Handley v. Indiana & Michigan Elec. Co., 82-5694

• Decision Date: 08 December 1983
• Docket Number: No. 82-5694,82-5694
• Citation: 732 F.2d 1265
• Parties: Roger L. HANDLEY, Plaintiff-Appellee, v. INDIANA & MICHIGAN ELECTRIC CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1265

732 F.2d 1265

1986 A.M.C. 1753

Roger L. HANDLEY, Plaintiff-Appellee, v. INDIANA & MICHIGAN ELECTRIC CO., Defendant-Appellant.

No. 82-5694.

United States Court of Appeals, Sixth Circuit.

Dec. 8, 1983.

Decided April 26, 1984.

John B. Pinney, argued, Graydon, Head & Ritchey, Cincinnati, Ohio, John R.S. Brooking, Adams, Brooking & Stepner, Covington, Ky., for defendant-appellant.

Meredith L. Lawrence, argued, Covington, Ky., for plaintiff-appellee.

Before LIVELY, Chief Judge, KRUPANSKY, Circuit Judge, and PHILLIPS, Senior Circuit Judge.

LIVELY, Chief Judge.

The question in this appeal is whether the district court had personal jurisdiction over a nonresident corporate defendant which was served with process pursuant to the Kentucky long arm statute. The plaintiff (Handley) is a seaman who sought damages for personal injuries suffered while working on one of the defendant's barges. Handley is a resident of West Virginia. The "pilot house daily log sheet" showed that the barge on which Handley was injured had been picked up in West Virginia. While still in West Virginia waters Handley hurt his back in trying to pull a "barge wire" aboard a barge with the assistance of one other seaman. The defendant (I & M) is an Indiana corporation with its principal place of business in West Virginia. The action was brought under the Jones Act, 46 U.S.C. Sec. 688 (1976) ¹ and the general maritime law; subject matter jurisdiction is admitted. The district court found that it had personal jurisdiction over I & M and awarded damages to Handley following a non-jury trial. On appeal the defendant acknowledges that Rule 52(a), Fed.R.Civ.P., controls any review of the merits of the case and it seeks reversal solely on its claim that the district court lacked personal jurisdiction.

I.

A.

This court has dealt with the issue of personal jurisdiction over nonresident defendants in a number of cases, almost exclusively, however, when subject matter jurisdiction has been based on diversity of citizenship. Our leading case of this variety is Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir.1968), which involved the Tennessee long arm statute. See also Poyner v. Erma Werke GMBH, 618 F.2d 1186 (6th Cir.1980) (the Kentucky long arm statute); Welsh v. Gibbs, 631 F.2d 436 (6th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1517, 67 L.Ed.2d 816 (1981) (the Ohio long arm statute); and Nationwide Motorist Ass'n of Michigan v. Freeman, 405 F.2d 699 (6th Cir.1969) (the Michigan long arm statute). In all of these cases, whether the plaintiff's claim was based on tort or breach of contract, decision of the personal jurisdiction question turned on whether the nonresident defendant had sufficient "minimum contacts" with the forum state to satisfy Fourteenth Amendment due process requirements. The territorial limitations on the jurisdiction of state courts require this determination in diversity cases. When personal jurisdiction of a federal district court over a nonresident of the forum state is challenged in an action whose subject matter jurisdiction is based on a federal statute, a different inquiry must be made. As part of a national system of courts a federal district court considering a case that arises under federal law is not subject to precisely the same due process limitations which restrict its reach in diversity cases. It is clear, however, that Rule 4, Fed.R.Civ.P., affects personal jurisdiction of district courts by placing territorial limits on their process.

When a federal statute creating a substantive right contains no process provisions service of process in a district court action over a nonresident defendant who is not found in the forum state is governed by the applicable statute or rule of that state, under Rule 4(e), Fed.R.Civ.P.:

(e) Summons: Service Upon Party Not Inhabitant of or Found Within State. Whenever a statute of the United States or an order of court thereunder provides for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state in which the district court is held, service may be made under the circumstances and in the manner prescribed by the statute or order, or, if there is no provision therein prescribing the manner of service, in a manner stated in this rule. Whenever a statute or rule of court of the state in which the district court is held provides (1) for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state, or (2) for service upon or notice to him to appear and respond or defend in an action by reason of the attachment or garnishment or similar seizure of his property located within the state, service may in either case be made under the circumstances and in the manner prescribed in the statute or rule.

B.

In Southern Machine Co. v. Mohasco Industries, Inc., supra, this court noted that "a 'long arm statute' may be used in a federal question action." 401 F.2d at 376 n. 2. However, the court did not explore the question of whether the same limits on personal jurisdiction apply as when diversity of citizenship is the basis of subject matter jurisdiction. This question was addressed in Chrysler Corp. v. Fedders Corp., 643 F.2d 1229 (6th Cir.), cert. denied, 454 U.S. 893, 102 S.Ct. 388, 70 L.Ed.2d 207 (1981), where one of the defendants was an alien corporation. After holding that the plaintiff had not established sufficient contacts with Michigan to support personal jurisdiction over the nonresident defendant pursuant to Michigan's long arm statute, id. at 1236-37, the court considered Chrysler's argument that the court had personal jurisdiction on a theory of "aggregate contacts." ² Under this theory, as stated by the court,

jurisdiction over a foreign corporation being sued on a federal cause of action may be founded on the corporation's contacts with the United States as a whole as opposed to its contacts with the forum state. This "national contacts" or "aggregate contacts" concept is based on the proposition that a court's jurisdictional power to render a binding judgment on federal questions must be examined in light of the due process clause of the Fifth rather than the Fourteenth Amendment.

Id. at 1237-38 (footnote and citation omitted). The court concluded that it was not required to determine whether to adopt the "aggregate contacts" rationale since Chrysler had failed to establish sufficient contacts even under that approach.

The issue is one which has divided the courts and has concerned commentators. In DeJames v. Magnificence Carriers, Inc., 654 F.2d 280 (3d Cir.1981), the majority found that personal jurisdiction over an alien corporation sued in the district court in New Jersey was limited by the provisions of the New Jersey long arm statute. The action, by a longshoreman for personal injuries, was based on the court's admiralty jurisdiction. The court acknowledged that the New Jersey statute was intended to extend jurisdiction to the limits permitted by the due process requirements of the Constitution. It recognized "[t]he anomaly of a federal court being limited by the requirements of the fourteenth amendment in a nondiversity case," but concluded that Congress intended this result by its failure to authorize nationwide service of process for admiralty cases. Id. at 284.

The DeJames majority concluded that the personal jurisdiction of a district court over a nonresident defendant served under a state long arm statute is subject to the same limitations as that of a state court using the same statute. Judge Gibbons, in dissent, argued that the majority's Fourteenth Amendment analysis was improper.

When a court asserts personal jurisdiction over a foreign defendant on the basis of a state law claim, it must ensure that the forum state does not unduly encroach on a sister state's interests. When a court, state or federal, adjudicates a federal claim, the federalism issue is of no relevance, for the court determines the parties' rights and liabilities under uniform, national law. No state intrudes on another's interests. The only relevant interest is the national one. Thus the applicable constitutional due process provision should not be the fourteenth amendment, but the fifth amendment.

DeJames, 654 F.2d at 292 (Gibbons, J., dissenting). In determining fairness under the Fifth Amendment, Judge Gibbons argued, the defendant's national contacts, not those with the particular location where the claim arose, should be considered. Id.

The Fifth Circuit has wrestled with this issue and has decisions of recent vintage which reach irreconcilable results. In Terry v. Raymond International, Inc., 658 F.2d 398, 402-03 (5th Cir.1981), cert. denied, 456 U.S. 928, 102 S.Ct. 1975, 72 L.Ed.2d 443 (1982), and Lapeyrouse v. Texaco, Inc., 693 F.2d 581, 585 (5th Cir.1982), the court held that the sole test of personal jurisdiction in federal question cases is one of constitutionality. Under this reasoning a state long arm statute merely prescribes the manner in which a nonresident may be served in a federal question case; the fact that a state statute may assert jurisdiction as well as prescribing the manner of service is "irrelevant." Terry, 658 F.2d at 402. On the other hand, in Burstein v. State Bar of California, 693 F.2d 511 (5th Cir.1982), and DeMelo v. Toche Marine, Inc., 711 F.2d 1260 (5th Cir.1983), the court concluded from the language of Rule 4(e) that where a federal statute contains no provision for service of process, personal jurisdiction over a nonresident defendant in a federal question case is limited by the "circumstances" as well as the "manner" prescribed for service of process in the applicable state statute or rule. Applying this reasoning a federal court will maintain personal jurisdiction over a nonresident defendant only if the plaintiff establishes that one or more of the conditions...