Transfer Without Personal Jurisdiction

A defendant who wins a Rule 12(b)(3) motion has shown that the plaintiff filed in the wrong district.¹ Section 1406(a) then gives the court two choices: dismiss the case or, if the interest of justice requires, transfer it “to any district or division in which it could have been brought.”² One feature of that choice surprises most students. In Goldlawr, Inc. v. Heiman, the Supreme Court held that a court lacking personal jurisdiction over the defendant may still order the transfer.

The result looks backward because improper venue and missing personal jurisdiction so often arrive together. Personal jurisdiction is a court’s power over a particular defendant; venue is the statutory choice of courthouse. The two are separate questions, yet a plaintiff who sues in a district with no tie to the defendant or the dispute commonly fails both tests, and the defendant may raise both objections in a single Rule 12 motion. A court that cannot bind the defendant seems to have one option left, which is dismissal, and dismissal can be fatal to a plaintiff whose limitation period expires in the interim.³

How, then, can a court that cannot bind the defendant order anything about the case? The answer lies in what a transfer order does. It decides where the case will be heard and nothing more. It does not decide the merits or the defendant’s liability, and the court that receives the case will judge for itself whether it has power over the defendant. A court that rules only on location needs no power over the defendant to send the case to a courthouse where that power can be tested.

This section follows the rule in three steps: the holding in Goldlawr, Justice Harlan’s dissent together with the limits that keep the rule in bounds, and the way later courts apply it. One point from the previous section holds throughout. The rule excuses a lack of personal jurisdiction in the court that transfers, but the destination must still be a district where the action could have been brought.

The Goldlawr Holding

The dispute in Goldlawr, Inc. v. Heiman began when Goldlawr, Inc. brought a private antitrust action for treble damages against several defendants in the Eastern District of Pennsylvania.⁴ After hearings on the defendants’ motion to dismiss for improper venue and lack of personal jurisdiction, the district court agreed that venue was improper as to two corporate defendants. Those corporations were neither inhabitants of, “found” in, nor transacting business in Pennsylvania, the alternative prerequisites for venue under § 12 of the Clayton Act.⁵ Section 12 governs both venue and personal jurisdiction in antitrust actions against corporations, and it permits service of process in the district where a corporation is an inhabitant or wherever it may be found.⁶ The Pennsylvania court nonetheless refused to dismiss. It used § 1406(a) to transfer the action to the Southern District of New York, where the corporations could be found and transacted business, so that venue was proper and personal jurisdiction could be obtained by service under § 12.⁷

The two corporations then appeared in New York and moved to dismiss, arguing that the Pennsylvania court, lacking personal jurisdiction over them, had lacked power to transfer under § 1406(a). The New York court agreed, and the Second Circuit, Judge Hincks dissenting, affirmed.⁸ If the defendants were right, the transfer would collapse after the fact and leave the plaintiff with a dismissed case and a limitations problem. The Supreme Court reversed, holding that the Court of Appeals erred in upholding the dismissal as to the two corporations.⁹

The case bears the name of a defendant who is not part of the holding. The district court also found venue improper as to a number of individual defendants, but the Supreme Court said that fact was not relevant to any issue properly before it.¹⁰ Heiman’s motion to dismiss was granted on the transfer-power ground and on a second, entirely independent ground. Because the petitioner did not seek certiorari on the second ground, the Court dismissed the writ as to Heiman.¹¹ The ruling therefore concerns only the two corporations.

The Court began with the text. Section 1406(a) directs the court of a district “in which is filed a case laying venue in the wrong division or district” to “dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.”¹² That language, the Court said, “is amply broad enough to authorize the transfer of cases, however wrong the plaintiff may have been in filing his case as to venue, whether the court in which it was filed had personal jurisdiction over the defendants or not.”¹³ The statute sets two conditions for transfer: the case must lay venue in the wrong place, and the destination must be a district where the case could have been brought. Personal jurisdiction in the transferring court appears nowhere in the list. To read it in, the Court observed, would import into § 1406(a) ambiguities that the language Congress used does not contain, and would partly frustrate the congressional objective.¹⁴

Purpose supplies the second reason. Section 1406(a) arose from the injustice that had often befallen plaintiffs whose actions were dismissed because they guessed wrong about some elusive fact on which venue provisions turn.¹⁵ The Clayton Act provision shows what such a fact looks like, since the Court itself noted the difficulty of deciding where corporations can be found or transact business.¹⁶ The Court called its own case a typical example, because dismissal would have cost the plaintiff a substantial part of its cause of action under the statute of limitations, and all because the plaintiff mistakenly thought the two corporations could be found or transacted business in Eastern Pennsylvania.¹⁷ Congress, the Court explained, recognized that when a venue mistake is made, the interest of justice may require transfer in place of dismissal, so that the plaintiff is not penalized by what Judge Parker called “time-consuming and justice-defeating technicalities.”¹⁸ The Court tied the section to the broader aim of removing whatever obstacles impede an expeditious and orderly adjudication of cases on their merits.¹⁹

Transfer also leaves the defendants’ objection with the court that can answer it. The defendants objected to the district, and transfer takes the case out of it. The statute limits the destination to a district where the action could have been brought, so in Goldlawr the corporations arrived in a court where venue was proper and § 12 authorized service of process.²⁰ The transfer order decided nothing about liability. A court that rules only on where the case will be heard has no need of power over the defendant to send the case to a courthouse where that power can be tested.

The tempting exam error is to reason that a court lacking personal jurisdiction must dismiss because it has no power over the defendant. For transfers, Goldlawr forecloses that reasoning. An Arizona plaintiff sues a New Mexico defendant in Arizona over an accident in New Mexico, and the defendant, who has no Arizona contacts, moves to dismiss for lack of personal jurisdiction and improper venue. Venue is improper in Arizona because the defendant does not reside there and the events occurred elsewhere, while the District of New Mexico is a proper venue because the defendant resides there and the accident happened there. The Arizona court may transfer the case to New Mexico under § 1406(a) despite lacking personal jurisdiction, and it will usually do so because transfer spares the plaintiff the time and expense of refiling.²¹

The statute’s own words mark that boundary, since § 1406(a) reaches only “a case laying venue in the wrong division or district.”²² Goldlawr removes one obstacle, the transferor’s lack of personal jurisdiction, and leaves in place a venue defect in the filing district and a destination where the action could have been brought. Justice Harlan dissented from the decision, and the force of his objection, along with the limits that keep the rule in bounds, is the next topic.

Dissent and Limits

Justice Black wrote the opinion of the Court in Goldlawr, and Justice Harlan dissented.²³ His opinion states the strongest case against the rule the majority adopted.²⁴ He began with the nature of an in personam action, a suit that seeks to bind a particular defendant. A district court that deals with such an action in a way that may affect the defendant’s substantive rights, he wrote, without first acquiring jurisdiction over the defendant, does something unfamiliar in federal jurisprudence, and no one suggests that Congress knew § 1406(a) might be used that way.²⁵ The worry takes concrete form in Goldlawr itself. Dismissal would have cost the plaintiff a substantial part of its claim to limitations, and transfer saved the claim.²⁶ A court with no power over the defendants thus made an order that touched a defense they would otherwise have held.

Harlan’s second point concerns the phrase on which the majority relied. The interest of justice, he wrote, “is assuredly not a one-way street,” so the phrase cannot justify the result by pointing only to the plaintiff’s loss.²⁷ His third point concerns coverage. If Congress meant § 1406(a) to rescue a plaintiff who chose a district where both venue and personal jurisdiction are lacking, he reasoned, it is incongruous that Congress gave no comparable relief to a plaintiff who chose a district where venue is proper but personal jurisdiction cannot be obtained.²⁸ His footnote gives an example in an ordinary diversity suit. A plaintiff who sued where the plaintiff resided, as the venue statute then allowed, but who could not obtain personal service on the defendant within the territory Rule 4(f) defined, would see the suit dismissed, and because that is not a case laying venue in the wrong division or district, § 1406(a) would be inapplicable.²⁹ The venue statute he cited has since been rewritten around the defendant’s residence, the place of the events, and a fallback rule,³⁰ yet the structure of his point survives the rewrite.

The Court adopted none of these arguments, so Harlan’s opinion records a competing view and the rule taught above is the law. He would have affirmed, substantially for the reasons in Judge Moore’s opinion below, and left the matter to Congress, preferably after the Judicial Conference of the United States had expressed its views.³¹ The dissent still repays study, because the gap it identifies is a real feature of the statute, and the first buyer above falls into it.³² Other transfer statutes address other defects. Section 1631, for example, allows dismissal or transfer when the original filing has a jurisdictional defect, and § 1404(a), taken up in the last section of this chapter, serves convenience.³³

Goldlawr removed one obstacle and left the statute’s other conditions in place, which gives the rule three boundaries.

The first is that the filing district must be the wrong venue. That is the gap Harlan described, and it explains why the plaintiff in the first hypothetical gets no help from § 1406(a).

The second is that the receiving court must itself be a proper forum. The statute permits transfer to a district in which the case could have been brought,³⁴ and Goldlawr excused a lack of personal jurisdiction in the transferring court and in no other. The condition keeps the remedy useful, because a transfer to a district where the defendant could be neither sued nor properly served would only relocate the dismissal and add a second round of delay. A candidate district qualifies if the plaintiff could have sued there when the case was filed.

The third is that transfer must serve the interest of justice, which calls for judgment on the facts and not a fixed rule. Transfer usually does serve that interest because it avoids the time and expense of refiling in the alternative forum.³⁵ The Goldlawr rationale suggests where the interest is strongest. The remedy protects a plaintiff who made an erroneous guess about an elusive fact on which venue turns, and the harm it prevents is the loss of the claim to limitations.³⁶ It fits best where the lack of personal jurisdiction was not clear at the outset and dismissal would be unduly harsh. Where the defect was obvious on the face of the filing and the claim can still be refiled in time, a court may reasonably find less to rescue.

Goldlawr sits at the other end of that line. The plaintiff there had guessed wrong about where two corporate defendants could be reached, and dismissal would have forfeited a substantial part of the claim.³⁷

One practical corollary follows. Because transfer remains available without personal jurisdiction, a court need not settle every jurisdictional question before it considers transfer. In a footnote in Briggs v. Goodwin, an appellate court wondered why the district court had not held the motion for transfer in abeyance until it decided whether the litigation could continue in that district. It cited Goldlawr for the point that transfer may be effected even without personal jurisdiction over all parties in the transferor court, and that in most cases it is preferable to dismissal if the venue defect can thereby be cured.³⁸ The remark is a passing comment and not a holding, but it follows the logic developed above: a transfer order decides only where the case will be heard.

The error to avoid on an exam is reading Goldlawr to make personal jurisdiction irrelevant to transfer. The decision removes the transferor’s lack of personal jurisdiction as a bar, and the venue defect, the proper destination, and the interest of justice all remain to be shown.

Goldlawr in Practice

Courts now apply Goldlawr as settled law. The Supreme Court wrote that § 1406(a) is “amply broad enough to authorize the transfer of cases, however wrong the plaintiff may have been in filing his case as to venue, whether the court in which it was filed had personal jurisdiction over the defendants or not.”⁴⁰ The decisions below show what judges do with that language when a defendant joins a venue objection to a personal-jurisdiction objection. They prefer transfer to dismissal, name a destination the record supports, and leave the remaining objections to the court that receives the case.

The Eastern District of Virginia faced that combination in Verosol B.V. v. Hunter Douglas, Inc., a dispute over whether a contract had been terminated. The defendant, Hunter-Douglas, had its principal place of business in New Jersey, the documents on the termination issue were at its New Jersey headquarters, and the witnesses it expected to call lived in or near New Jersey. Trial there would substantially reduce the time, expense, and disruption to its business that trial in Virginia would entail.⁴¹ The court first assumed that the plaintiffs had met their prima facie burden of showing personal jurisdiction over Hunter-Douglas, which made venue proper in Virginia, and on that assumption it transferred the case to the District of New Jersey under § 1404(a).⁴²

The court then added an alternative ground that carries the Goldlawr point. Even if Hunter-Douglas were not subject to personal jurisdiction in Virginia, so that venue would fail as well, transfer to New Jersey rather than dismissal would be appropriate under § 1406(a).⁴³ The court explained that § 1406(a) has been read broadly to allow transfer where an impediment, such as a lack of personal jurisdiction in the plaintiff’s chosen forum, stands in the way of adjudication on the merits.⁴⁴ Its reason for preferring transfer was practical. Both sides conceded that Hunter-Douglas was subject to personal jurisdiction and venue in New Jersey, so transfer would speed a decision on the merits in an undisputed forum and would avoid the cost and delay of dismissing and refiling there.⁴⁵ The structure spared the judge from resolving a contested jurisdictional question, because every path ended in the same courthouse.

In M.P. Paul v. International Precious Metals Corp., the court faced a defendant over whom it lacked personal jurisdiction and asked whether that defect required dismissal. It did not. A court with subject-matter jurisdiction but without personal jurisdiction over the defendant, the court wrote, “still has authority under 28 U.S.C. § 1404(a) or 28 U.S.C. § 1406(a) to order a transfer to another district.”⁴⁶ It transferred the case to the Southern District of Florida and declined to rule on the defendant’s motions to dismiss two counts for failure to state a claim, because those were matters for the transferee court.⁴⁷

The statutes involved matter. Section 1406(a) applies only to a case “laying venue in the wrong division or district,” and Goldlawr construed that statute alone.⁴⁸ In Verosol the court’s main ruling rested on § 1404(a), the convenience statute, with personal jurisdiction assumed, and the § 1406(a) discussion was a fallback available only if the missing personal jurisdiction also made venue improper.⁴⁹ Some courts have carried Goldlawr’s reasoning across to § 1404(a), and there is authority for the extension.⁵⁰ You should present it as a position those courts have adopted and not as a holding of Goldlawr. It reaches the situation Justice Harlan said the statute left uncovered, in which venue is proper and personal jurisdiction is missing.

Higher courts repeat the rule without hesitation. The Sixth Circuit in Smith v. Peters relied on Goldlawr’s discussion of text and purpose, quoted it at length, and noted that the circuit had followed Goldlawr earlier in Taylor v. Love.⁵¹ Decades later, the Supreme Court quoted the same passage in Sinochem International Co. v. Malaysia International Shipping Corp., repeating that § 1406(a) authorizes transfer “whether the court in which it was filed had personal jurisdiction over the defendants or not.”⁵²

The transfers in Verosol and M.P. Paul worked because the destination was a district where the defendant could be sued, and in Verosol the parties conceded as much.⁵³ Two mistakes follow from reading these cases carelessly. The first is to reason that a court without personal jurisdiction over the defendant must dismiss, which Goldlawr forecloses for a transfer. The second is to treat Goldlawr as a cure for every personal-jurisdiction problem, when § 1406(a) still requires a case laid in the wrong district and a destination where the action could have been brought.