Buckeye Associates v. Fila Sports, Inc.

• Citation: 616 F. Supp. 1484
• Decision Date: 04 September 1985
• Docket Number: Civ. A. No. 85-1031-Y.
• Parties: BUCKEYE ASSOCIATES, LTD. v. FILA SPORTS, INC., et al.
• Court: U.S. District Court — District of Massachusetts

616 F. Supp. 1484

BUCKEYE ASSOCIATES, LTD. v. FILA SPORTS, INC., et al.

Civ. A. No. 85-1031-Y.

United States District Court, D. Massachusetts.

September 4, 1985.

COPYRIGHT MATERIAL OMITTED

Evan T. Lawson, Lawson & Wayne, Boston, Mass., for plaintiff.

Lawrence J. Crowley, Jr., Julius Thannhauser, Riemer & Braunstein, Boston, Mass., for defendants.

MEMORANDUM AND ORDER

YOUNG, District Judge.

The plaintiff Buckeye Associates ("Buckeye") brought this action against defendants Fila Sports, Inc. ("Fila USA") and Fila Sports, S.P.A. ("Fila Italy"), seeking damages for alleged violations of the federal antitrust laws, breach of contract, misrepresentation, interference with advantageous relations, unfair and deceptive trade practices in violation of the Massachusetts Consumer Protection Act, violation of the Massachusetts Antitrust Act, and violation of the California Unfair Trade Law. Buckeye asserts subject matter jurisdiction pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1332, and general principles of pendent jurisdiction. The defendants have moved to dismiss the complaint for lack of personal jurisdiction or, in the alternative, to dismiss on the ground of forum non conveniens. For the reasons that follow, the motion is granted on the ground that Buckeye has failed to establish personal jurisdiction over the defendants.¹

The defendants' motion is accompanied by a lengthy brief and affidavits executed by the president of Fila USA, the chief executive officer of Fila Italy, and the legal counsel of Fila Italy. Buckeye's counsel appeared at an oral hearing on the motion but filed nothing in response to the defendants' papers.²

When jurisdiction is properly challenged, the plaintiff has the burden of establishing sufficient facts upon which the court can exercise personal jurisdiction over the defendant. American Freedom Train Foundation v. Spurney, 747 F.2d 1069, 1075 (1st Cir.1984). To establish personal jurisdiction, the plaintiff "must go beyond the pleadings and make affirmative proof." Chlebda v. H.E. Fortna & Bro., Inc., 609 F.2d 1022, 1024 (1st Cir.1979).³ Although the Court has considered the allegations in the complaint, the resolution of this motion essentially turns on whether the facts set forth in the defendant's own affidavits establish personal jurisdiction.

In analyzing whether it has personal jurisdiction over a defendant, a court must engage in a two-step inquiry: (1) Is the court authorized by either a federal or state statute to exercise jurisdiction? (2) Even if there is statutory authorization, does the defendant have the requisite minimum contacts with the jurisdiction so that the exercise of personal jurisdiction will comport with due process? International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

Because Buckeye chose not to file any papers in opposition to the motion to dismiss, it is unclear what statute Buckeye is relying on to assert personal jurisdiction. However, at the oral hearing, the parties focused on two statutory sources of jurisdiction: (1) Section 12 of the Clayton Act, 15 U.S.C. § 22, and (2) the Massachusetts long arm statute, Mass.Gen.Laws c. 233A, § 3.⁴ Those statutes do indeed provide the appropriate starting point in analyzing jurisdiction in this case.

I. Section 12 of the Clayton Act

Buckeye has asserted three claims under the federal antitrust laws. Thus, it is entitled to look to a relevant federal statute for serving process on the defendants. Fed.R. Civ.P. 4(e). Section 12 of the Clayton Act provides:

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.

15 U.S.C. § 22 (1982).

Section 12 is a venue statute which also provides worldwide service of process if the specified venue requirements are satisfied. Because venue is "primarily a matter of convenience of litigants and witnesses," Denver & Rio Grande Western R.R. Co. v. Brotherhood of R.R. Trainmen, 387 U.S. 556, 560, 87 S.Ct. 1746, 1748, 18 L.Ed.2d 954 (1967), it should be distinguished from personal jurisdiction. Likewise, service of process should be distinguished from personal jurisdiction — service of process is the mechanism by which the commencement of an action is brought to the notice of a defendant. Wright & Miller, Federal Practice and Procedure: Civil § 1063 (1969). Consequently, compliance with Section 12 does not by itself confer personal jurisdiction over a defendant. This Court can properly exercise jurisdiction over the defendants only if the due process requirements of International Shoe and its progeny are satisfied. Sportmart, Inc. v. Frisch, 537 F.Supp. 1254, 1257 (N.D.Ill. 1982).

Although Section 12 is primarily a venue statute, some federal courts have suggested that the analyses of venue and personal jurisdiction are "virtually congruent, since both are controlled by general due process principles." Id.; see Smokey's of Tulsa v. American Honda Motor Co., 453 F.Supp. 1265, 1267 (E.D.Okla.1978) ("The jurisdictional issue hinges upon the determination regarding venue, to wit: if venue is proper under Section 12 so is in personam jurisdiction; if venue is improper and the action is dismissed as to this defendant on account thereof, the jurisdiction question becomes moot and need not be resolved.") Because the Court rules that the venue requirements of Section 12 are not satisfied in this case, it is unnecessary to decide whether those requirements are congruent with the due process requirements of the United States Constitution.⁵

Under Section 12, venue is appropriate in any district where the defendant is an inhabitant, where it may be found, or where it transacts business. A corporation is an "inhabitant" of the state of its incorporation. Aro Mfg. Co. v. Automobile Body Research Corp., 352 F.2d 400 (1st Cir.1965), cert. denied, 383 U.S. 947, 86 S.Ct. 1199, 16 L.Ed.2d 210 (1966). Neither of the defendants in this case is incorporated in Massachusetts and thus neither is an "inhabitant" of this district. Therefore, the defendants must either be "found" or "transacting business" in Massachusetts for venue to be proper in this district. A corporation must engage in more extensive activities to be "found" within a district than it must to be "transacting business" there. Chrysler Corp. v. General Motors Corp., 589 F.Supp. 1182 (D.D.C.1984); Haskell v. Aluminum Co. of America, 14 F.2d 864 (D.Mass.1926). Consequently, the Court need only determine whether either or both of the defendants transacts business in Massachusetts.⁶

Whether a defendant has "transacted business" within a particular district sufficient to create venue under Section 12 is a factual question to be determined in each individual case. Sportmart, Inc. v. Frisch, 537 F.Supp. 1254, 1257 (N.D.Ill. 1982). This test of venue has been described as "the practical, everyday business or commercial concept of doing business or carrying on business of any substantial character." United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948). The general standard is that "isolated and sporadic contacts with the forum state are not sufficient to constitute transacting business; the business transacted must be of a substantial character, and it must have some degree of continuity." Grappone, Inc. v. Subaru of America, Inc., 403 F.Supp. 123, 130 (D.N.H. 1975). Among factors to be considered in applying this standard are: (1) place to do business; (2) people to carry on business; (3) tangible property; (4) subjection to state regulation; (5) business operations; (6) manifestations of doing business; and (7) goodwill activities. Agra Chem. Distrib. Co. v. Marion Laboratories, Inc., 523 F.Supp. 699, 702 (W.D.N.Y.1981).

Applying these standards to the case at bar, the Court rules that neither of the defendants transacts business in this district for purposes of Section 12. First, with respect to Fila Italy, the affidavit executed by Angiolo Tacci (the CEO of Fila Italy) states that Fila Italy is organized under the laws of Italy, its corporate offices are located in Italy, all of its corporate officers and employees are in Italy, it manufactures all of its merchandise in Italy, it owns no real property outside Italy, and its only bank accounts are located in Italy, Switzerland, and Austria. Fila Italy has no assets in the United States except that it is the sole shareholder of Fila USA. Fila USA is a wholly owned subsidiary of Fila Italy and acts as Fila Italy's exclusive U.S. distributor of merchandise manufactured in Italy by Fila Italy.

Pursuant to their exclusive distribution agreement, Fila USA purchases merchandise from Fila Italy's factory in Biella, Italy. Title is taken by Fila USA in Italy and all risk of loss shifts to Fila USA at the time of transfer. The only business conducted in the United States by Fila Italy involves several advertising and sponsorship agreements with certain American athletes; none of those agreements were made in Massachusetts. Officers or employees of Fila Italy occasionally travel to the United States to meet with Fila USA representatives or customers or to visit trade shows, but none of these activities is regularly conducted in Massachusetts.

On the basis of these uncontroverted facts, Fila Italy does not transact business in Massachusetts within the meaning of Section 12. In fact, Buckeye has not shown that Fila Italy has any contacts whatsoever with Massachusetts. At the oral hearing on the motion to dismiss, there was a suggestion that Buckeye may be attempting to reach Fila Italy through the business activities of its subsidiary, Fila USA, on an "alter ego" theory. However, even if Fila USA was found to be subject to personal jurisdiction and...