Background
Plaintiffs filed a civil RICO suit in federal court in Michigan against a North Carolina resident and nine Florida corporations, alleging fraud related to solar panel sales. The defendants moved to dismiss, arguing the Michigan court lacked personal jurisdiction over the Florida entities. The district court denied the motion, reasoning that the case was already pending in Michigan and that litigation there was as convenient for the defendants as in Florida. The defendants appealed, and the Sixth Circuit granted the petition to review the jurisdictional ruling.
The court’s reasoning
The court reviewed the interpretation of Section nineteen sixty-five subsection B of the RICO statute, which allows service on nonresident defendants only when the ends of justice require it. The court held that the term require conveys a sense of necessity. It reasoned that interests of convenience cannot require a defendant to be haled into a district where it lacks minimum contacts. The court found that the district court’s reliance on the case being pending for ten months and the defendants having counsel in Michigan was insufficient to meet the necessity standard. The court noted that while the statute allows bringing all members of a nationwide conspiracy into one trial, it does not permit haling any defendant into any district where a single defendant has minimum contacts.
The dissent
What it means going forward
The decision clarifies that convenience factors are insufficient to establish personal jurisdiction over nonresident RICO defendants under Section nineteen sixty-five subsection B. It requires a showing of necessity, effectively limiting the ability to sue out-of-state defendants in forums where they have no contacts unless no other forum is available or necessity is otherwise demonstrated.