The Fifth Circuit, sitting en banc, heard oral argument on September 21, 2021, in Douglass v. Nippon Yusen Kabushiki Kaisha, Case No. 20-30382, which directly raises this question. Douglass arises from a collision near Japan between a U.S. Navy destroyer and a civilian ship operated by NYK Line. See 996 F.3d 289, 291 (5th Cir. 2021). A Japanese corporation, NYK Line is one of the largest shipping companies in the world. It does vast amounts of shipping business in the United States but is not incorporated or headquartered there. Id. at 299–300.
The victims of the collision and their survivors sued NYK Line under a federal law. NYK Line sought dismissal by arguing that there was no personal jurisdiction. Plaintiffs countered that the test under the Fifth Amendment should be different than that under the Fourteenth Amendment. A panel of three judges concluded that the position was “persuasive.” Id. at 293. But it reluctantly affirmed the dismissal of the lawsuit on the basis of Fifth Circuit precedent. Id. at 297–98.
Resolution of this issue can make or break many federal claims. For example, in passing the Defend Trade Secrets Act, Pub. L. 114–153, Congress intended to reach misappropriation of American trade secrets that takes place abroad. But Daimler may be a serious barrier. It is easy to imagine a foreign partner pilfering sophisticated technology developed by an American company and then purposefully avoiding specific jurisdiction by not marketing products deriving from that technology in the United States (even if the partner earns significant revenues here by selling other products).
As another example, the Cuban Liberty and Democratic Solidarity Act, Pub. L. 104–114, commonly known as the Helms-Burton Act, creates a private right of action against any person who traffics in confiscated Cuban property. The likely defendants under the Helms-Burton Act are Canadian and European corporations that have maintained economic relationships with Cuba. While most of those corporations have an extensive business presence in the United States, that presence typically has little to do with Cuban assets. It can be difficult to establish jurisdiction under Daimler. See, e.g., Cueto Iglesias v. Pernod Ricard, 2021 WL 3083063, at *2 (S.D. Fla. Jun. 17, 2021) (no jurisdiction over a French corporation for selling Havana Club rum outside the United States).
The jurisdictional limitation imposed by the Fourteenth Amendment arguably flows from the unique nature of U.S. federalism. The Fifth Amendment may entail a different analysis. The United States has a strong sovereign interest in assuring a realistic forum when foreigners violate a law enacted by Congress. The federal government shares this view, contending that federal “constitutional powers and special competence in matters of foreign affairs and international commerce, in contrast to the limited and geographically cabined sovereignty of each of the several States, would permit the exercise of federal judicial power in ways that have no analogue at the state level.” See U.S. Br. at 32, Ford Motor Co. v. Mont. Eighth Jud. Dist., Case Nos. 19-368 & 19-369 (Mar. 6, 2020).
Litigators of cross-border disputes should keep abreast of Douglass and related cases.