Whaleco Inc. v. Gluck

United States Court of Appeals For the First Circuit

Nos. 25-1893 25-1894

WHALECO INC.,

Plaintiff, Appellant/Cross-Appellee, v.

JEFFREY GLUCK; GLUCK LAW FIRM, P.C., Defendants, Appellees/Cross-Appellants; ALEC MONOPOLY ART, LLC; ALEC MONOPOLY, LLC; COOKIES SF LLC, Defendants, Appellees.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge] Before

Montecalvo, Thompson, and Aframe, Circuit Judges.

Felicia H. Ellsworth, with whom John J. Butts, Wilmer Cutler Pickering Hale and Dorr LLP, Matan Shacham, and Keker, Van Nest & Peters LLP were on brief, for appellant/cross-appellee Whaleco Inc.

Kenneth B. Walton, with whom Patricia B. Gary, Daniel Scappichio, and Lewis Brisbois Bisgaard & Smith LLP were on brief, for appellees/cross-appellants Jeffrey Gluck and Gluck Law Firm,

P.C.

Megan A. Siddall, with whom Kristine C. Oren and Cloherty &

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Steinberg LLP were on brief, for appellees Alec Monopoly Art, LLC, and Alec Monopoly, LLC.

Brendan Palfreyman, with whom James F. Radke and Harris Beach Murtha Cullina PLLC were on brief, for appellee Cookies SF LLC. Steven T. Lowe, Lowe & Associates, Mala M. Rafik, and Rosenfeld & Rafik, P.C. on brief for National Society of Entertainment and Arts Lawyers, as amicus curiae supporting appellees.

October 19, 2026

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THOMPSON, Circuit Judge. Today's case has many intricacies. But we focus on one that affects a federal court's power to ply its trade — personal jurisdiction. See generally Sinochem Int'l Co. Ltd. v. Malay. Int'l Shipping Corp., 549 U.S. 422, 430-31 (2007) (noting that a court must have jurisdiction over a case's subject matter (subject-matter jurisdiction) but also over a defendant's person (personal jurisdiction)). And in these pages we explain why concerns about personal jurisdiction compel us to vacate the orders that triggered these appeals and remand.

I

We simplify the background ruthlessly, relaying only what's needed to grasp the jurisdiction problem.

A

Plaintiff Whaleco Inc., doing business as Temu ("Temu"), is an online shopping platform. Defendant Jeffrey Gluck is an intellectual-property lawyer and sole owner of Defendant Gluck Law Firm, P.C.¹Defendants Cookies SF LLC ("Cookies SF") and Alec Monopoly Art, LLC and Alec Monopoly, LLC (together, "Alec Monopoly") are Gluck's clients.

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Premised on diversity jurisdiction, Temu's complaint says that Gluck "lied" to get it to settle legal claims Cookies SF and Alec Monopoly previously had against it.²The attention- grabbing details — lifted straight from the complaint — are these (there are others). Besides negotiating the agreements for his clients (one for Cookies SF, and one for Alec Monopoly), Gluck personally signed two provisions in each document.³In the first provision, he "represent[ed]" that he and his firm "currently have no clients who intend to sue TEMU and have no present intention of advertising or marketing for additional clients" — though, that provision added, "[n]otwithstanding the foregoing, and for the avoidance of doubt, nothing contained herein shall restrict, inhibit, or limit, in any way, Gluck's right to represent clients against TEMU, bring claims against TEMU, and market and advertise for additional clients." And in the second provision, he

"acknowledge[d]" that each agreement was "entered into based on assurances of the truth and accuracy of the representations contained herein, and that any material breach of the

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representations" would allow the nonbreaching party "to pursue all available remedies." Temu then alleges that (i) "days" after he

"had signed the agreements but before [they] were effective, [he] advertised on social media for new clients to sue Temu," and that

(ii) "shortly after the settlement agreements became effective, [he] threatened Temu with a new lawsuit on behalf of additional clients with which [he] had long and tight relationships."⁴ Pivoting off these accusations, Temu's complaint lists many counts (intentional misrepresentation and fraudulent inducement; negligent misrepresentation; breach of contract; breach of implied covenant of good faith and fair dealing; and unjust enrichment) — each realleging all preceding allegations and each making special note of Gluck's "lie[s]." And (among other remedies) the complaint seeks rescission of the settlement agreements (with the return of all settlement proceeds) or damages (in lieu of recission).

B

Gluck, Cookies SF, and Alec Monopoly each moved to dismiss Temu's complaint for failure to state a claim for relief. See Fed. R. Civ. P. 12(b)(6). Gluck and Cookies SF also both moved

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to dismiss for lack of personal jurisdiction over them. See Fed. R. Civ. P. 12(b)(2).⁵And Gluck additionally sought sanctions against Temu and its lawyers for "frivolous" litigation. See Fed. R. Civ. P. 11.

By separate minute entries, the judge — for reasons not relevant here — granted Cookies SF's, Alec Monopoly's, and Gluck's motions to dismiss Temu's complaint for not sketching a viable cause of action. And "given [that] conclusion," the judge chose

"not [to] decide" the personal-jurisdiction "issue[s]" Gluck and Cookies SF raised — meaning (to use blunt language, and as explained in our next section) the judge didn't confirm the court's authority over the parties. The judge then found Cookies SF and

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Alec Monopoly entitled to attorney fees under the agreements. And the judge denied Gluck's sanctions motion.

II

Temu appeals the judge's rulings granting the Rule 12(b)(6) dismissals (which is why we've read the complaint in the light most favorable to Temu, see Schatz, 669 F.3d at 55-56) and allowing Cookies SF and Alec Monopoly to recover attorney fees. Gluck cross appeals the judge's ruling denying Rule 11 sanctions. The parties raise many issues here, most with multiple subparts. But we start and end with the threshold question of personal jurisdiction — an issue the judge decided needn't be addressed, even though (as noted) Gluck and Cookies SF put that matter front and center in their filings below (and they continue to challenge personal jurisdiction on appeal).

A

As a first-principles matter, "[a] court must have . . . power over the parties before it (personal jurisdiction) before it can resolve a case," Lightfoot v. Cendant Mortg. Corp., 580 U.S. 82, 95 (2017) (emphasis added) — a requirement that "flows not from" the Constitution's case-or- controversy clause (in article III) "but from" the Constitution's due-process clauses (in amendments five and fourteen), see Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982); see also Fuld v. Pal. Liberation Org., 606 U.S.

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1, 11, 16 (2025) (same). See generally Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 104 (1998) (stating that "the party invoking federal jurisdiction bears the burden of establishing its existence"). So — put slightly differently but with the same effect — "[u]ntil the court has established personal jurisdiction . . . any assertion of judicial power over the party violates due process." See Ins. Corp. of Ir., 456 U.S. at 706 (emphases added); see also Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) (stressing that "[p]ersonal jurisdiction . . . is 'an essential element of the jurisdiction of a district . . . court,' without which the court is 'powerless to proceed to an adjudication'" (first alteration and emphasis added) (quoting Emps. Reinsurance Corp. v. Bryant, 299 U.S. 374, 382 (1937))).⁶And building off these foundational rules, our judicial superiors tell us (and our sibling courts) that it's wrong to assume jurisdiction and jump to the merits just because they are easy while the jurisdictional issues may be tough. See Steel Co.,

523 U.S. at 93-102 (holding that "[h]ypothetical jurisdiction produces nothing more than a hypothetical judgment — which comes

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to the same thing as an advisory opinion").⁷So in a situation like Temu's, were we to (for example) skip over personal jurisdiction and jettison the judge's merits dismissal by ourselves reversing on the merits, we'd be making a judicial power grab — because (to continue using Supreme Court lingo) a court that lacks jurisdiction has no "authority" to issue a ruling "on the merits." See Ruhrgas, 526 U.S. at 577.

Gluck cites an older First Circuit case that says "where an appeal presents a difficult jurisdictional issue, yet the substantive merits underlying the issue are [easily] resolved in favor of the party challenging jurisdiction, the jurisdictional inquiry may be avoided." See N. Am. Cath. Educ. Programming Found., Inc. v. Cardinale ("N. Am."), 567 F.3d 8, 12 (1st Cir. 2009) (quoting Kotler v. Am. Tobacco Co., 926 F.2d 1217, 1221 (1st Cir. 1990), vacated on other grounds, 505 U.S. 1215 (1992)).⁸

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Relying on this language from Kotler, N. Am. opted to "first sweep away the hopeless claims" (a Rule 12(b)(6) analysis) and then concentrate "on personal jurisdiction only as to what remain[ed]."

Id. And our research found a same-era First Circuit case that read Steel Co.'s bar on hypothetical jurisdiction as limited to questions of article III jurisdiction. See McBee v. Delica Co. Ltd., 417 F.3d 107, 126-27 (1st Cir. 2005). All of that matters. And that's because under our precedent about precedent, "once a panel decides a legal issue . . . that ruling usually binds later panels too — even where the succeeding panel disagrees with the prior one." United States v. Guerrero, 19 F.4th 547, 552 (1st Cir. 2021). This is known as the law-of-the-circuit doctrine. Id. Exceptions exist, however. One arises "when a preexisting panel opinion is undermined by subsequently announced controlling authority."

Eulitt ex rel. Eulitt v. Me., Dep't of Educ., 386 F.3d 344, 349 (1st Cir. 2004). Another arises "when recent Supreme Court precedent calls into legitimate question a prior opinion of an inferior court." Id. at 350.

Ultimately, the doctrine gives way here — for a couple of straightforward reasons. To start, Steel Co.'s explicit ban on the practice of assuming jurisdiction when the merits offer a under Rule 12(b)(6)," he still insists the court didn't have personal jurisdiction over him.

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faster answer came down after Kotler (the progenitor of N. Am.). Notably as well, Steel Co. indicated that the two Court cases Kotler leaned on — Norton v. Mathews, 427 U.S. 524 (1976), and Sec'y of the Navy v. Avrech, 418 U.S. 676 (1974) (per curiam) — can't "be cited for the precedent-shattering general proposition that an 'easy' merits question may be decided on the assumption of jurisdiction." See Steel Co., 523 U.S. at 99 (first emphasis added). Also, yes, Steel Co. dealt with subject-matter jurisdiction (specifically, "standing" under article III) — as McBee noted. See McBee, 417 F.3d at 127. But Sinochem — decided after McBee — explained that if personal jurisdiction is at issue, a federal court must first confirm the existence of that type of jurisdiction before tackling the merits. See Sinochem, 549 U.S. at 430-31; id. at 431 (reiterating that "'[w]ithout jurisdiction the court cannot proceed at all in any cause'; it may not assume jurisdiction for the purpose of deciding the merits of the case"

(quoting Steel Co., 523 U.S. at 94, in turn quoting Ex parte McCardle, 74 U.S. (7. Wall.) 506, 514 (1869))).⁹Given these

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intervening directives from our judicial bosses, we can no longer let courts leapfrog personal jurisdiction problems and just decide the merits. See, e.g., Guerrero, 19 F.4th at 550. Actually, that's not as big a step as it appears. We say this because our recent caselaw signals a shift away from the N. Am./McBee reasoning outlined above. See Rodríguez-Rivera v. Allscripts Healthcare Sols., Inc., 43 F.4th 150, 162 n.8 (1st Cir. 2022) (observing that

"[w]hile the district court's dismissal did reach the merits of Rodríguez's claims, 'a federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject-matter jurisdiction) and the parties (personal jurisdiction)'" (quoting Sinochem, 549 U.S. at 430-31)).¹⁰

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B

The analysis is all downhill from here. Appreciating that a court has no power (as in none) to issue a merits ruling without ensuring the presence of both "subject-matter" and

"personal jurisdiction," see Sinochem, 549 U.S. at 430-31, we conclude that the judge erred by dismissing Temu's complaint on the merits without first addressing Gluck's and Cookies SF's personal-jurisdiction motions, see, e.g., Tagayun v. Lever & Stolzenberg, 239 F. App'x 708, 710 (3d Cir. 2007) (per curiam). See generally Sinochem, 549 U.S. at 431 (highlighting that

"[j]urisdiction is vital . . . if the court proposes to issue a judgment on the merits" (emphases added) (quoting Intec USA, LLC

v. Engle, 467 F.3d 1038, 1041 (7th Cir. 2006))). So we vacate the orders and judgment that precipitated these appeals. See Tagayun,

239 F. App'x at 708. A remand is needed then. See id. And knowing the "elbow room" we have to structure remands as circumstances require, see, e.g., Sharfarz v. Goguen (In re Goguen), 691 F.3d 62, 72 (1st Cir. 2012) (mentioning 28 U.S.C. § 2106), we provide these instructions — driven by the particular situation we face. The judge on remand must first rule on Gluck's and Cookies SF's motions challenging personal jurisdiction (the jurisdictional issue involves many complicated allegations, prompting the kind of inquiry best left to the judge on remand). If the judge concludes

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that personal jurisdiction does exist, the judge must reassess

(i) whether the complaint alleges a plausible claim for relief against Gluck, Cookies SF, or Alec Monopoly (or all three of them) and — depending on how the judge rules on romanette (i) — reassess

(ii) whether any party is entitled to attorney fees under the settlement agreements and (iii) whether Gluck should get Rule 11 sanctions against Temu and its attorneys. If the judge concludes that personal jurisdiction doesn't exist, the judge must dismiss Gluck and Cookies SF without prejudice and — with counsel's help — rule on the appropriate next steps concerning Alec Monopoly.¹¹

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And speaking of help, the judge may (of course) request further briefing and argument by counsel on the many potential (and complex) issues here. The judge may also develop any necessary facts bearing on the personal-jurisdiction question. See, e.g., Carreras v. PMG Collins, LLC, 660 F.3d 549, 557 (1st Cir. 2011). The goal should be to ensure that a future panel's review of any later appeal in this case is better off by what occurs on remand.

III

For the reasons recorded above, we vacate the judgment below and remand the case for further proceedings consistent with this opinion. All parties shall bear their own appellate costs. See Fed. R. App. P. 39.