David A. Warfield v. KR Entertainment , 165 F.3d 600 ( 1999 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 97-3707
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In re Federal Fountain, Inc., *
*
Debtor. *
*
_______________________ *
*
David A. Warfield, Trustee of *
the Estate of Federal Fountain, *
Inc., *
*
Appellant, * Appeal from the United States
* District Court for the Eastern
v. * District of Missouri.
*
KR Entertainment, Inc., *
*
Appellee. *
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_______________________ *
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United States of America, *
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Amicus on Behalf of Appellant; *
*
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Public Citizen, *
*
Amicus on Behalf of Appellee. *
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Submitted: October 22, 1998
Filed: January 7, 1999
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Before BOWMAN, Chief Judge, and McMILLIAN, RICHARD S. ARNOLD, FAGG,
WOLLMAN, BEAM, LOKEN, HANSEN, MORRIS SHEPPARD ARNOLD,
and MURPHY, Circuit Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
Federal Fountain, Inc. (represented by its trustee in bankruptcy, David A.
Warfield), and KR Entertainment, Inc., which has its principal place of business in
Nevada, entered into a contract under which Federal Fountain agreed to design and
install certain equipment necessary for the operation of KR's water entertainment show
in the Riviera Hotel in Las Vegas. While involved in bankruptcy proceedings, see 11
U.S.C. §§ 701-766, Federal Fountain filed suit to collect the balance due on the
contract. KR moved to dismiss for lack of personal jurisdiction over it, and the district
court granted the motion because Federal Fountain had failed to demonstrate that KR
had any contacts at all with the State of Missouri. On appeal, a panel of our court
affirmed the judgment of the district court. On petition for rehearing containing a
suggestion for rehearing en banc, the court voted to rehear the case en banc and
vacated the panel opinion and judgment. We now reverse the judgment of the district
court.
This case presents a single legal issue, namely, whether personal jurisdiction
may constitutionally be exercised over a defendant in a federal court only if there are
sufficient contacts between that defendant and the state in which he or she is expected
to appear. Fed. R. Bankr. P. 7004(d), on its face, quite clearly allows national service
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of process in cases like the present one, for it provides that a "summons and complaint
... may be served anywhere in the United States." We held, however, in South Dakota
v. Kansas City Southern Industries, Inc., 880 F.2d 40, 44 n.10 (8th Cir. 1989), cert.
denied, 493 U.S. 1023, 110 S. Ct. 726, 107 L. Ed. 2d 745 (1990), that due process
requires " 'in every case,' " quoting Reynolds Metals Co. v. Columbia Gas System, Inc.,
694 F. Supp. 1248, 1250 (E.D. Va. 1988) (emphasis in original), that there be
minimum contacts between a defendant and the state in which he or she is expected to
answer, before the court that issued the process may constitutionally assume personal
jurisdiction over that defendant. We take the present opportunity to disagree with that
holding and to align ourselves with virtually every other court that has ruled on the
issue.
We believe that certain elementary legal principles that have enjoyed widespread
acceptance for a significant period of time provide a firm foundation for the
proposition that Fed. R. Bankr. P. 7004(d) is a constitutional exercise of congressional
authority. In the words of Mr. Justice Scalia, "[t]he short of the matter is that
jurisdiction based on physical presence alone constitutes due process because it is one
of the continuing traditions of our legal system that define ... due process." Burnham
v. Superior Court of California, 495 U.S. 604, 619 (1990) (plurality opinion).
In this case, KR is concededly present in the territory of the United States, and
the courts of the United States may therefore legally exercise the authority to proceed
to judgment against it (after, of course, the proper notice and an opportunity to be
heard). As the Supreme Court observed in United States v. Union Pacific Railroad
Co., 98 U.S. 569, 604 (1878), there is "nothing in the Constitution which forbids
Congress to enact that ... [a federal trial court] ... shall ... have the power to bring
before it all the parties necessary to its decision." See also Robertson v. Railroad
Labor Board, 268 U.S. 619, 622 (1925) (Congress may provide that "the process of
[any] district court shall run into every part of the United States").
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We think, in sum, that the fairness that due process of law requires relates to "the
fairness of the exercise of power by a particular sovereign, ... and there can be no
question ... that the defendant ... has sufficient contacts with the United States to
support the fairness of the exercise of jurisdiction over him by a United States court."
Fitzsimmons v. Barton, 589 F.2d 330, 333 (7th Cir. 1979). Congress has in fact quite
frequently exercised its authority to furnish federal district courts with the power to
exert personal jurisdiction nationwide. See, e.g., § 22 of the Securities Act of 1933,
15 U.S.C. § 77v(a), and § 27 of the Securities Exchange Act of 1934, 15 U.S.C.
§ 78aa; see also 4 C. Wright and A. Miller, Federal Practice and Procedure: Civil 2d
§ 1067.1 at 331-32 (1987).
A few appellate courts have adopted the view that the constitutionality of the
application of statutes granting nationwide jurisdiction to federal courts depends on
whether the proposed forum puts a defendant at a "severe disadvantage," Republic of
Panama v. BCCI Holdings, S.A., 119 F.3d 935, 948 (11th Cir. 1997), in defending the
action and, if so, whether something called the "federal interest," id., in litigating the
matter in that forum outweighs attendant inconveniences to a defendant. With respect,
we detect nothing in the case law already discussed that suggests that due process, or
any other constitutional concern, requires such an approach to deciding the
jurisdictional question that this case presents. We note, too, that the vindication of
federal law principles in a federal court would seemingly always be sufficient to carry
the day in favor of the exercise of federal jurisdiction, even if we felt obliged to engage
in a balancing enterprise, which, in fact, we do not. The inconveniences associated
with a particular forum, moreover, can always be brought to the district court's
attention by means of a motion under 28 U.S.C. § 1404(a), which provides for transfer
of venue "[f]or the convenience of parties ... in the interest of justice."
For the reasons indicated, we reverse the judgment of the district court and
remand the case for further proceedings.
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A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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