Opinion ID: 2320756
Heading Depth: 2
Heading Rank: 3

Heading: Voidness for Lack of Personal Jurisdiction

Text: The defendants contend that even if the district court did not commit any procedural error in its entry of default judgment during the Rule 55(b)(2) proceedings, the default judgment is nonetheless void because the district court lacked personal jurisdiction ab initio. The defendants assert that both a correct application of the New York long-arm statute, C.P.L.R. § 302(a)(3)(ii), and principles of constitutional due process under the Fifth and Fourteenth Amendments require us to hold that personal jurisdiction was absent here, even as a prima facie matter, and that the district court's repeated determinations to the contrary were in error. Because we conclude that the defendants forfeited their jurisdictional defense, and therefore the district court's assertion of personal jurisdiction over them was proper, we reject the defendants' voidness argument.
A default judgment is void if it is rendered by a court that lacks jurisdiction over the parties. See  R Best Produce, 540 F.3d at 123 (citing In re Texlon Corp., 596 F.2d 1092, 1099 (2d Cir.1979)); Covington Indus., Inc. v. Resintex A.G., 629 F.2d 730, 732 (2d Cir.1980). Had the defendants asserted their voidness argument before the district court in the first instance, they might have done so pursuant to Rule 60(b)(4). That rule provides: On motion and just terms, the court may relieve a party . . . from a final judgment . . . [if] the judgment is void. Fed. R. Civ. 60(b)(4); see  R Best Produce, 540 F.3d at 122-23 (explaining that a defendant seeking to challenge a default judgment for lack of personal jurisdiction may proceed under Rule 60(b)(4)). We therefore find it appropriate to consider our precedent governing Rule 60(b)(4) motions. A judgment is void under Rule 60(b)(4) of the Federal Rules of Civil Procedure. . . `if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law.' Grace, 443 F.3d at 193 (quoting In re Texlon Corp., 596 F.2d at 1099). `Whereas we generally review motions pursuant to the provisions of Rule 60(b) for abuse of discretion, we review de novo a district court's denial of a Rule 60(b)(4) motion.' Burda Media, Inc. v. Viertel, 417 F.3d 292, 298 (2d Cir.2005) (quoting State St. Bank & Trust Co., 374 F.3d at 178). That is because, if the underlying judgment is void for lack of jurisdiction, it is a per se abuse of discretion for a district court to deny a movant's motion to vacate the judgment under Rule 60(b)(4). Id. (internal quotation marks omitted); accord Spamhaus Project, 500 F.3d at 598. `[T]he judgment is either void or it is not.' Cent. Vt. Pub. Serv. Corp. v. Herbert, 341 F.3d 186, 189 (2d Cir.2003) (quoting Recreational Props., Inc. v. Sw. Mortg. Serv. Corp., 804 F.2d 311, 314 (5th Cir.1986)).
The procedural history of this case is dispositive of our voidness analysis. The district court may have erred in its determination that the City had made a prima facie showing of personal jurisdiction over each of the defendants, for the reasons discussed in Judge Wesley's concurring opinion. But we have already concluded that by appearing, litigating, and then intentionally withdrawing from the proceedings, the defendants forfeited their jurisdictional defense. As a result, the defendants submitted to the jurisdiction of the district court. The default judgment that the court rendered was thus supported by personal jurisdiction and is not void. The defendants appear to assume that a default judgment is void for lack of personal jurisdiction even where a defendant's litigation tactics before the district court were inconsistent with the preservation of its jurisdictional defense. The defendants also appear to rely on the well-established principle that a defendant who does not answer a complaint in the first instance, and later suffers a default judgment to be entered against it, may subsequently challenge the default judgment as void for lack of personal jurisdiction. The defendants overlook the critical distinction between defendants who appear in courteven if only to challenge the court's jurisdictionand those who do not. See Sinoying Logistics, 619 F.3d at 213. A non-appearing defendant does not, by defaulting, forfeit its right to challenge any ensuing default judgment for lack of personal jurisdiction. A defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding. Ins. Corp. of Ireland, 456 U.S. at 706, 102 S.Ct. 2099; see also  R Best Produce, 540 F.3d at 123; Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 160 (2d Cir.2005), cert. denied, 547 U.S. 1175, 126 S.Ct. 2320, 164 L.Ed.2d 860 (2006); Transaero, 162 F.3d at 729; Restatement (Second) of Judgments § 65 cmt. b. In such a case, voidness of a judgment for lack of personal jurisdiction can be asserted on a collateral challenge pursuant to Rule 60(b)(4).  R Best Produce, 540 F.3d at 123. But when a defendant appears and challenges jurisdiction, we interpret that to constitute it[s] agree[ment] to be bound by the court's determination on the jurisdictional issue. Transaero, 162 F.3d at 729; see Ins. Corp. of Ireland, 456 U.S. at 706, 102 S.Ct. 2099 (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.); cf. SEC v. Ross, 504 F.3d 1130, 1150 (9th Cir.2007) (defendant-intervenor does not, through Rule 24(a) intervention, consent to personal jurisdiction, but does consent[] to have the district court determine all issues in the case, including issues of jurisdiction). Although an appearing defendant may, if it disagrees with the district court's threshold ruling on personal jurisdiction, seek reversal of that ruling on appeal, the defendant must properly preserve its defense for appellate review. Both Adventure Outdoors and Mickalis Pawn were appearing defendants. Both retained counsel who filed notices of appearance on their behalf. Both challenged the City's pleadings with two rounds of Rule 12(b) motions. Adventure Outdoors continued to litigate the case through summary judgment; Mickalis Pawn, though it withdrew prior to the close of discovery, nonetheless appeared [and] defended vigorously over the course of about two years of active litigation. Opening Br. of Mickalis Pawn at 4. By submitting to the jurisdiction of the district court to decide the question of personal jurisdictionbut then withdrawing from the proceedings, rather than litigating the case to final judgmentthe defendants failed to preserve their jurisdictional defense for review on appeal. And because they failed to preserve that defense, they acquiesced to the jurisdiction of the district court, and the resulting judgment of that court is not void. [24] We recognize that even where a defense has been forfeited, appellate review is not necessarily foreclosed. [T]his Court has discretion to decide the merits of a forfeited claim or defense where the issue is purely legal and there is no need for additional fact-finding or where consideration of this issue is necessary to avoid manifest injustice. Patterson v. Balsamico, 440 F.3d 104, 112 (2d Cir.2006) (internal quotation marks omitted). However, we will not excuse the defendants' forfeiture in this instance, where there is every indication that the defendants' default was not the product of inadvertence, but a deliberate tactic instead. We will not allow the defendants to escape the consequences of their strategic decisions simply because they have proven to be disadvantageous to them. Spamhaus Project, 500 F.3d at 600; cf. LNC Invs., Inc. v. Nat'l Westminster Bank, 308 F.3d 169, 176 n. 8 (2d Cir.2002) (noting that [i]t would be particularly unusual to address an argument despite its abandonment on appeal . . . . where the abandonment appears, as it does here, to be a strategic choice rather than an inadvertent error), cert. denied, 538 U.S. 1033, 123 S.Ct. 2080, 155 L.Ed.2d 1063 (2003). Our decision not to excuse the forfeiture is also informed by our respect for the limits of our own jurisdictionlimits that the defendants sought to evade through their strategic decisions to default. The core of our appellate jurisdiction is to review final decisions of the district courts. See 28 U.S.C. § 1291. With limited exceptions, see generally Myers v. Hertz Corp., 624 F.3d 537, 552 (2d Cir. 2010), only final orders and judgments may be appealed, see Cruz v. Ridge, 383 F.3d 62, 64 (2d Cir.2004) (per curiam). [T]he general rule [is] that a party is entitled to a single appeal, to be deferred until final judgment has been entered. Mohawk Indus., Inc. v. Carpenter, ___ U.S. ___, 130 S.Ct. 599, 605, 175 L.Ed.2d 458 (2009) (internal quotation marks omitted). In including a requirement of finality in defining the scope of our jurisdiction under 28 U.S.C. § 1291, Congress `express[ed] a preference that some erroneous trial court rulings go uncorrected until the appeal of a final judgment, rather than having litigation punctuated by piecemeal appellate review of trial court decisions which do not terminate the litigation.' In re World Trade Ctr. Disaster Site Litig., 521 F.3d 169, 178 (2d Cir.2008) (quoting Richardson-Merrell, Inc. v. Roller, 472 U.S. 424, 430, 105 S.Ct. 2757, 86 L.Ed.2d 340 (1985)). Denials of dispositive motions are therefore not ordinarily appealable on an interlocutory basis. See, e.g., Napoli v. Town of New Windsor, 600 F.3d 168, 170 (2d Cir.2010) (per curiam). We cannot permit the defendants to short-circuit the normal litigation process by withdrawing, inducing a default judgment to be entered against them, and then obtaining de facto interlocutory review over otherwise non-appealable decisions. We have observed, with respect to similar strategic conduct by plaintiffs: [I]f a litigant could refuse to proceed whenever a trial judge ruled against him, wait for the court to enter a dismissal for failure to prosecute, and then obtain review of the judge's interlocutory decision, the policy against piecemeal litigation and review would be severely weakened. This procedural technique would in effect provide a means to avoid the finality rule embodied in 28 U.S.C. § 1291. Moreover, if a party who was disappointed by an interlocutory ruling could obtain an appeal of that ruling by simply refusing to prosecute his or her lawsuit, adherence to the merger rule[ [25] ] would reward that party for dilatory and bad faith tactics. Such a result would conflict with the purpose of a Rule 41(b) dismissal for failure to prosecute, which is to penalize dilatoriness and harassment of defendants. Shannon v. Gen. Elec. Co., 186 F.3d 186, 192 (2d Cir.1999) (brackets, ellipsis, citations, and internal quotation marks omitted; footnote added); see also Rabbi Jacob Joseph Sch. v. Province of Mendoza, 425 F.3d 207, 210-11 (2d Cir.2005); Martens v. Thomann, 273 F.3d 159, 183 (2d Cir.2001). The same concerns arise here. To overlook the defendants' forfeiture would be to permit[] . . . an end-run around the final judgment rule. [26] Palmieri v. Defaria, 88 F.3d 136, 140 (2d Cir.1996). But see Savin v. Ranier, 898 F.2d 304, 307 (2d Cir.1990) (reviewing, on appeal from default judgment, the merits of appearing defendant's jurisdictional defense, where plaintiff did not claim that defendant had forfeited that defense by defaulting). We also decline to overlook the defendants' forfeiture based on their assertion that they suffered grave financial hardship by being forced to defend a lawsuit in New York. The defendants appear to contend that it would be unfair to expect them to have waited until after trial to seek appellate review of the district court's adverse interlocutory decisions concerning personal jurisdiction. Citing Gulf Coast Fans, Inc. v. Midwest Electronics Importers, Inc., 740 F.2d 1499 (11th Cir.1984), they urge that the district court's decision to delay final adjudication of their jurisdictional defense until trial put [them] in the uncomfortable position of having to prepare for a full-blown trial even if [they] might eventually prevail on the jurisdictional claim, id. at 1511. We are not without sympathy for these sentiments, nor do we necessarily disagree with Judge Wesley's conclusion that the district court erred in its jurisdictional analysis. But the Supreme Court has made clear that the possibility that a ruling may be erroneous and may impose additional litigation expense is not a sufficient basis for affording appellate review over interlocutory decisions. Richardson-Merrell, 472 U.S. at 436, 105 S.Ct. 2757.