Aquarium Pharm., Inc. v. Industrial Press. & Pack., Inc.

• Decision Date: 08 May 1973
• Docket Number: Civ. A. No. 73-572.
• Parties: AQUARIUM PHARMACEUTICALS, INC. v. INDUSTRIAL PRESSING & PACKAGING, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

358 F. Supp. 441

AQUARIUM PHARMACEUTICALS, INC. v. INDUSTRIAL PRESSING & PACKAGING, INC.

Civ. A. No. 73-572.

United States District Court, E. D. Pennsylvania.

May 8, 1973.

M. Stuart Goldin, Isenberg, Goldin & Blumberg, Philadelphia, Pa., for plaintiff.

John A. Erich, Reinhart, Boerner, Van Deuren & Norris, Milwaukee, Wis., for defendant.

MEMORANDUM OPINION

WEINER, District Judge.

The defendant in this diversity action, Industrial Pressing & Packaging, Inc. ("Industrial"), is incorporated and has its principal offices in the State of Wisconsin. Plaintiff, Aquarium Pharmaceuticals, Inc. ("Aquarium"), is a Pennsylvania corporation with its principal offices located in Perkasie, Pennsylvania. Aquarium alleges that the defendant manufactured and supplied them with certain types of tablets for use in the tropical fish industry, that the product was defective, and that it is entitled to the appropriate damages.

Industrial has requested this Court to dismiss the suit, arguing that, as it is a non-resident corporation which does not do business in the Commonwealth, there is no adequate basis for the imposition of in personam jurisdiction given the facts of the instant case. In the alternative, Industrial asks us to transfer this matter to the Eastern District of Wisconsin pursuant to 28 U.S.C. § 1404(a).

Defendant was served with a summons and complaint on March 14, 1973 through service on the Secretary of the Commonwealth pursuant to an Order of this Court.

In its accompanying affidavit, Industrial states that it maintains no offices in Pennsylvania and has not done any business in the State other than the making of a single shipment of work-in-progress inventory belonging to the plaintiff upon telephone request by the plaintiff to their Wisconsin office. Thereby, it is contended that such limited activity does not constitute "doing business" under the relevant statutes and case law and that dismissal is appropriate.

I

Pennsylvania has only recently amended its "long-arm" statute and this amended version has not, to our knowledge, been considered by any court as of this date.

The present statute, which became effective on February 13, 1973, in relevant part states:

(a) General Rule.—Any of the following shall constitute "doing business" for the purposes of this chapter:

. . . . . .

(2) The doing of a single act in this Commonwealth for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object with the intention of initiating a series of such acts.

(3) The shipping of merchandise directly or indirectly into or through this Commonwealth.

42 Pa.S. § 8309.

Section 8309 amends 15 P.S. § 2011(C), adopted by the Legislature in 1968, which reads as follows:

For the purposes of determining jurisdictions of courts within this Commonwealth, the doing by any corporation in this Commonwealth of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object, or doing a single act in this Commonwealth for such purpose, with the intention of thereby initiating a series of such acts, shall constitute "doing business." For the purposes of this subsection, the shipping of merchandise directly or indirectly into or through this Commonwealth shall be considered the doing of such an act in this Commonwealth.

It is Industrial's position that both statutes are identical in substance and that, since a single shipment of merchandise into Pennsylvania did not subject a corporation to the jurisdiction of Pennsylvania court under a former version of § 2011(C), Nelson v. Doll Furniture Co., 304 F.Supp. 159 (E.D.Pa.1969), dismissal is likewise warranted, given similar facts, under § 8309.

We disagree with defendant's reading of the Nelson decision and conclude that the actions of Industrial clearly fall within the ambit of § 8309, the present "long-arm" statute, even though they might not have been sufficient to confer jurisdiction under an earlier version of § 2011(C).

As we read § 2011(C) and § 8309 together, it is obvious that a substantial alteration has been made as a result of the recent amendment. Under the terms of § 2011(C), the "doing of a single act" "for the purpose of thereby realizing pecuniary benefit" had to be read in conjunction with the following clause, which required a finding that such act was done "with the intention of thereby initiating a series of such acts," before jurisdiction could be taken by courts of the Commonwealth. In § 2011(C), the final sentence, which stated that "the shipping of merchandise directly or indirectly into or through this Commonwealth shall be considered the doing of such an act," was used only in a definitional sense in that it referred back to the term "single act" in the previous clause. Therefore, shipment of merchandise into the Commonwealth, by itself, was not sufficient to permit the courts to take jurisdiction unless the shipment was made with the intention of initiating a series of such acts.

The amended statute, § 8309, extends the reach of § 2011(C) by transforming this last sentence of § 2011(C) from a definitional clause which was to be read in conjunction with other requirements into an independent clause upon which jurisdiction could be founded. No longer is intention a necessary prerequisite to the imposition of jurisdiction; the fact of shipment into the Commonwealth, standing by itself, subjects the acting corporation or entity to the reach of the § 8309 "long-arm" statute.

Such a reading of § 8309 is consistent with the clear intention of the Legislature, over the past decade, to extend the reach of the "long-arm" statute, as is evidenced by an examination of the recent amendments of that statute in 1963 and 1968. See 15 P.S. § 2011(B) (C), P.L. No. 703, §§ 1, 2 (1963), as amended, 15 P.S. § 2011(C), P.L. No. 216, § 54 (1968), as amended, 42 P.S. § 8309, Act 1972, No. 271, § 1 (1972); Gorso v. Bell Equipment Corp., 476 F.2d 1216 (3d Cir. 1973).

Numerous courts have stated that the public policy of Pennsylvania, as expressed by its "long-arm" statute, is to extend in personam jurisdiction to the full measure consistent with due process standards. Scafati v. Bayerische Motoren Werke Ag, 53 F.R.D. 256, 258 (W.D.Pa.1971); Wenzel v. Morris Distributing Co., 439 Pa. 364, 266 A.2d 662 (1970). The 1972 amendment only serves to further reinforce this conclusion.

It must be conceded that the actions of Industrial within the Commonwealth have been extremely minimal. Possibly, under the earlier "long-arm" statute, we would be inclined to dismiss this action. In Nelson v. Doll Furniture Co., supra, the Court concluded that shipment of $79.98 worth of chemicals into the State was insufficient, under § 2011(C) as it read after the 1963 amendment, to premise in personam jurisdiction. The 1963 statute required "entry" into the Commonwealth and was interpreted by the courts to necessitate "the physical presence of agents or property." Cecere v. Ohringer Home Furniture Co., 208 Pa. Super. 138, 147, 220 A.2d 350, 356 (1966). As a result, the burden upon the plaintiff was a heavy one and corporate activities of a substantial nature were found to be outside of the reach of the 1963 statute. See Optico Corp. v. Standard Tool Company, 285 F.Supp. 46 (E.D.Pa.1968) (sales by defendant averaging $150,000 annually and additional services does not subject corporation to personal service and jurisdiction); Rachelson v. E. I. duPont deNemours & Co., 257 F.Supp. 257 (E.D.Pa.1966) (distribution and sale of products); Miller v. Kiamesha-Concord Inc., 420 Pa. 604, 218 A.2d 309 (1966) (presence of independent sales representatives). But, as discussed above, the entry requirement was deleted in 1968 and further liberalization took place in 1972. Decisions involving the latest version of § 2011(C) are consistent with our conclusion that Industrial is amenable to service in this instance, see Smiley v. Gemini Investment Corp., 333 F.Supp. 1047 (W.D.Pa. 1971); Gorso v. Bell Equipment Corp., 330 F.Supp. 834 (W.D.Pa.1971), under the provisions of § 8309.

II

Industrial next argues that the Pennsylvania "long-arm" statute, if interpreted to cover this case, is unconstitutional in that it would be contrary to due process standards established by decisions of the United States Supreme Court. We disagree.

The landmark decision in this area is the oft-quoted International Shoe Co. v. Washington case, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Chief Justice Stone there stated:

". . . due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice'." Id. at 316, 66 S.Ct. at 158 (citations omitted).

Following International Shoe, a number of decisions have undertaken the onerous task of attempting to determine whether or not the "minimum contacts" of a foreign corporation with a particular state were sufficient to make that corporation amenable to process in that state. See, e. g., Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). Such a determination must inevitably be made on an ad hoc case-by-case basis and not by the application of a mechanical rule. Campbell v. Triangle Corp., 336 F.Supp. 1002 (E.D.Pa.1972). However, these distinctions must necessarily be made only after due consideration is given to the significant public policy considerations which are served by the concept of substituted service. These considerations were persuasively enunciated by Mr. Justice Black in his opinion for...