368 F.3d 1174 (9th Cir. 2004), 02-56770, Action Embroidery Corp. v. Atlantic Embroidery, Inc.

Docket Nº:02-56770.
Citation:368 F.3d 1174
Party Name:ACTION EMBROIDERY CORPORATION, a California Corporation; Vanguard Industries East, Inc., a Virginia Corporation with its principal place of business in California, Plaintiffs-Appellants, v. ATLANTIC EMBROIDERY, INC., a Virginia Corporation, Defendant, and Wolcott, Rivers, Wheary, Basnight, Kelly P.C., a Virginia Corporation, Defendant-Appellee.
Case Date:May 27, 2004
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1174

368 F.3d 1174 (9th Cir. 2004)

ACTION EMBROIDERY CORPORATION, a California Corporation; Vanguard Industries East, Inc., a Virginia Corporation with its principal place of business in California, Plaintiffs-Appellants,


ATLANTIC EMBROIDERY, INC., a Virginia Corporation, Defendant,


Wolcott, Rivers, Wheary, Basnight, Kelly P.C., a Virginia Corporation, Defendant-Appellee.

No. 02-56770.

United States Court of Appeals, Ninth Circuit

May 27, 2004

Argued and Submitted Dec. 5, 2003.

Page 1175

Jeffrey T. Petersen, Weissman, Wolff, Bergman, Coleman, Grodin & Evall, LLP, Beverly Hills, CA, for the Appellants.

James Anthony Murphy, Murphy Pearson Bradley & Feeney, San Francisco, CA, for the Appellee.

Appeal from the United States District Court for the Central District of California;

Page 1176

William J. Rea, District Judge, Presiding. D.C. No. CV-01-11187-WJR.

Before PREGERSON, COWEN,[*] and W. FLETCHER, Circuit Judges.


Appellants Action Embroidery Corp. ("Action") and Vanguard Industries East, Inc. ("Vanguard") appeal the district court's dismissal of their federal antitrust and state-law suit against Wolcott, Rivers, Wheary, Basnight & Kelly, P.C. ("Wolcott"), a Virginia professional corporation, for lack of personal jurisdiction. We decide two questions of first impression. First, we hold that venue and personal jurisdiction are independent requirements under Section 12 of the Clayton Act. Second, we join our sister circuits and adopt the doctrine of "pendent personal jurisdiction." We hold in this case that the federal district court has personal jurisdiction over the federal antitrust claims, and that it may, in its discretion, exercise pendent personal jurisdiction over the state-law claims contained in the same complaint.

I. Background

Action, Vanguard, and Atlantic Embroidery, Inc. ("Atlantic") are all in the business of providing embroidery services to the United States Armed Forces. In 1999, the United States Department of the Navy solicited bids from embroidery companies. Vanguard and Atlantic both submitted bids, but the Navy awarded the contract to Spur Laundry and Cleaners, Inc. ("Spur").

After having failed to secure the contract, Atlantic filed a federal antitrust suit in the federal district court for the Eastern District of Virginia alleging that Action and Vanguard had entered into illegal price fixing and market allocation agreements. Atlantic alleged, inter alia, that Action and Vanguard had agreed with Spur that Spur would submit the lowest bid on the Navy contract, and would then illegally subcontract with Action to perform the work in Mexico. Wolcott represented Atlantic in this suit. Atlantic's suit was dismissed with prejudice on the eve of trial.

In December 2001, Action and Vanguard brought the present suit in the Central District of California against Atlantic, Wolcott, and various individuals for antitrust violations under the Sherman Act, 15 U.S.C. § 1, and for violations of California law. Action and Vanguard allege that Atlantic's Virginia district court suit was groundless. They allege that after Atlantic realized that it could not participate competitively in the embroidery market, it conspired with its law firm, Wolcott, to bring meritless and unfairly burdensome litigation against Appellants, its successful competitors. Action and Vanguard allege that the Virginia district court suit was intended to absorb their resources and to cast suspicion on their business practices, thereby subjecting them to investigation and impairing their ability to bid successfully on future contracts. Action and Vanguard allege that Atlantic pursued this litigation specifically to achieve anticompetitive goals prohibited by the antitrust laws.

Atlantic moved to dismiss for lack of personal jurisdiction and to transfer for lack of proper venue. The district court granted Atlantic's venue motion and transferred the suit against it to the Eastern District of Virginia. The propriety of that transfer is not before us. Wolcott moved

Page 1177

only to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The district court granted Wolcott's motion and dismissed it from the action. Action and Vanguard timely appealed the dismissal of their suit against Wolcott.

We review the district court's decision to dismiss for lack of personal jurisdiction de novo. See Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128 (9th Cir. 2003). Parties asserting personal jurisdiction have the burden of proving such jurisdiction. Butcher's Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535, 538 (9th Cir. 1986). When a district court does not conduct an evidentiary hearing before making its jurisdictional ruling, parties asserting jurisdiction need only make a prima facie showing of personal jurisdiction. Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002). "In determining whether Appellants have met this prima facie burden, uncontroverted allegations in their complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in [their] favor...." Id. (citations and internal quotations omitted).

II. Personal Jurisdiction Over the Federal Antitrust Claims

A. Statutory Considerations

For a court to exercise personal jurisdiction over a defendant, there must be an "applicable rule or statute [that] potentially confers jurisdiction over the defendant." Amba Mktg. Sys., Inc. v. Jobar Int'l, Inc. 551 F.2d 784, 787 (9th Cir. 1977). Further, "[a] federal court obtains personal jurisdiction over a defendant if it is able to serve process on him." Butcher's Union, 788 F.2d at 538. A statutory basis for exercising personal jurisdiction may be found in a statute providing for service of process.

Action and Vanguard assert that Section 12 of the Clayton Act confers personal jurisdiction over defendant Wolcott in the Central District of California for their federal antitrust claims. This section, the long-arm statute for federal antitrust suits, provides in its entirety:

[1] Any suit, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; [2] and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

15 U.S.C. § 22 (bracketed numbers and emphasis added). The district court held that it did not have personal jurisdiction over Wolcott because Action had "not argued that venue exists under either Section 12 or the general venue statute in order to justify use of Section 12's worldwide service of process provision as a means of establishing personal jurisdiction." That is, the district court held that proper venue is a necessary component of personal jurisdiction under Section 12 of the Clayton Act. Whether this is so is a question of first impression in this circuit.

In Go-Video, Inc. v. Akai Electric Co. Ltd., 885 F.2d 1406 (9th Cir. 1989), we provided a partial but incomplete answer. The question in Go-Video was whether the special venue provision in Section 12 is the only source of venue for a federal antitrust suit, or whether the general venue provisions of 28 U.S.C. § 1391 are also available. We refused to read Section 12 as "an integrated whole," Go-Video, 885 F.2d at 1408, holding that the special venue provision of Section 12 is supplemented by the general venue provisions of § 1391 for federal antitrust plaintiffs. Id. at 1413. Accord In re Auto. Refinishing Paint Antitrust Litig., 358 F.3d 288, 296-97 (3d Cir. 2004);

Page 1178

Delong Equip. Co. v. Wash. Mills Abrasive Co., 840 F.2d 843, 855 n. 16 (11th Cir. 1988). GTE New Media Serv. Inc. v. BellSouth Corp., 199 F.3d 1343, 1350-51 (D.C.Cir. 2000); Goldlawr, Inc. v. Heiman, 288 F.2d 579, 581 (2d Cir. 1961), rev'd on other grounds, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962). Under Go-Video, venue is proper in a federal antitrust suit if the venue requirements of either Section 12 or 28 U.S.C. § 1391 are satisfied.

When we decided Go-Video, a number of district courts had held that the availability of personal jurisdiction under Section 12 depended on the availability of venue. See, e.g., Wood v. Santa Barbara Chamber of Commerce, Inc., 507 F.Supp. 1128, 1141 (D.Nev.1980); Friends of Animals, Inc. v. Am. Veterinary Med. Ass'n, 310 F.Supp. 620, 624 (S.D.N.Y.1970); Chem. Specialties Sales Corp. v. Basic Inc., 296 F.Supp. 1106, 1109 (D.Conn.1968). Delong Equip. Co., 840 F.2d at 857, 855-58 (conducting personal jurisdiction and venue analyses separately under Section 12: "Unlike personal jurisdiction issues, which primarily concern the extent of a court's power over the parties and the fairness of requiring a party to defend itself in a foreign forum, venue primarily addresses the convenience of the forum."); Paper Sys. Inc. v. Mitsubishi Corp., 967 F.Supp. 364, 366-67 (E.D.Wis.1997) ("When, as here ... the law provides for worldwide service of process and when, as here, nothing in the legislative history implies reading a venue provision as a jurisdictional limitation, the worldwide service of process clause should stand on its own, independent from the venue clause."); Petroleum Fin. Corp. v....

To continue reading