UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
April 26, 1996
ALLIEDSIGNAL INC., Plaintiff,
BLUE CROSS OF CALIFORNIA, Defendant.
The opinion of the court was delivered by: LIFLAND
MEMORANDUM AND ORDER
LIFLAND, District Judge
Blue Cross of California ("BCCA") moves to dismiss AlliedSignal Inc.'s ("AlliedSignal's") Complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). BCCA contends that even under the Employee Retirement Income Security Act's ("ERISA's") nationwide service of process provision, the Fifth Amendment's Due Process clause requires satisfaction of the criteria set forth in International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945), essentially that BCCA have sufficient minimum contacts with New Jersey such that this Court's exercise of jurisdiction "does not offend 'traditional notions of fair play and substantial justice.'" 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 61 S. Ct. 339 (1940)). AlliedSignal responds that because of the nationwide service provision, personal jurisdiction over BCCA is proper in any district court in the United States. For the reasons articulated below, the Court agrees with AlliedSignal and denies BCCA's motion.
This is a breach of fiduciary duty case brought in the special context of ERISA. See 29 U.S.C. § 1001 et seq. BCCA, along with many other Blue Cross entities, administered AlliedSignal's self-insured medical benefit plan (the "Plan") on a nationwide basis. Although no written agreement exists between AlliedSignal and BCCA, pursuant to contracts with intermediaries BCCA pays California hospitals for medical services provided under the Plan to AlliedSignal employees, retirees, and their dependents residing in California. AlliedSignal's Complaint alleges that BCCA failed to permit AlliedSignal to conduct an audit of BCCA's payments to California hospitals in connection with the Plan, thus breaching BCCA's fiduciary obligations to AlliedSignal. The Complaint also asserts pendent breach of contract, breach of the implied covenant of good faith and fair dealing, fraud and fraudulent inducement, conversion, and breach of common law fiduciary duty.
As Justice Brandeis noted, Congress has the power "to provide that the process of every District Court shall run into every part of the United States." Robertson v. Railroad Labor Bd., 268 U.S. 619, 622, 69 L. Ed. 1119, 45 S. Ct. 621 (1925) (citations omitted). Accordingly, ERISA provides:
Where an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.
29 U.S.C. § 1132(e)(2).
Although ERISA and a number of other federal statutes authorize nationwide service of process, such provisions are not easily reconcilable with a strict application of the minimum contacts doctrine. See 4 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1067.1 at 311 (1987). "The Supreme Court never has ruled on the issue, but all of the courts of appeals that have addressed the question have applied a national contacts standard when process is served under an applicable federal service provision." Id. (footnote omitted); see, e.g., Lisak v. Mercantile Bancorp, Inc., 834 F.2d 668, 671-72 (7th Cir. 1987), cert. denied, 485 U.S. 1007, 99 L. Ed. 2d 700, 108 S. Ct. 1472 (1988); Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 314-15 (2d Cir. 1981), cert. denied, 454 U.S. 1148, 71 L. Ed. 2d 301, 102 S. Ct. 1012 (1982); Driver v. Helms, 577 F.2d 147, 156-57 (1st Cir. 1978), rev'd on other grounds sub nom. Stafford v. Briggs, 444 U.S. 527, 63 L. Ed. 2d 1, 100 S. Ct. 774 (1980). Under the national contacts standard, a defendant is required to have minimum contacts with the forum, although the forum is not one particular state, but the United States generally.
The law of this circuit accords with that of the other circuits, and counsels use of a national contacts analysis when appraising personal jurisdiction in a case arising under a federal statute that contains a nationwide service of process provision. See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 294 n.3 (3d Cir.) ("The constitutional validity of national contacts as a jurisdictional base is confirmed by those statutes which provide for nationwide service of process wherever defendant is 'doing business' or 'may be found.'"),
cert. denied, 474 U.S. 980, 88 L. Ed. 2d 336, 106 S. Ct. 383 (1985); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir.), cert. denied, 454 U.S. 1085, 70 L. Ed. 2d 620, 102 S. Ct. 642 (1981) ("The anomaly of a federal court being limited by the requirement of the [restrictions placed on a state court's jurisdiction by the] fourteenth amendment [as opposed to restrictions placed on a federal court's jurisdiction under the fifth amendment] ... could be easily rectified by congressional authorization of nationwide service of process ...."); Staffin v. Greenberg, 509 F. Supp. 825, 831 (E.D. Pa. 1981), aff'd, 672 F.2d 1196, 1208 (3d Cir. 1982); see also United States v. Famous Artists Corp., 1996 U.S. Dist. LEXIS 3043, 1996 WL 114932, at *4 (E.D. Pa. 1996); Sovereign Bank v. Rochester Community Sav. Bank, 907 F. Supp. 123, 125 (E.D. Pa. 1995); Berk v. Ascott Inv. Corp., 759 F. Supp. 245, 261-62 (E.D. Pa. 1991); American Trade Partners v. A-1 Int'l Importing Enters., Ltd., 755 F. Supp. 1292, 1302 (E.D. Pa. 1990); Metro Communications, Inc. v. Baltimore Radio Show, 68 Bankr. 9, 10 (W.D. Pa. 1986); Shulton, Inc. v. Optel Corp., 1986 WL 1561, at *4 (D.N.J. 1986); City of Harrisburg v. Bradford Trust Co., 621 F. Supp. 463, 467 n.2 (M.D. Pa. 1985); Ethanol Partners Accredited v. Wiener, Zuckerbrot, Weiss & Brecher, 617 F. Supp. 300, 305-07 (E.D. Pa. 1985); Kramer v. Scientific Control Corp., 365 F. Supp. 780, 787 (E.D. Pa. 1973) ("It must be remembered that the United States is one jurisdictional area, even though it may be divided into 50 states and numerous judicial districts."); cf. Oxford First Corp. v. PNC Liquidating Corp., 372 F. Supp. 191, 198-205 (E.D. Pa. 1974) ("Even though we are not persuaded that federal service of process statutes are constrained by constitutional due process strictures as defined in International Shoe, we believe that the federal extraterritorial service power is not unlimited, ... and that [a fairness test] must be imposed.").
Indeed, in the very context of an ERISA action, Judge Lechner has concluded that "when Congress has enacted a nationwide service of process procedure such as [in] ERISA ..., a federal court may exercise personal jurisdiction over a properly served defendant provided the defendant has minimum contacts with the United States." IUE AFL-CIO Pension Fund v. Locke Mach. Co., 726 F. Supp. 561, 565 (D.N.J. 1989); see Shlomchik v. Retirement Plan of the Amalgamated Ins. Fund, 502 F. Supp. 240, 242 (E.D. Pa. 1980), aff'd, 671 F.2d 496 (3d Cir. 1981); see also McCracken v. Automobile Club of Southern Cal., Inc., 891 F. Supp. 559, 561 (D. Kan. 1995) ("[A] persuasive number of courts have used the national contacts standard in ERISA actions.").
Turning to the facts of this case, BCCA is a California corporation admittedly residing and conducting business within the United States. (Lohnberg Decl. P 3.) It thus has the requisite minimum contacts with the United States, see analysis in Famous Artists Corp., 1996 U.S. Dist. LEXIS 3043, 1996 WL 114932, at *5-6, and is subject to this Court's personal jurisdiction pursuant to ERISA's nationwide service of process provision. In addition, the Court has discretion to exercise pendent personal jurisdiction over the state law claims. Because AlliedSignal has stated a colorable federal claim against BCCA which "derive[s] from a common nucleus of operative fact," United Mine Workers v. Gibbs, 383 U.S. 715, 725, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966); see Robinson v. Penn Cent. Co., 484 F.2d 553, 555-56 (3d Cir. 1973), judicial economy suggests that the Court hear the federal and state law claims together. See Gibbs, 383 U.S. at 726.
Notwithstanding the wealth of authority to the contrary, BCCA suggests the law in this circuit is different, relying upon a footnote in In Re Real Estate Title and Settlement Servs. Antitrust Litig., in which the Court of Appeals observed:
This Court has held that the "minimum contacts" standard articulated in International Shoe generally applies to federal courts in federal statutory cases as well as to state courts, at least, it would seem, in cases in which Congress has not spoken to the extent of the reach of the federal court by, for example, providing for nationwide service. Cf. Oxford First Corp. v. PNC Liquidating Corp., 372 F. Supp. 191, 203-05 (E.D. Pa. 1974) (a federal court's personal jurisdiction over a defendant being sued under a federal statute providing for nationwide service of process should be determined by reference to a fairness test ...).
869 F.2d 760, 766 n.6 (3d Cir.), cert. denied sub nom. Chicago Title Ins. Co. v. Tucson Unified Sch. Dist., 493 U.S. 821, 107 L. Ed. 2d 44, 110 S. Ct. 77 (1989) (citation omitted) (emphasis added).
BCCA's reliance on Real Estate Title is misplaced. The Court of Appeals' mention of Oxford First Corp. does not imply that this circuit has adopted a fairness test for measuring the constitutionality of nationwide service of process. Real Estate Title neither decided the appropriate standard for evaluating personal jurisdiction pursuant to a nationwide service of process statute, nor held that under such a statute minimum contacts with a particular state are required.
BCCA also relies upon Professors Wright and Miller, who have written that a national contacts approach to personal jurisdiction in cases involving nationwide service of process statutes "includes no provision for protecting the defendant's right not to be forced to litigate in an unreasonably distant or inconvenient forum." 4 Wright & Miller, supra, § 1067.1 at 324. However, the passage continues: "defendants in such cases still may look to venue and transfer provisions to protect their interest in a more convenient forum." Id. at 332. Personal jurisdiction and venue are two distinct doctrines,
Horne v. Adolph Coors Co., 684 F.2d 255, 260 (3d Cir. 1982), and BCCA has not objected to venue pursuant to Fed. R. Civ. P. 12(b)(3). Therefore, it has waived this objection. See Fed. R. Civ. P. 12(h)(1).
Accordingly, IT IS on this 26th day of April, 1996, ORDERED that BCCA's motion to dismiss for lack of personal jurisdiction is denied.
John C. Lifland
United States District Judge