Ninth Circuit Gets Tangled Up in Minimum Contacts and Due Process
February 13, 2024
Do the Fifth Amendment’s due process protections require minimum contacts? And do those protections apply to foreign states sued under the Foreign Sovereign Immunities Act (FSIA)? Those are the fundamental questions on which Ninth Circuit judges offered differing approaches as they resolved a recent petition for rehearing en banc.
Regular TLB readers may recall that the same dynamic played out in a Fifth Circuit en banc decision from 2022, in which dissenting judges rejected “minimum contacts” as part of Fifth Amendment due process requirements for personal jurisdiction. The Ninth Circuit case, Devas v. Antrix, involved personal jurisdiction over a state-owned foreign corporation, whereas the Fifth Circuit case, Douglass v. Nippon Yusen Kabushiki Kaisha, involved a private foreign defendant. That distinction led to somewhat different approaches, even among judges who reject minimum contacts in Fifth Amendment due process cases. Although the Supreme Court denied cert in Douglass, it will someday have to decide whether Fifth Amendment due process requires minimum contacts, and it may well do so in a case involving a foreign government or state-owned enterprise because personal jurisdiction over these defendants is governed not by Rule 4(k) but instead by the FSIA.
The Facts and the District Court Opinion
Devas and Antrix, both Indian companies, made a deal for the construction and launch of two satellites. Devas was created by U.S. investors; Antrix is owned and controlled by the Indian government. The deal went bad, arbitration in India ensued, the arbitral panel concluded that Antrix had wrongfully repudiated the agreement, and an award was issued against Antrix for more than $550 million. Devas sought to enforce the award in India, while Antrix petitioned a different Indian court to annul the award. The protracted parallel litigation reached the Supreme Court of India in 2020, is apparently still ongoing, and has included a decision to annul the arbitral award.
Devas also filed a petition in federal court in Washington State to confirm the award. Antrix argued that the court lacked personal jurisdiction because it lacked “minimum contacts” with the forum – meaning the United States. Judge Thomas Zilly rejected this argument in a 2020 opinion, reasoning that Antrix has no due process rights because it is owned and controlled by a foreign government, and therefore, the minimum contacts test need not be satisfied. Alternatively, Judge Zilly held that the defendant had minimum contacts with the United States. Antrix had entered a long-term negotiation with a U.S. consulting company that ultimately led to the agreement with Devas. As part of those negotiations, an Antrix official traveled to Washington, D.C., and signed a memorandum of understanding with the U.S. consulting company.
These connections to the United States, the district court held, satisfied the Supreme Court’s minimum contacts test. The Court has developed that test in cases involving the exercise of jurisdiction by state courts under the Fourteenth Amendment, an analysis that is often applied in federal courts under Rule 4(k)(1)(A). But in cases against foreign sovereigns, personal jurisdiction is conferred by a federal statute (as discussed below) and the Fifth Amendment applies. Judge Zilly nonetheless used a minimum contacts test, without analyzing whether the Fifth and the Fourteenth Amendments have comparable personal jurisdiction requirements.
Let’s pause here and note three legal issues at play in the district court opinion:
- Does the Fifth Amendment Due Process Clause require “minimum contacts” for the exercise of personal jurisdiction at all? (The district court assumed yes, with no analysis, but see the dissenting opinions in Douglass v. Nippon Yusen Kabushiki Kaisha, which applied an originalist approach to the Fifth Amendment and concluded that it does not require minimum contacts with the forum.)
- Do foreign sovereigns have Fifth Amendment Due Process rights? (The district held no; I have argued yes.)
- If foreign sovereigns do not have due process rights, how should courts distinguish between foreign corporations (which have due process rights) and foreign sovereigns (which do not)? (The district court assumed that because the FSIA treats Antrix as a foreign sovereign for most purposes, that Antrix should also be treated as a foreign sovereign for constitutional purposes, but that approach conflates constitutional and statutory analysis).
The Court of Appeals’ Opinion
Unlike the district court, the Court of Appeals held that the minimum contacts test applies. Also unlike the district court, it reasoned that the minimum contacts test was not satisfied.
Before turning to the appellate court’s reasoning, note that its ruling is very unusual. Courts virtually always find that there is personal jurisdiction over foreign sovereign defendants in actions to enforce arbitral awards. The arbitration exception to the FSIA, 28 U.S.C. § 1605(a)(6), has no explicit “nexus requirement,” meaning that the text of the exception does not require a connection between the defendant and the territory of the United States. The exception is satisfied if the award is “governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards.” That language extends to many awards with no connection to the United States other than that the award is governed by the New York Arbitration Convention. A federal statute, 28 U.S.C. § 1330(b), also confers personal jurisdiction in actions against foreign sovereigns if an exception to immunity applies (like the arbitration exception). And lower courts have held that the Constitution imposes no nexus or minimum contacts requirement in that situation because foreign states have no due process rights. So, cases under the arbitration exception go forward, minimum contacts or no – so long as the defendant is characterized as a foreign state.
Unlike other courts, the Ninth Circuit in Devas imposed a minimum contacts test in this arbitral award enforcement action—but not on constitutional grounds. Instead, it reasoned that the FSIA itself, in the language that is now 28 U.S.C. § 1330(b), requires “minimum contacts” between the defendant and the forum. The Court’s decision followed a Ninth Circuit case from 1980, Thomas P. Gonzalez Corp. v. Consejo Nacional De Produccion De Costa Rica, holding that the FSIA’s long-arm provision implicitly incorporated a minimum contacts analysis based on the legislative history of the FSIA. The legislative history in Gonzalez does not, however, support the Court of Appeal’s decision in Devas. That history (from a House Report) provides that Section 133o(b) provides a federal long-arm statute that is
. . . patterned after the long-arm statute Congress enacted for the District of Columbia. Public Law 91-358, sec. 132(a), title I, 84 Stat. 549. The requirements of minimum jurisdictional contacts and adequate notice are embodied in the provision. Cf. International Shoe Co. v. Washington, 326 U.S. 310 (1945) [further citation omitted]. For personal jurisdiction to exist under section 1330(b), the claim must first of all be one over which the district courts have original jurisdiction under section 1330(a), meaning a claim for which the foreign state is not entitled to immunity. Significantly, each of the immunity provisions in the bill, sections 1605-1607, requires some connection between the lawsuit and the United States, or an express or implied waiver by the foreign state of its immunity from jurisdiction. These immunity provisions, therefore, prescribe the necessary contacts which must exist before our courts can exercise personal jurisdiction. Besides incorporating these jurisdictional contacts by reference, section 1330(b) also satisfies the due process requirement of adequate notice by prescribing that proper service be made under section 1608 of the bill. Thus, sections 1330(b), 1608, and 1605-1607 are all carefully interconnected. (Footnotes omitted.)
The Devas case involves a different immunity provision than the Gonzales case did: the arbitration exception, which was added after the adoption of the original bill that included this legislative history (and after Gonzalez). The arbitration exception does not require any jurisdictional contacts, and therefore much of the reasoning in the legislative history does not apply in this case. More broadly, the legislative history appears to suggest that the statute’s nexus requirements themselves satisfy due process, which is different from the Ninth Circuit’s holding that the statute requires minimum contacts as a distinct condition, one that is separate from the nexus requirements of the individual exceptions to immunity. On the other hand, one might reach the same conclusion the Gonzales court did by noting that when the FSIA was enacted in the late 1970s, courts and commentators assumed that foreign states did have constitutionally-based due process rights (see here, pages 646-7, 685), as the Gonzales court itself assumed (with respect to the Fourteenth Amendment and contacts with California). Congress may well, in turn, have quite reasonably assumed that courts would limit personal jurisdiction to what was constitutionally permissible – as a straight up constitutional matter – even if it did not assume that the immunity exceptions themselves incorporate (or satisfy) constitutional limitations.
In any event, the Devas panel went on to hold that Antrix’s contacts with the United States were random and fortuitous and thus did not satisfy the minimum contacts test from International Shoe. A concurrence (joined by two of the three panel judges) highlighted a second way that this case is unusual: Devas did not allege that Antrix had assets in the United States. The presence of assets might confer jurisdiction. And why seek to enforce the award here if no assets were available to satisfy it?
To summarize, the three-judge panel introduced a fourth legal issue:
- Are minimum contacts required by the FSIA, as a matter of statutory interpretation? (The Ninth Circuit reasoned yes.)
Denial of Petition for Rehearing en Banc
The Devas panel avoided the constitutional issues but did so through questionable statutory interpretation. Six judges on the Ninth Circuit dissented from a denial of reheating en banc in a February 6, 2024, opinion written by Judge Bumatay. The opinion devoted several pages to the evisceration of Gonzales’ interpretation of the FSIA and then went all in on the constitutional issues.
First, the dissent noted the debate about whether foreign states have due process rights at all. Although several Circuits have held that they do not, I have advanced an originalist argument that the word “person” in the Fifth Amendment unequivocally includes foreign states. Judge Bumatay cited my article and describes one small part of my support for that argument:
As an example, Emmerich de Vattel, an influential 18th-century international law scholar, wrote, “[t]he law of nations is the law of sovereigns: free and independent states are moral persons, whose rights and obligations we are to establish in this treatise.” Emmerich de Vattel, The Law of Nations or the Principles of Natural Law, bk. I, ch. I § 12 (1758) (Charles G. Fenwick trans., 1916).
Judge Bumatay did not resolve the issue. He reasoned instead that even if foreign sovereigns have due process rights, those rights do not include minimum contacts protections. There are two distinct arguments that might support this result. First, Fifth Amendment due process rights may not give minimum contacts protections to foreign sovereigns – even if other defendants are entitled to these protections. Alternatively, due process might not require minimum contacts for any defendant, whether foreign sovereign or private party. As mentioned above, the dissenting judges on the Fifth Circuit adopted the more general argument that the Fifth Amendment due process simply does not require minimum contacts, period. Judge Bumatay adopted the first argument, reasoning that “the original understanding of the Fifth Amendment’s Due Process Clause does not require minimum contacts for foreign states.” Instead,
the political branches may dictate what process is afforded to foreign sovereigns. As Professor Wuerth [Brunk] concludes, “[t]hat foreign states are protected by due process does not tell us what the content of those protections are[.] … [W]hen it comes to personal jurisdiction, due process limitations may be largely coextensive with the process that Congress chooses to provide.” Wuerth [Brunk], supra, at 679–86; see Stephen E. Sachs, The Unlimited Jurisdiction of the Federal Courts, 106 Va. L. Rev. 1703, 1743 (2020) (“The Fifth Amendment bars the execution of a federal judgment only if the federal court lacked jurisdiction. And Congress gets to answer th[e jurisdiction] question.”); Max Crema & Lawrence B. Solum, The Original Meaning of “Due Process of Law” in the Fifth Amendment, 108 Va. L. Rev. 447, 530–31 (2022) (“Because the Due Process of Law Clause requires process, … service on a defendant” may be “sufficient to validate personal jurisdiction whether or not the International Shoe Co. v. Washington minimum contacts test was satisfied.” (simplified)).
These sources (including my work) do support Judge Bumatay’s argument, but they provide better support for the broader view, adopted by some Fifth Circuit judges, that the Fifth Amendment requires minimum contacts for no defendant.
In other words, the opinion dissenting from the denial of rehearing en banc introduced a fifth legal question:
- Does the Fifth Amendment Due Process Clause require “minimum contacts” for private defendants but not for foreign states? (The dissenting judges reasoned yes.)
The two concurring judges from the panel decision in Devas suggested that they would favor rehearing en banc to revisit Gonzales, yet they did not dissent from the denial of rehearing. The case is complicated (including events such as the liquidation of Devas), so who knows what motivated that apparent change of heart. Unfortunately, however, it seems like Fifth Amendment due process has political overtones, with conservative judges favoring an originalist approach that does not require minimum contacts for personal jurisdiction. That is unfortunate because, at least when it comes to due process rights for foreign sovereigns and their agencies and instrumentalities, there are strong originalist and policy reasons to afford them due process rights. Even for private foreign defendants, allowing Congress to shape the metes and bounds of personal jurisdiction in federal courts might lead to a clearer approach.
After all, the Ninth Circuit reversed because it disagreed about the application of the minimum contacts test to the facts in this case – highlighting that this test generates uncertainty and confusion for potential defendants around the world.