The opinion of the court was delivered by: Paul L. Friedman, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff Donald Poling, a District of Columbia resident with his place
of business in Maryland, seeks recovery from defendant Rhonda M. Farrah
based on Ms. Farrah's alleged violations of the federal and District of
Columbia securities laws, breach of contract, intentional and negligent
misrepresentation, negligence, conversion and breach of fiduciary duty.
At the time the events leading to these claims allegedly took place, Ms.
Farrah was a resident of Connecticut. She currently resides in
California. According to Mr. Poling, he entered into a joint venture
agreement with Ms. Farrah on October 25, 1994, believing that she was a
program manager trading in bank instruments. See Complaint, Attachment,
Joint Venture Agreement. The next day, he wired $100,000 to defendant's
bank account in Pittsburgh, Pennsylvania, with the understanding that
Ms. Farrah would invest the money beginning in late November 1994. See
id., Attachment, Receipt of Wire Transfer. Despite their agreement and
Mr. Poling's subsequent inquiries, Ms. Farrah did not invest his money as
promised and his attempts to encourage her to do so were unsuccessful.
Around August 1995, Mr. Poling was no longer able to contact or locate
Ms. Farrah or his money. On November 15, 1999, he filed suit.
A. Jurisdiction Under the Securities Exchange Act
Counts I and II of the complaint are based on defendant's alleged
violations of the Securities Exchange Act of 1934. Jurisdiction in such
suits is based on Section 27 of the Act 15 U.S.C. § 78aa, which
provides for nationwide service of process. Section 27 provides in
Any suit or action to enforce any liability or duty
created by this chapter or rules or regulations
thereunder . . . may be brought in any such district
or in the district wherein the defendant is found or
is an inhabitant or transacts business, and process in
such cases may be served in any other district of
which the defendant is an inhabitant or wherever the
defendant may be found.
15 U.S.C. § 78aa. Although the D.C. Circuit has not dealt directly
with this issue, other circuits have concluded that because Section 27
provides for nationwide service of process, it also "confers personal
jurisdiction in any federal district court over any defendant with
minimum contacts to the United States." United Liberty Life Insurance
Co. v. Ryan, 985 F.2d 1320, 1330 (6th Cir. 1993); see also In re Federal
Fountain, Inc., 165 F.3d 600, 602 (8th Cir. 1999); Trust Company of
Louisiana v. N.N.P., Inc., 104 F.3d 1478, 1486-87 (5th Cir. 1997);
Kidder, Peabody & Co. v. Maxus Energy Corp., 925 F.2d 556, 562 (2d Cir.
1991); 4 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND
PROCEDURE § 1067.1 (2d ed. 1987). Under this analysis, the Court
would have jurisdiction over Ms. Farrah because currently and at all
times relevant to this complaint, she has resided and transacted business
within the United States, either in Connecticut or in California, and she
therefore has minimum contacts with the United States.
In its recent decision in GTE New Media Services, Inc. v. BellSouth
Corp., 199 F.3d 1343, 1350-51 (D.C.Cir. 2000), however, the D.C. Circuit
cast some doubt on this analysis. In GTE, the court considered whether
Section 12 of the Clayton Act, 15 U.S.C. § 22, which contains
language similar to (although not identical with) the language of Section
27 of the Securities Exchange Act, allows a court to exercise nationwide
over a defendant. Section 12 of the Clayton Act provides:
Any suit, action, or proceeding under the antitrust
laws against a corporation may be brought not only in
the judicial district whereof it is an inhabitant, but
also in any district wherein it may be found or
transacts business; and all process in such cases may
be served in the district of which it is an
inhabitant, or wherever it may be found.
15 U.S.C. § 22. In construing the service of process provision, the
court of appeals rejected an interpretation that would allow a court to
exercise nationwide personal jurisdiction. See GTE New Media Sem., Inc.
v. BellSouth Corp., 199 F.3d at 1350. Instead, the court concluded that
the venue provision (the phrase before the semicolon) modified and
limited the reach of the service of process provision (the phrase after
the semicolon). See id. at 1350-51. The court therefore held that in
suits brought under the Clayton Act, a court has personal jurisdiction
over a defendant only if one of the requisites for venue contained within
the venue provision — that the defendant either be an inhabitant of
or have transacted business in the district where the suit is brought
— has been met.
Although the D.C. Circuit was analyzing the Clayton Act and not the
Securities Exchange Act, the two provisions are sufficiently similar that
this Court thinks it prudent to follow the Circuit's analysis. Applying
the reasoning of GTE, it concludes that the service of process provision
of Section 27 by itself cannot give the Court personal jurisdiction over
Ms. Farrah, because that provision necessarily is limited by the
requirements of the venue provision contained within Section 27. Because
the special venue provision of Section 27 of the Securities Act differs
from the venue provision of Section 12 of the Clayton Act, however, it
does not follow from GTE that the Court does not have personal
jurisdiction over the defendant in this case. The specific language of
the venue provision of Section 27 must be considered.
Under Section 27, venue is proper "in any such district or in the
district wherein the defendant is found or is an inhabitant or transacts
business." 15 U.S.C. § 78aa (emphasis added). The phrase "any such
district" refers to the preceding sentence in the section, which provides
that criminal proceedings "may be brought in the district wherein any act
or transaction constituting the violation occurred." 15 U.S.C. § 78aa;
see Investors Funding Corp. v. Jones, 495 F.2d 1000, 1002-03 (D.C.Cir.
1974); Securities and Exchange Comm'n. v. Wallace, 94 F. Supp.2d 1, 2
(D.D.C. 2000). The Court therefore has personal jurisdiction over Ms.
Farrah in this civil action under Section 27 if this district is one in