Sixth Circuit Adopts Narrower “Forum State” Approach to Nationwide Service of Process under 18 U.S.C. § 1965(b) of RICO Act, Joining Majority View in Circuit Split

In Peters Broadcast Eng’g, Inc. v. 24 Capital, LLC, No. 21-3849 (6th Cir. July 13, 2022), the Sixth Circuit joins six other circuits in holding that, for nationwide service of process under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1965, at least one defendant must be subject to personal jurisdiction in the forum state.

In its RICO complaint, filed in the U.S. District Court for the Southern District of Ohio, Peters Broadcast alleged that “24 Capital, [Operations Manager] Jason Sankov, and other unnamed coconspirators engaged in a ‘conspiracy to steal, thieve and purloin from unsuspecting merchants’ by targeting small merchants and inducing them to borrow funds against receivables.”

Defendants moved to dismiss the action, “arguing the case should be dismissed under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.” The defendants – indeed, all the parties – lacked a nexus to Ohio: “Peters Broadcast is an Indiana corporation with its principal place of business is in Indiana. 24 Capital is a New York limited liability company with its principal place of business in New York. Sankov resides in Florida.”

The district court dismissed the case. Interpreting the RICO venue and jurisdiction statute, 18 U.S.C. § 1965, the court held that subsection 1965(b) determined when out-of-state defendants were subject to service of process: “In any action under section 1964 of this chapter in any district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof.”

The district court held that “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 Eleventh Circuit affirms. The panel notes the circuit split on how to interpret section 1965. “Over the past thirty years, a split has emerged as the circuits determined which RICO venue and process subsection permits service of process on out-of-district defendants. The minority approach, adopted by the Fourth and Eleventh Circuits, holds that § 1965(d) governs service over out-of-district defendants. Subsection (d) broadly allows process ‘on any person in any judicial district in which such person resides, is found, has an agent, or transacts his affairs’ . . . . This ‘national contacts’ approach considers ‘a defendant’s aggregate contacts with the nation as a whole rather than his contacts with the forum state.’” The Second, Third, Seventh, Ninth, Tenth, and D.C. Circuits have adopted this

“The majority approach holds that § 1965(b) governs service over out-of-district defendants . . . . The Second, Third, Seventh, Ninth, Tenth, and D.C. Circuits have adopted this ‘forum state’ approach. These circuits considered 18 U.S.C. § 1965 in its entirety to hold that the statute ‘does not provide for nationwide personal jurisdiction over every defendant in every civil RICO case, no matter where the defendant is found’ . . . . [Thus,] nationwide jurisdiction hinges on whether at least one defendant has minimum contacts with the forum state.”

“We find the reasoning of the forum-state approach persuasive, with a few clarifications to ensure meaning is conferred upon each subsection of the statute.” Noting that section 1965 is not itself 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.”

Accepting the majority approach, the panel holds that the district court lacked personal jurisdiction over both defendants. “While the second amended complaint makes mention of general injurious conduct occurring in Ohio, it provides no explanation of what acts or activities occurred in the state. Peters Broadcast did not ‘establish with reasonable particularity sufficient ‘minimum contacts’’ with Ohio such that the exercise of jurisdiction over 24 Capital and Sankov ‘would not offend ‘traditional notions of fair play and substantial justice.’’” Moreover, the defendants established through declarations their lack of presence or business in the state.