Omni Capital v. Rudolf Wolff & Co., 484 U.S. 97 (1987)

Omni Capital International, Ltd. v. Rudolf Wolff & Co., Ltd.

No. 86-740

Argued October 6, 1987
Decided December 8, 1987
484 U.S. 97

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

Syllabus

Omni Capital International, Ltd., and Omni Capital Corporation (hereafter petitioners), New York corporations, marketed an investment program involving commodity futures trades on the London Metals Exchange. Certain investors filed suits (later consolidated) against petitioners in the Federal District Court for the Eastern District of Louisiana, charging that petitioners fraudulently induced them to participate in petitioners’ program, in violation of various federal securities laws. Petitioners impleaded respondent Rudolf Wolff & Co., a British corporation with offices in London that was employed by petitioners to handle trades on the London Exchange, and respondent Gourlay (hereafter respondents), a United Kingdom citizen and resident who was Wolff’s representative in soliciting petitioners’ business. Petitioners contended that their liability, if any, was caused by respondents’ improper trading activities. While the action was pending, Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, was decided, recognizing an implied private cause of action under the Commodity Exchange Act (CEA), and the plaintiffs in this litigation amended their complaints to allege violations of that Act. The District Court dismissed the other securities law claims as preempted by the CEA, and held that it lacked personal jurisdiction over respondents because (1) the CEA was silent about service of process for private causes of action, (2) thus, application of Louisiana’s long-arm statute was required, and (3) that statute’s requirements were not met. The Court of Appeals affirmed.

Held: The District Court lacked personal jurisdiction over respondents in this federal question litigation under the CEA. Pp. 102-111.

(a) The requirement that a federal court have personal jurisdiction flows from the Due Process Clause of the Fifth Amendment. However, before a federal court may exercise personal jurisdiction over a defendant, there must be more than notice to the defendant and a constitutionally sufficient relationship between the defendant and the forum. There also must be a basis for the defendant’s amenability to service of summons. Absent consent, there must be authorization for service of summons on the defendant. Pp. 103-104.

(b) Under Federal Rule of Civil Procedure 4(e), a federal court normally looks either to a federal statute or to the long-arm statute of the State in which it sits to determine whether an out-of-state defendant is amenable to service. After the Curran decision, and while the present litigation was still pending in the District Court, Congress added § 22 to the CEA, explicitly authorizing a private cause of action for CEA violations but not referring to service of process, in contrast to Congress’ explicit authorization of nationwide service of process in other CEA provisions for other civil actions under the Act. This contrast, as well as the legislative history, supports the conclusion that Congress did not intend to provide nationwide service of process for private actions under the CEA. Nor was nationwide service implicitly authorized for any implied private cause of action under the CEA, such as petitioners’, that accrued prior to § 22’s effective date. Moreover, the District Court held, and petitioners concede, that the requirements of Louisiana’s long-arm statute were not met here. Pp. 104-108.

(c) Even were it within this Court’s power, judicial creation of a common law rule authorizing service of process in this litigation would be unwise. The strength of the longstanding assumption that federal courts cannot add to the scope of service of summons Congress has authorized, and the network of statutory enactments and judicial decisions tied to that assumption, argue strongly against devising common law service of process provisions. The responsibility for creating service of process provisions rests with those who propose the Federal Rules of Civil Procedure, and with Congress. Pp. 108-111.

795 F.2d 415, affirmed.

BLACKMUN, J., delivered the opinion for a unanimous Court.