Budget Blinds Inc v. White

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
7-28-2008
Budget Blinds Inc v. White
Precedential or Non-Precedential: Precedential
Docket No. 06-2610
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Case No: 06-2610
BUDGET BLINDS, INC.,
Appellant
v.
VALERIE WHITE;
BUDGET BLINDS OF NJ, INC.;
VAL U BLINDS, INC.
Case No: 06-2733
BUDGET BLINDS, INC.
v.
VALERIE WHITE;
BUDGET BLINDS OF NJ, INC.;
VAL U BLINDS, INC.,
Appellants
On Appeal from the United States District Court
for the District of New Jersey
District Court No. 05-mc-00388
District Judge: The Honorable William J. Martini
Argued April 9, 2008
Before: SMITH, HARDIMAN, and
COWEN, Circuit Judges
Howard A. Matalon, Esq.
Stryker, Tams & Dill, LLP
Two Penn Plaza East
Newark, NJ 07105-0000
Jeremiah J. Morgan, Esq. (argued)
Bryan Cave LLP
1200 Main Street
3500 One Kansas City Place
Kansas City, MS 64105-2100
Counsel for Budget Blinds, Inc.
Ronald J. Nelson, Esq. (argued)
161 Washington Valley Road
Suite 207, Washington Valley Office Park
Warren, NJ 07059-0000
Counsel for Valerie White, et al.
2
(Filed: July 28, 2008)
OPINION OF THE COURT
SMITH, Circuit Judge.
In this appeal, we consider whether a federal district
court properly relied on Federal Rule of Civil Procedure
60(b)(6) to vacate a default judgment entered by another district
court. We conclude that it did not, and we will remand so that
it may consider whether to set aside the default judgment under
Federal Rule of Civil Procedure 60(b)(4).
I.
Budget Blinds, Inc. (“BBI”) is a California corporation
that franchises mobile window covering businesses throughout
the United States. According to an affidavit that BBI’s Chief
Operating Officer filed with the District Court for the Central
District of California, BBI was founded in 1992 and had about
800 territories and 570 licensees nationwide as of October 17,
2005, the date of the affidavit. BBI owns and licenses two
trademarks that it has registered with the Principal Register of
the United States Patent and Trademark Office: (1) the name
“Budget Blinds” (registered on December 21, 1993); and (2) a
3
service mark consisting of the words “Budget Blinds” in a
specific font and configuration (registered on February 18,
2003).
Valerie White owns a New Jersey corporation called “Val
U Blinds, Inc.” that focuses on the design and installation of
window blinds. According to an affidavit that White filed with
the District Court for the District of New Jersey, she operates
this business from a home office in her basement and garage,
and her sales are limited to areas of New Jersey. The affidavit
further states that she conducted business from 1988 to June 1,
2004 as “Budget Blinds” or “Budget Blinds of NJ,” and that she
registered her business as a New Jersey domestic corporation in
September 1997 under the name “Budget Blinds of NJ, Inc.”
She changed her business’s name to “Val U Blinds” pursuant to
the Settlement Agreement that we describe below.
In a letter to Valerie White dated November 25, 2003,
BBI’s Legal Manager stated that White’s use of the name
“Budget Blinds” was a violation of BBI’s “federal, state, and
common law trademark rights” and was likely to cause public
confusion about the origin of White’s goods. White’s attorney
Ronald J. Nelson responded in a letter dated December 1, 2003
that White had used the name “Budget Blinds” since 1988, prior
to BBI’s first use of the name. Nelson’s letter added that White
had established “Budget Blinds” as a common law trademark in
the New Jersey counties served by her business and that BBI’s
franchisees in this area were infringing her rights by using the
4
name. In a letter to Nelson dated February 12, 2004, BBI’s
counsel questioned the existence of a common law trademark
and stated that “BBI is prepared to bring a lawsuit in California
pursuant to the Lanham Act to enjoin your client’s infringing
activities” if the parties could not reach a mutually-agreeable
resolution.
After several additional communications, the parties
entered a Settlement Agreement on April 14, 2004. Under the
Agreement, BBI would pay White and Budget Blinds of NJ, Inc.
(referred to as “the Corporation” in the Agreement) $160,000
“for the purchase and transfer of any and all interest, claim, or
ownership in or relating to the trade name and service mark
‘Budget Blinds’” and any confusingly similar names or marks.
Section 4 of the Agreement provided that after June 1, 2004,
White and the Corporation “shall not operate or do business”
under the trade name and service mark “Budget Blinds” “or any
other name or in any manner that might tend to give the general
public the impression that White [or her business] is in any way
associated or affiliated with BBI, or any of the businesses
conducted by it or other franchisees or licensees of the Marks.”
Among other things, Section 4 required White to change her
existing corporation’s name from “Budget Blinds of New
Jersey, Inc.” to “BB of NJ, Inc.,” to conduct all future business
using a new corporation to be established under the name “Val
U Blinds, Inc.,” and to remove the “Budget Blinds” trade name
and mark, as well as confusingly similar names or marks, from
her company’s advertising, signs, letterheads, stationery, printed
5
matter, and other forms. Most importantly for purposes of this
litigation, Section 4(f) of the Agreement also instructed White
to take specific steps to disassociate her company’s telephone
number from the name “Budget Blinds.” At the time of the
Agreement, the Yellow Pages directories for Burlington,
Gloucester, and Camden Counties listed a phone number for
White’s company next to the name “Budget Blinds.” 1 To
address this situation, Section 4(f) of the Agreement provided in
relevant part:
Promptly after execution of this Agreement,
White, the Corporation and Val-U Blinds shall
direct Verizon . . . in writing, with a copy to
counsel for BBI . . . , (i) that all of the said three
advertisements shall not be renewed in the said
three county editions, or elsewhere; and (ii) that
customers calling directory assistance in any of
those three counties (or anywhere else) on or after
June 1, 2004, should no longer be given [the
phone number for White’s company] or any other
number related to or affiliated with White, the
Corporation, or Val-U Blinds in response to an
inquiry for the telephone number of “Budget
1
The Agreement refers to these listings as “advertisements,”
a term whose connotations may be misleading. According to the
Agreement itself, the “advertisements” consisted simply of her
company’s name and phone number in an alphabetical list with
other companies’ names and numbers.
6
Blinds.” From time-to-time thereafter, upon the
reasonable request of BBI, White, the Corporation
and Val-U Blinds shall provide similar written
directions to other directory publishers (including
publishers of Internet-based “directories”)
identified by BBI.
In addition to these substantive provisions, the Agreement stated
that White and her corporations “hereby irrevocably appoint
BBI as their respective lawful attorney-in-fact with authority to
file any document in the name of and on behalf of White, the
Corporation or Val-U Blinds for the purpose of taking any of the
actions required by this Section 4 upon the event of a Default.”
Finally, the Agreement contained a choice-of-law clause: “This
Settlement Agreement will be governed by and construed under
the laws of the State of California.”
White says that she made a good-faith effort to comply
with her obligations under the Agreement, including those in
Section 4(f) related to her telephone number. The record
contains a letter dated May 5, 2004 from White’s attorney to
Verizon Customer Service directing Verizon “not to renew or
republish their existing advertisements in all Yellow Pages
(including Burlington, Gloucester, Camden and Middlesex
County editions) in which they have used the phrase ‘Budget
Blinds’ in whole or in part.” The letter also directs Verizon “to
instruct Directory Assistance, beginning June 1, 2004, to answer
all inquiries for ‘Budget Blinds’ by not providing the telephone
numbers of my client . . . .” The record includes similar letters
addressed to YellowPages.com and Verizon.com, both of which
are dated June 4, 2004.
7
Nonetheless, Verizon reprinted the listing that provided
the phone number for White’s company under the name “Budget
Blinds” in the updated print editions of its Yellow Pages
directories for Burlington, Gloucester, and Camden Counties
and the corresponding online directories. In a letter dated
February 1, 2005, BBI’s counsel informed White’s counsel that
the continuing existence of these listings was a violation of the
Agreement, and that “it appears that the only way to remedy this
violation is for your client to assign to BBI or to a franchisee
designated by BBI” the telephone number for White’s company.
In response, White’s counsel proposed setting up a recording
that would give callers to this telephone number a choice
between connecting to White’s company or to the local BBI
franchisee. BBI rejected this proposal in a letter dated February
23, 2005, reiterating its demand that White assign the number to
BBI and stating that it would deem White and her company to
be in breach of the Agreement “as long as there is any
circumstance under which a person looking in a current
telephone book and calling a number listed under the name
‘Budget Blinds’ will reach your clients.” In a letter dated March
9, 2005, White’s counsel informed BBI that, although White
would do everything that she considered “reasonably possible to
mitigate fully the effects of the unauthorized re-printing,” she
would not surrender the phone number itself.
BBI filed a Complaint against White, Val U Blinds, Inc.,
and Budget Blinds of NJ, Inc.2 (“Defendants”), which was
2
The Complaint does not reflect the fact that White had
already changed the name from “Budget Blinds of NJ, Inc.” to
8
docketed on April 7, 2005 in the United States District Court for
the Central District of California, Southern Division. The
Complaint lists eight causes of action: (1) breach of contract; (2)
specific performance; (3) federal trademark infringement; (4)
state trademark infringement; (5) federal false designation of
origin; (6) federal trademark dilution; (7) state trademark
dilution; and (8) violation of the California Unfair Competition
Act. As relief, BBI requested an injunction against further
violation of the agreement,3 actual and punitive damages, an
accounting of defendants’ profits, treble damages, costs of suit,
attorneys’ fees, and pre-judgment interest. The Complaint
asserts that venue is proper in the Central District of California
“because a substantial part of the events giving rise to Budget
Blinds’ claims occurred within this District in that the harm to
Budget Blinds has occurred in this district and the Defendants
have intentionally directed their actions toward Budget Blinds,
which is headquartered in this District.” The Defendants did not
file a response to the Complaint even though BBI sent them
notice of it. White’s counsel characterizes this as an intentional
decision, motivated in part by White’s limited resources, to
“BB of NJ, Inc.”
3
BBI’s Complaint does not explicitly demand that White
surrender the phone number to BBI or one of its franchisees.
Instead, it requests that White and her company be enjoined and
restrained from violating the Agreement, “which requires, in
summary, without limitation, that the Defendants discontinue
the use and/or display of the Budget Blinds Marks or similar
marks or trade names, in any manner whatsoever.”
9
ignore the Complaint on the ground that the California court
allegedly lacked personal jurisdiction over the Defendants.
On October 7, 2005, the District Court for the Central
District of California entered a default judgment against the
Defendants, granting BBI the injunctive relief that it requested
in its Complaint and $83,083.51 in monetary relief.4 BBI
registered this default judgment in the District Court for the
District of New Jersey on November 22, 2005. On January 20,
2006, BBI gave the Defendants notice that it would file a motion
on February 14 in the District Court for the District of New
Jersey for an order directing the turnover of funds from White’s
checking account to BBI in the amount specified in the
judgment. On January 24, the Defendants gave notice that they
would file a cross-motion in the New Jersey District Court to
vacate the default judgment, and they filed a Brief in opposition
to the turnover motion and in support of the cross-motion. In
this Brief, the Defendants asserted that the default judgment
should be declared null and void because the California district
court had lacked personal jurisdiction over them. In support of
this Brief, White submitted an affidavit explaining inter alia that
neither she nor her company had ever physically entered
California, owned property in California, solicited business in
4
This amount reflects $68,613.75 for treble damages and
$14,469.76 for attorneys’ fees and costs. BBI’s proposed order
requested $105,954.76 in monetary relief, which would have
reflected an additional $22,871.25 in compensatory damages,
but the California district court deleted this amount from the
final Order.
10
California, purchased or sold any goods in California, or even
maintained an internet website. Both the Brief and White’s
affidavit asserted that an earlier draft of the Agreement
contained a provision granting White’s consent to personal
jurisdiction in the Central District of California but that the
Defendants refused to allow inclusion of this provision in the
final Agreement. BBI filed a Memorandum of Law on January
31 opposing the Defendants’ cross-motion to vacate the default
judgment and arguing that the California court had personal
jurisdiction over the Defendants.
On April 5, 2006, the District Court for the District of
New Jersey issued an Opinion and Order in response to the
parties’ motions. See Budget Blinds v. White, No. 05-mc-388,
2006 U.S. Dist. LEXIS 17207, 2006 WL 891187 (D.N.J. Apr.
5, 2006). Instead of resolving the personal jurisdiction issue, the
District Court vacated the default judgment under Federal Rule
of Civil Procedure 60(b)(6), which provides: “On motion and
just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding for
. . . any other reason that justifies relief.” To decide the Rule
60(b)(6) issue, the District Court employed a three-part test
derived from Harad v. Aetna Casualty & Surety Co., 839 F.2d
979 (3d Cir. 1988): “When determining whether to vacate a
default judgment, a court should consider the following factors:
(1) whether the defendant has a meritorious defense; (2) whether
culpable conduct of the defendant led to the default; and (3)
whether the plaintiff will be prejudiced.” Budget Blinds, 2006
U.S. Dist. LEXIS 17207, at *4 (citing Harad, 839 F.2d at 982).
First, the District Court found that the Defendants had an
“extremely” meritorious defense, stating: “The facts establish
11
that White fully complied with her obligations under the
settlement agreement and therefore the provision [in the
Agreement] staying all litigation is, most likely, still in effect.”
2006 U.S. Dist. LEXIS 17207, at *5. Second, the District Court
concluded that the culpability factor “arguably benefits either
party” because White had “more than a colorable argument that
the district court lacked personal jurisdiction” but it would have
been “prudent” for her to appear before the California court to
make this argument. Id. at *5–*6 & n.2. Third, the District
Court found that “BBI will suffer absolutely no prejudice should
the Court order vacatur.” Id. at *7. Weighing these three
factors, the District Court concluded that vacatur was
appropriate. Id. at *7–*8.
Even though the briefs of both parties had focused on
personal jurisdiction, the New Jersey District Court did not
decide this issue, explaining in a footnote that “[t]he Court need
not pass on whether the California district court actually
possessed personal jurisdiction over White for purposes of a
Rule 60(b)(6) inquiry. It is enough to know that White
possessed more than a colorable argument that the district court
lacked personal jurisdiction.” Id. at *6 n.2. The District Court
did, however, “grant BBI’s reasonable legal fees and costs
associated with obtaining the default judgment and registering
the judgment in this Court,” in part because “a prudent attorney”
would have responded to BBI’s complaint despite his or her
belief that the California district court lacked personal
jurisdiction. Id. at *8. Accordingly, the District Court directed
BBI to submit, within 10 days of the Order, an affidavit setting
forth the details of the fees and costs expended.
12
On May 5, 2006, BBI filed a timely notice of appeal of
the portion of the District Court’s Order that vacated the
California default judgment. On June 29, 2006, the New Jersey
District Court stayed BBI’s application for fees and costs
pending resolution of this appeal. The District Court had
jurisdiction over the registration and enforcement of a foreign
judgment pursuant to 28 U.S.C. § 1963 (2000), and we have
jurisdiction over BBI’s appeal of a final order pursuant to 28
U.S.C. § 1291 (2000). The part of the District Court’s Order
vacating the default judgment is “final” within the meaning of
§ 1291, despite the fact that the amount of attorneys’ fees
remains unresolved. See Frangos v. Doering Equip. Corp., 860
F.2d 70, 72 (3d Cir. 1988) (citing Budinich v. Becton Dickinson,
486 U.S. 196, 199 (1988)).
On May 17, 2006, the Defendants filed a notice of cross-
appeal of the part of the Order that awarded fees and costs to
BBI. Although neither party questioned the existence of
appellate jurisdiction over this portion of the Order, we note that
the District Court has not quantified the amount of attorneys’
fees, and “[i]t has long been the rule in this circuit that this court
lacks jurisdiction to examine the merits of an attorneys’ fee
award where the award has not been quantified.” Frangos, 860
F.2d at 72. We will vacate the award of fees and costs without
considering its merits. The District Court granted the award
under its “inherent power under Rule 60(b) to impose terms and
conditions upon the opening of a judgment.” 2006 U.S. Dist.
LEXIS 17207, at *8 (quoting Feliciano v. Reliant Tooling Co.,
691 F.2d 653, 657 (3d Cir. 1982)). By vacating the Order
opening the judgment, we vacate these conditions as well.
13
III.
Federal Rule of Civil Procedure 55(c) states that a court
“may set aside a default judgment under Rule 60(b).” Rule
60(b) lists six reasons for which a “court may relieve a party or
its legal representative from a final judgment, order, or
proceeding,” including the catch-all provision in Rule 60(b)(6)
that allows a court to relieve a party from a judgment for “any
other reason that justifies relief” aside from the more specific
circumstances described in Rules 60(b)(1)–(5). We review
grants or denials of relief under Rule 60(b), aside from those
raised under Rule 60(b)(4),5 under an abuse of discretion
standard. See Harris v. Martin, 834 F.2d 361, 364 (3d Cir.
1987).
The power of a court to invoke Rule 60(b) to vacate its
own earlier judgment is unquestioned. As we discuss below,
however, it is unclear whether a court has the power to invoke
Rule 60(b) to vacate a judgment when the court in which the
judgment is registered (the “registering court”) is different from
the court that entered the judgment (the “rendering court”).
Nothing in the text of Rule 55(c) or Rule 60(b) suggests that a
registering court lacks the power to vacate the judgment of a
different rendering court, but as we discuss below, several
courts have suggested otherwise.
5
Our review is plenary when we review determinations
under Rule 60(b)(4). See Page v. Schweiker, 786 F.2d 150, 152
(3d Cir. 1986).
14
We decline to establish a categorical rule stating that
registering courts lack the power to use Rule 60(b)(6) to vacate
the judgments of rendering courts, but we emphasize that
registering courts should exercise this power only under very
limited circumstances. Even when a court is considering its own
judgment, “extraordinary circumstances” must be present to
justify the use of the Rule 60(b)(6) catch-all provision to vacate
the judgment. See, e.g., Gonzalez v. Crosby, 545 U.S. 524,
535–36 (2005) (citing Ackermann v. United States, 340 U.S.
193, 199 (1950)). When a court is considering whether to
vacate another court’s judgment under Rule 60(b)(6), these
circumstances must be even more “extraordinary” because of the
additional interest in comity among the federal district courts.
We need not decide exactly how “extraordinary” a circumstance
must be to justify the vacatur of another court’s judgment. The
circumstances of the instant case would not even be
extraordinary enough to justify a court’s decision to vacate its
own judgment. It follows, a fortiori, that they are not
extraordinary enough to justify vacating the judgment of another
court.
A.
Several circuits have either held, or stated in dicta, that
the power of a federal district court to set aside another district
court’s judgment is limited.
In Indian Head National Bank v. Brunelle, 689 F.2d 245
(1st Cir. 1982), the First Circuit held that “a registration court
errs in entertaining a Rule 60(b) motion that alleges neither a
judgment void for lack of personal jurisdiction nor grounds that
15
would support an independent equitable action.” Id. at 251–52.
In Indian Head, the District Court for the Eastern District of
Pennsylvania rendered a default judgment against the defendant,
Conproco Corporation. Id. at 247. The plaintiff registered the
judgment in the District Court for the District of New
Hampshire pursuant to 28 U.S.C. § 1963, and attempted to
attach Conproco’s New Hampshire’s bank account. Id. Instead
of directly appealing the judgment or moving in the rendering
court to set it aside, Conproco moved in the District of New
Hampshire to set aside the judgment under Rule 60(b)(1) and
Rule 60(b)(6), claiming that “the default judgment was due to
inadvertence and neglect.” Id. at 247–48. The New Hampshire
district court granted Conproco’s motion after finding that
Conproco had a valid defense and that the default judgment was
not the fault of Conproco or its counsel. Id. at 248. The First
Circuit reversed, explaining that “there are indications that the
drafters of the Rule intended to restrict motion practice under
60(b) to the court which rendered judgment,” 6 and that
6
The First Circuit pointed to the following language in the
advisory committee notes to the 1946 amendment that created
Rule 60(b):
Two types of procedure to obtain relief from judgments
are specified in the rules as it is proposed to amend them.
One procedure is by motion in the court and in the action
in which the judgment was rendered. The other
procedure is by a new or independent action to obtain
relief from a judgment, which action may or may not be
begun in the court which rendered the judgment.
16
deference to the rendering court promotes comity among federal
courts, efficient judicial administration (in light of the rendering
court’s familiarity with the issues), and simplified collection of
judgments. Id. The First Circuit said that a registering court
may grant Rule 60(b) relief from a different rendering court’s
judgment in only two situations: first, when the request for relief
is based on grounds that could also support an independent
equitable action, id. at 249–50 & n.8, and second, when a
request for relief from a default judgment is made under Rule
60(b)(4), id. at 250–51. Conproco’s request for relief did not fit
into these categories, so the First Circuit reversed the judgment
of the district court granting the relief. Id. at 252.
The Seventh Circuit went further in Board of Trustees v.
Elite Erectors, Inc., 212 F.3d 1031 (7th Cir. 2000), concluding
689 F.2d at 248 (citing F ED. R. C IV. P. 60 advisory committee
note). The First Circuit explained that the “other procedure” is
a reference to language that now appears under Rule 60(d):
“This rule does not limit a court’s power to: (1) entertain an
independent action to relieve a party from a judgment, order, or
proceeding; (2) grant relief under 28 U.S.C. § 1655 to a
defendant who was not personally notified of the action; or (3)
set aside a judgment for fraud on the court.” 689 F.2d at 248–49
& n.7. These actions had been available in both the rendering
court and other courts even before the Rule’s enactment. Id.
According to the First Circuit, the first of the two “types of
procedure” is a reference to Rule 60(b) motion practice, and the
committee’s language reflects its understanding that this
procedure would be limited to the rendering court. See id.
17
that a rendering district court may not “modify or annul” the
judgment of another district court under any provision of Rule
60(b), including Rule 60(b)(4). Id. at 1034. Elite Erectors
involved a default judgment rendered in the District Court for
the Eastern District of Virginia that the plaintiffs sought to
enforce in the District Court for the Southern District of Indiana.
Id. at 1033. The defendants moved in the Indiana district court
to annul the judgment under Rule 60(b)(4) on the ground that
the rendering court lacked personal jurisdiction over them. Id.
The Seventh Circuit held that any request to annul or modify a
judgment under Rule 60(b) “must be presented to the rendering
court.” Id. It proceeded to explain that the parties against
whom the Virginia district court entered judgment “are entitled
to resist enforcement in Indiana if, but only if, the United States
District Court for the Eastern District of Virginia lacked
personal or subject-matter jurisdiction.” Id. at 1035. But the
Seventh Circuit indicated that “resisting enforcement” of the
judgment in Indiana was not the same as “formally annulling it
under Rule 60(b)(4).” 7 Id. at 1034. The difference is that
annulling the judgment would deprive it of its effect in all
forums, including the rendering court, whereas successfully
resisting the judgment’s enforcement would deprive it of its
effect only in the Indiana district court. Id.
7
Despite this conclusion, the Seventh Circuit did not
explicitly overrule its earlier decision in In re Joint Eastern &
Southern District Asbestos Litigation, 22 F.3d 755 (7th Cir.
1994), which said: “We note that the authority of the registration
court to entertain a motion under Rule 60(b)(4) appears to be
well established.” Id. at 762 n.15.
18
Several other circuits have suggested in dicta that Rule
60(b) motions should generally be made before the rendering
court, but they have not adopted a rigid requirement. In
Covington Industries, Inc. v. Resintex A.G., 629 F.2d 730 (2d
Cir. 1980), the Second Circuit held that a registering court could
invoke Rule 60(b)(4) to vacate a rendering court’s judgment for
lack of jurisdiction, but it suggested that registering courts
should be more restrained when applying other sections of Rule
60(b). See 629 F.2d at 733 (“In the usual case, the court of
rendition will be more familiar with the facts than the court of
registration and perhaps more conversant with the applicable
law.”). In Morris ex rel. Rector v. Peterson, 871 F.2d 948 (10th
Cir. 1989), the Tenth Circuit cited Indian Head for “the general
rule that a registration court . . . usually defers on Rule 60(b)
motions to the court rendering the judgment . . . ,” but then
applied Indian Head’s exception for Rule 60(b)(4) motions.
Peterson, 871 F.2d at 950–51 & n.2 (citing Indian Head, 689
F.2d at 249, 251–52). In Harper Macleod Solicitors v. Keaty &
Keaty, 260 F.3d 389 (5th Cir. 2001), the Fifth Circuit held that
a registering court may invoke Rule 60(b)(4) to vacate a
rendering court’s judgment but expressed doubt in dicta that a
registering court could do the same with other sections of Rule
60(b). See id. at 395 (“judicial efficiency and comity among
district courts often counsel a registering court to defer ruling on
Rule 60(b) motions in favor of the rendering court . . . .”). In
FDIC v. Aaronian, 93 F.3d 636 (9th Cir. 1996), the Ninth
Circuit said that “[r]egistering courts generally prefer litigants
to bring motions for postjudgment relief in the rendering court,”
but it concluded that it was proper for a registering court to
entertain a challenge to a rendering court’s judgment on the
ground that the judgment was unconstitutional and therefore
19
void.8 Id. at 649.
We are persuaded by the reasoning of the First, Second,
Fifth, Seventh, Ninth, and Tenth Circuits to the extent that they
conclude that Rule 60(b) motions (other than motions under
Rule 60(b)(4)) should generally be raised in the rendering court.
Nonetheless, we decline to hold that registering courts lack the
power in all situations to invoke Rule 60(b)(6) to set aside
judgments.9 Rule 60(b)(6) exists so that courts may “vacate
judgments whenever such action is appropriate to accomplish
justice,” Klapprott v. United States, 335 U.S. 601, 614 (1949),
in situations that are not addressed by the other five clauses of
Rule 60(b). The drafters of Rule 60(b)(6) apparently recognized
that a catch-all provision would be necessary, since it would be
impossible to specify all of the scenarios in which justice might
8
In an earlier decision, the Ninth Circuit indicated that at
least some Rule 60(b) motions must be brought in the rendering
court. In First Beverages, Inc. v. Royal Crown Cola Co., 612
F.2d 1164 (9th Cir. 1980), the Ninth Circuit said: “The proper
approach to seeking relief from judgment because of a change
in the factual circumstances surrounding this case would be to
make a Rule 60(b) motion or a motion to reopen to hear
additional proof. Such motions must be directed in the first
instance to the district court.” Id. at 1172. Aaronian does not
cite First Beverages.
9
We do not consider in this opinion whether a registering
court ever has the power to set aside judgments under Rules
60(b)(1), (2), (3), or (5).
20
require vacatur of a judgment. Given the catch-all nature of
Rule 60(b)(6), we do not think that it would be wise to adopt a
rule that categorically forbids district courts from vacating the
judgments of other district courts under this provision.10
Although the interest in comity11 will usually make it
inadvisable for a registering court to vacate a rendering court’s
judgment, we cannot rule out the possibility that some set of
facts will cause the injustice of enforcing a rendering court’s
judgment to be so great as to outweigh the damage that setting
10
We also do not think that the language of the advisory
committee, as discussed in Indian Head, 689 F.2d at 248,
requires such a rule. The words of the advisory committee are
not as important as the text of the Rule, which imposes no
limitations on a court’s ability to set aside another court’s
judgment. Moreover, we note that even though the First Circuit
afforded weight to the advisory committee’s language, it did not
follow it literally, since Indian Head acknowledged that a court
may use Rule 60(b)(4) to vacate the judgment of another court
that lacked personal jurisdiction. See id. at 250–51.
11
When the judgment is not a default judgment, an additional
interest exists: efficient judicial administration resulting from
the rendering court’s greater familiarity with the facts. See
Indian Head, 689 F.2d at 248. With a default judgment,
however, the rendering court is unlikely to have any greater
knowledge of the facts than the registering court. See On Track
Transp. v. Lakeside Warehouse & Trucking, 245 F.R.D. 213,
221 (E.D. Pa. 2007).
21
aside the judgment would inflict upon comity. 12 We need not
decide here what facts would be sufficient, however, because it
is clear that the facts of the instant case fall far short of what is
necessary to justify vacatur of a rendering court’s judgment
under Rule 60(b)(6).
B.
Although the text of Rule 60(b)(6) states simply that a
court may grant relief from a final judgment for “any other
reason that justifies relief,” courts have added a requirement that
a party seeking Rule 60(b)(6) relief must demonstrate the
existence of “extraordinary circumstances” 13 that justify
12
Any such set of facts would probably be sufficient to form
the basis of an “independent equitable action” within the
meaning of the exception that the First Circuit described in
Indian Head. See 689 F.2d at 249 & n.8. We need not decide
here whether it is possible for a court to be confronted with a set
of facts that could not support an independent equitable action
but could nonetheless justify vacating another court's judgment
under Rule 60(b)(6).
13
Our circuit uses the terms “extraordinary circumstances”
and “exceptional circumstances” interchangeably when
discussing Rule 60(b)(6). See, e.g., Lasky v. Continental Prods.
Corp., 804 F.2d 250, 252 (3d Cir. 1986) (using both terms in the
same paragraph); Boughner v. Sec’y of Health, Educ. & Welfare,
572 F.2d 976, 978 (3d Cir. 1978) (concluding that “the
circumstances here are sufficiently exceptional and
22
reopening the judgment. See, e.g., Crosby, 545 U.S. at 535–36
(citing Ackermann, 340 U.S. at 199); Coltec Indus. v. Hobgood,
280 F.3d 262, 273 (3d Cir. 2002) (quoting In re Fine Paper
Antitrust Litig., 840 F.2d 188, 194 (3d Cir. 1988)). This
requirement exists in order to balance the broad language of
Rule 60(b)(6), which allows courts to set aside judgments for
“any” reason justifying relief, with the interest in the finality of
judgments. See In re Fine Paper Antitrust Litig., 840 F.2d at
194–95; Mayberry v. Maroney, 558 F.2d 1159, 1163 (3d Cir.
1977). As we explained above, when a registering court
considers the judgment of a different district court, the use of
Rule 60(b)(6) to vacate another court’s judgment implicates an
additional interest in comity, even if the judgment was a default
judgment. If the circumstances of a case are not sufficiently
“extraordinary” to outweigh the interest in the finality of
judgments, then it follows that the circumstances cannot
outweigh the interest in finality combined with the interest in
comity.
We have explained that a showing of extraordinary
circumstances involves a showing that without relief from the
judgment, “an ‘extreme’ and ‘unexpected’ hardship will result.”
Mayberry, 558 F.2d at 1163. This “hardship” requirement may
sometimes be satisfied when the judgment “precluded an
adjudication on the merits.” Boughner v. Sec’y of Health, Educ.
& Welfare, 572 F.2d 976, 978 (3d Cir. 1978). But extraordinary
circumstances rarely exist when a party seeks relief from a
extraordinary so as to mandate relief pursuant to Rule
60(b)(6) . . . .”).
23
judgment that resulted from the party’s deliberate choices.14
See, e.g., Coltec, 280 F.3d at 274 (“[C]ourts have not looked
favorably on the entreaties of parties trying to escape the
consequences of their own ‘counseled and knowledgeable’
decisions.”); see also Ackermann, 340 U.S. at 198–99 (petitioner
could not show the existence of extraordinary circumstances
when he voluntarily chose not to appeal due to the modest
expenses that an appeal would require).
In the instant case, the New Jersey District Court did not
mention the “extraordinary circumstances” requirement in its
opinion. We acknowledge that our decision in Harad may have
contributed to this error by sending confusing signals to the
District Court regarding the standards for vacating a default
judgment. In Harad, we reversed the district court’s decision
not to vacate its own earlier default judgment. 839 F.2d at 985.
We stated that “the decision to vacate a default judgment is left
to the sound discretion of the trial court,” but that “[i]n
exercising this discretion . . . the court must consider whether
vacating the default judgment will visit prejudice on the
plaintiff, whether the defendant has a meritorious defense, and
14
In Boughner, we invoked Rule 60(b)(6) to relieve
appellants of an adverse judgment resulting from the intentional
acts of their attorney. 572 F.2d at 979. But we only did so after
finding that the attorney’s “egregious conduct amounted to
nothing short of leaving his clients unrepresented.” Id. at 977.
Given this factual setting, we held that “appellants are not bound
by the acts of their attorney for the purposes of the rule.” Id. at
978.
24
whether the default was the result of the defendant’s culpable
conduct.” Id. at 982. Harad makes no reference to any clause
in Rule 60(b), nor does it consider whether “extraordinary
circumstances” were present. Thus, Harad may have created
the erroneous impression that an exception to the “extraordinary
circumstances” requirement exists when a district court is
considering whether to vacate a default judgment, as opposed to
a judgment on the merits.
A closer look at Harad reveals that its test was not
intended to apply to Rule 60(b)(6). Harad involved a complaint
filed by an attorney (Charles Harad) and one of his insurance
companies (Home), against another of his insurance companies
(Aetna), seeking a declaratory judgment that Aetna had a duty
to defend and indemnify Harad. 839 F.2d at 981. On December
23, 1986, Harad and Home served the complaint on Aetna at its
Hartford office rather than the Philadelphia office with which
they had negotiated previously. Id. The Hartford office
forwarded the complaint to the Philadelphia office, and Aetna
entered an appearance with the District Court for the Eastern
District of Pennsylvania on January 9, 1987, the same day that
Harad and Home filed a request for a default judgment. The
district court docketed the default judgment request on January
12 and the entry of appearance on January 14, and then granted
the request for default judgment on January 14. Id. Aetna
moved to vacate the default judgment, and the parties stipulated
that the sole issue to be addressed on the motion was whether
Aetna had established a meritorious defense to the plaintiffs’
action. Id. The district court then declined to vacate the default
judgment, but we reversed, concluding that Aetna had a
meritorious defense. Id. at 985. Although neither the district
25
court’s opinion, see Harad v. Aetna Cas. & Sur. Co., No. 86-cv-
7266, 1987 WL 12290 (E.D. Pa. June 9, 1987), nor our opinion
cited any Federal Rule of Civil Procedure, we see at least two
reasons for construing Harad as a grant of relief under Rule
60(b)(1), which allows relief from a judgment on the basis of
“mistake, inadvertence, surprise, or excusable neglect,” rather
than Rule 60(b)(6). First, the facts of the case, with the
complaint sent to the wrong office and the apparent delay in
docketing the entry of appearance, suggest that this was a matter
of “mistake, inadvertence, surprise, or excusable neglect.”
Second, Harad obtains its three-part test directly from United
States v. $55,518.05 in U.S. Currency, 728 F.2d 192 (3d Cir.
1984), a case that addresses Rule 60(b)(1). See Harad, 839 F.2d
at 982 (citing $55,518.05 in U.S. Currency, 728 F.2d at 195). In
$55,518.05 in U.S. Currency, we said:
We require the district court to consider the
following factors in exercising its discretion in
granting or denying a motion to set aside a default
under Rule 55(c) or a default judgment under
Rule 60(b)(1): (1) whether the plaintiff will be
prejudiced; (2) whether the defendant has a
meritorious defense; (3) whether the default was
the result of the defendant’s culpable conduct.
$55,518.05 in U.S. Currency, 728 F.2d at 195 (emphasis
added).15 Accordingly, we conclude that the District Court erred
15
$55,518.05 in U.S. Currency cited three cases as its
authority for this test. 728 F.2d at 195. First, it cites Gross v.
26
by relying solely on the three factors listed in Harad to grant
relief under Rule 60(b)(6).
Appellees assert that Emcasco Insurance Co. v.
Sambrick, 834 F.2d 71 (3d Cir. 1987), provides the appropriate
factors for deciding whether to set aside a default judgment. In
Emcasco, we applied the same three factors that we used in
Harad, plus a fourth—“the effectiveness of alternative
sanctions.” Id. at 73. Emcasco does not cite Rule 60(b) in its
review of the district court’s decision not to vacate a default
judgment. As with Harad, however, we construe Emcasco as
describing a standard for vacating a default judgment under
Rule 60(b)(1), not Rule 60(b)(6). First, we think that the default
Stereo Component Systems, Inc., 700 F.2d 120 (3d Cir. 1983),
a case applying Rule 60(b)(1). See 700 F.2d at 121–22 & n.1.
Second, it cites Feliciano v. Reliant Tooling Co., 691 F.2d 653
(3d Cir. 1982). Feliciano applies Rule 60(b) as a whole and
expressly declines to choose between Rule 60(b)(1) and Rule
60(b)(6) as its basis for relief. See Feliciano, 691 F.2d at 656.
Although Feliciano suggests that the three-part test might apply
to Rule 60(b)(6), it does not make this a part of its holding.
Thus, we do not think that Feliciano stands for the proposition
that the three-part test is sufficient to guide a Rule 60(b)(6)
inquiry. Third, $55,518.05 in U.S. Currency cites Farnese v.
Bagnasco, 687 F.2d 761 (3d Cir. 1982). Farnese is concerned
with whether to set aside an “entry of default” as opposed to a
“default judgment.” See Farnese v. Bagnasco, 687 F.2d at
763–64 (citing F ED. R. C IV. P. 55(c) (stating that a court may set
aside an entry of default “for good cause”)).
27
judgment in Emcasco could be fairly described as the product of
“mistake, inadvertence, surprise, or excusable neglect.” 16 The
Emcasco district court decided on January 14, 1987 that it would
enter a default judgment against the defendant unless he filed an
answer by January 16. 834 F.2d at 75. But the defendant and
his counsel were never informed of this decision and instead
16
Emcasco involved a suit by an insurance company
(EMCASCO) against an insured (Louis Sambrick) for a
declaratory judgment stating that the insurance policy did not
cover personal injuries that Sambrick had allegedly inflicted on
two other people. 834 F.2d at 72. EMCASCO served Sambrick
with its complaint on December 2, 1986, but Sambrick, who was
not represented by counsel, did not file a timely answer. Id. at
72–73. On December 31, EMCASCO served the still-
unrepresented Sambrick with an affidavit requesting default
judgment. Id. at 73. After Sambrick retained counsel, the
district court held a telephone conference with EMCASCO on
January 14, 1987, but neither Sambrick nor his counsel
participated in it, apparently because they were not notified. Id.
During the telephone conference, the district court told
EMCASCO that it would enter a default judgment unless
Sambrick filed an answer by January 16. Id. Sambrick and his
counsel were not told of this arrangement, but instead were led
to understand that they could avoid a default judgment if
Sambrick’s counsel entered an appearance, which Sambrick’s
counsel did on January 15. Id. On January 16, the district court
entered a default judgment against Sambrick. Id. The district
court subsequently rejected Sambrick’s motion to set aside the
default judgment. Id.
28
were erroneously told that they could avert a default judgment
merely by entering an appearance, which they did on January 15.
Id. Given these facts, Emcasco was in effect a Rule 60(b)(1)
case. Second, most of the cases that Emcasco cites in support of
its four-part test are applications of Rule 60(b)(1). See 834 F.2d
at 73–74.17 Thus, Emcasco does not provide a test that is
17
In support of its four-factor test, Emcasco cites nine cases.
See 834 F.2d at 73–74 (citing Zawadski De Bueno v. Bueno
Castro, 822 F.2d 416, 419–20 (3d Cir. 1987); Scarborough v.
Eubanks, 747 F.2d 871, 875–78 (3d Cir. 1984); Hritz v. Woma
Corp., 732 F.2d 1178, 1181 (3d Cir. 1984); $55,518.05 in U.S.
Currency, 728 F.2d at 194–95; In re MacMeekin, 722 F.2d 32,
35 (3d Cir. 1983); Gross, 700 F.2d at 122; Feliciano, 691 F.2d
at 656; Farnese, 687 F.2d at 764; Donnelly v. Johns-Manville
Sales Corp., 677 F.2d 339, 342 (3d Cir. 1982)). We have
already discussed $55,518.05 in U.S. Currency, Gross,
Feliciano, and Farnese. See supra note 15. Zawadski is
expressly based on the “excusable neglect” factor of Rule
60(b)(1). 822 F.2d at 417–18 & n.1. Our opinion in Hritz refers
to Rule 60(b) as a whole rather than any of the six clauses. See
Hritz, 732 F.3d at 1182 n.3; see also id. at 1186 n.1 (Garth, J.,
concurring). The district court’s opinion in Hritz, however,
makes clear that the order being appealed was based on Rule
60(b)(1). See Hritz v. Woma Corp., 92 F.R.D. 364, 366
(W.D. Pa. 1981). Scarborough and Donnelly are direct appeals
of grants of dismissal under Rule 41, not appeals of a decision
granting or denying a motion to set aside a previously-entered
default judgment. Scarborough, 747 F.2d at 874–75; Donnelly,
677 F.2d 340–41. Similarly, MacMeekin is a direct appeal of a
29
applicable to a Rule 60(b)(6) motion.
We acknowledge that default judgments are generally
disfavored in our circuit. See $55,518.05 in U.S. Currency, 728
F.2d at 194–95 (“[T]his court does not favor entry of defaults or
default judgments. We require doubtful cases to be resolved in
favor of the party moving to set aside the default judgment ‘so
that cases may be decided on their merits.’” (quoting Tozer v.
Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir.
1951))). But we cannot apply this presumption against default
judgments if doing so would be inconsistent with the Federal
Rules of Civil Procedure or our case law interpreting these
Rules. Because “extraordinary circumstances” are essential for
a grant of Rule 60(b)(6) relief, a case does not become
“doubtful” when the district court has made no attempt to show
that such circumstances exist.
Finally, our own review of the record does not suggest
that the circumstances of this case are “extraordinary” as we
have defined this term in our case law. The Defendants
acknowledge that their decision not to contest the California
judgment was the result of a deliberate choice. Thus, the default
judgment cannot be said to have created an “unexpected
hardship.” Cf. Boughner, 572 F.2d at 978. Since nothing else
in the record appears to qualify as an “extraordinary
circumstance” sufficient to justify setting aside any judgment,
let alone one entered by a different court, we will vacate the
District Court’s Order setting aside the default judgment.
dismissal under Rule 37. 722 F.2d at 34–36.
30
IV.
We next confront a question that parallels the one we
addressed about Rule 60(b)(6): does a federal district court have
the power to consider a motion to vacate another district court’s
judgment under Rule 60(b)(4) on the ground that the latter court
lacked personal jurisdiction over the defendant? Neither party
has contended that the District Court lacks this power.
Nevertheless, we will explain why we hold that this power
exists.
Rule 60(b)(4) allows a court to relieve a party from a
final judgment if “the judgment is void.” A judgment is void
within the meaning of Rule 60(b)(4) if the court that rendered it
lacked personal jurisdiction over the defendant. See Marshall
v. Bd. of Educ., 575 F.2d 417, 422 (3d Cir. 1978). Although
there is no question that a court may grant a Rule 60(b)(4)
motion to vacate one of its own judgments, we have not
explicitly ruled on whether a court has the power to grant a Rule
60(b)(4) motion to vacate another court’s judgment for lack of
personal jurisdiction.18
Five circuits have stated either in holdings or dicta that a
registering court has the power to hear a Rule 60(b)(4) motion.
18
In In re Universal Display & Sign Co., 541 F.2d 142 (3d
Cir. 1976), we allowed a registering court to consider a Rule
60(b)(4) motion, but we noted that the party seeking to enforce
the judgment had not objected to the registering court’s power
to do so. Id. at 143 n.6.
31
Three of these circuits explicitly held that a registering court
may vacate a default judgment of a rendering court when the
rendering court lacked personal jurisdiction over the defendant.
Covington, 629 F.2d at 732–34 (Second Circuit); Harper
Macleod, 260 F.3d at 394–95 (Fifth Circuit); Peterson, 871 F.2d
at 951 & n.2 (Tenth Circuit). The First Circuit endorsed the
view of these circuits in dicta, recognizing that Rule 60(b)(4)
challenges to default judgments are one of the two exceptions to
the general rule that Rule 60(b) motions must be addressed to
the rendering court. See Indian Head, 689 F.2d at 250–51. The
Ninth Circuit endorsed a registering court’s power to vacate a
rendering court’s judgment under Rule 60(b)(4), but its holding
addressed a Rule 60(b)(4) motion based on a challenge to the
constitutionality of the rendering court’s judgment rather than
the rendering court’s personal jurisdiction. 93 F.3d at 639–40.
We note that the Eastern District of Pennsylvania has produced
a thorough and well-reasoned opinion in On Track
Transportation, Inc. v. Lakeside Warehouse & Trucking, Inc.,
245 F.R.D. 213 (E.D. Pa. 2007), in which it held that a
registering court has the power to decide a Rule 60(b)(4) motion
challenging a rendering court’s default judgment for lack of
subject matter jurisdiction. Id. at 214–23.
The Seventh Circuit is an outlier on this issue. As we
discussed above, the Seventh Circuit concluded in Elite Erectors
that the registering court “was free to disregard the judgment,
without formally annulling it under Rule 60(b)(4), if the
rendering court lacked [personal or subject-matter] jurisdiction.”
212 F.3d at 1034–35. Because the registering court cannot
annul the judgment under Rule 60(b)(4), the most it can do is
decline to enforce the judgment—while leaving the judgment in
32
place so that other jurisdictions can enforce it. See id. As the
Eastern District of Pennsylvania noted in On Track, this is an
“impracticable” solution. See 245 F.R.D. at 219–20. If the
rendering court merely issued a default judgment, then it never
actually litigated the issue of personal jurisdiction. In contrast,
the registering court will have actually litigated the issue. Thus,
the registering court’s judgment will have preclusive effect, and
a defendant “could then move the rendering court to vacate the
judgment on the basis that it lacked jurisdiction, using the
decision of the registering court offensively.” Id. This would
lead to the same result as vacating the judgment altogether,
except with one extra step, along with the expenditure of time
and resources that this step would entail. Id. at 220. We see no
reason to break with the majority of circuits and embrace the
cumbersome process endorsed by the Seventh Circuit.
Finally, we do not think a registering court seriously
threatens the interest in comity when it vacates a rendering
court’s default judgment under Rule 60(b)(4) for lack of
personal jurisdiction. If the rendering court did not have
personal jurisdiction, then the judgment was not merely
erroneous; it never should have been entered in the first place.
Moreover, when the rendering court enters a default judgment
based on nothing but one party’s failure to appear, there is no
risk that the courts will reach opposite conclusions on personal
jurisdiction because the rendering court was not required to
address the issue. Finally, as the On Track court noted, comity
“must be balanced against the longstanding principle that ‘[a]
defendant is always free to ignore the judicial proceedings, risk
a default judgment, and then challenge that judgment on
jurisdictional grounds in a collateral proceeding.’” 245 F.R.D.
33
213, 221 (citing Ins. Corp. of Ir., Ltd. v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 706 (1982)). The latter
principle would be undermined if we held that Rule 60(b)(4)
actions could only be brought in the rendering court that
allegedly lacked personal jurisdiction over the defendant.
V.
We now reach the question that the parties originally
asked the District Court to address: whether the California
district court possessed personal jurisdiction over the
Defendants. We have the power to resolve this issue ourselves,
rather than remand it to the District Court, because we conduct
de novo review of jurisdictional issues raised under Rule
60(b)(4). See Page v. Schweiker, 786 F.2d 150, 152 (3d Cir.
1986). Both parties have informed us in their briefs and at oral
argument that they would prefer that we resolve the issue rather
than remand it. Unfortunately, we are unable to do so, because
we find that the existence of personal jurisdiction turns on
disputed questions of fact that should be resolved by a
factfinder. Therefore, we remand the matter to the District
Court, with the hope that the District Court will resolve this
matter as promptly and as inexpensively for the parties as
possible. Below we provide an overview of the personal
jurisdiction issues in this case, pointing out what we believe are
the key factual disputes.
A. Personal Jurisdiction in California
“In a diversity action, [a California federal district court]
may exercise personal jurisdiction over a non-resident defendant
34
if jurisdiction is proper under California’s long-arm statute and
if that exercise of jurisdiction accords with federal constitutional
due process principles.” Fireman’s Fund Ins. Co. v. Nat’l Bank
of Coops., 103 F.3d 888, 893 (9th Cir. 1996). California’s long-
arm statute provides simply that the court may exercise personal
jurisdiction “over a non-resident defendant on any basis not
inconsistent with the California or federal Constitution.” Id.
(citing C AL. C ODE C IV. P ROC. § 410.10). “The statutory and
constitutional requirements therefore merge into a single due
process test,” which requires that the defendant “have certain
minimum contacts with [the forum] such that the maintenance
of the suit does not offend traditional notions of fair play and
substantial justice.” Id. (citing Int’l Shoe Co. v. Washington,
326 U.S. 310, 316 (1945) (internal quotation omitted)). As both
parties acknowledge, we determine whether this requirement is
satisfied by applying a three-part test. The three-part test, as
summarized in Panavision International v. Toeppen, 141 F.3d
1316 (9th Cir. 1998), is as follows:
(1) The nonresident defendant must do some act
or consummate some transaction with the forum
or perform some act by which he purposefully
avails himself of the privilege of conducting
activities in the forum, thereby invoking the
benefits and protections of its laws; (2) the claim
must be one which arises out of or results from
the defendant’s forum-related activities; and (3)
exercise of jurisdiction must be reasonable.
35
141 F.3d at 1320 (citation omitted). BBI contends that all three
of these requirements were satisfied as a matter of law.19
B. Purposeful Availment
BBI asserts that White has purposefully availed herself
of the privilege of conducting activities in California and
thereby has invoked the benefits of California law. BBI bases
its argument on the Settlement Agreement as well as the
Defendants’ alleged trademark infringement.
1. Purposeful Availment Through The Settlement Agreement
The mere existence of a contract is insufficient to
establish minimum contacts. Burger King Corp. v. Rudzewicz,
471 U.S. 462, 478 (1985) (“If the question is whether an
individual’s contract with an out-of-state party alone can
automatically establish sufficient minimum contacts in the other
party’s home forum, we believe the answer clearly is that it
cannot.”). But a contract is typically an intermediate step
between past negotiations and future transactions, and Burger
King instructs that “it is these factors— prior negotiations and
contemplated future consequences, along with the terms of the
contract and the parties’ actual course of dealing—that must be
evaluated in determining whether the defendant purposefully
established minimum contacts with the forum.” Id. at 479. BBI
argues that several aspects of the Settlement Agreement’s terms,
19
BBI argues only that “specific jurisdiction” exists and does
not seek to prove the existence of “general jurisdiction.”
36
as well as prior negotiations and contemplated future
consequences, create minimum contacts.
First, BBI points out that the Agreement contains a
choice-of-law clause stating that it “will be governed by and
construed under the laws of the State of California.” Br. of
Appellant 39. As Burger King points out, a choice-of-law
provision “standing alone would be insufficient to confer
jurisdiction,” but combined with other factors, it may reinforce
a party’s “deliberate affiliation with the forum State and the
reasonable foreseeability of possible litigation there.” 471 U.S.
at 482. We must therefore consider other factors before we can
decide how much weight to afford to this provision.
Second, BBI points out that the Defendants negotiated
the Settlement Agreement by telephone and mail with
California-based BBI and its attorneys. Br. of Appellant 40.
Interpreting California law, the Ninth Circuit has said that,
ordinarily, use of the mails and telephone “simply do not qualify
as purposeful activity invoking the benefits and protection of the
[forum] state.” Roth v. Garcia Marquez, 942 F.2d 617, 622 (9th
Cir. 1991) (quoting Thos. P. Gonzalez Corp. v. Consejo
Nacional De Produccion De Costa Rica, 614 F.2d 1247, 1254
(9th Cir. 1980)). Moreover, an important distinction between
the negotiations in Burger King and those in the instant case is
that the Burger King defendant actively sought contract
negotiations with a company based in the forum state, whereas
White did not reach out to anyone in California until BBI
threatened litigation. See Burger King, 471 U.S. at 479
(“Eschewing the option of operating an independent local
enterprise, Rudzewicz deliberately ‘[reached] out beyond’
37
Michigan and negotiated with a Florida corporation for the
purchase of a long-term franchise and the manifold benefits that
would derive from affiliation with a nationwide organization.”).
Third, BBI asserts that the Defendants established
minimum contacts “by accepting BBI’s settlement payment
which was wired from a California bank to defendants.” Br. of
Appellant 41. To underscore the importance of this payment,
BBI cites a case from the Southern District of Mississippi,
Medical Assurance Co. of Mississippi v. Jackson, 864
F. Supp. 576 (S.D. Miss. 1994). Jackson involved a suit brought
by a Mississippi-based medical malpractice insurance company
against two Alabama residents: Moore, the victim of a botched
operation in Mississippi that created a need for additional
surgery; and Jackson, Moore’s attorney. Id. at 577. Jackson
threatened to sue the insurance company on Moore’s behalf and
demanded a $1,100,000 settlement. Id. After “a series of
letters and telephone calls,” Moore agreed to a settlement of
$56,250 from the insurance company in exchange for an
absolute release. Id. Jackson and Moore accepted and
negotiated the $56,250 check that the insurance company
tendered, but they refused to execute the absolute release that
the company had also sent them. Id. They returned an altered
version of the release form instead. Id. at 578. The insurance
company sued Jackson and Moore in a Mississippi federal
district court, alleging breach of the settlement agreement. Id.
at 578. Jackson and Moore claimed that the court lacked
personal jurisdiction over them because the insurance company
had sent the payment and the release documents to Alabama. Id.
The court rejected their claim, pointing out that “the check was
sent from Mississippi and was ultimately paid by a Mississippi
38
bank,” that “the release, which is central to this action” was sent
from Mississippi and was to be returned to Mississippi, and that
“defendants did, in fact, return a [modified] release document”
to Mississippi. Id. Moreover, the court pointed out that Jackson
initiated the transaction by threatening to sue the Mississippi-
based insurance company. Id. at 579.
Despite some superficial similarities, Jackson is
distinguishable. Although White and her attorney, like Moore
and Jackson, accepted payment from a bank located in the forum
state in exchange for accepting a settlement agreement, they did
not initiate the transaction by threatening to sue a California
company.20 Also, whereas Moore had traveled to Mississippi
for surgery performed by a Mississippi doctor, 864 F. Supp. at
577, White had not directed any activities toward California
before BBI contacted her. Thus, even if we regard Jackson as
persuasive authority, it does not compel a finding of purposeful
availment.
Fourth, BBI argues that the parties contemplated future
consequences. Among other things, the Agreement states that
the Defendants “hereby irrevocably appoint BBI as their
respective lawful attorney-in-fact with authority to file any
document in the name of and on behalf of [the Defendants] for
the purpose of taking any of the actions required by [Section 4
of the Agreement] upon the event of a default.” We agree that
20
White’s attorney did respond to BBI’s warnings of a
lawsuit with hints of a countersuit. Nonetheless, it was BBI that
set events in motion.
39
the attorney-in-fact provision suggests that the parties
contemplated future consequences to some extent. Still, a large
gulf exists between the future contacts contemplated by this
provision and the extensive future contacts contemplated by the
Burger King contract. Whereas the Burger King defendant
“entered into a carefully structured 20-year relationship that
envisioned continuing and wide-reaching contacts with Burger
King in Florida,” id. at 480, the Settlement Agreement merely
describes what will happen in the event of default.
In sum, we question whether any of the factors that BBI
cites (the choice of law clause, the mail and telephone
negotiations, the acceptance of the settlement check, and the
attorney-in-fact provision) would individually support
purposeful availment. The combined force of these factors,
however, may be sufficient. On the other hand, White has
asserted that the original agreement contained a clause
consenting to personal jurisdiction in California that the parties
removed at White’s insistence. If true, this suggests that we
should hesitate to read the terms of the contract, especially the
choice-of-law clause, as indicative of the “reasonable
foreseeability of possible litigation” in California court.21 See
21
Of course, even if White could prove that she refused to
consent to personal jurisdiction in California during the contract
negotiations, this would not matter if the events surrounding the
contract otherwise indicate that she has purposely availed
herself of that forum. In this case, however, BBI suggests that
we can interpret the choice-of-law clause as probative of
White’s acquiescence to litigation in a California court, since
40
471 U.S. at 482. BBI contests this fact, and we do not have
evidence of it in the record other than White’s affidavit and
brief. Therefore, on remand the District Court may wish to
investigate White’s claim regarding the contract negotiations,
since it could shed light on the extent to which the parties
contemplated an ongoing relationship with California, including
the possibility of litigation there.22
2. Purposeful Availment Through Trademark Infringement
BBI contends that the Defendants’ alleged trademark
infringement created personal jurisdiction in California because
the Defendants purposefully directed their activities toward that
forum. Br. of Appellant 42. Relying on the “effects test” of
Calder v. Jones, 465 U.S. 783 (1984), BBI says that purposeful
availment exists if the defendant “(1) committed an intentional
act, (2) expressly aimed at the forum state, (3) causing harm that
California courts are more familiar with California law than
other courts. If White specifically objected to a clause
consenting to personal jurisdiction, this counsels us against such
an interpretation of the choice-of-law clause.
22
At oral argument, BBI said that the District Court would be
unable to consider this evidence on remand because it would
violate the parol evidence rule. But the issue here is not how to
interpret the contract, but whether personal jurisdiction exists.
This requires an inquiry into “prior negotiations,” Burger King,
471 U.S. at 479, even when the contract purports to be the entire
agreement between the parties.
41
the defendant knows is likely to be suffered in the forum state.”
Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)
(summarizing Calder’s “effects test”).
BBI contends that trademark infringement “is treated as
an intentional tort for jurisdictional purposes.” The first case
that BBI cites for this proposition is Sebastian Int’l, Inc. v.
Russolillo, No. 00-03476 CM, 2000 U.S. Dist. LEXIS 21510
(C.D. Cal. Aug. 25, 2005). In Russolillo, the court held that the
defendant’s trademark infringement through the sale of
counterfeit goods was “intentional” because the plaintiff had
written a letter to put the defendant on notice of the
infringement. 2000 U.S. Dist. LEXIS 21510, at *13. BBI
claims that Russolillo is analogous to the instant case, because
BBI informed the Defendants of their infringement in 2003,
prior to the settlement, and informed them of their continuing
infringement on February 1, 2005. The second case that BBI
cites is Panavision. In Panavision, the court stated that although
the defendant’s registration of the plaintiff’s trademark as a
domain name was not sufficient to establish jurisdiction in the
forum state, the defendant’s “scheme to register [the plaintiff’s]
trademarks as his domain names for the purpose of extorting
money” from the plaintiff was an intentional act directed at the
forum state. 23 141 F.3d at 1322. The instant case is
23
BBI provides a misleading description of Panavision,
saying that it held that the “effects test” is “satisfied where
plaintiff alleged infringement of trademark due to defendant’s
use of plaintiff’s trademark as domain name.” This is directly
contrary to the court’s language requiring “something more”
42
distinguishable from both Russolillo and Panavision. In
Russolillo, the court indicated that it was the explicit warning
about trademark infringement, not the act of counterfeiting
itself, that rendered the defendant’s trademark infringement
“intentional.” 2000 U.S. Dist. LEXIS 21510, at *13. Although
BBI also sent a warning to the Defendants, the record suggests
that the Defendants acted in good faith to remedy the alleged
infringement. If this is true, then any ongoing “infringement”
was not the result of intentional acts on the Defendants’
part—unless we agree with BBI’s claim that surrendering
control of the telephone number was absolutely necessary to
prevent further infringement. Panavision supports the
Defendants, because it makes clear that the mere use of another
party’s trademark (i.e., registration of domain names and
creation of web sites) does not constitute an intentional act
aimed at the forum state for jurisdictional purposes. 141 F.3d at
1322. It is possible, however, that the District Court’s findings
than use of a trademark as a domain name:
We agree that simply registering someone else’s
trademark as a domain name and posting a web
site on the Internet is not sufficient to subject a
party domiciled in one state to jurisdiction in
another. . . . [T]here must be ‘something more’ to
demonstrate that the defendant directed his
activity toward the forum state. Here, that has
been shown.
Panavision, 141 F.3d at 1322 (citation omitted).
43
of fact will reveal more about whether White’s behavior can be
construed as “intentional.”
BBI also contends that the Defendants’ behavior was
“expressly aimed at the forum state.” We do not find it
immediately obvious why the failure to change New Jersey
telephone listings and to surrender a New Jersey telephone
number is behavior “expressly aimed” at California. But BBI
relies on language in Bancroft & Masters v. Augusta National,
223 F.3d 1082 (9th Cir. 2000), which states that “the [‘expressly
aiming’] requirement is satisfied when the defendant is alleged
to have engaged in wrongful conduct targeted at a plaintiff
whom the defendant knows to be a resident of the forum state.”
223 F.3d at 1086. Even though the Defendants’ alleged
infringement was limited to activities in New Jersey, Bancroft
implies that because it was targeted at franchisees of BBI, a
known “resident” of California, it was therefore expressly aimed
at California. 24 But Panavision suggests a contrary result.
Given the holding in Panavision that the use of a company’s
trademarks in domain names and web sites is not “expressly
aimed” at the forum in which the company has its principal
place of business, 141 F.3d at 1322, we question whether
24
Not all circuits have adopted this approach. For example,
the Tenth Circuit requires that “the forum state itself must be the
‘focal point of the tort’,” an approach that it has described as
“somewhat more restrictive” than Bancroft. Dudnikov v. Chalk
& Vermilion Fine Arts, 514 F.3d 1063 (10th Cir. 2008) (citing
Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1080 (10th Cir.
1995)).
44
listings in New Jersey telephone directories could be
characterized as actions expressly aimed at California.
Finally, BBI contends that the “brunt of the harm” to its
reputation and profits is felt in California because California is
its principal place of business.25 BBI argues that just because
BBI is a California corporation, a jurisdictionally sufficient
amount of economic harm is felt in California. See Harris
Rutsky & Co. Ins. Servs. v. Bell & Clements, Ltd., 328 F.3d
1122, 1131 (9th Cir. 2003) (for “a California corporation whose
principal place of business is in California, . . . the brunt of the
harm [is] felt in California.”). We cannot resolve this issue
without more evidence. BBI’s California complaint suggests
that the Defendants’ alleged infringement is causing economic
harm to BBI as a whole. But White claimed that as of March 9,
2005, her company had not received a single call from anyone
confused by the erroneous listing, which would suggest that
little economic harm has been inflicted upon the New Jersey
franchisees, let alone the national entity. Without further
factfinding, it is impossible to decide which party is correct
25
The Ninth Circuit has overruled the “brunt of the harm”
requirement, replacing it with a “jurisdictionally sufficient
amount of harm” requirement. Yahoo! Inc. v. La Ligue Contre
Le Racisme, 433 F.3d 1199, 1207 (9th Cir. 2006) (“We take this
opportunity to clarify our law and to state that the ‘brunt’ of the
harm need not be suffered in the forum state. If a
jurisdictionally sufficient amount of harm is suffered in the
forum state, it does not matter that even more harm might have
been suffered in another state.”).
45
about the economic effects felt by BBI in California.
C. Does The Cause of Action Arise Out of Forum-Related
Activities?
The next prong of the three-part test for specific
jurisdiction is whether the cause of action arises out of forum-
related activities. Although this is a distinct requirement, in this
case the analysis is identical to the “purposeful availment”
analysis. BBI has not asserted that White or her company has
any connection to California aside from those associated with
the causes of action for breach of contract and trademark
infringement. Thus, if the first prong is satisfied, then the
second prong is satisfied as well.
D. Fair Play and Substantial Justice, a.k.a. Reasonableness
If the District Court finds that the first two prongs are
satisfied, it must consider whether “minimum requirements
inherent in the concept of ‘fair play and substantial justice’ may
defeat the reasonableness of jurisdiction even if the defendant
has purposefully engaged in forum activities.” Burger King,
471 U.S. at 477–78. Although there is a “strong presumption of
reasonableness” if purposeful availment exists, Dole Food, 303
F.3d at 1117, courts must still consider reasonableness as a
separate factor. This is a heavily fact-based inquiry. California
has identified seven factors that affect reasonableness, none of
which are determinative:
(1) the extent of the defendants' purposeful
interjection into the forum state's affairs; (2) the
46
burden on the defendant of defending in the
forum; (3) the extent of conflict with the
sovereignty of the defendants' state; (4) the forum
state's interest in adjudicating the dispute; (5) the
most efficient judicial resolution of the
controversy; (6) the importance of the forum to
the plaintiff’s interest in convenient and effective
relief; and (7) the existence of an alternative
forum.
Harris Rutsky, 328 F.3d at 1132 (citing Core-Vent Corp. v.
Nobel Indus. AB, 11 F.3d 1482, 1487–88 (9th Cir. 1993)). Most
of these factors cannot be resolved without factfinding from the
District Court. For example, the District Court might wish to
consider the second factor in light of the statements throughout
White’s briefs that it is extremely burdensome for a small
business in New Jersey with no California connections (aside
from, perhaps, those created through its dealings with BBI) to
litigate in California. To decide the fifth factor, the District
Court should “focus on the location of the evidence and
witnesses.” Harris Rutsky, 328 F.3d at 1133. If most of the
evidence and witnesses are located in New Jersey, where the
alleged infringement occurred, this factor weighs against
personal jurisdiction in California.
VI.
We will vacate the April 5, 2006 Order of the District
Court for the District of New Jersey, including the assessment
47
of fees and costs. We remand this case so that the District Court
may decide the question that the parties asked it to decide over
two years ago: whether to set aside the California default
judgment for lack of personal jurisdiction.
48
Budget Blinds, Inc. v. White, et al., Nos. 06-2610 and 06-2733
Cowen, Circuit Judge, concurring in part and dissenting in part.
This case arises out of the context of a 28 U.S.C. § 1963
registration proceeding, and more fundamentally, involves a
collateral attack to a foreign default judgment. It is well-settled
that the grounds for obtaining collateral relief are extremely
limited. The majority, however, holds that registering courts
have the power to vacate a foreign judgment rendered by their
sister federal courts pursuant to Federal Rule of Civil Procedure
60(b)(6). In doing so, it becomes the first court in the nation to
reach this conclusion. Because I think this holding potentially
creates a circuit split where none existed before, and because I
question whether such a broad ruling is necessary under the
particular circumstances of this case, I respectfully dissent.
Under the circumstances before us, one may only seek to
collaterally vacate a default judgment obtained in another
jurisdiction based on a challenge to the underlying validity of
the judgment. Sheet Metal Workers’ Nat’l Pension Fund v.
Elite Erectors, Inc., 212 F.3d 1031, 1034 (7th Cir. 2000) (“[a]
party that simply refuses to appear may contend in a later case
that the first tribunal lacked jurisdiction – though jurisdiction is
the only issue thus preserved”) (emphasis in original); Yale v.
Nat’l Indem. Co., 602 F.2d 642, 644 (4th Cir. 1979) (“only void
judgments are subject to collateral attack, and [] a void judgment
49
is only one that is rendered by a court lacking jurisdiction over
the default or over the subject matter”); see also Ins. Corp. of
Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S.
694, 706 (1982) (“[a] defendant is always free to ignore the
judicial proceedings, risk a default judgment, and then challenge
that judgment on jurisdictional grounds in a collateral
proceeding”). From this, it naturally follows that registering
courts may entertain motions to vacate registered foreign
judgments pursuant to Rule 60(b)(4), on the basis that the
rendering court lacked jurisdiction. See 12 James Wm. Moore
et al., MOORE’S FEDERAL PRACTICE § 60.60[3][c] (3d ed. 1997);
30 Am. Jur. 2d Executions and Enforcement of Judgments § 813
(“the court in which the judgment is registered may determine
whether the court which entered the judgment had jurisdiction
over the subject matter and parties”). This is certainly the view
that has been expressly embraced by nearly all26 of our sister
circuits to have squarely confronted the question, and I thus
concur with the majority’s opinion insofar as it adopts this
relatively uncontroversial position as Third Circuit law.27
26
As the majority points out, only the Seventh Circuit has
held that registering courts lack such authority. See Sheet Metal
Workers’ Nat’l Pension Fund v. Elite Erectors, Inc., 212 F.3d
1031, 1034 (7th Cir. 2000); see also Pacific Reinsurance Mgmt.
Corp. v. Fabe, 929 F.2d 1215, 1217 (7th Cir. 1991)
(“[e]nforcement proceedings [pursuant to § 1963] do not allow
collateral attacks on the judgment”).
27
We have never expressly spoken on this issue, but our
prior decisions have certainly assumed the existence of such
50
However, the opinion does not stop there, but goes
further to hold that registering courts may also consider Rule
60(b)(6) motions to vacate foreign judgments under certain
“extraordinary circumstances.” Here, I must part ways with my
majority colleagues. While it is true that the precise contours of
the registering court’s authority to grant Rule 60(b) relief remain
unsettled, I am nevertheless unaware of any court considering
the question – before today – that has affirmatively declared
such authority to exist for any Rule 60(b) subsection outside of
the (b)(4) context.28 See 11 Charles A. Wright et al., F EDERAL
power on the part of enforcement courts. See In re Universal
Display & Sign Co., 541 F.2d 142, 143-44 (3d Cir. 1976)
(affirming registering court’s denial of Rule 60(b)(4) relief
where defendants litigated issue of personal jurisdiction in
rendering court but lost); Somportex Ltd. v. Phila. Chewing
Gum Corp., 453 F.2d 435, 444 (3d Cir. 1972) (affirming denial
of relief from English default judgment sought to be enforced in
Pennsylvania where defendants had opportunity to contest
jurisdiction in English forum).
28
There is no question, of course, that regardless of whether
a request for vacatur is labeled as one pursuant to Rule 60(b),
courts possess the inherent power to grant relief if the grounds
of the request otherwise satisfy the requirements of an
independent action in equity. See Fed. R. Civ. P. 60(d) (“[Rule
60] does not limit the power of a court to: (1) entertain an
independent action to relieve a party from a judgment, order, or
proceeding; (2) grant relief under 28 U.S.C. § 1655 to a
defendant not actually personally notified of the action; or (3)
51
set aside a judgment for fraud on the court.”); 12 James Wm.
Moore et al., M OORE’S F EDERAL P RACTICE § 60.60[3][b] (3d ed.
1997); 30 Am. Jur. 2d Executions and Enforcement of
Judgments § 813 (1994) (“[t]he registering court may[] grant
relief from the judgment in an independent equitable action,
particularly where some fraud or deception was practiced on the
rendering court”). Indeed, numerous courts, when encountering
Rule 60(b) vacatur requests based on allegations of fraud,
mistake or excusable neglect, have construed them as
independent equitable actions. E.g., Winfield Assocs., Inc. v.
W.L. Stonecipher, 429 F.2d 1087, 1090 (10th Cir. 1970) (so
construing Rule 60(b) motion, thus avoiding question of
“whether Rule 60(b) is a proper means of attacking a judgment
entered by a United States District Court sitting in another
state”); Hadden v. Rumsey Products, Inc., 196 F.2d 92, 95 (2d
Cir. 1952) (same). Thus, I would be satisfied if the holding here
on the Rule 60(b)(6) “extraordinary circumstances” category of
relief is expressly limited to only those narrow circumstances
that would support an independent equitable action. But, the
majority’s view of a registering court’s Rule 60(b)(6) authority
is not so limited.
In any event, I note that no grounds to support an
independent equitable action exist here, since defendant’s
affidavit makes clear that her default was intentional. App. vol.
2 at 56, ¶¶ 15-16 (attesting she did not appear in California
action on advice of counsel); see 12 M OORE’S F EDERAL
P RACTICE §§ 60.81-60.82 (independent equitable relief requires,
inter alia, that no adequate remedy is available at law and that
the judgment sought to be vacated is “manifestly
52
P RACTICE & P ROCEDURE § 2787, at 36 (2d ed. 1995) (“the courts
have not squarely decided to what extent, if at all, the court in
which a judgment is registered can give relief from the judgment
under Rule 60(b)”); Indian Head Nat’l Bank of Nashua v.
Brunelle, 689 F.2d 245, 251 (1st Cir. 1982) (noting neither the
parties nor the court itself could find a single case “where a
court of registration was willing to entertain directly a Rule
60(b) motion other than one attacking a default judgment for
lack of personal jurisdiction”). Indeed, the only court directly
confronting the issue expressly held to the contrary: “[A]
registration court errs in entertaining a Rule 60(b) motion that
alleges neither a judgment void for lack of personal jurisdiction
nor grounds that would support an independent equitable
action.” Brunelle, 689 F.2d at 251-52.
This is not surprising, in light of the general rule that
notwithstanding the rule’s silence on the topic, applications for
Rule 60(b) relief must typically be made in the court rendering
the judgment. See, e.g., 12 James Wm. Moore et al., MOORE’S
FEDERAL PRACTICE § 60.60[1] (3d ed. 1997) (although the rule
itself does not expressly so provide, “it is clear that the drafters
of the rule contemplated that the motion ... would always be
brought ‘in the court and in the action in which the judgment
unconscionable”); see also Somportex, 453 F.2d at 443 n.13
(suggesting collateral attacks to default judgments are allowed
in “limited” instances where fraud or excusable neglect are
involved).
53
was rendered’”) (emphasis added); 11 FEDERAL PRACTICE &
PROCEDURE § 2865, at 377 (Rule 60(b) motions generally made
to rendering court). While this does not per se preclude one
from challenging the underlying judgment upon registration,
registering courts most often deny such challenges without
prejudice, referring the parties to litigate the Rule 60(b) issue in
the rendering court. See 11 F EDERAL P RACTICE & P ROCEDURE
§ 2865, at 378 (“it is appropriate for the court in the district of
registration to decline to pass on the motion for [Rule 60(b)]
relief and to require the moving party to proceed in the court that
gave judgment”); e.g., United States v. Fluor Corp., 436 F.2d
383, 384-85 (2d Cir. 1970) (affirming registration court’s denial
of Rule 60(b)(5) motion without prejudice). And rightly so.
With these well-settled legal principles in mind, I think the First
Circuit’s holding in Brunelle best vindicates the significant
comity interests implicated in the registration context while
adequately preserving collateral avenues of relief for litigants.
Furthermore, even if one agrees with the substance of the
majority’s legal conclusion – one that is at odds with the
Brunelle decision – that registering courts have the power to
vacate foreign judgments under certain unspecified
“extraordinary circumstances” pursuant to Rule 60(b)(6), the
question remains whether this is the appropriate case in which
to make such a proclamation. This is especially so when,
notwithstanding its articulation of a new rule expanding the
bases for which collateral relief may be granted in registration
proceedings, the majority nevertheless acknowledges that no
extraordinary circumstances exist in this case, in any event, so
54
as to warrant any such relief. It would seem then, that a
satisfactory resolution could have been had here without
advancing the Rule 60(b)(6) issue; we should have accordingly
done simply this. For me, this case begins and ends with the
District Court’s vacatur of the default judgment insofar as its
decision was based in any part on its perception of the merits of
the underlying California action.29 It is axiomatic that when a
party purposefully fails to appear in an action on the basis of the
belief that the foreign tribunal lacks personal jurisdiction, she
waives the right to later contest the underlying merits of that
action in a collateral proceeding. E.g., Elite Erectors, Inc., 212
F.3d at 1034; Hazen Research, Inc. v. Omega Minerals, Inc.,
497 F.2d 151, 154 (5th Cir. 1974) (where “the defendant makes
no appearance and the judgment goes by default, the defendant
may defeat subsequent enforcement in another forum by
demonstrating that the judgment issued from a court lacking
personal jurisdiction ... [but] should the attack fail, the default
29
In my view, the reason why Harad v. Aetna Casualty and
Surety Company, 839 F.2d 979 (3d Cir. 1988) and Emcasco
Insurance Company v. Sambrick, 834 F.2d 73 (3d Cir. 1987) do
not apply turns not on that they were decided under Rule
60(b)(1) as opposed to Rule 60(b)(6), but simply because they
both pertained to direct attacks on default judgments (where the
motions for relief were made to the rendering courts
themselves). Insofar as Harad and Emcasco require any
consideration of the underlying merits of the action, they cannot
dictate the governing standard for vacatur in the case where a
party intentionally defaults and then seeks to vacate that
judgment in the context of a registration proceeding.
55
judgment becomes no less final and determinative on the merits
of the controversy than a decree entered after full trial”). Thus,
when the District Court considered the merits of the California
action below to opine that defendant “possesses an extremely
meritorious defense” warranted vacatur, App. vol. 1 at 7, it
missed the fundamental distinction between direct and collateral
attacks. 18 M OORE’S F EDERAL P RACTICE § 130.35[1]
(“registering court cannot look into the substance of the
judgment to reexamine its validity”). As the Restatement
cogently explains:
[I]t is inappropriate to consider the merits of an
attack on a judgment when that attack is made in
the course of a subsequent action in which the
judgment is relied on as a basis of claim or
defense. To consider the merits of the attack in
such a context is to contravene the general
principle that relief from a judgment should be
sought in the court that rendered the judgment.
R ESTATEMENT (S ECOND) OF J UDGMENTS § 80 cmt. a ¶ 2 (1982).
Accordingly, although I concur with the majority’s
ultimate disposition of the case, I respectfully dissent from its
pronouncements on the general availability of Rule 60(b)(6)
relief. Under the particular circumstances here, I would hold
56
that a registration court errs when it vacates a foreign judgment
on grounds other than those of voidness or which would
otherwise support an independent equitable action. The Full
Faith and Credit Clause and the weighty interests of comity
demand nothing less.
57