Companhia Brasileira Carbureto De Calcio—CBCC v. Applied Indus. Materials Corp.

• Decision Date: 26 January 2012
• Docket Number: No. 11–SP–500.,11–SP–500.
• Citation: 35 A.3d 1127
• Parties: COMPANHIA BRASILEIRA CARBURETO DE CALCIO—CBCC, et al., Appellants, v. APPLIED INDUSTRIAL MATERIALS CORPORATION, et al., Appellees.
• Court: D.C. Court of Appeals

35 A.3d 1127

COMPANHIA BRASILEIRA CARBURETO DE CALCIO—CBCC, et al., Appellants,

v.APPLIED INDUSTRIAL MATERIALS CORPORATION, et al., Appellees.

No. 11–SP–500.

District of Columbia Court of Appeals.

Argued Oct. 27, 2011.Decided Jan. 26, 2012.

Bruce K. Cohen, with whom Daniel B. Allanoff, Michael R. Lazerwitz, Michael J. Freed, Steven A. Kanner, Robert J. Wozniak, Mark Reinhardt, and Mark Wendorf were on the brief, for appellants. Steven J. Greenfogel also entered an appearance for appellants.

Dale Hershey, with whom the following were on the brief: Michael R. Borasky, Audrey K. Kwak, and Edward J. Longosz, II, for appellees Elkem Metals, Inc., and Elkem AS; James H. Hulme and Matthew M. Wright for appellee CC Metals & Alloys, LLC; Alan Kanzer and Amber Wessels for appellee Evonik Degussa GmbH; and Charles R. Claxton, Bethesda, MD, for appellee Applied Industrial Materials Corporation.

Before WASHINGTON, Chief Judge, and FISHER and OBERLY, Associate Judges.

FISHER, Associate Judge:

Pursuant to D.C.Code § 11–723 (2001), the United States Court of Appeals for the District of Columbia Circuit certified the following question of law to this court:

Under District of Columbia law, does a petition sent to a federal government agency in the District provide a basis for establishing personal jurisdiction over the petitioner when the plaintiff has alleged that the petition fraudulently induced unwarranted government action against the plaintiff?

Companhia Brasileira Carbureto de Calicio v. Applied Industrial Materials Corp., 395 U.S.App. D.C. 106, 110, 640 F.3d 369, 373 (2011). We hold that it does.

I. Legal Framework

Before a court in the District of Columbia may exercise personal jurisdiction over a nonresident defendant, two criteria must be satisfied. First, the exercise of personal jurisdiction must be authorized by the District's long-arm statute. As relevant here, that statute provides:

(a) A District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's—

(1) transacting any business in the District of Columbia;

(2) contracting to supply services in the District of Columbia;

(3) causing tortious injury in the District of Columbia by an act or omission in the District of Columbia;

(4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia[.]

D.C.Code § 13–423(a) (2001). “When jurisdiction over a person is based solely upon this section [of the long-arm statute], only a claim for relief arising from acts enumerated in this section may be asserted against him.” Id. § 13–423(b).

Second, the exercise of personal jurisdiction must comport with the requirements of due process. “To satisfy the requirements of due process, the nonresident defendant must have had sufficient ‘minimum contacts' with the forum state to justify subjecting him to the exercise of personal jurisdiction by its courts.” Environmental Research Int'l, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808, 811 (D.C.1976) (en banc); see also Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In assessing whether a defendant's contacts with the District are sufficient, “the most critical inquiry is not whether the nonresident defendant is physically present in the forum but whether the defendant's contacts with the forum are of such a quality and nature that they manifest a deliberate and voluntary association with the forum and are not fortuitous or accidental.” Harris v. Omelon, 985 A.2d 1103, 1105 (D.C.2009) (internal editing and citation omitted); see also World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295–99, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). “This requires ‘some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State’ to establish personal jurisdiction.” Harris, 985 A.2d at 1105 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)).

We have said that the District's long-arm statute permits the exercise of personal jurisdiction over nonresident defendants to the fullest extent permissible under the due process clause of the United States Constitution. Environmental Research, 355 A.2d at 810–11; see also Shoppers Food Warehouse v. Moreno, 746 A.2d 320, 326 (D.C.2000) (en banc). Nonetheless, in Environmental Research, we recognized a “government contacts” exception under which courts in the District of Columbia would refrain from exercising personal jurisdiction even though the requirements of due process and the long-arm statute otherwise would be satisfied.¹ 355 A.2d at 813. Recognizing the “unique character of the District as the seat of national government and ... the correlative need for unfettered access to federal departments and agencies for the entire national citizenry,” we held that “entry into the District of Columbia by nonresidents for the purpose of contacting federal governmental agencies is not a basis for the assertion of in personam jurisdiction.” Id. “To permit our local courts to assert personal jurisdiction over nonresidents whose sole contact with the District consists of dealing with a federal instrumentality not only would pose a threat to free public participation in government, but also would threaten to convert the District of Columbia into a national judicial forum.” Id.

Since our decision in Environmental Research, this court has reaffirmed the government contacts principle while recognizing some limitations on its scope. See, e.g., Lex Tex Ltd. v. Skillman, 579 A.2d 244 (D.C.1990); Rose v. Silver, 394 A.2d 1368 (D.C.1978). Meanwhile, other courts have suggested that there is, or may be, an exception under which individuals who fraudulently petition the government lose the protection of the government contacts doctrine and thus may be subject to personal jurisdiction based on their contacts with federal agencies. See, e.g., Naartex Consulting Corp. v. Watt, 232 U.S.App. D.C. 293, 301, 722 F.2d 779, 787 (1983) (affirming dismissal for lack of personal jurisdiction based on government contacts exception but stating, in dictum, that “[a] different case might be presented had Naartex made credible and specific allegations in the district court that the companies had used the proceedings as an instrumentality of the alleged fraud”); Nichols v. G.D. Searle & Co., 783 F.Supp. 233, 243 (D.Md.1992) (“[T]he Court will only permit the use of this fraud exception where plaintiffs have not merely alleged fraud but have established a prima facie case of fraud.”); Lamb v. Turbine Design, Inc., 273 Ga. 154, 538 S.E.2d 437, 440 (2000) (noting that “there is a fraud exception to the government contacts rule” but declining to apply it “when a company or an individual has allegedly provided misleading information in a government petition that does not impair the government agency in performing its duties”).

Although we have not addressed the possibility of a fraud exception, some of our decisions may have implicitly narrowed the scope of the government contacts doctrine by concluding that “the First Amendment provides the only principled basis” supporting it. Rose, 394 A.2d at 1374; see also Lex Tex, 579 A.2d at 248–49. Since the Supreme Court has held, in other circumstances, that at least some fraudulent petitions are not protected by the First Amendment, see California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 511–15, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972), our decision in Rose “arguably means that fraudulent petitions to government agencies do not fall within the government contacts exception,” Companhia Brasileira Carbureto de Calicio, 395 U.S.App. D.C. at 110, 640 F.3d at 373.

II. Factual and Procedural Background

The relevant facts have been recounted by the United States Court of Appeals and by the United States District Court, see Companhia Brasileira Carbureto de Calicio v. Applied Industrial Materials Corp., 395 U.S.App. D.C. 106, 640 F.3d 369 (2011); Companhia Brasileira Carbureto de Calcio–CBCC v. Applied Industrial Materials Corp., 698 F.Supp.2d 109 (D.D.C.2010), and we will describe them only briefly here. In 1993, domestic producers of ferrosilicon, an alloy used in manufacturing steel, successfully petitioned the United States International Trade Commission (ITC) to impose duties on ferrosilicon imports from Brazil.² After a few domestic producers were convicted of a price-fixing conspiracy, the ITC reconsidered, and reversed, its earlier determination. The ITC also concluded that several domestic producers had submitted false and misleading information which had provided the basis for its imposition of duties.

In 2001, three Brazilian producers sued a group of domestic producers and their foreign parents in the United States District Court for the District of Columbia, alleging that the domestic producers had fraudulently induced the ITC to impose duties on them. In 2010,³ the district court dismissed the suit, concluding that it lacked personal jurisdiction over the defendants due, in part, to the government contacts principle.⁴ The District of Columbia Circuit affirmed the district court's decision in large part, but concluded that the state of the government contacts principle was unsettled under District of Columbia law and certified this question to us.

III. Analysis

The unique concerns underlying the government contacts principle are as compelling today as they were when this court decided Environmental Research. The right to petition the government is “one of the most precious of the liberties safeguarded by the Bill of Rights,” BE & K Constr. Co. v. Nat'l Labor Relations Bd., 536 U.S. 516, 524, 122...