Source: https://law.justia.com/cases/federal/appellate-courts/F2/795/415/376080/
Timestamp: 2019-07-20 07:35:13
Document Index: 104580946

Matched Legal Cases: ['§ 77', '§ 78', '§ 6', '§ 78', '§ 2', '§ 78', '§ 7', '§ 13', '§ 25', '§ 2072', '§ 2071', '§ 6', '§ 2', '§ 20']

Point Landing, Inc. and Point Landing Fuel Corp.,plaintiffs-appellants, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants-appellees, v. Rudolf Wolff & Co., Ltd., Defendant-third Party Defendant-appellee,andjames Gourlay, Third Party Defendant-appellee.william S. Smith, Jr., and Ruby M. Smith, Plaintiffs, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants, v. Rudolf Wolff & Co., Ltd. and James Gourlay, Third Partydefendants-appellees.frank J. George and Brenda A. George, Plaintiffs, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants, v. Rudolf Wolff & Co., Ltd. and James Gourlay, Third Partydefendants-appellees.dennis M. Rosenberg and Joan Rosenberg, Plaintiffs, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants, v. Rudolf Wolff & Co., Ltd. and James Gourlay, Third Partydefendants-appellees, 795 F.2d 415 (5th Cir. 1986) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fifth Circuit › 1986 › Point Landing, Inc. and Point Landing Fuel Corp.,plaintiffs-appellants, v. Omni Capital Internationa...
Point Landing, Inc. and Point Landing Fuel Corp.,plaintiffs-appellants, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants-appellees, v. Rudolf Wolff & Co., Ltd., Defendant-third Party Defendant-appellee,andjames Gourlay, Third Party Defendant-appellee.william S. Smith, Jr., and Ruby M. Smith, Plaintiffs, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants, v. Rudolf Wolff & Co., Ltd. and James Gourlay, Third Partydefendants-appellees.frank J. George and Brenda A. George, Plaintiffs, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants, v. Rudolf Wolff & Co., Ltd. and James Gourlay, Third Partydefendants-appellees.dennis M. Rosenberg and Joan Rosenberg, Plaintiffs, v. Omni Capital International, Ltd., et al., Defendants-thirdparty Plaintiffs- Appellants, v. Rudolf Wolff & Co., Ltd. and James Gourlay, Third Partydefendants-appellees, 795 F.2d 415 (5th Cir. 1986)
US Court of Appeals for the Fifth Circuit - 795 F.2d 415 (5th Cir. 1986)
July 25, 1986. As Corrected Aug. 8, 1986
The original complaints allege violations of Sec. 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), Secs. 10b and 20 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j, 78t, Rule 10b-5, 17 C.F.R. Sec. 240.10b-5, and the Louisiana Blue Sky law. The district court dismissed the plaintiffs' claims under the 1933 Act and under Sec. 20 of the 1934 Act. The plaintiffs do not appeal from those dismissals.
In Rivers v. Rosenthal & Co., 5 Cir. 1980, 634 F.2d 774, vacated, 1982, 456 U.S. 968, 102 S. Ct. 2228, 72 L. Ed. 2d 841, this Court held that the CEA affords no implied private right of action. The plaintiffs' original complaints therefore allege no violations of federal commodities law. While these actions were pending, the Supreme Court recognized an implied private right of action under the CEA and vacated our judgment in Rivers. Merrill Lynch, Pierce, Fenner & Smith v. Curran, 1982, 456 U.S. 353, 102 S. Ct. 1825, 72 L. Ed. 2d 182. In the light of Curran, the plaintiffs amended their complaints to allege violations of Secs. 4b and 9(b) of the CEA, 7 U.S.C. §§ 6b, 13(b).4
Shortly thereafter this Court issued its opinion in DeMelo v. Toche Marine, Inc., 5th Cir. 1983, 711 F.2d 1260. In DeMelo the question was: " [W]hat standard of amenability [to personal jurisdiction] should apply when the plaintiff's claims are founded in part upon federal question jurisdiction, but service is effected under a state long-arm statute?" 711 F.2d at 1265. The Court noted that the two most recent Fifth Circuit cases on this point, Lapeyrouse v. Texaco, 5 Cir. 1982, 693 F.2d 581, and Burstein v. State Bar of California, 5 Cir. 1982, 693 F.2d 511, "decided only three days apart, give different answers".5 711 F.2d at 1265. Writing for the DeMelo Court, Judge Gee chose to follow Burstein, holding that "when a federal question case is based upon a federal statute that is silent as to service of process, and a state long-arm statute is therefore utilized to serve an out-of-state defendant, Rule 4(e) requires that the state's standard of amenability to jurisdiction apply". Id. at 1266.
Wolff and Gourlay, relying on DeMelo, then renewed their objections to the court's personal jurisdiction. The district court held that: (1) the CEA preempts private actions under Sec. 10(b) of the 1934 Act and Rule 10b-5; (2) the CEA does not expressly or impliedly authorize nationwide service of process in private actions; (3) DeMelo requires an application of the Louisiana long-arm statute in private actions under the CEA; and (4) neither Wolff nor Gourlay is subject to the jurisdiction of Louisiana state courts. The court therefore dismissed the claims against Wolff and Gourlay for lack of personal jurisdiction. Because our opinions on the issue of personal jurisdiction in federal question cases, " [l]ike a Tower of Babel ... spoke in irreconciliable voices", DeMelo, 711 F.2d at 1268, the Court decided to hear this appeal en banc without an opinion by the panel to which the consolidated appeals were assigned.
We would not need to decide the question of amenability to personal jurisdiction by service under the Louisiana long-arm statute, if the commodity trades here were governed by the securities laws. Wolff and Gourlay would then be subject to the court's jurisdiction under Sec. 27 of the 1934 Act, which permits service of process "wherever the defendant may be found". 15 U.S.C. § 78aa. Federal courts may exercise personal jurisdiction under Sec. 27 of the 1934 Act to the limits of due process. Leasco Data Processing Equipment Corp. v. Maxwell, 2 Cir. 1972, 468 F.2d 1326, 1340 (Friendly, J.).
Until 1974 the CEA applied only to transactions in certain agricultural commodities. See 7 U.S.C. § 2 (1970). Courts disagreed over which commodities transactions were covered by the securities statutes, and some transactions fell into a gap between federal securities and commodities laws.
The Commodity Futures Trading Commission Act of 1974 ("CFTA"), Pub. L. No. 93-463, 88 Stat. 1389, "the first complete overhaul of the Commodity Exchange Act since its inception", provides a "comprehensive regulatory structure". H.R.Rep. No. 975, 93d Cong., 2d Sess. 1. Congress intended the 1974 amendments to "fill all regulatory gaps" while "avoid [ing] unnecessary, overlapping and duplicative regulation." 120 Cong.Rec. H34736 (Oct. 9, 1974) (remarks of House Agriculture Committee Chairman Robert Poage); 120 Cong.Rec. S34997 (Oct. 10, 1974) (remarks of Senate Agriculture Committee Chairman Herman Talmadge).
Section 2(a) (1) (A), set out in the margin, is the critical provision of the CFTA.6 The statute confers on the Commodities Futures Trading Commission ("CFTC") exclusive jurisdiction over "accounts ... involving contract of sale of a commodity for future delivery traded or executed on a contract market designated pursuant to Sec. 7 of this title or any other board of trade, exchange, or market". The London Metals Exchange, although not a designated exchange, is a "board of trade, exchange, or market" within the meaning of Sec. 2. This Court has held that the CFTC has regulatory authority over trading in "London options". CFTC v. Miller, 5 Cir. 1978, 570 F.2d 1296, 1299.
120 Cong.Rec. H34, 737 (1974). The Supreme Court has concluded that Section 2 gives the CFTC "exclusive jurisdiction over commodity futures trading. The purpose of the exclusive-jurisdiction provision in the bill passed by the House was to separate the functions of the Commission from those of the Securities and Exchange Commission and other regulatory agencies." Curran, 456 U.S. at 386, 102 S. Ct. at 1843. See also Markham, Regulation of International Transactions Under the Commodity Exchange Act, 48 Fordham L. Rev. 129, 133 (1979).
As originally passed in the House, the bill provided that "nothing herein contained shall supersede or limit the jurisdiction at any time conferred on the Securities Exchange Commission". H.R. 1131, 93d Cong., 2d Sess. Sec. 201 (1974), U.S.Code Cong. & Admin.News 1974, p. 5843.7 The Senate added the phrase "except as hereinabove provided" to ensure that "the [CFTC's exclusive] jurisdiction, where applicable, supersedes state as well as federal agencies". S.Rep. No. 1131, 93d Cong. 2d Sess. 6 (1974), U.S.Code Cong. & Admin.News 1974, p. 5848. The Senate version was adopted by the Conference Committee and enacted into law. According to the Conference Report, Sec. 2(a) (1) (A) "preempt [s] the field insofar as futures regulation is concerned". H.Conf.Rep. No. 1383, 93d Cong. 2d Sess. (1974).
Congress has not altered the CFTC's jurisdiction over discretionary commodity accounts since 1974. The Senate Agriculture Committee has reported that " [t]he basic conclusion reached in 1974 that there should be a single regulatory agency responsible for futures trading is as valid now as it was then". S.Rep. No. 850, 95th Cong. 2d Sess. 22 (1978), U.S.Code Cong. & Admin.News 1978, pp. 2087, 2110. A report accompanying the House version of the 1982 amendments to the CEA explained that "the [CFTC] would continue to have exclusive jurisdiction over foreign futures transactions traded in the United States". H.R.Rep. No. 97-565(I), 97th Cong. 2d Sess. (1982), U.S.Code Cong. & Admin.News 1982, pp. 3871, 3953.
(1) Some courts and commentators, many but not all writing before 1982, adopt the plaintiffs' position. Peavey Co. v. Mitchell, W.D. Okla., 1983 [1983-84] Fed.Sec.L.Rep. (CCH) p 99, 593; Mullis v. Merrill Lynch, Pierce, Fenner & Smith, Inc., D. Nev. 1980, 492 F. Supp. 1345; Bromberg, Commodities Law and Securities Law--Overlaps and Preemptions, 1 J Corp.L. 217, 310 (1976); Note, The Continued Availability of Private Actions for Fraud Under the Securities Statutes in Commodity-Security Transactions, 22 B.C.L.Rev. 335 (1981). The Court of Appeals for the Ninth Circuit has approved this result in dictum. Mordaunt v. Incomco, 9 Cir. 1982, 686 F.2d 815, cert. denied, --- U.S. ----, 105 S. Ct. 801, 83 L. Ed. 2d 793 (1985). Mordaunt cites the Supreme Court's Curran opinion as authority for the proposition that the CEA does not preempt private actions under the securities laws. 686 F.2d at 816. The Curran opinion, however, does not address the preemption of private securities actions. The Court found that an implied right of action under the CEA survived the 1974 amendments. Because the 1974 amendments dramatically expanded the scope of the commodities laws to avoid "overlapping and duplicative" coverage, it appears to us that Curran does not support the proposition for which it is cited in Mordaunt. See T. Russo, Regulation of the Commodities, Futures, and Options Markets Sec. 10.20, at 10-54 (1983).
(2) Other courts, including the district court in this case, have concluded that plaintiffs may recover under "self-executing" sections of the securities acts but not under Sec. 10(b) of the 1934 Act or under other sections that proscribe activities contravening SEC regulations. American Grain Assoc. v. Canfield, Burch & Mancuso, W.D. La. 1982, 530 F. Supp. 1339; Westlake v. Abrams, N.D. Ga. 1980, 504 F. Supp. 337, 345.
(3) Still other courts hold that plaintiffs may not recover under any securities statute or regulation. Mallen v. Merrill Lynch, Pierce, Fenner & Smith, Inc., N.D. Ga. 1985, 605 F. Supp. 1105, 1114; Bartels v. International Commodities Corp., D. Conn. 1977, 435 F. Supp. 865, 869; Fairchild, Arabatzis & Smith, Inc. v. Prometco Co., S.D.N.Y. 1979, 470 F. Supp. 610, 614.
The securities acts contain broad and flexible concepts such as "manipulative acts and practices" and "just and equitable principles of trade". 15 U.S.C. § 78f-(b)5. The CEA permits the CFTC to designate a contract market in a particular commodity only if the new futures contract "will not be contrary to the public interest". 7 U.S.C. § 7(g).
Johnson, The Commodity Futures Trading Commission Act: Preemption as Public Policy, 29 Vand. L. Rev. 35-36 (1976).
On first considering the subject of the amenability of an out-of-state defendant, especially an alien defendant, to the personal jurisdiction of a federal court hearing a federal question case, one's natural reaction does not necessarily coincide with the conclusions one may be forced to reach in the light of the decided cases and commentary. It may seem anomalous to tie personal jurisdiction in a federal question case to the long-arm statute of the state in which the federal court sits. In a diversity case where the plaintiff asserts a local claim, a federal court using a state long-arm statute, as required by Rule 4(e), is bound by the limits of the fourteenth amendment. The court must make certain that the forum state does not unduly encroach on the interests of a sister state or of the nation. In a federal question case, however, where a federal court is adjudicating a federal claim involving a federal statute, concern for limiting the reach of a state is irrelevant. The court determines rights and liabilities under a uniform, national law. If fairness or due process is an issue, it is the due process standard of the fifth amendment, not the fourteenth amendment, that must be met. A heavy weight of authority, however, accepts the anomaly. See Note, National Contacts as a Basis for In Personam Jurisdiction over Aliens in Federal Question Cases, 70 Calif. L. Rev. 686 (1982).
To start at the logical beginning, the unmalleable principle of law that is unyielding to legal blandishments is that federal courts may exercise only so much of their Article III jurisdiction as they are granted by Congress. They must ground their personal jurisdiction on a federal statute or rule. "As courts of limited jurisdiction, the federal courts possess no warrant to create jurisdictional law of their own." Insurance Corporation of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 1982, 456 U.S. 694, 711, 102 S. Ct. 2099, 2109, 72 L. Ed. 2d 492 (Powell, J., concurring). See also Burstein, 693 F.2d at 514; Rebozo v. Washington Post Co., 5 Cir. 1975, 515 F.2d 1208, 1211; Wells Fargo & Co. v. Wells Fargo Express Co., 9 Cir. 1977, 556 F.2d 406, 414 (collecting authorities).
In rare instances there are gaps in the law enabling a federal court to fashion federal common law. We decline to do so here because of the nature of personal jurisdiction. That federal courts should determine their own personal jurisdiction is a proposition fundamentally at odds with our government of separated powers. The Supreme Court typically has approved the creation of federal common law only when there is some basis for the conclusion that Congress would have adopted the rule fashioned by the courts if it had considered the matter, or at least that Congress would have left the choice to the courts. See, e.g., United States v. Little Lake Misere Land Co., 1973, 412 U.S. 580, 93 S. Ct. 2389, 37 L. Ed. 2d 187; Clearfield Trust Co. v. United States, 1943, 318 U.S. 363, 63 S. Ct. 573, 87 L. Ed. 838; see generally M. Redish, Federal Jurisdiction: Tensions in the Allocation of Judicial Power 79-107 (1980); Friendly, In Praise of Erie--And of the New Federal Common Law, 39 N.Y.U. L. Rev. 383 (1964). We find no basis for either conclusion in this case.
The 1974 amendments to the CEA provide for actions (1) by the CFTC (formerly the Commodities Exchange Commission), (2) by state attorneys general, and (3) by private parties seeking to enforce a CFTC ruling in their favor. 7 U.S.C. §§ 13a-1, 13a-2, 18(d). To make these actions effective, the sections referred to expressly provide for nationwide service of process. In 1982 Congress provided for private actions under the CEA, 7 U.S.C. § 25, but was silent as to service of process. Point Landing argues that Congress intended to allow nationwide service of process in private actions because it did so in the other types of actions authorized under the CEA. There is no basis for this argument. On the contrary, the clear language of Secs. 13a-1, 13a-2 and 18(d) demonstrates that Congress knows how to provide for nationwide service of process. The more likely inference to draw from the congressional silence is that Congress omitted that language from Sec. 25 because it did not intend to permit nationwide service of process. Even though private actions are a "significant enforcement tool", Curran, 456 U.S. at 394, 102 S. Ct. at 1847, there is a rational governmental basis for limiting service of process in private suits while giving wide powers to those government regulatory bodies charged with primary responsibility for developing and enforcing regulatory policy. Indeed, a House Committee reported that it looks to vigorous enforcement by the CFTC, "so it does not become necessary to rely on private litigants as a policeman of the Commodities Exchange Act". H.R.Rep. No. 97-565(I) at 57, U.S.Code Cong. & Admin.News 1982, at 3906.
"Jurisdiction over the person generally is dealt with by Rule 4, governing the methods of service through which personal jurisdiction may be obtained." Insurance Corp. of Ireland, 456 U.S. at 715 n. 6, 102 S. Ct. at 2111 n. 6 (Powell, J., concurring). Rule 4 therefore has been characterized as a "jurisdictional provision." (Statement by Mr. Justice Black and Mr. Justice Douglas, 1963, 374 U.S. 865, 869, dissenting from adoption of amendments to the Federal Rules of Civil Procedure).
Rule 4(e) therefore permits service "under the circumstances ... prescribed" by a statute or rule of the state in which the district court sits. (No question is raised here by the parties as to the "manner" of service.) The critical phrase "under the circumstances" was added to the rule in 1963. This occurred several years after our decision in Lone Star Package Car Co. v. Baltimore & Ohio Railroad, 5 Cir. 1954, 212 F.2d 147.
In Lone Star this Court made the broad statement that whether the state long-arm statute asserts jurisdiction over a defendant sought to be joined in suit is irrelevant "where the power of the federal court ... can be independently sustained ... on the ground that the matter in controversy arises under the Constitution, laws or treaties of the United States". 212 F.2d at 153-54. See also Terry v. Raymond International, Inc., 5 Cir. 1981, 658 F.2d 398, 401, cert. denied, 1982, 456 U.S. 928, 102 S. Ct. 1975, 72 L. Ed. 2d 443, in which this Court declared that in a federal question case the "contours of amenability ... are more fluid".9
In Lapeyrouse v. Texaco, Inc., 5 Cir. 1982, 693 F.2d 581, Judge Williams, for the Court, citing Lone Star and Terry, found that the "sole test for amenability" to personal jurisdiction in a federal question case is the due process clause of the fifth amendment.10 The opinion states:
In Burstein v. State Bar of California, 5 Cir. 1982, 693 F.2d 511, in a thorough and perceptive analysis of Rule 4(e), Judge Randall, for the Court, concluded:
Judge Randall took pains to point out that Lone Star involved a diversity claim and in-state service. It therefore comes within Rule 4(d) (7) rather than Rule 4(e). Rule 4(d) (7) requires service only "in the manner prescribed by the law of the state in which the district court is held"; it does not have the "under the circumstances" language of Rule 4(e).
In DeMelo v. Toche Marine, Inc., 5 Cir. 1983, 711 F.2d 1260, the Court was confronted with the dilemma of choosing between Burstein or Lapeyrouse. Judge Gee, for the Court, "look [ed] to the Rule" and decided that the Burstein "exposition ... is the more sound". 711 F.2d at 1266. "Lone Star was decided in 1954, long before the 1963 amendments to Rule 4 added the second sentence to Rule 4(e).... Terry discussed neither the 1963 amendments to Rule 4 nor any of the intervening federal question cases that had applied a state standard of amenability.... [R]elying solely upon the broad language in Lone Star, Terry applied a federal standard, treating the reach of the state long-arm statute as 'irrelevant' ." 711 F.2d at 1268-69.
Most courts agree that Rule 4(e) incorporates the forum state's long-arm statute when the federal statute sued under does not authorize nationwide service of process. In Max Daetwyler Corp. v. R. Meyer, 3 Cir. 1985, 762 F.2d 290, cert. denied, --- U.S. ----, 106 S. Ct. 383, 88 L. Ed. 2d 336, the court recently addressed the issue before this Court: amenability to jurisdiction of an alien defendant in a federal question action when the defendant's contacts with the United States as a whole were sufficient to satisfy due process, but contacts with the forum state were insufficient. The court, per Garth, J., held that "in the absence of a governing federal statute providing for nationwide service of process, in personam jurisdiction may not rest upon an alien's aggregated national contacts," and the long-arm statute of the forum state must be applied. Id. at 291. The court declined the plaintiff's suggestion that it adopt a "national contacts theory," which asserts that "the proper inquiry in determining personal jurisdiction in a case involving federal rights is one directed to the totality of a defendant's contacts throughout the United States." Id. at 293. The court noted that, although the national contacts theory might be constitutionally valid, Rule 4(e) was a limitation on the court's power. It interpreted Rule 4(e) as adopting "an incorporative approach requiring that both the assertion of [personal] jurisdiction and the service of process be gauged by state amenability standards". Id. at 295.
The court in Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distributors Pty., Ltd., D.C. Cir. 1981, 647 F.2d 200, concluded, in a trademark case, that in the absence of a federal statute authorizing nationwide service of process, under Rule 4(e) "we must look to the District of Columbia long-arm statute". Id. at 204. Wells Fargo & Co. v. Wells Fargo Express, 9 Cir. 1977, 556 F.2d 406, 418, rejected the national contacts theory because the Lanham Act did not grant federal courts broad service of process powers. See also Johnson Creative Arts, Inc. v. Wool Masters, Inc., 1 Cir. 1984, 743 F.2d 947, 950 (Federal Rules of Civil Procedure and other congressional mandates limit exercise of personal jurisdiction in federal question cases).
The Court of Appeals for the Sixth Circuit has concluded that "a federal district court considering a case that arises under federal law is not subject to precisely the same due process limitations which restrict its reach in diversity cases". Handley v. Indiana & Michigan Electric Co., 6 Cir. 1984, 732 F.2d 1265, 1272. The Handley court invoked the Kentucky long-arm statute, but nevertheless asserted jurisdiction over a defendant not subject to the jurisdiction of the Kentucky courts. The court reasoned that, since the Kentucky statute extends jurisdiction to the limit of the fourteenth amendment, federal courts in federal question cases may extend jurisdiction to the limits of the fifth amendment. We find no warrant in the language or history of Rule 4(e) for this result.
In short, an "overwhelming majority of federal courts have held that, in the absence of specific provisions to the contrary, rule 4 adopts the state provisions on amenability to service and on manner of service". Note, Alien Corporations and Aggregate Contacts: A Genuinely Federal Jurisdictional Standard, 95 Harv. L. Rev. 470, 471 n. 6 (1981). Probably a majority of commentators agree that Rule 4(e) incorporates the forum state long-arm statute when the federal statute sued under does not provide for a nationwide service of process even though they may disagree with that conclusion as a matter of policy. Lilly, Jurisdiction over Domestic and Alien Defendants, 69 Va. L. Rev. 85 (1983); Von Mehren & Troutman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1123 n. 6 (1966); Note, National Contacts as a Basis for In Personam Jurisdiction over Aliens in Federal Question Suits, 70 Calif. L. Rev. 686, 690 n. 24, 693 (1982) Note, Alien Corporations and Aggregate Contacts: A Genuinely Federal Jurisdictional Standard, 95 Harv. L. Rev. 470, 479-81 (1981); see generally Project, Obtaining Personal Jurisdiction Over Alien Corporations--A Survey of U.S. Practice, 9 Vand.J. Transnat'l L. 345 (1976).
Rules of procedure are just that, rules of procedure. They are not substantive. They are for efficient housekeeping. To assure that the rules would be limited to procedure, Congress provided that they must not "abridge, enlarge or modify any substantive right". 28 U.S.C. § 2072. Rule 4 provides the mechanics for service of process. It has no necessary relation with a court's acquiring personal jurisdiction.
In Petrol Shipping Corp. v. Kingdom of Greece, Min. of Com.,7 the Second Circuit did not shrink from approving a method of service to fit a situation not contemplated by the rules. The defendant was the Greek Ministry of Trade, State Purchase Directorate, and service of process was effected by ordinary mail addressed to that agency. The court concluded that the defendant was merely an agency of the Greek government. Acknowledging that " [n]either Rule 4(d) (3), nor any other part of Rule 4, provides for service on such a party",8 the Court did not bow out of the case. Instead it fashioned a rule not inconsistent with Rule 4:
But the fact that Rule 4 does not provide a method for service on respondent does not mean that no service could be effective. Rule 83 permits "each district court, by action of a majority of the judges thereof" to "make and amend rules governing its practice not inconsistent with these rules." The Rule goes on to say, "in all cases not provided for by rule, the district court may regulate their practice in any manner not inconsistent with these rules." See also 28 U.S.C. § 2071.
And when there is no Federal Rule, and no local rule, the court may fashion one not inconsistent with the Federal Rules. Rule 83, supra; see In re United Corp., 283 F.2d 593 (3d Cir. 1960). There is no compelling reason why the court must fashion the rule in advance, although the better practice in a case such as this might be to secure an advance ruling, approving a given method of service.9
In International Shoe the Supreme Court held that the "Fourteenth Amendment requires that the defendant's operations establish sufficient contacts or ties with the state of the forum to make it reasonable and just ... to permit the state to enforce the obligations which [the defendant] has incurred there". 326 U.S. at 320, 66 S. Ct. at 160. As a result, "the overwhelming concensus among federal courts is to analyze questions of in personam jurisdiction over alien defendants by examining the relationship of the defendant, the litigation and the forum under traditional International Shoe principles." Superior Coal Co. v. Ruhrkohle A.G.11 This fits nicely in a diversity case and allows for variations caused by diverse state statutes, whether the statute is narrow or broad. But it is not designed for federal question cases involving a congressional law that should be uniformly enforced.12 In such cases a defendant could never be brought to trial or a trial could be held in an inappropriate location, because the defendant lacks the requisite contacts with the state in which the suit is filed.13 "The result is the subjugation of the federal interest in enforcement of federal laws to state considerations that should be irrelevant."14 Federal courts should "disregard" state law "provisions that are irrelevant in the federal context".15
397 F. Supp. at 290 (citation omitted). The court in Cryomedics, Inc. continued:
397 F. Supp. at 291.
Cryomedics, characterized as the leading case accepting the aggregate contacts test, did not blast off without authority.17 Judge Newman pointed to Edward J. Moriarty & Co. v. General Tire & Rubber Co.,18 in which the court in an antitrust action against a Greek defendant considered the defendant's ties to the state in which it sat, yet, "argued convincingly that it is not the territory in which a court sits that determines the extent of its jurisdiction, but rather the geographical limits of the unit of government of which the court is a part [especially] 'where national uniformity in enforcing [federal] right should be the true guideline' ". 397 F. Supp. at 290-91.
The Cryomedics court also cited Holt v. Klosters Rederi A/S,19 a suit under the Death on the High Seas Act, in which the court upheld jurisdiction on the basis of a contract exclusively outside the forum state. Furthermore, the Cryomedics court quoted from Engineered Sports Products v. Brunswick Corp.,20 a patent infringement action, holding that " [d]ue process or traditional notions of fair play and substantial justice should not immunize an alien defendant from suit in the United States because each state makes up only a fraction of the substantial nationwide market for the offending product" 362 F. Supp. at 728, and concluded that an alien "which transacts business in the United States only through other countries and which maintains a place of business only in the country of its incorporation ... has no reason based on fairness to prefer any one particular district to any other" 397 F. Supp. at 292 (quoting Engineered Sports Products, 362 F. Supp. at 728).
In 1961 Professor Thomas F. Green, Jr. formulated the aggregate contacts test.21 Shortly after, in First Flight Co. v. National Carloading Corp.,22 the court adopted the test in an action against a foreign corporation for damage to cargo. Service was effected under Rule 4(d) (3), but the court clearly expanded the scope of its minimal contact inquiry to the national forum. The court noted that Professor Green had suggested that "state jurisdiction under the Fourteenth Amendment is ... suitable for analogical application to federal jurisdiction under the Fifth Amendment.... The Supreme Court has left no doubt but that the material constitutionality inquiry in this regard concerns not contacts with the physical territory of the court, but rather contacts with the sovereignty of which the court is an arm. And the sovereignty of which a federal court is an arm is, of course, the United States." 208 F. Supp. at 738.
Centronics Data Computer Corp. v. Mannesmann, A.G.,23 was an antitrust action against a German corporation. The court found that it had jurisdiction; otherwise "aliens could commit serious torts or contract breaches without ever having enough contacts with any one forum to give those injured an opportunity to seek redress". 432 F. Supp. at 664.
In a claim based upon a federal securities or commodities statute, whether the quality and nature of a foreign defendant's activities support a fair play and substantial justice determination, International Shoe v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), involves a consideration of all of defendant's activities in the United States, not just in the forum state. See Leasco, supra, and Mariash v. Morrill, 496 F.2d 1138 (2nd Cir. 1974).
"The concept of personal jurisdiction comprises two distinct components: amenability to jurisdiction and service of process. Amenability to jurisdiction means that a defendant is within the substantive reach of a forum's jurisdiction under applicable law. Service of process is simply the physical means by which that jurisdiction is asserted." DeMelo v. Toche Marine, Inc., 5 Cir. 1983, 711 F.2d 1260, 1264 (citations omitted)
A straddle is the simultaneous purchase and sale of futures contracts, deliveries to be made in different months. Investors have attempted to use straddles in stock options or commodities to generate capital gains and ordinary losses. Commodity Exchange, Inc. v. CFTC, 543 F. Supp. 1340 [1980-1982] Comm.Fut.L.Rep. (CCH) p 21,445 (S.D.N.Y. 1982); 1 P. Johnson, Commodities Regulation Sec. 1.15, at 48, 49 (1982)
Omni never amended its third party complaints to add the commodities law counts. Third party defendants may, however, move to dismiss the primary complaint for failure to state a claim. Fed. R. Civ. P. 14(a)
Transactions on the London Metals Exchange have been held outside the scope of Sec. 4b of the CEA. Kleinberg v. Bear Stearns & Co., [9184-86] Comm.Fut.L.Rep. (CCH) p 22,613 (S.D.N.Y. 1985); de Atucha v. Commodity Exchange, Inc., S.D.N.Y. 1985, 608 F. Supp. 510. The plaintiffs' claims may however be cognizable under Sec. 4c(b) of the Act, 7 U.S.C. § 6c(b) and Regulation 32.9, 17 C.F.R. Sec. 32.9, or under Regulation 30.02, 17 C.F.R. Sec. 30.02.
Lapeyrouse relied on Terry v. Raymond International, Inc., 5 Cir. 1981, 658 F.2d 398 and Lone Star Package Car Co. v. Baltimore & Ohio R.R. Co., 5 Cir. 1954, 212 F.2d 147. Burstein distinguished Terry and Lone Star
Section 2(a) (1) (A) provides:
The SEC, in an amicus brief submitted at the Court's request, agrees that the CFTC has exclusive regulatory jurisdiction over individual discretionary accounts, by virtue of amendments to the CEA enacted in the Commodities Futures Trading Commission Act of 1974. " [W]here the broker and manager of a discretionary commodity account receive commissions based on trade prices rather than share in the customer's profits or losses, the account is not a security within the meaning of the federal securities laws." SEC brf. at 2
The CFTC, in its amicus brief, which was also requested by the Court, concludes that both the plain language and the legislative history of the 1974 amendments to the Act make clear that Congress intended Section 2(a) (1) (now Section 2(a) (1) (A)) of the Act, 7 U.S.C. § 2, to preclude application of federal securities laws to all transactions involving futures and options on futures including foreign-exchange traded futures contracts, the options on such contracts, and the discretionary commodity accounts that are involved in this case.
Both these statements are relied on in Lapeyrouse v. Texaco, Inc., 5 Cir. 1982, 693 F.2d 581, 585
DeMelo v. Toche Marine, Inc., 711 F.2d 1260 (5th Cir. 1983)
283 F.2d 593 (3d Cir. 1960)
83 F.R.D. 414, 419 (E.D. Pa. 1979)
In DeJames v. Magnificence Carriers, Inc., 654 F.2d 280 (3d Cir. 1981) the Court affirmed a district order dismissing an admiralty claim against a Japanese corporation which did conversion work on American ships in Japan. Service was obtained under a New Jersey long-arm statute. The Court of Appeals found that the defendant's contacts with New Jersey were insufficient to support personal jurisdiction
See Stabilisierungsfonds fur Wein et al. v. Kaiser Stuhl Wine Distributors Pty. Ltd. et al., 647 F.2d 200 (D.C. Cir. 1981), at 203 & n. 4.... A defendant's national contacts enter into the fifth amendment fairness analysis, for it would be unreasonable to subject to suit in the United States a foreign national defendant who had but one fleeting connection with this country. But it is not necessary, under the fifth amendment due process clause, that the defendant's contacts relate primarily to the particular United States location in which the claim arose. Thus, for example, it would not be unfair under the fifth amendment to subject a foreign national shipper to suit in New Jersey on the basis of an admiralty claim that arose in that state, even if the offending ship was the only one ever to dock in New Jersey, and all of defendant's other ships land in Texas. [T]he availability of witnesses points to the District of New Jersey as the most convenient forum for the litigation.
Note, Alien Corporations and Aggregate Contacts: A Genuinely Federal Jurisdiction Standard, 95 Harv. L. Rev. 470, 472 (1981)
Von Mehren v. Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1125 n. 6 (1966)
397 F. Supp. 287 (D. Conn. 1975)
But see Note, Alien Corporations and Aggregate Contacts: A Genuinely Federal Standard, 95 Harv. L. Rev. 470, 481 (1981)
289 F. Supp. 381 (S.D. Ohio 1967)
355 F. Supp. 354 (W.D. Mich. 1973). In Holt, as in Cryomedics, the defendant failed to challenge the validity of the service. Cf. Engineering Equipment Co. v. S.S. Selene, 446 F. Supp. 706, 709-10 (S.D.N.Y. 1978) in which the court aggregated the national contacts of an alien defendant to determine whether quasi in rem jurisdiction could be exercised
362 F. Supp. 722 (D. Utah 1973)
Green, Federal Jurisdiction in Personam of Corporations and Due Process, 14 Vand. L. Rev. 967 (1961)
209 F. Supp. 730 (E.D. Tenn. 1962). The claim was under 49 U.S.C. § 20(11)-(12) (1976)
432 F. Supp. 659 (D.N.H. 1977)