# Opposition Brief — Stauffacher v. Bennett

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1992
- **Citation:** 506 U.S. 1034

## Text

J2='712

No. 92-##2

In The

Supreme Court of the United States
October Term, 1992

¢

DAVID G. STAUFFACHER and JOHN P. STAUFFACHER,

Petitioners,

JOHN A. BENNETT and FIRST HERITAGE
SAVINGS CREDIT UNION,

Respondents.

*

On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Seventh Circuit

¢

BRIEF IN RESPONSE TO PETITION FOR
WRIT OF CERTIORARI

*

James R. Troupis

(Counsel of Record)
STEVEN P. MEANS

MICHAEL, Best & FRIEDRICH
Suite 900

One South Pinckney Street
P.O. Box 1806

Madison, WI 53701-1806
(608) 257-3501

COCKLE LAW BRIEF PRINTING CO), (800) 225.6964
OR CALL COLLECT (402) 342-2831

a

QUESTIONS PRESENTED FOR REVIEW

Respondents First Heritage Savings Credit Union
(“First Heritage”) and John Alexander Bennett (“Ben-
nett”) object to both the form and substance of the “Ques-
tions Presented” in pp. i-vi of the Petition for Writ of
Certiorari to the United States Court of Appeals for the
Seventh Circuit (“Petition”) and believe the issue should
be stated as follows:

Did the Seventh Circuit err in concluding that
the United States District Court for the Western
District of Wisconsin could not exercise personal
jurisdiction over First Heritage and Bennett?

PARTIES

Respondents First Heritage and Bennett do not object

to the “List of Parties” at p. vii of the Petition.

ili

TABLE OF CONTENTS

Page
JURISDICTIONAL STATEMENT ................... 1
os 8 88s I 1
STATEMENT OF THE CASE....................... 1
SUMMARY OF ARGUMENT....................... 4
eee sea k ba e'c.bis a a0sndvansrcas 4
I ee 5

I. THE SEVENTH CIRCUIT DECIDED THE CASE
UNDER STATE LAW - NOT DUE PROCESS.. 6

Il. DUE PROCESS WOULD NOT ALLOW THE
DISTRICT COURT TO EXERCISE PERSONAL
ign 60 vikn ki 44s ecceseedecsacace 7

A. Neither First Heritage Nor Bennett Had
Minimum Contacts With Wisconsin Suffi-
cient To Meet Either Constitutional Due
a eee 8

B. Stauffachers’ Hypothetical Arguments Rely
On Unestablished Factual Assertions And
Must Be Rejected As A Basis For Jurisdic-
oo er een 11

1. First Heritage and Bennett did not Con-
sent to Jurisdiction............... eee a |

2. Stauffachers Did Not Establish A Fac-
tual Basis For a Conspiracy ........... 14

Ill. FEDERAL SECURITIES LAW DOES NOT PRO-
VIDE A STATUTORY BASIS FOR PERSONAL
i655 05 50% os db ae cb awaceses 17

A. RICO Jurisdiction is Determined Under
State Law Which in Wisconsin Would Not
Bring Bennett or First Heritage Within the
RE NE gg cc cree eccuccce 17

B. Personal Jurisdiction is not Supported by
the Federal Securities Law................ 18

ae hs os on ckee iss vccscceces 19

iv

TABLE OF AUTHORITIES

Page
CASES
Bishop v. Wood, 426 U.S. 341 (1976)................5-: 6
Branti v. Finkel, 445 U.S. 507 (1980) ................. 13
Brink’s Mat Ltd. v. Diamond, 906 F.2d 1519 (11th
Oe | Peer rey rrr rT ree rr yr Try ery rer 17
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)
Pe Per eee fee Tere Tere TT ory TTT ee 7,9, 14
Chrysler Corp. v. Fedders Corp., 643 F.2d 1229 (6th
Cir. 1981), cert. denied 454 U.S. 893 (1981)......... 16
First Chicago Int'l v. United Exchange Co., 836 F.2d
OR i a ME oni an oo oo wv cnncaata so vnns 16
Giotis v. Apollo of the Ozarks, Inc., 800 F.2d 660 (7th
Cir. 1986), cert. denied, 479 U.S. 1092 (1987) ........ 5
Helicopteros Nacionales de Columbia, S.A. v. Hall, 466
oh eg Se eee ee Perr pass be ae ere 8
International Shoe Co. v. Washington, 326 U.S. 310
LF eer ree re ere 7,9
Lisak v. Mercantile Bancorp, Inc., 834 F.2d 668 (7th
Cir. 1987), cert. denied 485 U.S. 1007 (1988)........ 17

Securities & Exchange Comm'n v. International Swiss
Investments Corp., 895 F.2d 1272 (9th Cir. 1990).... 18

Shafer v.. Tietiner, G55 UD. 106 (1977)... 22s s cs ecwcass )
Turnock v. Cope, 816 F.2d 332 (7th Cir. 1987).......... 8

World-Wide Volkswagon Corp. v. Woodson, 444 US.
ee SN kee V ons Wn k WRU Urea sea bass aie eos ae

rece eel

TABLE OF AUTHORITIES - Continued

Page
STATUTES
Reh res Ae Ps Aw oan sw kha vand as eee eau ea ee 18
ee | | PP re ee ee 17
a ee rr rr rea 1
Pee Ce SIRS Vk isywedesakaceus Un exuesn s olen 5
eG re re re ae 3
Wee, es: Se ID a cock awk sun e aud heaneddana beau 3

OTHER AUTHORITIES

POP eee rere eee errs ee ree er ms ete: 6
SR OD is vince cance hacn en ene eee 1

JURISDICTIONAL STATEMENT

Respondents First Heritage and Bennett do not object
to the jurisdiction of this Court under 28 U.S.C. § 1254(1),
but do not accept the characterization of the jurisdiction
of the lower courts as set forth at pp. 2-6 of the Petition.

+

STATUTES INVOLVED

For purposes of responding to the Petition, First Her-
itage and Bennett do not dispute that the statutes listed at
p. 7 of the Petition relate to the arguments set forth in the
Petition. First Heritage and Bennett do not, however,
concede the applicability of these statutes to the issues
properly before this Court or accept the characterizations
of those statutes in the Petition.

6

STATEMENT OF THE CASE

First Heritage and Bennett object to the Statement of
the Case at pp. 7-28 of the Petition on grounds that it is
not “concise” as required by Sup. Ct. R. 14(g) and con-
tains “facts” that are not supported by the record and
which are contrary to the facts found by the courts below.
First Heritage and Bennett further object that the State-
ment of the Case in the Petition contains pages of mate-
rial that are not relevant to the questions of personal
jurisdiction that are at issue. The following is a more
concise and accurate statement of the case:

Petitioners David G. Stauffacher and John P.
Stauffacher (“Stauffachers”) filed an action in the United

States District Court for the Western District of Wisconsin
to recover damages allegedly suffered as the result of
their investment in two Canadian joint ventures involv-
ing gold-mine leases. (Petition at 7-8) Among the defen-
dants named were First Heritage, a Canadian credit
union with a branch facility in Hope, British Columbia,
Canada and Bennett, the branch manager of First Heri-
tage’s Hope branch. (Id.) The Stauffachers’ investment
involved two joint venture agreements with Donald
Dolan in which some of the invested money was depos-
ited at First Heritage. (Id. at 8-9) As part of a trust
arrangement, Bennett agreed to hold title to the gold-
mine leases as a trustee. (Jd. at 15, 24-25)

Neither First Heritage, nor Bennett, conducted any
activity within the State of Wisconsin. (Id. at 3a-4a,
16a-17a) Bennett made one or two phone calls into Wis-
consin to speak with the Stauffachers, but neither call
involved solicitation. (Id.) Bennett may also have mailed
documents to Stauffachers in Wisconsin but no such doc-
uments involved solicitation. (Id.)

Bennett had no other contacts with Wisconsin or the
United States. (/d.; id. at 9a) First Heritage had no other
contact except receipt of deposits from several State of
Washington residents, just over the Canadian border. (Id.
at 9a) The number of depositors and the amount depos-
ited was not set forth in the record. ((d.) / ° er considering
affidavits and proofs submitted on thie iss »2, the United
States District Court for the Western District of Wisconsin
dismissed the Stauffachers’ action against 3ennett and
First Heritage because of a lack of personal jurisdiction
over them. (Id. at 11a-32a) In dismissing this action, the
District Court made specific findings of fact, resolving all

inferences and disputes of fact in favor of the
Stauffachers, and concluded that it could not exercise
personal jurisdiction over these defendants. (Id. at
13a-18a) On appeal, the Seventh Circuit affirmed the Dis-
trict Court. (Id. at 1a-10a)

The Seventh Circuit first set forth the relevant facts
and then discussed whether Wisconsin’s long-arm statute
would allow personal jurisdiction to be exercised. (Id. at
la-2a) It concluded that the contacts with Wisconsin did
not satisfy the requirement of “substantial and not iso-
lated activities within this state” as required by Wis. Stat.
§ 801.05(1)(d). (Petition at 2a) It then concluded that there
had been no solicitation within Wisconsin as required by
Wis. Stat. § 801.05(4)(a). (Petition at 4a) Finally, it stated,
“there are other provisions of the long-arm statute but
none remotely applicable.” (Id. at 4a)

The Seventh Circuit followed its holding with a rejec-
tion of various arguments made by Stauffachers to
enhance the extent of First Heritage’s and Bennett’s con-
tacts with Wisconsin. The court held that a “consent to
jurisdiction” clause was inapplicable because First Heri-
tage and Bennett were not parties to the agreement which
contained it. (Id. at 5a) It also rejected Stauffachers argu-
ment that the contacts of certain alleged coconspirators
could be attributed to First Heritage and Bennett, noting
that no conspiracy had been established and that, if it
had, there were no allegations that anyone with contact
with Wisconsin was an agent of the conspiracy. (Id. at
7a-8a)

Finally, the court concluded that the international
service provisions of federal securities law would not

authorize personal jurisdiction because the “totality of
First Heritage’s U.S. contacts is too scarce to bring it
within the grasp of the U.S. courts”. (Jd. at 9a)

¢

SUMMARY OF ARGUMENT

The Petition should be denied because it seeks
review of state law issues resolved by the lower courts
and because it argues legal issues based on a set of facts
not supported by the record or found by the lower courts.
Certiorari is not the proper vehicle for review of either
state law or factual issues.

INTRODUCTION

Respondents Bennett and First Heritage, by their
attorneys Michael, Best & Friedrich by James R. Troupis
and Steven P. Means, submit the following arguments
and authorities in response to the Petition submitted by
Stauffachers.

Before the Seventh Circuit, Stauffachers stated the
relevant issue as follows:

Does the trial court in the Western District of
Wisconsin have personal jurisdiction under the
factual circumstances of this case, over Cana-
dian Defendants First Heritage Savings Credit
Union and John Alexander Bennett?

(Brief of Plaintiffs-Appellants, at 1) In their Petition, this
single, straight-forward issue has ballooned to a six page
statement of issues with nearly twenty subparts. (Petition

at i-vi) However, distilled to their essence, the multiple
issues raised by Stauffachers come down to a garden-
variety question of personal jurisdiction over foreign
defendants.

As with any jurisdictional issue a two level analysis
is required. Giotis v. Apollo of the Ozarks, Inc., 800 F.2d 660,
665 (7th Cir. 1986), cert. denied, 479 U.S. 1092 (1987). The
first level is whether there is a statutory basis for jurisdic-
tion. Here, Stauffachers have relied on the Wisconsin
long-arm statute, Wis. Stat. § 801.05, and Federal Securi-
ties law to meet the first test. Assuming one meets the
first level requirement, the second level of analysis is a
determination whether due process will allow jurisdic-
tion to be exercised in a particular case. Both the District
Court and the Seventh Circuit Court of Appeals rejected
the Stauffachers’ jurisdictional arguments and this Brief
in Response to Petition for Writ of Certiorari
(“Response”) discusses the basis for that conclusion.

+

DISCUSSION

The Petition is a paradigm of confusion. As a result,
in responding to the Petition, First Heritage and Bennett
have attempted to identify the issues being raised and
respond to them accordingly, following the outline of the
Seventh Circuit’s opinion.

The organizational confusion arises because
Stauffachers do not address the legal issue of personal
jurisdiction under the facts as found by both the District
Court and Seventh Circuit. Rather, Stauffachers continue

to argue a different version of the facts - a version which
has already been rejected by the two courts.

I. THE SEVENTH CIRCUIT DECIDED THE CASE
UNDER STAT. LAW - NOT DUE PROCESS

Stauffacher’s ““tition argues this case as if it
involved issues of duc process. However, the due process
issue was not addressed by the Seventh Circuit with
respect to the state law claims because no statutory (long-
arm) basis for jurisdiction was found. (Petition at 2a)
Because both the District and Appellate courts concluded
that the Wisconsin long-arm statute did not allow per-
sonal jurisdiction, they did not address the due process
issues, except by analogy.

The rules of this Court limit certiorari review to cases
where there are “special and important reasons therefor.”
Sup. Ct. R. 10. Here, the issue of the reach of Wisconsin’s
long-arm statute is a pure question of state law. See Bishop
v. Wood, 426 U.S. 341, 346 (1976) (“[T]his Court has
accepted the interpretation of state law in which the
District Court and the Court of Appeals have concurred
even if an examination of the state-law issue without
such guidance might have justified a different conclu-
sion.”). In Bishop, this court recognized that when both a
United States District Court familiar with a state’s laws
and a United States Court of Appeals agree on an inter-
pretation of state law, independent examination of the
state law issue by the Supreme Court is foreclosed.
Because the dismissal below was affirmed on
Stauffacher’s failure to demonstrate Wisconsin’s long-
arm jurisdiction, certiorari should be denied.

Il. DUE PROCESS WOULD NOT ALLOW THE DIS-
TRICT COURT TO EXERCISE PERSONAL JURIS-
DICTION.

Although the Seventh Circuit, for the most part,
steered clear of the due process issue, Stauffachers now
make due process a focus of the Petition.

Due process protects a party from being sued in a
forum unless the party has sufficient, meaningful “con-
tacts, ties, or relations” with that forum. Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (citing Interna-
tional Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)). A
defendant must have certain minimum contacts with the
forum such that maintenance of the suit does not offend
traditional notions of fair play and substantial justice.
International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945). A defendant’s conduct within the forum state
should be such that he could reasonably anticipate being
hailed into court there. World-Wide Volkswagon Corp. v.
Woodson, 444 U.S. 286, 297 (1980).

Although the Petition suggests that this long-
accepted minimum contacts analysis should be aban-
doned in favor of an expanded construction of due pro-
cess (Petition at 29), that suggestion is never followed up
and the arguments made, in fact, are based almost exclu-
sively on the continuing viability of the minimum con-
tacts standard. Thus, it is the minimum contacts standard
as it has evolved through this Court’s precedents that
should control the issues in this case.

A. Neither First Heritage Nor Bennett Had Mini-
mum Contacts With Wisconsin Sufficient To
Meet Either Constitutional Due Process Or
State Law.

The Memorandum and Order of the District Court
makes extensive and specific findings of fact based on the
written proofs it received on the personal jurisdiction
issue. (Petition at 13a-18a) Because the court received
proofs, it was not obligated to rely on the allegations of
the complaint where those allegations were contradicted.
Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Of
course, the “facts” under which the Seventh Circuit
decided the jurisdictional issue were the same as found
by the District Court, although the Seventh Circuit also
responded to some of the additional facts raised by
Stauffachers.!

The case at bar involves a question of “special”
rather than “general” jurisdiction, as the contacts urged
by the Petition relate directly to the cause of action. See
Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S.
408, 414 (1984). Therefore, the jurisdictional issue turns

1 It does not appear that Stauffachers ever appealed from
the District Court’s findings of fact. The notice of appeal refer-
enced only the portion of final judgment dismissing First Heri-
tage and Bennett and the Appellant’s Brief referred to whether
jurisdiction existed “under the factual circumstances of this
case.” The Statement of Facts in the Appellant’s Brief merely
repeated the fact arguments made to the District Court without
addressing the finding that those arguments were rejected.
Moreover, Stauffachers argued that the Seventh Circuit had de
novo review on appeal - a standard that is not applicable to
findings of fact.

on the relationship of defendants Bennett and First Heri-
tage with Wisconsin and the litigation. Id. (citing Shaffer v.
Heitner, 433 U.S. 186 (1977)). In the guiding precedent,
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), a
Florida franchisor sued a Michigan franchisee, in Florida,
for breach of the franchise agreement. Id. at 464. In
upholding the exercise of personal jurisdiction, this Court
clarified and restated the guidelines for resolving issues
of personal jurisdiction over nonresident defendants:

[T]he constitutional touchstone remains whether
the defendant purposefully established “mini-
mum contacts” in the forum State. International
Shoe Co. v Washington, supra, at 316, 90 L. Ed. 95,
66 S. Ct. 154, 161 ALR 1057. Although it has
been argued that foreseeability of causing injury
in another State should be sufficient to establish
such contacts there when policy considerations
so require, the Court has consistently held that
this kind of foreseeability is not a “sufficient
benchmark” for exercising personal jurisdiction.
World-Wide Volkswagen Corp. v Woodson, 444 US,
at 295, 62 L. Ed. 2d 490, 100 S. Ct. 559. Instead,
“the foreseeability that is critical to due process
analysis .. . is that the defendant’s conduct and
connection with the forum State are such that he
should reasonably anticipate being haled into
court there.” Id., at 297, 62 L. Ed. 2d 490, 100 S
Ct 559.

Id. at 474. In so holding, this Court emphasized that it is
the defendant’s contacts with the forum that are relevant
— not the plaintiff’s. Id. at 474-75.

The facts of this case, as stated by the Seventh Cir-
cuit, clearly take it beyond the Burger King jurisdictional
parameters. The only “contacts” with Wisconsin involved

10

the mailing of documents and one or two phone calls,
none of which involved any solicitation. (Petition at
3a-4a) These “contacts” were characterized by the court
as “occasional, unspecified and seemingly trivial.” (Id. at
3a) The District Court found likewise:

It is undisputed that First Heritage has no
offices or employees in Wisconsin. It is also
undisputed that Bennett has never been in the
State of Wisconsin. The transaction giving rise to
the dispute involves investments in mining ven-
tures in Canada. The situs of the property that is
the subject of the dispute is in Canada. Bennett’s
role in the venture was as trustee. His duties as
trustee were to be performed in Canada. . . . The
trust/escrow agreement and a subsequent docu-
ment entitled the Lease Record Title Transfer
were executed by Bennett in Canada, although
D. Stauffacher did execute his portion of the
lease title transfer document in Madison, Wis-
consin.

. . . Bennett placed one phone call to the
plaintiff, D. Stauffacher. (There is some indica-
tion that Bennett may have placed two calls but
the substance of only one call is known.) The
substance of the call was Bennett’s request that
he be allowed to withdraw from the trust
arrangement. Bennett mailed or caused to be
sent various documents to the plaintiffs.

(Id. at 16a-18a)

Clearly, Due Pracess would have compelled both the
District Court and the Seventh Circuit to dismiss this case

on the facts found. Stauffachers cannot - and don’t -
dispute this. Their tact is to argue new and different facts

11

and to argue the legal issue of personal jurisdiction only
under their alternate scenario.

B. Stauffachers’ Hypothetical Arguments Rely On
Unestablished Factual Assertions, And Must Be
Rejected As A Basis For Jurisdiction.

The issues argued in the Petition all involve “facts”
that fall outside the findings of the two lower courts.
Review of these issues by writ of certiorari would be
improper because the “facts” argued by Stauffachers are
not supported by the record. Rather, they are speculative
arguments and characterizations that were not supported
by proofs submitted to the District Court and are clearly
refuted by the record below.”

1. First Heritage and Bennett did not Consent
to Jurisdiction.

The Petition argues that the Seventh Circuit should
have upheld personal jurisdiction based upon a “consent
to jurisdiction” clause in a contract. The Seventh Circuit,
however, expressly noted that “First Heritage and Ben-
nett are not parties” to this contract. (Petition at 5a)
Stauffachers do not dispute this. Rather, they argue that
the consent to jurisdiction clause was later “ratified” or

2 In the interest of clarity and brevity, Bennett and First
Heritage will only discuss some of the main issues in detail. This
should not be construed as a waiver of any other objections to
misstatements and misunderstandings in the Petition for Writ of
Certiorari.

12

“approved” by Bennett and First Heritage and that Ben-
nett and First Heritage are therefore bound by it.

This ratification argument is based on a series of
written contracts. Stauffachers invested in two separate
gold-mine mineral leases with Don Dolan (“Dolan”).
There was a separate joint venture agreement for each
lease. (Complaint, Exh. 1,3) The first such agreement
allegedly contained a consent to jurisdiction clause. (Id.,
Exh. 1) Bennett and First Heritage were not parties to
these agreements. (/d., Exh. 1,3) A separate trust agree-
ment was then entered into in British Columbia between
Dolan, Stauffachers and defendant Bennett under which
Bennett was to hold title to the first mineral lease as
trustee. (Id., Exh. 2) No consent to jurisdiction clause
appeared in this first trust agreement. (/d.)

The second joint venture agreement was to be supple-
mented by the terms of the first joint venture agreement and
further stated that, at Bennett’s election, it could serve as the
trust agreement for the second mineral lease. (Id., Exh. 3, {
4D) Instead, Bennett became a party to a “lease record title
transfer agreement” (/d., Exh. 4), under which he agreed to
hold title to the second mineral lease as Trustee. Again, there
was no consent to jurisdiction clause in any of these docu-
ments.

Both the District Court and the Seventh Circuit Court
of Appeals rejected the notion that these contracts
resulted in a waiver of Bennett’s and First Heritage’s
personal jurisdiction defense. The District Court stated:

Concerning the choice of law provision
found in the first investment contract the Court
is of the opinion that Bennett and First Heritage
are not bound by that provision because they

13

were not parties to that agreement and accord-
ingly could not have “availed themselves of the
law of the forum.”

(Petition at 26a) The Seventh Circuit likewise stated:

For the same reason the Stauffachers cannot
prevail by reference to the forum selection
clause in the [first] investment contract. It is true
that the provision is broadly worded. . . . And
such clauses are-enforceable. But the only
remaining defendants, First Heritage and Ben-
nett, are not parties to the agreement.

(Id. at 4a-5a) (citations omitted). Despite the dual rejec-
tion of this bizarre theory, Stauffachers persist in arguing
that there was a consent to jurisdiction clause applicable
to Bennett and First Heritage.

To reach the legal issue of whether such ratification
will create jurisdiction, this Court must first reverse the
lower courts’ factual conclusion that Bennett and First
Heritage did not ratify or approve the consent to jurisdic-
tion clause and then decide if such ratification was suffi-
cient to create jurisdiction under state law (an issue not
addressed below). However, this Court has made it clear
that a writ of certiorari will not be issued to review
factual determinations. See Branti v. Finkel, 445 U.S. 507,
512 n. 6 (1980) (absent the most exceptional circum-
stances, factual determinations in which the District
Court and Court of Appeals have concurred will not be
reviewed by the Supreme Court). In addition, as noted
above, the Court will not accept a certiorari request to
rule on state law issues. Finally, even if this Court were
inclined to review the factual determinations of the two

14

lower courts, the documents themselves refute
Stauffachers’ claim of ratification or approval.

Assuming that ratification of the consent to jurisdic-
tion clause was found, that ratification could carry no
more weight than an actual agreement to that effect. In
Burger King, this court expressly addressed the signifi-
cance of a similar provision addressing choice of law and
concluded that it was only one of many factors to con-
sider in determining the jurisdictional issue. 471 U.S. at
482. Thus, the issue is not one that needs to be addressed
by this Court on certiorari.

2. Stauffachers Did Not Establish a Factual
Basis For a Conspiracy.

As a backstop argument, the Stauffachers argue that
if First Heritage and Bennett do not themselves have
sufficient contacts with Wisconsin, the alleged acts of
agents and co-conspirators may be attributed to them in
order to support the exercise of personal jurisdiction.
Stauffachers have even alleged that their own acts can be
attributed to First Heritage and Bennett:

The requirement of a defendant’s “purpose-
ful availment of the benefits and protections of
the laws of the forum state”, Burger King v.
Rudzewicz, 471 U.S. 462, 475 (1985) can also be
satisfied by the activities of plaintiff within the
state, if the activities are subsequently ratified
by the defendant and do, in fact, benefit the
enterprise and conspiracy to which defendants
are alleged to belong.

(Petition at 35) Again, the Petition is woefully inadequate.

15

The question of whether an agent’s or co-conspira-
tor’s acts may be attributed to a defendant for purposes
of creating jurisdiction is only relevant if an agency rela-
tionship or conspiracy has been established. The Seventh
Circuit concluded that, under the law of Wisconsin,
Stauffachers have not done this. It stated:

All of this leaves out of account, however,
the possibility that [co-defendant] Livesey
might be deemed an agent of First Heritage; and
we may assume without having to decide that
his two visits to Wisconsin on promotional mis-
sions related to the gold mining venture were
enough to satisfy the requirement of “solicita-
tion” in the subsection just quoted. The problem
is that although the plaintiffs continue to argue
that Livesey was First Heritage’s agent, he was
Dolan’s agent. His activities may have sufficed
to make Dolan suable in Wisconsin — though the
question is academic, since Dolan brought him-
self directly within that jurisdiction by his visits
— but Dolan is not First Heritage.

(Petition at 4a)

In addition to arguing that Livesey was the agent of
First Heritage and Bennett, Stauffachers attempted to
argue that Livesey was part of a conspiracy or RICO
enterprise with Bennett and First Heritage. The Seventh
Circuit Court of Appeals refused to consider this issue
because it had not been raised in the District Court:

The problem goes deeper than a failure to make
a preliminary evidentiary showing. While alleg-
ing a broad conspiracy, the Stauffachers have
never claimed that Livesey was an agent of the
conspiracy. . . . When one of the judges sug-
gested this theory to the plaintiff’s counsel at

16

argument he naturally embraced it with alacrity
and even asked for permission to file a supple-
mentary brief elaborating it. But the time for
that was in the district court, and had passed.

(Id. at 8a). As the Seventh Circuit concluded:

The cases are unanimous that a bare allega-
tion of a conspiracy between the defendant and
a person within the personal jurisdiction of the
court is not enough.

... [T]he plaintiffs have made no attempts
to show that there was a conspiracy.

(Id. at 7a, 8a)

Moreover, the “split of authority” relied on by
Stauffachers involves the question of what is needed to
allege a conspiracy in other contexts, such as when a
prosecutor attempts to place a co-conspirator’s statement
into evidence. Even those cases agree that a bare allega-
tion of conspiracy without either some factual support or
some detail as to the basis for the allegation of conspiracy
is insufficient. See, e.g., First Chicago Int'l v. United
Exchange Co., 836 F.2d 1375, 1378 (D.C. Cir. 1988) (bare
allegation of conspiracy or agent is insufficient to estab-
lish personal jurisdiction); Chrysler Corp. v. Fedders Corp.,
643 F.2d 1229, 1237 (6th Cir.), cert denied, 454 U.S. 893
(1981) (“totally unsupported allegations of conspiracy
cannot constitute sufficient contacts . . . to justify an
exercise of personal jurisdiction. .. . ”).

At some point, this Court may choose to address the
issue of what is needed to support a conspiracy allegation
for jurisdictional purposes. This case, however, is not the

17

proper vehicle, as nothing was offered in the courts
below to supplement the allegations.?

Ill. FEDERAL SECURITIES LAW DOES NOT PRO-
VIDE A STATUTORY BASIS FOR PERSONAL
JURISDICTION.

In addition to alleging that Wisconsin law authorizes
personal jurisdiction to be exercised over these defen-
dants, Stauffachers (at least on appeal) have argued that
federal racketeering and securities law also provide statu-
tory grounds for the exercise of personal jurisdiction. The
Seventh Circuit also rejected these arguments.

'

A. RICO Jurisdiction is Determined Under State
Law Which in Wisconsin Would Not Bring Ben-
nett or First Heritage Within the Court’s Juris-
diction.

_ Although RICO authorizes nationwide service of pro-
cess, it does not authorize service outside of the United
States. 18 U.S.C. § 1965(b); Lisak v. Mercantile Bancorp, Inc.,
834 F.2d 668, 671-73 (7th Cir. 1987), cert. denied, 485 U.S.
1007 (1988). For international service of process, such as
that involved in the present case, a RICO plaintiff must
rely on a state’s long-arm statute. Brink’s Mat Ltd. v.
Diamond, 906 F.2d 1519, 1521-23 (11th Cir. 1990). Because

3 Bennett and First Heritage do not concede that
Stauffachers sufficiently alleged a conspiracy of RICO enter-
prise that would include them.

ele

18

review of the exercise of personal jurisdiction under Wis-
consin law has been discussed above, the court is referred
to Sections I and II of this brief.

B. Personal Jurisdiction is not Supported by the
Federal Securities Law.

On appeal to the Seventh Circuit, Stauffachers
attempted to create personal jurisdiction under the Secu-
rities Exchange Act, 15 U.S.C. § 78aa. This provision has
been interpreted to allow service of process on a defen-
dant outside of the United States, see, e.g., Securities &
Exchange Comm'n v. International Swiss Investments Corp.,
895 F.2d 1272, 1275 (9th Cir. 1990), but nothing in that
statute changes the basic prerequisite of personal jurisdic-
tion.

Though there is great doubt that the Stauffachers had
ever properly raised securities law jurisdiction, nonethe-
less, the Seventh Circuit concluded that, in any event, the
exercise of personal jurisdiction would not be proper
because of a lack of sufficient contacts with the United
States. It stated:

Besides its trivial connection with Wisconsin, its
only other contact with the United States is that
a few of its depositors live across the national
boundary from it, in the State of Washington.
The totality of First Heritage’s U.S. contacts is
too sparse to bring it within the grasp of the
U.S. courts.

The suit was properly dismissed.

(Petition at 9a-10a)

a ee a er

19

The minimum contacts issue was discussed in Section
Il above, and need not be repeated here. The only new ©
“contacts” relevant to securities law involve the fact that
a few United States depositors have accounts with First
Heritage. Neither the number or amount of these
accounts was established below, nor is there any record
as to other contacts with the United States. With respect
to defendant Bennett, there were no additional contacts
alleged.

There is no adequate factual basis which supports a
further review. The jurisdictional issues were never
pleaded or preserved for review. Grant of the Petition
would therefore be inappropriate.

+

CONCLUSION

First Heritage and Bennett respectfully request that
the Petition for Writ of Certiorari be denied.

Dated this 23rd day of November, 1992.

MicHaeL, Best & FRIEDRICH
Attorneys for Respondents

James R. Troupts
(Counsel of Record)
STEVEN P. MEANS

MicHaeL, Best & FRIEDRICH
Suite 900

One South Pinckney Street
P.O. Box 1806

Madison, WI 53701-1806
(608) 257-3501

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1523%3A2. Public record. Not legal advice.