Personal Jurisdiction, Due Process and Transnational Litigation

The Fifth Amendment of the U.S. Constitution requires “due process” for “persons” deprived of their property. But who counts as a “person”—and to what “process” they are “due”—remains unresolved, especially in cases involving foreign defendants. The U.S. Court of Appeals for the Fifth Circuit, for example, recently held in Douglass v. Nippon Yusen Kabushiki Kaisha that the exercise of personal jurisdiction over a Japanese corporation for conduct that happened in Japanese territorial waters would violate the Fifth Amendment Due Process Clause. The Fifth Circuit has vacated the opinion and granted rehearing en banc to decide whether the Constitution really compels that result. Also unresolved is whether foreign nations and their state-owned enterprises are “persons” entitled to due process at all, an issue noted by several justices at oral argument in Opati v. Republic of Sudan, a case involving retroactive application of punitive damages. In personal jurisdiction cases, lower courts including the U.S. Courts of Appeals for the Second and D.C. Circuits have held that foreign nations are not “persons” entitled to due process.

Missing in these cases is any discussion of the original meaning of the Fifth Amendment or of international norms. Yet, at a minimum, Justices Neil Gorsuch and Clarence Thomas are open to rethinking due process along originalist lines (see Ford Motor Co. v. Montana Eighth District Court), and the Supreme Court considered international comity in a recent transnational personal jurisdiction case, Daimler AG v. Bauman. Equally important, originalist sources provide a workable, bright-line Fifth Amendment alternative to the personal jurisdiction morass of the 14th Amendment: There are no due process limits on the territorial reach of personal jurisdiction. International law or international comity may, however, provide a reason to impose some constraints on the exercise of personal jurisdiction in the interpretation of the Federal Rules of Civil Procedure.

Fifth Amendment Due Process: Original Meaning

For most cases in federal court, personal jurisdiction extends as far as the jurisdiction of the state courts in which the federal court is located pursuant to Federal Rule of Civil Procedure (FRCP) 4(k)(1)(A), meaning that state long arm statutes and the 14th Amendment impose the relevant limits. The few personal jurisdiction cases in federal court that explore the Fifth Amendment due process clause have some other basis for jurisdiction—such as Foreign Sovereign Immunities Act or FRCP 4(k)(2).

In the Douglass case, a ship owned by the defendant collided with a U.S. ship outside of the United States. Plaintiffs sued under a federal statute and argued that personal jurisdiction was appropriate under FRCP 4(k)(2), which applies if no state court would have personal jurisdiction and if the case is brought under a federal statute. A panel of the U.S. Court of Appeals for the Fifth Circuit imported the Supreme Court’s 14th Amendment reasoning from Daimler and held that the Fifth Amendment prevented the exercise of personal jurisdiction over the defendant because it was not “at home” in the United States.

The reasoning is unpersuasive. The defendants, after all, do extensive business in the United States both directly and through their subsidiaries. The decision seems unfair to the U.S. plaintiffs and the court presented no convincing reasons to apply problematic 14th Amendment reasoning to the Fifth Amendment. The decision could also render FRCP 4(k)(2) mostly or entirely useless because the number of cases in which no state court has jurisdiction and the Fifth Amendment is nonetheless satisfied appear to be vanishingly small. The panel concluded that it was bound by prior decisions from the Fifth Circuit.

Amici—an esteemed group of civil procedure scholars—argued for a different Fifth Amendment test. Rather than borrowing the jurisdictional analysis developed under the 14th Amendment and substituting the United States as the sovereign instead of an individual state, they suggest a “national jurisdiction” test. Courts would ask “whether a non-US defendant, sued on a federal claim and not amenable to suit in any state court, was doing systematic and continuous business in the US and whether the claim was related to that business.” Students of civil procedure will recognize “systematic and continuous” language as coming from the seminal 14th Amendment case International Shoe Co. v. Washington (1945). Amici defend their test as faithful to the purpose of FRCP 4(k)(2) and as consistent with prior cases. Their test was proposed prior to the Supreme Court’s decision in Ford, but my concern with the test is not so much whether it is superior to other national contacts tests nor whether it is faithful to the Supreme Court’s 14th Amendment cases. My concern is adopting amici’s test as an interpretation of the Fifth Amendment.

To begin, it is unusual to interpret the Fifth Amendment of the Constitution based on the purposes of a Federal Rule of Civil Procedure. More fundamentally, neither the opinions nor the briefing in Douglass even gesture to what the Fifth Amendment might have meant in 1791 when it was enacted. Based on detailed analysis of the terms “person” and “process” in the Fifth Amendment, I wrote in a 2019 article that early “cases involving foreign states suggest that the Constitution itself does not dictate the rules governing personal jurisdiction” and that the Fifth Amendment requires only that judges follow duly enacted law—an approach that might be termed “positivist” limitations on judicial power. The actual rules governing personal jurisdiction came from general law or international law. Positivist constitutional protections sound minimal, but they prevent arbitrary actions of federal courts, and they are consistent with the general 18th-century views of parliamentary supremacy. Stephen Sachs has similarly argued at length that the Fifth Amendment imposes no territory-based restrictions on personal jurisdiction.

As to the question of whether foreign nations receive due process protections, sources from the 18th century demonstrate beyond any doubt that foreign nations were “persons” under the Fifth Amendment. Indeed, references to both nations and corporations as “bodies” and “persons” were extremely common. Justice Stephen Breyer remarked at oral argument in Opati that if corporations are persons, maybe foreign nations are, too. He was exactly right. The off-hand suggestion in Weltover v. Argentina that foreign nations are not “persons” is simply wrong, as is the Second Circuit’s reasoning to the contrary in Frontera Resources Azerbaijan Corp. v. State Oil Co. of Azerbaijan Republic and the D.C. Circuit’s reasoning in Price v. Socialist People’s Libyan Arab Jamahiriya. A panel of the Second Circuit and a U.S. District Court for the Southern District of New York decision recently noted this argument but reasoned that they were bound by precedent.

As the Constitution would have been understood originally, foreign nations are entitled to Fifth Amendment due process, but due process places no territorial limits on the reach of personal jurisdiction by the federal courts over any defendant, whether a foreign state or not. Modern appellate court decisions have it exactly backward.

The policy advantages of taking the originalist approach are considerable. Even non-originalists should consider their advantages carefully. If foreign states lack constitutional rights, as they do under current doctrine, that means that Daimler and the Palestinian Liberation Organization are constitutionally protected but Germany and Israel or not. It follows that courts must draw a constitutional distinction between foreign states and private corporations—a troublesome endeavor when it comes to state-owned enterprises, especially because the constitutional basis for the distinction is entirely unclear. The original approach avoids these problems. Finally, it does not use a “minimum contacts” or “systematic and continuous contacts” test for personal jurisdiction, an advantage given the unworkable nature of those tests over the long period since the Supreme Court’s decision in International Shoe. There remains the potential problem of exorbitant assertions of jurisdiction that would offend other nations and perhaps violate international law.

International Law Limitations on Jurisdiction to Adjudicate

The limits—if any—that international law imposes on a national court’s exercise of personal jurisdiction (also called jurisdiction to adjudicate) are contested. The Restatement (Fourth) of the Foreign Relations Law of the United States provides in Reporters’ Note 1 to Section 422 that except for rules governing immunity, “modern customary international law generally does not impose limits on jurisdiction to adjudicate.” The Reporters’ Note supports this position by noting that countries rarely object to exorbitant extensions of personal jurisdiction as violations of international law. Scholars, including Austen Parrish and Ralf Michaels, have raised important counterarguments; William Dodge, Anthea Roberts and Paul Stephan have written a partial response defending the Restatement. The arguments against the Restatement position include that jurisdiction to adjudicate may not be distinct from jurisdiction to prescribe (and the limits on prescriptive jurisdiction are well accepted), and that even “exorbitant” exercises of jurisdiction rest on some connection to the forum state, suggesting that international law requires some link between the defendant and the forum.

We need not resolve the uncertainty around international law to argue that courts should interpret FRCP 4(k)(2) to require a nexus between the U.S. and the defendant. Doing so avoids at least a potential conflict with international law. The Charming Betsy canon requires courts to interpret statutes to avoid conflicts with international law—interpreting statutes or the FRCP to avoid a potential conflict is a step beyond that canon. Nevertheless, courts might interpret the FRCP and statutes that confer personal jurisdiction on the federal courts to require some kind of territorial nexus to the United States based on international comity. Unlike international law, international comity is not a binding international legal commitment but is instead deference to foreign courts and law. The Daimler case relied on international comity to limit, under the 14th Amendment, personal jurisdiction over a foreign corporation. Courts could use international comity to limit the scope of the FRCP and statutes, to the extent that their reach is not clear. A national contacts approach of some type would require a territorial nexus and prevent exorbitant exercises of jurisdiction in deference to foreign courts; it also seems plausible based on the background rules on personal jurisdiction when FRCP 4(k)(2) was adopted. It is not the best constitutional test, however. For originalist and policy reasons, the Fifth Amendment should not be interpreted as limiting the exercise of personal jurisdiction by federal courts. It is up to Congress (and the drafters of the FRCP) to set those limits.