Court Opinion

ID: 8913651
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:05:46.770251+00
Date Added: 2024-06-11T17:08:46.220380
License: Public Domain

GIBBONS, Circuit Judge,
dissenting:
I agree with the majority that the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 20 U.S.T. 361-367 (1969), does not afford a “wholly federal” means of service of process on a foreign national corporation. Like the majority, I believe the Convention, rather than creating an independent source of adjudicatory competence, facilitates and provides a uniform method of service of process pursuant to some already extant state or federal statute or rule. Unlike the majority, however, I believe Hitachi’s relation to New Jersey satisfies the fourteenth amendment due process concerns the Supreme Court enunciated in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). The majority relies on World-Wide Volkswagen to hold that Hitachi had no “reasonable expectation” of being haled before a court in New Jersey. The majority analogizes Hitachi to the local dealers involved in World-Wide Volkswagen. This analogy is off the mark.
In World-Wide Volkswagen the Supreme Court held that a local dealer may not be called to account in a distant place for a product not of its manufacture sold in a restricted market. The Court made clear that Judge Sobeloff’s famous hypothetical of the California gas station owner who sells a tire that blows out following a cross country trip to Pennsylvania, Erlanger Mills Inc. v. Cohoes Fibre Mills Inc., 239 F.2d 502, 507 (4th Cir. 1956), cited in WorldWide Volkswagen, supra, at 296, would remain confined to Civil. Procedure texts. See Comment, Federalism, Due Process and Minimum Contacts: World-Wide Volkswagen v. Woodson, 80 Colum.L.Rev. 1341, 1358-61 (1980). At the same time, the Court reaffirmed the principle that a manufacturer who injects a product into the stream of interstate commerce may be subject to personal jurisdiction in the state where the product causes harm. 444 U.S. at 297, 100 S.Ct. at 567. That manufacturer may be subject to a foreign state’s jurisdiction even if his defective product arrived in the forum through the activities of a manufacturer or distributor further down the chain of production or sale. The Court’s approving reference to the Illinois Supreme Court’s celebrated decision in Gray v. American Radiator and Sanitary *291Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), 444 U.S. at 298, 100 S.Ct. at 568; is particularly pertinent here. In Gray, a defective valve made in Ohio was incorporated into a water heater manufactured in Pennsylvania. The water heater exploded in Illinois. Although Titan Valve Manufacturing Co. maintained it had no contacts with Illinois, the Illinois court held that Titan’s indirect contacts through the manufacture and sale of valves to be incorporated in water heaters destined for interstate markets, including Illinois, satisfied the International Shoe minimum contacts and fairness tests.
Thus, World-Wide Volkswagen permits assertion of jurisdiction over one who manufactures a finished product and sells it to another manufacturer or distributor who will send the product into interstate commerce, even though the first manufacturer’s only direct contact with the forum state is the harm its product caused. One who forms an integral link in the chain of interstate manufacture or distribution is not a “local dealer.” A local dealer is at the end of the chain of production or distribution. A local dealer has no interest in the ultimate destination of the goods once they have been purchased by the consumer. It did not matter to the New York car distributors in World-Wide Volkswagen or to Judge Sobeloff’s California gas station owner whether, once purchased, their products traveled out of state or around the corner. These sellers derived no benefit from their customers’ choice of where to take the product. In contrast, Titan Valve, while not directly responsible for the appearance of its product in Illinois, benefitted by selling its goods to American Radiator for inclusion in products intended for interstate sale. Titan could not reasonably claim not to expect, nor disavow the desire that its product would end up in foreign fora.
Applying these principles to Hitachi, it is readily apparent that Hitachi is not a local dealer. It is true that Hitachi converts bulk carriers to automobile carriers in Japan, to the order of Japanese vessel owners. It is also true that Hitachi does not control the ultimate destination of its products. But these facts do not reveal the whole story. Hitachi’s ships are an integral part of the chain of international commerce in Japanese automobiles. Hitachi’s ships carry Japanese automobiles to American and New Jersey ports. The Port of New York-New Jersey is this nation’s largest, receiving over 185,292,125 tons of cargo per year. ' The New Jersey ports of Paulsboro, Camden-Glouster, and Trenton Harbor together account for another 28,533,725 tons per. year. 1981 World Almanac and Book of Facts at 204. It is not “merely foreseeable,” but virtually inevitable that ships Hitachi converts will dock in New Jersey.
Nor can it be said that Hitachi has no substantial interest in the destination of the ships it converts. Just as Titan Valve benefitted by sale of its products to another manufacturer who would send the valves into interstate commerce, so Hitachi benefits by selling its vessels to shipowners who will take them to New Jersey ports. Hitachi’s ship conversion business is a vital component of the process of distribution of Japanese automobiles in the United States. The American market for Japanese cars enhances Hitachi’s ship conversion business. The majority suggests this derivative benefit is too attenuated, for were there no American market for Japanese cars, Hitachi would convert vessels to something other than automobile carriers. At 285. That argument misses the point. The relevant question is whether Hitachi’s status as an intermediate link in the chain of Japanese car distribution benefits the business in which Hitachi is in fact engaged.
The majority also suggests that there is a dispositive distinction between Hitachi’s relation to the vesselowners and a manufacturer who through a subsequent manufacturer or distributor “takes advantage of an indirect marketing scheme.” At 285-286. It is true that the vesselowners do not market Hitachi’s ships. But both the vesselowners and Hitachi aid in the American marketing *292of Japanese cars. The majority looks at the wrong market. The relevant market is not the Japanese market for Japanese automobile carriers, but the market for which Japanese automobile carriers are essential — the American market for Japanese cars. I perceive no valid distinction between a manufacturer whose product serves as a link in the chain of production of another product, and one whose product forms an essential link in the chain of distribution of another product, at least when sale of the second product directly promotes production and sale of the first product. Thus I would hold that assertion of personal jurisdiction in New Jersey over Hitachi is consistent with World-Wide Volkswagen.
Finally, while it is not crucial to the disposition of this case, I believe the misconception underlying the majority’s statement that the fourteenth amendment governs amenability to suit on a federal claim, at 284-285, should be exposed and criticized. The fourteenth amendment due process clause does not properly apply in all its aspects to federal question claims. In International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the Supreme Court established a two-pronged test to determine the constitutionality of a state’s assertion of personal jurisdiction over an out-of-state defendant. A state’s exercise of jurisdiction must comport with traditional notions of fundamental fairness, and it must be consistent with the values of federalism embodied in the fourteenth amendment. See Jonnet v. Dollar Savings Bank, 530 F.2d 1123, 1132, 1140 (3d Cir. 1976) (Gibbons, J., concurring). Cf. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). When a court asserts personal jurisdiction over a foreign defendant on the basis of a state law claim, it must ensure that the forum state does not unduly encroach on a sister state’s interests. When a court, state or federal, adjudicates a federal claim, the federalism issue is of no relevance, for the court determines the parties’ rights and liabilities under uniform, national law. No state intrudes on another’s interests. The only relevant interest is the national one. Thus the applicable constitutional due process provision should not be the fourteenth amendment, but the fifth amendment.
The fifth amendment requires only that the forum be a fair and reasonable place at which to compel defendant’s appearance, and that he have had notice and a reasonable opportunity to be heard. See Stabilisierungsfonds fur Wein et a 1. v. Kaiserstuhl Wine Distributors Pty. Ltd. et a1., 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 that 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. The hypothetical defendant has sufficient contacts with the United States, and the availability of witnesses points to the District of New Jersey as the most convenient forum for the litigation. Cf. Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977) (central concern of jurisdictional inquiry is relationship among the defendant, the forum, and the litigation).
Similarly, were a state court adjudicating a federal claith, the relevant due process standard should remain the fifth amendment. The nature of the claim, not the identity of the court, should determine the appropriate due process test. New Jersey has enacted a “constitutional” long arm: its courts may assert personal jurisdiction to *293the limits of the relevant due process clause. A federal court in a federal question case referred under Federal Rule of Civil Procedure 4(e) to the New Jersey long arm thus must ask two questions: Would assertion of personal jurisdiction violate the fifth amendment? and, Has New Jersey placed any restriction on the constitutionally exercisable scope of jurisdiction? The answer to the second question is no, and therefore when addressing a federal claim, the federal court, or for that matter, a New Jersey court, need consider only the issue of fifth amendment fairness in determining whether to assert personal jurisdiction over the foreign defendant.
On the other hand, one might ask whence derives a state legislature’s authority to enact a competence statute of national application. The majority implies that a state legislature may permit assertion of adjudicatory competence to the limits of judicial jurisdiction under the fourteenth amendment, but it may not implement the fifth amendment by conferring competence to the limits of the federal due process clause. But a state long arm implements neither the fourteenth nor the fifth amendment. A state’s authority to promulgate rules of competence derives from a state’s sovereign power to adjudicate state law and federal question cases, and indeed to rule on controversies arising under a foreign nation’s law. This power is preserved to the states through the tenth amendment, although it may be limited by congressional provision for exclusive federal court subject matter jurisdiction.1 The fifth amendment simply defines the boundaries within which a state may adopt a rule of competence to assert personal jurisdiction in federal question cases.
Thus, while Rule 4(e) has the effect of converting a federal court into a state court for purposes of determining personal jurisdiction, the rule does not automatically make the fourteenth amendment the guiding due process provision. The rule’s real “anomaly” arises in instances where a federal court is referred to the long arm of a state whose legislature, unlike New Jersey’s, has determined not to permit assertion of personal jurisdiction to the full extent constitutionally permissible. In those instances, Congress’ failure to enact a general federal question competence statute has the result of bringing to bear on federal claims, to which federalism concerns have no relevance, individual state legislatures’ decisions in effect to protect out-of-state defendants from suit on state law claims. Cf. von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L.Rev. 1121, 1123-25 n.6 (referencing cases in which general federal policies qualify statutory incorporation of state law, and suggesting courts disregard state law provisions that are irrelevant in the federal context).
Since both as a matter of fourteenth amendment due process and as a matter of fifth amendment due process, the majority’s analysis of jurisdiction to adjudicate in this case is flawed, I dissent. I would reverse the judgment dismissing the complaint for lack of personal jurisdiction.

. In the case of admiralty claims, federal court jurisdiction is exclusive over the subject matter, but state laws concerning competence to assert personal jurisdiction still obtain, since rather than preempting them with an applicable federal competence statute, Congress through rule 4(e) has referred back to state rules of adjudicatory competence. Compare 15 U.S.C. § 77v (Securities Act of 1933); 15 U. S.C. § 78aa (Securities Exchange Act of 1934).