SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, and THOMAS F. LENNON, as appointed receiver for Alpha Telcom, Inc.; an Oregon Corporation; American Telecommunication Company, Inc., a Nevada Corporation; Strategic Partnership Alliance, LLC.; a Nevada Limited Liability Company; SPA Marketing, LLC, a Nevada Limited Liability Company, Receiver-Appellee, v. PRISCILLA ROSS; KEVIN M. RIMPLE; BRUCE F. RUARK; DENNIS L. BAUGHER; MICHAEL E. GIROUARD; LANCE LIPOUFSKI; SAMIR K. GHOSH; ROBERT TRIPODE; RICHARD WILSON; HAROLD C. NORRIS; THOMAS O. PARK; JOE BRANDENBURG; ERNEST BUSTOS; THELL G. PRUITT, Intervenors-Appellants.
Nos. 05-35541, 05-35542, 05-35544, 05-35545, 05-35546, 05-35547, 05-35552, 05-35554, 05-35555, 05-35559, 05-35577, 05-35578, 05-35580, 05-35663
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Filed October 15, 2007
504 F.3d 1130
D.C. No. CV-01-01283-OMP
Argued and Submitted February 6, 2007—Portland, Oregon
Opinion by Judge Bybee
Ernest Bustos, San Antonio, Texas, pro se, as the intervenor-appellant.
David R. Zaro, Allen Matkins Leck Gamble & Mallory LLP, Los Angeles, California, for the receiver-appellee.
Christopher Paik, Esq., Securities & Exchange Commission, Washington, DC, for the plaintiff-appellee.
OPINION
BYBEE, Circuit Judge:
Ernest Bustos and sixteen other Intervenor-Defendants (collectively, “Bustos“) appeal the district court‘s order requiring them to disgorge commissions they received
Because the theories advanced in the disgorgement action are novel, and the proceedings are complicated, we will recount the facts and proceedings in some detail.
I. FACTS AND PROCEEDINGS
Bustos worked as a sales agent for Alpha Telcom, selling investments styled as purchases of pay telephones and management services from Alpha Telcom and its affiliates. In fact, as detailed in our Rubera opinion, while Alpha Telcom‘s business plan was curiously anachronistic—selling service contracts on pay phones—its business model was timeless: the Ponzi scheme. See Rubera, 350 F.3d at 1087-89. As in all Ponzi schemes, expenses far exceeded revenues, and “returns” to investors were funded by monies obtained from more recent investors. On August 24, 2001, Alpha Telcom filed voluntary petitions for bankruptcy.
A. The SEC Enforcement Action
On August 27, 2001, the SEC commenced a civil enforcement action against Alpha Telcom for violations of the federal
In the underlying enforcement action, the district court held that the “investment opportunity” offered by Alpha Telcom was actually a security for purposes of the Securities Act of 19331 (“the Act“) and that Alpha Telcom had violated § 5 of the Act by failing to register the securities with the SEC prior to selling them in interstate commerce. SEC v. Alpha Telcom, Inc., 187 F. Supp. 2d 1250, 1258 (D. Or. 2002). The district court granted equitable relief against Rubera, the sole owner of Alpha Telcom, in the form of a permanent injunction against future violations of the securities laws and disgorgement in the amount of $3,750,707.66, representing “gross wages, shareholder compensation, shareholder loans, and other payments to Rubera and his family.” Id. at 1262-63. However, the court declined to impose civil penalties under § 20 of the Act, concluding that they were “not warranted” given that this offense was Rubеra‘s first violation and “his conduct did not amount to fraud, deceit, manipulation, or the like.” Id. at 1263. We affirmed the district court in all respects. See SEC v. Rubera, 350 F.3d 1084 (9th Cir. 2003).
B. The Disgorgement Motion and Subsequent Proceedings
On December 23, 2003, approximately two weeks after we decided Rubera, the Receiver filed a motion to disgorge $21 million in commissions on the sales of these unregistered
In support of its motion, the Receiver submitted detailed information about the financial condition of the Receivership Entities and of commissions paid out to each of the sales agents. On either December 24 or 31, 2003,4 it sent a Notice of Hearing on the motion for disgorgement to “the interested parties in this action” by first-clаss mail. The notice stated that the hearing would be held in Portland, Oregon on February 18, 2004, and that any response to the motion had to be filed and served within eleven days of service of the notice. The district court entered an order permitting the agents to file responses to the motion by February 2, 2004.
On February 2, several of the agents, including Bustos and 10 other Appellants, preserving their jurisdictional objections, moved to intervene as of right as defendants in the action
On February 11, thе district court granted the motion to intervene, stating that no formal answer was required and that the intervenors could “assert any defenses by motion or in their memoranda opposing the Receiver‘s motion . . . .” However, “[d]ue to the advanced stage of [the] case,” the district court conditioned intervention “on Intervenor‘s agreement not to revisit issues already adjudicated.” These issues presumably included the district court‘s prior findings that the investments sold by the agents were unregistered securities.6
Despite the district court‘s statement that no answer was required, the now Intervenor-Defendants filed a brief answer on February 18, 2004 and asserted several defenses, including lack of personal jurisdiction, improper venue, “insufficient process,” statute of limitations, and laches.7 They concurrently
C. The Disgorgement Order
The district court granted the Receiver‘s disgоrgement motion on August 18, 2004, and resolved the major issues that Bustos raises on appeal as follows. See In re Alpha Telcom, 2004 WL 3142555 (D. Or. Aug. 18, 2004).
1. Personal jurisdiction and venue
The district court concluded that it “necessarily ha[d] jurisdiction over matters pertaining to [the] Receivership, and the assets thereof.” Moreover, the agents had entered into agreements with Alpha Telcom, headquartered in Oregon, and those agreements specified that Oregon law would govern any disputes. Finally, the court noted that the securities laws permitted nationwide service of process, and the agents’ contacts with the United States alone were sufficient to support the exercise of personal jurisdiction over them (citing, inter alia,
2. Summary procedures and lack of service of process
The district court rejected the agents’ argument that they had not been properly served, holding that formal service was required only to institute an action. Because the Receiver‘s disgorgement motion was not an independent action but simply “part of the Receivership proceeding” that sought to “re-
The district court noted that the “more serious flaw” was the fact that the Receiver could not prove that any particular agent actually received notice of the motion because it had failed to send the notice by certified mail. This flaw, however, was remedied by the fact that the Receiver sent multiple mailings to the listed agents, that the court had required the Receiver to send “a follow-up mailing to the agents,” the “rebuttable presumption that mail, properly addressed, has been delivered,” and the fact that the agents appeared to be in regular contact with each other. Moreover, the court found, the “vast majority” of the agents appeared to have received actual notice of the motion, and presumably any agent who had not received actual notice could collaterally attack the disgorgement order if he or she could prove lack of actual notice.
3. Unjust enrichment
The Receiver‘s theory of unjust enrichment depended on whether the agents hаd a “legitimate claim” to the commissions they received. The district court noted that the Receiver had not formally alleged any wrongdoing on the part of the agents and chided the Receiver for filling its papers with accusations of wrongdoing that were not “germane to the legal theories he advances.” The court declined to hold that the commissions were analogous to disbursements in the typical gratuitous donee case, where a third party receives value for no consideration from a wrongdoer, and expressly rejected three theories put forth by the Receiver as to why the agents had no legitimate claim to the commissions: (1) that Alpha Telcom received no value for the agents’ services because the company lost money on each sale, (2) that agents were willing participants in a Ponzi scheme, and (3) that the agents’ services helped to perpetrate a fraud. Rather, the district court
4. Computation of disgorgement amount
Having decided that the agents would be liable for the funds, the district court detailed how it would handle claims by remaining agents who contested the amounts claimed by the Receiver and sought setoffs for expenses and taxes paid on the commissions. The court found that many of the agents had likely claimed personal expenses as business expenses on their tax returns, and therefore, citing its discretionary powers, established “a uniform setoff for expenses: 10 percent of the first $50,000 in commissions received by an agent, and 5 percent of all commissions over that amount.” The court determined that it was not practicable—and was far too expensive—to require the Receiver to evaluate each agent‘s claimed expenses and rejected objections, noting that “this is equity, not rocket science.” Finally, the district court refused to grant a setoff for income taxes paid on the commissions, noting that this was “a matter between the agents and the IRS (or state officials). The court will not interfere.”
D. Appellants’ Response and Appeal
The district court gave the agents 20 days to file an objection to the amount of disgorgement and then addressed each agent‘s individual objections in a detailed order dated February 1, 2005. The court subsequently entеred a Judgment of Disgorgement on March 31, 2005, and issued a “Notice to Agents” on March 31, 2005, advising them of the proper
On appeal, Bustos reiterates most of the objections made to the district court, and these center on two sets of issues. The first of these involves due process violations arising from the district court‘s lack of personal jurisdiction, the Receiver‘s failure to properly serve him with a summons and complaint, and the use of summary proceedings to adjudicate the disgorgement motion. The second involves various contentions that the district court abused its discretion in granting the motion for disgorgement and calculating the amount to be disgorged. Because we hold that Bustos‘s due process rights were violated by the proceedings below, we address only the first set of issues in this appeal. We begin with a brief review of the principles of personal jurisdiction and the relationship between jurisdiction and service of process.
II. JURISDICTION AND SERVICE OF PROCESS
In personam jurisdiction, simply stated, is the power of a court to enter judgment against a person. In rem jurisdiction is the court‘s power over property. Before a court may еxercise the state‘s coercive authority over a person or property, some statute must authorize the act. Sec. Investor Prot. Corp. v. Vigman, 764 F.2d 1309, 1313-14 (9th Cir. 1985). For state courts, generally a state long-arm statute supplies all the authority that state courts require. By contrast, there is no general federal long-arm statute, so federal courts must look either to the long-arm statutes of the state in which the court sits,
We have stated that “a court may exercise personal jurisdiction over a defendant consistent with due process only if he or she has ‘certain minimum contacts’ with the relevant forum ‘such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” ’ ” Yahoo! Inc. v. La Ligue Contre Le Racisme et L‘Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (en banc) (quoting Int‘l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940))). We have set forth a three-part test, derived from the Due Process Clause, that examines the defendant‘s purposeful conduct towards the forum, the relation between his conduct and the cause of action asserted against him, and the reasonableness of the exercise of jurisdiction. See id. at 1205-06; Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004); Bancroft & Masters, Inc. v. Augusta Nat‘l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).
The familiar “minimum contacts” test, coupled with statutory authorization, provides a basis for an exercise of jurisdiction, but “[s]ervice of process is the mechanism by which the court [actually] acquires” the power to enforce a judgment against the defendant‘s person or property. United States v. 2,164 Watches, More or Less Bearing a Registered Trademark of Guess?, Inc., 366 F.3d 767, 771 (9th Cir. 2004) (emphasis added). In other words, service of process is the means by which a court asserts its jurisdiction over the person. See Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986) (“A federal court is without personal jurisdiction over a defendant unless the defendant has been served in accordance with
Without a proper basis for jurisdiction, or in the absence of proper service of process, the district court has no power to render any judgment against the defendant‘s person or property unless the defendant has consented to jurisdiction or waived the lack of process. See Mason v. Genisco Tech. Corp., 960 F.2d 849, 851 (9th Cir. 1992); see also Omni Cap ital Int‘l v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987) (“[B]efore a court may exercise personal jurisdiction over a defendant, there must be more than notice to the defendant and a constitutionally sufficient relationship between the defendant and the forum. There also must be a basis for the defendant‘s amenability to service of summons. Absent consent, this means there must be authorization for service of summons on the defendant.“). A judgment entered without jurisdiction over the defendant is void.
With these principles in mind, we turn to the bases for jurisdiction asserted by the Receiver.
III. JURISDICTION IN SECURITIES RECEIVERSHIP ACTIONS
Bustos argues that the district court violated his due process rights by exercising personal jurisdiction over him despite the failure of the Receiver to name him in the complaint.9 In response, the Receiver asserts that the district court‘s exercise of jurisdiction was proper for three reasons: (1) the Securities Act provides for nationwide service of process, and Bustos
A. Jurisdiction in Claims Arising Under the Securities Act of 1933
1. Claims against Securities Act violators
[1] The Receiver‘s first argument is that the district court had jurisdiction pursuant to the Securities Act of 1933 (“Securities Act“). Section 12 of the Securities Act,
[2] The Receiver argues that § 22 is a nationwide service-of-process provision that authorizes the district court to exercise jurisdiction nationwide over any person who has minimum contacts with the United States. We agree that § 22 provides for nationwide service of process. The service of process language of § 22 tracks almost word-for-word that of the analogous provision in § 27 of the Securities and Exchange Act. Compare
[3] That the district court could have obtained jurisdiction over Bustos tells us nothing about whether it actually did so. The Receiver would apparently have us conclude that the ability to obtain jurisdiction coupled with actual notice of an intent to exercise jurisdiction gives birth to actual in personam jurisdiction over any interested party, whether or not that party has been properly served. Nothing in our jurisprudence supports such a remarkable extension of judicial power. The power to exercise jurisdiction nationwide is not self-executing. Mere contacts with the jurisdiction, even when coupled with some kind of actual notice, are not sufficient to invest the district court with in personam jurisdiction over a party-in-interest. As we discussed in the previous section, in order for the court to assert personal jurisdiction over a party-in-interest, the party must be properly served. See
[4] More importantly, the difficulty here runs deeper than mere insufficient service of process. The Receiver never filed a complaint and never named Bustos as a party. In other words, the Receiver never commenced an action against Bustos, see
2. Nominal defendants and summary proceedings
The Receiver also argues (and the district court concluded) that Bustos was wrongly in possession of receivership assets and that Bustos was a nominal defendant or constructive trustee and was, therefore, subject to disgorgement in a summary proceeding.12 We address each of these arguments in turn.
a. The nominal defendant designation
[5] We have recognized a truncated form of process vis-à-vis “a non-party depository as a nominal defendant to effect full relief in the marshaling of assets that are the fruit of the underlying fraud.” SEC v. Colello, 139 F.3d 674, 677 (9th Cir. 1998). A nominal defendant is not a real party in interest because he “has no legitimate claim to the disputed property.” Id. at 676; SEC v. Cherif, 933 F.2d 403, 414 (7th Cir. 1991) (stating that a nominal defendant “holds the subject matter of
[6] Bustos, however, falls into none of these categories. The Receiver has not established that Bustos holds any funds in trust for the defendant in the underlying action, Rubera, or that he received fraudulent transfers from the receivership entity, Alpha Telcom; there is no evidence that he was a mere puppet holding an account into which Alpha Telcom funneled its fraudulent earnings. Indeed, as the district court correctly perceived, Bustos appears to be no different from any other employee or vendor: he received compensation in return for services rendered. As such, he has presumptive title to those commissions, and unless the Receiver can prove otherwise, it is likely that the Receiver can disgorge those commissions only by showing that Bustos has himself violated the securities laws.
The Receiver argues that Bustos is like the nominal defendants in Hickey, Colello, and Wencke, because the commis-
[7] The district court noted the inconsistency in the Receiver‘s position and criticized the Receiver for referring to Bustos‘s wrongdoing while simultaneously naming him a nominal defendant. The district court concluded, however, that those allegations were not germane to the Receiver‘s claims. We respectfully disagree. The claim ultimately аccepted by the district court—unjust enrichment—turns on Bustos‘s own violations of the securities laws. As the district court concluded, Bustos‘s commissions could be deemed ill-gotten gains only because the services he provided—the sale of the pay phone interests—were, “in hindsight, illegal.” The Receiver‘s equivocation as to Bustos‘s status is both telling and fatal to his claim. The Receiver sought to name Bustos as a nominal defendant “while at the same time implying strongly that [he] is a violator of the securities laws.” Cherif, 933 F.2d at 415. But nothing in the underlying action establishes that Bustos has violated the securities law. He was not a party to that action and, so far as we can tell, had no reason to know that his own activities in connection with Alpha Telcom were in question. We do not believe that the Constitution permits the Receiver to use the nominal defendant designation
b. Summary proceedings in securities actions
The Receiver also relies on Wencke for the related proposition that, where there has already been an underlying securities action, a district court may permit the receiver to obtain relief through summary proceedings ancillary tо the main action. See Wencke, 783 F.2d 829. In other words, the Receiver argues that where a securities proceeding has established liability, a receiver may simply file a motion for disgorgement in the underlying action against non-parties who also may have violated the securities laws to effect relief. Although Wencke provides some support for the Receiver‘s claim, ultimately we think it is distinguishable.
Wencke arose out of summary proceedings ancillary to an SEC enforcement action. The receiver alleged that the defendant in the underlying action, one Walter Wencke, had funneled the proceeds from his securities violations involving certain corporations into the Ramapo Corporation, in which Wencke held a 60-percent stake. The receiver filed an application for disgorgement against the Ramapo shareholders, including deLusignan, a minority shareholder who held 25 percent of the stock, and Ramapo, seeking to disgorge the shares from the former and the charter from the latter.13 Wencke, 783 F.2d at 832. Eventually, the receiver gained possession of 75 percent of Ramapo‘s shares but continued to
We rejected the shareholder‘s appeal. First, we noted that we had previously approved the use of summary proceedings in “adjudicating in summary post-judgment proceedings the claims of nonparties to property claimed by securities receivers.” Id. at 836. Second, we noted that the district court‘s disgorgement order was directed only at Ramapo, not at deLusignan, and that deLusignan could still bring an action asserting his rights as a minority shareholder. Id. at 839 n.10. Third, we emphasized that because deLusignan had received actual notice, participated in extensive discovery, had been deposed, and was permitted to file briefs with the court, the use of summary proceedings did not violate his due process rights. Id. at 836-37. Finally, we noted that it was not necessary to the entry of the disgorgement order against the corporation to decide any issues or claims deLusignan might have had based on fraud or breach of contract by Wencke. Id. at 839 n.10.
Wencke differs from the instant case in several ways. First, and most importantly, because the disgorgement order was ultimately entered only against Ramapo Corporation, the district court did not need to obtain jurisdiction over deLusignan.14 DeLusignan‘s objections were simply irrelevant to the ques
Second, as in the nominal defendant cases noted earlier, the receiver in Wencke alleged no wrongdoing against either Ramapo or deLusignan; the only claim to the funds was that Wencke had funneled the proceeds of his wrongdoing into the corporation. Id. at 832-33. Consistent with this allegation, the district court declared Ramapo a constructive trustee for the benefit of the defrauded investors. Id. at 833. In other words, the district court in Wencke was simply exercising its authority “to decide the legitimacy of ownership claims made by non-parties to assets alleged to be proceeds from [the actual defendant‘s] securities laws violations.” Cherif, 933 F.2d at 414 n.11 (discussing Wencke, 783 F.2d 829). The use of summary proceedings in such cases is unremarkable because the purpose is simply to “obtain equitable relief from a non-party against whom no wrоngdoing is alleged” and can succeed only “if it is established that the non-party possesses illegally obtained profits but has no legitimate claim to them.” Id. (emphasis added).
Despite the Receiver‘s attempts to characterize it as such, this case does not involve Bustos‘s “claim[ ] . . . to [receivership] property claimed by” the Receiver. Wencke, 783 F.2d at 836. Rather, the case arises out of the Receiver‘s claims against Bustos for his alleged sale of unregistered securities. As we stated above, because the Receiver‘s disgorgement claim turns on Bustos‘s own violation of the securities laws, the Receiver cannot treat Bustos as a nominal defendant, nor can the Receiver plausibly claim that Bustos is a constructive trustee on behalf of Alpha Telcom or the defrauded investors. In other words, this is not a case involving the mere determination of who is entitled to possession of the funds where the minimal notice requirements of Mullane would suffice. Rather, the Receiver had to obtain the full in personam juris
Third, Bustos did not receive all of the benefits of being formally served with process and joined as a defendant in the underlying action. As a condition for intervention, the district court required him to waive any argument regarding whether the pay phone investments constituted securities and whether their sale violated
[8] In sum, given that the Receiver alleged that Bustos himself had violated the securities laws—and this is both the central allegation of the Receiver‘s disgorgement motion and the basis of the district court‘s order—the Receiver could not style Bustos as a nominal defendant or employ summary proceedings against him. The Receiver—and the SEC, to the extent it is involved—had to decide whether Bustos merely had no right to the funds because he was an empty vessel into which the true wrongdoers funneled their proceeds or because he had violated the securities laws. He has chosen the latter (and given the district court‘s skepticism of the fraudulent conveyance claim, the Receiver likely had no other option). Bustos is thus, as the Receiver admitted below, the real party-in-interest. The Receiver therefore had to proceed against Bustos as a plaintiff would proceed against any defendant potentially liable under
B. Jurisdiction and Service of Process in Receivership Actions
The Receiver also argues that, independent of the Securities Act, formal service of process was not required here because federal receivers have broad equitable powers and, pursuant to those powers, they can use summary proceedings to recover from third parties. See Hardy, 803 F.2d 1034; United States v. Arizona Fuels Corp., 739 F.2d 455 (9th Cir. 1984); SEC v. Universal Fin., 760 F.2d 1034 (9th Cir. 1985) (per curiam). According to the Receiver, our cases—which rely on
Congress has authorized federal receivers to exercise broad powers in administering, retrieving, and disposing of assets belonging to the receivership. In
[9] Some courts have held that the interplay between
The cases upon which the Receiver relies presume that the district court has jurisdiction by virtue of the district court‘s investment of ownership and/or control of the receivership entity in the receiver or by virtue of the receiver‘s filing in compliance with
In SEC v. Am. Capital Invs., Inc., 98 F.3d 1133 (9th Cir. 1996), we rejected jurisdictional challenges by non-party partners to the forced sale of certain partnership assets, noting that the receiver had obtained jurisdiction over the assets pursuant to its
[10] It should be obvious that these cases provide no basis for the Receiver‘s attempted use of summary proceedings against Bustos. Even assuming the Receiver could overcome the preliminary difficulty of establishing that Bustos‘s earned commissions are receivership assets, he has not given any evidence that the proceeds of these commissions are located in the District of Oregоn, or that he has attempted to establish control over out-of-district assets pursuant to
We should note that although receivers usually obtain jurisdiction in the manner described above, in one case we held that strict compliance with
More importantly, however, we held that through its active participation, Tenneco had submitted to the in personam jurisdiction of the district court. Thus, even though Tenneco claimed that it held the disputed proceeds in Houston, Texas, the failure of the receiver, who was appointed by the District of Arizona, to file in that district pursuant to
We think that Arizona Fuels does not govern this case. Nothing in the record suggests that the district court ever obtained in personam jurisdiction over Bustos. He was not named as a party to the underlying proceedings, and although he intervened, as we discuss in more detail below, that intervention did not constitute consent to the jurisdiction of the district court. Moreover, the receiver in Arizona Fuels was simply attempting to recover receivership assets—there was no allegation that the legitimacy of Tenneco‘s claim to the assets depended on its liability for some illegal activity. The Receiver in our case is alleging that Bustos himself violated the Securities Act. Bustos thus does not fall within this exception to the filing requirements of
The Receiver has one remaining jurisdictional argument that merits close attention. Bustos responded to notice of the Receiver‘s disgorgement motion by filing a motion to intervene as of right under
Few courts have directly addressed whether a non-party who intervenes in ongoing proceedings pursuant to
It seems apparent to us that in some cases an intervenor must necessarily acquiesce to the district court‘s jurisdiction. Indeed, in many cases an intervenor will have no objection to the district court‘s jurisdiction over her. On the other hand, consent to jurisdiction sometimes occurs unwillingly or even inadvertently. As the Court wrote in Insurance Corp. of Ireland, “[a] variety of legal arrangements have been taken to represent express or implied consent to the personal jurisdiction of the court.” 456 U.S. at 703. For example, the parties may consent to jurisdiction through a forum selection clause in a contract, Nat‘l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 315-16 (1964); Dow Chem. Co. v. Calderon, 422 F.3d 827, 831 (9th Cir. 2005); by filing a proof of claim in a bankruptcy proceeding, Tucker Plastics, Inc. v. Pay ‘N Pak Stores, Inc., 99 F.3d 910, 911 (9th Cir. 1996) (per curiam); or by filing an original complaint, a counterclaim or a crossclaim, Adam v. Saenger, 303 U.S. 59, 67-68 (1938); Schnabel v. Lui, 302 F.3d 1023, 1037-38 & n.5 (9th Cir. 2002); cf. Smith v. Salish Kootenai Coll., 434 F.3d 1127, 1138-40 (9th Cir. 2006)
[11] The rules governing consent are not as immutable as they may appear. We have held that a party who files a compulsory counterclaim under
[12] We do not think that Bustos consented to the court‘s jurisdiction. To the contrary, Bustos “objected to in personam jurisdiction as effectively as [he] could have” at every turn. Teyseer Cement Co., 794 F.2d at 478. Bustos sought to inter
[13] We do not think that anything in the Federal Rules suggests that a non-named party cannot intervene of right and then contest the federal court‘s exercise of in personam jurisdiction. First, in the standard alignment, where a plaintiff sues a defendant, the defеndant is entitled to object to the court‘s exercise of personal jurisdiction in its first responsive pleading.
[14] We do not see why an intervenor should be considered to have automatically consented to the jurisdiction of the court. The intervenor has consented to something, but it is not personal jurisdiction. Rather, the quid pro quo for his intervention is that he consents to have the district court determine all issues in the case, including issues of jurisdiction, venue and service of process. See Ins. Corp. of Ireland, 456 U.S. at 706 (“By submitting to the jurisdiction of the court for the limited purpose of challenging jurisdiction, the defendant agrees to abide by that court‘s determination on the issue of jurisdiction.“). Intervention of right simply puts the intervenor into the position he would have been in had the plaintiff (or another party) properly named him to begin with.
This case demonstrates the wisdom of the rule. If the Receiver had played the game straight-up, named Bustos as a defendant, and served him with a complaint and summons pursuant to
IV.
Our decision does not necessarily foreclose other avenues of seeking disgorgement from Bustos, although we express no views on the merits of such proceedings. The SEC may opt to bring a civil enforcement action against Bustos. There may be additional proceedings the Receiver can pursue under
V.
The district court lacked jurisdiction to enter the disgorgement order against Bustos. We therefore VACATE the district court‘s order and REMAND for further proceedings consistent with this opinion.
VACATED and REMANDED.