MARKETING & DIST. RESOURCES v. Paccar, Inc.

• Decision Date: 03 November 1978
• Docket Number: Civ. A. No. 74-2880-F.
• Citation: 460 F. Supp. 990
• Parties: MARKETING & DISTRIBUTION RESOURCES, INC. v. PACCAR, INC. d/b/a Peterbilt Motors Company.
• Court: U.S. District Court — District of Massachusetts

460 F. Supp. 990

MARKETING & DISTRIBUTION RESOURCES, INC. v. PACCAR, INC. d/b/a Peterbilt Motors Company.

Civ. A. No. 74-2880-F.

United States District Court, D. Massachusetts.

November 3, 1978.

Edward F. Perlman, David Wolf, Wolf, Greenfield & Sacks, Boston, Mass., for plaintiff.

Mitchel S. Ross, Hutchings & Wheeler, Boston, Mass., for defendant.

MEMORANDUM

FREEDMAN, District Judge.

This is a diversity action for breach of contract and unfair trade practices. The matter is before the Court on the defendant's objection to the Magistrate's recommendation that its motion to dismiss for lack of jurisdiction over the person be denied. The Court has reviewed the matter de novo and now denies the motion.

The law of the forum state determines the amenability of a foreign corporation to suit in a federal court diversity action. E. g., Caso v. Lafayette Radio Electronics Corporation, 370 F.2d 707 (1st Cir. 1966); Pulson v. American Rolling Mill Co., 170 F.2d 193 (1st Cir. 1948); Walsh v. National Seating Co., Inc., 411 F.Supp. 564 (D.Mass.1976). The burden of establishing a court's jurisdiction over a particular defendant is on the plaintiff. See, e. g., KVOS Inc. v. Associated Press, 299 U.S. 269, 57 S.Ct. 197, 81 L.Ed. 183 (1936); Aro Manufacturing Co. v. Automobile Body Research Corporation, 352 F.2d 400 (1st Cir. 1965), cert. denied, 383 U.S. 947, 86 S.Ct. 1199, 16 L.Ed.2d 210 (1966); Walsh v. National Seating Co., Inc., supra; Nichols Associates, Inc. v. Starr, 341 N.E.2d 909 (Mass. App.1976).

For purposes of the instant motion, the following facts are not in substantial dispute. The plaintiff, Marketing and Distribution Resources, Inc. ("MDR"), is a Massachusetts corporation with its principal place of business in Waltham, Massachusetts. The defendant, Paccar, Inc. ("Paccar"), is a Delaware corporation with its principal place of business in Bellevue, Washington. Paccar manufactures and markets motor vehicles through two unincorporated divisions, the Kenworth Motor Truck Company ("Kenworth") and the Peterbilt Motors Company ("Peterbilt").

In early 1971, through an exchange of telephone calls and correspondence, MDR and Paccar entered into an agreement¹ pursuant to which MDR agreed to produce a sales training program consisting of sound recordings and written material for Paccar's Kenworth division. MDR produced 101 copies of the program during the summer of 1971. Pursuant to Paccar's instructions, MDR mailed or shipped these copies to Kenworth in Washington and to various independent distributors of Kenworth products throughout the United States, including one to the Framingham Truck Sales & Service Corp. ("Framingham Truck") in Framingham, Massachusetts. Paccar paid MDR $150 per copy of the program.

Paccar obtained an additional 25 copies of the Kenworth sales training program in July of 1972. Neville Associates, Inc. ("Neville"),² a Massachusetts corporation having a principal place of business in Wellesley Hills, Massachusetts, produced the sound portion of these additional copies. Paccar itself produced the printed portion. Both portions were mailed to various independent distributors of Kenworth products.

In the fall of 1972, Neville and Paccar produced an adaptation of the Kenworth program for Paccar's Peterbilt division. Neville produced 75 copies of the sound portion of the Peterbilt program and Paccar produced an equal number of copies of the printed portion. Both portions were forwarded to Peterbilt which then mailed them to various independent distributors of Peterbilt products throughout the United States, including one in Massachusetts. Paccar paid Neville a total of $8,600 for those portions of the Kenworth and Peterbilt programs which Neville produced.

Paccar has contractual relations with two independent dealers in Massachusetts who order products from Paccar. These products are sold f. o. b. the factory. The dealers themselves service the products and Paccar exercises no control over dealer sales activities. A Paccar marketing representative whose territory includes a number of eastern states visits the dealer on occasion. There is a telephone directory listing for Kenworth trucks, sales and service at 855 Worcester Road, Framingham, Massachusetts. That listing, however, is for one of the independent dealers which carries Kenworth products.

Paccar has apparently never applied for, nor received, a "foreign corporation certificate of authority" to do business in Massachusetts and no Paccar officers or employees are residents of Massachusetts. Paccar has never owned any property in Massachusetts and has never been required to pay any Massachusetts tax. Paccar has never maintained any office, bank account or mailing address in Massachusetts and has never placed advertising in any publication printed in Massachusetts.

Claiming that its agreement with Paccar was an exclusive requirements contract, MDR brought this action. The complaint purports to set forth claims for breach of contract and for unfair competition on the theory that MDR has copyrights to the material in the Kenworth program.

Paccar was served with process by mail at its offices in Washington under the Massachusetts long-arm statute, Mass.Gen. Laws ch. 223A. Service was also made under Mass.Gen.Laws ch. 181, § 15 which permits substituted service upon the Secretary of the Commonwealth of Massachusetts in the case of a foreign corporation "doing business" in Massachusetts.³ Finally, Framingham Truck and Neville were served on the theory that they were Paccar's agents.

The central issue raised by the parties' briefs is whether, on these facts, the assertion of jurisdiction over Paccar under § 3(a) of the Massachusetts long-arm statute,⁴ which section gives the Massachusetts courts jurisdiction over the person of nonresidents as to claims arising from their "transacting any business in this commonwealth," is consistent with the Constitutional requirements of due process.⁵See Whittaker Corporation v. United Aircraft Corporation, 482 F.2d 1079 at 1082-1083 (1st Cir. 1973).

The requirements of due process in the context of the assertion of personal jurisdiction over a nonresident defendant have been the subject of Supreme Court discussion. E. g., Kulko v. Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978); Shaffer v. Heitner, 433 U.S. 186 at 201-212, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977); Hanson v. Denckla, 357 U.S. 235 at 250-255, 78 S.Ct. 1228, 2 L.Ed.2d 1283 reh. denied, 358 U.S. 858, 79 S.Ct. 10, 3 L.Ed.2d 92 (1958); McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). A nonresident defendant may be sued in a forum if it has "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. Washington, supra at 316, 66 S.Ct. at 158. There must have been "some act by which the defendant purposefully availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, supra, 357 U.S. at 253, 78 S.Ct. at 1240.

Perhaps the clearest recent statement of the due process requirement involved in the assertion of personal jurisdiction over a nonresident defendant was given by the Court of Appeals for the First Circuit in Vencedor Manufacturing Co., Inc. v. Gougler Industries, Inc., 557 F.2d 886 (1st Cir. 1977) (applying Puerto Rico's long-arm rule). The First Circuit approvingly discussed the need for an act which the non-resident knew or could know might have consequences in the forum. Id. at 892. Chief Judge Coffin said:

The verbal formula used by the Hanson Court to justify its holding is not easy to apply. It is hard to say when a corporation has "purposefully" availed itself of "the privilege of conducting activities within the forum State," or when it has invoked "the benefits and protections" of a state's laws. International Shoe stands as a warning that conclusory labels such as "presence" or "purposefully availing" should not replace a practical concern for the facts of each case. Hanson's language suggests that some sort of voluntary association with the forum is a jurisdictional prerequisite. Further elaboration of Hanson's formula should depend on a case-by-case analysis of contacts rather than a parsing of the Court's language.

Id. at 890.

Illustrative of the applicability of § 3(a) of the Massachusetts long-arm statute to cases like the one at bar is Whittaker Corporation v. United Aircraft Corporation, supra,⁶ on which both of the parties to the instant litigation rely. The facts of Whittaker may be summarized as follows. In the course of performing a government contract for the manufacture of certain jet aircraft engines, United Aircraft Corporation ("United"), a foreign corporation, ordered a sample unit of metal alloy from Whittaker Corporation's ("Whittaker") Massachusetts production facility. Thereafter, Whittaker provided United with a number of additional test units. United employees contacted Whittaker by telephone, teletype and mail and made four visits to Massachusetts during the test period. Upon completion of the tests, United required Whittaker to agree to make no changes in the manufacturing process of the alloy and to keep secret certain details of the work performed. United then notified participating subcontractors that they could use Whittaker as a source of the alloy. Gulf and Western International Products Company ("Gulf") and Ladish Company ("Ladish"), both foreign corporations, then placed orders for the alloy with Whittaker. In spite of the fact that United found a weakness in a unit of the alloy, a United employee visiting Whittaker's Massachusetts facility urged Whittaker to proceed with its work on the Ladish and Gulf orders. Whittaker did....