April 1, 1992



______________________________

No. 91-1824
No. 91-1947


UNITED ELECTRICAL, RADIO AND MACHINE WORKERS OF AMERICA, ET AL.,

Plaintiffs, Appellees,

v.

163 PLEASANT STREET CORPORATION, ET AL.

Defendants, Appellees,
_______________

INTERNATIONAL TWIST DRILL (HOLDINGS), LIMITED,

Defendant, Appellant.
______________________________

No. 91-2001

UNITED ELECTRICAL, RADIO AND MACHINE WORKERS OF AMERICA, ET AL.,

Plaintiffs, Appellants,

v.

163 PLEASANT STREET CORPORATION, ET AL.,

Defendants, Appellees.
_____________________________

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. A. David Mazzone, U.S. District Judge]
___________________
_________________________

Before

Breyer, Chief Judge,
___________

Selya and Cyr, Circuit Judges.
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_________________________















Mark D. Stern, with whom Robin Alexander was on brief, for
_____________ _______________
plaintiffs.
Mark D. Stern, with whom Edward J. Dailey was on brief, for
_____________ ________________
defendant Blue Cross and Blue Shield.
Charles L. Janes, with whom James C. Stokes, R. Scott
_________________ ________________ _________
Henderson, and Bingham, Dana & Gould were on brief, for defendant
_________ _____________________
International Twist Drill (Holdings), Limited.

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SELYA, Circuit Judge. These appeals call upon us to
SELYA, Circuit Judge.
_____________

ascertain the extent of a federal court's power, in an ERISA

case, to assert personal jurisdiction over a foreign corporation.

To complete our task, we must also consider when, and on what

terms, separate corporate identities can be disregarded, to the

end that a parent corporation may be sued and held responsible

for a subsidiary's employee benefit obligations. At the

conclusion of our odyssey, we find that the court below lacked

personal jurisdiction over the primary defendant in this case.

Hence, we vacate the orders which lie at the heart of these

appeals.

I. BACKGROUND
I. BACKGROUND

We begin by sketching the factual background mindful

that, as is often true at the preliminary injunction stage, the

record is somewhat scanty. For present purposes, we credit the

undisputed facts presented below and adopt the district court's

findings as to controverted matters to the extent they are

supported by the record and not clearly erroneous.

The plaintiffs comprise an employees' union, the United

Electrical, Radio and Machine Workers of America (the Union), and

certain retired or disabled employees of 163 Pleasant Street

Corporation (PSC). PSC is a Delaware corporation having its

principal place of business in New Bedford, Massachusetts. The

individual plaintiffs include both union and nonunion employees,

____________________
some of whom worked for PSC's predecessor-in-interest, Morse
1These appeals do not require us to differentiate between
Tool, Inc.1 All these employees had entered into, or were
PSC retirees and Morse Tool retirees or to consider separately
widows of former employees.

3














beneficiaries of, agreements under which PSC contracted to pay

retirees' health-care premiums.

The chief defendant is International Twist Drill

(Holdings), Ltd. (ITD), a corporation organized under the laws of

Scotland and maintaining its headquarters there. In June 1987,

ITD purchased all the common stock of Morse Tool, which

thereafter became PSC. At the time of purchase, Morse Tool was

mired in bankruptcy. Although the Commonwealth of Massachusetts,

through its Economic Stabilization Trust, held 150,000 shares of

Morse Tool's non-voting preferred stock in connection with a

preexisting debt, ITD was the sole voting shareholder. To all

intents and purposes, then, PSC became a wholly owned subsidiary

of ITD.

Both before and after the acquisition, ITD maintained

an active role in connection with PSC's affairs. During the

period when purchase was under consideration, John Lindsay, a

principal of ITD, became involved in negotiations regarding the

company's collective bargaining agreement but ITD was not

itself a signatory to that pact. After the purchase had been

consummated, ITD appointed PSC's directors, selecting primarily

members of its own board to serve in that capacity. Lindsay

acted for a period of time as PSC's president. Robert Massie,

another principal of ITD, served for a different period as PSC's

chief executive officer and treasurer. Throughout, ITD paid

Lindsay's and Massie's salaries. Moreover, at the end of each

month, James Dee, PSC's controller, telephoned Scotland to


4














discuss the subsidiary's fiscal affairs and obtain directions on

how to manage its finances. ITD provided PSC with (1) ITD's

financial statements (which PSC disseminated to its suppliers in

order to assuage fears about its credit); (2) funds (when

necessary to ameliorate PSC's often precarious fiscal situation);

and (3) certain goods and services that PSC required from time to

time. All in all, ITD pumped $8,000,000, more or less, into its

subsidiary.

ITD's largesse notwithstanding, PSC was unable to

survive. The company halted manufacturing operations in early

1990. In a letter dated June 1, 1991, PSC informed the

plaintiffs that it would cease paying their health insurance

premiums and that, consequently, coverage would expire at the end

of July.

Plaintiffs filed suit in the United States District

Court for the District of Massachusetts, naming PSC, ITD, and the

health-care insurer as defendants. The complaint alleged that

the planned cessation of payments would violate Massachusetts

common law, the Labor-Management Relations Act (LMRA), 29 U.S.C.

141-187 (1988), and the Employee Retirement Income Security

Act (ERISA), 29 U.S.C. 1001-1461 (1988). On July 24, 1991,

the district court held a hearing and entered a temporary

restraining order maintaining the insurance coverage in force.

On August 13, the court denied ITD's motion to quash the

____________________
complaint for want of personal jurisdiction and ordered ITD to
2To be precise, the preliminary injunction required that PSC
pay the health-care premiums pendente lite, as they accrued.2
pay the insurance premiums on or before August 23, 1991; and, if
________ ____
it failed to do so, then ITD was to make the payments.

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In granting the injunction, the district court found

"that ITD . . . does not have ties to Massachusetts except

through [PSC] or Morse Tool." Those ties, the court said,

constitute "clear and convincing evidence that ITD Holdings did

play an active and direct role in [PSC's] management." Although

"[t]he mere fact that a subsidiary company does business within

Massachusetts does not confer jurisdiction over its nonresident

parent company, even if the parent is the sole owner of the

subsidiary," the ITD/PSC relationship was, in the court's view,

"sufficient to establish both personal jurisdiction and liability

on the part of . . . ITD."

On August 15, 1991, ITD filed a notice of appeal. It

also sought to stay the injunction. The stay was denied, first

by the district court, then by a duty panel of this court. On

August 22, PSC filed for bankruptcy without paying the disputed

premiums. When ITD refused to make the payments, the district

court granted plaintiffs' motion to hold ITD in contempt and

imposed daily fines to continue for as long as the contemnor

remained obdurate. ITD sought unsuccessfully to stay the

contempt order and filed a second notice of appeal.3

II. THE DECISIONAL FRAMEWORK
II. THE DECISIONAL FRAMEWORK

Although the defendant's notices of appeal target the

district court's preliminary injunction and contempt decree,

respectively, both of those orders were premised on the district


____________________

3The plaintiffs have cross-appealed, challenging an
incidental ruling. See infra Part V(A).
___ _____

6














court's finding that ITD was subject to personal jurisdiction in

Massachusetts a finding that ITD has consistently disputed.

Our initial investigation proceeds along those lines. After all,

an absence of jurisdictional authority would render both orders

void. See Kulko v. Superior Court, 436 U.S. 84, 91 (1978) ("It
___ _____ ______________

has long been the rule that a valid judgment . . . may be entered

only by a court having jurisdiction over the person of the

defendant."); see also Willy v. Coastal Corp., 60 U.S.L.W. 4187,
___ ____ _____ _____________

4189 (U.S. March 3, 1992) ("Given that civil contempt is designed

to coerce compliance with the court's decree, it is logical that

the [contempt] order itself should fall with a showing that the

court was without authority to enter the [underlying] decree.").

The parties have focused singlemindedly on the strength

of PSC's corporate veil as the linchpin of the jurisdictional

inquiry. We deem it advisable to take a step backward. While we

are cognizant that a certain symbiosis exists between the

jurisdictional inquiry and the corporate inquiry, the inquiries

are separate and unequivalent. We think it best, therefore, to

begin by scrutinizing ITD's amenability to suit in Massachusetts

without reference to veil piercing. Only if this query produces

negative results must we proceed to the question of whether ITD

can be subjected to jurisdiction by disregarding PSC's

independent corporate identity.



III. DIRECT PERSONAL JURISDICTION
III. DIRECT PERSONAL JURISDICTION

The case at bar presents a golconda of questions


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concerning the assertion of personal jurisdiction over an alien

corporation in a situation where subject matter jurisdiction is

premised upon the existence of a federal question. See 28 U.S.C.
___

1331 (1988) (grant of federal question jurisdiction); 29 U.S.C.

185(c), 1132(e)(1) (establishing subject matter jurisdiction

under LMRA and ERISA, respectively). We take a step-by-step

approach.

A.
A.
__

Because the instant case is premised on a federal

question, it is distinguishable from cases that address personal

jurisdiction in the context of diversity jurisdiction, 28 U.S.C.

1332 (1988) a context in which the focal point is, of

necessity, the Fourteenth Amendment. The distinction is of

potential consequence. When a district court's subject matter

jurisdiction is founded upon a federal question, the

constitutional limits of the court's personal jurisdiction are

fixed, in the first instance, not by the Fourteenth Amendment but

by the Due Process Clause of the Fifth Amendment. See Lorelei
___ _______

Corp. v. County of Guadalupe, 940 F.2d 717, 719 (1st Cir. 1991)
_____ ____________________

(per curiam); Whistler Corp. v. Solar Elecs., Inc., 684 F. Supp.
______________ __________________

1126, 1128 (D. Mass. 1988). Inasmuch as the federalism concerns

which hover over the jurisdictional equation in a diversity case

are absent in a federal question case, a federal court's power to

assert personal jurisdiction is geographically expanded. In such

circumstances, the Constitution requires only that the defendant

have the requisite "minimum contacts" with the United States,


8














rather than with the particular forum state (as would be required

in a diversity case). See Lorelei, 940 F.2d at 719; Trans-
___ _______ ______

Asiatic Oil Ltd. v. Apex Oil Co., 743 F.2d 956, 959 (1st Cir.
_________________ _____________

1984).

Nevertheless, while courts in federal question cases

have found "that sufficient contacts [to justify the assertion of

personal jurisdiction] exist whenever the defendant is served

within the sovereign territory of the United States," Lorelei,
_______

940 F.2d at 719 (citing cases), the basis for service of process

returnable to a particular court must be grounded within a

federal statute or Civil Rule. See, e.g., id. at 719-20; Johnson
___ ____ ___ _______

Creative Arts, Inc. v. Wool Masters, Inc., 743 F.2d 947, 950 (1st
___________________ __________________

Cir. 1984). In other words, though personal jurisdiction and

service of process are distinguishable, they are inextricably

intertwined, since service of process constitutes the vehicle by

which the court obtains jurisdiction. See Lorelei, 940 F.2d at
___ _______

719 n.1; cf. Robertson v. Railroad Labor Bd., 268 U.S. 619, 622
___ _________ ___________________

(1925) (a federal court cannot acquire personal jurisdiction over

a defendant unless the defendant is properly served with

process).

Civil Rule 4 constitutes the principal mechanism for

service of process in the federal courts.4 In the majority of

____________________

4The rule states in relevant part:

Whenever a statute of the United States . . .
provides for service of a summons . . . upon
a party not an inhabitant of or found within
the state in which the district court is
held, service may be made under the

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cases, Rule 4(f) limits service of process "to the territorial

limits of the state in which the court is held." Johnson, 743
_______

F.2d at 950. But, a number of federal laws provide for either

nationwide or worldwide service, see 2 James W. Moore et al,
___

Moore's Federal Practice 4.42[2.-1] (2d ed. 1991) (listing
_________________________

statutes), and Rule 4(e) authorizes extraterritorial service in

such circumstances.

ERISA is a statute that contemplates extraterritorial

service.5 It provides in pertinent part:

Where an action under [ERISA] is brought in a
district court of the United States . . .
process may be served in any other district
where a defendant resides or may be found.

29 U.S.C. 1132(e)(2). By its express terms, this provision

____________________

circumstances and in the manner prescribed by
the statute . . . or, if there is no
provision therein prescribing the manner of
service, in a manner stated in this rule.
Whenever a statute or rule of court of the
state in which the district court is held
provides . . . for service of a summons . . .
upon a party not an inhabitant of or found
within the state, . . . service may . . . be
made under the circumstances and in the
manner prescribed in the statute or rule.

Fed. R. Civ. P. 4(e).

All process other than a subpoena may be
served anywhere within the territorial limits
of the state in which the district court is
held, and, when authorized by a statute of
the United States or by these rules, beyond
the territorial limits of that state . . . .

Fed. R. Civ. P. 4(f).

5The LMRA, on the other hand, makes no provision for either
nationwide or worldwide service. See Central Operating Co. v.
___ ______________________
Utility Workers of Am., 491 F.2d 245, 249-50 (4th Cir. 1974).
______________________

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limits extraterritorial service to a nationwide, not a worldwide,

scope.6 Accord Rodd v. Region Constr. Co., 783 F.2d 89, 91 (7th
______ ____ __________________

Cir. 1986); Cannon v. Gardner-Martin, Etc., 699 F. Supp. 265, 266
______ ____________________

(M.D. Fla. 1988).

Hence, our analysis comes full circle. When

insufficient statutory authorization for extraterritorial service

exists, Rule 4(e) allows such service "only to the extent

permitted by the law of the state in which the district court

sits." Lorelei, 940 F.2d at 720; see also Johnson, 743 F.2d at
_______ ___ ____ _______

950. It follows that, absent a federal statute permitting

service of process on ITD in Scotland, our threshold inquiry must

focus on Massachusetts law concerning personal jurisdiction,

notwithstanding that this is a federal question case. And,

because state law is subject to Fourteenth Amendment limitations,

the minimum contacts doctrine, while imposing no direct state-by-

state constraint on a federal court in a federal question case,

acts indirectly as a governing mechanism for the exercise of

personal jurisdiction. See Lorelei, 940 F.2d at 720.
___ _______



____________________

6Congressional intent to limit extraterritorial service in
ERISA cases to our national boundaries is, perhaps, most
graphically illustrated when one views section 1132(e)(2) against
the linguistic backdrop of those federal statutes providing for
worldwide service of process. See, e.g., 15 U.S.C. 22 (1988)
___ ____
(Clayton Act) ("[A]ll process . . . may be served in the district
of which [the corporate defendant] is an inhabitant, or wherever
it may be found."); 15 U.S.C. 77v (1988) (Securities Act)
(similar); 15 U.S.C. 78aa (1988) (Securities Exchange Act)
(similar); 15 U.S.C. 79y (1988) (Public Utility Holding Company
Act) (similar); 15 U.S.C. 80a-43 (1988) (Investment Company
Act) (similar); 28 U.S.C. 1608 (1988) (Foreign Sovereign
Immunities Act) (similar).

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B.
B.
__

In Massachusetts, a court may exercise personal

jurisdiction over a foreign defendant if such jurisdiction is

authorized by state statute or rule and its exercise does not
___

offend due process. See Ealing Corp. v. Harrods Ltd., 790 F.2d
___ ____________ _____________

978, 981 (1st Cir. 1986); Bond Leather Co. v. Q.T. Shoe Mfg. Co.,
________________ __________________

764 F.2d 928, 931 (1st Cir. 1985); Carlson Corp. v. Univ. of Vt.,
_____________ ____________

402 N.E.2d 483, 485 (Mass. 1980).

On the first prong of the furcula, the "soliciting

business" statute, Mass. Gen. L. ch. 223, 38 (1990), often

employed as a basis for jurisdiction in commercial cases, is

inhospitable to the plaintiffs' cause. Section 38 requires that

a defendant's business presence in Massachusetts be substantial

or have a significant impact upon the transaction that forms the

basis for the cause of action. See Mas Marques v. Digital Equip.
___ ___________ ______________

Corp., 637 F.2d 24, 28 (1st Cir. 1980). Since the district court
_____

supportably found that ITD's only ties with Massachusetts derive

from the PSC connection ITD itself does not own property,

maintain bank accounts, hold a license to do business, sell

goods, advertise, or solicit business in Massachusetts the less

demanding Massachusetts long-arm statute, Mass. Gen. L. ch. 223A,

3 (1990), offers the most appropriate jurisdictional mooring

for the plaintiffs' claim.7

____________________

7The statute provides in relevant part:

A court may exercise personal
jurisdiction over a person, who acts directly
or by an agent, as to a cause of action in

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Both federal and state courts have regularly construed

the "transacting any business" language of the statute in a

generous manner. See, e.g., Hahn v. Vermont Law School, 698 F.2d
___ ____ ____ __________________

48, 50 (1st Cir. 1983); Nova Biomedical Corp. v. Moller, 629 F.2d
_____________________ ______

190, 193 (1st Cir. 1980); Heins v. Wilhelm Loh Wetzlar Optical
_____ ____________________________

Mach. GmbH & Co., 522 N.E.2d 989, 991 (Mass. App. Ct.), rev.
_________________ ____

denied, 525 N.E.2d 678 (1988). The defendant need not have a
______

physical presence in Massachusetts. See Bond, 764 F.2d at 933.
___ ____

The test focuses instead upon whether the defendant attempted to

participate in the commonwealth's economic life. See Hahn, 698
___ ____

F.2d at 52; Nova, 629 F.2d at 195. Since the "extent of a
____

nonresident's involvement . . . is properly relevant to the

constitutional, not the statutory[,] dimension of the

jurisdiction inquiry," Bond, 764 F.2d at 932, even somewhat
____

exiguous acts on a defendant's part can, at times, suffice to

satisfy the long-arm statute's threshold for transacting

business. See, e.g., id. at 933 (mailing four letters into
___ ____ ___

Massachusetts "evidencing a single guaranty of payment for goods

sold"); Hahn, 698 F.2d at 51 (mailing application information and
____

acceptance letter to plaintiff in Massachusetts); Nova, 629 F.2d
____

at 195, 197 (mailing two letters, which charged patent

____________________

law or equity arising from the person's

(a) transacting any business in
this commonwealth;

(b) contracting to supply services
or things in this commonwealth[.]

Mass. Gen. L. ch. 223A, 3 (1990).

13














infringement and threatened litigation, into Massachusetts);

Carlson, 402 N.E.2d at 485 (signing a contract in Massachusetts).
_______

Nonetheless, the mere ownership of a subsidiary by a passive

investor, standing alone, has been held insufficient to satisfy

the statutory requirement. See Kleinerman v. Morse, 533 N.E.2d
___ __________ _____

221, 224 (Mass. App. Ct. 1989).

We do not believe that Kleinerman is dispositive here.
__________

In this case, plaintiffs alleged, and arguably proved, more than

passive investment: ITD's agent was enmeshed in the negotiations

for a collective bargaining agreement between PSC and the Union;

ITD paid the salaries for top executives of PSC; ITD communicated

with PSC regarding management of the business; ITD allowed

financial statements to be used to shore up PSC's credit rating;

and ITD made advances to PSC, in cash and in kind. In light of

the expansive interpretation accorded to Mass. Gen. L. ch. 223A,

3, we think the lower court's ruling that ITD was "transacting

business" in Massachusetts is likely sustainable.

We can reserve definitive judgment on this point,

however, because the long-arm statute also demands that

plaintiffs' cause of action arise from the defendant's

transaction of business in the commonwealth. See Marino v. Hyatt
___ ______ _____

Corp., 793 F.2d 427, 428 (1st Cir. 1986); Hahn, 698 F.2d at 51;
_____ ____

Singer v. Piaggio & C., 420 F.2d 679, 681 (1st Cir. 1970). The
______ ____________

statute's relatedness requirement mirrors a key constitutional

requirement for the exercise of specific jurisdiction. See
___

Ealing, 790 F.2d at 983 ("Explicit in the [Massachusetts] long-
______


14














arm statute is the specific-jurisdiction requirement that the

cause of action arise from the defendant's activity within the

state."). It behooves us, therefore, to truncate our statutory

analysis and enter the constitutional copse.

C.
C.
__

In Donatelli v. National Hockey League, 893 F.2d 459,
_________ ______________________

462-65 (1st Cir. 1990), we explicated the general policies and

concerns animating the jurisprudence of personal jurisdiction.

Rather than fully repastinating that ground, we concentrate here

on the constitutional touchstone for personal jurisdiction:

minimum contacts.

The minimum contacts standard requires that a court

asserting personal jurisdiction determine that the nonresident

defendant possesses sufficient contacts with the forum state so

that subjecting him, her, or it to the forum's jurisdiction does

not offend "traditional notions of fair play and substantial

justice." International Shoe Co. v. Washington, 326 U.S. 310,
_______________________ __________

316 (1945) (citation omitted). The test is far from precise:

"the criteria by which we mark the boundary line between those

activities which justify the subjection of a corporation to suit,

and those which do not, cannot be simply mechanical or

quantitative." Id. at 319. Each case requires an individualized
___

weighing of the material facts. Burger King Corp. v. Rudzewicz,
_________________ _________

471 U.S. 462, 485-86 (1985); Kulko, 436 U.S. at 92. In
_____

constructing such a weighbeam, the measuring points will rarely

be written in gleaming black or glistening white. "The greys are


15














dominant and even among them the shades are innumerable." Estin
_____

v. Estin, 334 U.S. 541, 545 (1948).
_____

In analyzing a defendant's contacts, the

decisionmaker's attention must be focused on "the relationship

among the defendant, the forum, and the litigation." Shaffer v.
_______

Heitner, 433 U.S. 186, 204 (1977). To this end, the concept of
_______

"purposeful availment" comes into play:

The application of [the minimum contacts]
rule will vary with the quality and nature of
the defendant's activity, but it is essential
in each case that there be some act by which
the defendant purposefully avails itself of
the privilege of conducting activities within
the forum State, thus invoking the benefits
and protections of its laws.

Hanson v. Denckla, 357 U.S. 235, 253 (1958); see also Keeton v.
______ _______ ___ ____ ______

Hustler Magazine, Inc., 465 U.S. 770, 774 (1984) (purposeful
_______________________

availment requirement assures that jurisdiction will not be based

solely upon a defendant's "random, isolated, or fortuitous"

contacts with the forum state).

The Court has also introduced concepts of

reasonableness and foreseeability into minimum contacts analysis,

demanding that a defendant's "conduct and connection with the

forum State [be] such that he should reasonably anticipate being

haled into court there." World-Wide Volkswagen Corp. v. Woodson,
___________________________ _______

444 U.S. 286, 297 (1980). This means that, even where

purposefully generated contacts exist, courts must consider a

panoply of other factors which bear upon the fairness of

subjecting a nonresident to the authority of a foreign tribunal.

See Donatelli, 893 F.2d at 464-65. The Court has identified five
___ _________

16














relevant criteria: (1) the defendant's burden of appearing, (2)

the forum state's interest in adjudicating the dispute, (3) the

plaintiff's interest in obtaining convenient and effective

relief, (4) the judicial system's interest in obtaining the most

effective resolution of the controversy, and (5) the common

interests of all sovereigns in promoting substantive social

policies. Burger King, 471 U.S. at 477. We have termed these
___________

five criteria the "Gestalt factors." Donatelli, 893 F.2d at
_________

465.8

In analyzing minimum contacts, we have recognized two

types of personal jurisdiction: general and specific. See,
___

e.g., id. at 462-63. General jurisdiction exists when the
____ ___

litigation is not directly founded on the defendant's forum-based

contacts, but the defendant has nevertheless engaged in

continuous and systematic activity, unrelated to the suit, in the

forum state. See Helicopteros Nacionales de Colombia, S.A. v.
___ __________________________________________

Hall, 466 U.S. 408, 414-16 & n.9 (1984). ITD's contacts are
____

manifestly insufficient to ground a claim of general jurisdiction

in the present case. The court below found that ITD's sole

connection with Massachusetts concerned a single forum-based

company, PSC. The transactions and communications in this

respect were qualitatively less than those found non-pervasive in

Helicopteros. Thus, plaintiffs' case necessarily depends upon
____________

____________________

8For present purposes, we think it has some significance
that the Court recently assayed the Gestalt factors in
considering a jurisdictional dispute involving a defendant from
another nation. See Asahi Metal Indus. Co. v. Superior Court,
___ _______________________ ______________
480 U.S. 102, 113-16 (1987).

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the presence or absence of specific jurisdiction.



D.
D.
__

Specific personal jurisdiction may be asserted where

the cause of action arises directly out of, or relates to, the

defendant's forum-based contacts. See id. at 414 & n.8;
___ ___

Donatelli, 893 F.2d at 462. The cases that address the question
_________

of when this phenomenon occurs tend to be fact-specific. See,
___

e.g., Glater v. Eli Lilly & Co., 744 F.2d 213, 215-16 (1st Cir.
____ ______ _______________

1984). Overall, courts have played the tortoise in designing an

analytic framework aimed at constructing a reasoned answer to

this conundrum.9

For our part, we have formulated a few, rather

abecedarian precepts pertaining to the relatedness requirement.

First, we steadfastly reject the exercise of personal

____________________

9Some circuits have made strides in this direction. The
Ninth Circuit has suggested that "the critical focus in the
'arising out of' prong is whether, 'but for' the defendant's
forum-related activities, the injury would have occurred; that
is, whether the 'entire course of events . . . was an
uninterrupted whole which began with, and was uniquely made
possible by, the [defendant's] contacts in [the forum state].'"
Alexander v. Circus Circus Enters., Inc., 939 F.2d 847, 853 (9th
_________ ___________________________
Cir. 1991) (citation omitted). The Sixth Circuit has articulated
a less rigorous standard, mandating that "the cause of action, of
whatever type, have a substantial connection with the defendant's
__________________________________
in-state activities." Third Nat'l Bank v. WEDGE Group Inc., 882
________________ ________________
F.2d 1087, 1091 (6th Cir. 1989) (emphasis in original; citation
omitted), cert. denied, 493 U.S. 1058 (1990). And the Seventh
_____ ______
Circuit has interpreted a long-arm statute's "arising from"
requirement in a similar vein, ruling that if the contract which
forms the basis for a suit "lies in the wake" of a defendant's
forum-state contacts, causality exists. Deluxe Ice Cream Co. v.
_____________________
R.C.H. Tool Corp., 726 F.2d 1209, 1216 (7th Cir. 1984). While
_________________
these tests help to focus the causality inquiry, their predictive
force is open to debate.

18














jurisdiction whenever the connection between the cause of action

and the defendant's forum-state contacts seems attenuated and

indirect. See Donatelli, 893 F.2d at 463. Instead, the
___ _________

defendant's in-state conduct must form an "important, or [at

least] material, element of proof" in the plaintiff's case.

Marino, 793 F.2d at 430 (construing Massachusetts statute).
______

Thus, in a contract case, the defendant's forum-based activities

must be "instrumental in the formation of the contract." Hahn,
____

698 F.2d at 51 (construing Massachusetts statute). We have

likewise suggested an analogy between the relatedness requirement

and the binary concept of causation in tort law under which both

elements cause in fact (i.e., the injury would not have

occurred "but for" the defendant's forum-state activity) and

legal cause (i.e., the defendant's in-state conduct gave birth to

the cause of action) must be satisfied to find causation

sufficient to support specific jurisdiction. Pizarro v. Hoteles
_______ _______

Concorde Int'l, C.A., 907 F.2d 1256, 1259 (1st Cir. 1990)
_____________________

(construing Puerto Rico statute). In this inquiry,

foreseeability is critical. See id. at 1259-60.
___ ___

To summarize these principles, we today suggest a

tripartite test for the ascertainment of specific jurisdiction.

First, the claim underlying the litigation must directly arise

out of, or relate to, the defendant's forum-state activities.

Second, the defendant's in-state contacts must represent a

purposeful availment of the privilege of conducting activities in

the forum state, thereby invoking the benefits and protections of


19














that state's laws and making the defendant's involuntary presence

before the state's courts foreseeable. Third, the exercise of

jurisdiction must, in light of the Gestalt factors, be

reasonable.



E.
E.
__

We turn now to the work of applying this test to the

case at hand. In considering the first segment relatedness

it is important to bear in mind the nature of plaintiffs' claim.

Their cause of action centers on ITD's supposed breach of a

contractual and statutory duty to pay health-care premiums. Of

the forum-related contacts mentioned by the district court, only

Lindsay's involvement in negotiation of the collective bargaining

agreement can be thought to give rise, or relate, to this cause

of action. See Hahn, 698 F.2d at 51. The breach of contract
___ ____

cannot conceivably be said to have arisen directly from, or been

caused proximately by, ITD's remaining Massachusetts contacts

all of which related to financial and business assistance

delivered after initial execution of the collective bargaining

agreement. For purposes of the second and third prongs of the

test, therefore, we can restrict our inquiry to Lindsay's

involvement in the labor negotiations.

Before exploring whether ITD, through Lindsay's

participation in the collective bargaining process, purposefully

availed itself of a Massachusetts venue in any constitutionally

relevant sense, we remark the obvious: the contacts of a


20














corporation's agent can subject the corporation to personal

jurisdiction. This result flows naturally from the corporate

form. "Since the corporate personality is a fiction, although a

fiction intended to be acted upon as though it were a fact, it is

clear that unlike an individual its 'presence' without, as well

as within, the state of its origin can be manifested only by

activities carried on in its behalf by those who are authorized

to act for it." International Shoe, 326 U.S. at 316 (citation
___________________

omitted). Inasmuch as ITD had not purchased PSC when Lindsay, a

part-owner of ITD, first became involved in the negotiations, we

can assume, at least for argument's sake, that he was acting as

an agent of ITD.

The Supreme Court, when analyzing personal jurisdiction

in contract cases, has taken a holistic approach, emphasizing

that a contract is an "intermediate step" in a process involving

"prior . . . negotiations [and] future consequences." Burger
______

King, 471 U.S. at 479 (quoting Hoopeston Canning Co. v. Cullen,
____ _____________________ ______

318 U.S. 313, 317 (1943)). Starting from this coign of vantage,

courts have found that participating in significant negotiations

within the forum state anent important contract terms can

constitute "minimum contacts" with the state for purposes of a

subsequent claim asserting breach of that contract. See, e.g.,
___ ____

Complete Concepts, Ltd. v. General Handbag Corp., 880 F.2d 382,
_______________________ ______________________

388-89 (11th Cir. 1989) (per curiam); Williams Elec. Co. v.
___________________

Honeywell, Inc., 854 F.2d 389, 392-93 (11th Cir. 1988) (per
________________

curiam); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d
________________ ________________________


21














834, 840 (9th Cir. 1986); Data Disc Inc. v. Systems Technology
______________ __________________

Assocs., Inc., 557 F.2d 1280, 1287-88 (9th Cir. 1977).
_____________

The present case, however, is at a considerable remove.

Here, unlike the defendants in the cited cases, ITD was not a

party to the contract. Here, unlike the cited cases, there is no

indication in the record that Lindsay's involvement in the

negotiations took place in the forum state or by means of

communications to and from the forum.10 The location of the

negotiations is vitally important to the jurisdictional inquiry

in a case like this one. If the negotiations occurred outside

the forum state, their existence cannot serve to bolster the

argument for the assertion of jurisdiction in the forum. See
___

Pathe Computer Control Systems Corp. v. Kinmont Indus., Inc., ___
____________________________________ ____________________

F.2d ___, ___ (1st Cir. 1992) [No. 91-1534, slip op. at 6].

Here, the negotiations constitute too thin a reed to support the

district court's exercise of personal jurisdiction over ITD. For

aught that appears, Lindsay might have played his part by

telephone calls from Scotland to the Union's national offices in

Pennsylvania, or by attending meetings held in a law firm's

conference room in Delaware, New York City, or some other venue.

The record leaves these important facts entirely open to

____________________

10On this point, the district judge simply noted that an
affidavit submitted on plaintiffs' behalf "says that Lindsay was
involved in all the contract negotiations with the union." This
statement accurately summarizes the affidavit in question. The
plaintiffs presented no other evidence regarding the manner of
Lindsay's involvement, the ways in which he participated, the
means he employed, or his whereabouts at the time. The record
below is equally barren of any proof as to where the negotiations
were conducted.

22














conjecture, speculation, and surmise.

When personal jurisdiction is contested, plaintiffs

bear the burden of proving the facts upon which the existence of

jurisdiction depends. See McNutt v. General Motors Acceptance
___ ______ __________________________

Corp., 298 U.S. 178, 189 (1936); General Contracting & Trading
_____ ______________________________

Co. v. Interpole, Inc., 899 F.2d 109, 115 (1st Cir. 1990); Good
___ _______________ ____

Hope Indus., Inc. v. Ryder Scott Co., 389 N.E.2d 76, 78 (Mass.
__________________ ________________

1979). The present plaintiffs, veil piercing aside, failed to

carry the devoir of persuasion. Because there is insufficient

evidence in the record to find that ITD, through its own

affirmative conduct, purposefully availed itself of the privilege

of conducting activities in Massachusetts such that it could

reasonably anticipate being haled into court there, the district

court lacked direct jurisdiction over ITD based upon the latter's

contacts with the commonwealth.11

IV. VEIL PIERCING
IV. VEIL PIERCING

Our task is not yet finished. Although ITD, in its own

right, lacked sufficient minimum contacts with Massachusetts to

permit the assertion of jurisdiction over its corporate person,

PSC was unarguably subject to the jurisdiction of the

Massachusetts courts. Hence, if PSC's contacts can be attributed

to ITD, then the jurisdictional hurdle can be vaulted. The

district court thought that such attribution was legally proper

____________________

11Absent proof of the necessary minimum contacts, we need
not address the question of reasonableness. The Gestalt factors
come into play only if the first two segments of the test for
specific jurisdiction have been fulfilled. Cf. Donatelli, 893
___ _________
F.2d at 465.

23














on the theory that PSC's corporate veil was susceptible to

piercing. On this record, we are constrained to disagree.

A.
A.
__

The principle of limited liability is a pillar of

corporate law. See DeBreceni v. Graf Bros. Leasing, Inc., 828
___ _________ _________________________

F.2d 877, 879 (1st Cir. 1987), cert. denied, 484 U.S. 1064
_____ ______

(1988). Mighty though it may be, however, the limited liability

principle is not an immutable rule. Moreover, while it is

generally true that questions of "[l]iability and jurisdiction

are independent," Sher v. Johnson, 911 F.2d 1357, 1365 (9th Cir.
____ _______

1990), the factors that we must consider for purposes of piercing

the veil separating two corporations in the liability context

also inform the jurisdictional inquiry. See Donatelli, 893 F.2d
___ _________

at 465-66. With this brief prelude, then, we turn to the case at

bar.

Ordinarily, courts respect the legal independence of a

corporation and its subsidiary when determining if a court's

jurisdiction over the offspring begets jurisdiction over the

parent. See, e.g., Cannon Mfg. Co. v. Cudahy Packing Co., 267
___ ____ ________________ ___________________

U.S. 333, 336-37 (1925); Pathe Computer, ___ F.2d at ___ [slip
_______________

op. at 6-7]; Donatelli, 893 F.2d at 465; Escude Cruz v. Ortho
_________ ___________ _____

Pharmaceutical Corp., 619 F.2d 902, 905 (1st Cir. 1980). But,
_____________________

the "presumption of corporate separateness [may] be overcome by

clear evidence that the parent in fact controls the activities of

the subsidiary." Escude Cruz, 619 F.2d at 905; accord Third
___________ ______ _____

Nat'l Bank v. WEDGE Group Inc., 882 F.2d 1087, 1090 (6th Cir.
__________ _________________


24














1989), cert. denied, 493 U.S. 1058 (1990); cf. Mangual v. General
_____ ______ ___ _______ _______

Battery Corp., 710 F.2d 15, 21 (1st Cir. 1983) ("While the
______________

parent-subsidiary relationship in itself is insufficient to

justify the exercise of jurisdiction, the close relationship

between the two companies is a relevant factor that may be

considered."). Thus, if the record contains facts that warrant

disregarding PSC's corporate independence, the district court was

entitled to find ITD subject to personal jurisdiction in

Massachusetts on the basis of its relationship with its

subsidiary. See Donatelli, 893 F.2d at 466 ("Since the essence
___ _________

of personal jurisdiction is to bring responsible parties before

the court, a corporation which is actually responsible for its

subsidiary's decision to undertake instate activities should, in

all fairness, be within the state courts' jurisdictional

reach.").

B.
B.
__

Under Massachusetts common law, disregarding the

corporate form is permissible only in rare situations. See
___

Pepsi-Cola Metro. Bottling Co. v. Checkers, Inc., 754 F.2d 10,
_______________________________ _______________

15-16 (1st Cir. 1985) (limning criteria to be evaluated in

considering veil piercing under Massachusetts law); My Bread
________

Baking Co. v. Cumberland Farms, Inc., 233 N.E.2d 748, 751-52
___________ _______________________

(Mass. 1968) (similar). It would, however, serve no useful

purpose to explore the interstices of the state-law standard.

This is, after all, a federal question case and in federal

question cases, courts are wary of allowing the corporate form to


25














stymie legislative policies. See, e.g., First Nat'l City Bank v.
___ ____ _____________________

Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 630
___________________________________________

(1983); Bangor Punta Operations, Inc. v. Bangor & A. R.R., 417
_____________________________ _________________

U.S. 703, 713 (1974). For this reason, a federal court, in

deciding what veil-piercing test to apply, should "look closely

at the purpose of the federal statute to determine whether the

statute places importance on the corporate form, an inquiry that

usually gives less respect to the corporate form than does the

strict common law alter ego doctrine." Town of Brookline v.
__________________

Gorsuch, 667 F.2d 215, 221 (1st Cir. 1981) (citations omitted).
_______

We think that in disputes involving workers' claims to

ERISA benefits, whether derived through collective bargaining

under the LMRA or from individual employment contracts, a federal

court should apply a federal common law standard of corporate

separateness. See Lumpkin v. Envirodyne Indus., Inc., 933 F.2d
___ _______ _______________________

449, 460-61 (7th Cir.), cert. denied, 112 S. Ct. 373 (1991);
_____ ______

United Steelworkers of Am. v. Connors Steel Co., 855 F.2d 1499,
__________________________ _________________

1506-07 (11th Cir. 1988), cert. denied, 489 U.S. 1096 (1989);
_____ ______

Alman v. Danin, 801 F.2d 1, 3-4 (1st Cir. 1986); Laborers Clean-
_____ _____ _______________

Up Contract Admin. Trust Fund v. Uriarte Clean-Up Serv., Inc.,
______________________________ _____________________________

736 F.2d 516, 523 (9th Cir. 1984).12

____________________

12While the veil-piercing inquiry in an ERISA case is thus
rooted in federal law, state law is not rendered completely
irrelevant. See Massachusetts Laborers' Health & Welfare Fund v.
___ _____________________________________________
Starrett Paving Corp., 845 F.2d 23, 27 (1st Cir. 1988) (order
_____________________
denying rehearing) (federal veil-piercing standard in ERISA cases
"takes its content in part from related state law"); Uriarte, 736
_______
F.2d at 523 ("In considering whether to disregard the corporate
form [in an ERISA case], we apply federal substantive law,
although we may look to state law for guidance.").

26














In an ERISA case, the applicable federal standard can

sometimes be less rigorous than its state common law

counterparts. The rationale for encouraging a modicum of

corporate disregard in ERISA cases is grounded on congressional

intent. Congress enacted ERISA to protect the interests of

employee benefit plan participants and their beneficiaries. See
___

Ingersoll-Rand Co. v. McClendon, 111 S. Ct. 478, 482 (1990);
___________________ _________

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 108 (1989);
____________________________ _____

see also 29 U.S.C. 1001 (statement of congressional findings
___ ____

and declaration of policy). Against this backdrop, it is logical

to conclude that the corporate form must on occasion yield in

cases concerning employee benefits. See, e.g., Lowen v. Tower
___ ____ _____ _____

Asset Management, Inc., 829 F.2d 1209, 1220 (2d Cir. 1987)
_______________________

("Courts have without difficulty disregarded form for substance

where ERISA's effectiveness would otherwise be undermined.");

Alman, 801 F.2d at 3 (ERISA "cannot be said to attach great
_____

weight to corporate form"); cf. Connors Steel, 855 F.2d at 1505-
___ _____________

07 (applying similar reasoning to cases brought under LMRA). A

contrary rule, giving fully as much tensile strength to the

corporate shield in ERISA litigation as is bestowed by state

common law, would permit "the shareholders of a marginal

corporation to invoke the corporate shield in circumstances where

it is inequitable for them to do so and thereby avoid financial

obligations to employee benefit plans." Alman, 801 F.2d at 4.
_____

Moreover, sanctioning conduct of this type would put the courts

at cross purposes with Congress and thwart Congress's discernible


27














intent. See Lumpkin, 933 F.2d at 461 ("[T]he congressional
___ _______

intent of ERISA is to hold employers responsible for pension

benefits, so that when the corporate form poses a bar to

liability, 'concerns for corporate separateness are secondary to

what we view as the mandate of ERISA.'") (quoting Pension Benefit
_______________

Guar. Corp. v. Ouimet Corp., 711 F.2d 1085, 1093 (1st Cir.),
____________ ____________

cert. denied, 464 U.S. 961 (1983)).
_____ ______

C.
C.
__

Adopting a federal veil-piercing standard for ERISA

cases is not tantamount to saying that separate corporate

identities can be overlooked at will or at whim. The federal

standard still demands a substantial showing. In determining

when it may be appropriate to disregard corporate separateness in

an ERISA-related dispute, a court using the federal standard

should consider (1) whether the parent and the subsidiary ignored

the independence of their separate operations, (2) whether some

fraudulent intent existed on the principals' part, and (3)

whether a substantial injustice would be visited on the

proponents of veil piercing should the court validate the

corporate shield. See Alman, 801 F.2d at 4; United Paperworkers
___ _____ ___________________

Int'l Union v. Penntech Papers, Inc., 439 F. Supp. 610, 617-21
____________ ______________________

(D. Me. 1977), aff'd sub nom. United Paperworkers Int'l Union v.
_____ ___ ____ _______________________________

T. P. Property Corp., 583 F.2d 33 (1st Cir. 1978). Several of
_____________________

our sister circuits have adopted substantially similar tests.

See Lumpkin, 933 F.2d at 461; Connors Steel, 855 F.2d at 1507;
___ _______ _____________

Contractors, Laborers, Teamsters & Eng'rs Health & Welfare Plan
_________________________________________________________________


28














v. Hroch, 757 F.2d 184, 190 (8th Cir. 1985); Uriarte, 736 F.2d at
_____ _______

524. In sum, litigants who insist that the corporate veil be

brushed aside must first prove three things: lack of corporate

independence, fraudulent intent, and manifest injustice.

D.
D.
__

The plaintiffs' effort to justify jurisdiction over

ITD, en route to establishing ITD's liability for health-care

premiums, founders on the middle ("fraudulent intent")

component.13 In addressing this component, it is important to

bear in mind that corporations which simply try to limit their

overall liability by establishing, or acquiring, separately

incorporated subsidiaries do not thereby transgress legal or

ethical norms. In our commercially sophisticated society,

limited liability is often a paramount consideration in the

decision to maintain corporate separateness, and properly so.

See, e.g., Anderson v. Abbott, 321 U.S. 349, 362 (1944) ("Limited
___ ____ ________ ______

liability is the rule, not the exception."). It is only when the

quest to limit corporate responsibility evolves into a specific

effort to evade a parent corporation's legal obligations that the

possibility of veil piercing begins to loom. See N.L.R.B. v.
___ ________

Fullerton Transfer & Storage Ltd., 910 F.2d 331, 338 (6th Cir.
__________________________________

1990). A more free-wheeling approach to veil piercing would

hamstring established businesses in their legitimate efforts to

expand into new fields; undermine the predictability of corporate

____________________

13Concluding, as we do, that the record will not support a
finding of fraudulent intent, we need not address here either the
first or third components.

29














risk-taking; and provide a huge disincentive for the investment

of venture capital. Not surprisingly, therefore, the cases that

permit veil piercing in the ERISA milieu all emphasize that a

finding of some fraudulent intent is a sine qua non to the

remedy's availability.

To be sure, the word "fraud" has a protean quality. It

connotes different things in different settings. In the ERISA

veil-piercing sense, "fraud" may inhere even short of the

reprehensible behavior necessary to prove, say, criminal fraud or

independently actionable civil fraud. Then, too, the kind and

quantum of fraud may be less than under some state-law veil-

piercing rules. But, although the fraud threshold is lower when

veil piercing is attempted in an ERISA case, the threshold is not

invisible. The case law invariably requires, as a prerequisite

to corporate disregard in an ERISA matter, some cognizable

showing that the parent corporation maintained the subsidiary to

avoid its statutory responsibilities, acted in a blameworthy

manner, looted the subsidiary, or so undercapitalized the

subsidiary that the latter could not reasonably have been

expected to meet its obligations. See, e.g., Laborers' Pension
___ ____ _________________

Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d 702, 705
___________ ______________________________

(6th Cir. 1988) (per curiam) (allowing veil piercing because

owner looted subsidiary); Lowen, 829 F.2d at 1221 (allowing veil
_____

piercing because subsidiary's capital was "wholly inadequate" and

owners looted subsidiary); Alman, 801 F.2d at 4 (allowing veil
_____

piercing because owners undercapitalized subsidiary and dealt in


30














bad faith with unions); Hroch, 757 F.2d at 191 (allowing veil
_____

piercing because owner used subsidiary "in an inequitable fashion

to avoid its obligations"); see generally J.A. Bryant, Jr.,
___ _________

Annotation, Liability of Corporation for Contracts of Subsidiary,
____________________________________________________

38 A.L.R.3d 1102, 1135 (1971) ("something on the order of moral

culpability on the part of the parent is required to warrant

holding it liable for an obligation of its subsidiary").

In this case, there is a glaring shortfall in the

proof. The district court made no finding, expressly or by fair

implication, that PSC was either a sham or inadequately

capitalized; that ITD maintained PSC's separate corporate

identity as a subterfuge; that ITD intended to use PSC as a shell

in order corruptly to avoid obligations owed to the Union under

the collective bargaining agreement or otherwise; or that ITD had

any other malevolent purpose. The court did not mention any

attempts by ITD to loot its subsidiary, skirt labor law

obligations, or subvert ERISA's policies by reliance on the

technicalities of the corporate form. The court cited no

evidence that ITD was, from the start or thereafter, playing a

rogue's game.

The plaintiffs attempt to fill this void by arguing

that PSC was so thinly capitalized that an ulterior motive can be

inferred from the silent record. The lyrics have a soothing

ring, but the tune is completely off-key. In the first place, we

are inclined to view the absence of a finding to this effect as

fatal, whether or not the evidence, scanty though it is, might


31














support a permissive inference such as the plaintiffs describe.

In the second place, the evidence, howsoever recast, simply does

not substantiate the inference.

Inadequate capitalization can, of course, be a badge of

fraud. But, the record here does not reflect a shoestring

operation. Rather, it reveals an investor spending freely in

what has all the earmarks of a good-faith, if ultimately

unsuccessful, endeavor to resurrect a moribund company. As the

plaintiffs admit, in the thirty months during which PSC endured,

ITD injected roughly $8,000,000, partly in cash and partly in

kind, in a fruitless effort to revivify PSC's manufacturing

operations. To draw an inference of fraudulent intent from so

forthcoming a history defies logic. Cf. Uriarte, 736 F.2d at 525
___ _______

(distinguishing the propriety of veil piercing in a case where a

subsidiary was undercapitalized from a case where a subsidiary

"was once adequately capitalized but subsequently fell upon bad

financial times").

We have previously examined this very issue in a case,

not cited by any party, which possesses uncanny similarities to

the case at bar. In United Paperworkers Int'l Union v. Penntech
_______________________________ ________

Papers, Inc., 439 F. Supp. 610 (D. Me. 1977), aff'd sub nom.
_____________ _____ ___ ____

United Paperworkers Int'l Union v. T. P. Property Corp., 583
_________________________________ _____________________

F.2d 33 (1st Cir. 1978), a paper mill, operated by Kennebec

Corporation, had a collective bargaining agreement with the

Paperworkers Union. The mill was shut down by its parent company

because the operation proved unprofitable. Later on, Penntech,


32














an unrelated company, exhibited an interest in buying Kennebec.

Kennebec and the union bargained in anticipation of the

acquisition. Penntech, which had not yet acquired the mill, made

suggestions on how to structure the collective bargaining

agreement. These suggestions were incorporated into the final

version of the pact. During the same period, Penntech also

negotiated with Kennebec's creditors in a successful attempt to

write down some of Kennebec's outstanding debt.

Two days after Kennebec and the union signed the

collective bargaining agreement, the sale was consummated.

Penntech became the sole owner of Kennebec (which retained its

separate corporate identity). The mill operated under Penntech's

stewardship for approximately one year. The ties between parent

and subsidiary were close. Penntech staffed Kennebec's board

with individuals who were associated with Penntech; elected

several insiders as officers; and loaned Kennebec over $100,000

to get the mill back on its feet. Nevertheless, Kennebec's

losses mounted. After a year, the mill folded.

Basing its claims on the LMRA, the union then attempted

to hold Penntech, a non-signatory, to the terms of the collective

bargaining agreement. The district court rejected the union's

attempt to subject Penntech to Kennebec's labor agreement. We

affirmed. Like the district court, we refused to disregard the

corporate form absent evidence of Penntech's fraudulent intent in

acquiring and maintaining Kennebec. See T. P. Property, 583 F.2d
___ ______________

at 35-36; Penntech, 439 F. Supp. at 617-21. This fraud
________


33














requirement:

holds true even when the subsidiary is found
to be an alter ego or instrumentality of the
parent. It is particularly so in contract
cases because contracts are private,
consensual relationships in which each party
has a clear and equal obligation to weigh the
potential benefits and risks of the
agreement. Unless fraud or misrepresentation
is involved, there can be little
justification for disregarding corporate
entities which the parties obviously expected
to remain intact.

Penntech, 439 F. Supp. at 618.
________

The striking factual and legal similarities between the

United Paperworkers cases and the present case solidify our
____________________

belief that the district court erred in concluding that PSC's

corporate veil could be pierced.14 Veil piercing cannot occur

without some degree of moral culpability on the parent

corporation's part. See American Bell Inc. v. Federation of Tel.
___ __________________ __________________

Workers, 736 F.2d 879, 887 (3d Cir. 1984) ("[T]here is no policy
_______

of federal labor law, either legislative or judge-made, that a

parent corporation is bound by its subsidiary's labor contracts

simply because it controls the subsidiary's stock and

participates in the subsidiary's management.") (citing T. P.
______

Property). Without a finding of fraudulent intent indeed,
________

without the slightest evidentiary basis for such a finding ITD

could not be subjected to jurisdiction because of its


____________________

14We recognize, of course, that the United Paperworkers
___________________
cases did not deal with the special policy concerns implicated by
ERISA. But, this is a distinction without a difference. As we
have explained, the ERISA cases consistently require a showing of
fraud as a precondition to piercing the corporate veil.

34














relationship to PSC.

E.
E.
__

The plaintiffs try to escape from the consequences of

their failure to show some vestige of fraudulent intent by

reliance on a somewhat different aspect of the Massachusetts

"alter ego" doctrine. This doctrine allows corporate disregard,

even absent a finding of fraud, if "there is a confused

intermingling of activity of two or more corporations engaged in

a common enterprise with substantial disregard of the separate

nature of the corporate entities, or serious ambiguity about the

manner in which the various corporations and their respective

representatives are acting." My Bread, 233 N.E.2d at 752.
_________

Accordingly, when a parent and its subsidiary fail "to make clear

which corporation is taking action in a particular situation," or

neglect to honor "the formal barriers between the corporations

with a proper segregation of their separate businesses, records,

and finances," their separate entities may occasionally be

disregarded "in order to prevent gross inequity." Id. (citation
___

omitted).

This effort fails for two reasons. First, as we have

previously explained, state law does not govern here. Rather,

the federal courts have developed, and must perforce use, their

own federal common law standard for determining corporate

independence in cases involving ERISA plans. See, e.g., Lumpkin,
___ ____ _______

933 F.2d at 460-61; Connors Steel, 855 F.2d at 1506-07; Alman,
______________ _____

801 F.2d at 3-4; Uriarte, 736 F.2d at 523; T. P. Property, 583
_______ _______________


35














F.2d at 35-36. We are aware of no case applying the federal
_______

standard which permits the piercing of a corporate veil on a

showing of something less than fraud (as we have defined it, see
___

supra pp. 29-30).
_____

Second, if we were to assume arguendo that, under
________

federal common law, a doctrine roughly congruent to the

Massachusetts alter ego doctrine (or even a slightly milder

varietal thereof) might be recognized as a basis for veil

piercing in an appropriate ERISA case, cf., e.g., cases cited
___ ____

supra note 12, the present plaintiffs still could not prevail.
_____

Successful invocation of the alter ego doctrine requires a

showing that businesses, although separately incorporated, have

been operated in so imbricated a manner as to justify a

reasonable perception that they were one and the same. See
___

Westcott Constr. Corp. v. Cumberland Constr. Co., 328 N.E.2d 522,
______________________ ______________________

525-26 (Mass. App. Ct. 1975). There is no such evidence in this

record. Similarly, there is no suggestion here that ITD

manipulated its interest in PSC in such a way as to "blur the

practical distinctions" between the two corporate entities. Oman
____

Int'l Fin. Ltd. v. Hoiyong Gems Corp., 616 F. Supp. 351, 364
________________ ___________________

(D.R.I. 1985). PSC alone signed the collective bargaining

agreement and the individual labor contracts; executing the pacts

in this manner "ma[de] clear which corporation [was] taking

action" with respect to the promise to pay health-case premiums.

My Bread, 233 N.E.2d at 752. In short, the evidence does not
________

begin to approach the level of "confused intermingling" or


36














"serious ambiguity" needed to support a finding that PSC and ITD

had become alter egos. Compare, e.g., WJM, Inc. v. Massachusetts
_______ ____ _________ _____________

Dep't of Pub. Welfare, 840 F.2d 996, 1009-10 (1st Cir. 1988)
_______________________

(respecting corporate separateness); Miller v. Honda Motor Co.,
______ _______________

779 F.2d 769, 772-73 (1st Cir. 1985) (same); Evans v. Multicon
_____ ________

Constr. Corp., 574 N.E.2d 395, 398-400 (Mass. App. Ct.) (same),
_____________

rev. denied, 577 N.E.2d 309 (1991); and Westcott, 328 N.E.2d at
____ ______ ________

526 (same) with Pepsi-Cola, 754 F.2d at 14-15 (disregarding
____ __________

corporate separateness).

F.
F.
__

In a final, apopemptic effort to salvage their victory

below, plaintiffs contend that, even if the lower court erred in

piercing the corporate veil, jurisdiction over ITD was

nonetheless exercisable under an "integrated enterprise" theory.

Whatever the cogency of this asseveration and we are highly

skeptical of its merits in light of the conspicuous lack of

support in the case law for transplanting this theory from the

liability context to the jurisdictional context the plaintiffs

have forfeited the opportunity to seek appellate review of this

contention.

It is frequently true that legal theories not squarely

presented in the nisi prius court are deemed waived on appeal.

See, e.g., McCoy v. Massachusetts Inst. of Technology, 950 F.2d
___ ____ _____ __________________________________

13, 22 (1st Cir. 1991), petition for cert. filed, 60 U.S.L.W.
_________________________

3601 (U.S. Feb. 14, 1992); Clauson v. Smith, 823 F.2d 660, 666
_______ _____

(1st Cir. 1987). Square presentation implies timely


37














presentation. In this instance, plaintiffs did not raise the

argument distinctly or in a timely fashion in the court below.

This deficiency is fatal even though plaintiffs appear here as

appellees for, although an appellate court has the power to

affirm a judgment on any independently sufficient ground

documented by the record, whether or not relied on below, see,
___

e.g., Polyplastics, Inc. v. Transconex, Inc., 827 F.2d 859, 860-
____ __________________ ________________

61 (1st Cir. 1987), the plaintiffs' dilatoriness in presenting

the integrated enterprise point, coupled with the nonchalant

nature of their allusion to it, have combined to leave the

present record without a basis adequate to permit judicial

evaluation of the doctrine's applicability.15 The record

simply does not contain satisfactory proof of the criteria upon

which the availability of the doctrine depends. See, e.g., Radio
___ ____ _____

& Television Broadcast Technicians, Etc. v. Broadcast Serv.,
___________________________________________ _________________

Inc., 380 U.S. 255, 256 (1965) (per curiam) (elucidating criteria
____

for operation of integrated enterprise doctrine); Rivas v.
_____

Federacion de Asociaciones Pecuarias, 929 F.2d 814, 820 n.16 (1st
____________________________________

____________________

15To be sure, the plaintiffs made a fleeting reference to
this theory in some papers handed to the district judge during
the preliminary injunction hearing. Neither the court nor ITD,
however, had time to consider or analyze the theory before the
court granted the preliminary injunction. Under the
circumstances, the plaintiffs' casual proffer was too little, too
late. See, e.g., McCoy, 950 F.2d at 22 (court of appeals will
___ ____ _____
not review claims that were "merely insinuated rather than
actually articulated in the trial court"); Mack v. Great Atlantic
____ ______________
& Pacific
__________


Tea Co., 871 F.2d 179, 183 (1st Cir. 1989) ("A litigant has the
_______
duty to spell out her theories clearly and distinctly before the
nisi prius court, on pain of preclusion.").

38














Cir. 1991) (similar). As a result, the court below did not

consider the theory. We are equally disadvantaged more so,

perhaps, because there are no pertinent findings for an appellate

court to review. Hence, plaintiffs' argument suffers from a

fatal insufficiency of proof.

We hasten to add that, were we willing to entertain an

attempt to assert jurisdiction over ITD under this newly emergent

theory, such evidence as there is suggests that the plaintiffs

would not be benefitted. While ITD owned PSC, that fact, without

more, is not enough to justify the invocation of the integrated

enterprise doctrine. See United Tel. Workers v. N.L.R.B., 571
___ ____________________ ________

F.2d 665, 667 (D.C. Cir.), cert. denied, 439 U.S. 827 (1978).
_____ ______

And as we have pointed out in a slightly different context, see
___

supra Part IV(E), other criteria for the application of the
_____

integrated enterprise doctrine are lacking. In sum, our

examination of the record fully persuades us that there is

insufficient evidence concerning the interrelationship of the

corporations' management and operations to bring the integrated

enterprise doctrine into play.

V. MISCELLANEOUS MATTERS
V. MISCELLANEOUS MATTERS

Finding a want of in personam jurisdiction on the
__ ________

record as it stands, we are left with two additional matters

initiated by the plaintiffs. We consider them seriatim.
________

A.
A.
__

The plaintiffs' cross-appeal makes but a single point.

It challenges the district court's denial of the plaintiffs'


39














request to exclude certain of ITD's affidavits. This strikes us

as a non-issue, since the material in the disputed affidavits is

of only tangential relevance to the matters upon which the main

appeals hinge. When, as in this case, disputed affidavits amount

to no more than buzznacking because, come what may, they will

have no bearing upon the outcome of an appeal, a reviewing court

should simply ignore them. See Sheinkopf v. Stone, 927 F.2d
___ _________ _____

1259, 1262 n.3 (1st Cir. 1991); William J. Kelly Co. v.
_______________________

Reconstruction Fin. Corp., 172 F.2d 865, 867-68 (1st Cir. 1949).
_________________________

We follow this course. Hence, because nothing turns on the

cross-appeal, it is pretermitted.

B.
B.
__

The other matter with which we must deal is plaintiffs'

motion to dismiss ITD's appeals. In this motion, plaintiffs

argue that, because ITD "has failed to obey . . . the preliminary

injunction and the contempt order issued by the district court,"

it should not be allowed to prosecute its appeals. In support,

the plaintiffs advance a novel theory of disentitlement derived

from the fugitive-from-justice doctrine. See generally Molinaro
___ _________ ________

v. New Jersey, 396 U.S. 365 (1970) (per curiam) (discussing
__________

fugitive-from-justice doctrine); United States v. Puzzanghera,
_____________ ___________

820 F.2d 25 (1st Cir.) (similar), cert. denied, 484 U.S. 900
_____ ______

(1987). We believe the plaintiffs' reliance on this doctrine is

utterly misplaced.

The fugitive-from-justice doctrine is a prudential

device which courts may invoke to estop fugitives from


40














challenging criminal convictions in absentia. Puzzanghera, 820
___________

F.2d at 27; United States v. Tremont, 438 F.2d 1202, 1203 (1st
_____________ _______

Cir. 1971) (per curiam). The driving force behind the doctrine

is the idea that a criminal defendant, following conviction and

initiation of an appeal, should not be allowed, by absconding, to

create a "heads I win, tails you lose" situation. Thus, the

doctrine holds that a fugitive, having flouted the justice

system, should not be permitted simultaneously to milk the system

for his own benefit by seeking vacation of the very conviction

that inspired his unlawful flight.

When the claim of disentitlement is addressed to a

civil suit, the doctrine must be applied sparingly. Thus, "while

we have previously extended the application of the doctrine

beyond an appeal in a criminal case, to a civil case, it is clear

that this must be a civil case closely related to the criminal

matter from which the applicant is a fugitive." United States v.
_____________

Pole No. 3172, Hopkinton, 852 F.2d 636, 643 (1st Cir. 1988)
__________________________

(citation omitted); cf. United States v. Eng, 951 F.2d 461, 464
___ ______________ ___

(2d Cir. 1991) (the doctrine of disentitlement holds that "a

person who is a fugitive from justice may not use the resources

of the civil legal system while disregarding its lawful orders in

a related criminal action"). In this case, the plaintiffs'

argument does not get out of the starting gate: since ITD

committed no crime, the fugitive-from-justice doctrine does not

in any way bar its prosecution of the instant appeals.

Apparently recognizing the weakness of their position,


41














the plaintiffs try to conjure up a new rule of law by analogy to,

and extension of, the fugitive-from-justice doctrine. They

argue, without a shred of supporting authority, that a civil

contemnor, not having complied with the underlying decree, should

be prohibited from appealing either that decree or the contempt

order itself. In the circumstances of this case, we refuse to

essay so heroic a leap.

Disentitlement is not a matter of jurisdictional

dimension; rather, it is a concept premised on principles of

equity. See United States v. Sharpe, 470 U.S. 675, 681 n.2
___ ______________ ______

(1985); United States v. Van Cauwenberghe, 934 F.2d 1048, 1054
______________ _________________

(9th Cir. 1991). ITD is not a fugitive. It has made a series of

good-faith challenges, in the district court and on appeal, to an

adverse jurisdictional ruling. In so doing, ITD has acted within

the legal system's rules, not as an outlaw, but as a litigant

determined to assert a colorable defense in a responsible way.

We think that, in general, a court should be extremely reluctant

to invoke the equitable doctrine of disentitlement when an

appellant has not committed any criminal act.16 Cf. Pole No.
___ _________

3172, 852 F.2d at 643. No such wrongdoing can conceivably be
____

attributed to ITD. On this record, we cannot even say that ITD

stands before us with unclean hands.


____________________

16It may be, in theory, that some outrageous conduct, short
of transgressing the criminal law, might in some special
circumstances justify a disentitlement penalty. We need not
speculate as to this possibility, however, as it is clear that
ITD has done nothing sufficiently culpable to warrant so
draconian a sanction.

42














We note, too, that the plaintiffs' argument flies in

the teeth of the case law regarding litigants' attempts to

challenge contempt orders on personal jurisdiction grounds.

Because "[c]ourt orders are accorded a special status in American

jurisprudence," In re Providence Journal Co., 820 F.2d 1342, 1347
____________________________

(1st Cir. 1986), modified, 820 F.2d 1354 (1st Cir. 1987) (per
________

curiam), cert. dismissed, 485 U.S. 693 (1988), parties wishing to
_____ _________

challenge such orders must proceed within the guidelines of the

collateral bar rule. This rule dictates "that court orders, even

those that are later ruled unconstitutional, must be complied

with until amended or vacated." Id. at 1345. As a conventional
___

matter, then, a party wishing to appeal a district court's order

should either obtain a stay of the order or comply with its terms

until an appeals court amends or vacates the order. See id. at
___ ___

1346.

Nevertheless, "court orders are not sacrosanct," id. at
___

1347, and the collateral bar rule is not without exceptions. One

such exception is pertinent here. It is established beyond

peradventure that a party may bring an appeal to challenge a

contempt order, notwithstanding the failure to obtain a stay or

comply with the order's terms, if the order was entered by a

court lacking jurisdiction over the contemnor or the subject

matter. See United States Catholic Conference v. Abortion Rights
___ _________________________________ _______________

Mobilization, Inc., 487 U.S. 72, 76 (1988); United States v.
__________________ _____________

United Mine Workers, 330 U.S. 258, 293 (1947); Providence
_____________________ __________

Journal, 820 F.2d at 1347. This tenet flows naturally from the
_______


43














fact that jurisdictional concepts are not merely technical rules.

Rather, such concepts are founded

on the central principle of a free society
that courts have finite bounds of authority,
some of constitutional origin, which exist to
protect citizens from . . . the excessive use
of judicial power. The courts, no less than
the political branches of government, must
respect the limits of their authority.

Catholic Conference, 487 U.S. at 77. Were a contrary view to
____________________

prevail, "a court could wield power over parties or matters

obviously not within its authority a concept inconsistent with

the notion that the judiciary may exercise only those powers

entrusted to it by law." Providence Journal, 820 F.2d at 1347.
__________________

To say more would be to paint the lily. We refuse to

twist the fugitive-from-justice doctrine into the unfamiliar

contours envisioned by the plaintiffs. We rule that a party

previously found in contempt for failing to comply with a court

order does not lose its right to appeal if the merits of the

appeal hinge upon the trial court's want of jurisdiction. ITD is

entitled to prosecute the instant appeals.

VI. CONCLUSION
VI. CONCLUSION

We are keenly aware of the plight of the plaintiffs

working men and women who, upon retiring, had every expectation

of continued health-care coverage. It seems unfair that the

plaintiffs' expectations were dashed when PSC was forced to close

its doors. It is painful for us to turn the plaintiffs away

without redress. But, "[w]e do what we must, for 'it is the duty

of all courts of justice to take care, for the general good of


44














the community, that hard cases do not make bad law.'" Burnham v.
_______

Guardian Life Ins. Co., 873 F.2d 486, 487 (1st Cir. 1989)
_________________________

(quoting United States v. Clark, 96 U.S. (6 Otto) 37, 49 (1877)
_____________ _____

(Harlan, J., dissenting) (quoting Lord Campbell)).

We need go no further. Because the plaintiffs failed

to establish that the court below was entitled to exercise in
__

personam jurisdiction over ITD, the district court's orders were
________

coram non judice and, therefore, no more than serial nullities.
_____ ___ ______

It follows inexorably that ITD's motion to quash the complaint

for want of personal jurisdiction should have been granted.

Accordingly, the plaintiffs' motion to dismiss ITD's appeals must

be denied; the appeals themselves must be sustained; the

plaintiffs' cross-appeal must be rejected; and the case must be

remanded to the district court with directions to vacate the

preliminary injunction and contempt order previously entered, and

for further proceedings not inconsistent herewith.



Reversed and remanded.
Reversed and remanded.
_____________________


















45