En Banc Fifth Circuit Reaffirms Fourteenth Amendment Limits on Fifth Amendment Personal Jurisdiction Over a Foreign Defendant, Rejecting Bid to Overrule Prior Decisional Law on This Issue

In Douglass v. Nippon Yusen Kabushiki Kaisha, No. 20-30379 (5th Cir. Aug. 16, 2022) (en banc), the Fifth Circuit holds 12-5 that the Fourteenth Amendment due process standards for personal jurisdiction over foreign defendants applies equally to the Fifth Amendment due process clause. A prior panel decision had agreed, see May 3, 2021 blog, but two judges had urged reversal of a 2016 Fifth Circuit decision – Patterson v. Aker Sols., Inc., 826 F.3d 231 (5th Cir. 2016) – so holding. 

On June 17, 2017, the ACX Crystal, a 730-foot container ship chartered by NYK, collided with the destroyer USS Fitzgerald in Japanese territorial waters. Seven sailors died. The plaintiff estates filed wrongful death and survival actions in the Eastern District of Louisiana, about a collision at sea between a Japanese vessel (NYK Line) and “a U.S. Navy destroyer in Japanese territorial waters.” The claims were governed by a federal statute, the Death on the High Seas Act, 46 U.S.C. §§ 30301-08. A second case was filed for sailors injured in the collision.

The plaintiffs asserted personal jurisdiction over NYK Line pursuant to Fed. R. Civ. P. 4(k)(2), alleging that, despite NYK Line’s status as a foreign corporation, its substantial, systematic, and continuous contacts with the United States should make NYK Line amenable to suit in any federal district court. Fed. R. Civ. P. 4(k)(2) provides that for foreign defendants, “serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if (A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.”

NYK Line filed and won a motion to dismiss on personal jurisdiction grounds, Fed. R. Civ. P. 12(b)(2), holding under established circuit precedent that the Fifth Amendment standard for national contacts mirrors the Fourteenth Amendment. Applying the Fourteenth Amendment standard, the district court concluded that NYK did not have sufficient contacts with the United States to justify the court’s exercising personal jurisdiction over it. As noted, the original panel in this case affirmed this decision, with reservations. The court agreed to rehear the matter en banc.

The en banc majority affirms. Writing for the majority, Judge Edith H. Jones initially sweeps away the plaintiffs’ suggestion that foreign corporations haled in U.S. federal courts lack any personal jurisdiction rights under the Fifth Amendment, finding this theory “irreconcilable with the countless cases where courts, including the Supreme Court, have afforded foreign corporations due-process-based personal-jurisdiction protections under the Fourteenth Amendment.”

The majority also observes that Rule 4(k)(2) provides no “substantive source of personal jurisdiction over NYK” and that the rule is “is expressly subservient to the constitutional limits of due process. The rule does not— and cannot—control the constitutional inquiry whether due process prohibits a court from exercising personal jurisdiction over the defendant in a given lawsuit . . . . No doubt service of a summons under Rule 4(k)(2) establishes personal jurisdiction when procedurally authorized by the Federal Rules and consistent with the Constitution. But as the rule expresses, the efficacy of service remains subject to the constitutional question whether a defendant is amenable to jurisdiction.”

Then reaching “the heart of the dispute,” the majority holds that the requirements of specific jurisdiction developed under Fourteenth Amendment apply equally to national-contacts jurisdiction for foreign defendants under the Fifth Amendment. Conceding the absence of controlling Supreme Court authority, the majority nonetheless holds “that the Fifth Amendment due process test for personal jurisdiction requires the same “minimum contacts” with the United States as the Fourteenth Amendment requires with a state. Both Due Process Clauses use the same language and serve the same purpose, protecting individual liberty by guaranteeing limits on personal jurisdiction. Every court that has considered this point agrees that the standards mirror each other.” The majority cites cases from the Second, Sixth, Seventh, Eleventh, Federal, and D.C. Circuits “all agree[ing] that no meaningful difference exists between the Fifth and Fourteenth Amendments’ minimum contacts analyses.”

While the Fourteenth Amendment jurisprudence is driven by federalism concerns, the majority holds that “an analogous ‘federalism’ dynamic may arise in the Fifth Amendment context under the rubric of ‘international comity.’ Just as a state court’s exercising coercive power over an out-of-state defendant offends Fourteenth Amendment due process when the relationship among the defendant, the state, and the litigation is insufficient, so, too, may a federal court’s exercising coercive power over a foreign non-resident defendant offend Fifth Amendment due process when the relationship among the defendant, the United States, and the litigation is insufficient. Either situation potentially infringes individual liberty, though the impact of foreign relations and national security surely can affect the United States’ ‘sovereign reach’ in ways irrelevant to this case.”

Finally, it affirms the district court’s holding that – under the correct due process standard – NYK is not subject to suit in USA courts due to lack of contacts. “NYK’s contacts with the United States comprise only a minor portion of its worldwide contacts. As the district court recognized: ‘All of NYK Line’s high-level decision-making takes place in Japan, and port calls made to the United States represent just six to eight percent of all port calls made by NYK Line worldwide. Furthermore, NYK Line’s American employees represent less than 1.5 percent of all [its] employees.’”

In a brief concurring opinion, Judges Ho and Costa observe that the doctrine of incorporation means that standards established under the Bill of Rights and the Fourteenth Amendment are the same, and thus personal jurisdiction rules are thus identical under both. “Under the doctrine of incorporation, the Supreme Court has repeatedly instructed that we must interpret the Due Process Clause of the Fourteenth Amendment coextensively with various provisions of the Bill of Rights.” The dissent’s approach “would involve an additional layer of complication— the launching of an unprecedented second body of substantive federal constitutional law.”

The principal dissent signed by Judge Jennifer Walker Elrod runs 46 pages, markedly longer than the majority. In an exhaustive analysis of the Fifth Amendment’s historical roots and its meaning in 1791, it finds no constitutional basis for applying Fourteenth Amendment standards to foreign defendants. “Because the Fifth Amendment’s Due Process Clause, as originally understood, poses no extrinsic limit on Congress’s ability to authorize expansive personal jurisdiction in federal courts, the district court had personal jurisdiction over NYK pursuant to Rule 4(k)(2).”

It also decries the effect this will have on civil justice as potential defendants organize their business to avoid any exposure to USA courts. Thus, “civil corporate defendants will be insulated against federal court personal jurisdiction in cases involving mere money damages if they can simply show that despite doing even extensive business in the United States, they are not ‘essentially at home’ here.”

Judges Oldham and Higginson, who also joined parts of the principal dissent, themselves file short dissents. Judge Oldham, declining to adopt the dissent’s reasoning in whole, would hold simply that “as originally understood, the Fifth Amendment did not impose any limits on the personal jurisdiction of the federal courts. Instead, it was up to Congress to impose such limits by statute.” Judge Higginson, despite “skepticism” about the dissent’s constitutional approach, agrees that placing domestic-justice constraints on the Fifth Amendment is anathema to the original meaning of due process. “[B]y importing the recently narrowed “place of business” and “at home” Fourteenth Amendment requirement, which assigns cases to courts inside the United States, into a Fifth Amendment constitutional rule against access-to-justice in any United States court for ever-increasing transnational litigation, what we do is embroider five words written to enhance liberty in 1791 to send United States plaintiffs overseas in for hope of justice.”

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