, a court must consider

whether the maintenance of the suit (i.e.

the exercise of personal jurisdiction over

the defendants to the suit) offends

traditional notions of fair play and

substantial justice.”) (citing Omni

Capital Int’l v. Rudolf Wolff & Co., Ltd.,

484 U.S. 97, 102-103 (1987); Int’l Shoe

Corp. v. Washington, 326 U.S. 310, 316

(1945)).15

III.

The second issue certified in this

appeal is whether we should adopt a first

resort rule in favor of the procedures

under the Hague Convention, rather than

the Federal Rules of Civil Procedure, for

jurisdictional discovery from foreign

defendants in foreign signatory “host”

nations. The appellants argue that

jurisdictional discovery in Germany, a

Convention signatory nation, should first

proceed under the Convention

procedures, rather than the Federal

Rules. The Convention prescribes

certain procedures by which a judicial

authority in one contracting nation may

request evidence located in another

nation. Our Supreme Court rejected a

first resort rule in favor of the

Convention in a case where personal

jurisdiction was not contested and the

discovery sought involved only the

merits of the case. Societe Nationale

Industrielle Aerospatiale v. United States

Dist. Court for the S. Dist. of Iowa, 482

U.S. 522 (1987). The appellants argue

specifically that we should carve out a

narrow exception to the Aerospatiale

decision where, as here, personal

jurisdiction has yet to be established and

the discovery sought is limited to proof

of jurisdiction.16

A.

“Under this provision, a defendant sued

under federal law may be subject to

jurisdiction based on its contacts with the

United States as a whole, when the

defendant is not subject to personal

jurisdiction in any state. Rule 4(k)(2)

confers personal jurisdiction over a

defendant so long as the exercise of

jurisdiction comports with the Due

Process Clause of the Fifth Amendment.” 

Dardana, 317 F.3d at 207 (citing 4

Wright & Miller, Federal Practice and

Procedure § 1068.1, at 612, 616 (2002);

Chew v. Dietrich, 143 F.3d 24, 27-28 (2d

Cir.), cert. denied, 525 U.S. 948 (1998)). 

15 We note, as did the Go-Video court,

that the Supreme Court has on two

occasions explicitly declined to decide

the constitutionality of national contacts

analysis. See 885 F.2d at 1414 n.8

(citing Omni Capital Int’l v. Rudolf Wolff

& Co., Ltd., 484 U.S. 97, 102-103 n.5

(1987); Asahi Metal Indus. v. Superior

Court, 480 U.S. 102, 113 n.* (1987)

(plurality opinion)).

16 The Federal Republic of Germany and

the Federation of German Industries have

submitted briefs as amicus curiae in

support of the appellants’ position for

this second issue on appeal, urging

reversal of the District Court. The brief

of amicus curiae submitted by the

Committee to Support the Antitrust Laws

supports the plaintiffs’ position, urging

affirmation of the District Court.
14

Aerospatiale holds that the Hague

Convention does not provide exclusive

procedures for obtaining documents and

information located in a foreign

signatory nation’s territory. Aerospatiale

first rejects a rule of exclusive use or a

rule of first use as a matter of law in

favor of the Convention on the ground

that neither the language nor the

negotiating history of the Convention

support such rules. Aerospatiale, 482

U.S. at 533-36. Specifically,

Aerospatiale holds that the Convention’s

plain language, as well as the history of

its proposal and ratification by the United

States, unambiguously supports the

conclusion that it was “intended as a

permissive supplement, not a preemptive

replacement, for other means of

obtaining evidence located abroad.” Id.

at 536 (emphasis added). The

Convention’s preamble speaks in nonmandatory terms, specifying its purpose

to “facilitate” discovery and to “improve

mutual judicial co-operation.” Id. at 534. 

 Similarly, its text uses permissive

language, and does not expressly modify

the law of contracting states or require

them to use the specified procedures or

change their own procedures. Id.

Accordingly, the Convention does not

deprive the District Court of its

jurisdiction to order, under the Federal

Rules of Civil Procedure, a foreign

national party to the proceeding to

produce evidence physically located

within its territory. Id. at 539-40. 

Aerospatiale rejects next a rule of

first resort favoring the Convention on

grounds of international comity and

respect for the “judicial sovereignty” of

the signatory nation in which evidence

sought is located. Id. at 542-43. 

International comity does not require in

all instances that American litigants first

resort to the Convention procedures

before initiating discovery pursuant to

our Federal Rules. Id. at 542-44. The

concept of comity requires in this context

“a more particularized analysis” of the

respective interests of the foreign host

nation and the requesting nation than a

blanket first resort rule would generate. 

Id. at 543-44. Aerospatiale notes that in

many situations, the Convention

procedures would be unduly timeconsuming and expensive, and less likely

to produce needed evidence than direct

use of the Federal Rules. Id. at 542-43. 

However, the Convention’s procedures,

although not mandatory, are available

whenever they will facilitate the

gathering of evidence, and apply in the

sense that they are one method of seeking

evidence that a court may elect. Id. at

541. Aerospatiale declines to hold “as a

blanket matter that comity requires resort

to Hague evidence convention

procedure.” Id. at 544. Therefore, the

determination of whether to resort to the

Convention requires “prior scrutiny in

each case of the particular facts,

sovereign interests, and likelihood that

such resort will prove effective.” Id.

(establishing the three-prong test for

determining whether to resort to the

Convention).

Aerospatiale acknowledges that

“both the discovery rules set forth in the

Federal Rules of Civil Procedure and the

Hague Convention are the law of the

United States.” Id. at 533. However, the

Federal Rules are “the normal methods”

for federal litigation involving foreign

national parties unless the “optional” or

“supplemental” Convention procedures

prove to be conducive to discovery under

some circumstances. Id. at 536 (“the

Convention was intended as a permissive

supplement, not a pre-emptive

replacement, for other means of

obtaining evidence located abroad”)

(emphasis added), 538 (both the text and

negotiating history of the Convention
15

show that “it was intended to establish

optional procedures that would facilitate

the taking of evidence abroad”)

(emphasis added), 541 (“the optional

Convention procedures are available

whenever they will facilitate the

gathering of evidence by the means

authorized in the Convention”)

(emphasis added), 542 (“the normal

methods of the Federal Rules of Civil

Procedure”) (emphasis added).

Notwithstanding its rejection of

the first resort rule, Aerospatiale instructs

the American courts to “exercise special

vigilance to protect foreign litigants from

the danger that unnecessary, or unduly

burdensome, discovery may place them

in a disadvantageous position.” Id. at

546. “Judicial supervision of discovery

should always seek to minimize its costs

and inconvenience and to prevent

improper uses of discovery requests. 

When it is necessary to seek evidence

abroad, however, the district court must

supervise pretrial proceedings

particularly closely to prevent discovery

abuses.” Id.

Aerospatiale has not explicitly

addressed, however, the issue of which

party bears the burden of convincing the

court of an “optional” and

“supplemental” use of the Convention

procedures in a particular case. Nor has

Aerospatiale, involving foreign

defendants over whom the trial court had

undisputed personal jurisdiction,

addressed the issue of what procedures to

follow in a case, as here, where

jurisdiction is contested and discovery

sought is limited only to proof of

jurisdiction.

B.

The appellants argue that the

District Court erred in extending the

Aerospatiale holding to the underlying

litigation where they have contested

jurisdiction and the discovery sought is

limited to proof of jurisdiction. The

appellants seek our review of only the

District Court’s legal conclusion that the

Aerospatiale holding applies equally to

jurisdictional discovery. This certified

issue involves a pure question of law,

subject to our plenary and de novo

review. 

Specifically, the appellants argue

that Aerospatiale is not applicable to

jurisdictional discovery and that this

Court should adopt a first resort rule in

favor of the Hague Convention

procedures based on considerations of

international comity and respect for the

German sovereignty, the host signatory

nation where discovery is to be

conducted. They argue that the

Aerospatiale balancing approach is

premised expressly on the existence of

personal jurisdiction in that case. Where

jurisdiction is disputed and not yet

established, they assert the balancing

approach must yield to a rule of first

resort.

The appellants stress the split of

authorities among federal district courts

and state courts regarding the extension

of Aerospatiale to jurisdictional

discovery. They cite for support GeoCulture, Inc. v. Siam Inv. Mgmt. S.A.,

936 P.2d 1063, 1067 (Or. Ct. App. 1997)

(requiring plaintiff to conduct

jurisdictional discovery, at least initially,

only through the Hague Convention,

noting that plaintiff had failed to allege a

prima facie basis for asserting

jurisdiction over the defendant); Jenco v.

Martech Int’l, Inc., No. Civ. A. 86-4229,

1988 WL 54733 at *1 (E.D. La. May 19,

1988) (holding, with almost no

meaningful analysis, that certain

jurisdictional discovery requests must be
16

made under the Hague Convention

because “[w]hile judicial economy may

dictate that the Federal Rules of Civil

Procedure should be used, the interests of

protecting a foreign litigant in light of the

jurisdictional problems are

paramount”)17; and Knight v. Ford Motor

Co., 615 A.2d 297, 301 n.11 (N.J. Super.

Ct. Law Div. 1992) (noting, in dicta, that

“[i]f jurisdiction does not exist over a

foreign party . . . the Convention may

provide the only recourse for obtaining

evidence”).

The appellants rely also on a

report by the Special Commission of the

Hague Conference attended, among

others, by delegations from the United

States and Germany. See Hague

Conference on Private International Law:

Special Commission Report on the

Operation of the Hague Service

Convention and the Hague Evidence

Convention, April 1989, reprinted in 28

Int’l Law Materials 1556 (1989). The

report stated that while views varied as to

whether the Hague Convention

“occupied the field and therefore

excluded application of domestic

procedural rules,” “the Commission

thought that in all Contracting States,

whatever their views as to its exclusive

application, priority should be given to

the procedures offered by the Convention

when evidence located abroad is being

sought.” Id. at 1564, 1569. The

appellants argue that the statement in the

report that “priority” should be given to

the Convention should be entitled to

substantial deference.

The appellants are correct that

Aerospatiale makes numerous references

to the existence of personal jurisdiction

in that case. We disagree, however, that

the Aerospatiale holding is dependent on

personal jurisdiction. As concluded by

the District Court here and the District

Court for the District of Columbia, which

considered the same argument raised by

the same defendant, BASF AG, in In re

Vitamins Antitrust Litig., 120 F. Supp.

2d 45, 49 (D.D.C. 2000), a trial court has

authority to determine its jurisdiction. 

See Ins. Corp. of Ireland, Ltd. v.

Compagnie des Bauxites de Guinee, 456

U.S. 694, 706 (1982) (“By submitting to

the jurisdiction of the Court for the

limited purpose of challenging

jurisdiction, the defendant agrees to

abide by that court’s determination on

the issue of jurisdiction”). Because the

District Court has jurisdiction over these

foreign defendants to the extent

necessary to determine whether they are

subject to personal jurisdiction, we see

no legal barrier to exercising the

discretion given to trial courts by

Aerospatiale in cases of jurisdictional

discovery. See In re Vitamins, at 49.

We agree with the majority of trial

courts’ decisions that there should be no

exception to the Aerospatiale holding for

jurisdictional discovery. See In re

Vitamins, at 49; Rich v. KIS California,

Inc., 121 F.R.D. 254, 260 (M.D.N.C.

1988) (Aerospatiale “did not carve out

any exception for disputes involving

personal jurisdiction”); Fishel v. BASF

Group, 175 F.R.D. 525, 529 (S.D. Iowa

1997) (Aerospatiale provides that the

Hague Convention procedures are

optional and do not divest federal district

courts of authority to order discovery

under the Federal Rules); In re Bedford

17 Jenco left undisturbed a portion of the

magistrate’s opinion allowing

interrogatories and document requests

directed at a foreign party to proceed

under the Federal Rules and overturned

only the magistrate’s ruling allowing

depositions to be taken under the Federal

Rules.
17

Computer Corp., 114 B.R. 2, 5-6 (Bankr.

D.N.H. 1990) (citing Rich and allowing

discovery limited to jurisdictional issues

to proceed under the Federal Rules). 

Unlike Geo-Culture, relied on by

the appellants, where the plaintiff failed

to allege even a prima facie case of

personal jurisdiction, the District Court

found that the plaintiffs here had

established a prima facie case of personal

jurisdiction, a conclusion not challenged

by the appellants. The plaintiffs’

allegations amounted, therefore, to more

than “mere blanket fishing expeditions”

and were “not the type of bare-boned

allegations that potentially could lead to

the fishing expeditions of obvious

concern to the signatory countries.” In re

Vitamins, 120 F. Supp. 2d at 50.

The appellants also relied on the

Federal Rules to challenge the District

Court’s personal jurisdiction. As we

have stated above, it is well established

that the trial court has inherent power

and jurisdiction to decide whether it has

jurisdiction. Ins. Corp. of Ireland, 456

U.S. at 706. The appellants’ arguments

are also premised on the assumption that

there is no personal jurisdiction in this

case. Such an assumption is premature

and unwarranted unless the result of the

pending jurisdictional discovery shows

otherwise. At this stage, where the

appellants have voluntarily appeared in

the court to challenge jurisdiction and

jurisdictional discovery is pending, the

District Court indisputably has

jurisdiction to determine whether there is

personal jurisdiction upon completion of

jurisdictional discovery. Moreover, the

denial of resort to Hague convention

procedures for jurisdictional discovery is

not unfair to the appellants because they

“[had] taken advantage of the [Federal]

[R]ule allowing them a preliminary

hearing and determination of the issues

raised in their motion.” See Fishel, 175

F.R.D. at 529.

Accordingly, the distinction

drawn by the appellants between

“merits” discovery and “jurisdictional”

discovery, predicated on a false

dichotomy of having and not having

jurisdiction, amounts to no real

difference because the court has

jurisdiction for either type of discovery.18

The undisputed presence of personal

jurisdiction in Aerospatiale is, therefore,

tangential to its holding and irrelevant to

the issue of whether Aerospatiale applies

also to jurisdictional discovery.

There are other reasons supporting

our conclusion that the Aerospatiale

balancing approach applies equally to the

determination of whether the Hague

Convention procedures should be used

initially for jurisdictional discovery. 

First, where Aerospatiale has

categorically rejected a first resort rule

for “merits” discovery, which we can

expect to be more comprehensive or

burdensome than jurisdictional

discovery, there is more justification to

reject a first resort rule for the more

limited and less intrusive jurisdictional

discovery. See Fishel, 175 F.R.D. at 529

(“The ascertainment of facts bearing on

personal jurisdiction normally involves

the least intrusive type of inquiries.”).

Second, where Aerospatiale has

rejected the first resort rule even though

the French defendants there may have

18 No one would dispute that if

jurisdiction discovery yields no evidence

sufficient to establish personal

jurisdiction, the court must dismiss the

underlying action against the appellants,

rather than deciding which set of

procedural rules to apply.
18

faced possible penal sanction under

France’s “blocking statute,” there is less

justification for us to adopt a first resort

rule where the appellants here face no

such sanction because Germany has no

“blocking statute.” 19 Aerospatiale

reiterates the well-settled view that

“[blocking] statutes do not deprive an

American court of the power to order a

party subject to its jurisdiction to produce

evidence even though the act of

production may violate that statute.” 482

U.S. at 544-45 n.29 (concluding that “the

enactment of such a statute by a foreign

nation” cannot be allowed to “graft a rule

of first resort onto the Hague

Convention, or otherwise to provide the

nationals of such a country with a

preferred status in our courts”). Neither

the appellants nor their supporters,

Germany or the Federation of German

Industries, have disputed the plaintiffs’

statement that Germany, unlike France,

does not have a “blocking statute,”

criminal or civil, that specifically

prohibits production of documents in

connection with foreign judicial or

administrative proceedings. Nor have

they identified a single instance where a

German national has been prosecuted,

penalized, or sanctioned under German

law for complying with discovery orders

from a United States judicial or

administrative proceeding pursuant to the

Federal Rules.

Third, where Aerospatiale has

rejected the adoption of a blanket first

resort rule based on the proffered reasons

of respecting the “judicial sovereignty”

of the signatory host nation and

preventing discovery abuse, the same

reasons proffered by the appellants here

must fail as well. 482 U.S. at 543-44

(finding no textual support in the Hague

Convention for a first resort rule and

opting for a three-prong balancing

approach), 545-46 (suggesting that

burdensome or intrusive discovery

practice is not a sufficient ground for

adopting the first resort rule because the

trial court has an inherent duty to

supervise discovery and prevent

discovery abuse). 

The appellants and their

supporters argue generally that Germany

is a civil law country where the gathering

of evidence is a judicial function and that

pursuing discovery without resort to the

Convention may be deemed an affront to

Germany’s sovereignty. The

Aerospatiale Court, as well as other

courts, has found such argument

“unpersuasive.” Id. at 543; see also

Great Lakes Dredge & Dock Co. v.

Harnischfeger Corp., 1990 WL 147066,

at *2 (N.D. Ill. Sept. 25, 1990);

Scarminach v. Goldwell GmbH, 531

N.Y.S. 2d 188, 191 (N.Y. Sup. Ct. 1988). 

As observed by the court in In re

Vitamins, 120 F. Supp. 2d at 50, there is

no reason to assume that discovery under

the Federal Rules would inevitably

offend Germany’s sovereign interest

because presumably Germany, like the

United States, would prohibit the alleged

price-fixing conspiracy and would

welcome investigation of such antitrust

violation to the fullest extent. See

19 Aerospatiale, 482 U.S. at 526 n.6

(quoting Article 1A of the French

“blocking statute,” French Penal Code

Law No. 80-538) (“Subject to treaties or

international agreements and applicable

laws and regulations, it is prohibited for

any party to request, seek or disclose, in

writing, orally or otherwise, economic,

commercial, industrial, financial or

technical documents or information

leading to the constitution of evidence

with a view to foreign judicial or

administrative proceedings or in

connection therewith.”). 
19

Germany’s Act Against Restraints of

Competition § 1; Treaty Establishing the

European Economic Community, Art.

81(1). There is also no reason to

“believe that the sovereign interests of . .

. foreign signatory nations would be any

more offended by [the] narrower

jurisdictional discovery than they would

be by the broader, merits-related

discovery allowed by Aerospatiale.” In

re Vitamins, 120 F. Supp. 2d at 51. We

likewise conclude that the appellants’

general argument is unpersuasive.20

Similarly, following the

Aerospatiale holding, we also find

unpersuasive the appellants’ argument

that a first resort to the Hague

Convention is required to avoid possible

burdensome or intrusive discovery

practice under United States law. 

Aerospatiale, 482 U.S. at 545-46; see

also Great Lakes, 1990 WL 147066, at

*2, and Scarminach, 531 N.Y.S. 2d at

191. Discovery abuse is an insufficient

reason to avoid the Federal Rules

because the appellants have remedies in

the District Court to restrict discovery

abuse. We expect that the District Court

will follow Aerospatiale’s instruction

and “exercise special vigilance” to

protect appellants from unduly

burdensome or abusive discovery. 

Aerospatiale, at 546.

We agree with the District Court’s

legal conclusion that the Aerospatiale

balancing test applies equally to

jurisdictional discovery and that there is

no first resort rule in favor of the Hague

Convention procedures for jurisdictional

discovery.

C.

The appellants also argue

alternatively that even if the Aerospatiale

balancing approach applies to

jurisdictional discovery, the three-prong

test would favor first use of the

Convention procedures in this case. The

District Court rejected that argument,

ruling that the appellants bore the burden

of persuasion under the balancing test

and that they failed to satisfy the burden. 

The court concluded alternatively that

even if the plaintiffs bore the burden of

persuasion, they had submitted adequate

evidence to show that the balancing test

disfavored first use of the Convention

procedures for jurisdictional discovery in

this case. 

We agree first with the District

Court’s conclusion of law that the

appellants bear the burden of persuasion

as to the optional use of the Convention

procedures. See Aerospatiale, 482 U.S.

at 547 (stating that the court should give

“the foreign litigant a full and fair

opportunity to demonstrate appropriate

reasons for employing Convention

procedures in the first instance, for some

aspects of the discovery process”)

(emphasis added). This language seems

20 Appellants and especially their

supporters, Germany and the Federation

of German Industries, stress the

controversial character of the “narrow

majority” decision in Aerospatiale and

profess their strong disagreement with

the Aerospatiale holding that the Hague

Convention procedures are merely an

optional supplement to the Federal Rules. 

We must reject their invitation to deviate

from Aerospatiale based on the same

proffered reasons, found insufficient by

the Aerospatiale Court, of respecting

international comity and preventing

discovery abuse. As a subordinate court,

we are bound by the Supreme Court’s

precedent.
20

to imply that the proposing party bears

the burden of persuasion. See also In re

Vitamins, 120 F. Supp. 2d at 51-52

(holding that proposing party bears the

burden);Valois of Am., Inc. v. Risdon

Corp., 183 F.R.D. 344, 346 (D. Conn.

1997) (same); Doster v. Schenk A.G.,

141 F.R.D. 50, 51-52 (M.D.N.C. 1991)

(“[I]t is more practical, if not logical, to

place the burden of persuasion on the

proponent of using the Hague

Convention.”); Rich, 121 F.R.D. at 257-

58 (same); Benton Graphics v.

Uddeholm Corp., 118 F.R.D. 386, 389

(D.N.J. 1987) (same); but see Hudson v.

Hermann Pfauter GmbH & Co., 117

F.R.D. 33, 38 (N.D.N.Y. 1987); Knight,

615 A.2d at 300. 

We also agree with the District

Court’s conclusions that the appellants

have failed to satisfy their burden of

persuasion under the Aerospatiale

balancing test and that the evidence on

record disfavors the first use of the

Convention procedures for jurisdictional

discovery. The court’s conclusions in

these two instances are reviewed only for

abuse of discretion, and we find none.

IV.

For the foregoing reasons, the

orders of the District Court certified for

review on this interlocutory appeal will

be affirmed. Costs are taxed against the

appellants. 

ROTH, Circuit Judge, concurring21:

I write separately to express my

concern that the Hague Convention has

been given short shrift since the Supreme

Court’s decision in Société Nationale

Industrielle Aerospatiale v. United States

District Court for the Southern District of

Iowa, 482 U.S. 522 (1987). The service

provisions of the Hague Convention were

adopted by the President and approved by

a unanimous vote of the Senate in 1972.

Id. at 530. The provisions then became the

“law of the land,” coexisting with other

federal law such as the Federal Rules of

Civil Procedure. U.S. Const. art. VI, cl. 2.

In Aerospatiale, the Hague Convention

was referred to as a “permissive

supplement” and an “optional procedure.”

Id. at 536. However the Hague

Convention is only as “optional” as

deciding to use the Federal Rules is

“optional” in such a case. The Convention

does not overwrite the Federal Rules of

Civil Procedure, but it is in no way inferior

to them. 

Unfortunately, I believe the

language used in Aerospatiale has

unintentionally compounded the problem

inherent with the Convention: that

“relatively few judges are experienced in

the area [of international law] and the

procedures of foreign legal systems are

often poorly understood.” Aerospatiale,

482 US. at 552 (Blackmun, J., dissenting).

Many times, rather than wade through the

mire of a complex set of foreign statutes

and case law, judges marginalize the

Convention as an unnecessary “option.” I

believe the Aerospatiale decision should

be reexamined to ensure that lower courts

are in fact exercising “special vigilance to

prot ect fore ign litigants” an d

demonstrating respect “for any sovereign

interest expressed by the foreign state.”

Id. at 485. Currently, I fear that many

courts are simply discarding the treaty as

an unnecessary hassle.

Our sage colleague,Judge Joseph F.

Weis, Jr., has opined that first resort to the

Hague Convention is in fact appropriate:

 

21Judge McKee shares the concerns

expressed herein and joins this

concurring opinion.
21

The arguments mustered

against giving priority to

Convention procedures are

not persuasive when

balanced with th e

o verriding interests,

national and international,

i n mo re eff ectiv e

implementation of the

Evidence Convention. It

should be remembered,

after all, that the treaty

negotiated by the United

States and the other

signatories is for the

benefit of private litigants

as a whole – some

inconvenience or expense

to an individual litigant

should not suffice to

jeopardize an arrangement

which benefits many.

Moreov er, throug h

ratification, the United

States has agreed to honor

the commitments which

the treaty contains. The

judiciary should not lightly

permit a private litigant to

under mine expr e ss

national policy.

Joseph F. Weis, Jr., The Federal Rules and

the Hague Conventions: Concerns of

Conformity and Comity, 50 U. Pitt. L.

Rev. 903, 931 (Spring, 1989).

Judge Weis’s view mirrors the

conclusions of the Special Commission of

the Hague Conference of April 1989, that,

whatever the views of the delegates as to

application of domestic procedural rules,

“priority should be given to the procedures

offered by the Convention when evidence

located abroad is being sought.” Hague

Conference of Private International Law:

Special Commission Report on the

Operation of the Hague Service

Convention and the Hague Evidence

Convention, April 1989, reprinted in 28

Int’l Law Materials 1556, 1569 (1989).

Among the delegates at the 1989 meeting

of the Special Commission was one from

the United States. 

I recognize that we are bound by

Aerospatiale but I believe that it is time for

the Supreme Court to revisit that decision

– particularly because I perceive that many

of our courts have not exercised the

“special vigilance to protect foreign

litigants” that the Supreme Court

anticipated.

Finally, under the precedent of

Aerospatiale, I do not oppose the panel’s

conclusion that the burden of persuasion

lies with the party advocating the use of

the Hague Convention. In an ideal

world, however, if the treaty were to be

given the priority to which its status as a

ratified treaty entitles it, I do not believe

that the burden of persuasion should lie

with the proponent of the Hague

Convention procedures.