WASHINGTON (CN) - The Supreme Court agreed Monday to identify the appropriate venue for professional gamblers to sue a federal agent who seized their money at an airport.
Drug Enforcement Administration Agent Anthony Walden confiscated $97,000 in winnings and gambling seed money from Gina Fiore and Keith Gipson, a pair of Las Vegas-based professional gamblers. The two had allegedly been making their way home from San Juan, Puerto Rico, in 2006 when suspicious DEA agents in San Juan alerted Walden to the cash.
They say agriculture scanners and other security measures had revealed nothing untoward, but Walden nonetheless met the gamblers at the gate during their layover in Atlanta, and, after a drug-sniffing dog pawed one of the bags once, he confiscated all the money on the pair and sent them on their way to Vegas without so much as cab fare.
Fiore and Gipson say they sent Walden receipts, tax documents and other proof that the money was legitimate, but Walden still falsified a probable cause affidavit and refused to return the money. The case eventually landed on the desk of Assistant U.S. Attorney Dahil Goss, who determined that Walden's affidavit had been "misleading" because it had omitted exculpatory evidence. Goss returned the money to Fiore and Gipson some seven months after Walden had seized it.
Fiore and Gipson then sued Walden and other unknown DEA agents in Nevada, claiming that they had violated their Fourth Amendment rights.
Arguing that he had no connection whatsoever to Las Vegas, Walden moved to dismiss the federal complaint for lack of personal jurisdiction and improper venue. Senior U.S. District Court Judge Edward Reed agreed, but a divided panel of the 9th Circuit reversed
in September 2011. The two-judge majority found that Walden's actions, particularly his alleged creation of probable cause, had been "aimed at Nevada."
"Although Fiore and Gipson sent Walden, from Nevada, documentation establishing the legitimate sources of their funds, he persisted in seeking forfeiture of their money," Judge Marsha Berzon wrote for the court. "Walden's intentional acts with regard to the false probable cause affidavit and the consequent delay in returning their money were expressly aimed at Nevada and so satisfy the requirements for personal jurisdiction.
The majority remanded the gamblers' search-and-seizure claim back to the District Court "for the exercise of discretion with regard to pendent personal jurisdiction."
Writing in dissent, Judge Sandra Ikuta argued that the gamblers had gotten "something from nothing," in contrast to the old adage that their trade is a "sure way of getting nothing from something."
"Although their complaint contains nothing that would provide a basis for asserting personal jurisdiction over the federal agent who allegedly violated their Fourth Amendment rights, the majority finds 'something' in the complaint: specifically, the 'false affidavit/forfeiture proceeding aspect'
of their case,' she wrote. (Emphasis in original.) "In fact, the District Court correctly determined that the complaint did not make a prima facie showing that the federal agent purposefully directed his actions to the forum state."
In August 2012, eight judges slammed
their 9th Circuit colleagues for refusing to grant a rehearing en banc.
"With the stroke of a pen, our circuit returns to a discredited era of specific personal jurisdiction, where foreseeability reigns supreme and purposeful direction is irrelevant," according to the dissent written by Judge M. Margaret McKeown.
Judge Diarmuid O'Scannlain wrote a separate dissent that lamented the panel majority's trampling of due process."
"It held that a Nevada court could exercise personal jurisdiction over a defendant for his allegedly tortious conduct in Georgia even though: (1) all of the actions forming the basis of the plaintiffs' sole legal claim were taken in and directed at Georgia, and (2) when the defendant took those actions he did not know that the plaintiffs had any relevant connection to Nevada," O'Scannlain wrote.
In allowing the panel ruling to stand, the 9th Circuit flouted circuit and Supreme Court precedent related to personal jurisdiction, O'Scannlain added, citing Burger King Corp. v. Rudzewicz
and Calder v. Jones
"The panel made the requirements of due process mean something wholly different in our circuit than they do in other circuits," he wrote. "We should have corrected this by taking this case en banc."
Judge McKeown said the majority's decision allows for a "virtually limitless expansion of personal jurisdiction" and regrettably returns the court to the "freeform foreseeability standard rejected by Burger King
"The due process clause requires that before a distant state exercises specific jurisdiction over a defendant, the defendant must purposefully direct activities at forum residents resulting in injuries arising out of or relating to those activities," she wrote. "Under the majority's construct, mere knowledge of the potential out-of-state plaintiff's residence, along with a wrongful act, confers specific personal jurisdiction. This runs afoul of both due process guarantees and Supreme Court precedent. Asserting personal jurisdiction over Walden broadens the specific jurisdiction test from one requiring targeted 'express aiming' to one where any attenuated foreign act with foreseeable effects upon a forum resident confers specific jurisdiction."
Judges Ronald Gould, Richard Tallman, Consuelo Callahan, Carlos Bea, Sandra Ikuta and N. Randy Smith joined McKeown's dissent. Tallman, Callahan, Bea and Ikuta joined O'Scannlain's opinion as well.