United States Court of Appeals,
Seventh Circuit.
Erno Kalman ABELESZ et al.,FN*
Plaintiffs–Appellees,OTP BANK,
Defendant–Appellant.
Erno Kalman Abelesz et al., Plaintiffs–Appellees,
Nos. 11–2353, 11–3247, 11–2386, 11–3249,
11–2875.
Before KANNE, WILLIAMS, and HAMILTON, Circuit Judges.
*1
[1] A group of
Holocaust survivors and heirs of other Holocaust victims filed suit against
several banks alleging that the banks participated in expropriating property
from Hungarian Jews during the Holocaust. This case and a parallel case against
the Hungarian national railway have produced nine separate pending appeals and
mandamus petitions. In this opinion, we address the plaintiffs' claims against
two privately owned Hungarian banks, defendants MKB Bank Zrt.
(“MKB”) and OTP Bank (“OTP”). In separate opinions released today, we address
plaintiffs' claims against another private bank, the Hungarian national bank,
and the Hungarian national railway.FN1
[20] The extraordinary
nature of this litigation, however, makes the district court's denial of MKB's
and OTP's motions to dismiss for lack of personal jurisdiction anything but
routine. Plaintiffs seek compensation for events that occurred on another
continent more than 65 years ago. The case has appreciable foreign policy
consequences, and the financial stakes are astronomical. Plaintiffs seek to
impose joint and several liability on each defendant bank for $75 billion in
damages—an amount that is nearly 40 percent of Hungary's annual gross domestic
product. The consequences for the plaintiffs themselves are also very
substantial. If the claims against these defendants do not belong in U.S.
courts, no matter how compelling the claims might be on the merits, we would do
the plaintiffs no favors by allowing them to spend more time and money to
proceed further toward an inevitable dismissal. It is the confluence of these
specific factors, together with the crystal clarity of the personal
jurisdiction issue, that removes this case from the
category of “ordinary” denials of motions to dismiss. See Cheney v. U.S. Dist. Court for Dist. of Columbia, 542 U.S. 367, 381, 124 S.Ct.
2576, 159 L.Ed.2d 459 (2004) (court of appeals
erred in finding it lacked authority to issue writ of mandamus to provide
immediate review of district court discovery order that could affect the
privacy of President's policymaking processes; executive privacy concerns
removed district court order from the category of “ordinary” discovery orders).
Plaintiffs' claims do not arise out of any business contacts these defendants
have with the United States, so specific personal jurisdiction does not apply
here. Plaintiffs assert instead that U.S. courts have general personal
jurisdiction over these Hungarian banks. General jurisdiction over a defendant,
which means that the defendant can be required to answer any claim that arose
anywhere in the world, requires that the defendant be “essentially at home” in
the forum. See Goodyear Dunlop Tires Operations, S.A. v.
Brown, ––– U.S. ––––, ––––, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011).
The allegations against MKB and OTP do not come close to meeting that standard,
and neither the plaintiffs nor the district court have offered even a colorable
argument for satisfying that standard.
*8
[21][22] This court is
authorized to issue a writ of mandamus pursuant to the All Writs Act, 28 U.S.C. § 1651(a).
Mandamus is a “drastic remedy traditionally used to confine a lower court to
the lawful exercise of its jurisdiction or to compel it to exercise its
authority when it has a duty to do so.” United States v. Lapi, 458 F.3d 555, 560–61 (7th Cir.2006);
see also Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 34–35, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980)
(per curiam) (“Only exceptional circumstances,
amounting to a judicial usurpation of power, will justify the invocation of
this extraordinary remedy.”). Three conditions must be satisfied for a writ to
issue. First, the party seeking the writ must demonstrate that the challenged
order is not effectively reviewable at the end of the case, that is, without
the writ the party will suffer irreparable harm. Second, the party seeking the
writ must demonstrate a clear right to the writ. Last, the issuing court must
be satisfied that issuing the writ is otherwise appropriate. See Cheney, 542 U.S. at 380–81;
In re Sandahl, 980 F.2d 1118, 1119 (7th Cir.1992)
(“[T]he petitioner must show irreparable harm (or, what amounts to the
same thing, the lack of an adequate remedy by way of direct appeal or otherwise)
and a clear right to the relief sought.”). The Supreme Court has said
that “[t]hese hurdles, however demanding, are not
insuperable.” Cheney, 542 U.S. at 381
(granting writ). We conclude that this exacting standard is satisfied here with
respect to the district court's denial of MKB's and OTP's motions to dismiss
for lack of personal jurisdiction.FN7
A. Requirements
for General Personal Jurisdiction
[26][27][28] In the realm of
personal jurisdiction, federal constitutional law draws a sharp and vital
distinction between two types of personal jurisdiction: specific or case-linked
jurisdiction, and general or all-purpose jurisdiction. Goodyear Dunlop Tires Operations, S.A., 131 S.Ct. at
2851. Specific jurisdiction is
jurisdiction over a specific claim based on the defendant's contacts with the
forum that gave rise to or are closely connected to the claim itself. Id.
General jurisdiction, in contrast, does not depend on
any connection between the underlying claim and the forum. “A court may assert
general jurisdiction over foreign (sister-state or foreign-country)
corporations to hear any and all claims against them when their affiliations
with the State are so ‘continuous and systematic’ as to render them essentially
at home in the forum State.” Id. (emphasis added). This is a
demanding standard, for the consequences for the defendant can be severe.
[29][30]
Where a court has general jurisdiction over a defendant, that defendant may be
called into that court “to answer for any alleged wrong, committed in any
place, no matter how unrelated to the defendant's contacts with the forum.” uBid, Inc. v. GoDaddy
Grp., Inc., 623 F.3d 421, 426 (7th Cir.2010).
The constitutional requirement for general jurisdiction therefore is “considerably
more stringent” than that required for specific jurisdiction. Purdue Research Foundation v. Sanofi–Synthelabo, S.A., 338 F.3d 773, 787 (7th Cir.2003),
quoting United States v. Swiss American Bank, Ltd., 274 F.3d 610, 619 (1st Cir.2001).
Courts look for “continuous and systematic general business contacts,” Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct.
1868, 80 L.Ed.2d 404 (1984), and inquire
whether the business was “sufficiently substantial and of such a nature” as to
permit the exercise of personal jurisdiction, Perkins v. Benguet
Consol. Mining Co., 342 U.S. 437, 447, 72 S.Ct.
413, 96 L.Ed. 485 (1952).
*11
[31] A corporation is “essentially
at home” both where it is incorporated and where its principal place of
business is located. Goodyear, 131 S.Ct. at
2853–54. Beyond those easy cases, the best
example of the “essentially at home” standard is found in Perkins, where
the president and general manager of a Philippine mining corporation returned
to his home in Ohio during the Japanese occupation of the Philippine Islands
during World War II. While in Ohio, he maintained an office from which he
conducted activities for the company. He kept company files and held directors'
meetings in the office, carried on correspondence related to the business,
distributed salary checks drawn on two active Ohio bank accounts, engaged an
Ohio bank to act as a transfer agent, and supervised policies dealing with the
rehabilitation of the corporation's properties in the Philippines. 342 U.S. at 447–49.
Based on these contacts, the Supreme Court determined: “The corporation
had been carrying on in Ohio a continuous and systematic, but limited, part of
its general business.” Id. at 438.
B. Defendants'
Contacts with the United States
*12
[32] Plaintiffs have
attempted to support general personal jurisdiction over MKB and OTP by
examining all of their contacts with the United States as a whole, as distinct
from contacts with the forum state of Illinois. Under Rule 4(k)(2) of the Federal Rules of Civil
Procedure, plaintiffs may do so, at
least regarding their claims arising under federal or international law. If a
foreign defendant is not subject to jurisdiction in any one state's court of
general jurisdiction, the rule allows jurisdiction over, and service of process
for, federal claims based on all of a defendant's contacts with the entire
United States.FN8
[33] The proper
inquiry is not, as plaintiff's suggest, whether a defendant's contacts “in the
aggregate are extensive.” The issue under the Due Process Clauses of the Fifth
and Fourteenth Amendments is whether the contacts “are so ‘continuous and systematic’
as to render [defendants] essentially at home in the forum.” Goodyear, 131 S.Ct. at
2851. MKB's and OTP's contacts with the
United States are much more like those in Helicopteros
and Goodyear than they are like the “continuous and systematic” general
business in Perkins. Even taking plaintiffs' allegations as true, the
alleged contacts are not sufficient to render either OTP or MKB “essentially at
home” in the United States such that a U.S. court could exercise general
jurisdiction over them.
[34] Plaintiffs assign
great weight to OTP's agreement to submit to U.S. jurisdiction in resolving
disputes arising out of its agreement with American Express. But that
information cuts the other way. While it is true that “choice of law provisions
may be some indication that a defendant purposefully has availed itself of the
protection of the laws of a particular jurisdiction,” Purdue Research
Foundation, 338 F.2d at 786 (discussing choice of law provisions in the
context of specific jurisdiction), the “particular jurisdiction” in
OTP's case is New York. Even more important, the agreement is limited to
disputes arising from one particular contract. If U.S. courts had a sound basis
for exercising general jurisdiction over OTP, American Express would not have
needed a forum-selection clause in its contract to ensure personal jurisdiction
over OTP.
*14
[35] Over the last
four years, various OTP personnel took 53 business trips to the United States,
42 of which were for conferences or seminars. These trips are much more closely
akin to the training trips to Texas taken by Helicol
employees in Helicopteros than they are to the
facts in Perkins, where the president of the company worked out of an
office in Ohio for several years during the Japanese occupation of the
Philippine Islands. These “sporadic contacts” are not so “continuous and
systematic” as to support general jurisdiction. See Tamburo, 601 F.3d at 701
(rejecting general jurisdiction where one defendant visited the forum twice in
ten years and another had visited the forum five times).
[36] Plaintiffs ask
that the contacts of MKB's parent company, Bayerische
Landesbank, be imputed to MKB. (We assume for
purposes of argument that Bayerische Landesbank has sufficient contacts to support general
jurisdiction in the United States.) We confronted a similar issue in Purdue
Research Foundation, where plaintiffs argued that a foreign defendant was
subject to general jurisdiction in Indiana based on the contacts of a wholly-owned
subsidiary. 338 F.3d at 787–88.
There, we applied the “general rule” that “the jurisdictional contacts of a
subsidiary corporation are not imputed to the parent.” Id. at 778 n. 17; Central States, Se. and Sw. Areas Pension
Fund v. Reimer Express World Corp., 230 F.3d 934, 943 (7th Cir.2000)
( “[C]onstitutional due process requires that personal
jurisdiction cannot be premised on corporate affiliation or stock ownership
alone where corporate formalities are substantially observed and the parent
does not exercise an unusually high degree of control over the subsidiary.”);
see also Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n. 13, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984)
(“But jurisdiction over an employee does not automatically follow from
jurisdiction over the corporation which employs him; nor does jurisdiction over
a parent corporation automatically establish jurisdiction over a wholly owned
subsidiary.”).
[37] As in Purdue
Research Foundation, plaintiffs here argue against the general rule based
on the fact that Bayerische Landesbank
executives hold four out of nine seats on MKB's Board of Supervisors.
Imputation, however, requires “an unusually high degree of control” or that the
subsidiary's “corporate existence is simply a formality.” Purdue Research Foundation, 338 F.3d at 788 n. 17
(rejecting effort to base jurisdiction on corporate affiliate's contacts).
There is no suggestion of either in this case. The interaction alleged between
MKB and Bayerische Landesbank
is not sufficient to establish that Bayerische Landesbank controls and dominates MKB to such an extent
that its jurisdictional contacts should be imputed to MKB. Cf. IDS Life Ins. Co. v. SunAmerica
Life Ins. Co., 136 F.3d 537, 540 (7th Cir.1998)
(“Parents of wholly owned subsidiaries necessarily control, direct, and
supervise the subsidiaries to some extent, but unless there is a basis for
piercing the corporate veil and thus attributing the subsidiaries' torts to the
parent, the parent is not liable for those torts, and cannot be served under
the tort provision of the long-arm statute.”) (internal citations omitted); Volkswagenwerk Aktiengesellschaft
v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir.1984)
(“The officers of any corporation that owns the stock of another necessarily
exercise a considerable degree of control over the subsidiary corporation and
the discharge of that supervision alone is not enough to subject the parent to
New York jurisdiction.”). Plaintiffs have offered no basis for piercing the
separate corporate identities in this case.
[38] Plaintiffs
correctly point out that general personal jurisdiction must be evaluated based
on the totality of the defendant's contacts with the forum, and we have
considered the contacts both individually and in their totality. The contacts
identified here fall well short of any case cited by plaintiffs finding general
jurisdiction, or any case we have found. Binding Supreme Court precedents,
including Perkins, Helicopteros, and Goodyear,
and binding Seventh Circuit precedents, such as uBid,
and Purdue Research Foundation, establish that the district court cannot
possibly exercise general personal jurisdiction over MKB or OTP. Neither
defendant meets the stringent “essentially at home” standard.FN9
D. The Supreme Court Precedents and the Scope of Rule 4(k)(2)
[39] To avoid these
controlling precedents that require dismissal on personal jurisdiction grounds,
plaintiffs advance several legal arguments challenging their relevance. The
district court dismissed Goodyear and J. McIntyre Machinery, Ltd. v. Nicastro, ––– U.S. ––––, 131 S.Ct.
2780, 180 L.Ed.2d 765 (2011), as “not on point
as far as personal jurisdiction is concerned in this case.” 807 F.Supp.2d at 704.
In that same vein, plaintiffs argue that Goodyear and J. McIntyre
are “limited to analyzing whether the ‘stream-of-commerce’ doctrine that can
bolster a state court's exercise of specific jurisdiction over a
foreign corporation would be enough by itself to also establish general jurisdiction.”
These efforts to avoid the Supreme Court's authoritative teachings are not at
all persuasive. Goodyear and J. McIntyre state clearly the
requirements for exercising general personal jurisdiction and the differences
between general and specific personal jurisdiction. See Goodyear, 131 S.Ct. at
2850–51 (explaining the difference between
general and specific jurisdiction); id. at 2853–54
(“For an individual, the paradigm forum for the exercise of general
jurisdiction is the individual's domicile; for a corporation, it is an
equivalent place, one in which the corporation is fairly regarded as at home.”);
id . at 2854
(noting the Court had considered the general jurisdiction standard only twice
since International Shoe, in Perkins and Helicopteros
); J. McIntyre Mach., Ltd., 131 S.Ct. at
2786–87 (plurality opinion) (discussing the
due process considerations that underlie the personal jurisdiction inquiry); id. at 2791
(“Due process protects petitioner's right to be subject only to lawful
authority.”). As Goodyear and J. McIntyre reaffirm, due process
considerations are present in all personal jurisdiction inquiries—regardless of
whether it is a state or federal court or whether the inquiry involves specific
or general personal jurisdiction.
*16
[40] Rule 4(k)(2)
does not help plaintiffs with the due process issue. Rule 4(k)(2)
permits the aggregation of contacts nationwide for the unusual situation where
a defendant's contacts with any given state are not extensive enough to support
that state's exercise of personal jurisdiction, but there are sufficient
minimum contacts with the nation as a whole. An example is ISI
International, where the Canadian defendant had a little contact with
Illinois, a little with California, a little with the District of Columbia, and
a little more with Michigan. 256 F.3d at 551. Although
the minimal contacts with each state were not sufficient to support
jurisdiction in any one state's courts, the aggregate contacts with the United
States as a whole were sufficient to authorize specific jurisdiction in the
United States, so Rule 4(k)(2)
applied. Id.
[41] Plaintiffs'
argument loses sight of the fundamental due process requirements that apply in
both state and federal courts. Plaintiffs, in asserting that Rule 4(k)(2)
relaxes the minimum-contacts inquiry, seem to argue that the constitutional
standards for the exercise of personal jurisdiction vary depending on whether
the action is in a state court or a federal court. We find no merit in this
position and no support within Goodyear, J. McIntyre, or any other case.
As the rule itself acknowledges, all exercises of jurisdiction by a federal
court must be “consistent with the United States Constitution and laws.” While Rule 4(k)(2)
applies a broader geographic standard for which contacts are relevant, the minimum
in the “minimum contacts” that are constitutionally sufficient to support
general or specific jurisdiction is the same. The rule does not and could not
relax the requirement that a defendant be “essentially at home” in the forum
state or nation for a court to exercise general jurisdiction over it. The
difference between litigating under state law in state court and under federal
law in federal court is that the federal Constitution and federal law allow a
plaintiff to aggregate a defendant's contacts with the entire nation rather than
with the forum state. The underlying constitutional requirements for minimum
contacts under either a general jurisdiction or specific jurisdiction analysis
remain the same. Plaintiffs have not shown even an arguable basis for general
personal jurisdiction over MKB or OTP.
FN7. Because writs of
mandamus should issue on the basis of the district court's clear lack of
general jurisdiction over these defendants, we do not reach the merits of MKB's
alternative argument that a writ should issue based on its political question
argument.
FN8. Rule 4(k)(2)
was added in 1993 to correct an anomaly in federal law. Without the provision,
a foreign defendant who lacked minimum contacts with any one forum state, but
who had minimum due process contacts with the United States as a whole, could
not be sued in a federal court without its consent. See ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 551 (7th Cir.2001).
FN9. When we pressed
plaintiffs for their best authority supporting the exercise of general
jurisdiction here, they cited ISI International, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548 (7th Cir.2001).
That case explained how Rule 4(k)(2)
works, but it applied only to specific jurisdiction, holding that a federal
district court had jurisdiction over a foreign defendant on claims arising from
that defendant's contacts with the United States in the disputed transaction itself.
ISI International adds no support for the attempt to exercise general
jurisdiction over these foreign defendants.