191 F.3d 30 (1st Cir. 1999), 99-1012, United States v. Swiss American Bank

Docket Nº:99-1012.
Citation:191 F.3d 30
Party Name:UNITED STATES OF AMERICA, Plaintiff, Appellant, v. SWISS AMERICAN BANK, LTD., ET AL., Defendants, Appellees.
Case Date:September 08, 1999
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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191 F.3d 30 (1st Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff, Appellant,


SWISS AMERICAN BANK, LTD., ET AL., Defendants, Appellees.

No. 99-1012.

United States Court of Appeals, First Circuit

September 8, 1999

Heard June 11, 1999.


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Stephen R. Heifetz, Trial Attorney, with whom Gerald E. McDowell, Chief, Asset Forfeiture and Money Laundering Section, Criminal Division, U.S. Dep't of Justice, Stefan D. Cassella, Assistant Chief, and Richard L. Hoffman, Assistant United States Attorney, were on brief, for appellant.

Howard Wilson, with whom Howard Fischer, 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.

William Shaw McDermott, with whom Irene C. Freidel, Edward S. Horton, and Kirkpatrick & Lockhart LLP were on brief, for appellee Bank of New York -- Intermaritime Bank (Geneva).

Before Selya, Boudin and Lipez, Circuit Judges.

SELYA, Circuit Judge.

This appeal raises issues of first impression, requiring us to delineate the circumstances under which foreign corporations may be brought before the federal courts through the medium of a recently enacted provision of the Civil Rules. In the underlying case, the government brought suit in the United States District Court for the District of Massachusetts against several foreign banking concerns in an effort to recover assets accumulated by a convicted felon and later forfeited to the government as part of a plea bargain. The district court accepted the defendants' argument that they were not within its jurisdictional reach and thus were not amenable to suit. At the same time, the court denied the government's request for jurisdictional discovery. The United States has appealed both rulings. We vacate these orders and remand for further proceedings consistent with this opinion.


We start by introducing the appellees and then turn to the forfeiture proceedings and what transpired below.

In its suit, the United States named four corporations as defendants. Two of these entities, Swiss American Bank, Limited, and Swiss American National Bank (collectively, "Swiss American" or "the Swiss American banks"), are institutions organized under the law of Antigua and Barbuda ("Antigua"), and headquartered there. A third defendant, Bank of New York-InterMaritime Bank ("IMB"), is organized under Swiss law and based in Geneva. Prior to December 28, 1987, IMB owned all the shares of the fourth defendant, Swiss American Holding Company ("SAHC"), a Panamanian corporation, and it owned at least some of SAHC's stock until December 15, 1988. Throughout that

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period, the Swiss American banks were wholly-owned subsidiaries of SAHC.1

In mid-1993, the government entered into a plea agreement with John E. Fitzgerald. As part of this bargain, Fitzgerald pled guilty to manifold charges of engaging in a racketeering conspiracy and attempted money laundering. He simultaneously conceded that the monies on deposit in various accounts that he had opened were fruits of his criminal activity. These funds included approximately $7,000,000 that Fitzgerald had laundered through several shell corporations and eventually deposited with Swiss American between 1985 and 1987.

Notice of the impending forfeiture was published in newspapers of general circulation in both Massachusetts and Antigua. No competing claims to the funds were filed, although Swiss American informed the district court that the Antiguan government had frozen the accounts in question. The court subsequently entered a final order of forfeiture, see 18 U.S.C. § 1963, which decreed, inter alia, that "any and all interest of John E. Fitzgerald in the principal and accrued interest in the [subject] bank accounts" be "condemned, forfeited and vested in the United States." United States v. Fitzgerald, No. 93-10149-RWZ (D. Mass. May 4, 1994).

Despite the district court's ukase, Swiss American apparently disbursed some $5,000,000 from the subject accounts to the Antiguan authorities and confiscated the rest. The government of Antigua then took the position that, although it had not demanded that any part of Fitzgerald's assets be transferred to it, the monies it had received were no longer available to the United States. The United States responded by filing the instant action against the four defendants whom we have identified, asserting claims of conversion, unjust enrichment, and breach of contract. The defendants moved to dismiss for want of personal jurisdiction.2 See Fed. R. Civ. P. 12(b)(2). The lower court agreed with the central premise of the defendants' motions, overrode the government's request for jurisdictional discovery, and dismissed the action. See United States v. Swiss American Bank, Ltd., 23 F.Supp.2d 130 (D. Mass. 1998). This appeal followed.


We divide our substantive discussion into four parts. We begin with the anatomy of the personal jurisdiction inquiry, in hope of providing a template for the more specific analyses that follow. We then proceed to address the government's two main jurisdictional arguments. Finally, we comment upon a separate point advanced exclusively by IMB.

A. Personal Jurisdiction: An Overview.

It is common ground that, for a court to render a binding decision consonant with due process, it must have personal jurisdiction over the parties, that is, the power to require the parties to obey its decrees. See Burnham v. Superior Court, 495 U.S. 604, 608-09 (1990). Because a plaintiff ordinarily consents to a court's jurisdiction by filing suit, disputes over personal jurisdiction typically feature the forum court's relationship to one or more defendants. Here, the jurisdictional analysis depends

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upon whether any statute or rule authorizes the forum court to exercise its dominion over the defendants, and if so, whether the court's exercise of that jurisdiction would comport with due process.

The constitutional inquiry proceeds in three steps: relatedness, purposeful availment, and reasonableness.3 See Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 144 (1st Cir. 1995). At the first stage, the court must ask whether the claim at issue arises out of or is related to the defendant's conduct within the forum state. See id.; see also Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 206-07 (1st Cir. 1994). At the second step, the court must scrutinize the defendant's contacts with the forum state to determine whether those contacts constitute purposeful activity, such that being haled into court there would be foreseeable. See Foster-Miller, 46 F.3d at 144; Ticketmaster, 26 F.3d at 207. Lastly, the Constitution imposes an overall reasonableness restraint on the exercise of personal jurisdiction. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980); United Elec., Radio and Mach. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1088 (1st Cir. 1992). An exercise of personal jurisdiction thus complies with constitutional imperatives only if the defendant's contacts with the forum relate sufficiently to his claim, are minimally adequate to constitute purposeful availment, and render resolution of the dispute in the forum state reasonable.

These constitutional requirements comprise a final hurdle for an aspiring plaintiff. A court need not even consider them unless it possesses statutory authorization to exercise specific personal jurisdiction over defendants of the type that the plaintiff targets. This authorization may derive from a federal statute, see, e.g., 15 U.S.C. § 22 (providing for worldwide service of process on certain corporate antitrust defendants), or from a state statute of general application, see, e.g., Mass. Gen. Laws ch. 223A, § 3 (providing "long-arm" jurisdiction). A state long-arm statute furnishes a mechanism for obtaining personal jurisdiction in federal as well as state courts. See Fed. R. Civ. P. 4(k)(1)(A).

In limited circumstances, the requisite authorization can be provided by Rule 4(k)(2), quoted infra Part II(C), which functions as a sort of federal long-arm statute. When a plaintiff depends upon this recently adopted rule to serve as the necessary statutory authorization for the exercise of specific personal jurisdiction, the constitutional requirements are the same as those limned above, but the analytic exercises are performed with reference to the United States as a whole, rather than with reference to a particular state. The defendant's national contacts take center stage because the rule applies only to situations in which federal courts draw jurisdictional authority from the federal sovereign (unreinforced by "borrowed" state statutes), and, thus, the applicable constitutional requirements devolve from the Fifth rather than the Fourteenth Amendment. See Fed. R. Civ. P. 4 advisory committee note; 4 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1067.1 (1999 Supp.); Gary B. Born & Andrew N. Vollmer, The Effect of the Revised Federal Rules of Civil Procedure on Personal Jurisdiction, Service, and Discovery in International Cases, 150 F.R.D. 221, 225 (1993).

With this general schematic in place, we proceed to consider the government's

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two suggested bases for the assertion of personal jurisdiction over the defendants in the District of Massachusetts: the Massachusetts long-arm statute, Mass. Gen. Laws ch. 223A, §§ 3(a) & (d), and Rule 4(k)(2). Our review of the district court's ruling in this respect is plenary...

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