Rollins v. Proctor & Schwartz

• Citation: 478 F. Supp. 1137
• Decision Date: 24 October 1979
• Docket Number: Civ. A. No. 77-1835.
• Court: U.S. District Court — District of South Carolina
• Parties: C. F. ROLLINS, Plaintiff, v. PROCTOR & SCHWARTZ and SCM Corporation, Defendants.

478 F. Supp. 1137

C. F. ROLLINS, Plaintiff, v. PROCTOR & SCHWARTZ and SCM Corporation, Defendants.

Civ. A. No. 77-1835.

United States District Court, D. South Carolina, Charleston Division.

October 24, 1979.

John E. Parker, Hampton, S. C., for plaintiff.

John P. Linton, Charleston, S. C., for defendants.

ORDER

BLATT, District Judge.

Plaintiff, a resident of Georgia, was badly injured on May 10, 1972, when he was pulled into textile machinery in a plant located in the state of Georgia, which machinery had been manufactured by defendant, Proctor & Schwartz, a Pennsylvania corporation. He originally brought suit on September 12, 1977, against Proctor & Schwartz, amending his complaint to add defendant, SCM Corporation, on January 23, 1978. The defendants have filed a motion to dismiss, which motion raises the following questions:

1. Does Proctor & Schwartz directly "do business" in South Carolina so as to be subject to suit on a foreign cause of action under S.C.Code § 36-2-802?

2. May the activities of SCM Corporation, admittedly "doing business" in South Carolina, be imputed to Proctor & Schwartz via an "alter-ego" theory, to subject Proctor & Schwartz to suit on a foreign cause of action under S.C.Code § 36-2-802?

3. If jurisdiction is proper under either of the above theories, is venue proper?

4. If Proctor & Schwartz is "doing business" here under either or both of the above theories, does S.C.Code § 15-5-150, the "door closing statute", bar suit in this court?

5. Does the Georgia two-year statute of limitations bar the action in this court?

6. If personal jurisdiction does not exist in South Carolina, should this court transfer this action to the Northern District of Georgia?

THE DIRECT ACTIVITIES OF PROCTOR & SCHWARTZ

The courts have recognized that, in order to fairly hold a defendant amenable to suit in a given jurisdiction, it is necessary to analyze the contacts of both the plaintiff and defendant with the forum. The cases have developed a sliding scale for evaluating defendant's contacts with the locus of suit, which scale ranges from those cases requiring a single contact — (resident plaintiff, injury in forum)—to those requiring substantial contacts arising to the level of "doing business" as opposed to "transacting any business"—(nonresident plaintiff, injury outside of forum). The instant case is a "doing business" situation, because neither the plaintiff nor the defendants are residents of South Carolina, nor did the cause of action arise here. Plaintiff is apparently suing here because of the relatively long — (six-year) — South Carolina statute of limitations (S.C.Code § 15-3-530(5)); however, this fact, while it understandably provides defense counsel cause for protest, should not serve alone to bar this suit if South Carolina is determined to be "a major center of defendant's business" or "a community into whose business life the defendant has significantly entered as determined by the quality, substantially, continuity, and systematic nature of its activities," Seymour v. Parke, Davis & Co., 423 F.2d 584, 587 (1st Cir. 1970), quoted with approval in Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745, 748 (4th Cir. 1971). In making this determination, the court is mindful that, as numerous courts have recognized, precedent is a guide which must be scrutinized carefully on this question because it is apparent that, in judging each unique situation, "in the facts will the answer be found." No court, well versed in these matters, would contend that the dividing line is clear; on the contrary, most of the litigated questions in this area lie outside the certain, somewhere within the penumbra of probability. When the fact pattern at bar shades toward that of a decided case, such case can be consulted for guidance, but not dogma, unless the two factual patterns are wholly coincident. With these thoughts in mind, the court examines defendant, Proctor & Schwartz's, activities in this forum.

It is interesting to note, at the outset, that Proctor & Schwartz closed a plant in Rock Hill, South Carolina, which it had operated for over ten (10) years, just five (5) months before this cause of action arose in May, 1972. Had this plant been operating at the time of the plaintiff's injury, the court could readily find that Proctor & Schwartz had so injected itself into the community and affairs of this state that notions of fundamental fairness would not be offended by holding it to be "doing business" here;¹ and the fact that a corporation, which is doing business when the cause of action arises, withdraws or lessens its contacts with the state before suit is filed, will not defeat jurisdiction. Snyder v. Eastern Auto Distributors, Inc., 357 F.2d 552, 556 (4th Cir. 1966).²

The court has expanded the record in this case beyond the pleadings and, accordingly, after proper notice to the parties, has considered the record as presented as a motion for summary judgment on jurisdictional and other grounds. (F.R.C.P. 12(b)). The facts relevant to the direct activity of Proctor & Schwartz in South Carolina follow. Proctor & Schwartz has made substantial sales in South Carolina to more than one hundred South Carolina factories over the past several years itemized as follows: 1973—$1,418,752.00; 1974—$1,056,480.00; 1975—$865,931.00; 1976—$1,463,750.00; 1977—$572,528.00; 1978—$550,102.00. These sales are certainly not "insubstantial".³ Proctor & Schwartz employs at least three, and possibly five salesmen who service South Carolina,⁴ one of whom lives in the state, works forty weeks a year here, and operates his Proctor & Schwartz office out of his home in this state, using a Proctor & Schwartz leased automobile; however, these salesmen do not "close" sales in this state, but they transmit "orders" to Proctor & Schwartz in Pennsylvania for final acceptance. Proctor & Schwartz advertises in at least one South Carolina telephone directory, listing the home of its South Carolina resident salesman as its telephone number, and it pays for an answering service for that number. Proctor & Schwartz exhibits and advertises at the Textile Show held annually in Greenville, South Carolina, and, during 1974-1975, it had a distributor—(Hayes Textiles) —in Spartanburg, South Carolina, which sold one Proctor & Schwartz machine in this state. Proctor & Schwartz had entered into a contract, cancelled on December 31, 1977, with a South Carolina company for overseas advertising; it also owns a small amount—(two filing cabinets)—of personal property here. In addition, the district sales manager for this defendant's Southeastern Sales Division, C. W. Schwartz— (one of the original Schwartz family)—has visited South Carolina plants on several occasions to conduct price negotiations for sales arranged by the aforementioned salesmen.

Against this quantum of community involvement, the defendants produced the following facts: Proctor & Schwartz owns no property—(except as noted above)—in South Carolina, maintains no bank accounts here, has no South Carolina agent for service of process, is not registered to do business here, and does not—(except for the telephone directory listing)—advertise locally in South Carolina, although it does advertise in magazines which may make their way into South Carolina.

The parties are in agreement that the decisions of the Fourth Circuit Court of Appeals, most notably Lee v. Walworth Valve Co., 482 F.2d 297 (4th Cir. 1973), and Ratliff v. Cooper Laboratories, 444 F.2d 745 (4th Cir. 1971), shape the contours of the contacts analysis to be undertaken here. For that reason, a review of the community involvement recited in those cases is useful. In Ratliff, non-resident plaintiffs sought to hold two foreign corporations in consolidated actions on causes of action arising from injuries allegedly induced by drugs manufactured and ingested outside South Carolina. The court had no difficulty holding that defendant, Cooper Laboratories, was not amenable to suit in South Carolina, finding that it did no more than solicit mail orders from South Carolina wholesalers and dealers and mail promotional material to doctors. The closer question was presented by the activities of Sterling Drug Company, which had filed an application to do business in South Carolina, appointed an agent for service of process, and maintained five "detail men" who lived in South Carolina and promoted Sterling's Products, but "whose primary responsibility is the promotion of drugs, not the actual sale of them." 444 F.2d at 746. The Court of Appeals refused to give any weight to the appointment of a statutory agent or the filing to do business⁵, and, thus, it was faced with a case where the only contact with the forum was through the five, substantially non-selling, resident "detail men." Against this single category of contacts, the court arrayed the following facts: Sterling had no property in South Carolina with the exception of its drug samples used by the detail men, it maintained no bank accounts here, did not advertise in any directories, maintained no office in the state and warehoused no goods here. On the strength of these negative factors, the court found that the one contact classification—(detail men) —mentioned above was insufficient to confer jurisdiction over a foreign defendant on a foreign cause of action. Significantly, the record as reflected in the Ratliff case contained no figures of the amount of sales made in South Carolina, nor of the percentage of the time spent in South Carolina by the resident detail men in promoting drugs. Only one with the clairvoyance of a true Solomon would purport to be able to predict what effect these figures would have had on the outcome of the decision; for this court's purpose, those omissions must be considered in comparing the quality and nature of contacts there with those presented here.

Lee v. Walworth Valve Company, 482 F.2d 297 (4th Cir. 1973) is the second major guidepost...