You have consulted with outside antitrust counsel and you believe that you have a great antitrust claim against a rival corporation. In which of the 94 federal judicial districts is it "fair and reasonably convenient" to sue your rival corporation? Can you file your antitrust case in any one of these 94 districts? In legal parlance – what is the proper venue? Clients often are focused on factors such as home court advantage, existence of related cases, whether the law of the circuit is more or less favorable to the issues, and the reputation of the district court judges. In addition to these (mostly unscientific) considerations, statutory criteria also are important and, as the Seventh Circuit discussed in KM Enterprises Inc. v. Global Traffic Technologies, Inc., [136] surprisingly confusing and inconsistent. In KM Enterprises Inc., the Seventh Circuit wrestled with the conflicting language in the Federal Rules of Civil Procedure, the Clayton Act, and the opinions of its sister circuits, and concluded that neither the Federal Rules nor the Clayton Act allows a plaintiff to "haul defendants hither and yon at their caprice" into any judicial district.

Venue in the Lower Court Case

KM Enterprises, Inc. ("KME"), an Illinois corporation, and Global Traffic Technologies, Inc. ("GTT"), a Minnesota company, are competitors in the market for devices that permit emergency vehicles to send a signal that preempts ordinary traffic lights and thereby allows the emergency vehicle to pass through an intersection with, rather than against, the light. KME filed suit in the Southern District of Illinois, claiming that GTT violated antitrust laws by improperly interfering with competitive bidding on public contracts and engaging in illegal tying. GTT did not transact business in the Southern District of Illinois, although a few of its devices had been installed at intersections in the district and it had made six direct sales in the district over a four-year period. The public bids referred to in the complaint occurred in the Northern District of Illinois. Nevertheless, KME sued GTT in the Southern District of Illinois, alleging violations of the Sherman and Clayton Acts.[137] KME accomplished personal jurisdiction over GTT in the Southern District relying on the service provision of Clayton Act § 12,[138] which provides special (but non-exclusive) rules for venue and service of process in antitrust cases against corporations. It did not rely on the Clayton Act § 12's venue provisions, however, it instead relyied on the general venue provision of 28 U.S.C. § 1391.[139] The district court dismissed the action for lack of venue because GTT did not have sufficient contacts with the district as it did not reside in the Southern District of Illinois and none of the events took place there.

On appeal, KME argued that GTT had sufficient contacts to satisfy Section 1391 and that it was entitled to rely on Section 1391 even though it had relied on Clayton Act § 12 for service of process. KME claimed that it was appropriate to use Clayton Act § 12's nationwide service of process provision, but not Clayton Act § 12's venue provision. Instead, KME relied on Section 1391 for venue. Presumably under this interpretation, the reverse would be possible: service under Fed. R. Civ. Pro. 4(k)(1)(A) and Clayton Act § 12's venue provision. In other words, it could mix and match among the service of process and venue provisions of Clayton Act § 12 and Section 1391.

À La Carte or Fixed Menus

An antitrust action, like all civil actions, is commenced by serving a summons and a complaint. Rule 4 of the Federal Rules of Civil Procedure provides that personal jurisdiction is "established" when a summons and a complaint are served on an entity (i) in a territory where that entity would be amendable to suit under the laws of the state in which the federal court sits or (ii) pursuant to the rules of a specialized federal statute. [140] Clayton Act § 12 is one such specialized federal statute that provides rules for service of process and for venue in antitrust cases. In fact, Section 12 provides for nationwide service of process[141] and is therefore more generous than Rule 4(k)(1)(A).[142] 

As noted, Clayton Act § 12 is both a service and venue provision. And therein lies the problem, as Clayton Act § 12's venue provision and the general venue statute, 28 U.S.C. § 1391, are not consistent with each other. The general federal venue statute for civil actions, 28 U.S.C. § 1391, provides (in relevant part) that venue is proper in a judicial district in which (i) any defendant resides if all defendants are residents of the state in which the district is located or (ii) a substantial part of the events or omissions giving rise to the claim occurred.[143] A corporation resides in a judicial district within which its contacts would be sufficient to subject it to personal jurisdiction.[144] In contrast, Clayton Act § 12 is more generous, providing that venue is proper anywhere the corporation is incorporated ("inhabitant"), "found," or "transacts business."

The Seventh Circuit explained why the issue is important. If a plaintiff must use Clayton Act § 12 as a whole (that is for both service and venue),

[t]hen there exist some limits on where a corporate antitrust defendant may be sued. Though personal jurisdiction is appropriate everywhere under the statute, venue is proper only in the district(s) the corporation inhabits, is found or transact business.… Section 12 is not a restrictive venue provision … but it falls short of providing universal venue in every judicial district in the United States.
But the same cannot be said if we decouple Section 12's clauses and enable a plaintiff to combine nationwide service of process with Section 1391.… Section 1391(b)(1) states venue is proper in any district where the defendant resides … while subsection (c)(2) provides that a corporation "resides" in any district in which it is subject to personal jurisdiction. But if the plaintiff relies on the Clayton Act's nationwide service of process to secure personal jurisdiction, then for purposes of Section 1391 the corporate defendant would reside in every judicial district in the count and venue would be proper everywhere.[145]

Table 1: Summary of Service and Venue Provisions

Click here to view table.

As noted, KME argued for an à la carte menu under which a plaintiff could chose to use nationwide service of process under Clayton Act § 12 without also satisfying Section 12's venue provision, instead using Section 1391's venue rules. KME did not cook this up out of nothing, but relied on opinions from the Third and Ninth Circuits, as well as the scholarly opinion of Wright & Miller.[146] For example, in Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406, 1410-11 (9th Cir. 1989), the Ninth Circuit held that decoupling was consistent with the Clayton Act's general aim of expanding venue in antitrust actions.[147]

In contrast, the D.C. and the Second Circuits[148] have held that Clayton Act § 12 must be used as a fixed menu, that is, if a plaintiff relies on nationwide service of process, plaintiff is limited to the venue choices of Clayton Act § 12. According to these circuits, their holding is mandated by the "plain language" of the statute, which provides that "in such cases" where nationwide service is used to establish personal jurisdiction over a corporation, venue is limited to the corporation's place of incorporation, where it is found or where it transacts business.[149] The common meaning of the term "in such cases" is "previously characterized or specified," and what previously is described in Clayton Act § 12 is the venue restrictions of incorporation, inhabitation, and transaction of business. Moreover, the Second Circuit noted that Congress did not intend "to give plaintiffs free rein to haul defendants hither and yon at their caprice."[150]

Breaking the Tie

Weighing in on the circuit and scholarly split, the Seventh Circuit agreed with the D.C. and Second Circuits' holding that Clayton Act § 12 must be read as a package, but rejected their reasoning.  The plain language is ambiguous, according to the Seventh Circuit, but the reasoning of the Ninth Circuit is "too bizarre and contrary to Congress's apparent intent." [151]

…  allowing  antitrust plaintiffs to mix and match Section 12's service of process provision with Section 1391's general venue provision renders the venue inquiry meaningless, since venue is satisfied in every federal judicial district under subsection (c)(2). This runs contrary to Congress's apparent intent in passing Sections 12 and 1391 that there be some limits on venue, in antitrust cases specifically and in general. Both statutes authorize venue only when certain enumerated requirements are met, be it that the defendant "transacts business" in the district, "resides" there, or something else. It would be quite strange to read two statutes that place limits on venue in a manner that eliminates those limits.[152] 

Thus, a plaintiff has a choice: use Clayton Act § 12 as a fixed menu, or use Section 1391 and the general state long-arm statute or some other source of personal jurisdiction and service.[153]

Was Venue Proper in the Southern District of Illinois

Applying the fixed menu option, the Seventh Circuit upheld the dismissal, concluding that venue was improper in the Southern District of Illinois under both Clayton Act § 12, and Section 1391. As noted under Clayton Act § 12 venue is proper in any district where the defendant is incorporated, is found, or transacts business. The Seventh Circuit found that none of these were satisfied. GTT is a Minnesota corporation and was not "found" in the Southern District of Illinois; nor did it transact business there. It did not promote its goods through product demonstrations or solicit orders through salespersons in the district, did not ship its products to the district, did not maintain offices or provide customer assistance in the district, had no employees in the district, and did not control a subsidiary or a distributor that transacted business in the Southern District.[154] Moreover, the fact that "GTT's technology is being used in a few places within the district does not demonstrate that it transacts business there."[155] 

For similar reasons, venue also fails under Section 1391. In states with multiple districts, like Illinois, Section 1391 provides that venue is proper in any district in which it would be subject to personal jurisdiction were the district a state.[156] An out-of-state corporation is subject to jurisdiction in the State of Illinois if (under Illinois state law) it is "fair, just and reasonable" to require the defendant to adjudicate in Illinois and (under federal constitutional law) the foreign corporation has minimum contacts with the state.[157] Here, KME lacked the minimum contacts. First, the claims do not relate to any contacts with the state of Illinois. KME's claims center on patent litigation that has nothing to do with Illinois, bid rigging in other states, or sales other than the six sales that were made in the Southern District. Second, "minimum contacts" is not the same as de minimus contacts. "Minimum contacts" means "continuous and systematic general business contacts"[158] and six sales over four years does not satisfy that criterion.

Conclusion

The intersection between general principles of federal personal jurisdiction and venue and the Clayton Act's specific provision of course will remain tangled until the Supreme Court decides to untie the knot. Right now, the universal antitrust venue is an option in the Third and Ninth Circuits, whereas the D.C. Circuit, the Second Circuit, and now the Seventh Circuit require plaintiffs to choose either the Clayton Act as a whole or the general venue statute as a whole.