A wide range of federal statutes reach conduct overseas. When those statutes include private rights of action, Americans may find themselves with claims against defendants with few—if any—ties to the U.S.
Since the U.S. Supreme Court’s decision in Daimler v. Bauman cut back states’ authority to hale non-resident corporations into court for conduct unrelated to their activities in-state, many have assumed that these would-be plaintiffs are out of luck.
Now, in Douglass v. Nippon Yusen Kabushiki Kaisha, the Fifth Circuit has decided to take a second look at the question of whether and how that rule applies when federal courts hear federal-law claims against corporations based abroad.
Long-Arm Statutes Subject to Due Process Limits
Federal courts’ personal jurisdiction usually depends on the long-arm statutes of the states in which they sit. Those statutes are subject to the 14th Amendment’s Due Process Clause, which limits states’ jurisdiction over non-resident defendants to situations where the claims against them arise from, or relate to, their in-state conduct.
But federal law has its own long-arm provisions, governed by the Fifth Amendment, that are intended to fill in where state law leaves gaps.
Although the Fifth and 14th Amendments’ Due Process clauses are worded identically, the Supreme Court has gone out of its way, in cases like Bristol-Myers Squibb v. Superior Court, to leave open whether the clauses impose the same constraints. And the government has argued, most recently last term in Ford v. Montana Eighth Judicial Dist. Ct., that the U.S.’s “unique constitutional prerogatives and powers” permit “the exercise of federal judicial power in ways that have no analogue at the state level.”
Yet most federal appellate courts, including the First, Second, Fourth, Fifth, Sixth, Ninth, Tenth, Eleventh, Federal, and D.C. circuits, have assumed or held without much analysis that federal service-of-process provisions are subject to the same limits as their state-law counterparts. The only difference they have recognized is that litigants proceeding under federal service-of-process provisions can aggregate defendants’ contacts with the U.S. as a whole, instead of any single state.
Questions to Be Answered
It’s worth asking why. After all, a central justification for the focus on forum contacts under the 14th Amendment is the need to protect interstate federalism. But federalism is beside the point when a federal court hears federal-law claims against, say, a foreign terrorist organization that injures Americans traveling abroad or a foreign company that traffics in overseas property confiscated from U.S. citizens. And it’s not clear how much the inconvenience that litigating here imposes on non-resident foreign defendants should weigh against the judgment of Congress that Americans should be able to bring claims based on foreign conduct.
These are among the questions the full Fifth Circuit will consider when it rehears Douglass.
Facts of the Case: A Collision in Japanese Waters
The appeal arises from a collision in Japanese waters on June 17, 2017, between the U.S. Navy destroyer USS Fitzgerald and a cargo ship (MV ACX Crystal) chartered by a Japanese shipping company that left seven U.S. sailors dead and dozens injured. In consolidated cases, the victims and their survivors sued the company under the federal Death on the High Seas Act. They asserted personal jurisdiction under Federal Rule of Civil Procedure 4(k)(2), which allows service of process in federal-law suits where the defendant is not subject to jurisdiction in any state.
Finding no connection between the accident and the shipping company’s limited U.S. contacts, the district court dismissed the suits under Daimler. A panel of the Fifth Circuit grudgingly affirmed, devoting much of its per curiam opinion to casting doubt on circuit precedent that subjected Rule 4(k)(2) to the same 14th-Amendment standard as its state-law counterparts. The two active judges on the panel concurred, urging the full court to revisit the issue. It agreed to do so July 2.
How Far Will Fifth Circuit Go?
With virtually no guidance from the Supreme Court, the case promises to take the predominantly conservative appeals court back to first principles. That could lead to interesting debates about federal power, sovereignty, and what it means to be faithful to the U.S. Constitution’s text. And it could make the Fifth Circuit, which includes Louisiana, Mississippi, and Texas, the go-to forum for federal claims against non-resident foreign corporations.
Although it’s impossible to predict the outcome, it seems unlikely that the court took the case en banc just to confirm its prior precedent. The question is how far it will go.
The now-vacated panel decision gives one hint: It endorsed a compromise position suggested by an amicus brief from civil-procedure scholars that would read the Fifth Amendment to allow jurisdiction over foreign corporations for claims based on foreign conduct that is related to their U.S. operations. But the court could go further still and hold, as the government’s brief in Ford suggested, that the Constitution imposes no territorial constraints on federal authority.
Whatever the result, the Supreme Court is sure to face calls to weigh in before long.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Eugene Sokoloff is counsel at MoloLamken LLP where he focuses on critical motions and appeals.