Anchor Glass Container Corp. v. Stand Energy Corp.

• Court: U.S. District Court — Southern District of Mississippi
• Citation: Anchor Glass Container Corp. v. Stand Energy Corp., 711 F.Supp. 325 (S.D. Miss. 1989)
• Decision Date: 28 March 1989
• Docket Number: Civ. A. No. J87-0500(L).
• Parties: ANCHOR GLASS CONTAINER CORPORATION, Plaintiff, v. STAND ENERGY CORPORATION, Matthias Toebben, Robert P. Robison and Judith A. Phillips, Defendants.

711 F. Supp. 325

ANCHOR GLASS CONTAINER CORPORATION, Plaintiff, v. STAND ENERGY CORPORATION, Matthias Toebben, Robert P. Robison and Judith A. Phillips, Defendants.

Civ. A. No. J87-0500(L).

United States District Court, S.D. Mississippi, Jackson Division.

March 28, 1989.

Ross F. Bass, Jr., Jackson, Miss., for plaintiff.

Dean Holleman, Gulfport, Miss., John H. Holloman, III, W. Whitaker Rayner, Jackson, Miss., for defendants.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

There are pending before this court a number of motions by the parties including a motion by defendants Stand Energy Corporation (Stand), Matthias Toebben, Robert P. Robison and Judith A. Phillips to dismiss, as well as cross motions by plaintiff Anchor Glass Container Corporation (Anchor) and defendants for partial summary judgment. Presently before the court for consideration is the defendants' motion to dismiss. Anchor Glass has responded to that motion and the court has considered the memoranda of authorities submitted by the parties.

Anchor brought this action alleging that it is the victim of an interstate scheme to defraud perpetrated by defendants during the course of which defendants "committed continuous acts of mail and wire fraud and commercial bribery" in order to "obtain lucrative natural gas supply contracts at inflated prices, and then to conceal what had happened." The factual basis alleged by plaintiff is as follows: Anchor is the successor in interest to Diamond-Bathurst, Inc. (Diamond).¹ Diamond was and Anchor now is in the business of manufacturing glass containers, a process requiring large quantities of natural gas. Beginning in 1985, Diamond entered into a series of long term contracts with Stand under which Stand was to supply natural gas to Diamond's manufacturing plants in California, Texas, New York, Illinois, Indiana and Mississippi. Tom Conrad, Diamond's director of Energy Resources until his termination in 1987, was responsible for negotiating these agreements on Diamond's behalf. According to plaintiff, Conrad and the defendants "combined and conspired to conceive and embark upon a scheme to fraudulently induce Diamond into executing" the agreements at inflated prices for a fixed term of years. Pursuant to this scheme, Conrad negotiated a number of such agreements on behalf of Diamond and received from Stand secret payments totalling over $85,000 through a company called Eastern Energy Resources, Inc., which was established by Conrad and Stand for the purposes of Conrad's receipt and concealment of those payments. When it was learned in June 1987 that Diamond was to merge with Anchor, defendants ceased making payments to Conrad fearing that their scheme would be discovered.

Immediately following the Anchor/Diamond merger, Anchor brought this declaratory judgment action against Stand requesting that the court terminate Anchor's contractual obligations to Stand. Stand answered and counterclaimed against Anchor for breach of contract. Subsequently, after Conrad revealed to Anchor representatives his having received secret payments from Stand,² Anchor amended its complaint to charge defendants with violating the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961-68, and with commercial bribery in violation of the Clayton Act, 15 U.S.C. § 2(c), as amended by the Robinson-Patman Act, 15 U.S.C. § 13(c), common law fraud, intentional or negligent misrepresentation, and breach of fiduciary duties and duties of good faith and fair dealing. By that amendment, plaintiff also joined as defendants in its RICO claim three directors of Stand, Toebben, Robison and Phillips.³ The defendants have moved to dismiss this action and as grounds assert, inter alia, that this court lacks personal jurisdiction or venue over all or some defendants and that therefore this action should be dismissed or, alternatively, venue should be transferred pursuant to 28 U.S.C. § 1404(a). Because the court is of the opinion that the questions raised by defendants concerning the propriety of venue and the exercise of personal jurisdiction over the individual defendants are dispositive of this motion, the court does not reach the remaining issues presented by the motion.⁴

In its complaint, Anchor Glass asserts that jurisdiction is conferred on this court by 28 U.S.C. § 1332 (diversity jurisdiction),⁵ 28 U.S.C. § 1331 (federal question jurisdiction), 18 U.S.C. § 1964 (RICO), 15 U.S.C. § 15 (Robinson-Patman) and 28 U.S.C. § 1337 (commerce and antitrust regulations). Further according to plaintiff, its state law claims fall within the doctrine of pendent jurisdiction. Here, it is clear that this court has subject matter jurisdiction over plaintiff's claims. This court must determine whether the Southern District of Mississippi is an appropriate venue for this action and the related issue of whether this court has personal jurisdiction over the individual defendants. While normally, issues of personal jurisdiction are considered in advance of venue issues, in this case, the decision on the venue question directly determines the propriety of the court's exerting personal jurisdiction over these defendants and for this reason, will be considered first.

The court first observes that the corporate defendant, Stand, did not challenge venue or the sufficiency of in personam jurisdiction until defendants moved collectively to dismiss plaintiff's first amended complaint. At that time, this action had been pending against Stand for almost a year. Stand is now taking the position that it is not subject to the personal jurisdiction of this court and that venue is improper as to it for the same reasons that venue is improper as to the individual defendants. Stand attributes its failure to raise these issues earlier, i.e., when it first answered the complaint and asserted its counterclaim against Anchor, to a "mistaken belief" by Stand's counsel concerning Stand's contacts with the State of Mississippi.⁶ In the court's opinion, Stand's "mistaken" failure to challenge this court's personal jurisdiction or venue of this action at the first—or even subsequent—opportunity to do so, operates as a waiver of any objection to these matters. Accordingly, the court proceeds to consider this motion only as it relates to the individual defendants.

For cases in which the court's jurisdiction is not founded solely on diversity of citizenship, venue is proper "only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law." 28 U.S.C. § 1391(b).⁷ Since jurisdiction here is not founded solely on diversity of citizenship and because defendants do not reside in this district, the pertinent inquiry is whether it can be said that plaintiff's claims arose in the Southern District of Mississippi such that venue would be proper in this district as to all defendants.

Plaintiff takes the position that its claims arose in more than one district and that it was free to choose among those districts the forum for its action, a choice which obviously was Mississippi. Although section 1391 does speak in terms of "the" judicial district in which the claim arose, the United States Supreme Court in Leroy v. Great Western United Corporation, 443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979), made the following observation:

Without deciding whether this language adopts the occasionally fictive assumption that a claim may arise in only one district, it is absolutely clear that Congress did not intend to ... give plaintiffs an unfettered choice among a host of different districts.... In our view, ... the broadest interpretation of the language in § 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose in only one specific district, a plaintiff may choose between those two (or conceivably even more) districts that with approximate equal plausibility—in terms of the availability of witnesses, the accessibility of other relevant evidence and the convenience of the defendant (but not of the plaintiff)—may be assigned as the locus of the claim.

Leroy, 443 U.S. at 183-85, 99 S.Ct. at 2716-17. In this case, it is apparent that there was some activity relative to Anchor's claims, to a greater or lesser extent, in at least nine states, including Mississippi. These include the states in which the subject contracts were negotiated and to be performed, and in which the alleged illegal payments to Conrad were made. The question whether plaintiff's claims may be said to have arisen in one or more of those states, and in particular, Mississippi, is determined by a "weight of contacts" approach under which venue is said to be proper in a district if the parties have a significant relationship to that district or if such a substantial portion of the claim occurred there that it could be said to have arisen there. See Miller Brewing, 616 F.Supp. at 1291; Follett College Stores Corp. v. Fernandez, 587 F.Supp. 1051, 1053 (N.D.Ill.1984). To accept the conclusion urged by Anchor that this district is one in which its claim arose would, in this court's opinion, require an overly broad application of the weight of contacts test in which any contact with the district, however slight, would provide a sufficient basis to justify finding that the claim arose in that district. The court cannot adopt such an expansive view and finds instead that the more reasonable approach to the "weight of contacts" determination is as follows:

The first step is to determine whether the contacts with the district are "miniscule" or "significant and substantial." Once it has been determined that there are two or more districts with "significant and substantial contacts" with plaintiff's claim, the court must determine which district has the most significant contacts. Only if it is "unclear" which district has the most substantial contacts is it necessary to decide whether two or

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