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Court of Appeals Holds that Personal Jurisdiction May Be Based on Petition Fraudulently Inducing Unwarranted Federal Action

On January 26, 2012, the District of Columbia Court of Appeals decided Companhia Brasileira Carbureto de Calcio v. Applied Industrial Materials Corp., No. 11-SP-500, slip op. (D.C. Jan. 26, 2012). In that case, the Court of Appeals considered the following question on certification by the United States Court of Appeals for the District of Columbia Circuit: “Under District of Columbia law, does a petition sent to a federal government agency in the District provide a basis for establishing personal jurisdiction over the petitioner when the plaintiff has alleged that the petition fraudulently induced unwarranted government action against the plaintiff?” Id. at 1-2. The Court of Appeals held that it does. Id. at 2. By way of background, the Court of Appeals has previously “recognized a ‘government contacts’ exception under which courts in the District of Columbia would refrain from exercising personal jurisdiction even though the requirements of due process and the [District of Columbia’s] long-arm statute otherwise would be satisfied.” Id. at 4. Pursuant to the government contacts exception, which was established to avoid impinging on freedom of speech and converting the District of Columbia into a “national judicial forum,” “entry into the District of Columbia by nonresidents for the purpose of contacting federal governmental agencies is not a basis for the assertion of in personam jurisdiction.” Id. 4-5 (internal quotation marks omitted). In affirmatively answering the question certified by the D.C. Circuit, the Court of Appeals clarified that the government contacts exception was never intended to provide that “individuals who enter the District of Columbia to fraudulently induce unwarranted government action against others, and succeed in doing so, should be able to avoid defending their actions in this jurisdiction.” Id. at 9. It further stated that “[s]uch fraud does not warrant our protection.” Id. It therefore held that the government contacts exception does not apply in cases where a defendant petitioned a federal government agency in the District of Columbia and thereby fraudulently induced unwarranted government action against the plaintiff. Id. at 10-11, 14. Finally, the Court of Appeals’ opinion sets forth pleading standards intended to reduce the risk that this holding will be abused by future litigants attempting to base personal jurisdiction in the District upon unfounded allegations of fraud. Id. at 11-14. To view the Court of Appeals’ opinion, click here.