Time, Inc. v. Manning

• Decision Date: 09 November 1966
• Docket Number: No. 22337.,22337.
• Citation: 366 F.2d 690
• Parties: TIME, INC., Appellant, v. Frank MANNING, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

366 F.2d 690 (1966)

TIME, INC., Appellant, v. Frank MANNING, Appellee.

No. 22337.

United States Court of Appeals Fifth Circuit.

September 29, 1966.

Rehearing Denied November 9, 1966.

COPYRIGHT MATERIAL OMITTED

Cicero C. Sessions, New Orleans, La., Cravath, Swaine & Moore, Harold R. Medina, Jr., New York City, Sessions, Fishman, Rosenson & Snellings, New Orleans, La., for appellant.

John E. Jackson, Jesse S. Guillot, New Orleans, La., for appellee.

Before JONES, WISDOM, and GEWIN, Circuit Judges.

WISDOM, Circuit Judge.

The questions for decision relate to jurisdiction and venue.

The complaint alleges that Frank Manning, an amateur astronomer in New Orleans, manufactures plastic "moonballs". One half of "Manning's Moonball" depicts the bright side of the moon; the other half lists information about the moon. In 1953, Manning obtained a copyright registration of a photograph of his "moonball", and in 1955, a copyright registration of the "moonball" as a work of a scientific or technical nature. Manning alleges that without his permission Time, Inc., a New York corporation not qualified to do business in Louisiana and having no authorized agent or office in that state, published in Life Magazine photographs both of his moonball and of one manufactured by an alleged infringer; that Time gave him no credit for the invention and represented that the alleged infringer sold "moonballs". As a result, so Manning says, Time destroyed his opportunity to sell his "moonballs" and obscured, perhaps obliterated, his role as their creator.

Time moved to quash service of process, to set aside return of service, to dismiss the action for lack of jurisdiction and venue and, alternatively, to transfer the case from the Eastern District of Louisiana to the Southern District of New York. The district judge denied the motions, although he certified that they "involve controlling questions of law as to which there is substantial ground for difference of opinion, and that an immediate appeal therefrom may substantially advance the ultimate termination of the litigation". Manning v. Time, Inc., E.D.La.1964, 233 F.Supp. 985. This Court granted the petitioner leave to take an interlocutory appeal from the judge's orders denying the motions. 28 U.S.C. § 1292(b). We affirm.

I

A. The first question the appeal raises is whether the district court has jurisdiction. Manning's theory is that he has a state cause of action, a claim for damages under the general tort article of the Louisiana Civil Code, Article 2315.¹ If he is correct, diversity of citizenship gives the court jurisdiction. 28 U.S.C. § 1332. Time insists that the action is for infringement of the plaintiff's copyright, and that jurisdiction must be based upon 28 U.S.C. § 1338. Whether jurisdiction is grounded on § 1332 or on § 1338 is of little concern at this point. Under either view, the district court has jurisdiction over the subject matter of the action.

B. The thornier problem is whether the district court has personal jurisdiction over the defendant foreign corporation.

The Federal Rules of Civil Procedure permit service of process upon a foreign corporation or on a non-resident "in the manner prescribed by the law of the state in which the district court is held * * *". Fed.R.Civ.P. 4(d) (7) & 4(e). Two requirements must be met. First, service must conform to state statutory standards, Sonnier v. Time, Inc., W.D.La.1959, 172 F.Supp. 576. Second, the foreign corporation must have sufficient contacts with the state so that application of the state statute will not offend due process. International Shoe Co. v. State of Washington, 1945, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. Service in this case met both requirements.

Time was served through the Secretary of State. Under LSA-R.S. 13:3471(1), "If the foreign corporation is not one required by law to appoint an agent for the service of process, but has engaged in a business activity in this state, service of process in an action or proceeding on a cause of action resulting from such business activity in this state * * *" may be made upon the Secretary of State. (Emphasis added.) Thus service in this case would be valid only if Manning's cause of action resulted from Time's activities within Louisiana. Time attempts to make much of this restriction. However, Manning's cause of action did result from the defendant's activities in Louisiana.

Before 1960, the Louisiana substituted service statute expressly required that the business activities requisite to the assertion of jurisdiction be engaged in "through acts performed by the corporation's * * * employees or agents in this state," and that the cause of action result from those acts. LSA-R.S. 13:3471(5) (d) (1950). In Sonnier v. Time, Inc., supra, the court held that Time was not amenable to substituted service in a libel action, because the cause of action did not result from the act of Time's employees or agents performed in the State. In response to the Sonnier decision, the Louisiana legislature amended LSA-R.S. 13:3471 to its present form. Now the cause of action need not result from the acts of the corporation's employees in the state, but need result only from the "business activity" of the corporation in Louisiana. Louisiana courts construe this new statute broadly, harmonizing the apparent antagonism between the express limitation contained in the language of the act and the obvious legislative intent to broaden the state's longarm jurisdiction.² We have recognized this state policy: "It is apparent that the new Louisiana statute is intended to go the permissible limits of due process in exercising this jurisdiction in personam over foreign corporations * * *." Buckley v. New York Times Co., 5 Cir. 1964, 338 F.2d 470, 472-473. The district court in Buckley v. Beaumont Enterprise stated the rule as follows:

The cause of action need only be a part of the chain of activity which created the "minimum contacts", or, that the particular activity which gave rise to the cause of action need only be a natural result of the general business activity of the foreign corporation within the State. 232 F.Supp. 986, 988.

Accordingly, the court applied the statute to a libel action against a foreign corporation whose business activities within the state consisted only of the distribution of newspapers there. The theory was that circulation of the newspaper in Louisiana constituted a publication of the libel, from which the cause of action arose.³ Regardless of whether Manning's complaint is based upon the Louisiana Civil Code or upon federal copyright law, we think that at least to the extent his moonball business was injured by the Louisiana circulation of Life Magazine, his cause of action "resulted from" Time's business activity in the state. Service on Time through the Secretary of State therefore conformed to LSA-R.S. 13:3471(1).

C. The second question pertaining to personal jurisdiction over the defendant is whether in the factual setting of this case service could properly be obtained by conforming to the Louisiana statute. We think that it could. Although the propriety of service issuing from a federal court need not necessarily be tested by the same yardstick as is the constitutional limitation upon service of process from a state court,⁴ the latter standard provides a helpful and often-used guideline. See, e. g., Gkiafis v. S.S. Yiosonas, 4 Cir., 1965, 342 F.2d 546, 548-549, 554; Lone Star Package Car Co. v. Baltimore & O. R. R., 5 Cir. 1954, 212 F.2d 147, 155; Note, 69 Harv.L.Rev. 508-09 (1956). This yardstick derives from the Supreme Court's holding in International Shoe, that the fourteenth amendment permits a state court to exercise jurisdiction over only those foreign corporations which have "certain minimum contacts with * * * the forum such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. State of Washington, supra, 326 U.S. at 316, 66 S.Ct. at 158. Time's contacts in Louisiana meet this test. Although the record does not disclose the circulation figures for Time's publications (Time, Life, Fortune, House & Home, and Sports Illustrated) in Louisiana, the district judge found that they had "wide circulation" in the state. 237 F.Supp. at 988. In addition he found that the defendant earned a significant amount of advertising revenue in Louisiana ($241,330 in 1963), maintained 14 college bureau representatives and four independent organizations in the state for the purpose of soliciting subscriptions, and gathered news there through five editorial stringers.

In Buckley v. New York Times Co., we held that "mere circulation of a periodical through the mails to subscribers⁵ and independent distributors * * *" and "sporadic news gathering by reporters on special assignment and the solicitation of a small amount of advertising do not constitute doing business nor engaging in business activity." 338 F.2d at 474. But that is not this case. In Buckley the number of copies distributed in the state by the respective defendants ranged from five to something less than 1800 — hardly "wide circulation."⁶ None of the defendants actively solicited subscriptions, and only one engaged in sporadic solicitation of advertising in Louisiana. None had a continuing arrangement for the gathering of news there. Here Time engaged in all of these activities to a significant extent. Its circulation was wide, it regularly solicited subscriptions, and it maintained editorial stringers. By coming into the state to engage in these activities, Time reaped substantial economic benefits from the state and took advantage of the protections offered by the law of Louisiana.

In Elkhart Engineering Corp. v. Dornier Werke, 5 Cir. 1965, 343 F.2d 861 the Court held that the tortious damage caused by a single airplane crash within a state fulfilled the minimum contacts requirement under the Alabama long-arm...