Expoconsul Intern., Inc. v. A/E SYSTEMS, INC.

• Decision Date: 13 January 1989
• Docket Number: No. 88 Civ. 0877 (JMW).,88 Civ. 0877 (JMW).
• Citation: 711 F. Supp. 730
• Parties: EXPOCONSUL INTERNATIONAL, INC., a New Jersey Corporation, Plaintiff, v. A/E SYSTEMS, INC., a/k/a A/E/C Systems, Inc., a Connecticut Corporation, Defendant.
• Court: U.S. District Court — Southern District of New York

711 F. Supp. 730

EXPOCONSUL INTERNATIONAL, INC., a New Jersey Corporation, Plaintiff, v. A/E SYSTEMS, INC., a/k/a A/E/C Systems, Inc., a Connecticut Corporation, Defendant.

No. 88 Civ. 0877 (JMW).

United States District Court, S.D. New York.

January 13, 1989.

John J. Jones, Hightstown, N.J., James E. Rosini, William A. Tanenbaum, Kenyon & Kenyon, New York City, for plaintiff.

John C. Hilton, John C. Linderman, McCormick, Paulding & Huber, Hartford, Conn., Albert Robin, Robin, Blecker & Daley, New York City, for defendant.

MEMORANDUM AND ORDER

WALKER, District Judge:

Defendant, A/E Systems Inc. ("A/E Systems") has moved to dismiss the complaint in this action on the basis that venue is improper. Alternatively, the defendant seeks to have the matter transferred to the District of Connecticut on the theory of forum non conveniens. Finally, the defendant seeks to have either plaintiff's Sherman Act claims dismissed for failure to state a claim or to have plaintiff submit a more definite statement with respect to these claims. For the reasons stated below, defendant's motion is denied in its entirety.

I. Background

A. The Parties

The A/E/C industry is the building design and construction industry in which architects, engineers and contractors or construction architects are involved. The defendant, A/E Systems, a Connecticut corporation having offices in Connecticut and Pennsylvania, runs the A/E/C Systems Show, an annual tradeshow where vendors of computers and other automation systems — who rent space from A/E Systems — display their products to attending architects, engineers and contractors. In connection with its tradeshows, A/E Systems is the owner of three federal trademark registrations: "A/E/C Systems," "A/E Systems" and "A/E Systems Report." The registrations disclaim the exclusive right to use the word "systems" apart from the stylized form in the registrations.¹

Plaintiff, Expoconsul International, Inc. ("Expoconsul"), a New Jersey corporation, is a competitor of defendant. In December, 1987, plaintiff sponsored its first A/E/C tradeshow, entitled "1987 AEC EXPO," at the Jacob Javits Convention Center in New York City. Plaintiff has planned future tradeshows at the Javits Center through 1992.

On May 20, 1987, A/E Systems sent a letter to Expoconsul, the validity of which has not been disputed, in which A/E Systems claimed that: (1) Expoconsul had no right to use "AEC Expo" as the name of its tradeshow; (2) Expoconsul had no right to use "AEC Systems" in a generic sense; (3) Expoconsul's actions constituted trademark infringement and unfair competition under both state and federal law; (4) Expoconsul was attempting to pass itself off as the sponsor of the A/E Systems show; and (5) Expoconsul was causing confusion among A/E/C tradeshow exhibitors and attendees. A/E Systems threatened litigation against Expoconsul unless Expoconsul agreed to comply with A/E System's demands. Complaint, Ex. F.

B. The Underlying Action

On February 8, 1988, plaintiff instituted the present action against defendant. Count I of the complaint alleges that defendant violated § 1 of the Sherman Act, 15 U.S.C. § 1, by

deliberately and intentionally conspiring and contracting, ... in restraint of trade, with A/E/C systems tradeshow exhibitors, attendees, speakers, suppliers and others to boycott and otherwise refuse to deal with Expoconsul with respect to Expoconsul's A/E/C systems tradeshow.

Complaint, ¶ 31. Count II of the complaint alleges that defendant violated § 2 of the Sherman Act, 15 U.S.C. § 2, because the acts taken by A/E Systems represent

a dangerously successful and intentional monopolization, attempt to monopolize, and combination and conspiracy with A/E/C systems tradeshow exhibitors, attendees, speakers, suppliers and others to monopolize interstate commerce in the relevant market and submarkets for A/E/C systems tradeshows.

Complaint, ¶ 33.

In addition to the antitrust claims, the complaint sets forth six other causes of action under both federal and state laws.² All of these claims stem from the premise that A/E Systems has intentionally and deliberately monopolized the market for A/E/C systems tradeshows, and has attempted to exclude plaintiff from that market through use of an invalid and unenforceable trademark. Complaint, ¶ 19.

Defendants have moved to dismiss the complaint on the basis that venue is improper in this district.³ Alternatively, defendant seeks to have this matter transferred to the District of Connecticut on the theory of forum non conveniens. In addition, defendant seeks either a dismissal of the first two counts of the complaint for failure to state a claim or, alternatively, a more definite statement with respect to those claims.

II. Discussion

A. Venue

For this action, the Court must look both to the general venue statute, 28 U.S.C. § 1391(b) and (c), and the specific venue provisions of § 12 of the Clayton Act.

For non-diversity cases, the general venue statute, 28 U.S.C. § 1391, provides:

(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendant's reside, or in which the claim arose, except as otherwise provided by law.

(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

28 U.S.C. § 1391(b), (c) (emphasis added). Section 12 of the Clayton Act states that venue for a corporate antitrust defendant is proper in the judicial district where the defendant is an "inhabitant," is "found," or "transacts business." 15 U.S.C. § 22. Courts have interpreted the term "inhabitant" to mean being incorporated under the laws of the jurisdiction, and the term "found" to mean "doing business." General Electric Co. v. Bucyrus-Erie Co., 550 F.Supp. 1037, 1041, n. 5 (S.D.N.Y.1982).

Thus, the first two bases for jurisdiction under the Clayton Act mirror the general venue statute, § 1391(b) and (c). It is the final alternative in § 12 of the Clayton Act — the transacting business alternative — that sets section 12 apart from section 1391(c). That final alternative "means that under most circumstances, venue will be easier to satisfy under section 12 than under the general venue provisions ..." Id. Congress added the "transacting business" criterion in 1914 in order "to provide plaintiffs with a larger number of forums in which to litigate their antitrust claims." Indian Head Inc. v. Allied Tube & Conduit Corp., 560 F.Supp. 730, 730 n. 1 (S.D. N.Y.1983), citing Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 372-3, 47 S.Ct. 400, 403, 71 L.Ed. 684 (1927). The provision has been broadly interpreted with this goal in mind. The Supreme Court has stated that the "transacting business" standard is "the 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, 68 S.Ct. 855, 861, 92 L.Ed. 1091 (1948). Thus, "by substituting practical, business conceptions for the previous hair-splitting legal technicalities ... the Court yielded to and made effective Congress' remedial purpose." Id. at 808, 68 S.Ct. at 862.

The test of substantiality is "whether the dollar volume of business, viewed objectively and without reference to the total volume of business of the corporation, is substantial from the point of view of the average businessman." Indian Head, supra, 560 F.Supp. at 731 n. 5. See also Fashion Two Twenty, Inc. v. Steinberg, 339 F.Supp. 836, 841 (E.D.N.Y.1971); United States v. Burlington Industries, Inc., 247 F.Supp. 185, 187 (S.D.N.Y.1965). From this viewpoint, as little as $30,000 of sales is substantial, Fashion Two Twenty, Supra 339 F.Supp. at 841, and sales that constitute less than 2% of the defendant's business is not insubstantial. J. & B. & S. Restaurant Corp. Inc. v. Henry's Drive-In, Inc., 353 F.Supp. 389, 392 (W.D.N.Y.1973).

In short, then, "the question is whether the amount of business in issue is so little as to be insignificant." Star Lines Ltd. v. Puerto Rico Maritime Shipping Authority, 442 F.Supp. 1201, 1205 n. 10 (S.D.N.Y.1978). Furthermore, the activity complained of need not be related to the transactions upon which venue is predicated. Id.

Applying Section 12 of the Clayton Act so as to effectuate its remedial purpose, the Court finds that A/E Systems is transacting sufficiently substantial business within this district to support venue under § 12. It is undisputed that since 1984, the defendant has received nearly one million dollars in revenues in New York State. A/E Systems states that from its 1988 trade show, it earned $70,500 from New York City business, and from its 1987 tradeshow, it earned $59,714 from New York City businessmen. Defendant's Reply Mem. at 8.⁴

Courts have held that such dollar volume alone is sufficient to establish that a defendant is "transacting business" in the forum district. See, e.g., McCrory Corp. v. Cloth World, Inc., 378 F.Supp. 322, 324 (S.D.N.Y. 1974) (Pollack, J.) ("purchases of more than a quarter million dollars over a three year period would seem on their face to be "substantial" for jurisdictional purposes"); J. & B. & S. Restaurant Corp., supra, 353 F.Supp. at 392 (defendant was "transacting business" when business amounted to $71,386 in one year, and $57,288 in the next year, less than two percent of the company's business in each year); Fashion Two Twenty, supra, 339 F.Supp. at 841 ($30,000 in annual sales was sufficient to constitute "transacting business").

In addition to the defendant's New York sales figures, defendant has the following contacts with the Southern District of New York:

1. Defendant has advertised on a regular basis in more than 40 publications in this district on a regular basis, and has visited at least

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