Opinion ID: 580868
Heading Depth: 1
Heading Rank: 3

Heading: direct personal jurisdiction

Text: 12 The case at bar presents a golconda of questions concerning the assertion of personal jurisdiction over an alien corporation in a situation where subject matter jurisdiction is premised upon the existence of a federal question. See 28 U.S.C. § 1331 (1988) (grant of federal question jurisdiction); 29 U.S.C. §§ 185(c), 1132(e)(1) (establishing subject matter jurisdiction under LMRA and ERISA, respectively). We take a step-by-step approach.
13 Because the instant case is premised on a federal question, it is distinguishable from cases that address personal jurisdiction in the context of diversity jurisdiction, 28 U.S.C. § 1332 (1988)--a context in which the focal point is, of necessity, the Fourteenth Amendment. The distinction is of potential consequence. When a district court's subject matter jurisdiction is founded upon a federal question, the constitutional limits of the court's personal jurisdiction are fixed, in the first instance, not by the Fourteenth Amendment but by the Due Process Clause of the Fifth Amendment. See Lorelei Corp. v. County of Guadalupe, 940 F.2d 717, 719 (1st Cir.1991) (per curiam); Whistler Corp. v. Solar Elecs., Inc., 684 F.Supp. 1126, 1128 (D.Mass.1988). Inasmuch as the federalism concerns which hover over the jurisdictional equation in a diversity case are absent in a federal question case, a federal court's power to assert personal jurisdiction is geographically expanded. In such circumstances, the Constitution requires only that the defendant have the requisite minimum contacts with the United States, rather than with the particular forum state (as would be required in a diversity case). See Lorelei, 940 F.2d at 719; Trans-Asiatic Oil Ltd. v. Apex Oil Co., 743 F.2d 956, 959 (1st Cir.1984). 14 Nevertheless, while courts in federal question cases have found that sufficient contacts [to justify the assertion of personal jurisdiction] exist whenever the defendant is served within the sovereign territory of the United States, Lorelei, 940 F.2d at 719 (citing cases), the basis for service of process returnable to a particular court must be grounded within a federal statute or Civil Rule. See, e.g., id. at 719-20; Johnson Creative Arts, Inc. v. Wool Masters, Inc., 743 F.2d 947, 950 (1st Cir.1984). In other words, though personal jurisdiction and service of process are distinguishable, they are inextricably intertwined, since service of process constitutes the vehicle by which the court obtains jurisdiction. See Lorelei, 940 F.2d at 719 n. 1; cf. Robertson v. Railroad Labor Bd., 268 U.S. 619, 622, 45 S.Ct. 621, 622-23, 69 L.Ed. 1119 (1925) (a federal court cannot acquire personal jurisdiction over a defendant unless the defendant is properly served with process). 15 Civil Rule 4 constitutes the principal mechanism for service of process in the federal courts. 4 In the majority of cases, Rule 4(f) limits service of process to the territorial limits of the state in which the court is held. Johnson, 743 F.2d at 950. But, a number of federal laws provide for either nationwide or worldwide service, see 2 James W. Moore et al, Moore's Federal Practice p 4.42[2.-1] (2d ed. 1991) (listing statutes), and Rule 4(e) authorizes extraterritorial service in such circumstances. 16 ERISA is a statute that contemplates extraterritorial service. 5 It provides in pertinent part: 17 Where an action under [ERISA] is brought in a district court of the United States ... process may be served in any other district where a defendant resides or may be found. 18 29 U.S.C. § 1132(e)(2). By its express terms, this provision limits extraterritorial service to a nationwide, not a worldwide, scope. 6 Accord Rodd v. Region Constr. Co., 783 F.2d 89, 91 (7th Cir.1986); Cannon v. Gardner-Martin, Etc., 699 F.Supp. 265, 266 (M.D.Fla.1988). 19 Hence, our analysis comes full circle. When insufficient statutory authorization for extraterritorial service exists, Rule 4(e) allows such service only to the extent permitted by the law of the state in which the district court sits. Lorelei, 940 F.2d at 720; see also Johnson, 743 F.2d at 950. It follows that, absent a federal statute permitting service of process on ITD in Scotland, our threshold inquiry must focus on Massachusetts law concerning personal jurisdiction, notwithstanding that this is a federal question case. And, because state law is subject to Fourteenth Amendment limitations, the minimum contacts doctrine, while imposing no direct state-by-state constraint on a federal court in a federal question case, acts indirectly as a governing mechanism for the exercise of personal jurisdiction. See Lorelei, 940 F.2d at 720.
20 In Massachusetts, a court may exercise personal jurisdiction over a foreign defendant if such jurisdiction is authorized by state statute or rule and its exercise does not offend due process. See Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 981 (1st Cir.1986); Bond Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d 928, 931 (1st Cir.1985); Carlson Corp. v. Univ. of Vt., 380 Mass. 102, 402 N.E.2d 483, 485 (1980). 21 On the first prong of the furcula, the soliciting business statute, Mass.Gen.L. ch. 223, § 38 (1990), often employed as a basis for jurisdiction in commercial cases, is inhospitable to the plaintiffs' cause. Section 38 requires that a defendant's business presence in Massachusetts be substantial or have a significant impact upon the transaction that forms the basis for the cause of action. See Mas Marques v. Digital Equip. Corp., 637 F.2d 24, 28 (1st Cir.1980). Since the district court supportably found that ITD's only ties with Massachusetts derive from the PSC connection--ITD itself does not own property, maintain bank accounts, hold a license to do business, sell goods, advertise, or solicit business in Massachusetts--the less demanding Massachusetts long-arm statute, Mass.Gen.L. ch. 223A, § 3 (1990), offers the most appropriate jurisdictional mooring for the plaintiffs' claim. 7 22 Both federal and state courts have regularly construed the transacting any business language of the statute in a generous manner. See, e.g., Hahn v. Vermont Law School, 698 F.2d 48, 50 (1st Cir.1983); Nova Biomedical Corp. v. Moller, 629 F.2d 190, 193 (1st Cir.1980); Heins v. Wilhelm Loh Wetzlar Optical Mach. GmbH & Co., 26 Mass.App.Ct. 14, 522 N.E.2d 989, 991 rev. denied, 402 Mass. 1105, 525 N.E.2d 678 (1988). The defendant need not have a physical presence in Massachusetts. See Bond, 764 F.2d at 933. The test focuses instead upon whether the defendant attempted to participate in the commonwealth's economic life. See Hahn, 698 F.2d at 52; Nova, 629 F.2d at 195. Since the extent of a nonresident's involvement ... is properly relevant to the constitutional, not the statutory[,] dimension of the jurisdiction inquiry, Bond, 764 F.2d at 932, even somewhat exiguous acts on a defendant's part can, at times, suffice to satisfy the long-arm statute's threshold for transacting business. See, e.g., id. at 933 (mailing four letters into Massachusetts evidencing a single guaranty of payment for goods sold); Hahn, 698 F.2d at 51 (mailing application information and acceptance letter to plaintiff in Massachusetts); Nova, 629 F.2d at 195, 197 (mailing two letters, which charged patent infringement and threatened litigation, into Massachusetts); Carlson, 402 N.E.2d at 485 (signing a contract in Massachusetts). Nonetheless, the mere ownership of a subsidiary by a passive investor, standing alone, has been held insufficient to satisfy the statutory requirement. See Kleinerman v. Morse, 26 Mass.App.Ct. 819, 533 N.E.2d 221, 224 (1989). 23 We do not believe that Kleinerman is dispositive here. In this case, plaintiffs alleged, and arguably proved, more than passive investment: ITD's agent was enmeshed in the negotiations for a collective bargaining agreement between PSC and the Union; ITD paid the salaries for top executives of PSC; ITD communicated with PSC regarding management of the business; ITD allowed financial statements to be used to shore up PSC's credit rating; and ITD made advances to PSC, in cash and in kind. In light of the expansive interpretation accorded to Mass.Gen.L. ch. 223A, § 3, we think the lower court's ruling that ITD was transacting business in Massachusetts is likely sustainable. 24 We can reserve definitive judgment on this point, however, because the long-arm statute also demands that plaintiffs' cause of action arise from the defendant's transaction of business in the commonwealth. See Marino v. Hyatt Corp., 793 F.2d 427, 428 (1st Cir.1986); Hahn, 698 F.2d at 51; Singer v. Piaggio & C., 420 F.2d 679, 681 (1st Cir.1970). The statute's relatedness requirement mirrors a key constitutional requirement for the exercise of specific jurisdiction. See Ealing, 790 F.2d at 983 (Explicit in the [Massachusetts] long-arm statute is the specific-jurisdiction requirement that the cause of action arise from the defendant's activity within the state.). It behooves us, therefore, to truncate our statutory analysis and enter the constitutional copse.
25 In Donatelli v. National Hockey League, 893 F.2d 459, 462-65 (1st Cir.1990), we explicated the general policies and concerns animating the jurisprudence of personal jurisdiction. Rather than fully repastinating that ground, we concentrate here on the constitutional touchstone for personal jurisdiction: minimum contacts. 26 The minimum contacts standard requires that a court asserting personal jurisdiction determine that the nonresident defendant possesses sufficient contacts with the forum state so that subjecting him, her, or it to the forum's jurisdiction does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citation omitted). The test is far from precise: the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. Id. at 319, 66 S.Ct. at 159. Each case requires an individualized weighing of the material facts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 485-86, 105 S.Ct. 2174, 2189, 85 L.Ed.2d 528 (1985); Kulko, 436 U.S. at 92, 98 S.Ct. at 1697. In constructing such a weighbeam, the measuring points will rarely be written in gleaming black or glistening white. The greys are dominant and even among them the shades are innumerable. Estin v. Estin, 334 U.S. 541, 545, 68 S.Ct. 1213, 1216, 92 L.Ed. 1561 (1948). 27 In analyzing a defendant's contacts, the decisionmaker's attention must be focused on the relationship among the defendant, the forum, and the litigation. Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2580, 53 L.Ed.2d 683 (1977). To this end, the concept of purposeful availment comes into play: 28 The application of [the minimum contacts] rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. 29 Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958); see also Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984) (purposeful availment requirement assures that jurisdiction will not be based solely upon a defendant's random, isolated, or fortuitous contacts with the forum state). 30 The Court has also introduced concepts of reasonableness and foreseeability into minimum contacts analysis, demanding that a defendant's conduct and connection with the forum State [be] such that he should reasonably anticipate being haled into court there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). This means that, even where purposefully generated contacts exist, courts must consider a panoply of other factors which bear upon the fairness of subjecting a nonresident to the authority of a foreign tribunal. See Donatelli, 893 F.2d at 464-65. The Court has identified five relevant criteria: (1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies. Burger King, 471 U.S. at 477, 105 S.Ct. at 2184. We have termed these five criteria the Gestalt factors. Donatelli, 893 F.2d at 465. 8 31 In analyzing minimum contacts, we have recognized two types of personal jurisdiction: general and specific. See, e.g., id. at 462-63. General jurisdiction exists when the litigation is not directly founded on the defendant's forum-based contacts, but the defendant has nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 & n. 9, 104 S.Ct. 1868, 1872-73 & n. 9, 80 L.Ed.2d 404 (1984). ITD's contacts are manifestly insufficient to ground a claim of general jurisdiction in the present case. The court below found that ITD's sole connection with Massachusetts concerned a single forum-based company, PSC. The transactions and communications in this respect were qualitatively less than those found non-pervasive in Helicopteros. Thus, plaintiffs' case necessarily depends upon the presence or absence of specific jurisdiction.
32 Specific personal jurisdiction may be asserted where the cause of action arises directly out of, or relates to, the defendant's forum-based contacts. See id. at 414 & n. 8, 104 S.Ct. at 1872 & n. 8; Donatelli, 893 F.2d at 462. The cases that address the question of when this phenomenon occurs tend to be fact-specific. See, e.g., Glater v. Eli Lilly & Co., 744 F.2d 213, 215-16 (1st Cir.1984). Overall, courts have played the tortoise in designing an analytic framework aimed at constructing a reasoned answer to this conundrum. 9 33 For our part, we have formulated a few, rather abecedarian precepts pertaining to the relatedness requirement. First, we steadfastly reject the exercise of personal jurisdiction whenever the connection between the cause of action and the defendant's forum-state contacts seems attenuated and indirect. See Donatelli, 893 F.2d at 463. Instead, the defendant's in-state conduct must form an important, or [at least] material, element of proof in the plaintiff's case. Marino, 793 F.2d at 430 (construing Massachusetts statute). Thus, in a contract case, the defendant's forum-based activities must be instrumental in the formation of the contract. Hahn, 698 F.2d at 51 (construing Massachusetts statute). We have likewise suggested an analogy between the relatedness requirement and the binary concept of causation in tort law under which both elements--cause in fact (i.e., the injury would not have occurred but for the defendant's forum-state activity) and legal cause (i.e., the defendant's in-state conduct gave birth to the cause of action)--must be satisfied to find causation sufficient to support specific jurisdiction. Pizarro v. Hoteles Concorde Int'l, C.A., 907 F.2d 1256, 1259 (1st Cir.1990) (construing Puerto Rico statute). In this inquiry, foreseeability is critical. See id. at 1259-60. 34 To summarize these principles, we today suggest a tripartite test for the ascertainment of specific jurisdiction. First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.
35 We turn now to the work of applying this test to the case at hand. In considering the first segment--relatedness--it is important to bear in mind the nature of plaintiffs' claim. Their cause of action centers on ITD's supposed breach of a contractual and statutory duty to pay health-care premiums. Of the forum-related contacts mentioned by the district court, only Lindsay's involvement in negotiation of the collective bargaining agreement can be thought to give rise, or relate, to this cause of action. See Hahn, 698 F.2d at 51. The breach of contract cannot conceivably be said to have arisen directly from, or been caused proximately by, ITD's remaining Massachusetts contacts--all of which related to financial and business assistance delivered after initial execution of the collective bargaining agreement. For purposes of the second and third prongs of the test, therefore, we can restrict our inquiry to Lindsay's involvement in the labor negotiations. 36 Before exploring whether ITD, through Lindsay's participation in the collective bargaining process, purposefully availed itself of a Massachusetts venue in any constitutionally relevant sense, we remark the obvious: the contacts of a corporation's agent can subject the corporation to personal jurisdiction. This result flows naturally from the corporate form. Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, it is clear that unlike an individual its 'presence' without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it. International Shoe, 326 U.S. at 316, 66 S.Ct. at 158 (citation omitted). Inasmuch as ITD had not purchased PSC when Lindsay, a part-owner of ITD, first became involved in the negotiations, we can assume, at least for argument's sake, that he was acting as an agent of ITD. 37 The Supreme Court, when analyzing personal jurisdiction in contract cases, has taken a holistic approach, emphasizing that a contract is an intermediate step in a process involving prior ... negotiations [and] future consequences. Burger King, 471 U.S. at 479, 105 S.Ct. at 2185 (quoting Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 317, 63 S.Ct. 602, 605, 87 L.Ed. 777 (1943)). Starting from this coign of vantage, courts have found that participating in significant negotiations within the forum state anent important contract terms can constitute minimum contacts with the state for purposes of a subsequent claim asserting breach of that contract. See, e.g., Complete Concepts, Ltd. v. General Handbag Corp., 880 F.2d 382, 388-89 (11th Cir.1989) (per curiam); Williams Elec. Co. v. Honeywell, Inc., 854 F.2d 389, 392-93 (11th Cir.1988) (per curiam); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir.1986); Data Disc Inc. v. Systems Technology Assocs., Inc., 557 F.2d 1280, 1287-88 (9th Cir.1977). 38 The present case, however, is at a considerable remove. Here, unlike the defendants in the cited cases, ITD was not a party to the contract. Here, unlike the cited cases, there is no indication in the record that Lindsay's involvement in the negotiations took place in the forum state or by means of communications to and from the forum. 10 The location of the negotiations is vitally important to the jurisdictional inquiry in a case like this one. If the negotiations occurred outside the forum state, their existence cannot serve to bolster the argument for the assertion of jurisdiction in the forum. See Pathe Computer Control Systems Corp. v. Kinmont Indus., Inc., 955 F.2d 94, 96 (1st Cir.1992). Here, the negotiations constitute too thin a reed to support the district court's exercise of personal jurisdiction over ITD. For aught that appears, Lindsay might have played his part by telephone calls from Scotland to the Union's national offices in Pennsylvania, or by attending meetings held in a law firm's conference room in Delaware, New York City, or some other venue. The record leaves these important facts entirely open to conjecture, speculation, and surmise. 39 When personal jurisdiction is contested, plaintiffs bear the burden of proving the facts upon which the existence of jurisdiction depends. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936); General Contracting & Trading Co. v. Interpole, Inc., 899 F.2d 109, 115 (1st Cir.1990); Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 389 N.E.2d 76, 78 (1979). The present plaintiffs, veil piercing aside, failed to carry the devoir of persuasion. Because there is insufficient evidence in the record to find that ITD, through its own affirmative conduct, purposefully availed itself of the privilege of conducting activities in Massachusetts such that it could reasonably anticipate being haled into court there, the district court lacked direct jurisdiction over ITD based upon the latter's contacts with the commonwealth. 11