Lead Opinion
These appeals present what appear to be two issues of first impression in this Circuit. First, whether a defendant who repeatedly moves to dismiss for lack of personal jurisdiction, but then withdraws from the litigation after those motions are denied, is permitted to attack an ensuing default judgment on the grounds that it is void for lack of personal jurisdiction. Second, whether a federal district court may exercise personal jurisdiction over an out-of-state firearms dealer under the New York long-arm statute, N.Y. C.P.L.R. § 302, based solely on the fact that the dealer’s unlawful sales practices have facilitated the trafficking of guns by third parties to New York State, where those guns contribute to a public nuisance. Because we resolve the first question in the negative, we do not reach the second.
The City of New York (the “City”) instituted this lawsuit in May 2006 against fifteen federally licensed retail firearms dealers operating from stores in Georgia, Ohio, Pennsylvania, South Carolina, and Virginia. The defendants-appellants, Mickalis Pawn Shop, LLC (“Mickalis Pawn”) and Adventure Outdoors, Inc. (“Adventure Outdoors”) are among those dealers.
After additional rounds of motion practice and varying amounts of discovery, the two defendants each moved to withdraw their respective counsel and announced to the district court that they would proceed no further in the litigation. The district court entered a default against each of them. Eventually, after proceedings before a magistrate judge, the court entered a default judgment and ordered perma
Both defendants now appeal from the default judgment on various grounds.
We conclude that the district court did not abuse its discretion in entering a default and issuing a default judgment against each of the defendants. We also conclude that the defendants forfeited the defense of lack of personal jurisdiction and any other defenses they may have had by willfully abandoning their defense of the litigation. The default judgment against them is therefore not void. However, because we agree with the defendants that the injunctions issued by the district court violate the requirements of Rule 65(d), we vacate the injunctions and remand to the district court for it to craft appropriate injunctive relief.
BACKGROUND
The facts underlying this litigation are discussed in detail in two lengthy opinions by the district court. See City of New York v. A-1 Jewelry & Pawn, Inc. (“A-1 Jewelry I”),
The Defendants-Appellants
Mickalis Pawn is a limited liability company formed under South Carolina law. It operates a single retail store — a pawn shop in Summerville, South Carolina — where it sells, among other things, firearms. At all relevant times, Mickalis Pawn’s revenue has been derived entirely from sales made at its Summerville store to customers who visit the store in person. As of 2006, Mickalis Pawn did not offer anything for sale in New York, nor had it ever done so. It has never sold any merchandise by mail order, by telephone, or by means of the Internet.
Adventure Outdoors is a Georgia corporation with its principal place of business in Georgia. It operates a single retail store, located in Smyrna, Georgia, from which it sells sporting goods, hunting and fishing equipment, camping supplies, and firearms and ammunition. Like Mickalis Pawn, its revenue is derived from sales made at its retail store to customers who visit the store in person. It does not ship its goods out of state, nor does it sell firearms at gun shows.
Adventure Outdoors has, however, maintained three websites through which customers may initiate the process of purchasing firearms from its store. These websites allow a customer from Georgia or elsewhere in the United States to place a deposit on a firearm through a wholesale distributor and direct the distributor to ship the firearm to Adventure Outdoors. The customer must then visit Adventure Outdoors’ store in person to complete the sale and retrieve the firearm. Adventure Outdoors concedes that this system would
Proceedings in the District Court
On May 15, 2006, the City brought suit against fifteen federally licensed retail firearms dealers located in states other than New York, including Mickalis Pawn and Adventure Outdoors, alleging that they engaged in unlawful sales practices that contribute to a public nuisance in the City.
On August 8, 2006, Mickalis Pawn, Adventure Outdoors, and four other defendant firearms dealers each timely moved to dismiss the complaint as to it for lack of personal jurisdiction. The moving defendants asserted that the requirements of the New York long-arm statute, C.P.L.R. § 302, were not satisfied; that the defendants lacked the constitutionally requisite
On August 15, 2007, following jurisdictional discovery, the district court denied the motions to dismiss in what it characterized as a “case of first impression” applying the New York long-arm statute to public-nuisance suits against out-of-state firearms dealers. A-1 Jewelry I,
On August 29, 2007, the City filed an amended complaint. The City substituted, for the five claims in its original complaint, two claims under N.Y. Penal Law §§ 240.45 and 400.05 — one each for public and statutory nuisance, respectively — and sought injunctive relief only.
Adventure Outdoors and Mickalis Pawn, among others, again moved to dismiss based on, inter alia, lack of personal jurisdiction.
Mickalis Pawn’s Default
On February 13, 2008, Larry Mickalis, the principal of Mickalis Pawn, was indicted by a federal grand jury in South Carolina for knowingly selling a firearm and ammunition to a convicted felon in violation of 18 U.S.C. §§ 922(d)(1) and 924(a)(2).
About one week later, on March 12, 2008, each of the three law firms representing Mickalis Pawn simultaneously moved to withdraw as counsel, citing the indictment of Mr. Mickalis and his decision to concentrate his financial resources on defending himself in the criminal action. Counsel asserted in their withdrawal motions that Mickalis Pawn would continue to assert its defense of lack of personal jurisdiction and did not intend to waive that defense. The City opposed the motions, arguing that such withdrawal of counsel would frustrate discovery and substantially delay the proceedings.
On March 18, the district court (Cheryl L. Poliak, Magistrate Judge) held a status conference to discuss, among other things, the motions of counsel to withdraw. At the conference, counsel for Mickalis Pawn confirmed that their client consented to their withdrawal. Counsel also announced, however, that “Mickalis Pawn has decided that it does not intend to further defend this case.” Transcript of Proceedings at 14 (Mar. 18, 2008). Counsel advised the court that Mr. Mickalis, acting on behalf of Mickalis Pawn, “understands that [default] is an obvious consequence of his decision to no longer defend” the lawsuit. Id. When the City argued that Mickalis Pawn’s failure to defend would lead to entry of default judgment and the imposition of injunctive relief, one of Mickalis Pawn’s attorneys stated that his client “does understand the consequences.” Id. at 15.
At the suggestion of counsel, Mr. Mickalis then joined the conference before the magistrate judge by telephone. Mr. Mickalis confirmed to the court that Mickalis Pawn had no intention of retaining substitute counsel or of further participating in the litigation. Magistrate Judge Poliak warned Mr. Mickalis: “[I]f you do not have an attorney to represent Mickalis Pawn, then the City is going to move for a default and because corporations cannot appear in court without counsel, a default will enter.... [T]hat means that the injunctive relief that the City has requested will in all likelihood be granted.” Id. at 17. Mr. Mickalis indicated that he understood this, but nonetheless reaffirmed his desire to withdraw from the case. When Magistrate Judge Poliak suggested that she might not permit all three of Mickalis Pawn’s law firms to withdraw, one of Mickalis Pawn’s attorneys protested that “[t]here’s not a whole lot to defend if [Mr. Mickalis is] prepared to go into default.” Id. at 18.
Although counsel for Mickalis Pawn conceded that default was the “likely” result of its decision to withdraw, id. at 22, Mickalis Pawn did not expressly consent to entry of a default. But in a March 18 letter to the court, counsel for Mickalis Pawn confirmed that they had advised their client “that if the motions to withdraw as counsel ... are granted[,] th[e] defendant will be without counsel” and “the Court will enter default judgment against it.” Letter to Magistrate Judge Poliak from Renzulli Law Firm, LLP (Mar. 18, 2008).
On March 27, 2008, the magistrate judge granted the pending motions for withdrawal of counsel. The City then formally requested that a default be entered against Mickalis Pawn pursuant to Federal Rule of Civil Procedure 55(a). The Clerk of Court entered the default on April 2, 2008.
Two months later, in June 2008, the City moved for a default judgment against Mickalis Pawn pursuant to Federal Rule of Civil Procedure 55(b)(2). Mickalis Pawn, putatively representing itself pro se, opposed the motion by submitting a list of objections. After reviewing both parties’ submissions, the magistrate judge issued a report and recommendation suggesting that the City’s motion be granted and that the City’s proposed findings of fact and conclusions of law be adopted in their entirety. On September 19, 2008, the district court (Jack B. Weinstein, Judge) adopted the magistrate judge’s recommendation and issued the City’s proposed findings of fact and conclusions of law as its own. See City of New York v. A-1 Jewelry & Pawn, Inc., No. 06-CV-2233,
Default judgment against Mickalis Pawn was entered on March 24, 2009. The district court also entered a permanent injunction against Mickalis Pawn. See City of New York v. Mickalis Pawn Shop, LLC (“Mickalis Pawn Inj.”), No. 06-CV-2233,
Adventure Outdoors’ Default
Unlike Mickalis Pawn, Adventure Outdoors continued to participate in the lawsuit through the close of discovery. On April 29, 2008, all other defendants having either settled or defaulted, Adventure Outdoors moved for summary judgment seeking dismissal based on, inter alia, lack of personal jurisdiction and preemption by the Protection of Lawful Commerce in Arms Act, 15 U.S.C. §§ 7901-7903.
While Adventure Outdoors’ summary-judgment motion was pending, the district court issued an order sua sponte directing the parties to make submissions as to whether they were entitled to a trial by jury. Following oral argument held on May 21, the district court decided that neither party was so entitled. The court announced that it would sit as the finder of fact with the assistance of an advisory jury, as provided by Federal Rule of Civil Procedure 39(c). The following day, the district court denied Adventure Outdoors’ motion for summary judgment. See City of New York v. A-1 Jewelry & Pawn, Inc. (“A-1 Jewelry III”),
Counsel advised the court that Adventure Outdoors nonetheless intended “to appeal from any default judgment that may be entered against it.” Id. Attached to the motion was a declaration by Jay Wallace, the president of Adventure Outdoors, attesting that he had been “informed ... of the consequences of not participating in the bench trial” and affirming that Adventure Outdoors consented to counsel’s withdrawal. Aff. of Jay Wallace ¶ 3, Ex. 1 to Renzulli Withdrawal Motion.
The district court, upon hearing argument from the parties, denied Adventure Outdoors’ motion to withdraw its counsel in light of the fact that trial was already underway. The court warned that if Adventure Outdoors “refuse[d] to go forward with the case,” that course of conduct would “constitute a default” under Federal Rule of Civil Procedure 55. Transcript of Proceedings at 7 (June 2, 2008). When the district court asked whether the defendant “refuse[d] to go forward with [jury] selection and further proceedings” in the matter, counsel responded that Adventure Outdoors indeed so refused. Id. at 10-12. Counsel declined, however, to consent expressly to entry of default or default judgment.
In light of Adventure Outdoors’ refusal to proceed, the City consented to dismissal of the advisory jury. The district court then noted Adventure Outdoors’ default on the record, conditionally granted the City’s motion for default judgment, and directed that all further proceedings in the case be held before the magistrate judge.
Thereafter, the City and Adventure Outdoors each made submissions to the magistrate judge regarding the City’s motion for default judgment. On January 27, 2009, the magistrate judge issued her report and recommendation to the effect that a default judgment be granted and that the City’s proposed findings of fact and conclusions of law be adopted. See City of New York v. Adventure Outdoors, Inc. (“A-1 Jewelry IV”),
On March 24, 2009, the district court adopted the magistrate judge’s report and recommendation in its entirety and entered a default judgment against Adventure Outdoors, simultaneously with the entry of default judgment against Mickalis Pawn. Id. at 203. The district court also issued a permanent injunction against Adventure Outdoors with terms substantially identical to those of the injunction entered against Mickalis Pawn. See City of New York v. Adventure Outdoors, Inc. (“Adventure Outdoors Inj.”), No. 06-CV-2233,
The defendants appeal.
DISCUSSION
I. Subject-Matter Jurisdiction
Following oral argument, we solicited supplemental briefing from the parties to address the effect of the Protection of Lawful Commerce in Arms Act (“PLCAA”), 15 U.S.C. § 7901 et seq., on these appeals.
The PLCAA, enacted by Congress in 2005, provides in pertinent part that “[a] qualified civil liability action may not be brought in any Federal or State court.” 15 U.S.C. § 7902(a). A “qualified civil liability action” is defined as “a civil action or proceeding ... brought by any person against a manufacturer or seller of a qualified product
We previously had occasion to consider this provision, which has come to be known as the “predicate exception,” in City of New York v. Beretta U.S.A. Corp.,
In the instant appeals, we solicited supplemental briefing from the parties on two questions. First, we asked them to address whether the PLCAA deprives a federal court of subject-matter jurisdiction over a “qualified civil liability action,” or if instead the PLCAA provides a complete defense against such an action. Second, we asked the parties to address whether the predicate exception applies only when the plaintiff pleads, as its cause of action, the violation of “a State or Federal statute applicable to the sale or marketing of the product,” or if, instead, supporting factual allegations concerning a statutory violation may satisfy the predicate exception even where the plaintiffs cause of action is not directly premised on the identified statutory violation.
Federal courts have an independent obligation to inquire into the existence of subject-matter jurisdiction. Arbaugh v. Y & H Corp.,
Whether a court possesses subject-matter jurisdiction, and whether a plaintiff can state a claim for relief, “are two questions that are easily, and often, confused.” Carlson v. Principal Fin. Grp.,
Because “[branding a rule as going to a court’s subject-matter jurisdiction alters the normal operation of our adversarial system,” Henderson ex rel. Henderson v. Shinseki, — U.S. -,
If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue. But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.
Arbaugh,
To be sure, the Supreme Court has noted since Arbaugh that “Congress ... need not use magic words in order to speak clearly,” Henderson,
We conclude that the PLCAA’s bar on “qualified civil liability action[s],” 15 U.S.C. § 7902(a), does not deprive courts of subject-matter jurisdiction. The language of the PLCAA “ ‘does not speak in jurisdictional terms or refer in any way to the jurisdiction of the [district courts].’ ” Henderson,
Having determined that we possess subject-matter jurisdiction, we would, in the ordinary course, proceed to consider whether the City’s lawsuit is nonetheless barred by the PLCAA. In this case, however, the defendants did not fully litigate their defenses under the PLCAA, but instead withdrew from the litigation, defaulted, and suffered a default judgment to be entered against them. We accordingly inquire not whether the City’s lawsuit was barred by the PLCAA, but rather, whether the district court abused its discretion in entering a default judgment against the defendants.
We have considered the parties’ other arguments concerning lack of subject-matter jurisdiction and conclude that they are without merit.
II. Entry of Default Judgment
The procedural posture of these appeals is in some respects unusual. Adventure Outdoors and Mickalis Pawn did not, for example, move before the district court to vacate or set aside the default judgment, as is permitted by Federal Rules of Civil Procedure 55(c) and 60(b).
“Federal Rule of Civil Procedure 55 is the basic procedure to be followed when there is a default in the course of litigation.” Vt. Teddy Bear Co. v. 1-800 Beargram Co.,
The first step, entry of a default, formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff. The entry of default is governed by Rule 55(a), which provides:
When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.
Fed.R.Civ.P. 55(a). Although Rule 55(a) contemplates that entry of default is a ministerial step to be performed by the clerk of court, see Pinaud v. Cnty. of Suffolk,
The second step, entry of a default judgment, converts the defendant’s admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted by Rule 54(c).
Because we have “a strong preference for resolving disputes on the merits,” and because “a default judgment is the most severe sanction which the court may apply,” Green,
A. Entry of Default Under Rule 55(a)
“In an appeal from a default judgment, the court may review both the interlocutory entry of default and the final [default] judgment.” Enron Oil Corp.,
The defendants argue that the district court abused its discretion by treating their withdrawal from the litigation as a basis for entering default against them. They assert that because over the course of several years they appeared in the litigation, repeatedly moved to dismiss, eventually filed an answer, and vigorously defended themselves in discovery, they did not “fail[] to plead or otherwise defend” within the meaning of Rule 55(a). They argue that Rule 55(a) therefore did not apply, and that the City was required to proceed to trial and prove its case, including the existence of personal jurisdiction over the defendants, by a preponderance of the evidence.
We disagree. To be sure, the “typical Rule 55 case [is one] in which a default has entered because a defendant failed to file a timely answer.” Brock v. Unique Racquetball & Health Clubs, Inc.,
We have embraced a broad understanding of the phrase “otherwise defend.” For example, in Brock, we concluded that a default was properly entered when the defendant, having demonstrated a lack of diligence during pre-trial proceedings, sought and received a mid-trial adjournment, but then failed to appear when the trial resumed. Id. at 63-65. We observed that “a trial judge, responsible for the orderly and expeditious conduct of litigation, must have broad latitude to impose the sanction of default for non-attendance occurring after a trial has begun.” Id. at 64.
Similarly, in Au Bon Pain Corp. v. Artect, Inc.,
And in Eagle Associates v. Bank of Montreal,
We also find persuasive the Third Circuit’s analysis in Hoxworth v. Blinder, Robinson & Co.,
The Court of Appeals affirmed. It decided that the plain meaning of the phrase “otherwise defend” was broad enough to support entry of default even after a defendant had filed an answer asserting affirmative defenses. Id. Relying upon our decisions in Brock and Au Bon Pain, as well as similar decisions in three other circuits, the Third Circuit concluded that “the district court’s power to maintain an orderly docket justifies the entry of a default against a party who fails to appear at trial” or to “meet other required time schedules.” Id. at 918.
We similarly conclude that the district court did not abuse its discretion in entering a Rule 55(a) default against either Adventure Outdoors or Mickalis Pawn.
First, each defendant affirmatively signaled to the district court its intention to cease participating in its own defense, even after the defendant was clearly warned that a default would result. The defendants’ refusal to proceed to trial places this case squarely within our rulings in Brock and Au Bon Pain.
Second, in the case of Mickalis Pawn, a Rule 55(a) default was also proper under Eagle Associates and like cases insofar as this defendant withdrew its counsel without retaining a substitute. See Lattanzio v. COMTA,
Finally, both defendants clearly indicated that they were aware that their conduct likely would result in a default.
In arguing that the district court nonetheless erred by entering a default, both
B. Entry of Default Judgment Under Rule 55(b)(2)
Our review of whether the default judgment was properly granted by the district court is for abuse of discretion. See Swarna,
The defendants argue that the district court abused its discretion in entering the default judgment for three principal reasons. First, Mickalis Pawn argues that the Rule 55 proceedings were beset by procedural irregularities. Second, both defendants argue that the district court erred by failing to make specific factual findings by a preponderance of the evidence that personal jurisdiction existed. Third, in response to our request for supplemental briefing, they assert that the plaintiffs claims are barred by the PLCAA.
1. Procedural Irregularities and Rule 55(b)(2). “A default judgment may be considered void if the judgment has been entered in a manner inconsistent with due process of law.” State St. Bank & Trust Co.,
Mickalis Pawn contends that the Rule 55(b)(2) proceedings were conducted in a manner violative of the Due Process Clause because, it says, the default judgment against it resulted from a “series of ex parte acts.” Opening Br. of Mickalis Pawn at 8. It observes that, after its three law firms collectively withdrew from the case in March 2008, it no longer was able to receive automatic notification through the electronic case filing system of docket activity in the case. Mickalis Pawn contends that all such filings by the district court or by the City made after March 2008 were “ex parte ” to the extent that Mickalis Pawn was not simultaneously sent a copy of those filings by mail, as the district court had previously ordered must be done.
But Mickalis Pawn does not assert that it was deprived of actual notice as to any of these filings. To the contrary, the record reflects that both Mickalis Pawn and Adventure Outdoors not only had notice of, but actively participated in, each stage of the Rule 55 proceedings before the district court. For example, they each filed objections to the City’s proposed findings of fact and to the magistrate judge’s successive reports recommending that the City’s motions for default judgment be granted.
2. Personal Jurisdiction and Rule 55(b)(2). The defendants argue that the district court erred by failing to make findings, based on a preponderance of the evidence, that the court had personal jurisdiction over each defendant. Both defendants contend that such findings are a procedural prerequisite to entering default judgment under Rule 55(b)(2). And Mickalis Pawn argues that it was “a per se abuse of discretion” not to have done so. Reply Br. of Mickalis Pawn at 24-25. The defendants also assert that they did not intend to abandon their objections to the district court’s exercise of personal jurisdiction upon their default. They point out that they continued to press their jurisdictional defense in their submissions to the district court and magistrate judge throughout the Rule 55 proceedings.
“[B]efore a court grants a motion for default judgment, it may first assure itself that it has personal jurisdiction over the defendant.” Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp.,
Personal jurisdiction, unlike subject-matter jurisdiction, can, however, be purposely waived or inadvertently forfeited. “Because the requirement of personal jurisdiction represents first of all an individual right, it can, like other such rights, be waived.” Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee,
“[I]n determining whether waiver or forfeiture of objections to personal jurisdiction has occurred, ‘we consider all of the relevant circumstances.’ ” Mattel, Inc. v. Barbie-Club.com,
In addition, other circuits have held that a defendant who unsuccessfully raises a jurisdictional objection at the outset, but later creates the impression that he has abandoned it, may not seek to renew his jurisdictional argument on appeal following an adverse determination on the merits. See Rice v. Nova Biomed. Corp.,
We find the analysis of the Seventh Circuit in e360 Insight v. Spamhaus Project,
The defendant timely moved to vacate the judgment pursuant to Rule 60(b). The motion was denied. The defendant then appealed, arguing that the district court had acted improperly by not inquiring into the existence of personal jurisdiction prior to entering judgment. Id. at 598.
The Seventh Circuit rejected the defendant’s argument and affirmed the entry of a default judgment. It “s[aw] no reason to require the district court to raise sua sponte affirmative defenses, which may, of course, be waived or forfeited, on behalf of an appearing party who elects not to pur
We perceive no error in the district court’s conclusion that [the defendant] Spamhaus intentionally elected to abandon its available defenses when it withdrew those defenses from consideration by the court and indicated that it was prepared to accept a default. Spamhaus’ then-counsel confirmed that it wished to “participate in the defense no further” and “do absolutely nothing.” It was not erroneous to treat this kind of voluntary abandonment of defenses, raised but not pursued, as a waiver. Based on its conduct before the court, we have no doubt that Spamhaus understood the defenses available to it, consistently asserted those defenses in the early stages of those proceedings and then affirmatively elected to abandon those defenses before the district court. We see no reason to allow Spamhaus to escape the consequences of that decision in the later stages of this proceeding.
Id. at 600 (citations omitted). The court concluded that “[b]eeause the jurisdictional challenges Spamhaus now seeks to raise have been waived and neither the district court nor this court has the duty to resurrect them, the district court did not abuse its discretion in entering judgment of liability nor in denying the motion for Rule 60(b) relief.” Id. at 602.
Similarly, in this case, Adventure Outdoors and Mickalis Pawn initially litigated their jurisdictional defense, but later changed course, announcing to the district court that they would cease defending even though a default would likely result. Spamhaus Project is persuasive authority for the proposition that a defendant forfeits its jurisdictional defense if it appears before a district court to press that defense but then willfully withdraws from the litigation and defaults, even after being warned of the consequences of doing so. We, like the Seventh Circuit, “see no reason to require the district court to raise sua sponte” the defense of lack of personal jurisdiction on behalf of parties who have “elect[ed] not to pursue those defenses for [themselves].”
Arguing otherwise, the defendants rely on D.H. Blair & Co. v. Gottdiener,
The defendants argue by analogy that the district court should not have granted the City’s motion for default judgment here without first determining that sufficient evidence existed in the record to sustain a finding of personal jurisdiction by a preponderance of the evidence. The analogy does not hold. D.H. Blair concerned a unique, quasi-appellate proceeding: a petition to confirm or vacate an arbitration award pursuant to the Federal Arbitration Act. See 9 U.S.C. § 9 (permitting parties to an arbitration to “apply to the court ... for an order confirming the award”); id. § 10(a) (permitting parties to petition for vacatur of an arbitral award). In considering a petition to confirm or vacate an arbitral award, a district court typically has at its disposal the full evidentiary record from the underlying arbitration. We concluded in D.H. Blair that “default judgments in confirmation/vacatur proceedings are generally inappropriate,” D.H. Blair,
Adventure Outdoors also asserts that our decision in Brock demonstrates that a plaintiff seeking a default judgment must prove its case — including the existence of personal jurisdiction — by a preponderance of the evidence, even after a defendant has defaulted. In Brock, the defendants failed to re-appear at trial following a two-week adjournment. The district court entered a default against the defendants, but then opted to complete the trial record by taking testimony from the plaintiffs witnesses. The court eventually entered a default judgment accompanied by findings of fact and conclusions of law. On appeal, we vacated and remanded for further proceedings. See Brock,
Although Brock did result in the vacatur of a default judgment on appeal, it does not support Adventure Outdoors’ argument. There, we remanded not for the district court to adjudicate the merits of the defendants’ defenses, but to permit the defendants to be heard concerning the “nature and details of the judgment to be entered in light of th[e] trial record” and the scope of the relief requested by the plaintiff. Id. at 65. Although it is true that the district court in Brock had opted to continue the trial proceedings following the defendants’ default, nothing in our decision on appeal ratified the district court’s decision in that respect.
It is an “ancient common law axiom” that a defendant who defaults thereby admits all “well-pleaded” factual allegations contained in the complaint. Vt. Teddy Bear Co.,
We recognize that there is some uncertainty whether the City’s claims were legally sufficient, in light of their possible preemption by the PLCAA. But we need not decide whether the district court abused its discretion in entering a default judgment, because the defendants have forfeited this defense on appeal. Mickalis Pawn did not address the PLCAA in its opening brief, and Adventure Outdoors raised it only by way of footnote. See Opening Br. of Adventure Outdoors at 32 n. 12. We ordinarily deem an argument to be forfeited where it has not been “sufficiently argued in the briefs,” Norton v. Sam’s Club,
We do not consider an argument mentioned only in a footnote to be adequately raised or preserved for appellate review. The enormous volume of briefs and arguments pressed on each panel of this court at every sitting precludes our scouring through footnotes in search of some possibly meritorious point that counsel did not consider of sufficient importance to include as part of the argument.
United States v. Restrepo,
To be sure, the doctrine of forfeiture is prudential and may be disregarded in our discretion. See In re Nortel Networks Corp. Sec. Litig.,
We have considered the remainder of defendants’ arguments concerning the City’s purported failure to plead a cause of action sufficient to support entry of default judgment, and we conclude that those arguments are without merit.
III. Voidness for Lack of Personal Jurisdiction
The defendants contend that even if the district court did not commit any procedural error in its entry of default judgment during the Rule 55(b)(2) proceedings, the default judgment is nonetheless “void” because the district court lacked personal jurisdiction ab initio. The defendants assert that both a correct application of the New York long-arm statute, C.P.L.R. § 302(a)(3)(ii), and principles of constitutional due process under the Fifth and Fourteenth Amendments require us to hold that personal jurisdiction was absent here, even as a prima facie matter, and that the district court’s repeated determinations to the contrary were in error. Because we conclude that the defendants forfeited their jurisdictional defense, and therefore the district court’s assertion of personal jurisdiction over them was proper, we reject the defendants’ voidness argument.
A. Governing Law
A default judgment is “void” if it is rendered by a court that lacks jurisdiction over the parties. See “R ” Best Produce,
Had the defendants asserted their voidness argument before the district court in the first instance, they might have done so pursuant to Rule 60(b)(4). That rule provides: “On motion and just terms, the court may relieve a party ... from a final judgment ... [if] the judgment is void.” Fed.R. Civ. 60(b)(4); see “R ” Best Produce,
“A judgment is void under Rule 60(b)(4) of the Federal Rules of Civil Procedure ... ‘if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law.’ ” Grace,
B. Analysis
The procedural history of this case is dispositive of our voidness analysis. The district court may have erred in its determination that the City had made a prima facie showing of personal jurisdiction over each of the defendants, for the reasons discussed in Judge Wesley’s concurring opinion. But we have already concluded that by appearing, litigating, and then intentionally withdrawing from the proceedings, the defendants forfeited their jurisdictional defense. As a result, the defendants submitted to the jurisdiction of the district court. The default judgment that the court rendered was thus supported by personal jurisdiction and is not void.
The defendants appear to assume that a default judgment is void for lack of personal jurisdiction even where a defendant’s litigation tactics before the district court were inconsistent with the preservation of its jurisdictional defense. The defendants also appear to rely on the well-established principle that a defendant who does not answer a complaint in the first instance, and later suffers a default judgment to be entered against it, may subsequently challenge the default judgment as void for lack of personal jurisdiction.
The defendants overlook the critical distinction between defendants who “appear” in court — even if only to challenge the court’s jurisdiction — and those who do not. See Sinoying Logistics,
But “when a defendant appears and challenges jurisdiction,” we interpret that to constitute “it[s] agreefment] to be bound by the court’s determination on the jurisdictional issue.” Transaero,
Both Adventure Outdoors and Mickalis Pawn were “appearing” defendants. Both retained counsel who filed notices of appearance on their behalf. Both challenged the City’s pleadings with two rounds of Rule 12(b) motions. Adventure Outdoors continued to litigate the case through sum
We recognize that even where a defense has been forfeited, appellate review is not necessarily foreclosed. “[T]his Court has discretion to decide the merits of a forfeited claim or defense where the issue is purely legal and there is no need for additional fact-finding or where consideration of this issue is necessary to avoid manifest injustice.” Patterson v. Balsámico,
Our decision not to excuse the forfeiture is also informed by our respect for the limits of our own jurisdiction — limits that the defendants sought to evade through their strategic decisions to default.
The core of our appellate jurisdiction is to review “final decisions” of the district courts. See 28 U.S.C. § 1291. With limited exceptions, see generally Myers v. Hertz Corp.,
In including a requirement of finality in defining the scope of our jurisdiction under 28 U.S.C. § 1291, Congress “ ‘expressed] a preference that some erroneous trial court rulings go uncorrected until the appeal of a final judgment, rather than having litigation punctuated by piecemeal appellate review of trial court decisions which do not terminate the litigation.”’ In re World Trade Ctr. Disaster Site Litig.,
We cannot permit the defendants to short-circuit the normal litigation process by withdrawing, inducing a default judgment to be entered against them, and then obtaining de facto interlocutory review over otherwise non-appealable decisions. We have observed, with respect to similar strategic conduct by plaintiffs:
[I]f a litigant could refuse to proceed whenever a trial judge ruled against him, wait for the court to enter a dismissal for failure to prosecute, and then obtain review of the judge’s interlocutory decision, the policy against piecemeal litigation and review would be severely weakened. This procedural technique would in effect provide a means to avoid the finality rule embodied in 28 U.S.C. § 1291.
Moreover, if a party who was disappointed by an interlocutory ruling could obtain an appeal of that ruling by simply refusing to prosecute his or her lawsuit, adherence to the merger rule[25] would reward that party for dilatory and bad faith tactics. Such a result would conflict with the purpose of a Rule 41(b) dismissal for failure to prosecute, which is to penalize dilatoriness and harassment of defendants.
Shannon v. Gen. Elec. Co.,
The same concerns arise here. To overlook the defendants’ forfeiture would be to “permit[ ] ... an end-run around the final judgment rule.”
We also decline to overlook the defendants’ forfeiture based on their assertion that they suffered grave financial hardship by being forced to defend a lawsuit in New York. The defendants appear to contend
We are not without sympathy for these sentiments, nor do we necessarily disagree with Judge Wesley’s conclusion that the district court erred in its jurisdictional analysis. But the Supreme Court has made clear that “the possibility that a ruling may be erroneous and may impose additional litigation expense” is not a sufficient basis for affording appellate review over interlocutory decisions. Richardson-Merrell,
IV. The Injunctions
We review the district court’s issuance of a permanent injunction for abuse of discretion. See Third Church of Christ, Scientist v. City of New York,
A. The Terms of the Injunctions
Simultaneously with entry of a default judgment, the district court imposed separate, but substantively identical, permanent injunctions to “abate the public nuisanee” caused by Adventure Outdoors and Mickalis Pawn. Mickalis Pawn Inj.,
Paragraph 3 of each injunction provides, with respect to the duties of the Special Master:
It will be the responsibility of the Special Master to ensure, to the fullest extent practicable, that from the effective date of this [injunction] forward, firearms sales by [the defendant] are made in full conformity with applicable laws pertaining to firearms and that [the defendant] adopts appropriate prophylactic measures to prevent violation of the firearms laws.
Id. ¶ 3.
[the defendant] shall adopt those practices that in the opinion of the Special Master serve to prevent in whole or in part[28] the illegal sale of firearms. [The defendant] shall also adopt those prophylactic practices that in the opinion of the Special Master will serve to prevent the movement of guns into the illegal market.
Id. ¶ 7 (footnote added).
The injunctions contemplate several ways by which the defendants may become subject to penalties. First, any partic
If the defendants fully comply with the foregoing terms, each injunction terminates automatically after three years. Id. ¶ 17. Any violation of the injunction, however — or any “violation of an applicable firearms law or regulation” certified to have occurred by the Special Master— “will re-commence the running of the three-year Compliance Period from the date of the violation.” Id. ¶ 18.
B. Governing Law
The defendants did not, by defaulting, forfeit the right to challenge the lawfulness of the injunctions. See Finkel,
In appealing the injunctions entered against them, the defendants principally argue that the injunctions are unconstitutionally vague and that they violate the requirements of Federal Rule of Civil Procedure 65(d). We review de novo whether the injunctions comply with Rule 65(d). See Garcia v. Yonkers Sch. Dist.,
Rule 65(d) provides that “[e]very order granting an injunction ... must: (A) state the reasons why it issued; (B) state its terms specifically; and (C) describe in reasonable detail — and not by referring to the complaint or other document — the act or acts restrained or required.” Fed. R. Civ.P. 65(d)(1). We have interpreted Rule 65(d) as requiring that “an injunction ... be specific and definite enough to apprise those within its scope of the conduct that is being proscribed.” S.C. Johnson & Son, Inc. v. Clorox Co.,
[T]he specificity provisions of Rule 65(d) are no mere technical requirements. The Rule was designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood. Since an injunctive order prohibits conduct under threat of judicial punishment, basic fairness requires that those enjoined receive explicit notice of precisely what conduct is outlawed.
Schmidt v. Lessard,
Rule 65(d) is said to serve two general purposes: “to prevent uncertainty and confusion on the part of those to whom the injunction is directed,” and to ensure “that the appellate court knows precisely what it is reviewing.” S.C. Johnson & Son,
In addition to complying with Rule 65(d)’s specificity requirements, district courts must take care to ensure that injunctive relief is not overbroad. Although a district court has “a wide range of discretion in framing an injunction in terms it deems reasonable to prevent wrongful conduct,” it is nonetheless “the essence of equity jurisdiction” that a court is only empowered “to grant relief no broader than necessary to cure the effects of the harm caused by the violation.” Forschner Grp., Inc. v. Arrow Trading Co.,
C. Analysis
We agree with the defendants that several portions of the injunctions are insufficiently specific or overbroad, or otherwise violate Rule 65(d).
First, the injunctions impose on defendants an obligation to act “in full conformity with applicable laws pertaining to firearms,” and to “adopt[ ] appropriate prophylactic measures to prevent violation” of those laws, without specifying which laws are “applicable” or identifying the ways in which the defendants must alter their behavior to comply with those laws. Mickalis Pawn Inj.,
The injunctions are also problematic because of the extent to which they vest the Special Master with discretion to determine the terms of the injunctions themselves. Paragraph 7 of each injunction requires the defendants to “adopt those practices that in the opinion of the Special Master serve to prevent in whole or in part the illegal sale of firearms” and “adopt those prophylactic practices that in the opinion of the Special Master will serve to prevent the movement of guns into the illegal market.” Mickalis Pawn Inj.,
“The power of the federal courts to appoint special masters to monitor compliance with their remedial orders is well established,” United States v. Yonkers Bd. of Educ,
Constitutional questions aside, we conclude that, at the very least, the injunctions’ sweeping delegations of power to the Special Master violate Rule 65(d). “A court is required to frame its orders so that those who must obey them will know what the court intends to forbid.” Diapulse Corp. of Am. v. Carba, Ltd., 626 F.2d
Finally, Paragraph 13(iii) of each injunction prohibits certain conduct by reference to the amended complaint. This drafting technique, however efficient, is expressly prohibited by Rule 65(d), which provides that “[e]very order granting an injunction” must “describe in reasonable detail — and not by referring to the complaint or other document — the act or acts restrained or required.” Fed.R.Civ.P. 65(d)(1)(C) (emphasis added).
The City defends the injunctions principally on the basis that “[t]wenty other firearms dealers have entered into negotiated settlement agreements with the City under virtually the same terms.” Opening Br. of City (Adventure Outdoors’ Appeal) at 58; see also Opening Br. of City (Mickalis Pawn’s Appeal) at 57. But there is an obvious difference between settlement agreements, which are voluntary contracts freely negotiated between parties, and injunctions, which are unilateral directives backed by a court’s powers of contempt. Parties may consent to settlement terms that would otherwise, if imposed unilaterally, violate Rule 65(d) or a defendant’s due process rights. See, e.g., SEC v. First Jersey Sec., Inc.,
We have carefully considered the other arguments made by the parties concerning the injunctions and find them to be without merit.
CONCLUSION
For the foregoing reasons, we affirm the entry of default judgment against Mickalis Pawn and Adventure Outdoors, but vacate the injunctions issued against them and remand the matter to the district court for further proceedings.
Notes
. Although there were many defendants in the district court that are not parties to this appeal, for ease of reference we refer to these two defendants-appellants simply as the "defendants.”
. The two defendants' appeals were consolidated for argument on March 11, 2010, before the same panel of this Court.
. Mayor Michael Bloomberg announced the filing of this lawsuit at a press conference held on May 15, 2006. In response to certain allegedly defamatory comments made by the mayor at that press conference, Mickalis Pawn and Adventure Outdoors each brought suit for defamation against the mayor, the City of New York, and others, in South Carolina and Georgia state courts, respectively. Following the City’s unsuccessful attempt to remove each lawsuit to federal court, see Adventure Outdoors, Inc. v. Bloomberg,
The City of New York also brought a separate but related action in December 2006 against twelve other federally licensed retail firearms dealers on similar grounds. See City of New York v. Bob Moates' Sport Shop, Inc., No. 06-CV-6504 (E.D.N.Y.) (complaint filed Dec. 7, 2006). That litigation, which was also before Judge Weinstein, ended in 2008 after all twelve defendants settled or were dismissed. See City of New York v. Bob Moates’ Sport Shop, Inc.,
. In a "straw” purchase, one individual buys a firearm with the purpose of transferring it to another individual who is prohibited from purchasing it himself. See City of New York v. Beretta U.S.A. Corp.,
. Adventure Outdoors and Mickalis Pawn also sought dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). In the alternative, they requested a stay of litigation pending appeal in City of New York v. Beretta U.S.A. Corp.,
. By agreement with the government, Mr. Mickalis ultimately pleaded guilty to a less
. The magistrate judge subsequently amended her report and recommendation on January 27, 2009. See City of New York v. Adventure Outdoors, Inc.,
. Not available on Lexis.
. During the conference, the City raised the question whether Adventure Outdoors would be permitted to appeal from the entry of default judgment. The district court properly declined to consider the issue, explaining that the question was not for it to decide.
. Not available on Lexis.
11. The PLCAA defines the term "qualified product" as "a firearm ..., including any antique firearm ..., or ammunition ..., or a component part of a firearm or ammunition, that has been shipped or transported in interstate or foreign commerce.” 15 U.S.C. § 7903(4).
. Although, in the district court proceedings, various defendants asserted that the PLCAA barred suit against them, see A-1 Jewelry II,
. Subject-matter jurisdiction over this litigation is founded on diversity of citizenship pursuant to 28 U.S.C. § 1332. We note that, although the parties appear to have misapprehended the test for determining the citizenship of a limited-liability company, see Handelsman v. Bedford Vill. Assocs. Ltd. P’ship,
. Rule 55(c) provides that "[t]he court may ... set aside a default judgment under Rule 60(b).” Fed.R.Civ.P. 55(c). Rule 60(b), in turn, identifies six grounds for relief from a final judgment, including mistake or excusable neglect; newly discovered evidence;
. A defaulted defendant may move before the district court to be relieved of its default, and the court "may set aside an entry of default for good cause.” Fed.R.Civ.P. 55(c). Because the entry of default is an "interlocutory act and, as such, a non-final order,” however, "[i]t is therefore not appealable” directly. Enron Oil Corp. v. Diakuhara,
. Rule 54(c) provides that "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c); see Silge v. Merz,
. Rule 55(b)(1) permits entry of judgment by the clerk of court, without involvement of a judge, in circumstances where "the plaintiff’s claim is for a sum certain and the defendant has failed to appear and is not an infant or incompetent person.” Green,
. Adventure Outdoors and Mickalis Pawn note that several leading treatises approve of Bass’s logic. For example, Wright & Miller, following Bass, counsel that once a defendant has "participated throughout the pretrial process and has filed a responsive pleading,” any failure by the defendant to appear thereafter should not result in a concession of liability, but rather, “the court should require plaintiff to present evidence supporting liability ... and a judgment should be entered in plaintiff’s favor only if the evidence supports it.” 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2682, at 18 (3d ed. 1998). Likewise, Moore’s Federal Practice, identifying a circuit split concerning whether a defendant’s failure to defend after the pleadings stage can be grounds for a Rule 55(a) default, concludes that "[t]he better view is that Rule 55(a)'s 'otherwise defend' language may not be extended to justify a default once there has been an initial responsive pleading or an initial action that constitutes a defense.” 10-55 James Wm. Moore et al., Moore’s Federal Practice § 55.11[2][b] [iii]; see also Am.Jur. 2d Judgments § 263. However, these authorities do not reflect the law of this Circuit by which we are bound.
The defendants also rely on a dictum from our more recent decision in D.H. Blair & Co. v. Gottdiener,
. Adventure Outdoors filed its own proposed findings of fact and conclusions of law in opposition to those submitted by the City. The magistrate judge considered Adventure Outdoors' submissions in preparing her report and recommendation. See A-1 Jewelry IV,
. We also reject Mickalis Pawn’s contention that the proceedings were procedural!/ improper because the City, after having indicated to Mickalis Pawn that it would seek a default judgment under Rule 55(b)(2), instead first sought entry of default under Rule 55(a). Because Rule 55 contemplates a "two-step process” beginning with entry of default under Rule 55(a), Green,
. The defendants attempt to distinguish Spamhaus Project on two bases. First, Adventure Outdoors argues that default judgments are not disfavored in the Seventh Circuit, as they are here, citing Pretzel & Stouffer, Chartered v. Imperial Adjusters, Inc.,
Second, the defendants point out that in Spamhaus Project, the defendant withdrew its answer before defaulting, whereas in the instant case, neither defendant withdrew its answer or had it stricken by the district court. Again, nothing in Spamhaus Project suggests that the ministerial step of withdrawing the answer was relevant to the court’s finding of forfeiture. Neither does anything in our own precedent suggest that a district court must "strike" a defendant’s answer before declaring that defendant to be in default. Cf., e.g., Cotton, 4 F.3d at 178-79; Brock,
. Although the parties do not advert to it, we have also reviewed our decision in Credit Lyonnais Securities (USA), Inc. v. Alcantara,
The defendants' appearance and withdrawal from the proceedings in this case, by contrast, forfeited their defense. Through that
. Most of our sister circuits appear to have held expressly that a district court may not enter a default judgment unless the plaintiff's complaint states a valid facial claim for relief. See, e.g., Conetta v. Nat’l Hair Care Ctrs., Inc.,
. Some of the parties’ submissions on appeal assume that our review of the defendants’ challenge to the default judgment is governed by a three-factor balancing test. To be sure, district and appellate courts considering whether to grant relief from a default judgment under Rule 60(b) ordinarily consider three criteria: " '(1) whether the default was willful, (2) whether the defendant demonstrates the existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting party prejudice.'” Green,
25. The "merger rule” holds that "[w]hen a district court enters a final judgment in a case, interlocutory orders rendered in the case ... merge with the judgment,” thereby rendering them amenable to appellate review. Shannon,
. Mickalis Pawn's default also prejudiced the City’s ability to obtain further discovery related to personal jurisdiction. Cf. Ins. Corp. of Ireland,
. The injunctions specify certain methods to be used in monitoring the defendants’ compliance, including in-store observation, videotape surveillance, records monitoring, “random and repeated integrity testing,” inventory inspections, and instructional training for the defendants’ employees. Mickalis Pawn Inj.,
28. The phrase “in whole or in part” appears only in the Mickalis Pawn injunction. Compare Mickalis Pawn Inj.,
. The injunctions require each defendant to post a $25,000 bond with the district court; any monetary penalties imposed for violations of the injunctions would be drawn from this sum. Mickalis Pawn Inj.,
. We reject, however, the defendants' argument that the injunctions violate principles of state sovereignty, comity, and federalism. To be sure, "[t]he court's discretion to frame equitable relief is limited by considerations of federalism,” Knox v. Salinas,
Concurrence Opinion
concurring:
I join the majority’s opinion in full. I write separately to express concerns with the jurisdictional analysis conducted by the court below. While I fully agree with the majority’s conclusion that this affirmative defense was waived, I am concerned that others might embrace the district court’s jurisdictional analysis. In my view, that would be a mistake because the district court’s jurisdictional analysis has no basis in New York law.
The claims brought by the City of New York against defendants Mickalis Pawn Shop, LLC and Adventure Outdoors, Inc. were pled as torts under New York law. See N.Y. Penal Law §§ 240.45, 400.05(1). The district court’s subject matter jurisdiction was grounded in 28 U.S.C. § 1332(a)(1). Therefore, the court was permitted to “exercise personal jurisdiction to the same extent as the courts of general jurisdiction” in the State of New York. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez,
The district court termed this case one of “first impression” and created, out of whole cloth, a seven-factor test for determining whether personal jurisdiction exists over “retail gun establishments.” City of New York v. A-1 Jewelry & Pawn, Inc.,
On August 8, 2006, following limited discovery, defendants moved to dismiss the complaint against them for lack of personal jurisdiction. By an order dated August 15, 2007, the district court denied defendants’ motion to dismiss. A-1 Jewelry & Pawn,
Prior to defendants’ default, the City filed an amended complaint, which sought injunctive relief against defendants for the creation of a public nuisance. See N.Y. Penal Law §§ 400.05(1), 240.45. Defendants then made a renewed motion to dismiss in which they reasserted their objection to the exercise of personal jurisdiction to no avail.
While the district judge below may take issue with the limitations placed on New York’s long-arm statute as an academic matter, these limitations “were deliberately inserted to keep the provision well within constitutional bounds,” Ingraham v. Carroll,
In evaluating whether personal jurisdiction exists as to a particular defendant the court must examine the “quality and nature” of the defendant’s contacts with the forum. Best Van Lines, Inc. v. Walker,
There is nothing in the record that supports the conclusion that defendants knew or should have known that sales of guns in their home states were having consequences in New York. Id. § 302(a)(3)(h). Moreover, section 302(a)(3)(h) provides that in order to form the basis for the exercise of personal jurisdiction over a non-domiciliary, the defendant must know (or be deemed to know) of the consequences of its conduct and “derive[ ] substantial revenue from interstate or international commerce.” Id. Here, even if we were to impute knowledge to the defendants, the record does not reveal anything approaching “substantial revenue” that could be said to have resulted from guns that made their way to New York. The conjunctive requirement present in section 302(a)(3)(h) could be understood to be constitutionally mandated. As the Supreme Court has explained, “foreseeability alone has never been a sufficient benchmark for personal jurisdiction.” World-Wide Volkswagen Corp. v. Woodson,
The district court concluded that when a defendant deals in inherently dangerous products a lesser showing is required in order to establish personal jurisdiction. However, neither the New York Court of Appeals nor this Court have ever so held.
A particularly troubling aspect of the jurisdictional analysis conducted below is the reliance on what the district judge termed the defendants’ “cumulative parallel conduct” as a basis for establishing personal jurisdiction. According to the district court’s theory, although the “out-of-state activities of a single defendant alone may not suffice to establish jurisdiction,” because of “knowing parallel conduct, the extent of the combined harm may provide a basis for jurisdiction over each one.”
The New York Court of Appeals has instructed that “[t]o determine whether a non-domiciliary may be sued in New York,
The district court determined that an “inflexible application of a traditional jurisdictional analysis that fails to take account of unique practical commercial factors does not effectively insure the fair and orderly administration of the law.” Id. at 419. The court preferred to adopt what it termed a “reality-based pragmatic jurisdictional analysis.” Id. However, the district court was not free to depart from “traditional jurisdictional analysis” in order to hold defendants subject to suit in New York. The “fair and orderly administration of the law” is best achieved by applying the same standards to all litigants and by adherence to well-defined legal principles.
The district court’s jurisdictional analysis undermines the protection afforded to out-of-state defendants by section 302(a)(3)(ii). As both this Court and the New York Court of Appeals have previously explained, this provision “is intended to ensure some link between a defendant and New York State to make it reasonable to require a defendant to come to New York to answer for tortious conduct committed elsewhere.” LaMarca,
The district court also asserted that “[t]here is no specific dollar threshold at which revenue becomes substantial for purposes of [section] 302(a)(3)(ii).”
The seven-factor test for personal jurisdiction relies heavily on alleged conduct by third parties — specifically, straw purchasers of handguns — in establishing a basis for the assertion of jurisdiction. However, the “unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.” Id. at 474,
The district court maintained that New York City has a strong interest in adjudicating this case, and that “fb]y enacting strong gun control laws to protect its citizens from gun-related crimes New York has expressed a special public policy interest in the subject matter of this litigation.”
[The limits on the exercise of personal jurisdiction over a defendant] are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States.... Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.
World-Wide Volkswagen,
In sum, the district court’s analysis with respect to defendants’ affirmative defense based on lack of personal jurisdiction was a substantial and unjustified deviation from well-known and easily understood principles of New York law. The jurisdictional analysis performed by the court below appears to be based on one federal judge’s view of how the law of New York ought to be constructed, rather than on how it is clearly delineated by statute and in the decisions of the state and federal courts.
By virtue of their default prior to trial, defendants waived their defense based on lack of personal jurisdiction. See Transaero, Inc. v. La Fuerza Aerea Boliviana,
. This appeal concerns only two defendants among many implicated by a "series of civil cases brought by the City of New York” before this district court. City of N.Y. v. Bob Moates’ Sport Shop, Inc.,
. Judge Weinstein has acknowledged in his academic writing that "New York's long-arm statute, unlike that of most states, has not been interpreted as going to the constitutional limit[]." Jack B. Weinstein, Mass Tort Jurisdiction and Choice of Law in a Multinational World Communicating by Extraterrestrial Sat
. Defendant Adventure Outdoors also filed an unsuccessful motion for summary judgment based in part on its contention that it was not properly subject to the district court's exercise of personal jurisdiction.
. As characterized by the City, defendant Adventure Outdoors is a "storefront establishment in Smyrna, Georgia" and defendant Mickalis Pawn Shop is "a store in Summer-ville, South Carolina.”
. As a substantive matter, the New York Court of Appeals has rejected the argument that a "general duty of care arises out of [a] gun manufactureras] ability to reduce the risk of illegal gun trafficking through control of the marketing and distribution of [its] products.” Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222, 235,
. As announced by the district court, these factors are as follows:
1) Number of "trace” handguns linked to criminal investigations in New York and elsewhere that are attributable to the defendant;
2) Distribution practices and their possible effects on crimes in New York;
3) Time-to-crime of the retailer's guns recovered in New York ...;
4) Sales price, type of gun and the intended use of the retailer's handguns
5) Crimes committed in New York with the retailer's handguns;
6) Total number of handguns the retailer ... sold in the United States and retailer's total revenue from the United States and New York markets; and
7) Actions of regulatory authorities related to the retailer’s distribution practices....501 F.Supp.2d at 424-25 .
. Other courts have sensibly held that "[wjhether revenue is 'substantial' under New York law is determined on both relative and absolute scales.” Ronar, Inc. v. Wallace,