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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-181
_______________________________________________________________________


 
                    CLARIFICATION OF VENUE PROVISION

                                _______


 July 11, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


 Mr. Moorhead, from the Committee on Judiciary, submitted the following

                              R E P O R T

                         [To accompany S. 532]

      [Including cost estimate of the Congressional Budget Office]
    The Committee on the Judiciary, to whom was referred the 
Act (S. 532) to clarify the rules governing venue, and for 
other purposes, having considered the same, report favorably 
thereon without amendment and recommend that the Act do pass.
                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Oversight Findings.....................................     3
Committee on Government Reform and Oversight.....................     3
New Budget Authority and Tax Expenditures........................     3
Congressional Budget Office Estimate.............................     3
Inflationary Impact Statement....................................     4
Section-by-Section Analysis and Discussion.......................     4
Changes in Existing Law Made by the Bill, as Reported............     4
                          Purpose and Summary

    S. 532 is a technical amendment to paragraph (3) of section 
1391(a) of title 28 of the United States Code. The bill is 
based on a proposal by the Judicial Conference of the United 
States and is intended to update the Code to comply with 
amendments made to venue provisions that ensure that in multi-
defendant cases, there is at least one federal district where 
venue is proper.

                Background and Need for the Legislation

                               background

    S. 532 is a technical amendment to title 28 of the United 
States Code. Its purpose is to update the code to comply with 
amendments made to venue provisions that ensure that in multi-
defendant cases, there is at least one federal district where 
venue is proper.
    28 U.S.C. Sec. 1391 venue provisions relating to diversity 
provides--(a) A civil action wherein jurisdiction is founded 
only on diversity of citizenship may, except as otherwise 
provided by law, be brought only in:
          (1) a judicial district where any defendant resides, 
        if all defendants reside in the same state;
          (2) a judicial district in which a substantial part 
        of the events or omissions giving rise to the claim 
        occurred, or a substantial part of property that is the 
        subject of the action is situated; or
          (3) a judicial district in which the defendants are 
        subject to personal jurisdiction at the time the action 
        is commenced, if there is no district in which the 
        action may otherwise be brought.
    As currently written it is uncertain whether in a multi-
defendant case to which this subsection applies, venue lies so 
long as any defendant is subject to personal jurisdiction in 
the district, or only when all defendants are subject to 
personal jurisdiction. A review of the legislative history 
states that the purpose of the amendment was to make subsection 
1391(a)(3) ``more closely parallel * * * 1391(b)(3).'' Section 
1391(b)(3) in turn provides for fall back federal question 
venue in a district in which ``any defendant may be found.''
    It is the conclusion of the Committee that Sec. 1391(a)(3) 
should be clarified to ensure venue in any judicial district in 
which any defendant is subject to personal jurisdiction, 
provided there was not a district in which the action could 
otherwise have been brought. This is consistent with the 
legislative history to create a safety valve to ensure that the 
venue requirements do not defeat the ability to bring suit in 
federal court if subject matter and personal jurisdiction are 
available. Furthermore, in multi-defendant cases, if a 
particular defendant is not subject to personal jurisdiction in 
a particular district, that defendant alone may move to be 
dismissed from the action for lack of personal jurisdiction, 
and the action may continue with the other defendants. S. 532 
simply clarifies these issues.

                                Hearings

    S. 532 was introduced in the Senate on March 10, 1995, by 
Senator Hatch and then referred to the Senate Committee on the 
Judiciary. On March 16, 1995, the Senate Committee on the 
Judiciary ordered reported the bill S. 532, by a voice vote, to 
the Senate under a unanimous consent request.
    On April 24, 1995, S. 532 was referred to the House 
Judiciary Subcommittee on Courts and Intellectual Property. The 
Subcommittee held a hearing on S. 532 and related court 
proposals on May 11, 1995. At that hearing, Judge Ann Clarie 
Williams of the United States District Court for the Northern 
District of Illinois testified in support of S. 532 on behalf 
of the Judicial Conference of the United States.

                        Committee Consideration

    On May 16, 1995, the Subcommittee on Courts and 
Intellectual Property met in open session and ordered reported 
the bill S. 532, by a voice vote, a quorum being present. On 
June 7, 1995, the Committee met in open session and ordered 
reported the bill S. 532 without amendment by voice vote, a 
quorum being present.
                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, S. 532, the following estimate 
and comparison prepared by the Director of the Congressional 
Budget Office under section 403 of the Congressional Budget Act 
of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 13, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 532, as ordered reported by the House Committee on 
the Judiciary on June 7, 1995. This act would clarify a 
provision in current law relating to judicial venue for civil 
actions brought in federal districts courts. CBO estimates that 
enacting this legislation would result in no cost to the 
federal government or to state or local governments. Enacting 
S. 532 would not affect direct spending or receipts; therefore, 
pay-as-you-go procedures would not apply to the act.
    If you wish further details in this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                         June E. O'Neill, Director.
                     Inflationary Impact Statement

    Pursuant to clause 2(1)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that S. 532 
will have no significant inflationary impact on prices and 
costs in the national economy.

                      Section-by-Section Analysis

    Section 1. Currently, paragraph (3) of section 1391(a) of 
title 28, United States Code provides that venue lies in ``a 
judicial district in which the defendants are subject to 
personal jurisdiction at the time the action is commenced, if 
there is no district in which the action may otherwise be 
brought.'' The problem with this language is that it may be 
read to mean that all defendants must be subject to personal 
jurisdiction in a district in order for venue to lie. Under 
this reading, there would be cases in which there would be no 
proper venue. This section would eliminate any ambiguity by 
amending paragraph (3) of section 1391(a) of title 28, United 
States Code to provide that venue would be proper under this 
provision in a district in which any defendant is subject to 
personal jurisdiction. This is consistent with the legislative 
history to create a safety valve to ensure that the venue 
requirements do not defeat the ability to bring suite in 
federal court if subject matter and personal jurisdiction are 
available.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

              SECTION 1391 OF TITLE 28, UNITED STATES CODE

Sec. 1391. Venue generally

    (a) A civil action wherein jurisdiction is founded only on 
diversity of citizenship may, except as otherwise provided by 
law, be brought only in (1) a judicial district where any 
defendant resides, if all defendants reside in the same State, 
(2) a judicial district in which a substantial part of the 
events or omissions giving rise to claim occurred, or a 
substantial part of property that is the subject of the action 
is situated, or (3) a judicial district in which [the 
defendants are] any defendant is subject to personal 
jurisdiction at the time the action is commenced, if there is 
no district in which the action may otherwise be brought.
          * * * * * * *