In Re: Automotive Refinishing Paint Antitrust Litigation Basf Ag and Basf Coatings Ag

This certified interlocutory appeal, arising out of alleged unlawful price-fixing by both domestic and foreign corporations, raises questions of considerable importance in antitrust litigation involving foreign nationals. Three of the issues are of first impression to this Court. The first issue is whether worldwide service of process authorized under Section 12 of the Clayton Act, 15 U.S.C. § 22, upon foreign corporations is independent of the specific venue provision contained in that statute. The second issue is whether a federal court's personal jurisdiction over a foreign corporation in antitrust litigation may be predicated on the foreign corporation's contacts with the United States as a whole (national contacts analysis), rather than with the specific forum in which the court sits (local contacts analysis). The final issue is whether jurisdictional discovery from foreign nationals may proceed under the Federal Rules of Civil Procedure without first resorting to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (Hague Convention or Convention). 23 U.S.T. 2555, reprinted in 28 U.S.C. § 1781 Note.

The District Court denied the motions to dismiss for lack of personal jurisdiction and the joint motion for a protective order filed by two German corporations, BASF Aktiengesellschaft (BASF AG) and BASF Coatings Aktiengesellschaft (BASF Coatings) (collectively "appellants"), defendants in the underlying antitrust litigation. The District Court construed Section 12 of the Clayton Act as authorizing worldwide service of process independently of the specific venue provision contained in that statute. The Court also held that personal jurisdiction over the foreign corporations would be measured on their contacts with the United States as a whole, rather than with the forum state. The Court finally rejected a rule favoring first resort to Hague Convention procedures for jurisdictional discovery of foreign defendants. BASF AG and BASF Coatings timely appealed. We affirm.

The underlying federal antitrust class litigation involves sixty-three actions filed in five states, Pennsylvania, New Jersey, Ohio, Kentucky, and Delaware, by private parties. Those actions were transferred to, and consolidated in, the United States District Court for the Eastern District of Pennsylvania for pre-trial purposes by the Judicial Panel on Multidistrict Litigation.1 The class action complaint alleges that from 1993 to at least December 31, 2000, the foreign and domestic defendants conspired to raise and maintain the prices of automotive refinish paint throughout the United States. All defendants, except the appellants, have stipulated to certification of a national class consisting of all direct purchasers of automotive refinishes from the defendants.

The appellants filed motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. In support of their motions to dismiss, the appellants submitted affidavits stating that they did not have presence in the state of Pennsylvania and never sold any automotive refinish paint to any customers in Pennsylvania. The plaintiffs replied that the appropriate forum for measuring the appellants' contacts for purposes of personal jurisdiction is the United States as a whole, rather than the forum state of Pennsylvania. The plaintiffs opposed the motions to dismiss and also served jurisdictional discovery requests pursuant to the Federal Rules of Civil Procedure, seeking production of documents concerning the appellants' contacts with the United States as a whole.

The plaintiffs submitted publicly available information to show a threshold case of personal jurisdiction based on the appellants' contacts with the United States and support their request for jurisdictional discovery.2 In response to the plaintiffs' request for jurisdictional discovery, the appellants filed a joint motion for a protective order, contending that the plaintiffs' discovery request was overly broad and burdensome. They argued also that any jurisdictional discovery should proceed first under the Hague Convention, of which the United States and Germany are signatories.

The reasons proffered by the appellants' expert, Martin Reufels, were that Germany, unlike the United States, viewed the gathering of evidence as a judicial, rather than private, function. Therefore, Germany had a sovereign interest in keeping discovery conducted within its borders in conformity with its laws. According to Reufels, compelling the appellants to produce documents pursuant to the Federal Rules of Civil Procedures would offend Germany's sovereign interests.

In its order and careful accompanying opinion, the District Court, Surrick, J., denied without prejudice the appellants' motions to dismiss. Rejecting the appellants' contrary arguments, the Court construed Section 12 of the Clayton Act as authorizing worldwide service of process independently of the specific venue provision contained in that statute. The Court held that the relevant forum for purposes of proof of personal jurisdiction was the United States as a whole, rather than the forum state of Pennsylvania. The Court concluded that the plaintiffs had made a threshold showing of personal jurisdiction that warranted jurisdictional discovery.3 In a separate order and accompanying opinion, the Court denied the appellants' joint motion for a protective order requiring the plaintiffs to conduct their jurisdictional discovery first under the Hague Convention procedures, rather than the Federal Rules of Civil Procedure.

Both the District Court and this Court granted the appellants' petition for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The appellants raise two issues for review on this interlocutory appeal. The first issue is whether a plaintiff may invoke the worldwide service of process provision contained in Section 12 of the Clayton Act and, thus, national contacts analysis, without satisfying the specific venue provision also contained in that statute. The second issue is whether a plaintiff may be permitted to seek jurisdictional discovery from foreign defendants under the Federal Rules of Civil Procedure without first resorting to the Hague Convention. We agree with the District Court and answer both in the affirmative.4

The first issue raised by the appellants involves two conceptually distinct, though intertwined, sub-issues. One is whether the District Court erred in ruling that the service of process provision contained in Section 12 of the Clayton Act is independent of the venue provision also contained in that statute. Two is whether the Court erred in ruling that in federal antitrust litigation, personal jurisdiction should be assessed on the basis of the appellants' contacts with the United States as a whole (national contacts analysis), rather than with the forum state (local contacts analysis). The two sub-issues are intertwined because if there is no specific venue limitation in federal antitrust litigation involving a foreign corporate defendant, the defendant can be sued in any federal district court based on its aggregate contacts with the United States as a whole. Because they are intertwined and because the appellants present them as a single integrated issue, we discuss them together.5

Section 12 of the Clayton Act provides: Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

Section 12, a long sentence, consists of two separate clauses, the first relating to venue and the second concerning service of process and, therefore, personal jurisdiction. It is undisputed that the second clause authorizes nationwide, indeed worldwide, service of process on a defendant corporation in federal antitrust litigation. The clause provides that the defendant may be served "wherever it may be found," that is, wherever it is "doing business." See, e.g., Go-Video, Inc. v. Akai Elec. Co., Ltd., 885 F.2d 1406, 1413 (9th Cir.1989) (Section 12 "authorizes worldwide service of process").

The parties dispute whether the two clauses of Section 12 should be read as an integrated whole or independently of each other. Specifically, they dispute whether the venue provision contained in the first clause of Section 12 must be satisfied before the plaintiffs could avail themselves of the authorization of worldwide service of process contained in the second clause. As explained by one court:

[t]he dispute centers on whether the jurisdiction provision operates independently from the venue provision, specifically, whether "in such cases" in the second clause refers to "any suit, action, or proceeding under the antitrust laws against a corporation" or only to antitrust actions against corporations brought in a judicial district in which the corporation is either an "inhabitant," "may be found" or "transacts business." If the first interpretation is adopted, plaintiffs can rely on 28 U.S.C. § 1391(d) [the Alien Venue Statute] which provides for venue in antitrust actions against foreign corporations "in any district" and on the second clause of Section 12 for personal jurisdiction over defendants based on a minimum contacts analysis considering their contacts with the United States as a whole. If the second interpretation prevails the service provision is only effective when, pursuant to Section 12's first clause, the action is brought in a district where the defendant resides, is found or transacts business.

In re Magnetic Audiotape Antitrust Litig., 171 F.Supp.2d 179, 184 (S.D.N.Y.2001), vacated sub nom. on other grounds, Texas Int'l Magnetics, Inc. v. BASF Aktiengesellschaft, 31 Fed.Appx. 738, 2002 WL 385569 (2d Cir. March 12, 2002). The plaintiffs dispute whether the present litigation can only be brought in a federal district where the appellants are "residents," may be "found," or "transact[] business" based on their contacts with the forum district or state. They contend that it may be brought in any federal district based on the appellant's "minimum contacts" with the United States as a whole.

Currently, two sister Courts of Appeals differ as to the construction of Section 12. The plaintiff-appellees rely on the decision in Go-Video, Inc. v. Akai Elec. Co., Ltd., 885 F.2d 1406 (9th Cir.1989), and a majority of recent District Courts' opinions to support their argument that the service of process provision is independent of the specific venue provision. On the other hand, appellants rely on the decision in GTE New Media Services Inc. v. BellSouth Corp., 199 F.3d 1343 (D.C.Cir.2000), where the Court wrote:

The language of the statute is plain, and its meaning seems clear: The clause before the semicolon relates to a supplemental basis for venue in actions under the Clayton Act; the clause after the semi-colon relates to nationwide service of process in antitrust cases; and invocation of the nationwide service clause rests on satisfying the venue provision.

Id. at 1350.

The GTE court "aligned" itself with the position taken by the Second Circuit forty years ago in Goldlawr, Inc. v. Heiman, 288 F.2d 579, 581 (2d Cir.1961) (holding in dicta that the expansive service of process provisions was contingent on satisfaction of the specific venue provision), rev'd on other grounds, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962).7 The GTE court claimed that its construction of Section 12 of the Clayton Act was the result of a "plain" or "unadorned" reading of the language of the statute, and implied that the Go-Video court's construction was the result of "literal convolutions." GTE, at 1351.

The Go-Video court did not find the language of Section 12 to be clear or unambiguous. Go-Video, 885 F.2d at 1412 (quoting Judge Stewart's linguistic analysis of the syntactic structure of Section 12 in Gen. Elec. Co. v. Bucyrus-Erie Co., 550 F.Supp. 1037, 1042, 1042 n. 7 (S.D.N.Y. 1982), without necessarily endorsing his analysis).8 Instead of relying on its own way of reading of the language of Section 12, as the GTE court did, the Go-Video court found it necessary to "interpret a passage in which antecedents and consequents are unclear by reference to the context and purpose of the statute as a whole." Id. The Go-Video court did not find the sparse legislative history of the Clayton Act conclusive on the issue. 885 F.2d at 1410. There was evidence, however, that "Congress viewed the questions of venue and service of process separately, with the latter issue of subsidiary importance." Id.

The Go-Video court found it more helpful to rely on the general interpretation that courts have given Section 12. Id. "[C]ourts have viewed the section's main contribution to be its expansion of the bounds of venue." Id. (citing United States v. Scophony Corp. of Am., 333 U.S. 795, 806-808, 68 S.Ct. 855, 92 L.Ed. 1091 (1948) (Section 12 substituted broad, practically-founded venue tests for the older, "hairsplitting legal technicalities" of the Sherman Act); 15 Wright, Miller & Cooper, Federal Practice and Procedure, § 3818, at 109-10 (1976) (venue provisions of Clayton Act were "clearly broadening in [their] effect")).9 See also Paper Systems, Inc. v. Mitsubishi Corp., 967 F.Supp. 364, 368 (E.D.Wis.1997) ("In the case of the antitrust laws, it makes no sense to tie a district court's jurisdiction to the state in which it sits; it neither promotes the enforcement of the antitrust laws nor the management of litigation."); Prof'l Adjusting Systems of America, Inc. v. Gen. Adjustment Bureau, Inc., 352 F.Supp. 648, 651 (E.D.Pa.1972) ("The reason for the broad scope of the Clayton Act venue provisions was to give plaintiff the widest possible selection of venue for his benefit, to promote a `private attorney general' type policy for exposing and policing combinations in restraint of trade."). In light of the above authority and comment, the Go-Video court found itself "reluctant to adopt a construction of section 12 which would, by limiting the availability of the valued tool of worldwide service of process, recast its venue provision as a restrictive, rather than a broadening, provision and might prevent plaintiffs from pursuing legitimate claims under the antitrust laws." 885 F.2d at 1410-11.

The Go-Video court also relied on the Supreme Court's case law regarding the relationship between federal venue statutes of general application and specific venue provisions contained in individual statutes to support its holding that the provision for worldwide service of process is independent of the specific venue provision in Section 12 of the Clayton Act. "[A]s a general matter, courts have interpreted special venue provisions to supplement, rather than preempt, general venue statutes." Id. at 1409 (citing 15 Wright & Miller, supra, at 108-109) ("Supreme Court has held that special venue statutes are supplemented by, and are to be read in light of, liberalizing provisions of the general venue statutes") (citing Pure Oil v. Suarez, 384 U.S. 202, 86 S.Ct. 1394, 16 L.Ed.2d 474 (1966)).

Of particular relevance to the Go-Video court was the Supreme Court's discussion of the relationship between the Alien Venue Statute, 28 U.S.C. § 1391(d), a venue provision of general applicability, and the specific venue provision, 28 U.S.C. § 1400(b), concerning actions for patent infringement, in Brunette Mach. Works, Ltd. v. Kockum Indus., Inc., 406 U.S. 706, 92 S.Ct. 1936, 32 L.Ed.2d 428 (1972). The Supreme Court held that the specific venue provision did not bar the suit under which venue had been satisfied under Section 1391(d), the Alien Venue Statute, even though the Court had previously held that the same patent venue statute did preclude the application of the general corporate venue provision of § 1391(c). Brunette, at 713-14, 92 S.Ct. 1936 (distinguishing Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957)).

Section 1391(d) is not like other general venue provisions. Brunette held that "Section 1391(d) is not derived from the general venue statutes that [a special venue provision might otherwise be read as] intended to replace." Id. at 713, 92 S.Ct. 1936. Rather, Section 1391(d) derives from a tradition going "back to the beginning of the Republic" under which "suits against aliens were left unrestricted, and could be tried in any district, subject only to the requirement of service of process." Id. at 708, 92 S.Ct. 1936. "The Brunette court interpreted § 1391(d) to state `a principle of broad and overriding application' which prevented an alien defendant from using a narrower venue provision in another statute as a `shield against suit.'" Go-Video, 885 F.2d at 1409-10 (citing Brunette, at 714, 92 S.Ct. 1936). "Absent some express congressional intent to the contrary, a special venue provision should not, under the clear language of Brunette be deemed exclusively controlling when the defendant involved is an alien. The principle that an alien may be sued in any district is simply too deeply rooted to assume otherwise." Bucyrus-Erie, 550 F.Supp. at 1040 (citing Brunette, at 714, 92 S.Ct. 1936); see also Go-Video, at 1410.

The approach of the Go-Video and Bucyrus-Erie courts is convincing and well reasoned in their construction of Section 12 of the Clayton Act.10 We, therefore, hold that the service of process provision on foreign corporations is independent of, and does not require satisfaction of, the specific venue provision under Section 12 of the Clayton Act.

We also reject the appellants' argument that the District Court does not have personal jurisdiction over them because they do not have contacts with the State of Pennsylvania. In this instance, Pennsylvania is the forum state because the underlying class actions have been transferred and consolidated for pretrial purposes.11 At least two sister Courts of Appeals have held that when personal jurisdiction is invoked under the Clayton Act, jurisdiction is based on the defendants' contacts with the United States as a whole. Access Telecom, Inc. v. MCI Telecomm. Corp., 197 F.3d 694, 718 (5th Cir.1999), cert. denied, 531 U.S. 917, 121 S.Ct. 275, 148 L.Ed.2d 200 (2000) ("When jurisdiction is invoked under the Clayton Act, the court examines the defendant's contacts with the United States as a whole to determine whether the requirements of due process have been met.") (citing Go-Video); Go-Video, 885 F.2d at 1415 (affirming the District Court's holding that "worldwide service provision of § 12 justifies its conclusion that personal jurisdiction may be established in any district, given the existence of sufficient national contacts").

We find support for our construction of Section 12 of the Clayton Act in the courts' construction of Section 27 of the Securities Exchange Act of 1934. This section, modeled after Section 12 of the Clayton Act, provides in relevant part:

Any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found.

15 U.S.C. § 78aa (emphasis added). The two sections are remarkably similar in their provisions for venue and service of process.12

In the context of construing Section 27, this Court has held broadly that "a federal court's personal jurisdiction may be assessed on the basis of the defendant's national contacts when the plaintiff's claim rests on a federal statute authorizing nationwide service of process." Pinker v. Roche Holdings Ltd., 292 F.3d 361, 369 (3d Cir.2002). Then Chief Judge Becker wrote in Pinker:

Where Congress has spoken by authorizing nationwide service of process, ... as it has in the Securities Act, the jurisdiction of a federal court need not be confined by the defendant's contacts with the state in which the federal court sits. See DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981). Following this reasoning, the district courts within this Circuit have repeatedly held that a "national contacts analysis" is appropriate "when appraising personal jurisdiction in a case arising under a federal statute that contains a nationwide service of process provision." AlliedSignal, Inc. v. Blue Cross of Calif., 924 F.Supp. 34, 36 (D.N.J. 1996); see also Green v. William Mason & Co., 996 F.Supp. 394, 396 (D.N.J.1998) ("[A]n assessment of personal jurisdiction under [a statutory provision authorizing nationwide service of process] necessitates an inquiry into the defendant's contacts with the national forum."). We too are persuaded by the reasoning of our prior opinions on the subject, and, consistent with several of our sister courts of appeals, hold that a federal court's personal jurisdiction may be assessed on the basis of the defendant's national contacts when the plaintiff's claim rests on a federal statute authorizing nationwide service of process.

Pinker, at 369-70 (emphasis in original).13 See also Dardana Ltd. v. A.O. Yuganskneftegaz, 317 F.3d 202, 207 (2d Cir.2003) (when personal jurisdiction over a foreign corporation is based in essence on the federal long-arm statute, due process analysis involves contacts with the United States as a whole); United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 36 (1st Cir. 1999) (same); Fitzsimmons v. Barton, 589 F.2d 330, 333 n. 4 (7th Cir.1979); Mariash v. Morrill, 496 F.2d 1138, 1142-43 (2d Cir.1974) (service of process under § 27 of Securities Exchange Act requires examination of defendant's contacts with the United States as a whole).

We agree with the holdings of our foregoing sister Courts of Appeals and the rationale of our decision in Pinker that have construed the similarly worded Section 27 of the Securities Exchange Act. We hold that personal jurisdiction in federal antitrust litigation is assessed on the basis of a defendant's aggregate contacts with the United States as a whole. Our holding in Pinker and on this appeal is consistent with the Federal Rule of Civil Procedure 4(k)(2).14 Personal jurisdiction therein is not limited to the defendant's contacts with a particular federal judicial district or the forum state. We hold further that personal jurisdiction under Section 12 of the Clayton Act is as broad as the limits of due process under the Fifth Amendment. See Go-Video, 885 F.2d at 1415 ("Under the due process component of the Fifth Amendment, a court must consider whether the maintenance of the suit (i.e. the exercise of personal jurisdiction over the defendants to the suit) offends traditional notions of fair play and substantial justice.") (citing Omni Capital Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 102-103, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987); Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).15

The second issue certified in this appeal is whether we should adopt a first resort rule in favor of the procedures under the Hague Convention, rather than the Federal Rules of Civil Procedure, for jurisdictional discovery from foreign defendants in foreign signatory "host" nations. The appellants argue that jurisdictional discovery in Germany, a Convention signatory nation, should first proceed under the Convention procedures, rather than the Federal Rules. The Convention prescribes certain procedures by which a judicial authority in one contracting nation may request evidence located in another nation. Our Supreme Court rejected a first resort rule in favor of the Convention in a case where personal jurisdiction was not contested and the discovery sought involved only the merits of the case. Societe Nationale Industrielle Aerospatiale v. United States Dist. Court for the S. Dist. of Iowa, 482 U.S. 522, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987). The appellants argue specifically that we should carve out a narrow exception to the Aerospatiale decision where, as here, personal jurisdiction has yet to be established and the discovery sought is limited to proof of jurisdiction.16

Aerospatiale holds that the Hague Convention does not provide exclusive procedures for obtaining documents and information located in a foreign signatory nation's territory. Aerospatiale first rejects a rule of exclusive use or a rule of first use as a matter of law in favor of the Convention on the ground that neither the language nor the negotiating history of the Convention support such rules. Aerospatiale, 482 U.S. at 533-36, 107 S.Ct. 2542. Specifically, Aerospatiale holds that the Convention's plain language, as well as the history of its proposal and ratification by the United States, unambiguously supports the conclusion that it was "intended as a permissive supplement, not a preemptive replacement, for other means of obtaining evidence located abroad." Id. at 536, 107 S.Ct. 2542 (emphasis added). The Convention's preamble speaks in non-mandatory terms, specifying its purpose to "facilitate" discovery and to "improve mutual judicial co-operation." Id. at 534, 107 S.Ct. 2542. Similarly, its text uses permissive language, and does not expressly modify the law of contracting states or require them to use the specified procedures or change their own procedures. Id. Accordingly, the Convention does not deprive the District Court of its jurisdiction to order, under the Federal Rules of Civil Procedure, a foreign national party to the proceeding to produce evidence physically located within its territory. Id. at 539-40, 107 S.Ct. 2542.

Aerospatiale rejects next a rule of first resort favoring the Convention on grounds of international comity and respect for the "judicial sovereignty" of the signatory nation in which evidence sought is located. Id. at 542-43, 107 S.Ct. 2542. International comity does not require in all instances that American litigants first resort to the Convention procedures before initiating discovery pursuant to our Federal Rules. Id. at 542-44, 107 S.Ct. 2542. The concept of comity requires in this context "a more particularized analysis" of the respective interests of the foreign host nation and the requesting nation than a blanket first resort rule would generate. Id. at 543-44. Aerospatiale notes that in many situations, the Convention procedures would be unduly time-consuming and expensive, and less likely to produce needed evidence than direct use of the Federal Rules. Id. at 542-43, 107 S.Ct. 2542. However, the Convention's procedures, although not mandatory, are available whenever they will facilitate the gathering of evidence, and apply in the sense that they are one method of seeking evidence that a court may elect. Id. at 541. Aerospatiale declines to hold "as a blanket matter that comity requires resort to Hague evidence convention procedure." Id. at 544, 107 S.Ct. 2542. Therefore, the determination of whether to resort to the Convention requires "prior scrutiny in each case of the particular facts, sovereign interests, and likelihood that such resort will prove effective." Id. (establishing the three-prong test for determining whether to resort to the Convention).