Heft v. Aai Corp.

• Decision Date: 24 January 2005
• Docket Number: No. CIV.A. 104CV1709.,CIV.A. 104CV1709.
• Parties: Julee H. HEFT, Plaintiff v. AAI CORPORATION, Defendant
• Court: U.S. District Court — Middle District of Pennsylvania

355 F.Supp.2d 757

Julee H. HEFT, Plaintiff v. AAI CORPORATION, Defendant

No. CIV.A. 104CV1709.

United States District Court, M.D. Pennsylvania.

January 24, 2005.

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John H. Arnold, Wrightsville, PA, for Plaintiff.

Heather L. Mitchell, Jeffrey P. Ayres, Venable LLP, Towson, MD, Stephen L. Grose, Keefer Wood Allen & Rahal, LLP, Camp Hill, PA, for Defendant.

MEMORANDUM

CONNER, District Judge.

Removal, personal jurisdiction, and venue occasionally conspire to render the question of where a case proceeds as great a controversy as how it proceeds. A corporation based in Maryland asserts that a federal court sitting in Pennsylvania lacks statutory and constitutional authority to bind the company to judgment in an action removed from the state judiciary. This court disagrees, and finds that maintenance of this suit for benefits under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1401, comports with federal personal jurisdiction and venue requirements.

I. Statement of Facts¹

The ERISA claims presented in this federal action are premised on a domestic relations order entered by a Pennsylvania court of common pleas. The former husband of plaintiff, Julee H. Heft ("Heft"), was employed by defendant, AAI Corporation, and was a participant in a retirement plan administered by the company at the time of the couple's divorce in 2001. A domestic relations order designated Heft as an "alternate payee," entitled to a share of benefits under the retirement plan when they became payable.² Heft's ex-husband died in 2002, and she sought benefits pursuant to the order and retirement plan. AAI Corporation denied her request based on purported deficiencies in the domestic relations order. (Doc. 1, Ex. 1 ¶¶ 3-16).

Heft soon commenced a civil action, claiming breach of contract and bad faith, in the Court of Common Pleas of York County, Pennsylvania. She served the complaint on AAI Corporation at its headquarters in Maryland. The company did not respond directly to the complaint, but filed a notice of removal premised on federal question jurisdiction over ERISA claims.³ (Doc. 1 ¶¶ 3-4, 10). Heft did not file a motion to remand.

Within several days of removal, AAI Corporation filed a motion to dismiss the complaint based on lack of personal jurisdiction and improper venue. The motion asserts that AAI Corporation is incorporated, does business, and employed Heft's ex-husband in Maryland. The company neither maintains offices or agents nor conducts any business in Pennsylvania. It administers retirement plans in Maryland, and the decision to deny benefits to Heft was made in that state. (Docs.3, 4). The parties do not dispute these facts, but only whether they provide a sufficient basis on which this court may entertain the claims. (See Docs. 5, 10).

II. Standard of Review

Motions to dismiss for lack of personal jurisdiction or improper venue generally require the court to accept as true the allegations of the pleadings.⁴ Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir.2002); Myers v. Am. Dental Ass'n, 695 F.2d 716, 724 (3d Cir.1982). The parties may submit affidavits in support of their positions, and may stipulate as to certain facts, but the plaintiff is entitled to rely on the allegations of the complaint absent evidentiary challenge. Carteret Sav. Bank, F.A. v. Shushan, 954 F.2d 141, 142 & n. 1 (3d Cir.1992); Myers, 695 F.2d at 724. Whatever the nature of the parties' submissions, the court is bound to view the facts in the light most favorable to the plaintiff. Carteret, 954 F.2d at 142 & n. 1; Myers, 695 F.2d at 724.

III. Discussion

Personal jurisdiction and venue are closely related concepts. Both are concerned with the territorial reach of the court, not its inherent adjudicative power. See Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982); Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 167-68, 60 S.Ct. 153, 84 L.Ed. 167 (1939). Both depend on statutory factors but incorporate equitable and prudential considerations. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Stafford v. Briggs, 444 U.S. 527, 535-37, 100 S.Ct. 774, 63 L.Ed.2d 1 (1980). Both may be waived if not timely asserted. Fed. R. Civ. P. 12(h)(1); see also Bauxites, 456 U.S. at 702, 102 S.Ct. 2099.

But important distinctions exist. United States ex rel. Rudick v. Laird, 412 F.2d 16, 20 (2d Cir.1969); 4 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1063 (3d ed.2002). The exercise of personal jurisdiction implicates constitutional, not merely statutory, concerns. See Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Considerations relevant to proper venue include not only the party's activities in the forum, but also the location of other parties and their activities. See Stafford, 444 U.S. at 535-37, 100 S.Ct. 774. A party may preserve an objection to personal jurisdiction, but not to venue, by simply refusing to appear in the initial case and asserting a collateral challenge in a subsequent enforcement action. Bauxites, 456 U.S. at 702, 102 S.Ct. 2099; Earle v. McVeigh, 91 U.S. 503, 507, 1 Otto 503, 23 L.Ed. 398 (1875), cited in United States v. County of Cook, 167 F.3d 381, 388 (7th Cir.1999).

AAI Corporation has raised timely objections to both personal jurisdiction and venue, and each will receive the individual analysis that it deserves. In light of its constitutional dimension, the issue of personal jurisdiction will be addressed first. See Leroy v. Great W. United Corp., 443 U.S. 173, 180, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979).

A. Personal Jurisdiction

The authority of the United States courts to bind individuals to judgment is limited by both federal statute and the Due Process Clause of the Fifth Amendment. Pinker, 292 F.3d at 369. Through restrictions on the geographic scope of effective service of process, the legislature may prescribe the persons over whom the court may acquire jurisdiction. Id. But, regardless of congressional directives, the Constitution provides the ultimate limitation on the reach of a court's authority. Id. Thus, any analysis of personal jurisdiction requires an examination of both statutory and constitutional provisions. Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir.1996).

1. Statutory Provisions

To satisfy the statutory aspect of personal jurisdiction, service of process on the party must be authorized under governing law. Pinker, 292 F.3d at 369; DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir.1981). The applicable law in this case is ERISA, which provides for nationwide service of process:

Where an action [for benefits under ERISA] is brought in a district court of the United States ... process may be served in any ... district where a defendant resides or may be found.

29 U.S.C. § 1132(e)(2); see also FED. R. CIV. P. 4(k)(1)(D) (providing that service is effective if "authorized by a statute of the United States").⁵ A corporation "resides" in its state of incorporation and is "found" in any district in which it purposefully conducts business. See I.A.M. Nat'l Pension Fund v. Wakefield Indus., Inc., 699 F.2d 1254, 1257-58 (D.C.Cir.1983); In re Fruehauf Trailer Corp., 250 B.R. 168, 200-01 (D.Del.2000). AAI Corporation is incorporated and conducts the majority of its business in Maryland, and thus is amenable to service in that state and subject to this court's jurisdiction under § 1132(e)(2). See Pinker, 292 F.3d at 369.

That AAI Corporation was served pursuant to Pennsylvania rules prior to removal does not affect the federal jurisdictional analysis. Once a case is removed to a district court, state limits on the territorial effectiveness of service no longer govern. See 28 U.S.C. §§ 1447(a), 1448.⁶ The question is not whether state law would have allowed service or whether proper service has actually been made, but whether Congress has authorized service on the person and thereby conferred on the district court the capacity to exercise jurisdiction. See Pinker, 292 F.3d at 369.

Many cases, from this circuit and others, suggest to the contrary that effective service of process is a necessary prerequisite to the exercise of personal jurisdiction.⁷ These statements, most of which appear to be dicta, represent an unwarranted fusion of the concepts of notice and personal jurisdiction. Both are necessary prerequisites to a valid judgment, but they stand on fundamentally different doctrinal bases. See Henderson v. United States, 517 U.S. 654, 671-72, 116 S.Ct. 1638, 134 L.Ed.2d 880 (1996); Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209-10 (10th Cir.2000); see also Harold L. Korn, The Development of Judicial Jurisdiction in the United States: Part I, 65 BROOK. L. REV. 935, 983-99 (1999); James Weinstein, The Federal Common Law Origins of Judicial Jurisdiction: Implications for Modern Doctrine, 90 VA. L. REV. 169, 194-203 (2004). The notice requirement ensures that interested individuals are apprised of the pendency of a lawsuit and have a fair opportunity to decide "whether to appear or default, acquiesce or contest." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950); see also Henderson, 517 U.S. at 671-72, 116 S.Ct. 1638; Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 795-97, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983). In contrast, personal jurisdiction limitations guarantee that individuals — regardless of whether they had notice of the pendency of an action — will not be compelled to appear in a court with which they have no connection. See Bauxites, 456 U.S. at 702, 102 S.Ct. 2099; Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154. Merely because the two concepts flow from similar sources — service of process...