Contested Personal Jurisdiction Must Be Resolved Before a Merits Dismissal

1. Introduction

In Whaleco Inc. v. Gluck, the First Circuit reaffirmed a fundamental limitation on federal judicial power: a court cannot resolve the merits of a lawsuit while leaving a properly contested question of personal jurisdiction unanswered. Even when dismissal for failure to state a claim appears straightforward, the court must first establish its authority over the defendants challenging that authority.

The decision arose from allegations that an intellectual-property lawyer made false representations to induce settlement agreements with Whaleco Inc., which operates the online shopping platform Temu. The appellate court did not determine whether those allegations stated valid claims. Instead, it vacated the district court’s judgment because the court had dismissed the complaint on the merits without deciding pending personal-jurisdiction motions.

The opinion’s principal precedential contribution is its rejection of earlier First Circuit language permitting courts to bypass difficult personal-jurisdiction questions when the merits could readily be decided for the defendant. It also carefully preserves the distinction between an impermissible merits-first adjudication and permissible dismissal on an independent, nonmerits ground.

2. Background and Procedural History

The settlements and alleged misrepresentations

Temu sued Jeffrey Gluck, Gluck Law Firm, P.C., and Gluck’s clients: Cookies SF LLC and Alec Monopoly Art, LLC and Alec Monopoly, LLC, collectively described in the opinion as Alec Monopoly. Temu invoked diversity jurisdiction.

Gluck negotiated separate settlements for Cookies SF and Alec Monopoly and personally signed two provisions in each agreement. One represented that he and his firm currently had no clients intending to sue Temu and no present intention to advertise or market for additional clients. Importantly, the same provision expressly preserved his right to represent clients against Temu, bring claims against it, and advertise for additional clients.

The second provision acknowledged that the agreements depended on assurances concerning the truth and accuracy of their representations and that a material breach would permit available remedies. Gluck signed the agreements in November 2024; Temu signed both on December 3, 2024.

Temu alleged that Gluck advertised for new claims against it shortly after signing but before the agreements became effective. It also alleged that, shortly after effectiveness, he threatened litigation for additional clients with whom he had longstanding relationships. According to Temu, these circumstances showed that his representations about existing clients and present intentions were false.

That distinction matters: the complaint challenged the truth of representations about existing circumstances and intentions, while the agreements expressly preserved future representation and advertising rights. The First Circuit did not decide whether that distinction supported liability, whether any contractual promise was breached, or whether the provisions were enforceable.

Claims and requested relief

The complaint asserted:

• Intentional misrepresentation and fraudulent inducement;
• Negligent misrepresentation;
• Breach of contract;
• Breach of the implied covenant of good faith and fair dealing; and
• Unjust enrichment.

Temu sought, among other remedies, rescission of the settlements and return of the settlement proceeds, or damages instead of rescission. These were allegations and requested remedies—not findings that anyone had acted unlawfully.

The district court’s rulings

All defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the complaint failed to state a legally sufficient claim. Gluck and Cookies SF also moved under Rule 12(b)(2), contesting personal jurisdiction. Alec Monopoly did not contest personal jurisdiction below. Gluck separately requested Rule 11 sanctions against Temu and its lawyers.

The district court dismissed the complaint on the merits and expressly declined to decide the personal-jurisdiction objections because of that disposition. It then awarded contractual attorney fees to Cookies SF and Alec Monopoly and denied Gluck’s sanctions motion.

Temu appealed the dismissals and fee rulings. Gluck cross-appealed the denial of sanctions. Gluck and Cookies SF continued to maintain that the court lacked personal jurisdiction over them.

3. Summary of the Opinion

The First Circuit held that the district court could not dismiss the claims on their merits without first resolving the contested personal-jurisdiction questions. It therefore vacated the orders and judgment underlying the appeals and remanded.

The remand requires the district court to:

1. Decide Gluck’s and Cookies SF’s personal-jurisdiction motions, developing the relevant facts if necessary.
2. If jurisdiction exists, reassess whether the complaint plausibly states claims against the defendants.
3. Depending on that assessment, reconsider contractual attorney fees and Gluck’s Rule 11 request.
4. If jurisdiction is lacking, dismiss the defendants over whom jurisdiction is absent without prejudice and determine the appropriate next steps concerning Alec Monopoly.

The appellate court expressed no final view on personal jurisdiction, substantive liability, contractual fee entitlement, or whether sanctions were warranted. Each party was required to bear its own appellate costs.

4. Analysis: Precedents and Their Influence

A. Supreme Court authority establishing the jurisdictional prerequisite

Sinochem Int'l Co. Ltd. v. Malay. Int'l Shipping Corp., 549 U.S. 422 (2007)

This was the opinion’s central authority. It explains that federal courts ordinarily may not decide the merits without establishing both subject-matter jurisdiction and personal jurisdiction. The First Circuit relied particularly on its treatment of personal jurisdiction, which foreclosed reading the prohibition on assumed jurisdiction as limited to Article III questions.

Equally important, this precedent preserves procedural flexibility. Courts need not resolve jurisdictional questions in a fixed order, and they may sometimes dismiss on a nonmerits ground, such as forum non conveniens, without completing a jurisdictional inquiry. That exception did not apply here because dismissal for failure to state a claim addressed the merits.

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998)

This decision rejected “hypothetical jurisdiction”: assuming jurisdiction merely because the merits offer an easier route to disposing of the case. Its underlying concern is institutional authority. An apparently correct substantive answer does not become a valid judgment if the court lacked power to give it.

Although the jurisdictional issue there involved Article III standing, the First Circuit read its prohibition together with later Supreme Court guidance expressly addressing personal jurisdiction. The opinion also invoked its statement that the party asserting federal jurisdiction bears the burden of establishing it.

Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982)

This authority supplies the constitutional explanation: personal jurisdiction protects individual liberty through due process, rather than through Article III’s case-or-controversy requirement. A court cannot exercise adjudicatory authority over an objecting party without establishing the necessary jurisdiction.

Because the protection belongs to the litigant, it can be waived. That distinguishes personal jurisdiction from subject-matter jurisdiction. Here, however, Gluck and Cookies SF expressly preserved their objections; the court could not treat those objections as irrelevant simply because it ruled in their favor on the merits.

Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999)

This decision reinforces two complementary propositions. First, personal jurisdiction is essential to a merits adjudication. Second, courts have discretion to choose among jurisdictional questions without asserting substantive law-declaring authority. A court may therefore resolve an easier jurisdictional issue before a harder one, but that discretion does not authorize moving directly to the merits.

Additional foundational authorities

• Lightfoot v. Cendant Mortg. Corp., 580 U.S. 82 (2017), directly supports the proposition that a court must possess power over the parties before resolving a case.
• Fuld v. Pal. Liberation Org., 606 U.S. 1 (2025), reinforces the due-process foundation of personal jurisdiction.
• Emps. Reinsurance Corp. v. Bryant, 299 U.S. 374 (1937), supplies the foundational description of personal jurisdiction as an essential element without which a district court cannot adjudicate.
• Ex parte McCardle, 74 U.S. (7. Wall.) 506 (1869), appears through the Supreme Court’s subsequent decisions for the longstanding principle that a court cannot proceed to adjudication without jurisdiction.

B. Earlier First Circuit decisions permitting merits-first treatment

N. Am. Cath. Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8 (1st Cir. 2009)

Gluck relied on this decision’s statement that a difficult jurisdictional question could be avoided where the underlying merits were easily resolved for the party contesting jurisdiction. That decision had first eliminated claims it considered hopeless and then addressed personal jurisdiction only for the remaining claims.

The present panel rejected that approach insofar as it permits courts to bypass contested personal jurisdiction before a merits ruling. This is the opinion’s most consequential clarification of circuit law.

Kotler v. Am. Tobacco Co., 926 F.2d 1217 (1st Cir. 1990), vacated on other grounds, 505 U.S. 1215 (1992)

This was the source of the merits-first formulation repeated in the later circuit decision. The First Circuit explained that the Supreme Court’s 1998 rejection of hypothetical jurisdiction undermined that earlier approach.

The Supreme Court had also rejected reliance on Norton v. Mathews, 427 U.S. 524 (1976), and Sec'y of the Navy v. Avrech, 418 U.S. 676 (1974) (per curiam), for a general rule permitting easy merits decisions on assumed jurisdiction. Those were the authorities underlying the earlier circuit formulation.

McBee v. Delica Co. Ltd., 417 F.3d 107 (1st Cir. 2005)

This decision had understood the Supreme Court’s prohibition on hypothetical jurisdiction as restricted to Article III jurisdiction. The present opinion explained that the Supreme Court’s subsequent 2007 decision expressly required courts to establish contested personal jurisdiction before deciding the merits. The earlier narrow reading therefore could not govern this case.

C. Authority allowing departure from inconsistent circuit precedent

The panel acknowledged that one circuit panel ordinarily cannot disregard another panel’s legal holding merely because it disagrees.

• United States v. Guerrero, 19 F.4th 547 (1st Cir. 2021), states this law-of-the-circuit principle and recognizes the relevance of controlling developments in the law.
• Eulitt ex rel. Eulitt v. Me., Dep't of Educ., 386 F.3d 344 (1st Cir. 2004), identifies exceptions where controlling authority undermines an earlier panel decision or recent Supreme Court precedent legitimately calls it into question.

The panel treated those exceptions as applicable. Its reasoning was not that judicial efficiency had become less important, but that the older merits-first practice was inconsistent with binding Supreme Court restrictions on judicial power.

The chronology is notable: the 2009 circuit decision itself followed the Supreme Court’s 2007 decision. The present opinion nevertheless concluded that the older formulation on which the circuit decision relied could not justify bypassing personal jurisdiction in light of controlling Supreme Court doctrine.

D. Supporting circuit authority and the statutory-jurisdiction reservation

In Rodríguez-Rivera v. Allscripts Healthcare Sols., Inc., 43 F.4th 150 (1st Cir. 2022), the First Circuit had already signaled that both subject-matter and personal jurisdiction ordinarily must precede merits adjudication. The panel cited that decision as evidence that its present ruling followed an existing doctrinal movement rather than introducing an entirely unexpected rule.

The court expressly preserved a separate circuit practice identified in In re Fin. Oversight & Mgmt. Bd. for P.R., 916 F.3d 98 (1st Cir. 2019): hypothetical jurisdiction may remain available where the bypassed jurisdictional issue is statutory. The personal-jurisdiction objection here implicated constitutional due process, so that reservation did not apply.

Waleski v. Montgomery, McCracken, Walker & Rhoads, LLP, 143 S. Ct. 2027 (2023), was cited through a dissent from denial of certiorari recognizing a circuit split over hypothetical statutory jurisdiction. That separate writing was not presented as a binding Supreme Court resolution of the split.

E. Contrary commentary and other supporting precedents

The court addressed a passage in Wright and Miller’s federal-practice treatise suggesting that courts may avoid difficult jurisdictional questions when the merits clearly favor the jurisdictional challenger. It declined to follow that passage.

Its relevant support was In re Enter. Rent-A-Car Wage & Hour Emp. Pracs. Litig., 735 F. Supp. 2d 277 (W.D. Pa. 2010), affirmed, 683 F.3d 462 (3d Cir. 2012). The panel observed that neither opinion analyzed the controlling 2007 Supreme Court decision and that their approach conflicted with the First Circuit’s more recent direction.

The remaining citations served specific procedural or explanatory functions:

5. Analysis: The Court’s Legal Reasoning

A merits dismissal still exercises judicial power

The central error was treating a ruling favorable to the defendants as a reason not to establish jurisdiction over them. A Rule 12(b)(6) dismissal determines the legal sufficiency of claims. It therefore exercises adjudicatory power even when the defendant wins.

The due-process limitation is not merely protection against an adverse outcome. It restricts the court’s authority to adjudicate in the first place. Consequently, an apparently easy merits question cannot substitute for the missing jurisdictional determination.

Appellate review could not cure the defect by reaching the merits

The same restriction constrained the First Circuit. It could not simply bypass personal jurisdiction and reverse the dismissals on substantive grounds. Doing so would itself exercise the law-declaring authority whose existence remained unresolved.

Rather than undertake a complicated personal-jurisdiction inquiry initially on appeal, the court returned the issue to the district court, where additional briefing, argument, and factual development could occur.

The opinion decides sequencing, not the jurisdictional outcome

Gluck emphasized his and his firm’s California connections and disputed whether their dealings with Boston-based Temu established relevant Massachusetts conduct. Cookies SF likewise relied on its California location and execution of its agreement there.

The First Circuit did not accept or reject those arguments. It established the obligation to decide them. The opinion therefore supplies no holding that negotiating a settlement with a Massachusetts company either necessarily creates or necessarily fails to create personal jurisdiction.

Why Alec Monopoly’s dismissal was also vacated

Alec Monopoly had not challenged personal jurisdiction, but Temu’s allegations linked all defendants through agency, ratification, and settlement representations. Temu also argued that all were indispensable parties to its request to undo the agreements.

The court concluded that deciding Alec Monopoly’s merits dismissal separately would be premature because its proper treatment could depend on what happened to Gluck and Cookies SF. This was a case-specific use of remand authority, not a holding that Alec Monopoly lacked jurisdiction or that Temu had established indispensability.

Fees and sanctions remained unresolved

The contractual fee awards and sanctions denial were returned for reconsideration within the remand framework. Vacatur did not establish that contractual fees were unavailable or that sanctions should be imposed.

The opinion’s treatment of sanctions is a direction for this intertwined litigation, not a separate holding resolving every question about collateral sanctions authority when jurisdiction is disputed.

6. Potential Impact

• Clearer sequencing in the First Circuit: Courts cannot rely on the older easy-merits formulation to avoid a properly preserved personal-jurisdiction objection.
• Greater attention to jurisdictional records: Parties may need to develop forum-contact evidence before securing a merits ruling. The opinion permits necessary factual development but does not automatically require jurisdictional discovery in every case.
• Reduced reliance on apparent efficiency: A prompt merits dismissal may save effort initially, but it risks vacatur if jurisdiction remains unresolved.
• Continuing procedural flexibility: Courts retain discretion over the order of jurisdictional questions and may use appropriate nonmerits dismissal grounds. Waived personal-jurisdiction objections present a different situation.
• Consequences for multi-defendant litigation: Interdependent claims, rescission requests, and necessary-party arguments may make a comprehensive remand preferable to piecemeal appellate merits review.
• No new substantive settlement rule: The decision does not determine when representations about present intent are actionable, whether these settlements can be rescinded, or whether an attorney’s future representation rights were improperly restricted.

Its broader significance is institutional: legitimate adjudication requires both a legally supportable answer and authority to provide that answer.

7. Complex Concepts Simplified

Personal jurisdiction

A court’s authority over a particular defendant. The defendant can generally waive this protection, but a preserved objection must be addressed before a merits judgment.

Subject-matter jurisdiction

A court’s authority to hear the category of dispute. Diversity jurisdiction was the asserted basis here; that did not independently establish authority over each defendant.

Hypothetical jurisdiction

Assuming that jurisdiction exists to decide another issue. The court rejected that shortcut for the contested personal-jurisdiction questions presented here.

Rule 12(b)(2) and Rule 12(b)(6)

The first challenges the court’s authority over the defendant. The second challenges whether the complaint states a legally sufficient claim. They ask different questions.

Nonmerits dismissal

A disposition that does not decide whether the underlying claim is legally or factually justified. Forum non conveniens, which concerns a more appropriate forum, is one example discussed in the opinion.

Law-of-the-circuit doctrine

The rule that later appellate panels ordinarily follow earlier panels’ legal holdings, subject to recognized exceptions involving controlling legal developments.

Vacatur and remand

Vacatur sets aside the challenged rulings. Remand returns the case to the lower court for further proceedings. Neither establishes that Temu ultimately wins.

Dismissal without prejudice

A dismissal that does not finally reject the claim on its merits and generally leaves open litigation in a court with proper jurisdiction.

Rescission and indispensable parties

Rescission seeks to undo an agreement. Indispensable-party arguments ask whether the litigation can fairly and effectively proceed without particular participants. The First Circuit resolved neither issue here.

8. Conclusion

Whaleco Inc. v. Gluck establishes that ease of decision cannot replace adjudicatory authority. A federal court may not dismiss claims on their merits while leaving preserved personal-jurisdiction objections unresolved.

By rejecting inconsistent earlier circuit language and vacating the intertwined rulings, the First Circuit restored the proper sequence: establish authority over the contesting defendants, then address the merits and related requests for relief. The underlying settlement dispute remains open.