SCOTUS for law students (sponsored by Bloomberg Law): Gambling on personal jurisdiction
on Nov 1, 2013 at 11:41 am
It is quite certain that professional gamblers Gina Fiore and Keith Gipson were not thinking about personal jurisdiction when they carried $97,000 in cash through the San Juan and Atlanta airports on their way to Las Vegas.
But personal jurisdiction is exactly what the Supreme Court will consider on Monday, when it hears oral arguments in Walden v. Fiore. At issue in the case is whether Fiore and Gipson can sue a Georgia police officer working as a Drug Enforcement Administration (DEA) agent in federal district court in Nevada for seizing their funds without probable cause and holding the money for more than six months before it was returned to them.
The case should interest all law students because it goes to the heart of an important question of civil procedure: what is the proper test to determine whether there is personal jurisdiction? The answer to the question has a constitutional dimension because a court’s jurisdiction is driven in part by the fundamental fairness requirements of due process guaranteed by the Fifth and Fourteenth Amendments.
Any doubt about the importance of these issues is easily dispelled by the strong opinions exchanged among the judges of the U.S. Court of Appeals for the Ninth Circuit. Civil procedure issues may not ordinarily engender the kind of judicial passions that we see in issues of affirmative action, free speech, or abortion rights. But in one opinion dissenting from the Ninth Circuit’s decision not to rehear the case en banc, Judge Margaret McKeown warned that the three-judge panel decision returned the law of personal jurisdiction to “a discredited era” of legal reasoning.
How the Supreme Court decides the case may turn very much on the facts of the dispute, so let’s take a look.
Fiore and Gipson consider themselves professional gamblers, the kind with enough of a reputation that casinos know they are coming and provide complimentary rooms. In 2006, they traveled to Atlantic City and then to Puerto Rico. On August 8, 2006, they returned to Las Vegas, where they each maintained a residence. They flew from San Juan to Atlanta, and then Atlanta to Las Vegas.
At the San Juan airport, because they were traveling on one-way tickets, the two were subjected to ramped-up security screening. Testing for drugs, including any small traces, was negative. Fiore had $34,000 in cash in her carry-on bag, and Gipson had $48,000 in his. Gipson also had another $15,000 he was carrying personally. This total of $97,000 included gambling winnings as well as their own bank of $30,000 in gambling seed money with which they started. Three federal Drug Enforcement Administration (DEA) agents questioned Fiore and — indirectly – Gipson, who stood nearby and occasionally chimed in at the San Juan airport. The pair produced California driver’s licenses, explained that they had residences in both California and Nevada, described the gambling trip they had just concluded, and said Las Vegas would be the final stop on this trip. The DEA agents said they might be questioned again in Las Vegas, and so Fiore and Gipson made plans to have their lawyers meet them at the Las Vegas airport.
When Fiore and Gipson changed planes in Atlanta, they were met by Anthony Walden and another federal agent. Walden was a local Atlanta-area police officer who had been deputized to assist the DEA as needed. Walden and the other agent questioned Fiore, who produced an itinerary of casinos visited and a log of wins and losses. Other agents questioned Gipson, who indicated that his records of the trip were in his checked bag. The DEA agents produced a drug-sniffing dog, which reacted briefly but positively to Gipson’s carry-on bag. The DEA agents then informed Fiore and Gipson that the law enforcement officials would seize their carry-on bags and allow them to proceed to the flight without their things, and they declined to allow the pair to hold on to enough money to pay for taxis when reached Las Vegas. The agents told Fiore and Gipson that if they eventually provided sufficient paperwork to establish that their funds were legitimate, the money would be returned to them.
Safely back in Nevada, Fiore and Gipson sent the appropriate paperwork to Walden in Georgia later in August and early in September, according to the appeals court. They documented their winnings at the casino in San Juan, their itinerary, and the fact that they were professional gamblers as established by past tax returns, hotel and travel receipts and more.
Instead of returning the funds, however, Walden and another agent allegedly filed a false affidavit with the U.S. Attorney in Atlanta in an effort to provide probable cause for the government to seize the funds and initiate a forfeiture action against Fiore and Gipson. Walden’s affidavit suggested that forfeiture was appropriate because Gipson had been uncooperative and the accounts given by Fiore and Gipson conflicted in some ways. But the Assistant U.S. Attorney who handled the case in Atlanta concluded that there was no basis for a forfeiture action, that Walden’s affidavit had omitted details that weighed in Fiore and Gipson’s favor, and that the funds should be returned to the pair in Nevada. Nearly seven months after the initial seizure, the funds were sent back to Fiore and Gipson on March 1, 2007.
Fiore and Gipson sued Walden and several other agents in federal district court in Nevada. They sued for violation of their Fourth Amendment rights, relying on the 1971 case of Bivens v. Six Unknown Named Agents, which created a cause of action for damages and other relief for some federal constitutional torts by federal officials. Their lawsuit alleged that their rights were violated by seizure of the funds without probable cause, by the long delay in returning the funds after requested documentation was provided, by Walden’s affidavit to support a forfeiture action, and by the referral of the case to the U.S. attorney for prosecution.
A federal district judge in Nevada dismissed the lawsuit on the ground that there was no personal jurisdiction over Walden in the federal court in Nevada. The district court found that the seizure of funds and search of bags took place in and was aimed at Georgia, and that these details deprived the Nevada court of personal jurisdiction.
Fiore and Gipson appealed to the Ninth Circuit. By a two-to-one vote, a panel of the Ninth Circuit reversed. Judge Marsha Berzon wrote for the majority, explaining first that the Nevada long-arm statute allows personal jurisdiction unless doing so would offend due process. That meant, she said, that the case really turned on what due process required for personal jurisdiction, a notion that has traditionally involved the presence of sufficient minimum contacts between the defendant and the forum state.
There is some general agreement that the relevant test comes from the 1984 Supreme Court decision in Calder v. Jones. In that ruling, the Court held that personal jurisdiction may be determined based on a three-part test: (1) the defendant committed an intentional act; (2) the act was aimed at the forum state; and (3) the harm caused would be experienced in the forum state.
The Ninth Circuit panel found that Walden’s intentional act was submitting an allegedly false affidavit. The act was clearly targeted outside Georgia, the Ninth Circuit said, because Walden knew that Fiore and Gipson were merely changing planes, they told him that they resided in Nevada, and they showed him their California driver’s licenses. Moreover, Fiore and Gipson sent Walden documentation from Nevada before he filed his affidavit. Finally, the harm would occur in Nevada, the Ninth Circuit found, because Walden knew that was where Fiore and Gipson were being deprived of the funds.
Judge Sandra Ikuta dissented from the panel decision. She argued that the allegedly false affidavit could not, standing alone, provide the basis for personal jurisdiction. In her view, the Fourth Amendment violation claimed in the lawsuit was the seizure and retention of the funds without probable cause, both of which took place in and were focused on Georgia and conducted by a Georgia law enforcement officer. The allegedly false affidavit, she said, could not become a separate, additional claim that created personal jurisdiction in Nevada.
When the Ninth Circuit considered whether to hear the case en banc, eight judges voted for rehearing and voiced their view in two separate opinions. Both criticized the Ninth Circuit panel for misapplying the personal jurisdiction factors from Calder. Judge Diarmuid O’Scannlain argued that the case had nothing to do with Nevada, and that the panel resolved every issue incorrectly to find jurisdiction in Nevada. “The panel’s holding breaks from binding authority, substantially broadens personal jurisdiction, and creates needless uncertainty in cases involving conduct that may have effects in places that defendants cannot reasonably predict,” he wrote. And Judge McKeown wrote that the panel elevated the importance of hard-to-measure “foreseeability” over the significance of more concrete “purposeful” action, a direction that she regarded as having been clearly rejected by the Supreme Court.
Because the underlying practical question involves where law enforcement officials may properly be sued for allegedly violating the rights of individuals, there is strong interest from government officials in how the case comes out. The Solicitor General filed a brief urging the Court to reject the Ninth Circuit standard and will take part in the oral argument. A number of states also filed a friend-of-the-court brief warning that the Ninth Circuit’s approach would make law enforcement officers subject to lawsuits in states with which they have no real connection and in which defending against claims will be extremely inconvenient, costly, and unpredictable.
It is important to remember that although the rule on which the Supreme Court settles in the case may well have the effects on law enforcement that the Solicitor General and state officials raised, the rule itself is unlikely to be limited in any way to lawsuits against police and may have broader ramifications for personal jurisdiction in many different types of cases. And however the case comes out, the important civil procedure issue of personal jurisdiction is front and center.
[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to the respondents in this case. However, the author of this post is not affiliated with the firm.]