MEMORANDUM DECISION AND ORDER DENYING CERTAIN DEFENDANTS MOTIONS, PURSUANT TO RULES 8(a)(1) AND 12(b)(2), (6), AND (7) OF THE FEDERAL RULES OF CIVIL PROCEDURE, MADE APPLICABLE HEREIN BY RULES 7008(a) AND 7012(b) OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE, TO DISMISS PLAINTIFF’S ACCELERATED DISTRIBUTION AVOIDANCE ACTIONS
Before the Court are motions brought by two former employees of the debtors, seeking to dismiss the avoidance actions filed against them by Enron Corp. (“Enron”). Employee-defendant James L. Noles (“Noles”) moves to dismiss: (1) pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure (hereinafter each rule entitled the “Rule”), made applicable herein by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure (hereinafter each
I. Background
A. General Procedural History
Commencing on December 2, 2001, Enron Corp. and certain of its affiliated entities (collectively, the “Debtors” or “Enron,” as applicable) filed for voluntary petitions for relief under chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”). The Debtors’ chapter 11 cases have been procedurally consolidated for administrative purposes. As of the date hereof, the Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.
On December 12, 2001, pursuant to section 1102 of the Bankruptcy Code, the United States Trustee for the Southern District of New York (the “United States Trustee”) appointed the Official Committee of Unsecured Creditors of Enron Corp., et al. (the “Creditors’ Committee”) to represent the interests of all unsecured creditors of the Debtors. The Creditors’ Committee has been reconstituted from time to time.
On February 21, 2002, the Court directed the United States Trustee to appoint an examiner (the “ENA Examiner”) in the Enron North America Corp. Debtor case pursuant to section 1104 of the Bankruptcy
On March 27, 2002, pursuant to section 1102 of the Bankruptcy Code, the United States Trustee appointed the Official Employment-Related Issues Committee of Enron Corp., et al. (the “Employee Committee”) in the Debtors’ chapter 11 cases. The Employee Committee has been reconstituted from time to time.
The Court also directed on April 8, 2002 the appointment of an examiner (the “Enron Examiner”) in the Debtors’ cases pursuant to section 1104 of the Bankruptcy Code to inquire into, inter alia, all transactions involving special purpose vehicles or entities created or structured by or for the Debtors, and transactions not reflected on the Debtors’ balance sheets or not reflected in the respective debtor’s financial statements in accordance with generally accepted accounting principles. On May 24, 2002, an order was entered approving the United States Trustee’s appointment of Neal Batson, Esq., as the Enron Examiner. At various intervals, the Enron Examiner filed reports concerning these cases.
During June 2004, this Court held hearings to consider confirming a plan of reorganization under chapter 11 of the Bankruptcy Code proposed by the Debtors. On July 15, 2004, the Court entered findings of fact and conclusions of law supporting confirmation of the Debtors’ Fifth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code filed on July 2, 2004 and entered an order confirming the Plan and the global compromise of inter-estate issues embodied in the motion filed by the Debtors and approving the global compromise in the event the Plan is not confirmed or does not become effective for one or more of the proponents of the Plan. The Plan provides for the disposition of all of the Debtors’ assets and the distribution of value realized therefrom in accordance with the priority scheme of the Bankruptcy Code.
There have been a number of avoidance actions brought by the Creditors’ Committee on behalf of the Debtors, the Employee Committee on behalf of itself, and the Employee Committee on behalf of the Debtors. 3
In considering a motion to dismiss, the Court accepts as true the factual allegations in a complaint. See Dwyer v. Regan, 111 F.2d 825, 828-29 (2d Cir.1985). The allegations of Enron’s complaint are as follow.
Enron and its affiliates had two active non-qualified deferred compensation plans in effect in 2001, that is, the Enron Corp. 1994 Deferral Plan, Restated as of October 6, 2000, and the Enron Expat. Services, Inc.1998 Deferral Plan, Restated as of September 1, 2001 (collectively, the “Deferral Plans”). On or about October 2001 through November 2001, there were approximately 240 to 350 participants in the Deferral Plans.
Certain qualified executive employees (known as “Top-Hat” employees) of Enron or its affiliates were permitted under the Deferral Plans to defer current earnings and, thereby, defer taxes on the amounts deferred. The Deferral Plans provided that the deferred compensation owed to Top-Hat employees was part of the general corporate assets of the Debtor and that, with respect to benefits under the Deferral Plans, such obligations were unsecured obligations of the Enron and its affiliates.
Under the Deferral Plans, the Top-Hat employees had a right of election to accelerate deferred compensation payments subject to the consent of a committee for each of the Deferral Plans. Prior to October 29, 2001, each of the Deferral Plans did not have a standing committee; however, on such date, Kenneth Lay, Enron’s then Chief Executive Officer, appointed Greg Whaley (“Whaley”) as a committee of one for each of the Deferral Plans.
Between October 25, 2001 and November 30, 2001, approximately 206 Top-Hat employees made requests for accelerated deferred compensation payments. Wha-ley approved 126 such requests, which resulted in Enron providing accelerated distributions (the “Accelerated Distributions”) between October 30, 2001 and December 5, 2001 to 113 Top-Hat employees in the cash equivalent of $53,135,993.10. The remaining Deferral Plans’ participants requesting accelerated deferred compensation payments did not receive such payments.
Accordingly, on November 14, 2003, the Employee Committee filed a complaint (the “Complaint”) on behalf of Enron, seeking to avoid and to recover pre-petition and post-petition Accelerated Distributions made by Enron to Top-Hat employees in 2001, including (1) Noles, who allegedly received such a distribution on November 16, 2001, and (2) Staley, who allegedly received such a distribution on December 5, 2001. 4 (Compl., Adv. Proc. No. 03-92909(AJG))
Subsequently, Noles filed his above-referenced motion to dismiss on December 17, 2003 and Staley filed his above-referenced motion to dismiss on January 30, 2004. 5 In turn, the Employee Committee filed its opposition to Noles’s motion on January 12, 2004 and to Staley’s motion on February 19, 2004. 6
II. Discussion
A. Rule 8(a)(1) Is Inapplicable To Noles’s Personal Jurisdiction Contention
Noles contends that while Rule 8(a)(1), made applicable herein by Bankruptcy Rule 7008(a), specifically requires that the Complaint contain “a short and plain statement of the grounds upon which the court’s jurisdiction depends,” Enron’s Complaint has no averments that can establish personal jurisdiction over him. Relying on
Kernan v. Kurz-Hastings, Inc.,
Although the Employee Committee did not file a response to Noles’s Rule 8(a)(1) contention, the Court finds that Noles overstates the requirements of the rule. Rule 8(a)(1) applies to subject matter jurisdiction, not personal jurisdiction and, therefore, Noles’ Rule 8(a)(1) argument is without merit.
Stirling Homex Corp. v. Homasote Co.,
B. Personal Jurisdiction Exists Over Noles And Staley
In his motion to dismiss Enron’s avoidance action against him based on the Court’s lack of personal jurisdiction, Noles concedes that this district’s ruling in
J.T. Moran Fin. Corp. v. American Consol. Fin. Corp. (In re J.T. Moran Fin. Corp.),
Nevertheless, Noles contends that personal jurisdiction in bankruptcy courts based on nationwide service of process is not unlimited. Noles claims that after the 1996 amendments (the “1996 Amendments”) to Bankruptcy Rule 7004, the Court must consider traditional due process factors even if there has been proper service of process. Specifically, Noles asserts that while Bankruptcy Rule 7004(f) provides that service of a summons in accordance with Bankruptcy Rules can be effective to establish personal jurisdiction over a defendant, that concept is limited because, subsequent to the J.T. Moran holding and other often-cited cases on the issue, the 1996 Amendments’ new subdivision (f) of Bankruptcy Rule 7004 begins with the following clause: “If the exercise of jurisdiction is consistent with the Constitution and laws of the United States
Based on the 1996 Amendments, Noles maintains that even if service is accomplished pursuant to Bankruptcy Rule 7004(d), the exercise of this Court’s jurisdiction must still be consistent with the Constitution in order to confer personal jurisdiction. Noles contends that the appropriate analysis to apply, as stated in
R & R Hardwood v. Action Mortgage Co./Sterling Sav. Bank (In re Pond),
No. 99-00852,
Noles asserts that while the Second Circuit has not made a definitive ruling on the nexus of personal jurisdiction and nation
Noles therefore argues that the Court should review its personal jurisdiction over him in accordance with traditional due process analysis regarding state minimum contacts, reasonableness and traditional notions of fair play. Citing
Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L.,
In particular, Noles maintains that (1) Enron has neither alleged in the Complaint any contacts between him and New York nor has it alleged any reasonable basis for him to have expected that he would be “hailed” into this Court, and (2) even if the Court were to permit the Complaint to be amended to add such statements, such amendments would still fail applicable jurisdictional standards. Noles asserts that there are no grounds for the application of New York’s long-arm statute, considering, inter alia, that: (1) he was employed by Enron in Texas; (2) he resided in Texas during such employment; (3) he only had two isolated contacts with New York consisting of (a) an unplanned layover at a New York airport due to mechanical problems in an airplane, and (b) meeting with a foreign potential customer at a third party’s New York office, solely at the convenience of the third party; and (4) he could not have reasonably expected that issues relating to his participation in a retirement savings plan with his Texas employer would be addressed in a federal court in New York.
Even if New York’s long-arm statute applies, Noles argues, citing due process reasonableness factors enumerated in
Ker-nan v. Kurz-Hastings, Inc.,
Staley, as well, does not allege that service upon him was improper; however, he similarly moves to dismiss, asserting the Court lacks personal jurisdiction over him pursuant to Bankruptcy Rule 7004(f) because he (1) is a citizen of Houston, Texas, who is registered to vote in Houston and tries to vote in local elections there by absentee ballot, and (2) is temporarily living as a resident alien in London, England, United Kingdom.
Additionally, Staley contends that the Court’s exercise of jurisdiction over him would violate the Fifth Amendment’s Due Process Clause because (1) he has insufficient contacts with New York, and (2) maintenance of the suit in New York will offend traditional notions of fair play and substantial justice. Staley points out that (1) he neither did business nor lived in New York, (2) he rarely visited New York, (3) nothing in his visits to New York or in the transactions and occurrences that give rise to Enron’s claims in this action gave him any notice that he might be required to appear in court in New York, (4) New York has no special interest in providing a forum for Enron to bring this action, (5) New York is not a convenient forum for him, and (6) in no way did he engage in continuous or systematic activities with New York.
In opposition, the Employee Committee maintains it is well settled that where a statute provides for nationwide service of process, such service provides a statutory basis for personal jurisdiction. The Employee Committee asserts that many courts, including the Southern District of New York, therefore have held that no inquiry into a defendant’s “minimum contacts” with the forum state is required pursuant to Bankruptcy Rule 7004.
Moreover, the Employee Committee asserts that Noles’s contention that the 1996 Amendments to Bankruptcy Rule 7004 require a bankruptcy court to engage in a
The Employee Committee also asserts that courts have affirmed the principle that Bankruptcy Rule 7004 confers nationwide personal jurisdiction in the aftermath of the 1996 Amendments. In
Warfield v. KR Entertainment, Inc. (In re Federal Fountain, Inc.),
The Employee Committee further notes,
inter alia,
that Noles’s reliance on
Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L.,
In sum, the Employee Committee argues that given the broad case law supporting the federal “minimum contacts” analysis and lack of any law to the contrary, this Court has personal jurisdiction over Noles so long as he has “minimum contacts” with the United States. Since Noles is a resident of the State of Alabama, the Employee Committee contends that this Court has personal jurisdiction over him.
Although Staley contends that “minimum contacts” do not exist between himself and the State of New York, the Employee Committee notes that he misconstrues the jurisdictional rules applicable to him. In particular, the Employee Committee asserts that in a federal question case, such as the avoidance against Staley under chapter 5 of the Bankruptcy Code, the relevant question for jurisdictional purposes is whether he has sufficient “minimum contacts” with the United States as a whole, not with any particular forum state.
The Employee Committee maintains that Staley has the requisite “minimum contacts” with the United States because he admits to being a citizen of Texas, Houston is his home, and remains registered to vote there. Moreover, the Employee Committee notes that the federal “minimum contacts” test in federal question cases is applicable to Staley irrespective of him residing in London, England because Article 10(a) of the Hague Convention, which is applicable to cases arising under the Bankruptcy Code by virtue of Bankruptcy Rule 7004(f), authorizes worldwide service of process.
The Court finds that it has personal jurisdiction over Noles and Staley. Contrary to Noles’s suggestion that the 1996 Amendments to Bankruptcy Rule 7004(f) and Second Circuit’s holding of Gaston & Snow provide for a state “minimum contacts” test pursuant to the rule, the Court finds that subdivision (f)’s initial clause, that is, “[i]f the exercise of jurisdiction is consistent with the Constitution and laws of the United States,” does not require that a state “minimum contacts” analysis be undertaken to determine personal jurisdiction in a federal question case such as this adversary proceeding under chapter 5 of the Bankruptcy Code.
After the 1996 Amendments, courts have recognized in federal question cases that no inquiry into a defendant’s “minimum contacts” with the forum state is needed to exercise jurisdiction pursuant to Bankruptcy Rule 7004; rather, only a federal “minimum contacts” test is required, whereby the Fifth Amendment’s Due Process Clause limits a bankruptcy court’s exercise of personal jurisdiction over a defendant.
NationsBank, N.A. v. Macoil, Inc. (In re Med-Atlantic Petroleum Corp.),
The federal “minimum contacts” test is also valid for Staley who resides in London, England, because (1) he does not contend that service of process upon him was improper, and (2) he admits that he is a resident and an active registered voter of Houston, Texas and, therefore, has sufficient contacts with the United States, and, even if he were not a Texas resident, the Hague Convention, which is applicable herein under Bankruptcy Rule 7004(f), 10 authorizes service of process with respect to his current residence in London.
Even if the Court were to adopt the Eleventh Circuit’s view expressed in
Republic of Panama
that (1) “a defendant’s ‘minimum contacts’ with the United States do not ... automatically satisfy the due process requirements of the Fifth Amendment” because “there are circumstances, although rare, in which a defendant may have sufficient contacts with the United States as a whole but still will be
Furthermore, while the district court in
Dittmann v. Dyno Nobel, Inc.,
No. 97-CV-1724,
‘[A] court may exercise [personal] jurisdiction over a defendant served under a federal nationwide service statute if the defendant has minimum contacts with the United States and maintenance of the suit would not offend fair play and substantial justice.’ The second prong of this approach would consider ‘the federal interests in furthering fundamental social policies, the judicial system’s interest in the efficient resolution of controversies, the particular forum’s interest in adjudicating the dispute, and the plaintiffs interest in obtaining convenient and effective relief particular the burden on the defendant.’
Id.
at *10 n. 2 (quoting Wright & Miller, Federal Practioe and Prooedure § 1067.1, at 331 (2d ed.1987);
Willingway Hosp., Inc. v. Blue Cross & Blue Shield of Ohio,
C. Staley Fails To Show Employee Committee Did Not State A Claim Upon Which Relief Can Be Granted
Staley asserts, without any additional support, that the Complaint fails to state a claim on which relief can be granted and thereby moves pursuant to Rule 12(b)(6) to dismiss the Complaint. In response, the Employee Committee notes that Staley offers no substantive arguments whatsoever in support of his conclusory assertion and, therefore, contends that he faded to meet his burden of proof with respect to a Rule 12(b)(6) motion to dismiss.
The Court agrees with the Employee Committee that Staley’s unsupported assertion is insufficient to meet his burden under a Rule 12(b)(6) motion and, therefore, his motion is denied.
See Gould Elec. Inc. v. U.S.,
D. Joinder Of Enron Expat Is Unnecessary
Staley also moves pursuant to Rule 12(b)(7) to dismiss the Complaint for its failure to join Enron Expat as a necessary party, arguing that in (1) joinder of such entity will not deprive this Court of jurisdiction over the subject matter of the action, and (2) in the absence of such a joinder complete relief cannot be accorded among the current parties. Further, Staley argues, in the alternative, that such entity claims or may claim an interest relating to the subject of this action and is so situated that disposition of this action in the entity’s absence may subject this defendant to double, multiple, or otherwise inconsistent obligations by reason of claims by such entity.
The Employee Committee counters that Enron Expat did not make the payment forming the basis for Plaintiffs claim against Staley and, thus, Enron Expat would be an improper party to join in the Complaint. In addition, the Employee Committee notes that the absence of Enron Expat from this action does not necessarily expose Staley to any risk of multiple or inconsistent obligations because Enron Expat could not sue Staley to recover the payment at issue. The Employee Committee further asserts that the absence of Enron Expat will not hinder Staley’s ability to defend himself, as all of the relevant
The Court finds that Staley’s Rule 12(b)(7) motion is without merit. First, Staley fails to offer any facts to support that Enron Expat is a necessary party. Second, Enron Expat did not make an Accelerated Distribution to Staley, where such distribution forms the basis of the Complaint against him. See Choyce Declaration of PL’s Mem. L. in Opp’n to Sta-ley’s Mot. Raising Defenses Under Rule 12(b). Moreover, contrary to Bankruptcy Rule 7019(a)(2)(i)-(ii) concerns that (i) the absence of Enron Expat will impair or impede Staley’s ability to defend himself, and (ii) the absence of Enron Expat from this adversary proceeding will expose Sta-ley to substantial risk of incurring double, multiple or otherwise inconsistent obligations, the record reflects that (1) payroll, employment and similar records pertaining to Enron Expat, and other the relevant evidence, are under the custody and control of the parties to this action, that is, Enron and/or Staley, and (2) as noted, Enron Expat itself did not make the Accelerated Distribution to Staley. See id. Choyce Declaration; Jones Declaration.
As stated previously, to the extent Noles, Staley, and certain other defendants in the Accelerated Distribution Avoidance Actions are seeking transfer of venue under section 1412 of title 28 of the United States Code, the Court will address such request in a separate decision.
III. Conclusion
Based on the foregoing, the Court finds that: (1) Noles’s Rule 8(a) contention is without merit; (2) personal jurisdiction exists over Noles pursuant to Bankruptcy Rule 7004; (3) personal jurisdiction exists over Staley pursuant to Bankruptcy Rule 7004; (4) Staley failed to establish that the Employee Committee did not state a claim upon which relief can be granted; and (5) Staley failed to establish joinder of Enron Expat is necessary. Therefore, for the reasons set forth herein, it is hereby:
ORDERED, that Noles’s motion to dismiss pursuant to Rule 8(a) based on the Complaint allegedly having no averments that can establish personal jurisdiction over him is denied; and it is further
ORDERED, that Noles’s motion to dismiss pursuant to Rule 12(b)(2) based on the Court’s lack of personal jurisdiction over him pursuant to Bankruptcy Rule 7004(f) is denied; and it is further
ORDERED, that Staley’s motion to dismiss pursuant to Rule 12(b)(2) based on the Court’s lack of personal jurisdiction over him pursuant to Bankruptcy Rule 7004(f) is denied; and it is further
ORDERED, that Staley’s motion to dismiss pursuant to Rule 12(b)(6) based on the Complaint’s alleged failure to state a claim on which relief can be granted is denied; and it is further
ORDERED, that Staley’s motion to dismiss pursuant to Rule 12(b)(7) based on the Complaint’s alleged failure to join Enron Expat as a necessary party is denied without prejudice.
Notes
. Subdivisions (2), (6), and (7) of Rule 12(b) of the Federal Rules of Civil Procedure provide as follows:
Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: ... (2) lack of jurisdiction over the person, ... (6) failure to state a claim upon which relief can be granted, (7) failure to join a party under Rule 19.
Fed. R. Civ. P. 12(b)(2), (6), (7).
. While Noles initially moved in his December 17, 2003 motion to transfer of venue to the Northern District of Alabama pursuant section 1412, his attorney subsequently acknowledged during the hearing on his motion that if the Court found that personal jurisdiction did not exist over him, the Southern District of Texas would be an appropriate venue based on most of his factual circumstances occurring within Texas.
. The Court entered an order on August 28, 2002, assigning and authorizing, inter alia, the Employee Committee to investigate and prosecute certain avoidance actions (the "90-Day Bonus Avoidance Actions”) against each Enron employee who received a significant lump sump payment from Enron, each labeled as a 90-day retention bonus (each a "Bonus” and collectively, the "Bonuses”), within days before Enron's bankruptcy filing. The beneficiaries of any recovery on such assigned actions are certain former Enron employees who entered into a settlement agreement with Enron and who were not recipients of such Bonuses.
On or about Januaiy 8, 2003, counsel for the Employee Committee mailed letters to each of the 292 Bonus recipients, demanding repayment of the Bonuses within thirty (30) days. Each letter stated that failure to remit the Bonus in its entirety, or to produce documentation establishing a defense to the avoid-ability of such Bonus, within thirty (30) days would result in the institution of a lawsuit against the Bonus recipient.
In a pre-emptive effort, a group of 106 Bonus recipients filed a complaint in this Court on February 6, 2003, one or two days prior to the end of the thirty-day period of the Employee Committee’s demand letter, where such recipients sought a declaration that the bonuses are not avoidable pursuant to sections 544, 547, 548, and 550 of the Bankruptcy Code (the "Declaratory Judgment Action”).
In turn, beginning on March 14, 2003, the Employee Committee filed 90-Day Bonus Avoidance Actions
(see
Compls. (3/14/2003, 3/28/2003, and 4/9/2003), Adv. Proc. Nos. 03-03496, 03-03522, and 03-03598, respectively)
On August 28, 2003, this Court concluded that the 106 Bonus recipients that filed the Declaratory Judgment Action was an improper use of Declaratory Judgment Act (the "DJA”), 28 U.S.C. §§ 2201-2202, and, since it is beyond the purposes and purview of the DJA, the Court dismissed it.
See Allen v. Official Employment-Related Issues Committee, et al. (In re Enron Corp., et ai),
Subsequently, the Houston Bankruptcy Court issued, inter alia, two Memorandum of Decision on April 19, 2004 and May 24, 2004, respectively, regarding the 90-Day Bonus Avoidance Actions.
By order dated December 1, 2003, this Court also authorized, inter alia, for the Creditors’ Committee to commence avoidance proceedings under sections 544, 547, 548, and 550 of the Bankruptcy Code against certain former insider employees of the Debtors and professional firms. On that same day, the Creditors' Committee, on behalf of the Debtors, filed actions in this Court against former Enron insider employees, seeking to avoid and recover alleged preferential and/or fraudulent transfers made by the Debtors within one year preceding the date the Debtors filed their respective bankruptcy cases.
. The Employee Committee filed additional Accelerated Distribution Avoidance Actions against other Top-Hat employees in 2003 and 2004.
. While Top-Hat employee-defendants Gahn and Mayeux, both residing in Houston, Texas, also filed separate answers with affirmative defenses on December 17, 2003 asserting the Court lacked personal jurisdiction over them, such defendants did not file a motion to dismiss based on lack of personal jurisdiction.
.On October 14, 2004, this Court issued an unpublished Memorandum Decision and Order in the Accelerated Distribution Avoidance Actions, which denied certain defendants' motions to transfer venue pursuant to section 1409(d) of title 28 of the United States Code. On October 25, 2004, Staley filed a motion seeking this Court's reconsideration of its October 14, 2004 Memorandum Decision and Order.
. The Second Circuit in
Keman v. Kurz-Has-tings, Inc.,
(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial's system’s interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering social substantive policies.
Id. at 244.
. As noted by the Employee Committee, in
Michaelesco v. Richard (In re Michaelesco),
[B]ecause “congressional power to authorize nationwide service of process in cases involving the enforcement of federal law is beyond question/' Mariash v. Morrill,496 F.2d 1138 , 1143 n. 6 (2d Cir.1974), with respect to U.S. residents, constitutional due process in a federal question case requires only that the nationwide service authorized by statute is "reasonably calculated to inform the defendant of the pendency of the proceedings in order that he may take advantage of the opportunity to be heard in his defense.” Id. at 1143. A minimum contacts analysis with the forum state in which the district court sits is unnecessary because the sovereign exercising jurisdiction is the United States, not a particular state. See id. Thus, exercise of jurisdiction is justified if the defendant resides within the territorial boundaries of the United States and has been properly served.
In a proceeding brought in the Bankruptcy Court under the related to jurisdiction of 28 U.S.C. [§] 1334(b), Fed. R. Bankr.P. 7004(d) applies, .... Accordingly, as subject matter jurisdiction under 28 U.S.C. § 1334(b) is based on a federal question— here relatedness of a proceeding to a case under Title 11 — and nationwide service of process is authorized in such proceedings, several circuit courts have concluded and the holding of Mariash directs that whether there exists a connection between a defendant and the forum state in which the Bankruptcy Court sits is irrelevant and the personal jurisdiction inquiry should focus on whether the defendant in the proceeding resides within the United States.
Id. at 652-53 (citations omitted).
. The Court further notes that while the 1996 Advisory Committee Notes to subdivision (f) of Bankruptcy Rule 7004 specifically provide that ''[t]he new subdivision (f) is consistent with the 1993 amendments to F.R. Civ. P. 4(k)(2),” and, in turn, (1) the initial clause of Rule 4(k)(2) is identical to Bankruptcy Rule 7004(f) and (2) the Advisory Committee Notes of the 1993 Amendments to Rule 4(k)(2) emphasize that the Fifth Amendment provides limitations on the exercise of personal jurisdiction under the rule, the Ninth Circuit in
In re Pintlar Corp.,
. In particular, Bankruptcy Rule 7004(f) provides that "service in accordance with ... the subdivisions of Rule 4 [of the Federal Rules of Civil Procedure] made applicable by these rules is effective to establish personal jurisdiction.” Fed. R. Bankr. P. 7004. Rule 4(f)(1) of the Federal Rules of Civil Procedure provides that "service upon an individual ... may be effected in a place not within the judicial district of the United States ... by any internationally agreed means authorized by the Hague Convention ...." Fed. R. Civ. P. 4. In turn, Article 10(a) of the Hague Convention authorizes service of process by mail to individuals located in signatory nations outside of the United States in the absence of objections from the country of destination.
See Pavia v. Club Med, Inc.,
No. 3:97cv808,
. Moreover, the Court notes that a party that is subject to an avoidance action not having state "minimum contacts” with the jurisdiction in which a chapter 11 multi-debtor bankruptcy case is pending is not by itself "rare” or "highly unusual” when one considers the bankruptcy venue provisions under title 11. Although a properly venue bankruptcy case or proceeding under title 11 may be subject to transfer to another district "in the interest of justice” or "for the convenience of the parties” pursuant to section 1412 of title 28 of the United States Code, a chapter 11 debtor has a number of venue options under sections 1408 of title 28 of the United States Code that results in its case pending in a district in which the party subject to an adversary proceeding has no state "minimum contacts” with such district when the adversary proceeding is filed in the same district under 1409. Often times the location of a corporate debtor’s business operations, especially in a large multi-debtor case, is not the same as the venue of its chapter 11 case because venue under section 1408(1) could be based upon a number of factors, including a "corporation’s domicile [which] is generally held to be its state of incorporation.”
In re FRG Inc.,
Section 1408 of title 28 of United States Code provides as follows:
Except as provided in section 1410 of this title, a case under title 11 may be commenced in the district court for the district—
(1) in which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than the domicile, residence, or principal place of business, in the United States, or principal assets in the United States, of such person were located in any other district; or
(2) in which there is pending a case under title 11 concerning such person’s affiliate, general partner, or partnership.
28U.S.C. § 1408.
Section 1409 of title 28 of United States Code provides as follows:
(a) Except as otherwise provided in subsections (b) and (d), a proceeding arising under title 11 or arising in or related to a case under title 11 may be commenced in the district court in which such case is pending.
(b) Except as provided in subsection (d) of this section, a trustee in a case under title 11 may commence a proceeding arising in or related to such case to recover a money judgment of or property worth less than $ 1,000 or a consumer debt of less than $ 5,000 only in the district court for the district in which the defendant resides.
(c) Except as provided in subsection (b) of this section, a trustee in a case under title 11 may commence a proceeding arising in or related to such case as statutory successor to the debtor or creditors under section 541 or 544(b) of title 11 in the district court for the district where the State or Federal court sits in which, under applicable non-bankruptcy venue provisions, the debtor or creditors, as the case may be, may have commenced an action on which such proceeding is based if the case under title 11 had not been commenced.
(d) A trustee may commence a proceeding arising under title 11 or arising in or related to a case under title 11 based on a claim arising after the commencement of such case from the operation of the business ofthe debtor only in the district court for the district where a State or Federal court sits in which, under applicable nonbankruptcy venue provisions, an action on such claim may have been brought.
(e) A proceeding arising under title 11 or arising in or related to a case under title 11, based on a claim arising after the commencement of such case from the operation of the business of the debtor, may be commenced against the representative of the estate in such case in the district court for the district where the State or Federal court sits in which the party commencing such proceeding may, under applicable nonbank-ruptcy venue provisions, have brought an action on such claim, or in the district court in which such case is pending.
28 U.S.C. § 1409.
. While Rule 4(k) is not applicable herein, the Advisory Committee Notes of the 1993 Amendments to Rule 4(k) similarly note that:
There also may be a further Fifth Amendment constraint in that a plaintiff's forum selection might be so inconvenient to a defendant that it would be a denial of "fair play and substantial justice” required by the due process clause, even though the defendant had significant affiliating contacts with the United States. This provision does not affect the operation of federal venue legislation. 28 U.S.C. § 1391. Nor does it affect the operation of federal law providing for the change of venue. 28 U.S.C. § 1404, 1406. The availability of transfer for fairness and convenience under § 1404 should preclude most conflicts between the full exercise of territorial jurisdiction permitted by this rule and the Fifth Amendment requirement of "fair play and substantial justice.”
1993 Advisory Comm. Notes to Fed. R. Civ. P. 4(k).