Seventh Circuit: Clayton Act's Section 12 Venue and Service of Process Provisions Must Be Read Together | Practical Law

Seventh Circuit: Clayton Act's Section 12 Venue and Service of Process Provisions Must Be Read Together | Practical Law

In KM Enterprises, Inc. v. Global Traffic Technologies, Inc., the US Court of Appeals for the Seventh Circuit joined the US Courts of Appeals for the DC and Second Circuits in holding that the service of process and venue provisions in Section 12 of the Clayton Act must be read together. A party that seeks to avail itself of the service of process provision in Section 12 must also satisfy the venue provision in that Section.

Seventh Circuit: Clayton Act's Section 12 Venue and Service of Process Provisions Must Be Read Together

by Practical Law Litigation
Published on 07 Aug 2013 • USA (National/Federal)
In KM Enterprises, Inc. v. Global Traffic Technologies, Inc., the US Court of Appeals for the Seventh Circuit joined the US Courts of Appeals for the DC and Second Circuits in holding that the service of process and venue provisions in Section 12 of the Clayton Act must be read together. A party that seeks to avail itself of the service of process provision in Section 12 must also satisfy the venue provision in that Section.
On August 2, 2013, the US Court of Appeals for the Seventh Circuit issued an opinion in KM Enterprises, Inc. v. Global Traffic Technologies, Inc., joining the US Courts of Appeals for the DC and Second Circuits in holding that the service of process and venue provisions in Section 12 of the Clayton Act must be read together. A party that seeks to avail itself of the service of process provision in Section 12 also must satisfy the venue provision in that section.
Illinois corporation KM Enterprises, Inc. (KM) sued Global Traffic Technologies, Inc. (GTT) and its subsidiary in the Southern District of Illinois, alleging violations of the Sherman and Clayton Acts and related state laws. GTT is incorporated in Delaware and headquartered in Minnesota. KM and GTT are competitors in the market for devices that permit emergency vehicles to send signals that preempt ordinary traffic lights. KM claimed that GTT violated federal antitrust laws by improperly interfering with competitive bidding on public contracts and engaging in monopolistic activity similar to illegal tying.
The district court dismissed the suit for improper venue, holding that GTT's contacts with the district could not support venue under 28 U.S.C. § 1391 because GTT did not reside in the district and none of the events at issue occurred there. KM appealed, arguing that venue is proper under the general venue statute, Section 1391, and also under Section 12 of the Clayton Act, which provides special rules for venue and service of process in antitrust actions against corporations.
Before addressing the merits of the suit, the Seventh Circuit had to decide whether a plaintiff who takes advantage of Section 12's service of process provision, which provides for nationwide service of process, also must meet the standard for proper venue set out in Section 12. Alternatively, it considered whether a plaintiff could use Section 12 for service of process but rely on Section 1391 for venue. The Seventh Circuit considered two approaches:
  • The "independent" approach applied by the US Courts of Appeals for the Third and Ninth Circuits. Under this approach, the provisions of Section 12 may be decoupled. That is, a plaintiff may rely on nationwide service under Section 12 without also satisfying Section 12's venue provision.
  • The integrated approach applied by the DC and Second Circuits. Under this approach, Section 12's venue and service of process provisions must be read together.
The Seventh Circuit joined the DC and Second Circuits in holding that the service of process and venue provisions in Section 12 must be read together. Specifically, the Seventh Circuit held that a party can avail itself of the nationwide service of process permitted under Section 12 only if it also satisfies the venue provision of Section 12. If, however, the party seeks to establish venue exclusively through Section 1391, it must establish personal jurisdiction in another way.
The Seventh Circuit then turned to the merits of the case and held that the Southern District of Illinois is not a proper venue under either Section 12 or Section 1391.
Court documents: