Heft v. AAI CORP.Heft v. AAI CORP.
MEMORANDUM
Removal, personal jurisdiction, and venue occasionally conspire to render the question of where a case proceeds as great a controversy as how it proceeds. A corporation based in Maryland asserts that a federal court sitting in Pennsylvania lacks statutory and constitutional authority to bind the company to judgment in an action removed from the state judiciary. This court disagrees, and finds that maintenance of this suit for benefits under the Employee Retirement Income Security Act (“ERISA”),
I. Statement of Facts 1
The ERISA claims presented in this federal action are premised on a domestic relations order entered by a Pennsylvania court of common pleas. The former husband of plaintiff, Julee H. Heft (“Heft”), was employed by defendant, AAI Corporation, and was a participant in a retirement plan administered by the company at the time of the couple’s divorce in 2001. A domestic relations order designated Heft as an “alternate payee,” entitled to a share of benefits under the retirement plan when they became payable. 2 Heft’s ex-husband died in 2002, and she sought benefits pursuant to the order and retirement plan. AAI Corporation denied her request based on purported deficiencies in the domestic relations order. (Doc. 1, Ex. 1 ¶¶ 3-16).
Heft soon commenced a civil action, claiming breach of contract and bad faith, in the Court of Common Pleas of York County, Pennsylvania. She served the complaint on AAI Corporation at its headquarters in Maryland. The company did not respond directly to the complaint, but filed a notice of removal premised on federal question jurisdiction over ERISA claims. 3 (Doc. 1 ¶¶ 3-4, 10). Heft did not file a motion to remand.
Within several days of removal, AAI Corporation filed a motion to dismiss the complaint based on lack of personal jurisdiction and improper venue. The motion asserts that AAI Corporation is incorporated, does business, and employed Heft’s ex-husband in Maryland. The company neither maintains offices or agents nor conducts any business in Pennsylvania. It administers retirement plans in Maryland, and the decision to deny benefits to Heft was made in that state. (Docs.3, 4). The parties do not dispute these facts, but only whether they provide a sufficient basis on which this court may entertain the claims. (See Docs. 5,10).
Motions to dismiss for lack of personal jurisdiction or improper venue generally require the court to accept as true the allegations of the pleadings.
4
Pinker v. Roche Holdings Ltd.,
III. Discussion
Personal jurisdiction and venue are closely related concepts. Both are concerned with the territorial reach of the court, not its inherent adjudicative power.
See Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee,
But important distinctions exist.
United States ex rel. Rudick v. Laird,
AAI Corporation has raised timely objections to both personal jurisdiction and venue, and each will receive the individual analysis that it deserves. In light of its constitutional dimension, the issue of personal jurisdiction will be addressed first.
See Leroy v. Great W. United Corp.,
A. Personal Jurisdiction
The authority of the United States courts to bind individuals to judgment is limited by both federal statute and the Due Process Clause of the Fifth Amendment.
Pinker,
1. Statutory Provisions
[5,6] To satisfy the statutory aspect of personal jurisdiction, service of process on the party must be authorized under governing law.
Pinker,
Where an action [for benefits under ERISA] is brought in a district court of the United States ... process may be served in any ... district where a defendant resides or may be found.
effective if “authorized by a statute of the United States”).
5
A corporation “resides” in its state of incorporation and is “found” in any district in which it purposefully conducts business.
See I.A.M. Nat’l Pension Fund v. Wakefield Indus., Inc.,
That AAI Corporation was served pursuant to Pennsylvania rules prior to removal does not affect the federal jurisdictional analysis. Once a case is removed to a district court, state limits on the territorial effectiveness of service no longer govern.
See
Nevertheless, the court cannot and will not “overrule” these precedential statements.
See Mennen Co. v. Atlantic Mut. Ins. Co.,
2. Constitutional Provisions
The constitutional personal jurisdiction inquiry in the case
sub judice
is more complex. The issue must be analyzed within the context of the familiar “minimum contacts” test enunciated in
International Shoe Co. v. Washington,
a. Minimum Contacts
An obvious prerequisite to assessing a party’s contacts with the “forum” is defining the latter term. It is well settled that the “forum” of a
state
court is the territory of the state itself.
Id.; see also Burger King,
Often phrased as a limitation on the inherent power of the court, personal jurisdiction actually represents a manifestation of individual liberties protected by the Fifth and Fourteenth Amendments.
Bauxites,
The association necessary to permit the exercise of
in personam
jurisdiction may come from the individual’s personal appearance in the court itself or, as is more often the case, from the individual’s affiliation with the governing entity.
Int’l Shoe,
It necessarily follows that the “forum” of the federal courts is the entire territory of the United States. Regardless of their location, federal courts are components of the national government, and exercise a portion of its sovereign powers.
See Max Daetwyler Corp. v. Meyer,
The Due Process Clauses of the Fifth Amendment, applicable to federal courts, and the Fourteenth Amendment, applicable to state courts, impose the same standard for the exercise of personal jurisdiction; a person will be required to appear in a court only if he or she has purposefully established a connection with the “forum.”
See Max Daetwyler,
Several courts of appeal, most explicitly the First Circuit, have held to the contrary that, at least in cases premised on diversity of citizenship, a federal district court cannot exercise personal jurisdiction unless the party has some affiliation — “minimum contacts” — with the state in which the court sits.
See, e.g., United Elec., Radio. & Mach. Workers v. 163 Pleasant Street Corp.,
Nevertheless, this court need not dismiss the complaint
sub judice.
Jurisdictional “forum” restrictions imposed on state courts do not burden federal tribunals.
See
Graham C. Lilly,
Jurisdiction over Domestic and Alien Defendants,
69 Va. L. Rev. 85, 128-49 (1983),
cited with approval in Helicopteros Nacionales de Colombia, S.A. v. Hall,
Several decisions by the Court have analyzed the reach of a district court’s personal jurisdiction by reference to the defendant’s contacts with the state in which the federal court sits.
14
Lower courts and commentators have seized on these opinions as holding that Fourteenth Amendment analysis, with its more limited territorial “forum,” applies to district courts.
See, e.g., Akro Corp. v. Luker,
But these decisions, although discussing the Fourteenth Amendment, were analyzing the statutory — not the constitutional — propriety of the exercise of personal jurisdiction. In these cases, the district courts had asserted jurisdiction over the objecting parties based on provisions of the Federal Rules of Civil Procedure permitting effective service on any person “who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located.”
16
This
statutory
requirement of federal court jurisdiction incorporates the
constitutional
requirement of state court
It is thus clear that AAI Corporation possesses “minimum contacts” with the “forum” of this court. As a corporation incorporated and doing business in the United States, it has voluntarily associated itself with the federal government and enjoys the protection of federal law. These national contacts support the exercise of personal jurisdiction over AAI Corporation. See id.
This does not end the constitutional due process analysis, however. The exercise of personal jurisdiction must not only be supported by “minimum contacts” with the forum, but must comport with “traditional notions of fair play and substantial justice.”
Int’l Shoe,
The phrase “traditional notions of fair play and substantial justice” embodies the principle that a court may not bind a party to judgment when the burden of appearing in the tribunal substantially and unjustifiably limits the party’s ability to defend against the action.
See World-Wide Volkswagen v. Woodson,
The court disagrees with those opinions that have held, either expressly or implicitly, that a reasonableness inquiry is unnecessary under the Fifth Amendment when the defendant is a citizen of the United States.
21
These decisions have focused almost exclusively on the concept of sovereignty, suggesting that a federal court’s exercise of personal jurisdiction over a domestic defendant is constitutionally reasonable
per se. See Bd. of Trs. v. Elite Erectors, Inc.,
State borders do not deserve significant weight in evaluating the fairness of haling a defendant into a federal court.
See Pinker,
The exercise of personal jurisdiction over AAI Corporation satisfies these constitutional limitations. The federal interest underlying ERISA. — facilitation of beneficiary claims,
see
Exercise of personal jurisdiction over AAI Corporation is supported by “minimum contacts” and comports with “traditional notions of fair play and substantial justice.” Accordingly, the motion to dismiss for lack of personal jurisdiction will be denied.
B. Venue
Of course, that the court may exercise jurisdiction over the parties does not necessarily render it the appropriate district for the claims.
See Robertson v. R.R. Labor Bd.,
The United States Code contains a number of venue provisions. The general venue statute,
Like many statutory schemes, ERISA contains a venue provision. When a participant or beneficiary brings suit in federal court for the payment of benefits owed under a qualifying employee plan, the case “may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.”
The parties debate an issue that has split district courts: whether a “breach” of ERISA plan for purposes of
However intriguing this issue may be, it is simply irrelevant to the matter
sub judi-ce.
This case was originally commenced in a state court, and is now pending in the federal judiciary because of the privilege granted to defendants by
Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
Id.
This section acts not only as a grant of authority, but also as a limitation on venue.
See Polizzi,
Several authorities have suggested that challenges to proper venue are “waived” by the defendant’s removal of an action.
See
14C CháRles AlaN WRight et al., Federal Praotioe and Prooedure § 3726 (3d ed.1998). This is a misnomer. Once a defendant files a notice of removal, the propriety of venue is determined by reference to
Nonetheless, other venue provisions are potentially relevant in cases removed from state courts. As discussed previously, venue statutes presumptively operate in the alternative rather than the prohibitive.
30
See Cortez,
But whether a transfer may be warranted in the interest of justice is not the issue before the court. The motion
sub judice
seeks dismissal of the case under
IV. Conclusion
A federal court is not bound by the personal jurisdiction and venue limitations that burden the state court from which a case is removed. Notwithstanding whether Pennsylvania tribunals could have entertained the action sub judice, this court is authorized to do so under ERISA and the Fifth Amendment to the United States Constitution. The motion to dismiss will be denied.
An appropriate order will issue.
ORDER
AND NOW, this 24th day of January, 2005, upon consideration of defendant’s motion to dismiss (Doc. 3), and for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that:
1. The motion to dismiss (Doc. 3) is DENIED.
2. Plaintiff shall effect service of process on defendant and file proof thereof on or before February 14, 2005. Failure to comply with this order may result in dismissal of the complaint for failure to prosecute. SeeFED. R. CIV. P. 41(b) (“For failure of the plaintiff to prosecute or to complywith these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant.”); Link v. Wabash R.R. Co., 370 U.S. 626 , 630-31,82 S.Ct. 1386 ,8 L.Ed.2d 734 (1962) (interpretingFederal Rule of Civil Procedure 41(b) as permitting stia sponte dismissals by the court).
Notes
. In accordance with the standard of review for a motion to dismiss for lack of personal jurisdiction and improper venue, the court will present the facts as alleged in plaintiff's complaint and stipulated by the parties. See infra Part II. The statements contained herein reflect neither the findings of the trier of fact nor the opinion of the court as to reasonableness of the parties’ allegations.
. A copy of the order was provided to AAI Corporation, which determined that it was a “qualified domestic relations order” for purposes of ERISA.
See
. See Metro. Life Ins. Co. v. Taylor,
. These motions do differ with respect to burden allocation: The plaintiff bears the ultimate burden of demonstrating that the court may exercise personal jurisdiction,
see Pinker v. Roche Holdings Ltd.,
. To be precise, the applicable law in this case is the federal removal statute, which allows a district court to issue process and direct service upon parties following removal "in the same manner as in cases originally filed in such district court.”
.
See also
. See,
e.g., Omni Capital Int’l. Ltd. v. Rudolf Wolff & Co., Ltd.,
. Indeed, to hold that a failure of service necessarily establishes a failure of personal jurisdiction would render
. In light of AAI Corporation's lack of significant contacts with the Commonwealth of Pennsylvania, the initial service of process in this case was defective. See 42 Pa. Cons Stat. § 5322(b), (d) (providing that service of process "outside of this Commonwealth” is effective if personal jurisdiction may be asserted over the person consistent with "the Constitution of the United States.”); see also infra text accompanying note 13.
. As a practical matter, alien defendants would enjoy a much greater likelihood of success than domestic defendants in a constitutional challenge to the exercise of personal jurisdiction by a federal court.
See, e.g., United States v. Swiss Am. Bank, Ltd.,
.
Cf.
.
See also Pinker,
. The court need not resolve, as Heft argues, whether the Pennsylvania activities of a subsidiary of AAI Corporation’s parent company establish the minimum contacts necessary to support the exercise of personal jurisdiction over AAI Corporation by Pennsylvania courts.
But see Clark v. Matsushita Elec. Indus. Co.,
.
See Bendix Autolite Corp. v. Midwesco Enter., Inc.,
. See also cases cited supra note 12.
.
. Of course, resolution of the statutory inquiry in these circumstances invariably obviates the need to examine the constitutional question.
See, e.g., Omni Capital,
. Federalism concerns related to
Erie Railroad Co. v. Tompkins,
. See also
. Again, the standard is the same under both the Fifth and Fourteenth Amendments, with changes only in the nature of the "forum.”
Peay,
.
See Bd. of Trs. v. Elite Erectors, Inc.,
. See Burnham v. Superior Court of Cal.,
. Fullerton, supra, at 39-60; Henry M. Hart, Jr., The Power of Congress To Limit the Jurisdiction of Federal Courts: An Exercise in Dialectic, 66 Harv. L. Rev. 1362, 1365 (1953); Lusardi, supra, at 23-44; Welkowitz, supra, at 26-48.
. See also sources cited supra note 23.
.
Cf.
.
Compare Keating,
. The court disagrees with
Superior Precast, Inc. v. Safeco Ins. Co. of Am.,
. The court expresses no view as to whether a restrictive venue provision, such as the one found in the National Bank Act,
. A defendant who removes to an improper forum (i.e., to a district and division
not
"embracing the place where such action is pending”) may be precluded from challenging venue under
. Neither the language nor legislative history of ERISA arguably defeats this presumption.
See Keating,
. The other federal transfer statute,
. This conclusion is dictated by
Stewart Org.
v.
Ricoh Corp.,