The Sixth Circuit joined the majority of its sister circuits in adopting the forum-state approach and holding that § 1965(b) of the RICO statute governs service over out-of-district defendants

Peters Broadcasting Engineering Inc. v. 24 Capital LLC, 2022 WL 2708989, __ 4th Cir. __ (6th Cir.  July 13, 2022)

The court affirmed the lower court’s ruling holding that 18 U.S.C. § 1965(b) governs service over out-of-district defendants and requires that at least one defendant has minimum contacts with the forum state.  The Sixth Circuit joins the majority of circuits which have so held.

After forming a contract, 24 Capital, LLC (“24 Capital”) believed Peters Broadcast Engineering, Inc. (“Peters Broadcast”) breached their agreement. 24 Capital received a judgment by confession in New York state court. Then Peters Broadcast brought this suit in the Southern District of Ohio, alleging that 24 Capital and its Operations Manager, Jason Sankov, engaged in a scheme in violation of “RICO” 18 U.S.C. § 1962. The district court granted the defendants’ motion to dismiss for lack of personal jurisdiction. Peters Broadcast appeals, arguing the district court erred in interpreting the RICO provision authorizing nationwide exercise of personal jurisdiction in certain circumstances.

Following the majority approach, the district court found that no defendant had minimum contacts with Ohio, and thus Peters Broadcast did not establish personal jurisdiction under RICO. Because Peters Broadcast did not assert sufficient facts to establish that the court had personal jurisdiction over either defendant and did not specifically allege how the claims arose from conduct within Ohio, the court held it lacked personal jurisdiction under RICO and pendent jurisdiction for the state law claims.

The Sixth Circuit discussed why the majority approach was the proper approach discussing that reading § 1965(d) to allow service upon anyone with “nationwide contacts” to sufficiently confer jurisdiction would render § 1965(b) superfluous. The forum-state approach ensures that no subsection is redundant: it allows the exercise of jurisdiction over nonresident defendants to the extent due process and “the ends of justice” require only if there is another defendant with minimum contacts in the forum. *5.

The court provided a few clarifications to ensure meaning is conferred upon each subsection of the statute discussing that § 1965(a) provides for venue, not jurisdiction. Because subsection (a) is not jurisdictional, another rule—such as Federal Rule of Civil Procedure 4(k)(1)(A) and the relevant state’s long-arm statute—is required to establish personal jurisdiction over an initial defendant. Then, § 1965(b) extends personal jurisdiction through nationwide service of process over “other parties residing in any other district,” as long as venue is proper through (a) with that initial defendant and the “ends of justice” require it.*6.  Section 1965(c) is not jurisdictional and simply describes subpoena procedure. Similarly, § 1965(d) is not jurisdictional. Subsection (d) extends to “other process” that differs from a summons or subpoena, such as notifying a party of an injunction or an order committing a person for civil contempt of a decree. 

The court discussed that the majority approach ensures that there will be at least one federal forum for all defendants in a single civil RICO trial.

The Court thus joined the majority of our sister circuits in adopting the forum-state approach and holding that § 1965(b) governs service over out-of-district defendants.  In applying these principles to the facts at hand, the court found that Peters Broadcast bears the initial burden to make a prima facie case for personal jurisdiction by establishing that either 24 Capital or Sankov has minimum contacts with Ohio. Further, even if Peters Broadcast had established a prima facie case of personal jurisdiction under RICO, the burden then shifts to the defendants to support their motion to dismiss with evidence. See Malone, 965 F.3d at 504. 24 Capital and Sankov did precisely this in their motion to dismiss.*7.   

Thus, pursuant to the forum-state approach, Peters Broadcast may file its civil RICO action “in a district court where personal jurisdiction can be established over at least one defendant,” and then “summonses can be served nationwide on other defendants if required by the ends of justice.” See Laurel Gardens, 948 F.3d at 120 (citation omitted).*8. 

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s