Seventh Circuit Says Antitrust Plaintiffs Can’t Mix And Match Venue Rules To Sue Anywhere In The Nation

The U.S. Court of Appeals for the Seventh Circuit has rejected a broad interpretation of venue rules that would subject corporations to antitrust suit in any district court in the nation.

A three-judge panel has affirmed the dismissal of the antitrust complaint in KM Enterprises Inc. v. Global Traffic Technologies Inc. et al. on the ground that the plaintiff, Illinois-based KM Enterprises Inc., could not sue Global Traffic Technologies Inc. of Minnesota in the District of Illinois, where KM is located, because Global Traffic’s ties to Illinois are insignificant.  KM alleges that Global Traffic violated federal antitrust laws by improperly interfering with competitive bidding on public contracts for systems that allow ambulances to bypass normal traffic light patterns.

The Seventh Circuit ruled that plaintiffs must follow the federal antitrust venue rules provided in the Clayton Act, rejecting KM’s argument that the interplay of the general principles of federal personal jurisdiction and venue and the Clayton Act’s specific provisions permits federal antitrust plaintiffs to sue defendants in any U.S. district court.

Several federal courts of appeals have wrestled in recent years with how to reconcile general principles of personal jurisdiction and venue with the different standards for personal jurisdiction and venue set forth for antitrust actions in the Clayton Act.  While the existence of personal jurisdiction determines whether a court can exercise power over a defendant, federal venue rules determine in which specific district court a suit should be heard.

Unlike the more limited general federal principles of personal jurisdiction, the Clayton Act provides for nationwide personal jurisdiction of corporate antitrust defendants.  The Clayton Act’s venue provisions, however, provide for venue only in districts in which the corporation is an inhabitant, is found or transacts business.

KM argued for what the Seventh Circuit called a “mix and match” approach, relying on the Clayton Act to establish personal jurisdiction in a district of the plaintiff’s choosing, and then relying on general federal principles of venue, which provide for venue in any district court that has personal jurisdiction of the defendant.

This favorable interpretation of venue rules for antitrust plaintiffs has been adopted by the Third and Ninth Circuit Courts of Appeals.  The Second and D.C. Circuit Courts of Appeals, however, have rejected this approach and held that when the general federal principles and the Clayton Act’s provisions governing personal jurisdiction and venue are read together, it is clear that an antitrust plaintiff that relies on the Clayton Act to establish personal jurisdiction must also satisfy the Clayton Act’s venue rules.

The Seventh Circuit sided with the Second and D.C. Circuits and held that the various personal jurisdiction and venue rules must be read together, requiring antitrust plaintiffs to satisfy the Clayton Act’s venue rules.

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