Opinion ID: 385703
Heading Depth: 3
Heading Rank: 2

Heading: The Nature of the Jurisdiction Invoked by the FTC's Service

Text: 27 The exercise of jurisdiction by any governmental body in the United States is subject to limitations reflecting principles of international and constitutional law, as well as the strictures of the particular statute governing that body's conduct. When more than one nation is involved, jurisdictional issues are often elusive. Some jurisdiction which American governmental bodies might exercise consistently with the U.S. Constitution and laws could violate international law, while some exercises of jurisdiction to which international law does not object may violate the Constitution or laws of the United States. The jurisdictional questions posed by this case are peculiarly complex because the jurisdiction of three institutions is at issue: the jurisdiction of the nations involved, under international law, to require production of documents by a French citizen on French soil; the jurisdiction of the federal courts to enforce the agency's subpoena; and the jurisdiction of the agency to effect service of its subpoena by registered mail. 28
29 The Restatement (Second) of the Foreign Relations Law of the United States distinguishes two types of jurisdiction of a state: jurisdiction to prescribe and jurisdiction to enforce. 78 Jurisdiction to prescribe signifies a state's authority to enact laws governing the conduct, relations, status or interests of persons or things, whether by legislation, executive act or order, or administrative rule or regulation. 79 Jurisdiction to enforce, by contrast, describes a state's authority to compel compliance or impose sanctions for noncompliance with its administrative or judicial orders. 80 International law imposes different limitations upon a state's exercise of its jurisdiction, depending upon whether the jurisdiction exercised is prescriptive or enforcement jurisdiction. 81 30 Traditionally, a state has plenary power to prescribe rules within its own territorial boundaries. 82 Conversely, under traditional principles of absolute territoriality, (the laws of a nation) can have no force to control the sovereignty or rights of any other nation within its own jurisdiction. 83 Over time these rigid principles have yielded to certain exceptions. Thus, the current Restatement recognizes that a state has prescriptive jurisdiction not only over conduct, things, status or interests within its territory, 84 but also over conduct outside its territory which has or is intended to have substantial effects within its territory 85 as well as conduct of its nationals even when they are outside its borders. 86 31 When an American court orders enforcement of a subpoena requiring the production of documents and threatens penalties for noncompliance with that subpoena, it invokes the enforcement jurisdiction, rather than the prescriptive jurisdiction, of the United States. 87 The two types of jurisdiction are not geographically coextensive (a) state having jurisdiction to prescribe a rule of law does not necessarily have jurisdiction to enforce it in all cases, 88 for unlike a state's prescriptive jurisdiction, which is not strictly limited by territorial boundaries, enforcement jurisdiction by and large continues to be strictly territorial. 89 The Restatement illustrates this disjunction with the following hypothetical: 32 X is a national of state A residing in state B. A has jurisdiction to prescribe a rule subjecting X to punishment if he fails to return to A for military service. X does not return. A has no jurisdiction to enforce its rule by action against X in the territory of B. 90 33 If a state should enforce a rule which it does not have jurisdiction to enforce, it violates international law, thus giving rise to a claim by the state adversely affected which may then be adjudicated in an appropriate international forum. 91 This would be true even if the state had jurisdiction to prescribe the rule in the first place. 34 Again, the Restatement provides a clear illustration of how such a claim might arise: 35 X, a national of state A, kills a man in the territory of state B, and escapes to A. Public officers of B seize X in the territory of A and bring him back to B for trial. B has jurisdiction to prescribe criminal rules dealing with the conduct of X but no jurisdiction to take enforcement action in the territory of A. A has a claim against B under the rule (of international law) stated in this Section. 92 36 Similarly, the district court's enforcement order here violates the above principles of international law not because the United States lacks jurisdiction to prescribe rules relating to the antitrust matters under investigation, but because the court's order represents an attempt by the U. S. to exercise its enforcement jurisdiction within foreign territory before its prescriptive jurisdiction over the investigated conduct has been proved to exist. 37 More than a decade ago, one commentator analyzed a situation identical to the one before us, under principles of international law, in the form of a hypothetical problem: 38 (Suppose a) court orders aliens to produce documents both located abroad and related to their business activities abroad. The only valid basis of legislative (prescriptive) jurisdiction which could be invoked is the ... (so-called) effects doctrine. It must be proved that the commercial activities engaged in abroad had a harmful effect on the economy in the forum country. When a court, however, orders the production of documents, it is still in its investigatory stage. The documents are needed to prove the effects. Hence, the order is made before there is a finding as to whether or not effects exist. This means that the order is issued before legislative jurisdiction is proved to exist. Consequently, this would be an exercise of enforcement jurisdiction without legislative jurisdiction and, thus, contrary to international law. 93 39 Two separate conferences of the International Law Association have also studied this problem and reached the same conclusion that the district court's proposed enforcement of the administrative subpoena, by compelling the conduct in France of French nationals, would violate international law. The Fifty-First Conference, held in Tokoyo, initially concluded that: 40 It is difficult to find any authority under international law for the issuance of orders compelling the production of documents from abroad. The documents are admittedly located in the territory of another State. To assume jurisdiction over documents located abroad in advance of a finding of effect upon commerce raises the greatest doubts among non-Americans as to the validity of such orders. 94 41 The Fifty-Second Conference of the International Law Association, held in Helsinki, went on to draw a clear distinction between the type of production ordered in DeSmedt 95 and the type ordered here: 42 (T)he basic principle is that the jurisdiction to order production of documents must be commensurate with the limits of the legislative (prescriptive) jurisdiction to regulate the matters to which the documents relate. Thus, the true legal position will be as follows: 43 (1) Where a State requires a local branch (of a foreign company) to produce documents relating to its own affairs, the demand cannot be resisted merely because the documents are not within the jurisdiction or that they belong to a non-resident alien. A case may arise when the discovery is prohibited by his lex situs (the law of the residence of the alien and the documents). In such case, each State is acting within its jurisdiction, the one in requiring production and the other in forbidding it, and a conflict arises. 44 (4) Where, however, a State proceeds against a local branch to enforce the production of documents situate abroad and moreover relating to the affairs or to activities outside the jurisdiction of the head-office of the non-resident alien, the requirement is only lawful if the enforcing State has, in fact, substantive jurisdiction to enquire into those affairs and activities. A State abuses its powers if it uses the process of its courts to reach further than its legislative jurisdiction properly extends. 96 45 By this analysis, the district court's enforcement of the FTC's subpoenas so served would clearly extend American enforcement jurisdiction beyond the limits of its prescriptive jurisdiction. As such, the district court's enforcement order violated a fundamental principle of international law. 46
47 When a state's jurisdiction to adjudicate, 97 as opposed to its enforcement or prescriptive jurisdiction, is at issue, questions of service of process, subject matter jurisdiction, and personal jurisdiction are invariably intertwined and hence, frequently confused. Before a federal court may adjudicate a controversy, it must possess jurisdiction over both the subject matter of the action and over the persons whose rights are to be affected by its determination. 98 Both types of jurisdiction are constitutionally limited. The subject matter jurisdiction of the federal courts depends totally upon congressional implementation of a constitutional grant of subject matter jurisdiction. 99 Furthermore, federal courts are subject to limits of personal jurisdiction a court may not exercise its adjudicatory authority over an individual unless it has power to reach him, as circumscribed by the due process clause of the Constitution. 100 Under modern doctrine, 101 due process is not satisfied unless the defendant has sufficient minimum contacts with the forum such that the maintenance of a lawsuit against him in that forum does not offend traditional notions of fair play and substantial justice. 102 Procedural due process further requires that a court not exercise its adjudicatory authority over a person, even when it has the power to do so, unless that person has been given adequate notice and opportunity to be heard. 103 Thus a court may lack personal jurisdiction over an individual either because it is powerless to affect his rights or because it has failed to give him proper notice that his rights are at issue. 48 If properly accomplished, service of process confers personal jurisdiction upon a court to adjudicate the rights of a party. 104 When as here, the issue is the propriety of a particular technique of serving a particular type of process, however, neither subject matter jurisdiction nor personal jurisdiction in either the power or the notice sense is directly at issue. 105 The basic inquiry here is thus whether the district court's enforcement order should be vacated because the manner used by the agency to serve its subpoena was unauthorized by, or in in some other way obnoxious to, domestic or international law. 49 The district court, however, apparently viewed the central issue in the case as whether or not the power of the FTC to serve process abroad could validly be inferred from its broad investigatory and regulatory jurisdiction. 106 The court read Blackmer v. United States 107 as unequivocally conclud(ing) that the lawful exercise of jurisdiction confers the authority to effect service. 108 It then postulated that since the Blackmer Court had upheld Congress' power expressly to authorize issuance of subpoenas abroad, it must have also approved Congress' power to secure service of those subpoenas. By delegating its subpoena power to the FTC, the district court concluded, Congress by implication must have delegated to the agency authority to effect subpoena service in any permissible manner. 109 50 Such an analysis fundamentally misreads the Supreme Court's jurisdictional findings in Blackmer, as a review of the history of that case will demonstrate. Upon discovery of the Teapot Dome scandal in 1923, a number of the prominent Americans involved, among them Harry Blackmer, fled to France. To compel their testimony in the subsequent criminal proceedings, Congress passed the Walsh Act 110 authorizing the federal district courts to compel the attendance of American witnesses abroad in connection with domestic criminal proceedings. The statute expressly authorized service of judicial subpoenas outside the United States and specified the means of service to be employed. 111 Pursuant to the Act, the Supreme Court of the District of Columbia issued a subpoena which was served upon Blackmer in the statutorily authorized fashion, requiring Blackmer to appear as a witness at a criminal trial. When Blackmer failed to respond, he was found in contempt of court. The U. S. Supreme Court affirmed the contempt conviction and upheld the statute against a due process attack solely on the grounds that Blackmer was, and continued to be, a citizen of the United States. 112 51 The Blackmer Court found the statute consistent with both the Constitution and international law for two reasons. With respect to the exercise of the United States' prescriptive authority over Blackmer, the Court found there is no question of international law, but solely of the purport of the municipal law which establishes the duties of the citizen in relation to his own government, namely, the duty which the citizen owes to his government ... to support the administration of justice by attending its courts and giving his testimony whenever he is properly summoned. 113 With respect to the exercise of the United States' adjudicative authority over Blackmer, the Court held that the trial court's authority to give Blackmer constitutionally required notice was a necessary adjunct of its judicial power over him, which in turn was independently based upon the contact provided by his American citizenship. 114 52 Upon examination, this case bears little resemblance to Blackmer. In Blackmer, the primary question was one of personal jurisdiction: whether Blackmer's American citizenship provided a sufficient basis for the court's assertion of its adjudicatory power over him. 115 The witness did not challenge the subject matter jurisdiction of the court; Congress had by statute explicitly delegated to the court the authority to issue its subpoenas abroad as part of its general jurisdiction to adjudicate. Nor did Blackmer question whether Congress had authorized the particular technique of service employed. In the Walsh Act, Congress had clearly stated its intent to equip courts with a means by which to serve American witnesses abroad to procure their attendance in criminal proceedings. 116 Thus the only question of international law discussed in Blackmer was whether Congress, by enacting the Walsh Act, had exceeded its prescriptive jurisdiction. 117 53 Here, by contrast, the primary questions are those of subject matter jurisdiction and technique of service. At the time of service, Congress had explicitly conferred subject matter jurisdiction on the agency to investigate conditions which may affect America's foreign trade, but it had not explicitly delegated to the agency any authority to serve its subpoenas on foreign citizens abroad. 118 In Blackmer, the congressional intent regarding the proper method of service was unmistakable; here, it is precisely the congressional intent with respect to technique of service which is in dispute. 54 In direct contradistinction to Blackmer, in this case the personal jurisdiction of both the district court and the agency over the respondent is not at issue: the court has secured personal jurisdiction over the respondent by proper service of process and, misguidedly or not, the respondent has conceded that the documents being sought are subject to the personal jurisdiction of the agency. 119 The relevant issues under international law, therefore, are whether the FTC has properly served its subpoena and whether the court exceeded its enforcement jurisdiction by enforcing that subpoena. 55 The district court chose to answer the question of the propriety of the FTC's method of service by reference to the agency's subject matter jurisdiction. 120 Thus, the district court derived the agency's specific authority to serve its subpoena abroad in the manner chosen not from any federal statute, but solely by implication from the agency's general investigatory and regulatory jurisdiction. In view of the prevailing principles of international law opposing that mode of service, 121 we will examine whether such an implication was warranted. 56