Court Opinion

ID: 8942845
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:05:52.628462+00
Date Added: 2024-06-11T17:09:46.581997
License: Public Domain

WISDOM, Circuit Judge,
with whom Chief Judge CLARK, and Judges ALVIN B. RUBIN, POLITZ, JOHNSON, and JERRE S. WILLIAMS join, concurring in part and dissenting in part:
I respectfully dissent from Section III of the majority opinion. That section is an exercise in lawyering, not in judging. By focusing attention on the details of service of process, the majority lose sight of important questions of jurisdiction. In this federal question case, the effect of the majority’s decision is to grant jurisdictional immunity to alien defendants who have done business in this country thereby destroying any real possibility of holding them accountable for their violation of federal statutes.1 This immunity is granted in spite of the defendants’ apparently extensive contacts throughout the country, because the defendants’ contacts in Louisiana where the suit was filed, are so minimal that the state’s long-arm statute cannot be used for service of process, under traditional International Shoe2 principles.
I can understand that in a diversity case a federal court should be restricted in the use of a state long-arm statute to situations in which a defendant’s state contacts are sufficient to meet the requirements of fairness under the due process clause of the fourteenth amendment. I cannot un*428derstand the rationale for imposing state legislative and territorial restraints on federal courts in a federal question case involving a national policy, such as that embodied in the Commodities Exchange Act, calling for national uniformity in enforcement.3 The majority’s conclusion does violence to the structure of the American polity. A federal court’s service arm in a federal question case should not be handcuffed to the place of the court’s seat.
Statutes and rules should be construed so as not to reach an irrational result. Here there is a bizarre hiatus in the Rules. There is no national long-arm service of process provision in the Commodities Exchange Act. And Rule 4 does not appear to provide for service of process on and personal jurisdiction over an alien corporation which may have numerous contacts with the nation but few contacts with either the forum state or with any other particular state. When there is a hiatus in the Federal Rules the district court may establish its own ad hoc rule, provided that it is fair and reasonable and not inconsistent with any of the express rules. In a federal question action, aggregating a defendant’s national contacts is analogous to aggregating state contacts in a diversity case. Aggregation of national contacts is a fair and reasonable ad hoc solution to the problem. The basis for amenability to suit is the relationship between the defendant and the forum. In a diversity action in which a federal court sits as a state court, there is good reason to be guided by International Shoe. No such reason exists when the federal court sits as an integral part of our national system of courts responsive to federal law and federal objectives.
I.
I start with Rule 1 of the Federal Rules of Civil Procedure:
[These rules] shall be construed to secure the just, speedy, and inexpensive determination of every action.
Here, the defendants’ Louisiana connections are so tenuous as to be insubstantial for purposes of complying with the minimum contacts rule, as established in International Shoe and its progeny, and apparently the defendants’ contacts are insubstantial with respect to any particular state, even New York. In the aggregate, however, the defendants’ contacts with the country as a whole are substantial. The defendants do not suggest that they have substantial contacts elsewhere in the United States or that this forum is less convenient to them than some other forum in this country. The district court found the defendants subject to its jurisdiction,4 until the defendants called the DeMelo 5 case to its attention.
The majority’s construction of Rule 4 brings about the unjust, inconvenient, and expensive result of immunizing Wolff and Gourlay from liability, except for suit by the plaintiffs in Great Britain, and there is no likelihood that a British court would find liability for the violation of, or even understand, the technical federal statute here involved. I believe that there is an alternative construction of the Rules in keeping with the objectives of Rule 1, and that suit in a United States forum will give both sides fair consideration of the substantive issue.
II.
Rules of procedure are just that, rules of procedure. They are not substantive. *429They 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.
Indeed Rule 82 provides in part:
These rules shall not be construed to extend or limit the jurisdiction of the United States district courts or the venue of actions therein.
In short, if there is personal jurisdiction, Rule 4 should not be construed as limiting the jurisdiction of the United States district courts. “With the adoption of the Federal Rules of Civil Procedure in 1938”, Professor Marilyn J. Berger has written, “Congress finally attempted to provide a uniform standard for exercising personal jurisdiction in federal courts. Despite that attempt there is currently no uniform method for acquiring personal jurisdiction in federal question cases. A contributing factor to the lack of uniformity is Federal Rule of Civil Procedure 4____ Although the Rule describes the mechanism for service of process, it does not clarify the amenability basis [that is, the relationship between the defendant and the forum]”.6
In short, if there is personal jurisdiction, Rule 4 should not be construed as limiting the jurisdiction of United States district courts.
III.
A. Rule 83 provides in part:
In all cases not provided for by rule, the district judges and magistrates may regulate their practice in any manner not inconsistent with these rules.
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 re United Corp.,10 cited in the Petrol Shipping opinion, arose in a different context, but it shows the lattitude extended to a district court in fashioning its own rule. The district court denied attorneys the right to file objections to allowance of fees and expenses for services rendered in the reorganization of a corporation, when the *430attorneys appeared and requested leave to file objections on the day of the hearing on that subject, fifteen days after the deadline fixed by the court for filing objections. No rule covered the situation. The Court of Appeals for the Third Circuit approved the district court’s order:
A United States District Court, in all cases not provided for by- the Federal Rules of Civil Procedure, 28 U.S.C., or by its local rules, may regulate the practice to be followed in proceedings properly before it in any manner not inconsistent with the Federal Rules of Civil Procedure or statute. See Rule 83, Fed.Rules of Civ.Proc. and Section 2071, Title 28 U.S.C. The manner and enforcement of such regulations rests in the court’s sound discretion and will not be interfered with by an appellate tribunal in the absence of a showing of arbitrariness or fundamental unfairness.
283 F.2d at 596.
There is ho federal rule and no local rule governing service of process on alien defendants or personal jurisdiction over alien defendants. The language of Rule 4(e) does not contain any suggestion that it provides the exclusive method for obtaining service and personal jurisdiction over an alien defendant. Indeed the first sentence óf Rule 4(e) provides:
Whenever a statute of the United States or an order of the court thereunder provides for service of a summons, or notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state in which the district court is held, service may be made under the circumstances and in the manner prescribed by the statute or order, or, if there is no provision therein prescribing the manner of service, in a manner stated in this rule. (Emphasis added.)
The permissive words “may be made” suggest that other methods are permissible. The unqualified words “in a manner stated in this rule” suggest that the method of service should be analogous to service under a state long-arm statute. The analogy here is between state and nation, between state contacts and national contacts, between the due process clause of the fourteenth amendment and the due process clause of the fifth amendment. Rule 4(e) should be read as silent on the point at issue or, at most, permitting a nonexclusive form of service on an alien or foreign defendant, when there are sufficient state contacts to justify use of the state long-arm statute.
Rules 82 and 83, considered with Rule 1, point to courts’ not taking a scrivener’s arid reading of the Federal Rules. The rules were adopted in 1938 to get away from rigid common law procedures. The growth of multinational corporations engaging in international commercial activities strongly argues for a flexible view of the personal jurisdiction of national courts when the defendant is an alien. The due process protection of the fifth amendment and the liberal transfer provision of the Rules will ensure an alien defendant a fair trial.
B. I summarize to this point. Rule 4 describes the mechanism for service of process. It says nothing about jurisdiction, because regardless of service, there must first be jurisdiction. But there is no reason for federal courts to be bound by a state test of jurisdiction. The state test is based on the due process clause of the fourteenth amendment: fairness demands that the defendant have substantial contacts with the state, as established in International Shoe and other decisions of the Supreme Court. International Shoe, as everyone knows, concerned the reach of a state law in a state court action. But the appropriate test for a federal question case is a federal test: Are the contacts with the country as a whole substantial enough to satisfy the due process clause of the fifth amendment?
No one denies that the district court had subject-matter jurisdiction, for the defendants allegedly violated a federal statute enbodying what was intended to be a uniform national policy on commodities exchanges. The defendants advertised in the Wall Street Journal, conducted a number of investor meetings in various states, and *431had many contacts with the country as a whole. No one pretends that in a civil suit in Great Britain the courts would look kindly on enforcement of the United States securities laws. It passes belief that Congress intended to provide aliens a sanctuary from liability because of a housekeeping rule for federal courts that was obviously not written with alien defendants in mind.
IV.
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 person-am 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
Federal courts are common law courts. The genius of the common law has been its capacity for innovation and growth, its ability to fill those interstices in the law inad*432vertently left by legislative enactment. Nothing in the Rules suggests that the Supreme Court in adopting them intended to foreclose any other method of service that would satisfy the requirements of due process. The majority uses a gap in the procedural rules to work an injustice in the substantive result, failing to exercise the judicial power imparted to us by Article III of the Constitution and the court’s common law power implicitly confirmed by the seventh amendment.
In Cryomedics, Inc. v. Spembly, Ltd.,16 the District Judge Jon Newman, who is now on the Court of Appeals for the Second Circuit specifically considered the issue before this court without referring to Rule 4(e). Cryomedics, a Connecticut corporation, brought an action in federal court against an alien corporation for patent infringement. The alien corporation, Spem-bly, Ltd., filed a motion to dismiss based upon lack of personal jurisdiction.- Judge Newman held:
[I]t is not necessary to decide whether Spembly’s contacts with Connecticut are alone sufficient to satisfy the demands of the Constitution. When a federal court is asked to exercise personal jurisdiction over an alien defendant sued on a claim arising out of federal law, jurisdiction may appropriately be determined on the basis of the alien’s aggregated contacts with the United States as a whole, regardless of whether the contacts with the state in which the district court sits would be sufficient if considered alone— If the defendant’s contacts with the United States are sufficient, to satisfy the fairness standard of the Fifth Amendment ... then the only limitation on place of trial would be the doctrine of forum non conveniens.
397 F.Supp. at 290 (citation omitted). The court in Cryomedics, Inc. continued:
The few courts that have explicitly considered the appropriate unit of government with which there must be contacts have all agreed that the aggregation of an alien defendant’s contacts with the United States is the proper procedure in a case arising under federal law ____ It is difficult to see how International Shoe and its progeny, which dealt with the limits on the jurisdiction of state courts, and on which Spembly bases its arguments, could be read to limit the jurisdiction of a federal court on a federally created cause of action____
397 F.Supp. at 291.
Significantly, in Cryomedics the defendant did not challenge the validity of the service. Here too the defendants have not challenged the validity of the service. Even if they have not waived their right to challenge service of process, the issue is: were there sufficient contacts for the court to have personal jurisdiction? On that issue there is no challenge and there can be no question. Failure to challenge service opens the door to inquiry into the sufficiency of the contacts between the defendant and the governmental entity of which the court was a part. Here, that entity was the United States and the fairness standard was the due process clause of the fifth amendment, not of the fourteenth amendment. The territorial limits therefore were the boundaries of the United States, not the state in which the court happened to sit, and the determination of the sufficiency of the contacts to support personal jurisdiction turned on contacts with the nation, not those with the state.
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 *433it 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 Reden 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.
Although it must be admitted that the weight of authority, both in the cases and in the commentary, rejects the aggregate contacts doctrine, I am not persuaded by authority that leads to an irrational and unnecessary result. Judging requires something more than counting how many cases are pro and how many are con. In a federal question case with respect to a matter as important as personal jurisdiction over alien and foreign defendants, I would construe the rules to achieve the objectives of Rule 1. By analogy to International Shoe and its progeny, personal jurisdiction is found in the relationship of the defendants to the nation and the aggregate of their contacts with the nation as a whole. The due process clause of the fifth *434amendment is at least as effective as the corresponding clause in the fourteenth amendment in assuring fairness, to the alien defendant.
Y.
Burstein and DeMelo present a superficially attractive, heuristic way out of a bad situation — into a worse situation. It is something like using a sword on the Gordian knot and finding the edge so blunt that it simply mangles half the knot, leaving that part still entangled.
I would hold that the district court was right the first time in holding:
Since the Congressional statutes support the exercise of personal jurisdiction to the extent of due process, we would need to look to Louisiana state statutes (such as “long-arm”), if at all, for methods of service of process only. No service of process issue is raised.
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).
Factors to be considered are whether the defendant was doing business in the United States, whether the defendant did an act in this country related to the claim, and whether the defendant caused an effect in the United States by an act done elsewhere.
This is a reasonable ad hoc ruling on a hiatus in the Rules. It is not inconsistent with Rule 4(e) and is highly consistent with Rules 1, 82, and 83, and with the objective of the Commodities Exchange Act. It is consistent with the role federal courts are designed to play in the American polity.

. In this opinion the term “alien", when applied to a corporation, refers to a corporation organized under the laws of a foreign country. The term "foreign", when applied to a corporation, refers to a corporation organized under the laws of a state other than the state of its forum.
Wolff is a corporation organized under the laws of Great Britain with its offices in London. Gourlay is a British citizen with his office in Wolffs suite of offices. Neither has an office in the United States.

. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

. Justices Black and Douglas opposed the submission of the Rules of Civil Procedure to Congress and their approval by the United States Supreme Court. They had little or no objection to “simple housekeeping details”, but they objected strongly to rules which "substantially affected litigants and in practical effect were equivalent of new legislation”. Statement by Mr. Justice Black and Mr. Justice Douglas, 374 U.S. 865 (1963). The justices "could see no reason why the extent of a Federal District Court’s personal jurisdiction should depend on the existence or nonexistence of a state’s ‘long-arm statute’ ”. Id. at 869.

. In order dated May 13, 1983.

. DeMelo v. Toche Marine, Inc., 711 F.2d 1260 (5th Cir.1983).

. Berger, Acquiring In Personam Jurisdiction in Federal Question Cases: Procedural Frustration under Federal Rule of Civil Procedure 4, 1982 Utah L.Rev. 285, 286.

. 360 F.2d 103 (2d Cir.1966).

. 360 F.2d at 107.

. 360 F.2d at 108 (emphasis added).

. 283 F.2d 593 (3d Cir.1960).

. 83 F.R.D. 414, 419 (E.D.Pa.1979).

. "The necessary use of differing state long-arm statutes, and the determination of minimum contacts with a particular state means that the effective benefit and production of many federally created rights can be limited by the law of the state in which the district court sits.” Recent Decision, 9 Vand.J.Transnat’1 L. 435, 444 (1976).

. 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.
In a strong and persuasive dissent, Judge John J. Gibbons argued:
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.
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.
654 F.2d at 292.

. 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).