U.S. S.E.C. v. Carrillo

Citation115 F.3d 1540
Decision Date30 June 1997
Docket NumberNo. 96-4408,96-4408
Parties, 11 Fla. L. Weekly Fed. C 96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellant, v. Bosque Puerto CARRILLO, Terrence James Ennis, Ralf Stefan Jaeckel, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Paul R. Berger, Mark Pennington, Washington, DC, for SEC.

A.C. Strip, Strip, Fargo, Schulman & Hoppers, Columbus, OH, for Ennis and Jaeckel.

Alvin D. Lodish, Sherril Colombo, Rubin, Baum, Levin, Constant, Friedman & Bilzin, Miami, FL, for B.P. Carrillo.

Appeal from the United States District Court for the Southern District of Florida.

Before COX and BARKETT, Circuit Judges, and SMITH *, Senior Circuit Judge.

BARKETT, Circuit Judge:

The United States Securities and Exchange Commission ("SEC") appeals from the district court's order dismissing its claims based on lack of personal jurisdiction with respect to defendants, a Costa Rican corporation and two of its officers. Because we find that the defendants had sufficient minimum contacts with the United States, and that exercising jurisdiction would not contravene traditional notions of fair play, we REVERSE.

I. BACKGROUND

Defendant Bosque Puerto Carrillo ("Bosque") is a Costa Rican corporation that owns and operates a teak tree plantation. Defendants Ralf Stefan Jaeckel and Terence James Ennis are, respectively, First and Second Vice Presidents of Bosque, and both are Costa Rican citizens domiciled in that country. On April 12, 1993, the SEC filed a complaint alleging that the defendants fraudulently offered and sold unregistered securities to United States residents to finance Bosque's operations. 1 The SEC averred that Bosque, Jaeckel, and Ennis placed advertisements promoting these securities in American Way, the complimentary in-flight magazine of American Airlines, and Lacsa's World, a similar publication of Costa Rica's Lacsa Airlines. Defendants Jaeckel and Ennis also allegedly "arranged for two highly favorable articles about Bosque's securities" to be written for publication in Lacsa's World through telephone communication with a freelance author in Florida.

After hearing argument and reviewing relevant portions of the record, which included the complaint and depositions of Jaeckel and Ennis, the district court found that initial purchases of Bosque's securities were made in Costa Rica. Defendants subsequently mailed information, including prospectuses, offering materials, and applications for further investments, to previously established investors. Payments for subsequent investments were made through accounts at the Miami branch of Banco Internacional de Costa Rica, a Costa Rican bank.

II. DISCUSSION

We review the district court's dismissal for lack of personal jurisdiction de novo. Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir.1996). Where, as here, the district court has exercised its discretion not to hold an evidentiary hearing, the standard by which to decide the issue of personal jurisdiction is clear:

[T]he plaintiff must establish a prima facie case of personal jurisdiction over a nonresident defendant. A prima facie case is established if the plaintiff presents enough evidence to withstand a motion for directed verdict. The district court must accept the facts alleged in the complaint as true, to the extent they are uncontroverted by the defendant's affidavits. Finally, where the plaintiff's complaint and the defendant's affidavits [or depositions] conflict, the district court must construe all reasonable inferences in favor of the plaintiff.

Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990) (citations omitted); see also Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir.1988).

It is well established that "[t]he due process clause ... constrains a federal court's power to acquire personal jurisdiction" over a nonresident defendant. In re Chase & Sanborn Corp., 835 F.2d 1341, 1344 (11th Cir.1988), rev'd on other grounds sub nom. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989). The exercise of personal jurisdiction comports with due process when "(1) the nonresident defendant has purposefully established minimum contacts with the forum ... and (2) the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice." Francosteel Corp. v. M/V Charm, 19 F.3d 624, 627 (11th Cir.1994); accord Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1545 (11th Cir.1993). The district court deemed it unnecessary to address the second prong of this inquiry, finding that the Costa Rican defendants did not have sufficient minimum contacts with the relevant forum.

To constitute minimum contacts for purposes of specific jurisdiction, 2

the defendant's contacts with the applicable forum must satisfy three criteria. First, the contacts must be related to the plaintiff's cause of action or have given rise to it. Second, the contacts must involve some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum ..., thus invoking the benefits and protections of its laws. Third, the defendant's contacts with the forum must be such that [the defendant] should reasonably anticipate being haled into court there.

Vermeulen, 985 F.2d at 1546 (citations and quotation marks omitted).

In this case, the district court indicated that the applicable forum was the State of Florida. See R2-99-3. Appellees suggest that we have not yet specifically set forth a rule for identifying the relevant forum--the United States or the State where the district court sits--for purposes of minimum contacts analysis in a nondiversity action involving an alien defendant. 3 See Brief of Corporate Appellee at 21 (citing Chase & Sanborn, 835 F.2d at 1345 n. 10 (declining to address the issue of which forum was proper)). However, a survey of our precedents reveals that we generally have deemed the applicable forum for minimum contacts purposes to be the United States in cases where, as here, service of process has been effected pursuant to a federal statute authorizing nationwide or worldwide service, although we have never explicitly stated a rule to that effect. See, e.g., Vermeulen, 985 F.2d at 1545 (suit involving alien defendant under Foreign Sovereign Immunities Act).

Other circuits have uniformly held that "[w]hen the personal jurisdiction of a federal court is invoked based upon a federal statute providing for nationwide or worldwide service, the relevant inquiry is whether the respondent has had sufficient minimum contacts with the United States." In re Application to Enforce Admin. of Subpoenas of S.E.C. v. Knowles, 87 F.3d 413, 417 (10th Cir.1996) (Securities Exchange Act); accord Busch v. Buchman, Buchman & O'Brien, 11 F.3d 1255, 1258 (5th Cir.1994) (Securities Exchange Act); United Liberty Life Ins. Co. v. Ryan, 985 F.2d 1320, 1330 (6th Cir.1993) (Securities Exchange Act); United Elec. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1085-86 (1st Cir.1992) (ERISA); Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406, 1414-16 (9th Cir.1989) (Clayton Act); Lisak v. Mercantile Bancorp, Inc., 834 F.2d 668, 671-72 (7th Cir.1987) (RICO); SIPC v. Vigman, 764 F.2d 1309, 1315 (9th Cir.1985), rev'd on other grounds sub nom. Holmes v. SIPC, 503 U.S. 258, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (Securities Exchange Act); Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 314 (2d Cir.1981) (Foreign Sovereign Immunities Act); see also 4 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1067.1, at 311 & Supp. 80 (1987 & Supp.1996).

This rule is predicated on the well settled principle that "service of process constitutes the vehicle by which the court obtains jurisdiction." United Elec. Workers, 960 F.2d at 1085. Courts have reasoned that "a federal statute which permits the service of process beyond the boundaries of the forum state [via a nationwide or worldwide service provision] broadens the authorized scope of personal jurisdiction. Under such a statute, the question becomes whether the party has sufficient contacts with the United States, not any particular state." Go-Video, Inc., 885 F.2d at 1414 (citations and internal quotation marks omitted). Where process is served pursuant to a federal statute authorizing nationwide or worldwide service, courts have explained that there is also a constitutional rationale for deeming the relevant forum to be the entire United States in federal question cases:

When a district court's subject matter jurisdiction is founded upon a federal question, the constitutional limits of the court's personal jurisdiction are fixed, in the first instance, not by the Fourteenth Amendment but by the Due Process Clause of the Fifth Amendment. Inasmuch as the federalism concerns which hover over the jurisdictional equation in a diversity case are absent in a federal question case, a federal court's power to assert personal jurisdiction is geographically expanded. In such circumstances, the Constitution requires only that the defendant have the requisite "minimum contacts" with the United States, rather than with the particular forum state (as would be required in a diversity case).

United Elec. Workers, 960 F.2d at 1085 (citations omitted); accord Lisak, 834 F.2d at 671-72.

Additional support for the national contacts approach is found in Fed.R.Civ.P. 4(k)(2), which 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.

"Rule 4(k)(2) thus sanctions personal jurisdiction over foreign defendants for claims arising under...

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