BJ Semel Associates, Inc. v. United Fireworks Mfg. Co.

• Decision Date: 07 December 1965
• Docket Number: No. 19131.,19131.
• Parties: B. J. SEMEL ASSOCIATES, INC., and B. J. Semel d/b/a South East Fire-works, Appellants, v. UNITED FIREWORKS MANUFACTURING CO., INC., Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

122 US App. DC 402, 355 F.2d 827 (1965)

B. J. SEMEL ASSOCIATES, INC., and B. J. Semel d/b/a South East Fire-works, Appellants, v. UNITED FIREWORKS MANUFACTURING CO., INC., Appellee.

No. 19131.

United States Court of Appeals District of Columbia Circuit.

Argued June 8, 1965.

Decided December 7, 1965.

Petition for Rehearing Denied January 19, 1966.

Mr. Marshall C. Berger, New York City, a member of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, for appellants. Mr. Harry E. Taylor, Jr., Washington, D. C., also entered an appearance for appellants.

Mr. James vanR. Springer, Washington, D. C., with whom Mr. James C. McKay, Washington, D. C., was on the brief, for appellee.

Before FAHY, BURGER and McGOWAN, Circuit Judges.

Petition for Rehearing En Banc Denied January 19, 1966.

McGOWAN, Circuit Judge:

The appeal before us in this private civil action under the antitrust laws presents solely the question of whether the venue of the action was properly laid in the District Court. This issue turns upon the language of Section 12 of the Clayton Act, 15 U.S.C. § 22, which reads as follows:

"Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found."

We have concluded that, looking only to those facts as to which there is no essential dispute in the record before us, venue did exist within the meaning of the statute. Thus the order appealed from, which quashed the service of process, is reversed.

I

The complaint in this action alleged violations of the Sherman Act, 15 U.S.C. §§ 1, 2, and 3, as well as illegal price discrimination under the Robinson-Patman Act, 15 U.S.C. § 13(a). Appellant is a District of Columbia corporation with its principal place of business in Washington. It is engaged in the business of distributing fireworks at wholesale, in the District and elsewhere. Appellee is an Ohio corporation which manufactures fireworks and sells them to wholesalers and retailers throughout the United States. Its factory and office are in Dayton. Service of process was effected upon appellee at its Dayton office.

The complaint was met with a motion under Rule 12(b), FED.R.CIV.P., to dismiss for improper venue. An affidavit in support of the motion represented that appellee had no office, property, or personnel in the District of Columbia. It was said that no salesmen, sales agents, or advertising were used in the District to solicit business. Price lists were mailed into the District only upon specific request. Appellee had three customers in the District, including appellant, to whom sales were made pursuant to unsolicited requests received in Dayton. Resulting merchandise deliveries were all F.O.B. Dayton.¹ Sales to one of the customers other than appellant totalled $1056.23 in 1963 and $1121.50 in 1964. Sales to the other such customer were $643.20 in 1962. Since appellee's organization in 1962, its employees had been in the District on only five occasions. Three of these were in the autumn of 1963 in connection with hearings of a Senate Subcommittee on Juvenile Delinquency. These are said to have involved no solicitations or negotiations, although "these visits by the President and Affiant Vice-President included incidental goodwill contacts with customers in the District." The other two visits by Affiant in 1964 were said to be "each of less than a day's duration and related solely to this suit and problems arising out of the assignment by appellant to appellee of certain accounts receivable as security for payment of the price of merchandise sold to appellant."

An opposing affidavit was submitted by an officer of appellant. It recited that appellant bought $69,174.51 worth of fireworks from appellee in 1963, and $97,993.87 in 1964, or a total of $167,163.88. Two paragraphs² describe frequent telephone conversations, "as many as twenty-two a month," concerning "every aspect of appellant's business, including advertising, promotion, defective merchandise, deliveries, and customers' complaints." Appellee was said to have "insisted" upon an assignment to it of appellant's accounts receivable generated by appellant's resales of appellee's products.

It will be noted that this last-mentioned affidavit gave a different version of the "goodwill" calls admittedly paid by appellee's officers upon appellant in 1963. This prompted the filing of a further affidavit by the movant, denying appellant's description of these meetings and insisting that they involved no business discussions other than generalized goodwill exchanges.

The motion was heard and disposed of by the District Court solely on these affidavits, together with legal memoranda and oral argument by the parties. The court's order recited no more than that "having found that venue is improperly laid as to the defendant in the District of Columbia," service is quashed.

II

Putting to one side the clash between the affidavits as to what occurred during the 1963 calls of appellee's officers upon appellant in Washington,³ certain facts emerge as not in dispute. One is that the volume of sales made by appellee to appellant was substantial. Billings of the order of $70,000 to $100,000 annually are not insignificant in most businesses, and certainly there is nothing in this record to suggest that they are so in the fireworks trade. A second is that appellant and appellee were in constant and frequent telephonic communication about all aspects of their business relationships, including appellant's own relations with its customers — a circumstance of active interest to appellee because of its practice of requiring assignment to it of appellant's receivables.

It seems equally clear that appellee had no permanent base or personnel in the District; that it relied heavily, if not entirely, on the telephone for the provision of those services which a travelling salesman or a local agent would otherwise have been expected to supply; and that it uniformly adhered to a trade policy of shipping its products F.O.B.

In trying to relate these facts to the governing law, it is important to remember that we are interpreting a venue statute, not resolving a constitutional objection to the assertion of jurisdiction. Compare International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Furthermore, the venue statute with which we deal is not generalized in its reach but was intended by Congress to be an important facet in the scheme of private remedies devised to promote the objectives of the antitrust laws.⁴ Thus it is that the lore of the myriad cases dealing with the familiar problem of the requisite indicia of corporate presence to render the foreign corporation subject to suit locally is not directly apposite here.⁵ The Supreme Court has pointedly reminded us of the inutility of much of this learning in construing Section 12 of the Clayton Act, and has said that we are, as has it, to seek to make effective "Congress' remedial purpose" in enacting that statute by making "the test of venue" under it a "practical, everyday business or commercial concept of doing or carrying on business `of any substantial character' * * *." United States v. Scophony Corp., 333 U.S. 795, 807-808, 68 S.Ct. 855, 862, 92 L.Ed. 1091 (1948). The remedial purpose referred to in Scophony was clearly that identified by the Court as the relieving of "persons injured through corporate violations of the antitrust laws from the `often insuperable obstacle' of resorting to distant forums for redress of wrongs done in the places of their business or residence."⁶

Scophony does not decide this case, but it does provide an authoritative characterization of the purposes of Section 12 and of the considerations relevant to the realization of those purposes. Since this exegesis was provided in 1948, a number of courts have made their way by the light it provides. Green v. U. S. Chewing Gum Mfg. Co., 224 F.2d 369 (5th Cir. 1955); Brandt v. Renfield Importers, Ltd., 278 F.2d 904 (8th Cir.), cert. denied, 364 U.S. 911, 81 S.Ct. 274, 5 L.Ed.2d 226 (1960); Lower Colorado River Authority v. Westinghouse Electric Corp., 219 F.Supp. 743 (W.D.Tex.1963). In one way or another it is possible, as appellee does, to note factual variations from this case, but appellee's chief reliance in this regard is upon the circumstance that deliveries of the goods sold were, in these cases, made for the seller's account to the buyer's place of business. We, however, are unable to believe that the spirit of Scophony comports with allowing the seller's shipping practices to determine his amenability to suit under Section 12. Were it otherwise, F.O.B. would always, and without more, compel the buyer to litigate on the seller's home grounds — the very result which Congress sought to avoid in Section 12.⁷

One thing at least which does emerge from the post-Scophony cases, it seems to us, is a substantiality requirement in terms of the volume of trade done.⁸ Venue is not to be found in every case simply because of an isolated transaction of modest proportions. "Transacts business," as used in the statute, imports continuity — and continuity and total volume tend to be inter-acting. As said above, we think the volume of business was such here as to surmount any attack of a de minimis nature. And the wholly respectable proportions of this volume complete the picture which we think the record paints of a manufacturer who looked to the District of Columbia as one of its important markets and whose contacts with that market, although physically remote in a sense, were nonetheless continuous and substantial. No more than the shipping device of F.O.B. do we think the telephone capable of...