By J. Scott McMahon and Miles Kavaller
—Miles Kavaller
Several years ago, while attending an industry function, a colleague and I were causally discussing jurisdiction in federal court litigation. My respected colleague informed me that the filing of a BOC-3[i] with the Interstate Commerce Commission, many of whose functions were transferred to the Federal Motor Carrier Safety Administration with the passage of the Interstate Commerce Commission Termination Act in 1995[ii], was sufficient to allow a federal district court in any of the 48 contiguous states to exercise personal jurisdiction over a motor carrier, forwarder and broker. Not so, I replied. The BOC-3 merely allowed for service on the designated agent but only in a jurisdiction where the motor carrier, forwarder or broker had sufficient contacts under the traditional International Shoe criteria.[iii]
I had not had the opportunity to assert this position in any case until recently when fellow member Scott McMahon, representing a Boca Raton, Florida broker, sued my client, a Tracy, California based motor carrier, in Palm Beach, Florida. The case was ultimately settled, and the jurisdiction issue was not plead, argued or decided, but we had an animated conversation.
Scott contended that the filing of the BOC-3 covering all states, conferred jurisdiction over my motor carrier client, absent the usual criteria for doing business in Florida and the Circuit Court in Palm Beach. He cited Ocepek v. Corporate Transport Inc, 950 F.2d 556 (8th Cir. 1991). At the time, mid 2017, International Shoe jurisprudence notwithstanding, my research disclosed no appellate authority to the contrary specifically addressing the BOC-3 operating as consent to jurisdiction.
At a recent meeting of another professional organization we discussed Western Logistics v. Oscar Villenueva d/b/a Las Marias Pallets, 2017 WL 4785831 (M.D. Tenn. 2017) decided on October 24, 2017. (“Western Logistics”). Following 6th Circuit law, Western Logistics concluded that the BOC-3 alone was not sufficient to confer personal jurisdiction. Contrary district court decisions were addressed and rejected. But Tennessee is in the Sixth Circuit, and there is no decision directly on point from that Circuit. And there no other decisions citing Western Logistics. Accordingly, outside the Eighth Circuit although probably not the Sixth Circuit as well, district courts are free to choose whether to accept jurisdiction by consent or require that the party asserting jurisdiction address the traditional International Shoe factors. This article will offer reasons for following either line of cases. Scott will take the position reached in Ocepek and I will argue in favor of the Western Logistics decision.
The Western Logistics court followed 6th Circuit precedent. It considered Bendix Autolite Corp. v. Midwesco Enterprises, 486 U.S. 888 (1988), where the Supreme Court suggested in dictum, that pursuant to Ohio statute, “to be present in Ohio, a foreign corporation must appoint an agent for service of process, which operates as consent to the general jurisdiction of the Ohio courts.” Id. at 889. The Court did not conduct any analysis of the state statute, however, and was not called upon to judge its constitutionality. The Sixth Circuit therefore concluded that Bendix’s suggestion that the mere designation of an agent for service of process constitutes consent to jurisdiction was dictum. The court also picked up on Bendix’s comment that “[r]equiring a foreign corporation to appoint an agent for service in all cases and to defend itself with reference to all transactions, including those in which it did not have the minimum contacts necessary for supporting personal jurisdiction, is a significant burden.” Bendix, 486 U.S. at 893 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 114, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987)). The Sixth Circuit read that portion of Bendix to be “saying that the mere designation of an agent in compliance with the service-of-process statute does not automatically eliminate the requirement of minimum contacts to establish personal jurisdiction.” Pittock v. Otis Elevator Co., 8 F.3d 325 at 329 (6th Cir. 1993).
The Western Logistics court concluded, based in part on that reading, that the Pittock court held unequivocally that the mere designation of an agent for service of process in a particular state, in compliance with a state statute, standing alone, does not constitute consent to general jurisdiction within that state. Because the plaintiffs did not show that defendant Otis had any contacts with the state of Ohio and instead based personal jurisdiction solely on consent, the court affirmed the dismissal of the case based on lack of personal jurisdiction. The Sixth Circuit’s opinion in Pittock is binding precedent within the Sixth Circuit on the precise issue presented.
U.S. Supreme Court authority in Daimler AG v. Bauman, 571 U.S. 117 (2014) would appear to support the Western Logistics logic.[i] “Accordingly, the inquiry under Goodyear[ii] is not whether a foreign corporation’s in-forum contacts can be said to be in some sense ‘continuous and systematic,’ it is whether that corporation’s ‘affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.’” Id. at 139. From a broker, carrier, forwarder perspective, defending in a jurisdiction where it has no ties or where nothing relating to the case occurred is unfair. It is an undue burden to subject a party to the choice of defending a suit in order to avoid a default judgment and the sister-state enforcement of that default judgment in a federal district court or state court which does have jurisdiction based on the traditional International Shoe factors.
—Scott McMahon’s argument follows.
Does a motor carrier consent to personal jurisdiction in every state where it operates by appointing a “designated agent for service of process” under the Motor Carrier Act, 49 U.S.C. Section 13304(a)? Particularly where the carrier does not otherwise meet the “minimum contacts” standards for establishing personal jurisdiction within that state? Yes and No. These opposed answers arise from a patch-work of conflicting Federal case law[i], with divergence between several Circuit and District Courts. I present the position that registered agent designation alone affords “consent” to personal jurisdiction. For my motor carrier colleagues, please do not mistake this or what follows as a “legal advocation” of that position. Rather, I see this article as a “spirited academic debate” with a fellow transportation attorney. That is my prefatory disclaimer.
Before moving forward, I confess that my initial reaction is to agree with my good friend Miles. Perhaps it is unfair that interstate carriers are deemed to have consented to personal jurisdiction in every state where registered, and simply because they may pass through (i.e. “operate within or traverse”) that state for commercial convenience. Particularly carriers filing BOC-3 blanket designations to operate in the 48 contiguous. Interstate carriage nearly always requires cross border transport, however brief, and often without the carrier “doing any business” therein. However, I am not the arbiter of what the Courts (or Congress) deem fair, and thus objectively address the precedent inapposite to that offered by Miles. Depending on your case and jurisdiction, one may choose that which serves your client’s best interest, at least until this issue is finally adjudicated by the United States Supreme Cour
[i] State law decisions are not addressed, nor will I address state versus federal law jurisdictional standards.
Under Rule 4 of the Federal Rules of Civil Procedure, the federal district courts follow state long arm statutes where the federal court is located, and whether its application otherwise comports with due process requirements of the 14th Amendment.
THE REGISTRATION REQUIRMENTS OF THE FEDERAL MOTOR CARRIER ACT (“MCA”) AND ACCOMPANYING FEDERAL REGULATIONS
Title 49 U.S.C. Section 13304(a), and its precursor iterations, dictate that motor carriers (and brokers) providing transportation under Chapter 135 “…shall designate an agent in each State in which it operates…on whom process issued by a court with subject matter jurisdiction may be served in an action brought against that carrier or broker…”.
Likewise, Chapter 49 C.F.R Section 366.4 further provides: “Every motor carrier (of property or passengers) shall make a designation for each State in which it is authorized to operate and for each State traversed during such operations. Every motor carrier (including private carriers) operating in the United States in the course of transportation between points in a foreign country shall file a designation for each State traversed.[i]
There is no mention of “consent to jurisdiction”, the absence of which is conspicuous. So the question is, did Congress intend that interstate carriers would (or must) consent to personal jurisdiction in all states where authorized to operate and/or within which they “traverse” during said operations? On this there is a split of opinion.
CASE LAW ADDRESSING CARRIER CONSENT TO PERSONAL JURISDICTION
UNANSWERED QUESTIONS:
A few parting thoughts and takeaways, as the case law leaves unanswered questions:
First, the decisions fail to address a defendant’s right to transfer venue to a more “convenient forum” under 28 U.S.C. Section 1404 (“For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented”) In other words, even if there is personal jurisdiction, the carrier may still timely move to transfer venue to a more convenient forum. Alternatively, a carrier may rely on the venue requirements in Carmack cases.
Second, negotiated contracts with an enforceable forum selection clause could avoid the jurisdictional analysis. For those of us on the carrier side of the equation, this is yet another reminder of the critical importance of ensuring that a forum selection clause in our shipper/broker/carrier agreements are carefully reviewed and the client advised accordingly.
Third, by extension, if jurisdiction is permissible based upon carrier registered agent designation alone, one can argue property brokers with blanket registrations likewise consent to personal jurisdiction wherever registered, regardless of their minimum contacts with that state. That would seem to be an even further stretch.
Fourth, would the jurisdictional analysis change if the case arises from the carrier’s actions in tort versus contract, given the expressed Congressional intent under Section 13304(a) to “protect the general public and injured parties”. In other words, if public protection and safety are primary concerns, should jurisdiction be analyzed differently in a commercial dispute (i.e. a freight charge or cargo loss claim)?
Fifth, the case law touches upon the potential difference between a blanket versus a state specific designation, implying a blanket designation provides a less credible argument for finding personal jurisdiction while encouraging forum shopping. Something to keep in mind. See Davis v. Quality Carriers et al., No. 2:2008cv04533 (D.N.J. 2009).
Sixth, because the BOC-3 requirements are in the ICC Termination Act, would the argument follow that jurisdiction by consent should be strictly limited to cases arising under that statute and not cases, regardless of theory, that arise under state law?
CONCLUSION
We submit that the arguments on both sides of the consent vs. minimum contacts debate are logically sound. We would be interested in your experience in future cases, whatever side is taken.
[i] See 49 U.S.C. §13304(a); 49 C.F.R. Part 366.
[ii]Act, Dec. 29, 1995, P.L. 104-88, §2, 109 Stat. 804.
[iii] Due process requirements are satisfied when in personam jurisdiction is asserted over a nonresident corporate defendant that has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). This seminal decision established the concept of “specific jurisdiction” which arises of the contacts the defendant has in connection with a specific occurrence. General jurisdiction, on the other hand, requires substantially more, the point made clear in Daimler AG v. Bauman.
[iv] The complaint alleged that during Argentina’s 1976-1983 “Dirty War,” Daimler’s Argentinian subsidiary, Mercedes-Benz Argentina (MB Argentina) collaborated with state security forces to kidnap, detain, torture, and kill certain MB Argentina workers, among them, plaintiffs or persons closely related to plaintiffs. Damages for the alleged human-rights violations were sought from Daimler under the laws of the United States, California, and Argentina. Jurisdiction over the lawsuit was predicated on the California contacts of Mercedes-Benz USA, LLC (MBUSA), a subsidiary of Daimler incorporated in Delaware with its principal place of business in New Jersey. MBUSA distributes Daimler-manufactured vehicles to independent dealerships throughout the United States, including California.
[v] Goodyear Dunlop Tires Operations, S. A. v. Brown, 564 U. S. 915 (2011).
[vi] State law decisions are not addressed, nor will I address state versus federal law jurisdictional standards.
Under Rule 4 of the Federal Rules of Civil Procedure, the federal district courts follow state long arm statutes where the federal court is located, and whether its application otherwise comports with due process requirements of the 14th Amendment.
[vii] Under this same regulation, subsection (b), property brokers “shall make a designation for each State in
which its offices are located or in which contracts will be written”. For purposes of this article and its
limitations, the jurisdictional implications upon broker agent registration are not discussed.
[viii] Ocepek addressed the pre-ICCTA registration provisions is Section 10330(b), which are nearly
identical to those contained in the current Section 13304(a).
[ix] The Ocepek Court furthermore rejected the carrier’s argument that its authorized agent (as registered
with the State of Missouri) agreed “only to accept service for those actions that arose in Missouri,”
concluding this self-imposed limitation impermissibly attempted to obviate Congressional intent.
