Filed: Feb. 13, 2004
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 2-13-2004 In Re Automotive Precedential or Non-Precedential: Precedential Docket No. 02-4272 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "In Re Automotive " (2004). 2004 Decisions. Paper 954. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/954 This decision is brought to you for free and open access by the Opinions of the United Sta
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 2-13-2004 In Re Automotive Precedential or Non-Precedential: Precedential Docket No. 02-4272 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "In Re Automotive " (2004). 2004 Decisions. Paper 954. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/954 This decision is brought to you for free and open access by the Opinions of the United Stat..
More
Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
2-13-2004
In Re Automotive
Precedential or Non-Precedential: Precedential
Docket No. 02-4272
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"In Re Automotive " (2004). 2004 Decisions. Paper 954.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/954
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL Raymond A. Just
Shearman & Sterling
55 California Street
IN THE UNITED STATES COURT OF 20 th Floor
APPEALS San Francisco, CA 94104
FOR THE THIRD CIRCUIT
____________ Counsel for Appellant
No. 02-4272 Geoffrey C. Hazard, Jr. (Argued)
____________ University of Pennsylvania
The Law School
IN RE: AUTOMOTIVE REFINISHING 3400 Chestnut Street
PAINT ANTITRUST LITIGATION Philadelphia, PA 19104-6204
BASF AG and BASF COATINGS AG, Gerald J. Rodos
Appellants Barrack, Rodos & Bacine
____________ 2001 Market Street
3300 Two Commerce Square
Appeal from the United States District Philadelphia, PA 19103
Court
For the Eastern District of Pennsylvania Warren Rubin
D.C. No.: MDL 1426 Law Offices of Bernard M. Gross
District Judge: Honorable R. Barclay 1515 Locust Street, Suite 200
Surrick Philadelphia, PA 19102
____________
Joseph C. Kohn
Argued: December 15, 2003 Robert J. LaRocca
Kohn, Swift & Graf
Before: ROTH, McKEE, and ROSENN, One South Broad Street, Suite 2100
Circuit Judges Philadelphia, PA 19107
(Filed February 13, 2004 ) Howard I. Langer
Columb, Honik & Langer
121 South Broad Street, 9 th Floor
Stephen Fishbein (Argued) Philadelphia, PA 19107
Shearman & Sterling
599 Lexington Avenue Counsel for Appellees
New York, NY 10022
William T. Hangley
Edward W. Madeira, Jr. Hangley, Aronchick, Segal & Pudlin
Matthew J. Hamilton One Logan Square, 27th Floor
Pepper Hamilton Philadelphia, PA 19103
18 th & Arch Streets
3000 Two Logan Square Counsel for Amicus-Appellant
Philadelphia, PA 19103 Fedr. German Ind.
James J. Rodgers The District Court denied the
Dilworth Paxson motions to dismiss for lack of personal
1735 Market Street jurisdiction and the joint motion for a
3200 The Mellon Bank Center protective order filed by two German
Philadelphia, PA 19103 corporations, BASF Aktiengesellschaft
(BASF AG) and BASF Coatings
Counsel for Amicus-Appellant Aktiengesellschaft (BASF Coatings)
Fed. Republic Germany (collectively “appellants”), defendants in
the underlying antitrust litigation. The
____________ District Court construed Section 12 of
the Clayton Act as authorizing
OPINION OF THE COURT worldwide service of process
____________ independently of the specific venue
provision contained in that statute. The
ROSENN, Circuit Judge. Court also held that personal jurisdiction
over the foreign corporations would be
measured on their contacts with the
This certified interlocutory United States as a whole, rather than with
appeal, arising out of alleged unlawful the forum state. The Court finally
price-fixing by both domestic and rejected a rule favoring first resort to
foreign corporations, raises questions of Hague Convention procedures for
considerable importance in antitrust jurisdictional discovery of foreign
litigation involving foreign nationals. defendants. BASF AG and BASF
Three of the issues are of first impression Coatings timely appealed. We affirm.
to this Court. The first issue is whether
worldwide service of process authorized I.
under Section 12 of the Clayton Act, 15
U.S.C. § 22, upon foreign corporations is The underlying federal antitrust
independent of the specific venue class litigation involves sixty-three
provision contained in that statute. The actions filed in five states, Pennsylvania,
second issue is whether a federal court’s New Jersey, Ohio, Kentucky, and
personal jurisdiction over a foreign Delaware, by private parties. Those
corporation in antitrust litigation may be actions were transferred to, and
predicated on the foreign corporation’s consolidated in, the United States District
contacts with the United States as a Court for the Eastern District of
whole (national contacts analysis), rather Pennsylvania for pre-trial purposes by
than with the specific forum in which the the Judicial Panel on Multidistrict
court sits (local contacts analysis). The Litigation.1 The class action complaint
final issue is whether jurisdictional
discovery from foreign nationals may
proceed under the Federal Rules of Civil 1
The defendants, in addition to the two
Procedure without first resorting to the appellants here, are: PPG Industries, Inc.;
Hague Convention on the Taking of E.I. DuPont de Nemours and Company;
Evidence Abroad in Civil or Commercial DuPont Performance Coatings, Inc.;
Matters (Hague Convention or Sherwin-William, Co.; Sherwin-William
Convention). 23 U.S.T. 2555, reprinted Automotive Finishes Corporation; Akzo
in 28 U.S.C. § 1781 Note. Nobel Car Refinishers B.V., a Dutch
company; Akzo Nobel Coatings, Inc., a
2
alleges that from 1993 to at least jurisdictional discovery.2 In response to
December 31, 2000, the foreign and the plaintiffs’ request for jurisdictional
domestic defendants conspired to raise discovery, the appellants filed a joint
and maintain the prices of automotive motion for a protective order, contending
refinish paint throughout the United that the plaintiffs’ discovery request was
States. All defendants, except the overly broad and burdensome. They
appellants, have stipulated to argued also that any jurisdictional
certification of a national class consisting discovery should proceed first under the
of all direct purchasers of automotive Hague Convention, of which the United
refinishes from the defendants. States and Germany are signatories.
The appellants filed motions to The reasons proffered by the
dismiss pursuant to Federal Rule of Civil appellants’ expert, Martin Reufels, were
Procedure 12(b)(2) for lack of personal that Germany, unlike the United States,
jurisdiction. In support of their motions viewed the gathering of evidence as a
to dismiss, the appellants submitted judicial, rather than private, function.
affidavits stating that they did not have Therefore, Germany had a sovereign
presence in the state of Pennsylvania and
never sold any automotive refinish paint
to any customers in Pennsylvania. The 2
The District Court noted the following
plaintiffs replied that the appropriate facts submitted by the plaintiffs: the
forum for measuring the appellants’ appellants are the holders of numerous
contacts for purposes of personal patents in the United States; in its
jurisdiction is the United States as a publicly released documents, such as the
whole, rather than the forum state of forms filed with the Securities and
Pennsylvania. The plaintiffs opposed the Exchange Commission and annual
motions to dismiss and also served reports, and its web site, BASF AG
jurisdictional discovery requests pursuant presents itself as part of a globally
to the Federal Rules of Civil Procedure, integrated group, BASF or BASF Group,
seeking production of documents consisting of BASF AG, the parent
concerning the appellants’ contacts with corporation in the group and its 153
the United States as a whole. consolidated subsidiaries; BASF AG
owns 100 percent of the shares of BASF
The plaintiffs submitted publicly Corporation, a domestic corporation
available information to show a threshold located in New Jersey; BASF AG’s
case of personal jurisdiction based on the publicly released documents show that it
appellants’ contacts with the United sold approximately $1.5 billion in goods
States and support their request for to its wholly owned subsidiary, BASF
Corporation, in 2000; according to
BASF’s website, BASF Coatings has a
“significant market position[ ] in North
U.S. corporation; and BASF America”; BASF Coatings maintains an
Corporation, a U.S. corporation based in office in Michigan; and according to
New Jersey, which is part of the BASF BASF AG’s 2001 annual report, the
Group, a global network of corporations BASF Group explicitly endorses the
that include the two German “exchange of staff among BASF Group
corporations, which are the only companies” as being “critical” in
appellants in this interlocutory appeal. achieving its worldwide corporate goals.
3
interest in keeping discovery conducted Court denied the appellants’ joint motion
within its borders in conformity with its for a protective order requiring the
laws. According to Reufels, compelling plaintiffs to conduct their jurisdictional
the appellants to produce documents discovery first under the Hague
pursuant to the Federal Rules of Civil Convention procedures, rather than the
Procedures would offend Germany’s Federal Rules of Civil Procedure.
sovereign interests.
Both the District Court and this
In its order and careful Court granted the appellants’ petition for
accompanying opinion, the District interlocutory appeal pursuant to 28
Court, Surrick, J., denied without U.S.C. § 1292(b). The appellants raise
prejudice the appellants’ motions to two issues for review on this
dismiss. Rejecting the appellants’ interlocutory appeal. The first issue is
contrary arguments, the Court construed whether a plaintiff may invoke the
Section 12 of the Clayton Act as worldwide service of process provision
authorizing worldwide service of process contained in Section 12 of the Clayton
independently of the specific venue Act and, thus, national contacts analysis,
provision contained in that statute. The without satisfying the specific venue
Court held that the relevant forum for provision also contained in that statute.
purposes of proof of personal jurisdiction The second issue is whether a plaintiff
was the United States as a whole, rather may be permitted to seek jurisdictional
than the forum state of Pennsylvania. discovery from foreign defendants under
The Court concluded that the plaintiffs the Federal Rules of Civil Procedure
had made a threshold showing of without first resorting to the Hague
personal jurisdiction that warranted Convention. We agree with the District
jurisdictional discovery.3 In a separate Court and answer both in the
order and accompanying opinion, the affirmative.4
II.
3
The appellants have not appealed from
the Court’s ruling that the plaintiffs have The first issue raised by the
shown a prima facie case of personal
jurisdiction. Accordingly, we do not
review that ruling. “Prior to discovery, a 4
The District Court has original federal
plaintiff may defeat a motion to dismiss question subject matter jurisdiction under
based on legally sufficient allegations of 28 U.S.C. § 1331 over this class action
jurisdiction.” In re Magnetic Audiotape brought under 15 U.S.C. § 1 (section 1 of
Antitrust Litig., 334 F.3d 204, 206 (2d the Sherman Act) and 15 U.S.C. §§ 15
Cir. 2003). The District Court rejected and 26 (sections 4 and 16 of the Clayton
the plaintiffs’ arguments that the Act). We have appellate jurisdiction
jurisdictional contacts of BASF under 28 U.S.C. § 1292(b) over this
Corporation, the wholly owned domestic interlocutory appeal. Because the
subsidiary of BASF AG, should be certified issues on appeal involve pure
imputed to BASF AG and that the questions of law, we review the District
jurisdictional contacts of the appellants’ Court’s rulings de novo. Bowers v.
alleged co-conspirators should be National Collegiate Athletic Ass’n, 346
imputed to the appellants. F.3d 402, 410 (3d Cir. 2003).
4
appellants involves two conceptually only in the judicial district
distinct, though intertwined, sub-issues. whereof it is an inhabitant, but
One is whether the District Court erred in also in any district wherein it may
ruling that the service of process be found or transacts business;
provision contained in Section 12 of the and all process in such cases may
Clayton Act is independent of the venue be served in the district of which
provision also contained in that statute. it is an inhabitant, or wherever it
Two is whether the Court erred in ruling may be found.
that in federal antitrust litigation,
personal jurisdiction should be assessed 15 U.S.C. § 22 (emphasis added). 6
on the basis of the appellants’ contacts
with the United States as a whole
(national contacts analysis), rather than 6
Section 12 permits venue in any federal
with the forum state (local contacts district in which a corporation is an
analysis). The two sub-issues are “inhabitant,” may be “found,” or
intertwined because if there is no specific “transacts business.” Those terms are
venue limitation in federal antitrust defined as follows:
litigation involving a foreign corporate
defendant, the defendant can be sued in Being an “inhabitant” is held to
any federal district court based on its mean incorporated under the laws
aggregate contacts with the United States of that jurisdiction. E.g., Aro
as a whole. Because they are intertwined Manufacturing Co. v. Automobile
and because the appellants present them Body Research Corp., 352 F.2d
as a single integrated issue, we discuss 400, 404 (1st Cir. 1965), cert.
them together. 5 denied, 383 U.S. 947,
86 S. Ct.
1199,
16 L. Ed. 2d 210 (1966).
A. Being “found” in a district is
generally equated with “doing
Section 12 of the Clayton Act business” there, and requires
provides: greater contacts than does
“transacting business.” E.g.,
Any suit, action, or proceeding Wood v. Santa Barbara Chamber
under the antitrust laws against a of Commerce, Inc., 507 F. Supp.
corporation may be brought not 1128 (D. Nev. 1980); Grappone,
Inc. v. Subaru of America, Inc.,
403 F. Supp. 123 (D.N.H. 1975);
5
The Committee to Support the Antitrust Friends of Animals Inc. v.
Laws, a nonprofit corporation based in American Veterinary Medical
the District of Columbia, has submitted Ass’n,
310 F. Supp. 620
an amicus curiae brief in support of the (S.D.N.Y. 1970).
plaintiffs’ position on the two certified
issues. The amicus curiae briefs in Gen. Elec. Co. v. Bucyrus-Erie Co., 550
support of the appellants’ position, F. Supp. 1037, 1041 n.5 (S.D.N.Y.
submitted by the Federal Republic of 1982). A corporation is “found” where it
Germany and the Federation of German has “presence” and “continuous local
Industries, do not address the first activities” in the district. Caribe Trailer
certified issue. Systems, Inc. v. Puerto Rico Maritime
Shipping Auth., 475 F. Supp. 711. 716
5
Section 12, a long sentence, consists of interpretation is adopted, plaintiffs
two separate clauses, the first relating to can rely on 28 U.S.C. § 1391(d)
venue and the second concerning service [the Alien Venue Statute] which
of process and, therefore, personal provides for venue in antitrust
jurisdiction. It is undisputed that the actions against foreign
second clause authorizes nationwide, corporations “in any district” and
indeed worldwide, service of process on on the second clause of Section 12
a defendant corporation in federal for personal jurisdiction over
antitrust litigation. The clause provides defendants based on a minimum
that the defendant may be served contacts analysis considering their
“wherever it may be found,” that is, contacts with the United States as
wherever it is “doing business.” See, a whole. If the second
e.g., Go-Video, Inc. v. Akai Elec. Co., interpretation prevails the service
Ltd., 885 F.2d 1406, 1413 (9th Cir. 1989) provision is only effective when,
(Section 12 “authorizes worldwide pursuant to Section 12’s first
service of process”). clause, the action is brought in a
district where the defendant
The parties dispute whether the resides, is found or transacts
two clauses of Section 12 should be read business.
as an integrated whole or independently
of each other. Specifically, they dispute In re Magnetic Audiotape Antitrust
whether the venue provision contained in Litig., 171 F. Supp. 2d 179, 184
the first clause of Section 12 must be (S.D.N.Y. 2001), vacated sub nom. on
satisfied before the plaintiffs could avail other grounds, Texas Int’l Magnetics,
themselves of the authorization of Inc. v. BASF Aktiengesellschaft, 31 Fed.
worldwide service of process contained Appx. 738,
2002 WL 385569 (2d Cir.
in the second clause. As explained by March 12, 2002). The plaintiffs dispute
one court: whether the present litigation can only be
brought in a federal district where the
[t]he dispute centers on whether appellants are “residents,” may be
the jurisdiction provision “found,” or “transact[ ] business” based
operates independently from the on their contacts with the forum district
venue provision, specifically, or state. They contend that it may be
whether “in such cases” in the brought in any federal district based on
second clause refers to “any suit, the appellant’s “minimum contacts” with
action, or proceeding under the the United States as a whole.
antitrust laws against a
corporation” or only to antitrust Currently, two sister Courts of
actions against corporations Appeals differ as to the construction of
brought in a judicial district in Section 12. The plaintiff-appellees rely
which the corporation is either an on the decision in Go-Video, Inc. v. Akai
“inhabitant,” “may be found” or Elec. Co., Ltd., 885 F.2d 1406 (9th Cir.
“transacts business.” If the first 1989), and a majority of recent District
Courts’ opinions to support their
argument that the service or process
(D.D.C. 1979) (quoting Fox-Keller, Inc. provision is independent of the specific
v. Toyota Motor Sales, U. S. A., Inc., venue provision. On the other hand,
338 F. Supp. 812, 815 (E.D. Pa. 1972)). appellants rely on the decision in GTE
6
New M edia Services Inc. v. Bellsouth claimed that its construction of Section
Corp., 199 F.3d 1343 (D.C. Cir. 2000), 12 of the Clayton Act was the result of a
where the Court wrote: “plain” or “unadorned” reading of the
language of the statute, and implied that
The language of the statute is the Go-Video court’s construction was
plain, and its meaning seems the result of “literal convolutions.” GTE,
clear: The clause before the semi- at 1351.
colon relates to a supplemental
basis for venue in actions under The Go-Video court did not find
the Clayton Act; the clause after the language of Section 12 to be clear or
the semi-colon relates to unambiguous. Go-Video, 885 F.2d at
nationwide service of process in 1412 (quoting Judge Stewart’s linguistic
antitrust cases; and invocation of analysis of the syntactic structure of
the nationwide service clause Section 12 in Gen. Elec. Co. v. Bucyrus-
rests on satisfying the venue Erie Co., 550 F. Supp. 1037, 1042, 1042
provision. n.7 (S.D.N.Y. 1982), without necessarily
endorsing his analysis).8 Instead of
Id. at 1350.
The GTE court “aligned” itself which it (the corporation) is an
with the position taken by the Second inhabitant, or wherever it may be
Circuit forty years ago in Goldlawr, Inc. found.” Thus, ‘in such cases,’
v. Heiman, 288 F.2d 579, 581 (2d Cir. Congress has seen fit to enlarge
1961) (holding in dicta that the expansive the limits of the otherwise
service of process provisions was restricted territorial areas of
contingent on satisfaction of the specific process. In other words, the
venue provision), rev’d on other grounds, extraterritorial service privilege is
369 U.S. 463 (1962).7 The GTE court given only when the other
requirements are satisfied.
7
The Goldlawr court concluded that Goldlawr, 288 F.2d at 581.
Section 12
8
Judge Stewart wrote that “the usual
specifies where suit against a rules of syntax” would favor the
corporation under the antitrust construction of Section 12 that the
laws may be brought, namely, in a service of process clause is independent
district where it is an inhabitant of the venue clause:
and also where “it may be found
or transacts business.” The word “such” means “the
Conversely, it should follow that aforementioned,” Webster’s Third
if a corporation is not an International Dictionary (unabr.
inhabitant of, is not found in, and ed. 1963). Thus, when “such”
does not transact business in, the precedes a noun it is assumed to
district, suit may not be so refer to a particular antecedent
brought. By statutory grant if suit noun and any dependent adjective
is brought as prescribed in this or adjectival clauses modifying
section ‘all process in such cases that noun, but not to any other part
may be served in the district of of the preceding clause or
7
relying on its own way of reading of the Systems, Inc. v. Mitsubishi Corp., 967 F.
language of Section 12, as the GTE court Supp. 364, 368 (E.D. Wis. 1997) (“In the
did, the Go-Video court found it case of the antitrust laws, it makes no
necessary to “interpret a passage in sense to tie a district court’s jurisdiction
which antecedents and consequents are to the state in which it sits; it neither
unclear by reference to the context and promotes the enforcement of the antitrust
purpose of the statute as a whole.” Id. laws nor the management of litigation.”);
The Go-Video court did not find the Prof’l Adjusting Systems of America,
sparse legislative history of the Clayton Inc. v. Gen. Adjustment Bureau, Inc.,
Act conclusive on the
issue. 885 F.2d at 352 F. Supp. 648, 651 (E.D. Pa. 1972)
1410. There was evidence, however, that (“The reason for the broad scope of the
“Congress viewed the questions of venue Clayton Act venue provisions was to
and service of process separately, with give plaintiff the widest possible
the latter issue of subsidiary importance.” selection of venue for his benefit, to
Id. promote a ‘private attorney general’ type
policy for exposing and policing
The Go-Video court found it combinations in restraint of trade.”). In
more helpful to rely on the general light of the above authority and
interpretation that courts have given comment, the Go-Video court found
Section 12. Id. “[C]ourts have viewed itself “reluctant to adopt a construction
the section’s main contribution to be its of section 12 which would, by limiting
expansion of the bounds of venue.”
Id. the availability of the valued tool of
(citing United States v. Scophony Corp. worldwide service of process, recast its
of Am.,
333 U.S. 795, 806-808 (1948) ( venue provision as a restrictive, rather
Section 12 substituted broad, practically- than a broadening, provision and might
founded venue tests for the older, “hair- prevent plaintiffs from pursuing
splitting legal technicalities” of the
Sherman Act); 15 Wright & M iller,
Federal Practice and Procedure, § 3818, was enacted by Congress with the
at 109-10 (1976) (venue provisions of remedial purpose of enlarging the venue
Clayton Act were “clearly broadening in jurisdiction of the federal courts by
[their] effect”)). 9 See also Paper substituting “practical, business
conceptions for the previous hairsplitting
legal technicalities encrusted on the
sentence. Applying this ‘found’-‘present’-‘carrying-on-business’
rule to section 12, “in such sequence. . . .” Id. The Court noted that
cases” would refer to “any the Congressional enactment “relieve[s]
suit, action, or proceeding persons injured through corporate
under the antitrust laws violations of the antitrust laws from the
against a corporation,” and ‘often insuperable obstacle’ of resorting
not to anything else in to distant forums for redress of wrongs
section 12’s first clause. done in the places of their business
residence. A foreign corporation no
Bucyrus-Erie, 550 F. Supp. at 1042 n.7. longer could come to a district,
9
As the Supreme Court noted in United perpetuate there the injuries outlawed,
States v. Scophony Corp.,
333 U.S. 795, and then by retreating or even without
808 (1948), the third and final prong of retreating to its headquarters defeat or
“transact[ing] business” in Section 12 delay the retribution due.”
Id.
8
legitimate claims under the antitrust Section 1391(d) is not like other
laws.” 885 F.2d at 1410-11. general venue provisions. Brunette held
that “Section 1391(d) is not derived from
The Go-Video court also relied the general venue statutes that [a special
on the Supreme Court’s case law venue provision might otherwise be read
regarding the relationship between as] intended to replace.” Id. at 713.
federal venue statutes of general Rather, Section 1391(d) derives from a
application and specific venue provisions tradition going “back to the beginning of
contained in individual statutes to the Republic” under which “suits against
support its holding that the provision for aliens were left unrestricted, and could
worldwide service of process is be tried in any district, subject only to the
independent of the specific venue requirement of service of process.”
Id. at
provision in Section 12 of the Clayton 708. “The Brunette court interpreted §
Act. “[A]s a general matter, courts have 1391(d) to state ‘a principle of broad and
interpreted special venue provisions to overriding application’ which prevented
supplement, rather than preempt, general an alien defendant from using a narrower
venue statutes.”
Id. at 1409 (citing 15 venue provision in another statute as a
Wright &
Miller, supra, at 108-109) ‘shield against suit.’” Go-Video,885
(“Supreme Court has held that special F.2d at 1409-10 (citing Brunette, at 714).
venue statutes are supplemented by, and “Absent some express congressional
are to be read in light of, liberalizing intent to the contrary, a special venue
provisions of the general venue statutes”) provision should not, under the clear
(citing Pure Oil v. Suarez,
384 U.S. 202 language of Brunette be deemed
(1966)). exclusively controlling when the
defendant involved is an alien. The
Of particular relevance to the Go- principle that an alien may be sued in any
Video court was the Supreme Court’s district is simply too deeply rooted to
discussion of the relationship between assume otherwise.” Bucyrus-Erie, 550 F.
the Alien Venue Statute, 28 U.S.C. § Supp. at 1040 (citing Brunette, at 714);
1391(d), a venue provision of general see also Go-Video, at 1410.
applicability, and the specific venue
provision, 28 U.S.C. § 1400(b), The approach of the Go-Video
concerning actions for patent and Bucyrus-Erie courts is convincing
infringement, in Brunette Mach. Works, and well reasoned in their construction of
Ltd. v. Kockum Indus., Inc., 406 U.S. Section 12 of the Clayton Act.10 We,
706 (1972). The Supreme Court held
that the specific venue provision did not
bar the suit under which venue had been 10
We are not persuaded by the
satisfied under Section 1391(d), the conclusions drawn by the GTE and
Alien Venue Statute, even though the Goldlawr courts for the reasons
Court had previously held that the same discussed by the Go-Video and Bucyrus-
patent venue statute did preclude the Erie courts. First, because we do not
application of the general corporate find the language of Section 12 to be
venue provision of § 1391(c). Brunette, clear and unambiguous, we are not
at 713-14 (distinguishing Fourco Glass persuaded by the “plain” or “unadorned”
Co. v. Transmirra Prods. Corp., 353 U.S. reading of the statutory language by the
222 (1957)). GTE court. We, therefore, believe that it
is necessary to consider the overall
9
therefore, hold that the service of process
provision on foreign corporations is
purpose of the statute in construing the independent of, and does not require
statutory language. Second, we agree satisfaction of, the specific venue
with the analysis made in several District provision under Section 12 of the
Courts’ decisions that the conclusions of Clayton Act.
GTE and Goldlawr are not persuasive
because the defendant corporations in B.
those two cases were not alien
corporations and were, instead, out-of- We also reject the appellants’
state corporations. The distinction is argument that the District Court does not
crucial. “The general venue provision of have personal jurisdiction over them
[28 U.S.C. § 1391(c)] governing such because they do not have contacts with
domestic corporations is, in contrast to [§ the State of Pennsylvania. In this
1391(d)] governing alien corporations, instance, Pennsylvania is the forum state
more difficult to satisfy than the because the underlying class actions have
[S]ection 12 venue requirements.” been transferred and consolidated for
Bucyrus-Erie, 550 F. Supp. at 1041 (first pretrial purposes.11 At least two sister
two emphases added, the last emphasis in Courts of Appeals have held that when
original). That is because the added
prong of “transacting business” in
Section 12 is easier to satisfy than the involved only out-of-state domestic
traditional prongs of being an corporations, is unpersuasive.
“inhabitant” or “doing business.”
Id. at 11
Underlying the appellants’ argument
1041 n.5 (“‘doing business’ . . . requires for the local contacts analysis is an
greater contacts then does ‘transacting assumption that the court’s personal
business’”). Because Goldlawr did not jurisdiction is limited to the state to
involve an alien corporation, the which the class action has been
Goldlawr court, not surprisingly, did not transferred. That assumption is
need to consider the impact of the unwarranted. Consolidation of the
general venue provision of § 1391(d). underlying class action in Pennsylvania
As the Go-Video court observed, the is only for pretrial purposes pursuant to
Goldlawr court’s conclusion is 28 U.S.C. § 1407. As correctly
unpersuasive regarding the relationship concluded by the District Court, the
of venue and jurisdiction under Section transferee court can exercise personal
12 for two reasons. “First, [Goldlawr’s jurisdiction to the same extent that the
conclusion in this regard] is dictum, transferor court could. See In re Agent
unrelated to the actual holdings of the Orange Prod. Liability Litig., 818 F.2d
case. Second, and more important, 145, 163 (2d Cir. 1987); In re
Goldlawr was decided before the Telectronics Pacing Systems Inc., 953 F.
Supreme Court’s decisions in Pure Oil Supp. 909 (S.D. Ohio 1997). Even under
and Brunette, decisions in which the the local contacts analysis, personal
Supreme Court clarified the relationship jurisdiction should be assessed at least
between specific statutory venue based on the appellants’ contacts with the
provisions and the general federal venue five states where the individual actions
statutes [for alien corporations]. . . .” were brought, New Jersey, Ohio,
Go-Video, 885 F.2d at 1411. For the Delaware, Kentucky, and Pennsylvania.
same reasons, the GTE holding, which
10
personal jurisdiction is invoked under the process.12
Clayton Act, jurisdiction is based on the
defendants’ contacts with the United In the context of construing
States as a whole. Access Telecom, Inc. Section 27, this Court has held broadly
v. MCI Telecomm. Corp., 197 F.3d 694, that “a federal court’s personal
718 (5th Cir. 1999), cert. denied, 531 jurisdiction may be assessed on the basis
U.S. 917 (2000) (“When jurisdiction is of the defendant’s national contacts when
invoked under the Clayton Act, the court the plaintiff’s claim rests on a federal
examines the defendant’s contacts with statute authorizing nationwide service of
the United States as a whole to determine process.” Pinker v. Roche Holdings Ltd.,
whether the requirements of due process
292 F.3d 361, 369 (3d Cir. 2002). Then
have been met.”) (citing Go-Video); Go- Chief Judge Becker wrote in Pinker:
Video, 885 F.2d at 1415 (affirming the
District Court’s holding that “worldwide Where Congress has spoken by
service provision of § 12 justifies its authorizing nationwide service of
conclusion that personal jurisdiction may process, . . . as it has in the
be established in any district, given the Securities Act, the jurisdiction of
existence of sufficient national a federal court need not be
contacts”). confined by the defendant’s
contacts with the state in which
We find support for our the federal court sits. See
construction of Section 12 of the Clayton DeJames v. Magnificence
Act in the courts’ construction of Section Carriers, Inc., 654 F.2d 280, 284
27 of the Securities Exchange Act of (3d Cir. 1981). Following this
1934. This section, modeled after reasoning, the district courts
Section 12 of the Clayton Act, provides within this Circuit have repeatedly
in relevant part: held that a “national contacts
analysis” is appropriate “when
Any suit or action to enforce any appraising personal jurisdiction in
liability or duty created by this a case arising under a federal
chapter or rules and regulations statute that contains a nationwide
thereunder, or to enjoin any service of process provision.”
violation of such chapter or rules
and regulations, may be brought
in any such district or in the 12
See, e.g., Go Video, 855 F.2d at 1414;
district wherein the defendant is Leasco Data Processing Equip. Corp. v.
found or is an inhabitant or Maxwell, 468 F.2d 1326, 1340 n.10 (2d
transacts business, and process in Cir. 1972); Bucyrus-Erie, 550 F. Supp. at
such cases may be served in any 1043. Construing Section 27 of the
other district of which the Securities Exchange Act, Judge Friendly,
defendant is an inhabitant or writing for the court, concluded that the
wherever the defendant may be phrase “in such cases” in that statute is
found. independent of the venue provision and
“speaks expressly only to service of
15 U.S.C. § 78aa (emphasis added). The process.” Leasco, at 1340 (citing United
two sections are remarkably similar in States v. Scophony Corp., 333 U.S. 795
their provisions for venue and service of (1948)).
11
AlliedSignal, Inc. v. Blue Cross A.O. Yuganskneftegaz, 317 F.3d 202,
of Calif., 924 F. Supp. 34, 36 207 (2d Cir. 2003) (when personal
(D.N.J. 1996); see also Green v. jurisdiction over a foreign corporation is
William Mason & Co., 996 F. based in essence on the federal long-arm
Supp. 394, 396 (D.N.J.1998) statute, due process analysis involves
(“[A]n assessment of personal contacts with the United States as a
jurisdiction under [a statutory whole); United States v. Swiss Am.
provision authorizing nationwide Bank, Ltd., 191 F.3d 30, 36 (1st Cir.
service of process] necessitates 1999) (same); Fitzsimmons v. Barton,
an inquiry into the defendant’s 589 F.2d 330, 333 n.4 (7th Cir. 1979);
contacts with the national Mariash v. Morrill, 496 F.2d 1138, 1142-
forum.”). We too are persuaded 43 (2d Cir. 1974) (service of process
by the reasoning of our prior under § 27 of Securities Exchange Act
opinions on the subject, and, requires examination of defendant’s
consistent with several of our contacts with the United States as a
sister courts of appeals, hold that whole).
a federal court’s personal
jurisdiction may be assessed on We agree with the holdings of our
the basis of the defendant’s foregoing sister Courts of Appeals and
national contacts when the the rationale of our decision in Pinker
plaintiff’s claim rests on a federal that have construed the similarly worded
statute authorizing nationwide Section 27 of the Securities Exchange
service of process. Act. We hold that personal jurisdiction
in federal antitrust litigation is assessed
Pinker, at 369-70 (emphasis in on the basis of a defendant’s aggregate
original).13 See also Dardana Ltd. v. contacts with the United States as a
whole. Our holding in Pinker and on this
appeal is consistent with the Federal Rule
13
Pinker, 292 F.3d at 369-70 (citing of Civil Procedure 4(k)(2).14 Personal
Republic of Panama v. BCCI Holdings
(Luxembourg) S.A.,
119 F.3d 935, 946-
47 (11th Cir. 1997); Busch v. Buchman,
Buchman & O’Brien Law Firm,
11 F.3d 14
Federal Rule of Civil Procedure 4(k)(2)
1255, 1258 (5th Cir. 1994); United provides:
Liberty Life Ins. Co. v. Ryan,
985 F.2d
1320, 1330 (6th Cir. 1993); United Elec., If the exercise of jurisdiction is
Radio & Mach. Workers of Am. v. 163 consistent with the Constitution
Pleasant St. Corp.,
960 F.2d 1080, 1085 and laws of the United States,
(1st Cir. 1992); Sec. Investor Protection serving a summons or filing a
Corp. v. Vigman,
764 F.2d 1309, 1316 waiver of service is also effective,
(9th Cir. 1985), rev’d on other grounds, with respect to claims arising
Holmes v. Sec. Investor Protection under federal law, to establish
Corp.,
503 U.S. 258 (1992); Autoscribe personal jurisdiction over the
Corp. v. Goldman & Steinberg, Inc., person of any defendant who is
1995 WL 56662, at *3 (4th Cir. Feb. 3, not subject to the jurisdiction of
1995) (per curiam) (not precedential) the courts of general jurisdiction
(citing Hogue v. Milodon Engineering, of any state.
Inc.,
736 F.2d 989, 991 (4th Cir. 1984)).
12
jurisdiction therein is not limited to the III.
defendant’s contacts with a particular
federal judicial district or the forum state. The second issue certified in this
We hold further that personal jurisdiction appeal is whether we should adopt a first
under Section 12 of the Clayton Act is as resort rule in favor of the procedures
broad as the limits of due process under under the Hague Convention, rather than
the Fifth Amendment. See Go-Video, the Federal Rules of Civil Procedure, for
885 F.2d at 1415 (“Under the due jurisdictional discovery from foreign
process component of the Fifth defendants in foreign signatory “host”
Amendment, a court must consider nations. The appellants argue that
whether the maintenance of the suit (i.e. jurisdictional discovery in Germany, a
the exercise of personal jurisdiction over Convention signatory nation, should first
the defendants to the suit) offends proceed under the Convention
traditional notions of fair play and procedures, rather than the Federal
substantial justice.”) (citing Omni Rules. The Convention prescribes
Capital Int’l v. Rudolf Wolff & Co., Ltd., certain procedures by which a judicial
484 U.S. 97, 102-103 (1987); Int’l Shoe authority in one contracting nation may
Corp. v. Washington,
326 U.S. 310, 316 request evidence located in another
(1945)). 15 nation. Our Supreme Court rejected a
first resort rule in favor of the
Convention in a case where personal
jurisdiction was not contested and the
“Under this provision, a defendant sued discovery sought involved only the
under federal law may be subject to merits of the case. Societe Nationale
jurisdiction based on its contacts with the Industrielle Aerospatiale v. United States
United States as a whole, when the Dist. Court for the S. Dist. of Iowa, 482
defendant is not subject to personal U.S. 522 (1987). The appellants argue
jurisdiction in any state. Rule 4(k)(2) specifically that we should carve out a
confers personal jurisdiction over a narrow exception to the Aerospatiale
defendant so long as the exercise of decision where, as here, personal
jurisdiction comports with the Due jurisdiction has yet to be established and
Process Clause of the Fifth Amendment.” the discovery sought is limited to proof
Dardana, 317 F.3d at 207 (citing 4 of jurisdiction.16
Wright & Miller, Federal Practice and
Procedure § 1068.1, at 612, 616 (2002); A.
Chew v. Dietrich,
143 F.3d 24, 27-28 (2d
Cir.), cert. denied,
525 U.S. 948 (1998)).
15
We note, as did the Go-Video court,
that the Supreme Court has on two
16
The Federal Republic of Germany and
occasions explicitly declined to decide the Federation of German Industries have
the constitutionality of national contacts submitted briefs as amicus curiae in
analysis. See 885 F.2d at 1414 n.8 support of the appellants’ position for
(citing Omni Capital Int’l v. Rudolf Wolff this second issue on appeal, urging
& Co., Ltd.,
484 U.S. 97, 102-103 n.5 reversal of the District Court. The brief
(1987); Asahi Metal Indus. v. Superior of amicus curiae submitted by the
Court,
480 U.S. 102, 113 n.* (1987) Committee to Support the Antitrust Laws
(plurality opinion)). supports the plaintiffs’ position, urging
affirmation of the District Court .
13
Aerospatiale holds that the Hague our Federal Rules. Id. at 542-44. The
Convention does not provide exclusive concept of comity requires in this context
procedures for obtaining documents and “a more particularized analysis” of the
information located in a foreign respective interests of the foreign host
signatory nation’s territory. Aerospatiale nation and the requesting nation than a
first rejects a rule of exclusive use or a blanket first resort rule would generate.
rule of first use as a matter of law in
Id. at 543-44. Aerospatiale notes that in
favor of the Convention on the ground many situations, the Convention
that neither the language nor the procedures would be unduly time-
negotiating history of the Convention consuming and expensive, and less likely
support such rules. Aerospatiale, 482 to produce needed evidence than direct
U.S. at 533-36. Specifically, use of the Federal Rules.
Id. at 542-43.
Aerospatiale holds that the Convention’s However, the Convention’s procedures,
plain language, as well as the history of although not mandatory, are available
its proposal and ratification by the United whenever they will facilitate the
States, unambiguously supports the gathering of evidence, and apply in the
conclusion that it was “intended as a sense that they are one method of seeking
permissive supplement, not a preemptive evidence that a court may elect.
Id. at
replacement, for other means of 541. Aerospatiale declines to hold “as a
obtaining evidence located abroad.”
Id. blanket matter that comity requires resort
at 536 (emphasis added). The to Hague evidence convention
Convention’s preamble speaks in non- procedure.”
Id. at 544. Therefore, the
mandatory terms, specifying its purpose determination of whether to resort to the
to “facilitate” discovery and to “improve Convention requires “prior scrutiny in
mutual judicial co-operation.”
Id. at 534. each case of the particular facts,
Similarly, its text uses permissive sovereign interests, and likelihood that
language, and does not expressly modify such resort will prove effective.”
Id.
the law of contracting states or require (establishing the three-prong test for
them to use the specified procedures or determining whether to resort to the
change their own procedures.
Id. Convention).
Accordingly, the Convention does not
deprive the District Court of its Aerospatiale acknowledges that
jurisdiction to order, under the Federal “both the discovery rules set forth in the
Rules of Civil Procedure, a foreign Federal Rules of Civil Procedure and the
national party to the proceeding to Hague Convention are the law of the
produce evidence physically located United States.”
Id. at 533. However, the
within its territory.
Id. at 539-40. Federal Rules are “the normal methods”
for federal litigation involving foreign
Aerospatiale rejects next a rule of national parties unless the “optional” or
first resort favoring the Convention on “supplemental” Convention procedures
grounds of international comity and prove to be conducive to discovery under
respect for the “judicial sovereignty” of some circumstances. Id. at 536 (“the
the signatory nation in which evidence Convention was intended as a permissive
sought is located.
Id. at 542-43. supplement, not a pre-emptive
International comity does not require in replacement, for other means of
all instances that American litigants first obtaining evidence located abroad”)
resort to the Convention procedures (emphasis added), 538 (both the text and
before initiating discovery pursuant to negotiating history of the Convention
14
show that “it was intended to establish Aerospatiale holding to the underlying
optional procedures that would facilitate litigation where they have contested
the taking of evidence abroad”) jurisdiction and the discovery sought is
(emphasis added), 541 (“the optional limited to proof of jurisdiction. The
Convention procedures are available appellants seek our review of only the
whenever they will facilitate the District Court’s legal conclusion that the
gathering of evidence by the means Aerospatiale holding applies equally to
authorized in the Convention”) jurisdictional discovery. This certified
(emphasis added), 542 (“the normal issue involves a pure question of law,
methods of the Federal Rules of Civil subject to our plenary and de novo
Procedure”) (emphasis added). review.
Notwithstanding its rejection of Specifically, the appellants argue
the first resort rule, Aerospatiale instructs that Aerospatiale is not applicable to
the American courts to “exercise special jurisdictional discovery and that this
vigilance to protect foreign litigants from Court should adopt a first resort rule in
the danger that unnecessary, or unduly favor of the Hague Convention
burdensome, discovery may place them procedures based on considerations of
in a disadvantageous position.” Id. at international comity and respect for the
546. “Judicial supervision of discovery German sovereignty, the host signatory
should always seek to minimize its costs nation where discovery is to be
and inconvenience and to prevent conducted. They argue that the
improper uses of discovery requests. Aerospatiale balancing approach is
When it is necessary to seek evidence premised expressly on the existence of
abroad, however, the district court must personal jurisdiction in that case. Where
supervise pretrial proceedings jurisdiction is disputed and not yet
particularly closely to prevent discovery established, they assert the balancing
abuses.”
Id. approach must yield to a rule of first
resort.
Aerospatiale has not explicitly
addressed, however, the issue of which The appellants stress the split of
party bears the burden of convincing the authorities among federal district courts
court of an “optional” and and state courts regarding the extension
“supplemental” use of the Convention of Aerospatiale to jurisdictional
procedures in a particular case. Nor has discovery. They cite for support Geo-
Aerospatiale, involving foreign Culture, Inc. v. Siam Inv. Mgmt. S.A.,
defendants over whom the trial court had 936 P.2d 1063, 1067 (Or. Ct. App. 1997)
undisputed personal jurisdiction, (requiring plaintiff to conduct
addressed the issue of what procedures to jurisdictional discovery, at least initially,
follow in a case, as here, where only through the Hague Convention,
jurisdiction is contested and discovery noting that plaintiff had failed to allege a
sought is limited only to proof of prima facie basis for asserting
jurisdiction. jurisdiction over the defendant); Jenco v.
Martech Int’l, Inc., No. Civ. A. 86-4229,
B. 1988 WL 54733 at *1 (E.D. La. May 19,
1988) (holding, with almost no
The appellants argue that the meaningful analysis, that certain
District Court erred in extending the jurisdictional discovery requests must be
15
made under the Hague Convention the Convention should be entitled to
because “[w]hile judicial economy may substantial deference.
dictate that the Federal Rules of Civil
Procedure should be used, the interests of The appellants are correct that
protecting a foreign litigant in light of the Aerospatiale makes numerous references
jurisdictional problems are to the existence of personal jurisdiction
paramount”)17 ; and Knight v. Ford Motor in that case. We disagree, however, that
Co., 615 A.2d 297, 301 n.11 (N.J. Super. the Aerospatiale holding is dependent on
Ct. Law Div. 1992) (noting, in dicta, that personal jurisdiction. As concluded by
“[i]f jurisdiction does not exist over a the District Court here and the District
foreign party . . . the Convention may Court for the District of Columbia, which
provide the only recourse for obtaining considered the same argument raised by
evidence”). the same defendant, BASF AG, in In re
Vitamins Antitrust Litig., 120 F. Supp.
The appellants rely also on a 2d 45, 49 (D.D.C. 2000), a trial court has
report by the Special Commission of the authority to determine its jurisdiction.
Hague Conference attended, among See Ins. Corp. of Ireland, Ltd. v.
others, by delegations from the United Compagnie des Bauxites de Guinee, 456
States and Germany. See Hague U.S. 694, 706 (1982) (“By submitting to
Conference on Private International Law: the jurisdiction of the Court for the
Special Commission Report on the limited purpose of challenging
Operation of the Hague Service jurisdiction, the defendant agrees to
Convention and the Hague Evidence abide by that court’s determination on
Convention, April 1989, reprinted in 28 the issue of jurisdiction”). Because the
Int’l Law Materials 1556 (1989). The District Court has jurisdiction over these
report stated that while views varied as to foreign defendants to the extent
whether the Hague Convention necessary to determine whether they are
“occupied the field and therefore subject to personal jurisdiction, we see
excluded application of domestic no legal barrier to exercising the
procedural rules,” “the Commission discretion given to trial courts by
thought that in all Contracting States, Aerospatiale in cases of jurisdictional
whatever their views as to its exclusive discovery. See In re Vitamins, at 49.
application, priority should be given to
the procedures offered by the Convention We agree with the majority of trial
when evidence located abroad is being courts’ decisions that there should be no
sought.” Id. at 1564, 1569. The exception to the Aerospatiale holding for
appellants argue that the statement in the jurisdictional discovery. See In re
report that “priority” should be given to Vitamins, at 49; Rich v. KIS California,
Inc., 121 F.R.D. 254, 260 (M.D.N.C.
1988) (Aerospatiale “did not carve out
17
Jenco left undisturbed a portion of the any exception for disputes involving
magistrate’s opinion allowing personal jurisdiction”); Fishel v. BASF
interrogatories and document requests Group, 175 F.R.D. 525, 529 (S.D. Iowa
directed at a foreign party to proceed 1997) (Aerospatiale provides that the
under the Federal Rules and overturned Hague Convention procedures are
only the magistrate’s ruling allowing optional and do not divest federal district
depositions to be taken under the Federal courts of authority to order discovery
Rules. under the Federal Rules); In re Bedford
16
Computer Corp., 114 B.R. 2, 5-6 (Bankr. raised in their motion.” See Fishel, 175
D.N.H. 1990) (citing Rich and allowing F.R.D. at 529.
discovery limited to jurisdictional issues
to proceed under the Federal Rules). Accordingly, the distinction
drawn by the appellants between
Unlike Geo-Culture, relied on by “merits” discovery and “jurisdictional”
the appellants, where the plaintiff failed discovery, predicated on a false
to allege even a prima facie case of dichotomy of having and not having
personal jurisdiction, the District Court jurisdiction, amounts to no real
found that the plaintiffs here had difference because the court has
established a prima facie case of personal jurisdiction for either type of discovery.18
jurisdiction, a conclusion not challenged The undisputed presence of personal
by the appellants. The plaintiffs’ jurisdiction in Aerospatiale is, therefore,
allegations amounted, therefore, to more tangential to its holding and irrelevant to
than “mere blanket fishing expeditions” the issue of whether Aerospatiale applies
and were “not the type of bare-boned also to jurisdictional discovery.
allegations that potentially could lead to
the fishing expeditions of obvious There are other reasons supporting
concern to the signatory countries.” In re our conclusion that the Aerospatiale
Vitamins, 120 F. Supp. 2d at 50. balancing approach applies equally to the
determination of whether the Hague
The appellants also relied on the Convention procedures should be used
Federal Rules to challenge the District initially for jurisdictional discovery.
Court’s personal jurisdiction. As we First, where Aerospatiale has
have stated above, it is well established categorically rejected a first resort rule
that the trial court has inherent power for “merits” discovery, which we can
and jurisdiction to decide whether it has expect to be more comprehensive or
jurisdiction. Ins. Corp. of Ireland, 456 burdensome than jurisdictional
U.S. at 706. The appellants’ arguments discovery, there is more justification to
are also premised on the assumption that reject a first resort rule for the more
there is no personal jurisdiction in this limited and less intrusive jurisdictional
case. Such an assumption is premature discovery. See Fishel, 175 F.R.D. at 529
and unwarranted unless the result of the (“The ascertainment of facts bearing on
pending jurisdictional discovery shows personal jurisdiction normally involves
otherwise. At this stage, where the the least intrusive type of inquiries.”).
appellants have voluntarily appeared in
the court to challenge jurisdiction and Second, where Aerospatiale has
jurisdictional discovery is pending, the rejected the first resort rule even though
District Court indisputably has the French defendants there may have
jurisdiction to determine whether there is
personal jurisdiction upon completion of
jurisdictional discovery. Moreover, the 18
No one would dispute that if
denial of resort to Hague convention jurisdiction discovery yields no evidence
procedures for jurisdictional discovery is sufficient to establish personal
not unfair to the appellants because they jurisdiction, the court must dismiss the
“[had] taken advantage of the [Federal] underlying action against the appellants,
[R]ule allowing them a preliminary rather than deciding which set of
hearing and determination of the issues procedural rules to apply.
17
faced possible penal sanction under from a United States judicial or
France’s “blocking statute,” there is less administrative proceeding pursuant to the
justification for us to adopt a first resort Federal Rules.
rule where the appellants here face no
such sanction because Germany has no Third, where Aerospatiale has
“blocking statute.” 19 Aerospatiale rejected the adoption of a blanket first
reiterates the well-settled view that resort rule based on the proffered reasons
“[blocking] statutes do not deprive an of respecting the “judicial sovereignty”
American court of the power to order a of the signatory host nation and
party subject to its jurisdiction to produce preventing discovery abuse, the same
evidence even though the act of reasons proffered by the appellants here
production may violate that statute.” 482 must fail as well. 482 U.S. at 543-44
U.S. at 544-45 n.29 (concluding that “the (finding no textual support in the Hague
enactment of such a statute by a foreign Convention for a first resort rule and
nation” cannot be allowed to “graft a rule opting for a three-prong balancing
of first resort onto the Hague approach), 545-46 (suggesting that
Convention, or otherwise to provide the burdensome or intrusive discovery
nationals of such a country with a practice is not a sufficient ground for
preferred status in our courts”). Neither adopting the first resort rule because the
the appellants nor their supporters, trial court has an inherent duty to
Germany or the Federation of German supervise discovery and prevent
Industries, have disputed the plaintiffs’ discovery abuse).
statement that Germany, unlike France,
does not have a “blocking statute,” The appellants and their
criminal or civil, that specifically supporters argue generally that Germany
prohibits production of documents in is a civil law country where the gathering
connection with foreign judicial or of evidence is a judicial function and that
administrative proceedings. Nor have pursuing discovery without resort to the
they identified a single instance where a Convention may be deemed an affront to
German national has been prosecuted, Germany’s sovereignty. The
penalized, or sanctioned under German Aerospatiale Court, as well as other
law for complying with discovery orders courts, has found such argument
“unpersuasive.” Id. at 543; see also
Great Lakes Dredge & Dock Co. v.
19
Aerospatiale, 482 U.S. at 526 n.6 Harnischfeger Corp.,
1990 WL 147066,
(quoting Article 1A of the French at *2 (N.D. Ill. Sept. 25, 1990);
“blocking statute,” French Penal Code Scarminach v. Goldwell GmbH, 531
Law No. 80-538) (“Subject to treaties or N.Y.S. 2d 188, 191 (N.Y. Sup. Ct. 1988).
international agreements and applicable As observed by the court in In re
laws and regulations, it is prohibited for
Vitamins, 120 F. Supp. 2d at 50, there is
any party to request, seek or disclose, in no reason to assume that discovery under
writing, orally or otherwise, economic, the Federal Rules would inevitably
commercial, industrial, financial or offend Germany’s sovereign interest
technical documents or information because presumably Germany, like the
leading to the constitution of evidence United States, would prohibit the alleged
with a view to foreign judicial or price-fixing conspiracy and would
administrative proceedings or in welcome investigation of such antitrust
connection therewith.”). violation to the fullest extent. See
18
Germany’s Act Against Restraints of the District Court to restrict discovery
Competition § 1; Treaty Establishing the abuse. We expect that the District Court
European Economic Community, Art. will follow Aerospatiale’s instruction
81(1). There is also no reason to and “exercise special vigilance” to
“believe that the sovereign interests of . . protect appellants from unduly
. foreign signatory nations would be any burdensome or abusive discovery.
more offended by [the] narrower Aerospatiale, at 546.
jurisdictional discovery than they would
be by the broader, merits-related We agree with the District Court’s
discovery allowed by Aerospatiale.” In legal conclusion that the Aerospatiale
re Vitamins, 120 F. Supp. 2d at 51. We balancing test applies equally to
likewise conclude that the appellants’ jurisdictional discovery and that there is
general argument is unpersuasive.20 no first resort rule in favor of the Hague
Convention procedures for jurisdictional
Similarly, following the discovery.
Aerospatiale holding, we also find
unpersuasive the appellants’ argument C.
that a first resort to the Hague
Convention is required to avoid possible The appellants also argue
burdensome or intrusive discovery alternatively that even if the Aerospatiale
practice under United States law. balancing approach applies to
Aerospatiale, 482 U.S. at 545-46; see jurisdictional discovery, the three-prong
also Great Lakes,
1990 WL 147066, at test would favor first use of the
*2, and Scarminach, 531 N.Y.S. 2d at Convention procedures in this case. The
191. Discovery abuse is an insufficient District Court rejected that argument,
reason to avoid the Federal Rules ruling that the appellants bore the burden
because the appellants have remedies in of persuasion under the balancing test
and that they failed to satisfy the burden.
The court concluded alternatively that
even if the plaintiffs bore the burden of
20
Appellants and especially their persuasion, they had submitted adequate
supporters, Germany and the Federation evidence to show that the balancing test
of German Industries, stress the disfavored first use of the Convention
controversial character of the “narrow procedures for jurisdictional discovery in
majority” decision in Aerospatiale and this case.
profess their strong disagreement with
the Aerospatiale holding that the Hague We agree first with the District
Convention procedures are merely an Court’s conclusion of law that the
optional supplement to the Federal Rules. appellants bear the burden of persuasion
We must reject their invitation to deviate as to the optional use of the Convention
from Aerospatiale based on the same procedures. See Aerospatiale, 482 U.S.
proffered reasons, found insufficient by at 547 (stating that the court should give
the Aerospatiale Court, of respecting “the foreign litigant a full and fair
international comity and preventing opportunity to demonstrate appropriate
discovery abuse. As a subordinate court, reasons for employing Convention
we are bound by the Supreme Court’s procedures in the first instance, for some
precedent. aspects of the discovery process”)
(emphasis added). This language seems
19
to imply that the proposing party bears Court’s decision in Société Nationale
the burden of persuasion. See also In re Industrielle Aerospatiale v. United States
Vitamins, 120 F. Supp. 2d at 51-52 District Court for the Southern District of
(holding that proposing party bears the Iowa,
482 U.S. 522 (1987). The service
burden);Valois of Am., Inc. v. Risdon provisions of the Hague Convention were
Corp.,
183 F.R.D. 344, 346 (D. Conn. adopted by the President and approved by
1997) (same); Doster v. Schenk A.G., a unanimous vote of the Senate in 1972.
141 F.R.D. 50, 51-52 (M.D.N.C. 1991)
Id. at 530. The provisions then became the
(“[I]t is more practical, if not logical, to “law of the land,” coexisting with other
place the burden of persuasion on the federal law such as the Federal Rules of
proponent of using the Hague Civil Procedure. U.S. Const. art. VI, cl. 2.
Convention.”);
Rich, 121 F.R.D. at 257- In Aerospatiale, the Hague Convention
58 (same); Benton Graphics v. was referred to as a “permissive
Uddeholm Corp.,
118 F.R.D. 386, 389 supplement” and an “optional procedure.”
(D.N.J. 1987) (same); but see Hudson v.
Id. at 536. However the Hague
Hermann Pfauter GmbH & Co., 117 Convention is only as “optional” as
F.R.D. 33, 38 (N.D.N.Y. 1987); Knight, deciding to use the Federal Rules
is
615 A.2d at 300. “optional” in such a case. The Convention
does not overwrite the Federal Rules of
We also agree with the District Civil Procedure, but it is in no way inferior
Court’s conclusions that the appellants to them.
have failed to satisfy their burden of
persuasion under the Aerospatiale Unfortunately, I believe the
balancing test and that the evidence on language used in Aerospatiale has
record disfavors the first use of the unintentionally compounded the problem
Convention procedures for jurisdictional inherent with the Convention: that
discovery. The court’s conclusions in “relatively few judges are experienced in
these two instances are reviewed only for the area [of international law] and the
abuse of discretion, and we find none. procedures of foreign legal systems are
often poorly understood.” Aerospatiale,
IV. 482 US. at 552 (Blackmun, J., dissenting).
Many times, rather than wade through the
For the foregoing reasons, the mire of a complex set of foreign statutes
orders of the District Court certified for and case law, judges marginalize the
review on this interlocutory appeal will Convention as an unnecessary “option.” I
be affirmed. Costs are taxed against the believe the Aerospatiale decision should
appellants. be reexamined to ensure that lower courts
are in fact exercising “special vigilance to
ROTH, Circuit Judge, concurring21 : p r o t e c t f o r e i g n l it i g a n ts ” a n d
demonstrating respect “for any sovereign
I write separately to express my interest expressed by the foreign state.”
concern that the Hague Convention has Id. at 485. Currently, I fear that many
been given short shrift since the Supreme courts are simply discarding the treaty as
an unnecessary hassle.
21
Judge McKee shares the concerns Our sage colleague, Judge Joseph F.
expressed herein and joins this Weis, Jr., has opined that first resort to the
concurring opinion. Hague Convention is in fact appropriate:
20
The arguments mustered Convention and the Hague Evidence
against giving priority to Convention, April 1989, reprinted in 28
Convention procedures are Int’l Law Materials 1556, 1569 (1989).
n ot persu asiv e w he n Among the delegates at the 1989 meeting
balanced with the of the Special Commission was one from
overriding interests , the United States.
national and international,
in mo re eff ective I recognize that we are bound by
implementation of the Aerospatiale but I believe that it is time for
Evidence Convention. It the Supreme Court to revisit that decision
should be remembered, – particularly because I perceive that many
after all, that the treaty of our courts have not exercised the
negotiated by the United “special vigilance to protect foreign
States and the other litigants” that the Supreme Court
signatories is for the anticipated.
benefit of private litigants
as a whole – some Finally, under the precedent of
inconvenience or expense Aerospatiale, I do not oppose the panel’s
to an individual litigant conclusion that the burden of persuasion
should not suffice to lies with the party advocating the use of
jeopardize an arrangement the Hague Convention. In an ideal
which bene fits many. world, however, if the treaty were to be
Moreover, through given the priority to which its status as a
ratification, the United ratified treaty entitles it, I do not believe
States has agreed to honor that the burden of persuasion should lie
the commitments which with the proponent of the Hague
the treaty contains. The Convention procedures.
judiciary should not lightly
permit a private litigant to
undermine express
national policy.
Joseph F. Weis, Jr., The Federal Rules and
the Hague Conventions: Concerns of
Conformity and Comity, 50 U. Pitt. L.
Rev. 903, 931 (Spring, 1989).
Judge Weis’s view mirrors the
conclusions of the Special Commission of
the Hague Conference of April 1989, that,
whatever the views of the delegates as to
application of domestic procedural rules,
“priority should be given to the procedures
offered by the Convention when evidence
located abroad is being sought.” Hague
Conference of Private International Law:
Special Commission Report on the
Operation of th e Hague Servic e
21
