Personal Jurisdiction and Extraterritoriality
November 8, 2023
The U.S. Supreme Court has repeatedly said that Congress has constitutional authority to regulate extraterritorially. “Both parties concede, as they must,” Chief Justice Rehnquist wrote in EEOC v. Arabian American Oil Co. (1991), “that Congress has the authority to enforce its laws beyond the territorial boundaries of the United States.” The presumption against extraterritoriality, which the Court applies to determine the geographic reach of federal statutes, “represents a canon of construction, or a presumption about a statute’s meaning, rather than a limit upon Congress’s power to legislate,” Justice Scalia elaborated in Morrison v. National Australia Bank (2010). Indeed, the Court, quoting Morrison, reaffirmed this proposition just last term in Yegiazaryan v. Smagin (2023).
Yet it turns out that there are significant constitutional limits on Congress’s power to legislate extraterritorially. Those limits are found in the rules of personal jurisdiction that the Supreme Court has derived from the Due Process Clauses of the U.S. Constitution. To be clear, the authority of Congress to enact a law with extraterritorial effect and the authority of courts to exercise personal jurisdiction over a defendant are different things. The first is jurisdiction to prescribe, and the second is jurisdiction to adjudicate. But on a practical level, the two are intimately connected, for Congress cannot effectively extend its laws extraterritorially if courts lack personal jurisdiction to apply those laws.
This post discusses two examples of personal jurisdiction limiting extraterritoriality. The 1990 Anti-Terrorism Act (ATA) and the 1996 Helms-Burton Act both aimed to create liability for foreign conduct by foreign actors. But Congress’s intent has been thwarted in each case by limits on personal jurisdiction that prevent courts from reaching intended defendants. These examples raise important questions about Congress’s role in defining the rules of personal jurisdiction, questions it seems likely that the Supreme Court will soon face.
The Anti-Terrorism Act
Enacted in 1990, the ATA allows U.S. nationals who are injured by international terrorism (or their estates, survivors, or heirs) to sue for treble damages. The cause of action expressly applies to “international terrorism,” which is limited to violent acts that “occur primarily outside the territorial jurisdiction of the United States, or transcend national boundaries.”
In 2004, a group of victims and their families sued the Palestine Liberation Organization (PLO) and the Palestinian Authority (PA) based on terrorist attacks in Israel during 2002 and 2004. The district court held that it had personal jurisdiction over the defendants and, following a jury trial, awarded $655 million in damages. But, in Waldman v. Palestine Liberation Organization (2016), the Second Circuit reversed, finding neither specific nor general personal jurisdiction over the defendants. Congress responded with the Anti-Terrorism Clarification Act of 2018, which provides that, for purposes of civil suits under the ATA, “a defendant shall be deemed to have consented to personal jurisdiction” if it accepts certain assistance from the United States or maintains an office in the United States under a presidential waiver. When the defendants ceased such activities, Congress passed a second statute, the Promoting Security and Justice for Victims of Terrorism Act of 2019 (PSJVTA), which applies specifically to the PLO and the PA and provides that making payments to terrorists and their families or maintaining offices in the United States (without the waiver provision) shall be deemed consent to jurisdiction.
In the meantime, another suit was filed against PLO and the PA based on a 2018 terrorist attack in Israel. In Fuld v. Palestine Liberation Organization (2023), the Second Circuit held that the PSJVTA was unconstitutional, disposing of the Waldman plaintiffs’ attempt to recall the mandate in their case in a per curiamopinion. Fuld held that the things that Congress deemed consent could not be considered true consent under the Supreme Court’s prior cases: “Congress cannot, by legislative fiat, simply ‘deem’ activities to be ‘consent’ when the activities themselves cannot plausibly be construed as such.”
My colleagues Maggie Gardner and Zach Clopton have analyzed the Fuld decision at length in prior posts, both generally approving of the result. I do not take issue here with their analyses of the Supreme Court’s personal jurisdiction cases. My point is different—that the Court’s rules on personal jurisdiction have frustrated Congress’s intent to apply the ATA extraterritorially to the PLO and the PA. As the Second Circuit acknowledged, “[t]he PSJVTA was enacted for the precise purpose of preventing dismissals based on lack of personal jurisdiction in cases just like this one—civil actions against the PLO and the PA pursuant to the Anti-Terrorism Act.”
The Helms-Burton Act
Another example of how personal jurisdiction rules limit Congress’s ability to regulate extraterritorially is the Helms-Burton Act, which Congress passed in 1996. Helms-Burton created a cause of action allowing U.S. nationals to sue any person who “traffics” in property expropriated by the Cuban government for damages in an amount three times the value of the property. Citing concerns about conflict with other countries, every U.S. president suspended this provision until 2019, when President Trump lifted the suspension and allowed Helms-Burton claims to be filed for the first time.
Congress’s findings make clear that it authorized this cause of action to discourage foreign companies from investing in Cuba by threatening them with liability for trafficking in expropriated property. Congress noted that “[t]he Cuban Government is offering foreign investors the opportunity to purchase an equity interest in, manage, or enter into joint ventures using property and assets some of which were confiscated from United States nationals” and that “[t]he United States Department of State has notified other governments that the transfer to third parties of properties confiscated by the Cuban Government ‘would complicate any attempt to return them to their original owners.’”
As Ingrid Brunk and I noted in an earlier post, however, U.S. rules on personal jurisdiction have frustrated Congress’s intent. In Herederos de Roberto Gomez Cabrera, LLC v. Teck Resources Ltd. (2022), for example, the Eleventh Circuit held that the district court lacked personal jurisdiction over a Canadian company that allegedly managed mines in Cuba expropriated from the plaintiffs’ father. The court lacked specific jurisdiction because the claims did not arise out of contacts with the United States and lacked general jurisdiction because the defendant was not incorporated under U.S. law and did not have its principal place of business in the United States.
Congressional Control over Personal Jurisdiction
It is worth noting that Congress enacted both Helms-Burton and the ATA at a time when U.S. courts could exercise “doing business” jurisdiction, general jurisdiction over claims arising outside the United States based on a defendant’s continuous and systematic contacts with the United States. Maybe Congress was counting on such jurisdiction when it passed these statutes. But the Supreme Court put an end to “doing business” jurisdiction in Daimler AG v. Bauman (2014). In other words, the Court has tightened the rules on personal jurisdiction in a way that further constrains Congress’s ability to regulate extraterritorially.
Perhaps Congress should have more authority to determine the rules of personal jurisdiction, at least in transnational cases when Congress has made clear its intent to regulate extraterritorially. The United States is unusual for constitutionalizing the rules of personal jurisdiction. “In Europe, by contrast,” as Ralf Michaels has noted, “the most important source [of personal jurisdiction law] is a subconstitutional legislative instrument, the Brussels I Judgment Regulation,” while “the basis in national legal systems is statutory law.” Legislatures, it seems, are capable of writing fair and workable rules of personal jurisdiction.
Ingrid Brunk and Steve Sachs each argue that the original meaning of the Fifth Amendment allows Congress to set the rules of personal jurisdiction for federal courts. Ingrid writes, “the Constitution itself does not dictate the rules governing personal jurisdiction, whether as a function of Article III or of the Fifth Amendment.” And Steve adds: “A federal court’s writ may run as far as Congress, within its enumerated powers, would have it go.” Congress should, therefore, be able to deem that payments to terrorist abroad constitute consent to personal jurisdiction in the United States or provide that Canadian companies may be sued in federal court for trafficking in expropriated property.
These arguments may soon be tested at the U.S. Supreme Court. It seems likely that the plaintiffs in the ATA cases will petition for cert. And as a sign of respect to its coordinate branches of government, the Court rarely allows a lower court decision striking down a federal statute as unconstitutional to stand without review.