By Brian Young and Mary Gately

Law360 (March 23, 2021, 4:55 PM EDT) --

Brian Young

Mary Gately

Many businesses, including foreign and global businesses, maintain close relationships with the U.S. government and international or quasi-governmental agencies, like the International Finance Corporation, that are uniquely located in the District of Columbia.

For example, many businesses have dedicated government affairs departments responsible for liaising with the government. But a business's activities in the District of Columbia can have significant implications on where the business may be sued.

Suppose, for example, a District of Columbia-based activist alleges a foreign company defamed or libeled the activist and caused reputational injury to the activist in the district. Under the District of Columbia long-arm statute, those allegations alone can open the door to jurisdiction in the District of Columbia if the activist can show the company regularly does or solicits business, or engages in a persistent course of conduct in the District of Columbia.

This business or conduct does not have to relate to the claims made in the lawsuit, as long as they show some continuing relationship with the District of Columbia. Significantly, the business's government contacts could fall under scrutiny depending on the residency of the business, the type of governmental agency and the nature of the business's relationship with the governmental agency.

In the last quarter of 2020 alone, there were two cases in which the U.S. Court of Appeals for the District of Columbia Circuit addressed the government contacts exception, Akhmetshin v. Browder and Elsalameen v. Bank of Palestine PLC.[1] In Akhmetshin, discussed below, the dissenting judge on the panel indicated a need for additional guidance from the D.C. Court of Appeals on whether foreign defendants can be subject to personal jurisdiction based on their government contacts.

A business would be well-advised to assess its contacts with the District of Columbia to limit the possibility that it unwittingly becomes a defendant in an unfamiliar forum based on a lawsuit with limited connections to the forum.

Personal Jurisdiction Under the District of Columbia Long-Arm Statute

Personal jurisdiction generally falls into two categories.

Under the 2011 U.S. Supreme Court decision in Goodyear Dunlop Tires Operations SA v. Brown, there is general jurisdiction, under which a court "may hear any and all claims against [a defendant] when [the defendant's] affiliations with the State are so continuous and systematic as to render them essentially at home in the forum State."[2] A company is essentially at home in its state of incorporation or principal place of business.[3]

Specific jurisdiction, on the other hand, is more limited. It focuses on the relationship between the defendant, the state and the cause of action, requiring that the defendant's conduct giving rise to the suit creates a substantial connection with the state.[4]

In any case where personal jurisdiction is challenged, a court must answer two separate questions: (1) whether the jurisdiction's long-arm statute is satisfied, and (2) whether the exercise of jurisdiction comports with due process.[5]

The District of Columbia's long-arm statute is implicated when alleged tortious conduct originating outside of the jurisdiction causes injury in the jurisdiction. Section 13-423(a)(4) of the District of Columbia Code provides for the:

exercise [of] personal jurisdiction over a person ... as to a claim for relief arising from the person's ... causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia.[6]

As a D.C. Circuit judge, in her 1987 decision in Crane v. Carr, Justice Ruth Bader Ginsburg explained how this provision of the long-arm statute, at least in theory, passes constitutional muster, stating:

under (a)(4), the act outside/impact inside the forum is the basis for drawing the case into the court, but because the harm-generating act (or omission) occurred outside, the statute calls for something more. The "something more" or "plus factor" does not itself supply the basis for the assertion of jurisdiction, but it does serve to filter out cases in which the in forum impact is an isolated event and the defendant otherwise has no, or scant, affiliations with the forum.[7]

In other words, the alleged plus factors need not be related to the suit at all.[8] As a result, this provision is often used to bring libel suits against nonresident defendants who have little connection to the District of Columbia beyond their interactions with the governmental or quasi-governmental agencies in the district.[9]

The inquiry in cases asserted under subsection (a)(4) focus exclusively on whether a defendant has the required plus factors.

The plus factors can encompass a range of information about a business's activity in the District of Columbia, such as sales, the travel of its employees, officers, and board members, its customers, potential customer revenue, marketing, shareholders, offices, agents, phone calls, emails, marketing, and essentially any kind of activity that might show a business has a continuing relationship — i.e., persistent course of conduct — with the District of Columbia.[10]

As a result, cases where jurisdiction is asserted under subsection (a)(4) may involve jurisdictional discovery relating to the plus factors, provided the plaintiff can make a "'detailed showing of what discovery it wishes,'"[11] and how the requested discovery could produce facts that would affect the court's jurisdictional analysis.[12]

There are important limitations to the court's consideration of the plus factors.

First, the plus factors must involve conduct by the defendant business in the District of Columbia. For example, some courts have held that telephone calls and emails originating from outside the jurisdiction are not necessarily plus factors under the long-arm statute because they do not show conduct by the defendant in the district.[13]

Another relatively undiscussed limitation concerns the relevance of customers or other contacts who are based or reside in the District of Columbia, but with whom the defendant interacts with substantially or exclusively outside of the district. Given the omnipresence of global companies operating all over the world, should business with a Washington-based nongovernmental organization in Asia count as a contact in the district?

We think not because to hold otherwise would be to count a third party's contacts against the defendant when it is the defendant's purposeful availment of the forum that matters,[14] but courts have not provided definitive guidance.

In addition, as discussed below, a defendant's governmental and even trade association contacts should be excluded from the jurisdictional analysis.[15] With these factors in mind, the ultimate inquiry for the court is whether the plus factor shows a defendant has isolated or sporadic contacts with the District of Columbia, or whether the contacts are more continuous or persistent.

Overview of the Government Contacts Exception

The government contacts exception requires courts to disregard, for personal jurisdiction purposes, any contact with the District of Columbia that involves uniquely governmental activities.[16]

The exception was officially recognized in the 1976 District of Columbia Court of Appeals decision in Environmental Research International Inc. v. Lockwood Greene Engineers Inc.,[17] which remains the D.C. Court of Appeals only en banc decision on this topic.

The court in Lockwood identified at least two sources for the exception. First, the court articulated a First Amendment rationale related to "the unique character of the District as the seat of national government and in the correlative need for unfettered access to federal departments and agencies for the entire national citizenry."[18]

Second, the court explained that "assert[ing] jurisdiction over nonresident defendants on the basis of their contact with the government would "threaten to convert the District of Columbia into a national judicial forum."[19]

A series of subsequent decisions by the D.C. Court of Appeals have at least created some confusion about whether the First Amendment is the only basis for the government contacts exception or whether there is an additional basis for it rooted in due process or other nonconstitutional bases for the exception.

As is often the case, the applicability of the exception in each case will depend on the facts and the section of the long-arm statute at issue. The first D.C. Court of Appeals panel decision suggesting an exclusive First Amendment basis for the government contacts exception, Rose v. Silver in 1978,[20] involved a different provision of the district's long-arm statute than the provision at issue in the Lockwood case.

The Lockwood case involved out-of-state activity/in-state harm and "plus factors" under D.C. Code Section 13-423(a)(4)). Rose involved the "doing business" provision under D.C. Code Section 13-423(a)(1), where the claim must arise out of the contacts with the forum.

The Rose court itself recognized that its decision did "not affect analyses, at one time characterized by reference to the government contacts principle, that would preclude long-arm jurisdiction" where a third party sues a defendant based on their unrelated government contacts.[21]

The scope of the government contacts exception remains unsettled. Several courts have considered government contacts as part of the jurisdictional analysis where the defendant is dealing with the government as a customer or just another counterparty in a business transaction.[22] This makes sense because those contacts do not implicate the First Amendment right to petition the government.

The due process concerns would also be less obvious. A business could reasonably foresee being sued in the capital if it does business with the federal government. Of course, whether those contacts satisfy the long-arm statute or withstand constitutional due process scrutiny will depend on the nature of the suit and facts of the case.

While a number of courts have applied the government contacts exception to nonresident defendants without deciding the issue,[23] recent cases related to the government contacts exception have more directly addressed whether nonresident aliens can invoke the government-contacts exception, particularly if the only basis for the exception is related to the First Amendment.[24]

Nonresident aliens generally cannot invoke First Amendment protections, but they do have due process rights that are routinely applied in personal jurisdiction analyses. As a result, if the government contacts exception has a due process rationale or other rationale not exclusively rooted in the First Amendment right to petition the government, nonresident aliens can invoke the government-contacts exception to personal jurisdiction to disregard its contacts with governmental agencies.

For example, the U.S. Court of Appeals for the Second Circuit has recognized other nonconstitutional policy considerations, in its 1991 decision in Klinghoffer v. SNC Achille Lauro,[25] that justify application of the government contacts exception, "such as the judiciary's reluctance to interfere with the smooth functioning of other governmental entities."

In the end, any exercise of personal jurisdiction must pass constitutional muster even if the long-arm statute is satisfied, which means a court could conceivably address due process as an underpinning of the government-contacts exception, and as part of the minimum contacts and fairness inquiry mandated by the due process clause.[26]

In the end, most defendants should be able to take advantage of the government-contacts exception and its due process underpinnings. Whether as a matter of state law or constitutional due process protection afforded to nonresident defendants, a defendant's government contacts should not form a significant part of the jurisdictional analysis when those contacts do not give rise to the claims at issue.

Nevertheless, the courts are still mulling over many of these issues. U.S. Circuit Judge David Tatel's recent dissent in Akhmetshin discusses the need for the D.C. Court of Appeals to decide whether:

the government contacts exception is limited to those who seek to influence federal legislation and policy through direct contacts with government officials, such as by visiting them in their offices, or whether it extends to those who likewise seek to influence federal policy but through such tried and true methods as press conferences, talk show appearances, or book promotional appearances, discussions and speeches at think tanks, and interviews in both print and audio-visual media.[27]

Judge Tatel further questioned whether the exception applies to foreign defendants, describing both questions about the scope of the government contacts exception as being of "extreme public importance."[28] As Judge Tatel explained:

[S]omeday the pandemic will end, and even though travel to Washington may never return to pre-pandemic levels, how the courts resolve the two issues in this case could significantly affect one of this city's major businesses: lobbying.[29]

Therefore, what counts as lobbying and what as simply doing business should be at the forefront of every business's assessment of its activities in the District of Columbia.

Practical Considerations

A nonresident defendant should have some comfort that its contacts with D.C. are unlikely to give rise to jurisdiction where those claims are unrelated to the claim and/or involve governmental contacts.

But the potential for long-arm jurisdiction under subsection (a)(4) should make any potential defendant doing lobbying or business in Washington pause for thought and internally assess the nature of its relationship with the seat of the U.S. government, and to be purposeful related to its connections to the District of Columbia. That assessment should include at least the following inquiries:

• Assess where your customers are located and where you could be said to be doing business with your customers in the District of Columbia.

• Consider whether you are lobbying or doing business with the government or quasi-governmental organizations, such as the International Finance Corporation or U.S. Department of State entities like the U.S. International Development Finance Corporation. Assess any loans or grant programs you may be participating in with or through the government.

• Review websites maintained by the business, any email marketing distribution lists and any marketing content to see whether it targets the District of Columbia.

• Limit travel to Washington for essential personnel necessary for the trip and document the itineraries for any trips. Assess whether the purpose of any trip is to generate business or lobby the government.

• Track trade association meetings and visits that occur in D.C.

• Consider having a designated person within the business who monitors lobbying, trips and contacts with the District of Columbia.

Carefully conducting each of these inquiries as part of an overall assessment will help ensure that a business does not inadvertently cause itself to be subject to suit in the District of Columbia.

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Brian Young is an associate and Mary Gately is a partner at DLA Piper.

Disclosure: The authors represented the Bank of Palestine in Elsalameen v. Bank of Palestine PLC.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] See Akhmetshin v. Browder , 983 F.3d 542 (D.C. Cir. 2020); Elsalameen v. Bank of Palestine PLC , 828 F. App'x 728 (D.C. Cir. 2020).

[2] Goodyear Dunlop Tires Operations SA v. Brown , 564 U.S. 915, 919 (2011).

[3] Id. at 924.

[4] Walden v. Fiore , 571 U.S. 277, 284 (2014).

[5] Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distributors Pty. Ltd ., 647 F.2d 200, 203 (D.C. Cir. 1981).

[6] D.C. Code § 13-423(a)(4).

[7] Crane v. Carr , 814 F.2d 758, 763 (D.C. Cir. 1987) (citations omitted).

[8] Id.

[9] See, e.g., Forras v. Rauf , 812 F.3d 1102 (D.C. Cir. 2016); McFarlane v. Esquire Magazine , 74 F.3d 1296 (D.C. Cir. 1996); Crane, 814 F.2d at 758; Moncrief v. Lexington Herald-Leader Co. , 807 F.2d 217 (D.C. Cir. 1986); Blumenthal v. Drudge , 992 F. Supp. 44 (D.D.C. 1998); Lewy v. S. Poverty Law Ctr. , 723 F. Supp. 2d 116 (D.D.C. 2010).

[10] See Lewy, 723 F. Supp. 2d at 116-22; Burman v. Phoenix Worldwide Indus., Inc. , 437 F. Supp. 2d 153-55 (D.D.C. 2006), Drudge, 992 F. Supp. at 56-57; Elsalameen v. Bank of Palestine, P.L.C., No. 16-1976 (ABJ), 2019 U.S. Dist. LEXIS 162137, at *6-17 (D.D.C. 2019).

[11] Bigelow v. Garrett , 299 F. Supp. 3d 34, 47 (D.D.C. 2018) (quoting United States v. Philip Morris Inc. , 116 F. Supp. 2d 116, 130 n.16 (D.D.C. 2000)).

[12] Cheyenne Arapaho Tribes of Oklahoma v. United States , 558 F.3d 592, 596 (D.C. Cir. 2009); GTE New Media Servs. Inc. v. BellSouth Corp ., 199 F.3d 1343, 1351 (D.C. Cir. 2000) (citing Crane, 814 F.2d at 763) (allowing inquiry into defendant's affiliations with D.C.).

[13] See, e.g., Tavoulareas v. Comnas , 720 F.2d 192, 194 (D.C. Cir. 1983).

[14] See Walden, 571 U.S. at 284-85.

[15] See Groop Internet Platform Inc. v. Psychotherapy Action Network , 2020 WL 353861, at *6 (D.D.C. 2020) ("[C]ourts in this District have flatly refused to consider trade association membership in the jurisdictional inquiry.").

[16] Naartex Consulting Corp. v. Watt , 722 F. 2d 779, 786-87 (D.C. Cir. 1983).

[17] 355 A.2d 808 (D.C. 1976). See also Fandel v. Arabian American Oil , 345 F.2d 87, 89 (D.C. Cir. 1965) ("Washington presents many business organizations with special needs for a continuous and ponderable physical presence there and the purpose of Congress was not to make that presence in every case a base for the assertion of personal jurisdiction.")

[18] 355 A.2d at 813.

[19] Id.

[20] Rose vs. Silver , 394 A.2d 1368, 1374 (D.C. 1978) ("we conclude that the First Amendment provides "the only principled basis for exempting a foreign defendant from suit in the District of Columbia.").

[21] Id. at 1374 n. 6. See also Lex-Tex Ltd. v. Skillman , 579 A.2d 244, 248-49 (D.C. 1990) (addressing whether the government contacts principle is based on something more than due process that arose out of the need to protect "entities against claims by third parties based on transactions unrelated to the entity's special government purpose in the District of Columbia."); Companhia Brasileira Carbureto De Calcio-CBCC v. Applied Industrial Materials Corp. , 35 A.3d 1127, 1133 (D.C. 2012) ("to the extent that other rationales, such as due process concerns, continue to underpin the doctrine, a fraud exception does not offend those principles either.").

[22] See, e.g., World-Wide Minerals, Ltd. v. Republic of Kazakhstan , 116 F. Supp. 2d 98, 105-06 (D.D.C. 2000); Dooley v. United Techs. Corp ., 786 F. Supp. 65, 74-76 (D.D.C. 1992); Ramamurti v. Rolls-Royce Ltd., 454 F. Supp. 407, 411-12 (D.D.C. 1978).

[23] See, e.g., Elsalameen, 2019 U.S. Dist. LEXIS 162137, at *14.

[24] See Akhmetshin, 983 F.3d at 550..

[25] Klinghoffer v. SNC Achille Lauro , 937 F. 2d 44, 51-52 (2d Cir 1991) (contacts arising out of PLO's permanent observer status in UN could not be used for jurisdictional purposes under New York long arm statute).

[26] See Lewy, 723 F. Supp. at 128.

[27] See Akhmetshin, 983 F.3d at 562 (Tatel, J., dissenting).

[28] Id. (internal quotation marks and citations omitted).

[29] Id.

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