Donatelli v. National Hockey League

• Decision Date: 09 November 1989
• Docket Number: No. 89-1681,89-1681
• Citation: 893 F.2d 459
• Parties: John Clark DONATELLI, Plaintiff, Appellee, v. NATIONAL HOCKEY LEAGUE, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 459

893 F.2d 459

58 USLW 2419

John Clark DONATELLI, Plaintiff, Appellee, v. NATIONAL HOCKEY LEAGUE, Defendant, Appellant.

No. 89-1681.

United States Court of Appeals First Circuit.

Heard Nov. 9, 1989.

Decided Jan. 12, 1990.

Herbert Dym, with whom Bingham B. Leverich, Bruce N. Kuhlik, Kenneth J. Diamond, Covington & Burling, Christopher H. Little, John Voorhees, Fran R. Robins-Liben, and Tillinghast, Collins & Graham were on brief for defendant, appellant.

Martin W. Aisenberg, with whom Robert S. Thurston, Jones & Aisenberg, John B. Harwood, and McKinnon & Harwood were on brief for plaintiff, appellee.

Before BOWNES, VAN GRAAFEILAND ^* and SELYA, Circuit Judges.

SELYA, Circuit Judge.

After plaintiff-appellee John Clark Donatelli sued the National Hockey League (NHL), the United States District Court for the District of Rhode Island refused to dismiss the case for want of personal jurisdiction. Donatelli v. NHL, 708 F.Supp. 31 (D.R.I.1989). Believing that its order "involve[d] a controlling question of law as to which there is substantial ground for difference of opinion, and an immediate appeal ... m[ight] materially advance the ultimate termination of the litigation," 28 U.S.C. Sec. 1292(b), the district court asked us to review immediately its conclusion that "an unincorporated association is subject to the general personal jurisdiction of every court having jurisdiction over one of its members." Donatelli, 708 F.Supp. at 38. Impressed by the issue's novelty and importance, and by the district court's concern, we allowed an interlocutory appeal.

The district court's in personam jurisdiction in this case was invoked pursuant to Rhode Island's longarm statute, R.I.G.L. Sec. 9-5-33 (1985 Reenactment). Because the state has consistently characterized the reach of that statute as coextensive with the outermost limits of the Due Process Clause, see, e.g., Bendick v. Picillo, 525 A.2d 1310, 1312 (R.I.1987); Conn v. ITT Aetna Finance Co., 105 R.I. 397, 252 A.2d 184, 186 (1969), we conduct our analysis exclusively in terms of whether the lower court's assertion of jurisdiction was constitutionally permissible. We conclude it was not.

I

It would be pleonastic to rehearse the case's background and travel anew, as these subjects are brightly illumined in the opinion below. See Donatelli, 708 F.Supp. at 32-33, 35. Suffice it to say that the NHL is a 21-member unincorporated association which sponsors a professional ice hockey league. Each member operates a team; the teams are distributed throughout various metropolitan areas in the United States and Canada; each team bears the name of its home city (e.g., "New York Rangers," "Winnipeg Jets"); and the league is comprised of the 21 teams. The clubs are independently owned entities, structured as their owners please. Some operate as corporations, some as partnerships, and some as joint ventures.

The members comprise the league, but the league does not dominate the members. The NHL is run by a board of governors consisting of one representative from each member team, but has no ownership interest in any team. It exercises no control over the day-to-day business operations of any team and receives no substantial part of the teams' revenues (although the league's operating budget is funded by the teams on an equal-share basis). The clubs perform virtually all of their crucial functions (e.g., player recruitment, ticket sales, broadcast arrangements, furnishing of equipment and premises, concession arrangements, advertising) independently of the league. The NHL does perform one uniquely vital task: it establishes and monitors the regular-season playing schedule and postseason playoffs (but not the preseason exhibition games). The NHL maintains its own offices and staff; adopts and enforces by-laws governing the sport; operates a scouting network ¹; conducts an annual player draft; determines player eligibility; promulgates playing rules; and furnishes referees and linesmen to officiate at the games. The league also sells the rights to televise regular-season and playoff games throughout the United States and Canada; the proceeds go to the member clubs.

The clubs own a separate corporation, National Hockey League Services, Inc. (NatServ), chartered in New York. NatServ is the assignee of the NHL logo (which the teams collectively own) and of the right to use all the team names and logos for various product endorsements. In turn, NatServ subcontracts these rights to an independent firm, Licensing Corporation of America (LCA). LCA deals directly with an array of advertisers and manufacturers and makes royalty payments to NatServ. After defraying its operating expenses, NatServ remits all surplus revenues to its shareholders (the 21 teams). None of the income earned by NatServ inures to the NHL.

Donatelli is a hockey player of some skill. He brought this action in a Rhode Island state court to challenge the NHL player draft and the league's failure to declare him a "free agent," entitled to negotiate for his services with any and all teams. ² The case was timely removed. Thereafter, the district court found, and the parties do not dispute, that Donatelli's suit was unrelated to the NHL's or its members' contacts in Rhode Island. Id. at 34. The court also found that, although the NHL itself had no presence within Rhode Island sufficient to justify the exercise of general jurisdiction, it was nevertheless "subject to the general personal jurisdiction of every court having general personal jurisdiction over one of its member clubs." Id. at 36. Because at least one such team (the Boston Bruins) had minimum contacts with the forum, id., the court believed that in personam jurisdiction over appellant devolved "through the contacts of the Bruins." Id. at 38. Accordingly, the court declined to shelve the suit. ³

II

In the late 1930s, Winston Churchill disclaimed any ability to forecast the Soviet Union's reaction to Nazi aggression, reputedly terming the Russian colossus "a riddle wrapped in a mystery inside an enigma." That phrase might just as aptly describe the doctrinal vagaries of the concept of personal jurisdiction. Inasmuch as we today confront what appears to be an open question, we must winnow the salient policies and concerns underlying the development of Supreme Court doctrine in order to be able to formulate a method, and then a rule, of decision. Hence, we believe it wise, if time consuming, to analyze certain landmark cases and extrapolate the underlying values relevant to a reasoned determination of whether (and if so, how) the activities of members of an unincorporated association ought to affect the forum's ability to assert personal jurisdiction over the association itself.

In a very real sense, concepts of personal jurisdiction entered the modern era with the watershed opinion in International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). International Shoe signalled a clear retreat from the somewhat mechanical approach to jurisdictional inquiries previously demanded by Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1878), and its progeny. See, e.g., Hazard, A General Theory of State-Court Jurisdiction, 1965 Sup.Ct.Rev. 241, 245-72 (1965); Note, Developments in the Law--State Court Jurisdiction, 73 Harv.L.Rev. 909, 919-23 (1960). In International Shoe, the Court ushered in a more functional analytic scheme, one geared toward assessing the inherent fairness of compelling a party to submit to the suzerainty of a particular state's courts. To that end, the Court promulgated the now-familiar standard of "minimum contacts," hinging the concept rather firmly to "traditional notions of fair play and substantial justice." 326 U.S. at 316, 66 S.Ct. at 158 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)).

The Court also spotlighted the importance of distinguishing between "specific" personal jurisdiction (i.e., jurisdiction which a state may assert when a suit arises directly out of forum-based activities) and "general" personal jurisdiction (i.e., jurisdiction which may be asserted in connection with suits not directly founded on forum-based conduct). Id. 326 U.S. at 317-18, 66 S.Ct. at 158-59; see generally Von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L.Rev. 1121, 1136-63 (1966) (discussing distinction). In this case, our focus is upon--and our subsequent discussion concerns--general as opposed to specific jurisdiction. Donatelli's suit does not stem from any activities conducted, or torts committed, by appellant within Rhode Island. Because plaintiff's claims do not arise out of, and are not directly related to, defendant's contacts with the forum state, specific jurisdiction is lacking. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct. 1868, 1872 n. 8, 80 L.Ed.2d 404 (1984); see also Donatelli, 708 F.Supp. at 34. In order to maintain the action in Rhode Island, therefore, plaintiff must demonstrate the existence of general jurisdiction anent the NHL. And, "[a]lthough minimum contacts suffice in and of themselves for specific jurisdiction under International Shoe, the standard for general jurisdiction is considerably more stringent." Glater v. Eli Lilly & Co., 744 F.2d 213, 216 (1st Cir.1984) (footnote omitted).

Explicating the constitutional perimeters of general jurisdiction, International Shoe warned that a corporation's "single or isolated items of activities in a state ... are not enough to subject it to suit on causes of action unconnected with the activities there." 326 U.S. at 317, 66 S.Ct. at 159. Contrastingly, the Court mentioned "instances in which the continuous corporate operations within a state were thought so substantial and of such a nature as to justify suit against [a corporate defendant] on causes of action arising from dealings entirely distinct from those activities." Id. at 318, 66...