United States Court of Appeals
For the First Circuit
No. 00-2502
UNITED STATES OF AMERICA,
Plaintiff, Appellant,
v.
SWISS AMERICAN BANK, LTD.,
SWISS AMERICAN NATIONAL BANK, and
INTER-MARITIME BANK, GENEVA,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Torruella and Lipez, Circuit Judges,
and Tauro,* District Judge.
Mia Levine, Trial Attorney, United States Department of Justice,
with whom Gerald E. McDowell, Chief Trial Attorney, Karen Taylor, Trial
Attorney, Donald K. Stern, United States Attorney, and Richard L.
Hoffman, Assistant United States Attorney, were on brief, for
appellant.
Howard Wilson, with whom Alan H. Scheiner, Rosenman & Colin LLP,
Michael B. Keating, Sarah Cooleybeck, and Foley, Hoag & Eliot LLP were
on brief, for appellees Swiss American Bank, Ltd. and Swiss American
National Bank.
Wm. Shaw McDermott, with whom Irene C. Freidel, Aimee Bierman, and
Kirkpatrick & Lockhart LLP were on brief, for appellee Inter-Maritime
Bank, Geneva.
* Of the District of Massachusetts, sitting by designation.
December 27, 2001
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TORRUELLA, Circuit Judge. The United States government
attempted to recover $7 million in drug proceeds that a Massachusetts
resident deposited in an Antiguan bank and then forfeited to the United
States as part of a plea agreement. After the bank did not turn over
the funds, the United States filed a claim in the Massachusetts
District Court for conversion, unjust enrichment, and breach of
contract against Swiss American Bank and its alleged alter ego, Bank of
New York-Inter-Maritime Bank. For the second time, the government
appeals the court's dismissal of the case for lack of personal
jurisdiction and its refusal to allow jurisdictional discovery. After
completing a plenary review, we agree with the district court that the
government failed to make a prima facie showing of specific or general
jurisdiction, and conclude that the district court acted within its
discretion to deny the government jurisdictional discovery. We
therefore affirm the judgment.
I.
Between 1985 and 1987, John E. Fitzgerald, a resident of
Massachusetts, deposited about $7 million in Swiss American Bank and
Swiss American National Bank (collectively SAB), both organized under
the laws of Antigua and Barbuda and located there. Fitzgerald
deposited the money in accounts held in the name of shell corporations.1
1 According to the government, the accounts were held in the name of
Rosebud Investments, Ltd., White Rose Investments, Ltd., Handle
Investments, Ltd., J & B Investments, Ltd., and Guardian Bank, Ltd.
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When he made the deposits, SAB was the wholly owned subsidiary of Swiss
American Holding Company,2 a Panamanian corporation, which in turn was
wholly owned by Bank of New York-Inter-Maritime Bank (IMB), an
institution organized under Swiss law and based in Geneva.
In 1993, Fitzgerald pled guilty to several counts of
conspiracy for racketeering and attempted money laundering. He
admitted that the funds deposited at SAB were drug proceeds that he had
laundered through shell corporations organized with the help of Peter
F. Herrington, then SAB's general manager. During some of the time
that Fitzgerald deposited his money at SAB, his funds represented about
one-third of the bank's total deposits. As part of his plea agreement,
Fitzgerald agreed to forfeit the money in his SAB accounts to the
United States government.
In November 1993, the U.S. District Court for the District
of Massachusetts entered a preliminary order of forfeiture regarding
the deposited funds. Beginning in January 1994, the United States made
a series of requests to the Antiguan government seeking assistance in
recovering the money. Meanwhile, notice of the impending forfeiture was
published in the Antiguan Gazette and the Boston Globe. No competing
For clarity's sake, we refer to them collectively as "Fitzgerald's
accounts."
2 The government failed to serve Swiss American Holding Company. As
a result, it is not a party to this litigation.
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claims were filed. However, on March 28, 1994, during the filing
period, SAB sent a letter to the district court that stated:
[I]n the event of your action for forfeiture
being successful, the banks have been instructed
by the Government of Antigua and Barbuda to
freeze all of the assets . . . in issue in your
Petition, until the ultimate beneficial owners
have been ascertained to the Government's
satisfaction. This is a directive that the banks
have to honor on pain of having their licences
revoked and is a problem that you may well have
to address on the successful conclusion of your
litigation.
On May 4, 1994, the district court entered a final order
decreeing the money in Fitzgerald's SAB account to be forfeited to the
United States. In a November 13, 1995 letter, the Solicitor General of
Antigua informed the United States that the bank records of
Fitzgerald's account had been destroyed in a September 1995 hurricane
and that the funds had been frozen by the Antiguan government. On
November 20, 1995, the United States learned from a lawyer for Antigua
that the SAB funds were "no longer available" because they had been
transferred to the Antiguan government and used to pay off debts. It
is undisputed that in either December 1994 or January 1995, after the
final order of forfeiture was entered, SAB transferred $5 million from
Fitzgerald's account to the Antiguan government and kept the remaining
$2 million, apparently to pay off loans taken out by Fitzgerald. SAB
and the Antiguan government agree that the funds were disbursed with
the Antiguan government's approval.
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On December 23, 1997, the United States filed a complaint in
federal district court in Massachusetts suing SAB and IMB for
conversion, unjust enrichment, and breach of contract. On September
30, 1998, the district court dismissed the government's case for lack
of personal jurisdiction. See United States v. Swiss Am. Bank, Ltd.,
23 F. Supp. 2d 130 (D. Mass. 1998) ( Swiss I ). The court ruled that the
government failed to show that the defendants were beyond the
jurisdictional reach of any state court of general jurisdiction, as
required by Federal Rule of Civil Procedure 4(k)(2). Id. at 136. The
court also denied the government's request for discovery because of its
failure to plead this element of personal jurisdiction. Id.
The government appealed, and we reversed the district court's
dismissal for lack of jurisdiction under Rule 4(k)(2). See United
States v. Swiss Am. Bank, Ltd., 191 F.3d 30 (1st Cir. 1999) ( Swiss II).
We said that three elements are required for the exercise of personal
jurisdiction under Rule 4(k)(2): (1) the plaintiff's claim must arise
under federal law; (2) the defendant must be beyond the jurisdictional
reach of any state court of general jurisdiction (the "negation
requirement"); and (3) the exercise of jurisdiction must not violate
the defendant's rights under the Constitution or federal law. See id.
at 38-39. We found that the government had satisfied the first element
of this test, and directed the district court to apply a new burden-
shifting framework to the negation requirement. See id. at 41. We
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also directed the court to reconsider the government's request for
discovery in light of the new negation requirement analysis that we set
forth. See id. at 46. Finally, we declined to rule on IMB's argument
that the case against it should be dismissed on the merits, saying that
this matter should await resolution of the jurisdictional issue. See
id. at 46-47.
On remand, SAB and IMB renewed their motions to dismiss, and
the government subsequently renewed its request for discovery. The
district court held a hearing on these motions on March 30, 2000. The
court's review included affidavits and related evidence submitted by
both parties, including a report from the government's investigator, as
well as the allegations contained in the pleadings. At the hearing,
the court granted IMB's motion to dismiss for failure to adequately
plead alter ego liability and for lack of personal jurisdiction. See
United States v. Swiss Am. Bank, Ltd., 116 F. Supp. 2d 217, (D. Mass.
2000) ( Swiss III). Following the hearing, the court issued a written
opinion dismissing the case against SAB for lack of personal
jurisdiction. See id. at 225. Applying the burden-shifting framework
set forth in Swiss II, the court found that the defendants had conceded
the negation requirement. Id. at 220. It then turned to the third
element under Rule 4(k)(2): whether jurisdiction would violate
constitutional due process because the defendants lacked adequate
contacts with the United States as a whole and because the exercise of
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jurisdiction would be unreasonable. Id. The court found that the
government failed to show sufficient contacts under either a general or
specific theory of personal jurisdiction. Id. at 222-25. Finding that
the government's jurisdictional showing was "bootless" and did not
amount to a colorable claim, the court also denied the request for
jurisdictional discovery. Id. at 225.
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II.
It is basic law that a court must have personal jurisdiction
over the parties to hear a case, "that is, the power to require the
parties to obey its decrees." Swiss II, 191 F.3d at 35. At the same
time, "[d]etermining personal jurisdiction has always been more an art
than a science." Donatelli v. Nat'l Hockey League, 893 F.2d 459, 468
n.7 (1st Cir. 1990). As Justice Marshall said, the jurisdictional
determination "is one in which few answers will be written in black and
white. The greys are dominant and even among them the shades are
innumerable." Id. (quoting Kulko v. Super. Ct., 436 U.S. 84, 92
(1978)) (internal quotation marks and citations omitted).
The personal jurisdiction inquiry in federal question cases
like this one differs from the inquiry in diversity cases. See 28
U.S.C. § 1332. Here, "the constitutional limits of the court's
personal jurisdiction are fixed . . . not by the Fourteenth Amendment
but by the Due Process Clause of the Fifth Amendment." United Elec.,
Radio & Mach. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1085
(1st Cir. 1992) ( Pleasant St. I ). This distinction matters because
under the Fifth Amendment, a plaintiff need only show that the
defendant has adequate contacts with the United States as a whole,
rather than with a particular state. See id. At the same time,
however, the plaintiff must still ground its service of process in a
federal statute or civil rule. See id. In this case, the government's
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asserted basis for jurisdiction is Federal Rule of Civil Procedure
4(k)(2).3 The Rule functions "as a species of federal long-arm statute"
by "clos[ing] [the] loophole" that existed when foreign defendants
"lacked single-state contacts sufficient to bring them within the reach
of a given state's long-arm statute," but "had enough contacts with the
United States as a whole to make personal jurisdiction over them in a
United States court constitutional." Swiss II, 191 F.3d at 40.
Whereas state long-arm statutes require a showing that the parties have
sufficient contacts with the forum state, Rule 4(k)(2) requires a
showing that the parties have sufficient contacts with the United
States as a whole.
"A district court may exercise authority over a defendant by
virtue of either general or specific jurisdiction." Mass. Sch. of Law
at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir. 1998).
"Specific jurisdiction exists when there is a demonstrable nexus
between a plaintiff's claims and a defendant's forum-based activities."
3 Enacted in 1993, the Rule provides:
If the exercise of jurisdiction is consistent
with the Constitution and laws of the United
States, serving a summons or filing a waiver of
service is also effective, with respect to claims
arising under federal law, to establish personal
jurisdiction over the person of any defendant who
is not subject to the jurisdiction of the courts
of general jurisdiction of any state.
Fed. R. Civ. P. 4(k)(2).
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Id. "General jurisdiction exists when the litigation is not directly
founded on the defendant's forum-based contacts, but the defendant has
nevertheless engaged in continuous and systematic activity, unrelated
to the suit, in the forum state." Pleasant St. I , 960 F.2d at 1088.
Here the government argues that it has met the tests for both general
and specific jurisdiction. In the alternative, the government contends
that if its jurisdictional showing fell short, the district court
should have allowed it to take limited discovery of SAB's contacts with
the United States as a whole.
When a district court rules on a motion to dismiss for lack
of personal jurisdiction without holding an evidentiary hearing, as in
this case, the "prima facie" standard governs its determination. See
United Elec. Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp.,
987 F.2d 39, 43 (1st Cir. 1993) ( Pleasant St. II); Boit v. Gar-Tec
Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992). "Under this standard,
it is plaintiff's burden to demonstrate the existence of every fact
required to satisfy both the forum's long-arm statute and the Due
Process Clause of the Constitution." Pleasant St. II, 987 F.2d at 44
(internal quotation marks omitted). "The prima facie showing must be
based upon evidence of specific facts set forth in the record." Id.
To meet this requirement, the plaintiff must "go beyond the pleadings
and make affirmative proof." Id. (internal quotation marks omitted).
However, in evaluating whether the prima facie standard has been
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satisfied, "the district court is not acting as a factfinder; rather,
it accepts properly supported proffers of evidence by a plaintiff as
true and makes its ruling as a matter of law." Id. When "the district
court employs the prima facie standard . . . appellate review is de
novo." Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 147
(1st Cir. 1995).
A. General Jurisdiction
The government argues that it has demonstrated sufficient
contacts to make a prima facie showing of general jurisdiction. In
evaluating whether the exercise of personal jurisdiction is warranted,
courts concentrate on the "quality and quantity of contacts between the
potential defendant and the forum." Phillips Exeter Acad. v. Howard
Phillips Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999). The assertion
of general jurisdiction comports with due process when two criteria are
met. First, there must be "continuous and systematic general business
contacts" between the foreign defendant and the forum. Helicópteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984).
Second, the plaintiff must show that the exercise of jurisdiction would
be reasonable. See Donatelli, 893 F.2d at 465 (discussing the five
"gestalt factors" used to determine fundamental fairness of exercising
jurisdiction). As a threshold matter, "[t]he standard for evaluating
whether these contacts satisfy the constitutional general jurisdiction
test is considerably more stringent than that applied to specific
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jurisdiction questions." Noonan v. Winston Co., 135 F.3d 85, 93 (1st
Cir. 1998) (internal quotation marks omitted).
We start with the defendant's contacts with the forum because
"[i]f the same do not exist in sufficient abundance . . . the inquiry
ends." Donatelli, 893 F.2d at 465. The district court found that the
contacts discovered by the government's investigator, and taken as true
for purposes of the motion to dismiss, were as follows: (1) in 1992 and
1993 SAB placed twelve advertisements in American Way magazine, a
publication of American Airlines; (2) during an unspecified period, SAB
subscribed to Visa International, a California credit card company, and
entered into a licensing agreement with MasterCard International, a New
York company; (3) in 1990, SAB was an appellant in a lawsuit in a
Florida court; (4) in 1998, information about SAB was posted on three
internet sites;4 (5) in 1996, SAB entered into a contract with Arkansas
Systems, Inc., an Arkansas company, for the provision of ATM support
services; (6) sometime before 1985, SAB entered into a joint venture
with Home State Savings Bank of Ohio; (7) in 1996, SAB loaned $350,000
to a Colorado company that runs an internet service called Sportspiks;
(8) in 1996, SAB "may have" had business relations with Nhancement
Technologies, Inc., a California company; (9) SAB "had correspondent
4 Because we consider only contacts established before the government
filed its complaint in December 1997, see Noonan, 135 F.3d at 93 n.8,
the appearance of information about SAB on the internet in 1998 is not
relevant to our analysis.
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banking relationships and accounts" with four New York banks; and (10)
SAB had a business relationship with Fitzgerald. See Swiss III, 116 F.
Supp. 2d at 221-22.
The government concedes that SAB has no office, personnel,
or telephone number in the United States, but nevertheless argues that
the contacts described above are continuous and systematic when
considered "in the aggregate." Ticketmaster-N.Y., Inc. v. Alioto, 26
F.3d 201, 204 (1st Cir. 1994). The government contends that the
contacts show that "SAB conducts business in the United States without
the need for a physical presence," and that "[a]s the banking universe
expands to include Internet banking and correspondent bank
relationships as routine, so too must the bases under which
internationally active banks are held accountable by the jurisdictions
in which they have customers and conduct business."
Compelling as this argument may be in some respects, it fails
the legal test for "continuous and systematic" contacts. In
determining what constitutes "continuous and systematic" contacts, our
analysis is "a fact-specific evaluation" of the defendant's contacts
with the forum. Noonan, 135 F.3d at 93. For guidance in this factual
inquiry, we look to "the types of contacts deemed sufficiently
continuous and systematic in other cases." Id.
As the district court correctly pointed out, SAB's contacts
with the United States are less continuous and systematic than contacts
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found to be insufficient for general jurisdiction in previous cases.
See Swiss III, 116 F. Supp. 2d at 224-25. In Helicópteros, the Supreme
Court found that a Texas district court could not exercise jurisdiction
over a Colombian corporation that sent its chief executive officer to
Houston for contract negotiations; accepted into its New York bank
accounts checks drawn on a Houston bank; bought equipment and training
services from a Texas corporation; and sent personnel to that
corporation's Texas facilities for training. 466 U.S. at 416.
Similarly, in Noonan, we found that the Massachusetts
district court could not exercise jurisdiction over a British company
that sent an employee to Massachusetts to photograph the plaintiff,
directly solicited business from a Massachusetts company, and received
$585,000 in orders from that same company. 135 F.3d at 93. In
Donatelli, we said that no jurisdiction attached in Rhode Island over
the National Hockey League, which for ten years provided league
officials at exhibition games, telecast games into Rhode Island, and
sold products with the National Hockey League logo. 893 F.2d at 470-
71. In Glater, the defendant Indiana corporation employed eight sales
representatives in New Hampshire, conducted business in the state, and
advertised in trade journals that circulated there. 744 F.2d at 215.
We said that "these vestigial contacts" did not suffice for the
exercise of jurisdiction. Id. at 217.
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In short, the government has not shown that SAB's limited and
intermittent contacts with the United States rise to the level of what
we have previously understood as "continuous and systematic." As a
result, the government has not made the prima facie showing needed for
the exercise of general personal jurisdiction.
B. Specific Jurisdiction
The government asserts that even if it has not shown contacts
sufficient to satisfy the "continuous and systematic" threshold for
general jurisdiction, it has nevertheless proved individual contacts
with the forum sufficient for the exercise of specific jurisdiction.
Determining whether the plaintiff has alleged sufficient facts for a
finding of specific jurisdiction requires a three-part analysis.
Phillips Exeter, 196 F.3d at 288.
First, an inquiring court must ask whether the
claim that undergirds the litigation directly
relates to or arises out of the defendant's
contacts with the forum. Second, the court must
ask whether those contacts constitute purposeful
availment of the benefits and protections
afforded by the forum's laws. Third, if the
proponent's case clears the first two hurdles,
the court then must analyze the overall
reasonableness of an exercise of jurisdiction in
light of a variety of pertinent factors that
touch upon the fundamental fairness of an
exercise of jurisdiction.
Id. We begin with the question of whether the government made a prima
facie showing that its claims were directly related to or arose out of
SAB's contacts with the United States.
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"The requirement that a suit arise out of, or be related to,
the defendant's in-forum activities comprises the least developed prong
of the due process inquiry." Ticketmaster-N.Y., 26 F.3d at 206. "We
know to a certainty only that the requirement focuses on the nexus
between defendant's contacts and the plaintiff's cause of action."
Id.; accord Sawtelle v. Farrell, 70 F.3d 1381, 1389 (1st Cir. 1995).
We begin by identifying the alleged contacts, since there can be no
requisite nexus between the contacts and the cause of action if no
contacts exist. Cf. Sawtelle, 70 F.3d at 1389 (stating that the
defendant's contacts are central to each prong of the tripartite
analysis).
In this case, the government essentially alleges two
relatedness contacts between SAB and the United States. First, the
government asserts that the contractual relationship between SAB and
Fitzgerald (or the United States, as Fitzgerald's successor in
interest) constitutes a contact, one which was overlooked by the
district court. Second, the government claims that the injurious
effects of the alleged conversion were felt in the United States, and
thus constitute a contact with the forum. The government does not
allege any other related contacts with the forum, such as telephone
calls, mail, or physical presence.
We turn first to the alleged contact based on the
relationship between Fitzgerald and SAB. The flaw in the government's
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argument is that SAB's business relationship and/or contract with
Fitzgerald, however, is not itself a contact with the United States as
a forum. See Sawtelle, 70 F.3d at 1389 (stating that the relatedness
requirement is not met by a cause of action that arises out of a
general relationship between the parties, but rather, that the action
must arise out of specific contacts between the defendant and the
forum). A contract is "but an intermediate step serving to tie up
prior business negotiations with future consequences which themselves
are the real object of the business transaction." Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 479 (1985) (internal quotations omitted). A
contract, by itself, cannot automatically establish minimum contacts.
Id. at 478. Rather, Burger King developed what we have described as a
"'contract-plus' analysis." Ganis Corp. v. Jackson, 822 F.2d 194, 197-
98 (1st Cir. 1987). Thus, "prior negotiations and contemplated future
consequences, along with . . . the parties' actual course of dealing .
. . must be evaluated in determining whether the defendant" has minimum
contacts with the forum. Burger King, 471 U.S. at 479 (finding that
franchise contract, which envisioned a twenty-year relationship and
continuing contacts with the forum, constituted a contact for purposes
of due process analysis).
The government concedes that there is no evidence that
Herrington or any other SAB representative went to the United States in
connection with Fitzgerald's accounts. SAB's lack of a physical
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presence in the United States, however, is not fatal to the case for
jurisdiction. See Burger King, 471 U.S. at 476 ("Jurisdiction in these
circumstances may not be avoided merely because the defendant did not
physically enter the forum State."); Pritzker v. Yari, 42 F.3d 53, 62
(1st Cir. 1994) ("a non-resident defendant may not always be able to
elude the net by such simple expedients as remaining physically outside
the forum"). When physical presence is lacking, we look for some other
indication that the defendant reached into the forum, such as mail or
telephone contacts. See Burger King, 471 U.S. at 476; Mass. Sch. of
Law, 142 F.3d at 36. The government has no such evidence here. For
example, the record does not show that the bank called or wrote to
Fitzgerald to solicit him as a customer or to manage his account.5 Cf.
Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 716-17 (1st Cir. 1996)
(defendant's correspondence soliciting business from plaintiff
satisfied minimal contacts requirement). Instead, the evidence shows
that Fitzgerald opened the SAB accounts in Antigua and that most of the
$7 million came not directly from the United States, but from "other
foreign locations." Swiss II, 191 F.2d at 38.
Although the government does not specifically argue the
point, SAB's March 28, 1994 letter to the Massachusetts district court
5 There is record evidence (in a report from the government's
investigator) that Herrington made phone calls to Boston in 1986 during
the period in which Fitzgerald was setting up his SAB accounts.
However, the report does not specify that Fitzgerald was the recipient
of those calls.
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informing it that the Antiguan government had frozen Fitzgerald's
accounts is also a jurisdictional contact. See Sawtelle, 70 F.3d at
1389-90 (letter and call made to forum by defendant in malpractice case
were "unquestionably a contact for purposes of our analysis"). The
letter was not a related contact for purposes of the government's
claim, however, because the letter was not essential to either the
formation or breach of the alleged contract between SAB and the
government. See Phillips Exeter, 196 F.3d at 289 (stating that a
contact is related for purposes of a contract claim when the contact is
"instrumental either in the formation of the contract or in its
breach"). Rather, the letter simply gave notice that payment might not
occur, so, at most, it can be considered only marginally instrumental
to the alleged breach.
In sum, having examined the business relationship between SAB
and Fitzgerald and/or the United States, which involves no in-forum
activities, we find that the government has not satisfied Burger King's
"contract-plus" requirement, see 471 U.S. at 478-79, to demonstrate
that this relationship is in fact a contact with the forum for the
purposes of the relatedness inquiry.
We now turn to the government's argument that the effects of
the injuries caused by SAB's activities qualify as related contacts.
The relatedness inquiry for tort claims focuses on whether the
defendant's in-forum conduct caused the injury or gave rise to the
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cause of action. Mass. Sch. of Law, 142 F.3d at 35. The government
asserts that SAB's role in advising Fitzgerald on laundering $7 million
in drug proceeds through an account in Antigua and the bank's
subsequent disbursement of those funds caused wrongful effects -- the
loss of the money to the United States government -- which were felt in
the United States. Because SAB refused to tender the allegedly
converted funds, and the effects of this injury were felt in the United
States, the government opines that these in-forum effects are contacts
that satisfy the relatedness element.
Because the government can point to no in-forum activities
by SAB that relate to its claim, the government attempts to bolster its
case for specific jurisdiction by relying on the in-forum "effects"
theory inaugurated in Calder v. Jones, 465 U.S. 783 (1984). In that
case, two newspapermen from Florida who were working for the National
Enquirer wrote an allegedly libelous article about a California
entertainer. Id. at 784-85. The article was primarily based on phone
calls to California sources. Id. at 785. However, Calder did not turn
on the presence of physical, mail, or telephone contacts between the
defendants and the forum. Id. at 787 n.6. Instead, the Supreme Court
held that California could assert personal jurisdiction over the
newspapermen "based on the 'effects' of [defendants'] Florida conduct
in California." Id. at 789.
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Unfortunately for the government, though, in this case,
Calder cannot carry the day. Calder "cannot stand for the broad
proposition that a foreign act with foreseeable effects in the forum
state always gives rise to specific jurisdiction." Bancroft & Masters,
Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000).
Calder is inapposite to this case for a number of reasons.
First, we have previously recognized that Calder's "effects"
test was adopted "for determining purposeful availment in the context
of defamation cases." Noonan, 135 F.3d at 90 (emphasis added). Thus,
the "effects" test is a gauge for purposeful availment and is to be
applied only after the relatedness prong has already been satisfied.
Although "there is a natural blurring of the relatedness and purposeful
availment inquiries in cases (like this one) in which the alleged
contacts are less tangible than physical presence[,] . . . the
inquiries are different. . . ." Phillips Exeter, 196 F.3d at 289. The
purposes behind each prong bring this difference into focus.
The relatedness inquiry separates general jurisdiction from
specific jurisdiction cases. Ticketmaster-N.Y., 26 F.3d at 206. When
alleged contacts fall short of being "continuous and systematic" so
that the exercise of general jurisdiction would be unfair, those
contacts may still support the exercise of specific jurisdiction if
they are related to the cause of action. Phillips Exeter, 196 F.3d at
288. The relatedness prong ensures fundamental fairness by protecting
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a defendant from being hauled into an out-of-state forum based on a
single contact with that forum that is wholly unrelated to the suit at
issue. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-
92 (1980) (noting that due process protects a defendant from
inconvenient forums and prevents states from overreaching the
boundaries of their sovereignty); Phillips Exeter, 196 F.3d at 287-88
(stating that due process protects those whose extra-forum activities
do not make personal jurisdiction in the forum foreseeable). When the
nexus between the forum contacts and the cause of action is too
attenuated, it violates fundamental fairness to force a defendant with
non-continuous or non-systematic contacts to defend himself in that
forum. Mass. Sch. of Law, 142 F.3d at 36 (arguing that a letter from
A to B, reporting on C's actions, cannot confer personal jurisdiction
over C in B's home state because the connection between B's state and
C's extra-forum activities is too attenuated).
The purposeful availment inquiry, though, focuses on the
defendant's intentionality. See Noonan, 135 F.3d at 90-91 (discussing
Calder's intent requirement for purposeful availment). This prong is
only satisfied when the defendant purposefully and voluntarily directs
his activities toward the forum so that he should expect, by virtue of
the benefit he receives, to be subject to the court's jurisdiction
based on these contacts. See Phillips Exeter, 196 F.3d at 292;
Ticketmaster-N.Y., 26 F.3d at 207-208.
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Calder addressed purposeful availment, rather than
relatedness. See Noonan, 135 F.3d at 90 (discussing the intent of the
defendants in Calder by aiming their article at the forum state).
Calder focused on the defendants' intent to cause injury in the forum
by aiming their article at a forum resident and then publishing the
article there, knowing that the injury would be felt in the forum. 465
U.S. at 789-90. The only contacts between one of the Calder defendants6
and the forum were that his article was published within the forum and
the legal injury occurred within the forum. Calder, 465 U.S. at 786,
790; see also Keeton, 465 U.S. at 777 (noting that the legal injury of
libel occurs "wherever the offending material is circulated"). Both
the in-forum publication and the in-forum injury were clearly related
to the plaintiff's defamation suit, so the Supreme Court did not need
to address the relatedness prong before proceeding to the purposeful
availment inquiry. Thus, since Calder's "effects" test is relevant
only to the purposeful availment prong, it cannot be used to strengthen
the government's relatedness showing.
Second, courts "have struggled somewhat with Calder's
import." Bancroft & Masters, 223 F.3d at 1087.7 As we have previously
6 The second Calder defendant had other contacts with the forum, such
as the telephone calls he made to sources located in California.
Calder, 465 U.S. at 785-86.
7 Without conducting an exhaustive review of the case law, we note that
several circuits do not appear to agree as to how to read Calder.
Compare Oriental Trading Co., Inc. v. Firetti, 236 F.3d 938, 943 (8th
-24-
noted, Calder's "effects" test was specifically designed for use in a
defamation case. Noonan, 135 F.3d at 90 (citing Calder as having
"adopted an effects test for determining purposeful availment in the
context of defamation cases"). Thus, whether Calder was ever intended
to apply to numerous other torts, such as conversion or breach of
contract, is unclear. See Imo Indus., Inc. v. Kiekert AG, 155 F.3d
254, 261 (3d Cir. 1998) (noting that courts, in applying Calder to non-
defamation cases, have adopted "a mixture of broad and narrow
interpretations"); McGlinchy v. Shell Chemical Co., 845 F.2d 802, 817
(9th Cir. 1988) (refusing to apply "effects" test to contract claim).
Third, the facts of Calder diverge widely from the facts in
this case. Although Calder's significance is based on its "effects"
theory, in that case, the actual tort or injury, not just its
consequences, occurred within the forum. Compare Keeton v. Hustler
Magazine, 465 U.S. 770, 776-77 (1984) (tort of libel is generally held
to occur wherever the libelous material is circulated), with Swiss II,
191 F.3d at 37 (legal injury of conversion occurs where conversion
Cir. 2001) (emphasizing numerous faxes and telephone calls into the
forum in finding jurisdiction under Calder), and Wien Air Alaska, Inc.
v. Brandt, 195 F.3d 208, 212 (5th Cir. 1999) (same), with Imo Ind.,
Inc. v. Kiekert AG, 155 F.3d 254, 260 (3d Cir. 1998) ("Generally
speaking, under Calder an intentional tort directed at the plaintiff
and having sufficient impact upon it in the forum may suffice to
enhance otherwise insufficient contacts with the forum such that the
'minimum contacts' prong of the Due Process test is satisfied."), and
Lake, 817 F.2d at 1423 (finding jurisdiction under Calder where
nonresident attorney obtained ex parte order from out-of-forum court
knowing it would be used to cause injury in the forum).
-25-
takes place). Moreover, the in-forum publication of the article in
Calder provided an important contact for jurisdictional purposes; a
contact that is absent in this case, since any tortious conversion or
breach of contract occurred in Antigua.
Fourth, our Calder-based precedent dictates that the
government's "effects" argument is insufficient here to show
relatedness. "We have wrestled before with this issue of whether the
in-forum effects of extra-forum activities suffice to constitute
minimum contacts and have found in the negative." Mass. Sch. of Law,
142 F.3d at 36; accord Sawtelle, 70 F.3d at 1390-91 (relatedness
showing was "tenuous at best" when based on "effects" of defendants'
malpractice, committed outside of forum, and on ancillary legal advice
mailed into the forum); Kowalski v. Doherty, Wallace, Pillsbury &
Murphy, 787 F.2d 7, 11 (1st Cir. 1986) (finding that "effects" in the
forum are not equivalent to an actual injury caused in the forum by in-
forum activities).
The district court, based on the government's mere showing
of in-forum effects, rather than actual contacts or injury within the
forum, found the government's relatedness showing so "scant" that it
did not consider the purposeful availment or reasonableness elements of
the tripartite jurisdictional analysis. Swiss III, 116 F. Supp. 2d at
222. We are likewise underwhelmed by the government's relatedness
showing. Thus, our jurisdictional analysis need proceed no further.
-26-
Since the government has failed to satisfy the first prong of the
jurisdictional test, its argument for specific jurisdiction must fail.
C. Jurisdictional Discovery
In the alternative, the government requests discovery to
develop additional facts. The government asked for discovery in the
initial proceedings before the district court, but the court denied the
motion. In Swiss II, we vacated the denial and directed the district
court to reevaluate the government's request because the burden-
shifting framework for the negation requirement that we laid out
"undermine[d] the rationale for the district court's decision." 191
F.3d at 46. We noted that under our precedents, "[a] timely and
properly supported request for jurisdictional discovery merits
solicitous attention." Id. at 45.
On remand, the district court heard argument about the
government's request for jurisdictional discovery. In Swiss III, the
court denied the government's request. Considering only the
relatedness element of the test for specific jurisdiction, the court
said that "the government, while asserting that it has stated a
'colorable case' in satisfaction of the minimum contacts requirement
for specific personal jurisdiction, offers scant evidence in support of
that conclusion." 116 F. Supp. 2d at 222. The court concluded:
"Indeed, so bootless . . . is the government's showing here in light of
the applicable authority, that it has made no colorable claim
-27-
sufficient to entitle it to any further discovery." Id. at 225
(citation and internal quotation marks omitted).
We have long held that "a diligent plaintiff who sues an out-
of-state corporation and who makes out a colorable case for the
existence of in personam jurisdiction may well be entitled to a modicum
of jurisdictional discovery if the corporation interposes a
jurisdictional defense." Sunview Condominium Ass'n v. Flexel Int'l,
Ltd., 116 F.3d 962, 964 (1st Cir. 1997) (emphasis added); accord
Surpitski v. Hughes-Keenan Corp., 362 F.2d 254, 255-56 (1st Cir. 1966).
However, "that entitlement is not absolute." Sunview, 116 F.3d at 964.
A plaintiff must be diligent in preserving his or her rights. Id.
Moreover, even when the plaintiff has been diligent and has made a
colorable claim for personal jurisdiction, the district court still has
"broad discretion to decide whether discovery is required." Crocker v.
Hilton Int'l Barb., Ltd., 976 F.2d 797, 801 (1st Cir. 1992).
The standard for reversing a district court's decision to
disallow jurisdictional discovery is high. Given the trial court's
broad discretion in determining whether to grant jurisdictional
discovery, "[a] ruling will be overturned only upon a clear showing of
manifest injustice, that is, where the lower court's discovery order
was plainly wrong and resulted in substantial prejudice to the
aggrieved party." Crocker, 976 F.2d at 801 (internal quotation marks
omitted) (emphasis added); see also Noonan, 135 F.3d at 94.
-28-
In this case, the government has been unable to show that the
district court's denial of discovery was "plainly wrong" and an abuse
of discretion. Even if this Court disagreed with the district court's
assessment that the government's jurisdictional showing was "bootless,"
Swiss III, 116 F. Supp. 2d at 225, such disagreement is an insufficient
basis for overturning the district court's decision. In order to
reverse the district court, we would have to find that its analysis was
"plainly wrong and resulted in substantial prejudice." Crocker, 976
F.2d at 801. We can make no such finding here.
After our analysis of the government's argument, it is
unclear that the government has presented what amounts to a "colorable"
claim for personal jurisdiction. As discussed above, the government's
relatedness showing was unconvincing. And, in order to find specific
personal jurisdiction, all three prongs of the tripartite test must be
satisfied. Phillips Exeter, 196 F.3d at 39. Moreover, if the
plaintiff fails to make a strong showing with respect to the first two
prongs, then the exercise of personal jurisdiction is more likely to be
found unreasonable under the third prong. Id. at 39 n.1. Thus, even
if this Court were ruling afresh (rather than under a restricted
standard of review) on the jurisdictional discovery issue, it is not
clear that discovery would be warranted. As a result, we can hardly
state that the district court was "plainly wrong" in denying discovery
for lack of a colorable claim.
-29-
We have also held that, in addition to presenting a colorable
claim, a plaintiff must be diligent in preserving his rights to be
entitled to jurisdictional discovery. Sunview, 116 F.3d at 964. This
includes the obligation to present facts to the court which show why
jurisdiction would be found if discovery were permitted. See Barrett
v. Lombardi, 239 F.3d 23, 26 (1st Cir. 2001). The government, here,
has been less than diligent. As SAB points out, only on appeal did the
government flesh out its description of the types of contacts it hopes
to discover: (1) "the origins and nature of SAB's relations and
contacts with Fitzgerald;" (2) "business meetings that took place in
the United States, or were conducted by telephone, with persons in the
United States, relating to the subject accounts;" (3) "information that
might have been sent by mail or other means" by SAB to the United
States; and (4) the "origin and nature of any other business relations"
between SAB and American account holders or business partners. The
government should have given the district court this more detailed
description of the "additional pertinent avenues of inquiry" that it
hoped to pursue. Whittaker Corp. v. United Aircraft Corp., 482 F.2d
1079, 1086 (1st Cir. 1973). Because the government did not present
these specifics below, they do not enter into our analysis of whether
the court abused its discretion in denying the request for discovery.
Failure to allege specific contacts, relevant to establishing personal
jurisdiction, in a jurisdictional discovery request can be fatal to
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that request. See Crocker, 976 F.2d at 801 (denying discovery where
appellants sought information, irrelevant to forum contacts, on
solicitation of business and the provision of goods or services outside
of the forum); Noonan, 135 F.3d at 94 (denying discovery where
plaintiffs sought information about the interrelationships among the
defendants; information irrelevant to purposeful availment).
Given the overall unpersuasive case for personal
jurisdiction, the government's failure to allege specific contacts it
was seeking to discover, and the wide discretion given to the district
court, we cannot conclude, in light of our precedent, that the district
court was "plainly wrong" in denying discovery.
III.
In its complaint, the government alleged that IMB is SAB's
alter ego. At the March 30, 2000 hearing on SAB's and IMB's motions to
dismiss, the district court dismissed the government's case against IMB
"for failure adequately to plead allegations of alter ego liability and
for lack of personal jurisdiction." Swiss III, 116 F. Supp. 2d at 219.
On appeal, the government challenges this ruling. In the alternative,
it contends that it should have been allowed to take discovery about
IMB's relationship with SAB, arguing, as it did below, that discovery
is needed because "the defendants exclusively hold the critical
information that would explain the events surrounding the disappearance
of the funds."
-31-
In Swiss II, IMB argued that it could not be held liable for
SAB's alleged misconduct because it was not SAB's alter ego. We said
that this argument was "premature" because it involved "reaching the
merits of a case," which, according to Supreme Court precedent, "should
await a determination of the district court's jurisdiction over IMB."
191 F.3d at 46. We noted "[t]he lack of a developed record and the
fact that the district court has not yet expressed its views on this
motion" as added reason to decline to address IMB's argument on the
merits. Id. The jurisdictional question over IMB can now be resolved,
in light of this Court's decision affirming the lack of personal
jurisdiction over SAB.
The government concedes that personal jurisdiction extends
to IMB only if (1) the government makes a prima facie case for
jurisdiction over SAB and if (2) the government can establish alter ego
liability. See Pleasant St. I , 960 F.2d at 1091 ("if [subsidiary]
PSC's contacts can be attributed to [parent company] ITD, then the
jurisdictional hurdle can be vaulted"); Donatelli, 893 F.2d at 466
("Since the essence of personal jurisdiction is to bring responsible
parties before the court, a corporation which is actually responsible
for its subsidiary's decision to undertake instate activities should,
in all fairness, be within the state court's jurisdictional reach.").
Since the government was unable to make the case for jurisdiction over
SAB, the first "if" has not been satisfied. Therefore, personal
-32-
jurisdiction cannot extend to IMB. We thus affirm the district court's
dismissal of the case against IMB.
IV.
For the foregoing reasons, we agree with the district court's
dismissal of the case against SAB and IMB for lack of personal
jurisdiction.
Affirmed.
(Dissenting follows)
-33-
LIPEZ, Circuit Judge, dissenting. The majority concludes
that the district court did not abuse its discretion in denying
jurisdictional discovery. I respectfully disagree with that
conclusion, and therefore dissent. My disagreement with the majority
stems in large part from the majority's treatment of Calder v. Jones,
465 U.S. 783 (1984). In assessing whether the government's tort claims
arise out of or relate to SAB's contacts with the forum, the majority
states that, "since Calder's 'effects' test is relevant only to the
purposeful availment prong, it cannot be used to strengthen the
government's relatedness showing." That reasoning cannot be squared
with Calder's holding that jurisdiction can be "based on" the in-forum
effects of the defendant's out-of-forum activity. 465 U.S. at 787.
Under Calder, those effects are jurisdictional contacts in their own
right, relevant to the relatedness requirement.
Although I agree with the majority that the government has
not yet made out a prima facie case for specific jurisdiction, I
believe that the government's effects argument creates a "colorable"
case for specific jurisdiction with respect to its tort claims against
SAB. Accordingly, I conclude that the district court abused its
discretion in summarily denying the government's request for
jurisdictional discovery on the ground that the government's case for
personal jurisdiction is "bootless."
I.
-34-
My disagreement with the majority over the import of Calder
leads me to a different view on the question of jurisdictional
discovery. Thus, before turning to the discovery question, I first
must address Calder itself, and its implications for the government's
case for specific jurisdiction.
A. The Jurisdictional Relevance of Effects
The dispute in Calder arose out of an allegedly libelous
article published in the National Enquirer about Shirley Jones, a well-
known California entertainer. Jones sued the Enquirer, Ian Calder, its
president and editor, and John South, the reporter who wrote the
offending article. Calder and South were both Florida residents, and
it was undisputed that the article had been written, researched, and
edited in Florida. Indeed, Calder never even called California in
connection with the article: "all of his acts with reference to [the
Jones] article apparently were performed in Florida." Jones v. Calder,
187 Cal. Rptr. 825, 829 (Cal. Ct. App. 1982).
The California Court of Appeal concluded that "[t]he fact
that the actions causing the effects in California were performed
outside the State did not prevent the State from asserting jurisdiction
over a cause of action arising out of those effects." Calder, 465 U.S.
at 787. The Supreme Court agreed, noting its "approval of the
'effects' test employed by the California court." Id. at 787 n.6.
-35-
That test was drawn from § 37 of the Restatement (Second) of Conflicts
of Laws, which provides:
A state has power to exercise judicial
jurisdiction over an individual who causes
effects in the state by an act done elsewhere
with respect to any cause of action arising from
these effects unless the nature of the effects
and of the individual's relationship to the state
make the exercise of jurisdiction unreasonable.
As the language of the Restatement test suggests, its
elements mirror those of our traditional specific jurisdiction inquiry.
The first clause, authorizing jurisdiction over "one who causes effects
in the state by an act done elsewhere," establishes that in-forum
effects are relevant contacts for the jurisdictional analysis. The
second clause then limits the exercise of jurisdiction to cases in
which there is a sufficient nexus between the defendant's forum
contacts (here, the in-forum effects) and the plaintiff's cause of
action. That clause correlates to the relatedness requirement for
specific jurisdiction, which is satisfied when the plaintiff's cause of
action either "aris[es] out of or relate[s] to the defendant's contacts
with the forum." Helicópteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414 n.8 (1984) (emphasis added). We have said that "we
think it significant that the constitutional catchphrase is disjunctive
in nature, referring to suits arising out of or relating to in-forum
activities. We believe that this added language portends added
flexibility and signals a relaxation of the applicable standard."
-36-
Ticketmaster-NY, Inc. v. Alioto, 26 F.3d 201, 206 (1st Cir. 1994)
(citations and internal quotation marks omitted). There is no reason
to depart from our usual understanding of the relatedness inquiry in
this case. Therefore, although the Restatement uses “arising out of”
language to describe its relatedness requirement, the requirement also
can be satisfied by a showing that the plaintiff's cause of action
"relates to" the in-forum effects of the defendant's activity.
The final clause of the effects test adds a proviso,
forbidding effects-based jurisdiction in cases where "the nature of the
effects and of the individual's relationship to the [forum] make the
exercise of jurisdiction unreasonable." Restatement (Second) of
Conflict of Laws, § 37. Prior to Calder, the Supreme Court had
explained that the general "reasonableness" inquiry mandated by the
effects test overlaps in large part with the purposeful availment
inquiry. See Kulko v. Superior Court, 436 U.S. 84 (1978). Thus,
effects-based jurisdiction is "unreasonable" under the Restatement test
where the defendant has not intentionally reached out to the forum
state in some way, so that he or she reasonably could anticipate being
haled into court there. See id. at 96-98.
The circumstances of Calder easily satisfied the first two
clauses of the Restatement test. The article, written by defendants
Calder and South in Florida, had caused harmful effects in the forum
state; as the Court observed, "the brunt of the harm [to Jones], in
-37-
terms both of [her] emotional distress and the injury to her
professional reputation, was suffered in California." Calder, 465 U.S.
at 789. Jones's cause of action arose out of those effects. See id.
at 787. Thus, as the majority explains, since the in-forum effects of
the Calder defendants' actions "were clearly related to the plaintiff's
defamation suit, . . . the Supreme Court did not need to address the
relatedness prong before proceeding to the purposeful availment
inquiry."
The Court began that inquiry by distinguishing the
defendants' situation from that of a hypothetical welder who works on
a boiler in Florida that later explodes in California. See id. at 789.
The welder obviously can "foresee" that the boiler might make its way
to California and cause harmful effects there. Id. Yet, the Court
observed, it may well be unfair to subject the welder to jurisdiction
in California when he "has no control over and derives no benefit from
his employer's sales in that distant State." Id.
Unlike the unfortunate welder, Calder and South were "not
charged with mere untargeted negligence." Id. Rather, the Court
emphasized, “their intentional, and allegedly tortious, actions were
expressly aimed at the forum state.” Id. The allegedly libelous story
“concerned the California activities of a California resident” whose
“career was centered in California.” Id. at 788-89. Moreover, the
defendants knew the article “would have a potentially devastating
-38-
impact” on Jones, and that she would suffer “the brunt of the injury”
in California, where she lived and worked. Id. at 789-90. In short,
California was “the focal point both of the story and of the harm
suffered.” Id. at 789. Thus, the defendants “must 'reasonably
anticipate being haled into court there,'” id. at 790 (quoting World-
Wide Volkswagen Corp. v. Woodson, 444 U.S. 287, 297 (1980)), and
jurisdiction reasonably could be “based on the 'effects' of
[defendants'] Florida conduct in California,” id. at 789.
B. The Majority's Reading: Calder and Related Contacts
Given Calder's focus on the reasonableness of exercising
jurisdiction on the basis of effects, it is easy to understand the
majority's assertion that Calder “is a gauge for purposeful availment.”
When a plaintiff seeks to base jurisdiction on the in-forum effects of
the defendant's activity elsewhere, the case likely will turn on such
questions as whether the defendant's allegedly tortious conduct was
intentionally and “expressly aimed” at the forum state, and whether the
“brunt of the harm” was felt there. Calder, 465 U.S. at 789. Those
inquiries properly fall under the purposeful availment prong because
they are designed to determine whether the defendant intentionally
reached out to cause harm in the forum state.8
8 Calder clarified that the purposeful availment requirement is met
whenever the defendant intentionally reaches out to the forum in some
way, whether it is seeking benefits or causing harm. The Court
reaffirmed that point in Burger King Corp. v. Rudzewicz, explaining
-39-
Contrary to the conclusion of the majority, however, it does
not follow that Calder “is relevant only to the purposeful availment
prong [and so] cannot be used to strengthen the government's
relatedness showing.” As I have explained, the Restatement “effects”
test approved in Calder includes a relatedness element. Itpermits a
state to exercise effects-based jurisdiction only when the plaintiff's
claims arise out of or relate to the in-forum effects of the
defendant's acts. See Restatement (Second) of Conflicts of Laws, § 37;
Calder, 465 U.S. at 787 (noting that effects-based jurisdiction was
proper where Jones's claims arose out of the California effects of the
defendants' actions).
The majority does not suggest that the government's claims
against SAB are not related to the in-forum effects of SAB's allegedly
tortious activity. Accordingly, when it says that the effects test
“cannot be used to strengthen the government's relatedness showing,”
the majority must mean that, under Calder, the in-forum effects are not
jurisdictional contacts themselves, but merely additional evidence that
the defendants acted purposefully. Based on that interpretation of
that due process requires that individuals have “fair warning” that
their activities might subject them to jurisdiction in the forum, and
that the fair warning requirement is satisfied if the defendant
“'purposefully directed' his activities at residents of the forum and
the litigation results from alleged injuries that 'arise out of or
relate to' those activities.'” 471 U.S. 462, 472 (1985) (quoting
Keeton v. Hustler Mag., Inc., 465 U.S. 770, 774 (1984); Helicópteros,
466 U.S. at 414 n.8).
-40-
Calder, the majority states that the relatedness inquiry can be
satisfied only when “the defendant's in-forum conduct caused the injury
or gave rise to the cause of action.”
However, the effects test adopted in Calder explicitly
authorizes jurisdiction based on the in-forum effects of “an act done
elsewhere.” Restatement (Second) of Conflict of Laws, § 37. Those
effects are relevant jurisdictional contacts, apart from any link
between the plaintiff's tort claims and the defendant's “in-forum
conduct.” Thus, in Calder, the Court did not rely on the presence of
physical, mail, or telephone contacts between the defendants and the
forum. Instead, it held that jurisdiction was proper “based on
'effects' of [defendants'] Florida conduct in California.” Calder, 465
U.S. at 789; see also Hugel v. McNell, 886 F.2d 1, 4 (1st Cir. 1989)
(explaining that, under Calder, “[t]he knowledge that the major impact
of the injury would be felt in the forum State constitutes a purposeful
contact or substantial connection whereby the intentional tortfeasor
could reasonably expect to be haled into the forum State's courts to
defend his actions”); Haisten v. Grass Valley Med. Reimbursement Fund,
Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986) (noting that in Calder “the
Court . . . allowed the exercise of jurisdiction over a defendant whose
only 'contact' with the forum state [was] the 'purposeful direction' of
a foreign act having effect in the forum state” (first emphasis
added)). It is difficult to understand how jurisdiction could have
-41-
been permissible in those circumstances were the in-forum effects of
acts done elsewhere not themselves contacts.
Indeed, the majority's methodology would seem to compel a
result contrary to that reached in Calder. On the majority's
understanding, “the effects test . . . is to be applied only after the
relatedness prong has been satisfied.” That creates a quandary for the
plaintiff whose cause of action arises out of or relates to the in-
forum effects of out-of-forum activity. If those effects are off-
limits during the relatedness inquiry, and if that inquiry must be
completed before the effects can be taken into account under the
purposeful availment analysis, then the plaintiff never will be able to
establish jurisdiction “based on” those effects. Calder, therefore, is
a dead letter. The only cases in which in-forum effects could be
considered are those in which jurisdiction might just as easily be
based on some other forum contacts.
The majority offers two bases for its reading of Calder.
First, it emphasizes that in Noonan v. Winston Co., 135 F.3d 85, 90
(1st Cir. 1998), we said that Calder “adopted an effects test for
determining purposeful availment in the context of defamation cases.”
It is important to see that statement in context:
The decisive due process issue in this
[defamation] case is whether the defendants'
activities satisfy the purposeful availment
requirement. Plaintiffs correctly draw our
attention to Calder v. Jones, in which the
-42-
Supreme Court adopted an effects test for
determining purposeful availment in the context
of defamation cases.
Id. (internal citation omitted). Noonan cannot bear the weight the
majority gives it. Calder did establish a test for determining
purposeful availment in defamation cases. The majority's reading
depends on the entirely different point that Calder did not also
establish that jurisdiction can be based on the in-forum effects of
out-of-forum activity when such effects relate or give rise to the
cause of action. Noonan did not discuss relatedness at all, and so
provides no support for the majority's restrictive interpretation of
Calder.
Second, the majority points out that “we have wrestled before
with [the] issue of whether the in-forum effects of extra-forum
activities suffice to constitute minimum contacts and have found in the
negative.” Mass. Sch. of Law v. Amer. Bar Ass'n, 142 F.3d 26, 35-36
(1st Cir. 1998). In further support of that point, the majority cites
Kowalski v. Doherty, Wallace, Pillsbury & Murphy, 787 F.2d 7 (1st Cir.
1986), and Sawtelle v. Farrell, 70 F.3d 1381 (1st Cir. 1995), in which
we held that New Hampshire could not exercise jurisdiction over foreign
law firms based on allegedly negligent acts committed outside the
state.9 We discussed those cases in Massachusetts School of Law, and
9 We reasoned in Kowalski and Sawtelle that the effects of an injury
are not the same thing as the injury itself. See Kowalski, 787 F.2d at
11; Sawtelle, 70 F.3d at 1390. I address the distinction between
-43-
concluded that, “[j]ust as the New Hampshire effects of [out-of-state]
negligence, without more, could not sustain an action in New Hampshire
against the negligent actor, see Kowalski, 787 F.2d at 11, so too the
Massachusetts effects of the [defendants'] [out-of-state] actions,
without more, fail to sustain an action in a Massachusetts court.” 142
F.3d at 36 (also citing Sawtelle, 70 F.3d at 1394).
We did not mention Calder – much less rely on it – in
Massachusetts School of Law, Kowalski, or Sawtelle. Nevertheless, our
holdings in those cases are consistent with the effects test that I
have described. Under Calder, in order for jurisdiction to be based
solely on the in-forum effects of the defendant's activity, the
plaintiff must show that the defendant acted “for the very purpose” of
causing harmful effects in the forum. Lake v. Lake, 817 F.2d 1416,
1422 (9th Cir. 1987); Restatement (Second) of Conflict of Laws, § 37
cmt. e (“When the act was done with the intention of causing the
particular effects in the state, the state is likely to have judicial
jurisdiction though the defendant had no other contact with the
state.”). No such showing was made (or even attempted) in
Massachusetts School of Law, Sawtelle, and Kowalski. In those cases,
therefore, effects-based jurisdiction would have been “unreasonable”
under the Restatement test, not because the in-forum effects were not
contacts, but because the “nature of the effects” was such that
injury and effects below, as part of the purposeful availment analysis.
-44-
jurisdiction could not rest on them alone. Restatement (Second) of
Conflict of Laws, § 37; see also Calder, 465 U.S. at 789-89; Kulko, 436
U.S. at 96-97.
To be sure, in-forum effects that lack the requisite
intentionality are still jurisdictional contacts that must be taken
into account in the overall analysis. Calder compels that conclusion,
and our cases do not suggest otherwise. But other contacts between the
defendant, the forum, and the litigation are necessary in order to
render the exercise of jurisdiction reasonable. See Restatement
(Second) of Conflict of Laws, § 37 cmt. e (“The fact that the effect in
the [forum] was . . . foreseeable will not itself suffice to give the
[forum] judicial jurisdiction over the defendant.”); Panda Brandywine
Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001)
(explaining that “the effects of an alleged intentional tort are to be
assessed as part of the analysis of the defendant's relevant contacts
with the forum” (internal quotation marks omitted)).
Here, the majority does not dispute that SAB's actions caused
harmful effects – the loss of money – in the United States. Nor does it
dispute that those harmful effects are related to the government's
claims of wrongful conversion and unjust enrichment. The crucial
question, therefore, is whether SAB's actions satisfy the purposeful
availment inquiry; that is, whether SAB “expressly aimed” its allegedly
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tortious activity at the United States with the knowledge that “the
brunt of the harm” would be felt there. Calder, 465 U.S. at 789.
C. Purposeful Availment
We have said that Calder imposes a two-part test for
purposeful availment, requiring a plaintiff to show (1) that it felt
the injurious effects of a defendant's tortious act in the forum, and
(2) that the defendant's act was “calculated to cause injury” to the
plaintiff there. Noonan, 135 F.3d at 90 (citing Calder, 465 U.S. at
791). The government easily satisfies the first prong. The loss of
the forfeit $7 million to the United States government as a result of
SAB's alleged conversion and unjust enrichment necessarily had
injurious effects that were felt in the United States. In Swiss II, we
concluded that the “legal injur[ies] occasioned by” the torts of
conversion and unjust enrichment occurred in Antigua, where the
conversion and enrichment took place. United States v. Swiss Am. Bank,
Ltd., 191 F.3d 30, 37 (1st Cir. 1999). Nevertheless, we acknowledged
that, “upon the occurrence of the alleged conversion and the consequent
unjust enrichment, the United States felt the effects of a tortious
injury in the [United States].” Id. at 38.
The majority suggests that the fact that the government's
injury occurred in Antigua distinguishes this case from Calder. Cf
Kowalski, 787 F.2d at 11 (distinguishing between injury and effects for
purposes of the New Hampshire long-arm statute, which requires that the
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plaintiff's injury occur in the forum); Sawtelle, 70 F.3d at 1390
(explaining that, in Kowalski, “we rejected the plaintiff's contention
that, because the 'effects' of the [defendant law] firm's negligence
were felt in New Hampshire, the law firm had caused an injury there by
conduct directed at that forum. . . . The injury, if any, occurred in
Massachusetts”). Yet here, as in Calder, the plaintiff suffered “the
brunt of the harm” in the forum. Calder, 465 U.S. at 789. That
similarity suggests that the outcome of our jurisdictional analysis
should not be different in this case simply because the injury caused
by libel is deemed to occur wherever the libelous material is
circulated, while the injury of conversion is deemed to occur where the
conversion took place. Such formalistic distinctions can be helpful in
cases like Swiss II, where the applicable state long-arm statute
requires an in-forum injury as a prerequisite to jurisdiction. See
Swiss II, 191 F.3d at 38 (applying § 3(d) of the Massachusetts long arm
statute, which authorizes jurisdiction over one who, inter alia, causes
“tortious injury in this commonwealth”); see also Kowalski, 787 F.2d at
11 (applying similar New Hampshire statute). Our inquiry here is not
so rigidly confined, where strict rules give way to “traditional
notions of fair play and substantial justice.” Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (internal quotation marks
omitted). Given the flexible nature of our due process analysis, we
should hesitate before adopting a bright-line rule that in-forum
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effects do not constitute jurisdictional contacts unless they also can
be deemed an “injury.”
That is not to say that the situs of the plaintiff's injury
is irrelevant to the jurisdictional analysis. In cases where the
injury occurred outside the forum, the plaintiff may find it difficult
to satisfy the second prong of the Calder test, which requires a
showing that the defendant's act was “calculated” to cause the harmful
effects in the forum. That inquiry is designed to determine whether
the nature of the effects is such that jurisdiction reasonably can be
based on them alone, and it is here that the government's prima facie
case for jurisdiction falters. The government argues that “SAB knew
that its intentional conduct in Antigua would cause injury to the
United States government.” That is not enough. The government must
show that SAB's actions were “expressly aimed” at the United States as
a forum. Calder, 465 U.S. at 789 (distinguishing the case of the
negligent welder); Wein Air Alaska, Inc. v. Brandt, 195 F.3d 208, 212
(5th Cir. 1999) (“Foreseeable injury alone is not sufficient to confer
specific jurisdiction, absent the direction of specific acts toward the
forum.”); cf. Burger King, 471 U.S. at 474 (“Although it has been
argued that foreseeability of causing injury in another State should be
sufficient to establish [minimum] contacts there . . . , the Court has
consistently held that this kind of foreseeability is not a 'sufficient
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benchmark' for exercising personal jurisdiction.” (footnote omitted)
(quoting World-Wide Volkswagen, 444 U.S. at 295)).
The government argues that SAB's intentional defiance of the
preliminary forfeiture order issued by the district court constitutes
such express aiming. The forfeiture order identified the forfeited
property as “funds which were deposited into the Swiss American Bank,
Ltd., and the Swiss American National Bank in St. Johns, Antigua during
the time period September 1985 through June 23, 1987.” It is
undisputed that SAB was aware of the order, and responded by writing to
the district court to inform it that the Antiguan government had frozen
Fitzgerald's accounts. However, the fact that SAB had notice that the
money it took for itself belonged to the United States government does
not, in itself, make the United States as a forum the focal point of
SAB's allegedly tortious activity. As the Third Circuit has observed,
Calder did not “carve out a special intentional torts exception to the
traditional specific jurisdictional analysis, so that a plaintiff could
always sue in his or her home state.” IMO Indus., Inc. v. Kiekert AG,
155 F.3d 254, 265 (3d Cir. 1998). Therefore, it cannot be enough that
the defendant knew when it acted that its victim lived in the forum
state. See id. (“Simply asserting that the defendant knew that the
plaintiff's principal place of business was located in the forum would
be insufficient in itself to meet [the 'expressly aimed']
requirement.”); accord Southmark Corp. v. Life Investors, Inc., 851
-49-
F.2d 763, 773 (5th Cir. 1988) (concluding that the location of the
plaintiff's principal place of business in the forum was a “mere
fortuity,” insufficient to show that the defendant expressly aimed its
actions at the forum); ESAB Group, Inc. v. Centricut, Inc., 126 F.3d
617, 625 (4th Cir. 1997) (finding no jurisdiction where the defendant
knew that its acquisition of the plaintiff's trade secrets would result
in lower sales for the plaintiff, but did not “manifest behavior
intentionally targeted at and focused on” the forum state). Something
more is needed to show that SAB's actions were “purposefully directed”
or “expressly aimed” at the United States.
Because the government has not demonstrated that SAB's
actions were “intentionally targeted at and focused on the forum,” IMO
Indus., 155 F.3d at 263, the in-forum effects of those actions do not
provide a sufficient basis for the exercise of jurisdiction. Although
those effects qualify as a relevant (and, as I have explained, related)
contact between SAB and the United States as a forum, that contact is
too “attenuated” to satisfy the requirement of purposeful availment.
Burger King, 471 U.S. at 475 (internal quotation marks omitted). In
the words of the Restatement, “the nature of the effects and of the
[defendant's] relationship to the [forum] make the exercise of
[effects-based] jurisdiction unreasonable.” Restatement (Second) of
Conflict of Laws, § 37. Thus, the government must demonstrate that SAB
had other contacts with the forum “such that the maintenance of the
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suit does not offend 'traditional notions of fair play and substantial
justice.'” Int'l Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311
U.S. 457, 463 (1940)).
D. The Gestalt Factors
Although I have concluded that the in-forum effects of SAB's
activity lack the requisite purposefulness to support jurisdiction on
their own, my inquiry does not end there. The Supreme Court has laid
out five criteria for assessing the overall reasonableness of an
exercise of personal jurisdiction. See Burger King, 471 U.S. at 476-
77. In close cases, those criteria – which we have termed the “gestalt
factors,” see Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d
138, 150 (1st Cir. 1995) – “may tip the constitutional balance.” Nowak
v. Tak How Inv., Inc., 94 F.3d 708, 717 (1st Cir. 1996); accord Burger
King, 471 U.S. at 477 (explaining that gestalt factors “sometimes serve
to establish the reasonableness of jurisdiction upon a lesser showing
of minimum contacts than would otherwise be required”). Even if they
do not alter the constitutional balance, the gestalt factors can be
important in determining whether the plaintiff's jurisdictional showing
is “colorable” enough to support a request for jurisdictional
discovery. Therefore, the jurisdictional inquiry is incomplete in this
case without consideration of the gestalt factors.
Those factors are “the plaintiff's interest in obtaining
convenient and effective relief; the burden imposed upon the defendant
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by requiring it to appear; the forum's adjudicatory interest; the
[forum] judicial system's interest in the place of adjudication; and
the common interest of all affected sovereigns . . . in promoting
substantive social policies.” Donatelli v. Nat'l Hockey League, 893
F.2d 459, 465 (1st Cir. 1990). We refer to them as the “gestalt”
factors “because, in any given case, they may neither be amenable to
mechanical application nor be capable of producing an open-and-shut
result. Their primary function is simply to . . . put[] into sharper
perspective the reasonableness and fundamental fairness of exercising
jurisdiction.” Foster-Miller, Inc., 46 F.3d at 150.
In assessing the burden of appearance on the defendant, we
have considered whether the defendant does business with the forum,
Nowak, 94 F.3d at 718, and the distance between the defendant's place
of business and the forum, Ticketmaster-NY, Inc., 26 F.3d at 210. As
the majority has explained, the record does not show that SAB does
business in the United States. In addition, the distance from Antigua
to the United States is “appreciable.” Id. For these reasons, the
burden on SAB of litigating in a United States district court in
Massachusetts is a relatively heavy one. See Asahi Metal Indus. Co.,
Ltd. v. Superior Court, 480 U.S. 102 (1987). “This Court has
recognized, however, that it is almost always inconvenient and costly
for a party to litigate in a foreign jurisdiction.” Nowak, 94 F.3d at
718. Thus, for this factor to be significant, “the defendant must
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demonstrate that exercise of jurisdiction in the present circumstances
is onerous in a special, unusual, or other constitutionally significant
way.” Id.; see also Pritzker v. Yari, 42 F.3d 53, 64 (1st Cir. 1994).
There is nothing to suggest an especially onerous burden here.
Moreover, as the Supreme Court said in Asahi, “often the
interests of the plaintiff and the forum in the exercise of
jurisdiction will justify even the serious burdens placed on [an] alien
defendant.” 480 U.S. at 114. In Pleasant St. II, we found that the
burden of requiring a Scottish corporate defendant to appear in
Massachusetts was “substantially outweighed by Massachusetts' interest
in adjudicating this dispute and plaintiffs' interest in obtaining
convenient and effective relief.” United Elec., Radio & Mach. Workers
v. 163 Pleasant St. Corp., 987 F.2d 39, 46 (1st Cir. 1993) ( Pleasant
St. II). This case is similar.
Our cases recognize that courts “must accord deference to the
plaintiff's choice of forum.” Nowak, 94 F.3d at 718. As in Nowak, a
suit involving a Hong Kong defendant, “it is obvious that a
Massachusetts forum is more convenient” than a forum in Antigua. Id.
Moreover, the United States clearly has a strong interest in the
enforcement of its forfeiture laws. The judicial system's interest in
obtaining the most effective resolution of the controversy “also favors
the retention of jurisdiction over this dispute.” Pleasant St. II, 987
F.2d at 46. The district court has an interest in ensuring that its
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own forfeiture order is satisfied and in litigating all claims arising
out of Fitzgerald's criminal proceeding in Massachusetts. See Keeton,
465 U.S. at 777 (explaining that the forum has an interest in
litigating all claims arising out of the underlying libel case).
In discussing the final gestalt factor relating to
sovereignty, the Supreme Court has said that when the defendant is a
foreign entity, the sovereignty factor of the reasonableness analysis
“calls for a court to consider the procedural and substantive policies
of other nations whose interests are affected by the assertion of
jurisdiction” by the court. Asahi, 480 U.S. at 115. In this case,
there is a potentially significant sovereignty issue that the district
court did not reach, and which the parties do not discuss in their
briefs. In a January 29, 1998 letter, the Antiguan Cabinet Secretary
informed the United States that it froze Fitzgerald's funds in 1990
“because of evidence that the monies were the proceeds of illegal
conduct.” The letter also states: “In a judgement handed down from
our High Court dated December 20, 1990, it was found that Fitzgerald
was not the owner of these funds.” The letter then says that the
Antiguan government discussed the disposition of the funds with SAB
after the Massachusetts district court issued its forfeiture order, and
that “acting in the public interest of Antigua and Barbuda,” the
Antiguan government “released the freeze order on the funds and
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approved the disposition of the funds in a manner agreed by the Banks
and approved by the Government.”
While SAB and IMB, not the government of Antigua, are the
defendants in this case, the fifth gestalt factor requires us to take
into account the sovereignty concerns raised by this letter. The
Antiguan government has claimed $5 million of the forfeited funds, and
cites in support of its decision to do so a 1990 order of the Antiguan
High Court. Although that claim does not affect the $2 million
allegedly converted by SAB, it is an important consideration for the
remaining $5 million. Therefore, at least without further briefing by
the parties on these sovereignty concerns, I cannot conclude that the
government's showing under the gestalt factors is strong enough to “tip
the constitutional balance” here. Nowak, 94 F.3d at 717. 10
Nevertheless, the consideration of these gestalt factors reinforces my
conclusion that the government's case for specific jurisdiction was
colorable enough to merit the jurisdictional discovery denied by the
district court. In my view, that denial was plainly wrong, and an
abuse of discretion.
II.
The district court briskly denied the government's request
for jurisdictional discovery, explaining that the government's showing
10It bears emphasis that the weighing analysis should be done in the
first instance by the district court, which should not have ended its
specific jurisdiction inquiry with the relatedness element.
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was “so bootless . . . that it has made no colorable claim sufficient
to entitle it to any further discovery.” United States v. Swiss Am.
Bank, Ltd., 116 F. Supp. 2d 217, 225 (D. Mass. 2000). That
determination is based on a legal misunderstanding of the import of
Calder, and therefore constitutes an abuse of discretion. Koon v.
United States, 518 U.S. 81, 100 (1996) (“A district court by definition
abuses its discretion when it makes an error of law.”).
We have held consistently to the rule that a plaintiff may
take jurisdictional discovery if its claim is “colorable.” Sunview
Condo. Ass'n v. Flexel Int'l, Ltd., 116 F.3d 962, 964 (1st Cir. 1997).
The “colorable” or “not frivolous” standard for obtaining
jurisdictional discovery requires some showing that discovery is needed
or likely to be useful. However, that showing is significantly lower
than the prima facie showing of jurisdiction, which requires the
plaintiff “to demonstrate the existence of every fact required to
satisfy both the forum's long-arm statute and the Due Process Clause of
the Constitution.”11 Pleasant St. II, 987 F.2d at 44 (internal
quotation marks omitted). The jurisdictional discovery question, by
contrast, is whether the government's showing of minimum contacts falls
11 The government argues that our admonition in Swiss II, 191 F.3d at
45, that "[a] timely and properly supported request for jurisdictional
discovery merits solicitous attention," further softens the “colorable”
standard. That is not so. Rather, the "timely" and "properly
supported" language reflects our statements elsewhere that a plaintiff
must be "diligent" to merit discovery. See, e.g., Sunview Condo., 116
F.3d at 964.
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so far short that discovery is “unnecessary (or, at least, is unlikely
to be useful) in regard to establishing the essential jurisdictional
facts.” Dynamic Image Techs., Inc. v. United States, 221 F.3d 34, 38
(1st Cir. 2000).
Our approach to jurisdictional discovery originates with
Surpitski v. Hughes-Keenan Corp., 362 F.2d 254, 255-56 (1st Cir. 1966).
In that case, we held that the district court should have allowed
discovery before ruling on a motion to dismiss for lack of personal
jurisdiction where the plaintiff “had at least made good headway, and
shown his position not to be frivolous.” Id. at 255. While Surpitski
is an older case, we have cited and reaffirmed its discovery-friendly
holding numerous times. See Swiss II, 191 F.3d at 46; Sunview Condo.,
116 F.3d at 964; Pleasant St. II, 987 F.2d at 48 n.18; Boit v. Gar-Tec
Prods., Inc., 967 F.2d 671, 681 (1st Cir. 1992); Whitaker Corp. v.
United Aircraft Corp., 482 F.2d 1079, 1086 (1st Cir. 1973). In Sunview
Condo. we explained that "a diligent plaintiff who sues an out-of-state
corporation and who makes out a colorable case for the existence of in
personam jurisdiction may well be entitled to a modicum of
jurisdictional discovery if the corporation interposes a jurisdictional
defense." 116 F.3d at 964. Jurisdictional discovery is appropriate
“where the plaintiff had been diligent and was somewhat unfamiliar with
his adversary's business practices,” Boit, 967 F.2d at 681, and “where
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complex factual matters are in question,” Whittaker Corp., 482 F.2d at
1086.
Other circuits similarly allow for discovery when a diligent
plaintiff with a colorable but undeveloped case requests it. See
Edmond v. United States Postal Serv. Gen. Counsel, 949 F.2d 415, 425
(D.C. Cir. 1991) ("As a general matter, discovery under the Federal
Rules of Civil Procedure should be freely permitted, and this is no
less true when discovery is directed to personal jurisdiction.");
Butcher's Union Local No. 498 v. SDS Inv., Inc., 788 F.2d 535, 540 (9th
Cir. 1986) ("Discovery should ordinarily be granted where pertinent
facts bearing on the question of jurisdiction are controverted or where
a more satisfactory showing of the facts is necessary." (internal
quotation marks omitted)); Compagnie des Bauxites de Guinee v. L'Union
Atlantique S.A. D'Assurances, 723 F.2d 357, 362 (3d Cir. 1983) ("Where
the plaintiff's claim is not clearly frivolous, the district court
should ordinarily allow discovery on jurisdiction in order to aid the
plaintiff in discharging that burden."); Wyatt v. Kaplan, 686 F.2d 276,
283 (5th Cir. 1982) ("In an appropriate case, we will not hesitate to
reverse a dismissal for lack of personal jurisdiction, on the ground
that the plaintiff was improperly denied discovery."); see also 5A
Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1351 at 256-59 (2d ed. 1990) ("In particularly complex cases, . . .
it may be desirable to hold in abeyance a decision on a motion to
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dismiss for lack of personal jurisdiction. Doing so will enable the
parties to employ discovery on the jurisdictional issue, which might
lead to a more accurate judgment than one made solely on the basis of
affidavits."). In sum, "[n]umerous cases have sustained the right of
plaintiffs to conduct discovery before the district court dismisses for
lack of personal jurisdiction." Renner v. Lanard Toys Ltd., 33 F.3d
277, 283 (3d Cir. 1994).12
In light of this right, several appellate courts have found,
as we did in Surpitski, that district courts erred in denying discovery
in cases in which plaintiffs did not allege sufficient facts to make a
prima facie case for personal jurisdiction. In Renner, for example,
the Third Circuit concluded that discovery should have been granted
where the record was "ambiguous" and "incomplete." Id. at 283. In
Edmond, the lower court's decision to deny discovery was error because
the plaintiffs' allegations were "far from conclusory." 949 F.2d at
425. In Skidmore v. Syntex Labs., Inc., 529 F.2d 1244 (5th Cir. 1976),
the court said that discovery should have been allowed because the
plaintiff's attorney was not at fault for having failed to discover the
requisite jurisdictional facts earlier. Id. at 1248.
12But see Jazini v. Nissan Motor Co., 148 F.3d 181, 186 (2d Cir. 1998)
("Since the Jazinis did not establish a prima facie case that the
district court had jurisdiction over Nissan Japan, the district court
did not err in denying discovery on that issue.").
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Here, the district court based its discretionary denial of
discovery on an error of law – its failure to recognize the import of
Calder and the need to evaluate more fully the government's case for
jurisdiction. See Ruiz-Troche v. Pepsi Cola of Puerto Rico Bottling
Co., 161 F.3d 77, 86 (1st Cir. 1998) (mistaken application of law
constitutes abuse of discretion); United States v. Snyder, 136 F.3d 65,
67 (1st Cir. 1998) (per se abuse of discretion occurs when district
court commits error of law). Assessed properly, the government's case
is colorable. As I have explained, Calder held that the in-forum
effects of intentionally tortious conduct are a significant
jurisdictional contact in their own right. Therefore, when viewed
through the prism of the effects test that Calder endorsed, the
government's tort claims are related to SAB's contacts with the forum.
It is under the purposeful availment prong – which the district court
never even considered – that the government's showing falls short.
Because Antigua was the legal situs of the government's injury, it is
not immediately obvious that SAB expressly aimed its tortious activity
at the United States as a forum. Thus, in order to establish a prima
facie case, the government cannot rely solely on the in-forum effects
of SAB's actions; it must demonstrate the existence of other contacts
between SAB and the forum so that the exercise of jurisdiction over SAB
is fundamentally fair.
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The government points out that its ability to show more
contacts between SAB and the United States, under either a general or
specific theory of personal jurisdiction, has been hampered by the
bank's privately held status and by Antigua's banking secrecy laws.
Accordingly, the government's failure to establish the necessary
contacts does not necessarily indicate that those contacts do not
exist. Rather, it may mean simply that the government has not been
able to learn of them without the benefit of discovery. For example,
the business contacts between SAB and American companies suggest that
there may be more such contacts that the government might be able to
discover if it had access to the bank's records. Similarly, with the
benefit of discovery, the government might find out that SAB sent
letters or made phone calls to Fitzgerald in the United States, or even
sent representatives to meet with him here. Indeed, the government's
investigator has already found phone records indicating that Herrington
placed calls to Boston during the period in which Fitzgerald was
setting up his SAB accounts. If the government had access to the
bank's records, it might be able to show that Fitzgerald received those
calls, thereby strengthening both the relatedness and purposeful
availment elements of its case for specific jurisdiction.
Our precedent in Pleasant St. II is instructive here. The
proceedings that led to that decision began when the district court
entered an injunction and a contempt order against a Scottish
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corporation. See 987 F.2d at 42. During the pendency of the
corporation's appeal, the plaintiff proceeded with discovery, but
because of the timing of the filings, the discovered material was not
part of the record on appeal. Id. We thus vacated the injunction and
contempt order for lack of personal jurisdiction in Pleasant St. I
unaware of the jurisdictional contacts that the plaintiff had
discovered. United Elec., Radio & Mach. Workers v. 163 Pleasant St.
Corp., 960 F.2d 1080 (1st Cir. 1992). On remand, the district court
granted the defendant's motion to dismiss. The plaintiffs appealed for
a second time, and in Pleasant St. II we reversed the dismissal in
light of the new facts learned through discovery. We explained:
Under the facts of this case, the incomplete
nature of the record prevented any sort of
conclusive determination on the personal
jurisdiction issue at the time 163 Pleasant St.
I was handed down. The jurisdictional deficiency
which informed the holding in our previous
opinion did not stem from either a settled
factual predicate or legally insufficient
allegations, but from perceived voids in the
evidentiary landscape.
Id. at 47. Noting that before Pleasant St. I , "no discovery directed
at filling those voids took place," id., we continued:
if, on the record before it, the district court
had decided the personal jurisdiction issue
adversely to plaintiffs without at least
affording them the opportunity to . . . request
discovery, we almost certainly would have
declined to affirm the district court's judgment
and held the ruling to be an abuse of the court's
discretion.
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Id. at 48 n.18. In this case, as in the Pleasant St. litigation, the
“incomplete nature of the record” rather than a “settled factual
predicate or legally insufficient allegations” is the reason that the
government cannot make out a prima facie case for jurisdiction. Id. at
47.
SAB launches two additional attacks on the government's
contention that it is entitled to discovery. First, it argues that the
care that a court must show in extending its authority over foreign
nationals weighs against allowing the government to take discovery.
Two circuits have taken this consideration into account in declining to
reverse lower court decisions to disallow discovery. See Cent. States,
S.E. and S.W. Areas Pension Fund v. Reimer Express World Corp., 230
F.3d, 934, 947 (7th Cir. 2000) ("[I]mposing such burdensome, wide-
ranging discovery against defendants from a foreign nation is not
appropriate at a stage where the district court is trying to determine
whether it has any power over the defendants."); Jazini v. Nissan
Motor Co., 148 F.3d 181, 185-86 (2d Cir. 1998) (declining to allow
plaintiff who made “conclusory non-fact-specific jurisdictional
allegations” to obtain discovery because to do so “would require the
federal courts to conduct substantial jurisdictional discovery over
foreign corporations – a practice in which they have not hitherto
engaged”).
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Weighing sovereignty concerns when the plaintiff has not yet
shown that the exercise of jurisdiction is proper is indeed a delicate
matter. We have urged courts to “exercise even greater care before
exercising personal jurisdiction over foreign nationals.” Noonan, 135
F.3d at 93. But our caution does not extend so far as to prevent
discovery in a case such as this, where discovery is the only means of
filling in the missing pieces of a jurisdictional showing that is more
than “colorable.”
The bank argues further that the government has not been a
“diligent” plaintiff, as Surpitski and later cases define the term,
because it failed to (1) adequately pursue the contacts that it was
authorized to investigate pursuant to an Asset Discovery Order issued
in the criminal case against Fitzgerald; (2) make adequate use of its
interviews with Fitzgerald and Herrington; and (3) present the district
court with a rationale for why discovery would further its case.
The Asset Discovery Order was issued under statutes that
authorize discovery “to facilitate the identification and location of
property declared forfeited.” 21 U.S.C. § 853(m). SAB argues that the
investigation undertaken pursuant to the Asset Discovery Order is the
equivalent of discovery.13 However, that Order only authorized
13 SAB makes much of the district court's statement that the government
was not entitled "to any further discovery." Swiss III, 116 F. Supp.
2d at 225. I assume that the court's use of the word "further" simply
refers to the government's investigation pursuant to the Asset
Discovery Order.
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discovery on the location of forfeitable assets. It was not a broad
discovery tool. The Asset Discovery Order did not give the government
access to SAB's records, which would appear to be the most obvious and
promising source of information for the in-forum contacts the
government needs to uncover. The government's investigation to this
point has been hampered by its inability to explore these records, an
obstacle that court-ordered discovery may (or may not) be able to
remove.14
SAB also argues that the government had ample opportunity
during the course of its investigations in its earlier prosecution of
Fitzgerald and in the present case to obtain information relevant to
SAB's forum contacts. Herrington, SAB points out, was interviewed at
length by United States law enforcement officials in 1991 on the Isle
of Man, and again by a government investigator after the initiation of
proceedings against SAB. Fitzgerald, who had signed a plea and
cooperation agreement with the government, presumably was available to
provide information relevant to the jurisdictional issues. Given its
access to such information, SAB contends, the government already has
(or should have) discovered any contacts between SAB and the United
States.
14In its November 13, 1995 letter to the government, SAB said that the
relevant records were destroyed in a hurricane. The government
presumably would test this assertion if it were permitted to pursue
jurisdictional discovery.
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That argument is weakened significantly by the fact that
Fitzgerald died shortly after the forfeiture order was entered in 1994
– before the events leading to the present controversy with the bank –
and thus hardly could have aided the government in its attempts to
uncover SAB's forum contacts. Herrington's 1991 interview likewise
predated the forfeiture order and SAB's failure to comply.
Accordingly, the government had no reason to press him regarding his or
SAB's contacts with the United States.15 Rather, the interview focused
on facts relevant to the criminal charges of conspiracy and money
laundering that later were brought against Fitzgerald and several other
individuals. A government investigator did conduct a brief telephone
interview with Herrington in 1998, after the government filed its
complaint in the present action. But the apparent purpose of the
interview was to gather information demonstrating IMB's control of SAB,
not to determine the extent of the latter's forum contacts. In any
event, that interview does not alter the government's status as a
“stranger” to SAB within the meaning of Surpitski, 362 F.2d at 255, and
15 During that interview, Herrington was questioned about certain
conversations with Fitzgerald in which he explained how Fitzgerald's
anticipated deposits would be handled by SAB. Herrington indicated
that all those conversations took place in Antigua. When asked whether
“they all were face to face,” he answered, “I, in the best of my
knowledge, er, I never met Mr. Fitzgerald anywhere else but Antigua.”
The government interviewer did not ask Herrington whether he ever had
contacted Fitzgerald by other means (for example by mail or telephone).
There was no cause for the government to seek such details in the
context of its 1991 investigation.
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its progeny. See, e.g., Whittaker Corp., 482 F.2d at 1086 (noting that
jurisdictional discovery is appropriate where, inter alia, a party is
“somewhat unfamiliar with his adversary”); Am. Express Int'l, Inc. v.
Méndez-Capellán, 889 F.2d 1175, 1181 (1st Cir. 1989) (finding that
parties were not “total stranger[s]” under Surpitski where they had a
“long commercial relationship”). Indeed, the government's attempt to
investigate only underscores that its relationship with the bank is an
artifact of the forfeiture order. While Fitzgerald had business
dealings with SAB, and so was not a stranger to the bank, the
government had no such ongoing relationship.
Finally, SAB argues that the government did not meet its
burden of explaining to the district court the discovery sought and its
value. We have said that plaintiffs must “explain[] . . . how
discovery, if allowed, would bear on the narrow jurisdictional issue.”
Dynamic Image, 221 F.3d at 39. In opposing SAB's motion to dismiss,
the government articulated the theories of general and specific
jurisdiction that it was trying to prove and requested discovery of
“any information regarding the existence, nature and scope of SAB
contacts with the United States and United States persons.” As the
majority points out, only on appeal did the government fully explain
the types of contacts it hopes to discover. The majority is correct to
disregard specifics not presented below. In my view, however, the
government adequately explained to the district court the purpose of
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its request for discovery, and its description of the contacts it hoped
to find, while bare, meets the diligence standard.16 After all, it is
obvious that the government seeks evidence of physical, telephone, or
mail contacts that are lacking in the current record.
In short, the government was a diligent plaintiff with a
colorable claim. See Surpitski, 362 F.2d at 255; Sunview Condo., 116
F.3d at 965. If given the opportunity for appropriate discovery, it
may well be able to make out a prima facie showing of specific
jurisdiction. The district court did not recognize that possibility,
however, because it refused to treat the in-forum effects of SAB's
allegedly tortious activities as a jurisdictional contact. As a
result, the court ended its specific jurisdictional analysis with the
relatedness element, and summarily denied the government’s request for
discovery. Based as it was on a mistaken application of Calder, that
denial was “plainly wrong,” Crocker v. Hilton Int'l Barb., Ltd., 976
16 SAB also faults the government for not renewing its motion for
discovery before the bank filed its motion to dismiss following remand.
The timing of the government's motion was proper. The Federal Rules of
Civil Procedure do not provide an opposing party an explicit right to
discovery in the motion to dismiss context, and the government could
best explain to the court why it merited discovery in response to the
arguments in SAB's motion to dismiss. The government preserved its
request for discovery at each juncture of this case, in contrast to
plaintiffs in other cases in which we have affirmed denials of requests
for discovery. See Dynamic Image, 221 F.3d at 38; Sunview Condo., 116
F.3d at 964; Boit, 967 F.2d at 681.
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F.2d 797, 801 (1st Cir. 1992).17 See Ruiz-Troche, 161 F.3d at 86.
Moreover, the denial caused the government “substantial prejudice.”
Crocker, 976 F.2d at 801. Without discovery, the government's case
ends.
III.
Because I conclude that the district court erred in refusing
to allow jurisdictional discovery with respect to the government's
claims against SAB, I would also vacate the dismissal of the case
against IMB. The district court determined that the government had
failed adequately to plead alter ego liability against IMB, and that it
had not established a sufficient basis for personal jurisdiction. We
said in Swiss II that any ruling on alter ego liability was
17 Contrary to the majority's suggestion, Crocker does not stand for
the proposition that the district court retains “broad discretion to
decide whether discovery is required” even if the plaintiff has been
diligent and has made a colorable claim for personal jurisdiction.
Crocker, 976 F.2d at 801. In affirming the district court's denial of
discovery in Crocker, we did not so much as hint that the plaintiffs'
case was colorable, or that they had been diligent. Instead, we simply
observed that discovery would have been futile, as the information the
plaintiffs sought would not have established that the defendant did
business in Massachusetts, as required by that state's long arm
statute. See id. In so doing, we noted the district court's broad
discretion in considering such questions, and explained that its
decision would be overturned “'only upon a clear showing of manifest
injustice, that is, where the lower court's discovery order was plainly
wrong and resulted in substantial prejudice to the aggrieved party.'”
Id. (quoting Santiago v. Fenton, 891 F.2d 373, 379 (1st Cir.1989)
(discussing standard for pre-trial, non-jurisdictional, discovery)).
Under our precedents dating back to Surpitski, a district court's order
would be “plainly wrong” if, without any reason to the contrary, it
denied jurisdictional discovery to a diligent plaintiff with a
colorable claim.
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“premature,” because the jurisdictional question should be resolved
before reaching the merits of the case. 191 F.3d at 46 (citing Steel
Co. v. Citizens for a Better Env't, 523 U.S. 83, 118 (1998); Ruhrgas AG
v. Marathon Oil Co., 526 U.S. 574 (1999)). The factors discussed in
Swiss II continue to weigh in favor of that approach here.
As the majority explains, personal jurisdiction over IMB is
contingent on the government's ability to make out a prima facie case
for jurisdiction over SAB. The district court ruled on the latter
question without having allowed discovery against SAB to proceed. I
would remand the case so that such discovery could take place. If the
government, with the benefit of jurisdictional discovery, were able to
establish a prima facie case of jurisdiction over SAB, the district
court would then have to reassess the jurisdictional status of IMB and
its alter ego ruling, as well as any discovery issues relating to IMB.
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