When Court Lacks Personal Jurisdiction, 28 USC § 1631 Permits Transfer: First Circuit | Practical Law

When Court Lacks Personal Jurisdiction, 28 USC § 1631 Permits Transfer: First Circuit | Practical Law

The US Court of Appeals for the First Circuit held in Federal Home Loan Bank of Boston v. Moody's Corp. that 28 U.S.C. § 1631 permits a court to transfer a case when it lacks personal jurisdiction.

When Court Lacks Personal Jurisdiction, 28 USC § 1631 Permits Transfer: First Circuit

by Practical Law Litigation
Published on 03 May 2016 • USA (National/Federal)
The US Court of Appeals for the First Circuit held in Federal Home Loan Bank of Boston v. Moody's Corp. that 28 U.S.C. § 1631 permits a court to transfer a case when it lacks personal jurisdiction.
On May 2, 2016, the US Court of Appeals for the First Circuit held in Federal Home Loan Bank of Boston v. Moody's Corp. that 28 U.S.C. § 1631 permits a court to transfer a case when it lacks personal jurisdiction (No. 14-2148 (1st Cir. May 2, 2016)).
Federal Home Loan Bank of Boston commenced a Massachusetts state court action against Moody's Corporation, Moody's Investors Service, Inc. (collectively, Moody's), and other ratings agency defendants, alleging that they provided falsely high ratings to mortgage-backed securities and thereby caused the plaintiff to make riskier investments than it had intended to make. After other defendants removed the action to Massachusetts federal district court, Moody's appeared solely to consent to the notice of removal. Then, Moody's filed a motion to dismiss for lack of personal jurisdiction. The district court rejected the motion, finding that Moody's had sufficient contacts with the state to subject it to general jurisdiction in Massachusetts courts.
After the Supreme Court issued its opinion in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), Moody's moved for reconsideration, asserting that the Supreme Court had limited the reach of a court's personal jurisdiction. Federal Home Loan Bank argued that if the district court found jurisdiction lacking after Daimler AG, it should sever the Bank's claims against Moody's from those against the other defendants and transfer them to the Southern District of New York under 28 U.S.C. § 1631. The district court:
  • Granted the motion to dismiss.
  • Rejected Federal Home Loan Bank's motion to sever and transfer its claims against Moody's.
  • Entered separate and final judgment in Moody's favor.
Under 28 U.S.C. § 1631, a court can transfer a case for "want of jurisdiction." The district court ruled that the statute permits transfer only when a court lacks subject matter jurisdiction, and therefore found that it could not be applied in this case, where personal jurisdiction was at issue. The Bank appealed.
The First Circuit disagreed with the district court, basing its holding on:
  • The text and legislative history of the statute.
  • The language in other sections of Title 28 indicating Congressional intent.
  • The holdings of several of its sister circuits, including the US Courts of Appeal for the Sixth, Eighth, Ninth, and Tenth Circuits, that also found that the statute applies to cases in which personal jurisdiction is lacking.
Therefore, the First Circuit vacated the dismissal of the claims against Moody's and remanded the case to the district court to consider whether transfer to the Southern District of New York would be in the interest of justice.