Fooshee v. Interstate Vending Company

Decision Date21 August 1964
Docket NumberCiv. A. No. W-3070.
Citation234 F. Supp. 44
PartiesDon FOOSHEE, d/b/a Fooshee Amusement Company, Plaintiff, v. INTERSTATE VENDING COMPANY, a corporation, Interstate Vending Company of Wichita, Inc., a corporation, Cigarette Service Company, Inc., a corporation, F. R. Solomon Vending Company, Inc., a corporation, F. R. Solomon, Arthur S. Stevens, N. S. Stevens, and Jameel G. Razook, Defendants.
CourtU.S. District Court — District of Kansas

Fettis & Allan, Jochems, Sargent & Blaes, Wichita, Kan., for plaintiff.

Kahrs, Nelson, Fanning & Hite, Wichita, Kan., Sonnenschein, Levinson, Carlin, Nath & Rosenthal and Frederic S. Lane, Chicago, Ill., for defendants.

WESLEY E. BROWN, District Judge.

This is a suit brought under Sections 4 and 16 of the Clayton Act, 15 U.S.C.A. §§ 15, 26, alleging that defendants have violated Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1, 2, and Section 2 of the Clayton Act, 15 U.S.C.A. § 13. Plaintiff is seeking to enjoin the alleged violations and to recover treble damages.

This matter is presently before the Court on defendant Interstate Vending Company's motion to quash service of summons and to dismiss. The motion attacks the jurisdiction and venue of this Court and the adequacy of the service of process made on defendant. For the reasons stated herein, the motion to quash service and to dismiss is denied.

It is noted that since commencement of the suit, Interstate Vending Company has changed its name to Interstate United Corporation. For convenience, the corporate defendants will hereinafter be referred to as follows:

Interstate United (Vending) Co.: "Interstate" Interstate Vending Company of Wichita, Inc.: "Interstate of Wichita" Cigarette Service Company: "Cigarette Service" F. R. Solomon Vending Company: "Solomon Vending"

Plaintiff's complaint was filed on December 23, 1963, and service was had on Interstate by personally serving F. R. Solomon in Wichita on December 30, 1963, the return of service stating that F. R. Solomon was serviced as "branch manager" of Interstate. On January 14, 1964 defendants were given ten additional days in which to plead, and on January 24, 1964, by agreement of counsel, defendants were granted an additional thirty days in which to answer the complaint.

On April 16, 1964, defendant Interstate filed its motion to quash and to dismiss in accordance with Fed.R.Civ.P. 12(b) (2), (3), and (5) for lack of jurisdiction, improper venue and insufficient service of process, asserting it is not an inhabitant of Kansas, is not found here and is not transacting business here. Interstate contends it is an Illinois corporation, not authorized to do business in Kansas, has no agent in the state, and asserts that F. R. Solomon is neither director, officer, employee nor agent of Interstate and is not authorized to accept service on Interstate's behalf.

An affidavit of Robert K. Deutsch, vice president of Interstate was filed along with the motion. Mr. Deutsch swore, inter alia, that Interstate is an Illinois corporation; that its only place of business is in Lincolnwood, Illinois; that it owns the stock of many subsidiaries including the other corporate defendants in this suit; that Interstate itself is not in the business of placing or maintaining vending machines, though its subsidiaries are; that Interstate is not qualified to do business in Kansas; that it has neither officer, agent, employee nor other person in the state authorized to receive service for it; that Interstate maintains no stock of merchandise, bank account, telephone listing or transfer agent in Kansas; that it neither owns nor leases real property in the state; that it does not place advertising or hold meetings of shareholders or directors in the state; and that F. R. Solomon is not a director, officer, employee or agent of Interstate and has never been authorized to accept service of summons for Interstate.

On May 21, 1964 plaintiff filed an affidavit of Mr. M. Y. Blum in opposition to Interstate's motion. The affidavit was also filed in another suit pending before this Court (Wichita Vending Company v. Interstate Vending Company, Civil Action No. W-3082). In this affidavit, Mr. Blum swore, inter alia, that he is a limited partner in Wichita Vending Company (plaintiff in W-3082); that he has sold cigarette vending machines to Interstate of Wichita for which machines he received purchase orders and payment checks from Interstate (of Chicago); that he has had conversations with Mr. Shapiro from Interstate's Chicago office in which Mr. Shapiro indicated he was in Kansas to help solicit business for their local operation and that he had available unlimited capital to procure local business; that he had a conversation with Mr. White, district manager of Interstate (of Chicago) in which Mr. White asked for Mr. Blum's cooperation in Interstate's business operations in Wichita; that thereafter he was notified on various occasions by managers of Interstate's Wichita subsidiaries that before placing orders for machines, Mr. White's approval must be obtained; that in Chicago he was introduced to Mr. Wolf, president of Interstate, who stated to affiant that he would appreciate any help Blum could give to Interstate's people in Wichita; and that he has seen cigarette vending machines in Wichita bearing decals reading "Interstate Vending Company."

On June 3, 1964 Interstate filed an affidavit of F. R. Solomon in support of its motion in which Mr. Solomon swore, inter alia, that he is general manager of each of the Interstate subsidiaries in Wichita (i. e., Interstate of Wichita, Cigarette Service and Solomon Vending); that Interstate does not own any cigarette machines, service trucks or assets in Kansas used by the subsidiaries; that few, if any, machines in Sedgwick or Butler County, Kansas, bear a sticker referring to Interstate; that most of these stickers refer to Interstate of Wichita; that Interstate has no telephone number in Wichita; that the phone numbers for all of Interstate's Wichita subsidiaries are identical; that Interstate does not maintain any office in Kansas; that he is not an officer, director, employee or agent of Interstate and has never been authorized to receive summons for Interstate; that he does not conduct any business or render any services in behalf of Interstate in Kansas; that Interstate does not sell any products in the state; that the subsidiaries do not sell products manufactured or otherwise sold by Interstate; that the products sold by the subsidiaries are purchased from suppliers and not from Interstate; that funds disbursed in Kansas by Interstate in the form of salaries or machine purchases or otherwise is done for interorganizational convenience and such sums are charged to the account of the subsidiary involved.

Plaintiff lays venue under 15 U. S.C.A. § 15 which states that suit may be brought "in any district court of the United States in the district in which the defendant resides or is found or has an agent, * * *." It is to be remembered that once defendant has challenged venue, the burden to establish same is on plaintiff. E. g., Wentling v. Popular Science Publishing Company, 176 F. Supp. 652 (M.D.Pa.1959).

Plaintiff does not mention 15 U.S.C.A. § 22, which gives the broadest jurisdictional base for antitrust suits against corporate defendants (suit may be brought "in any district wherein it may be found or transacts business; * *."). In Austad v. United States Steel Corp., 141 F.Supp. 437 (N.D.Calif. 1956), the Court remarked that jurisdiction is not to be determined by the niceties of pleadings and concluded that the congressional intent behind 15 U.S.C.A. § 22 "is not to be frustrated by any lack of artistry in plaintiff's pleading." Id. at 440. We need not reach such considerations in deciding the matter presently before us.

Nor do we reach the proposition solely relied on in Ross-Bart Port Theatre v. Eagle Lion Films, 140 F.Supp. 401 (E.D. Va.1954). In that case defendant's motion and affidavit re venue and jurisdiction did not deny allegations in the verified complaint as to the place of defendant's alleged misconduct. From this, the court inferentially concluded that defendant was admittedly present in the district and therefore suable in the district. Parenthetically, we note that the complaint at bar is not verified, though under Fed.R.Civ.P. 11, the signature of plaintiff's attorney certifies that to his belief "there is good ground to support it; * * *."

We feel the present matter can be equitably resolved within the framework of 15 U.S.C.A. § 15 pled and argued by both counsel.

At the outset, it should be noted that the separate entities of parent and subsidiary bodies corporate are usually entitled to be so treated. See, e. g., Austad v. United States Steel Corp., supra. But at the same time it must be recognized that where the facts warrant, it is within the court's power to pierce the corporate veil. See e. g., Bergold v. Commercial Nat'l Underwriters, Inc., 61 F. Supp. 639 (D.Kan.1945).

The initial part of the question presented by Interstate's motion, therefore, involves the issue of whether Interstate is "found" within the District of Kansas and is thereby amenable to suit here under 15 U.S.C.A. § 15.

The purpose of the venue section of the Clayton Act, 15 U.S.C.A. § 15 should be kept in mind. It was to "remove the existing limitations upon the venue of actions between diverse citizens and to permit the plaintiff to sue the defendant wherever he could catch him." Freeman v. Bee Mach. Co., 319 U.S. 448, 454, 63 S.Ct. 1146, 1149, 87 L.Ed. 1509, 1514 (1943), quoting L. Hand in Thorburn v. Gates, 225 F. 613, 615 (S.D.N.Y. 1915).

"Found," in the venue sense does not necessarily require physical presence. Freeman v. Bee Mach. Co., supra; Switzer Bros., Inc. v. Chicago Cardboard Co., 252 F.2d 407 (7th Cir. 1958). "Found" under 15 U.S.C.A. § 15 has been held to mean many things, but the better reasoned cases seem to...

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