Garrett v. Ruth Originals Corp.

• Decision Date: 28 August 1978
• Docket Number: No. C-2-77-540.,C-2-77-540.
• Citation: 456 F. Supp. 376
• Parties: R. Alan GARRETT, Plaintiff, v. RUTH ORIGINALS CORPORATION, and Ruth Combs, Defendants.
• Court: U.S. District Court — Southern District of Ohio

456 F. Supp. 376

R. Alan GARRETT, Plaintiff, v. RUTH ORIGINALS CORPORATION, and Ruth Combs, Defendants.

No. C-2-77-540.

United States District Court, S. D. Ohio, E. D.

August 28, 1978.

COPYRIGHT MATERIAL OMITTED

Charles S. Lopeman, Lopeman, Lopeman & Patton, Columbus, Ohio, for plaintiff.

Duke W. Thomas, Suzanne Richards, Vorys, Sater, Seymour & Pease, Columbus, Ohio, for defendants.

OPINION AND ORDER

KINNEARY, District Judge.

This matter is before the Court on the defendants' motion to dismiss for lack of personal jurisdiction or, in the alternative, to transfer venue of this action to the Western District of North Carolina. For the reasons which follow, the Court has determined that the defendants' motion, except as to the defendant Ruth Combs, is without merit.

The plaintiff, R. Alan Garrett, brought this diversity action for breach of a contract of employment against the defendants Ruth Originals Corporation and Ruth Combs. Ruth Originals Corporation hereinafter "the Corporation" is incorporated and has its principal place of business in the State of North Carolina; it does not maintain an office in Ohio. Defendant Ruth Combs is the President of the Corporation, and resides in North Carolina.

In response to the plaintiff's complaint the defendants filed a motion to dismiss for lack of personal jurisdiction or to transfer venue to the Western District of North Carolina. The burden was therefore placed on the plaintiff to set forth specific facts establishing the Court's jurisdiction over the defendants. Weller v. Cromwell Oil Company, 504 F.2d 927, 929-30 (CA 6, 1974). Plaintiff has responded with an affidavit and a memorandum contra the motion to dismiss. Therefore, the facts upon which the Court will base its decision of this motion are those contained in the plaintiff's affidavit, and those upon which the parties are in agreement.

I

On June 1, 1975, Robert C. Edwards, Executive Vice-President of Ruth Originals placed a phone call to the plaintiff in Ohio informing him of the opening for the position of Director of Marketing of the Corporation's Fadoosie Division. Plaintiff was employed at that time by a department store in Columbus, had done business with the Corporation for at least nine years, and was acquainted with many of its officers and representatives. During the conversation, Mr. Edwards made it apparent that the Corporation was at the very least desirous that the plaintiff apply for the position.¹

Shortly thereafter the plaintiff, while in New York, called Mr. Edwards concerning the Fadoosie position; this call was placed at the suggestion of the defendants' New York representative, Ms. Barbara Tribblehorn. Plaintiff then made two visits to the Corporation's offices in North Carolina at which time the majority of the contract's details were determined. Plaintiff asserts that the final acceptance of the employment contract occurred during a subsequent telephone call placed by Mr. Edwards to the plaintiff in Ohio. It was during that call that the plaintiff's salary was agreed upon.

Plaintiff moved to New York to assume his new position. The alleged breach of the contract occurred some eleven months later when the Fadoosie Division was discontinued, and the plaintiff was offered no other employment with Ruth Originals. The plaintiff then returned to Columbus, where he filed this complaint alleging breach of contract on the part of the defendant corporation, and tortious interference with contractual relations on the part of Ruth Combs.

II

In a diversity suit, the jurisdiction in personam of this Court over the defendant is determined by the law of the forum state. In-Flight Devices Corporation v. Van Dusen Air, Inc., 466 F.2d 220, 224 (CA 6, 1972). Personal jurisdiction over non-resident defendants in Ohio is authorized by Ohio Revised Code § 2307.382 which provides in pertinent part:

(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:

(1) Transacting any business in this state;

. . . . .

(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;

(B) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him.

At present, there appears to be no controlling Ohio authority with regard to the application of this statute to the facts of this case. It has been held by the Court of Appeals for the Sixth Circuit, however, that O.R.C. § 2307.382 was intended by the Ohio legislature to extend personal jurisdiction to the constitutional limit. In-Flight Devices Corp. v. Van Dusen Air, Inc., supra at 224. That constitutional limit is the due process clause, which

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."

International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)).

In the Sixth Circuit there has evolved a three step analysis which is used to determine the applicability of the state statute and the limits of due process. As stated by the Court in Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (CA 6, 1968),

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable.

The most important Sixth Circuit precedent for the case at bar is In-Flight Devices Corporation v. Van Dusen Air, Inc., 466 F.2d 220 (CA 6, 1972), not only because it further elaborated the three part long-arm analysis, but because it dealt expressly with the Ohio statute now at issue. In applying the appropriate legal standard to the facts of this case, this Court will apply the step-wise approach employed by Judge Celebrezze in In-Flight Devices.

A. Purposeful Activity in the Forum

With regard to the first step of the test for personal jurisdiction, the Court in In-Flight Devices stated that

in this Circuit one has "acted" so as to transact business in a state "when obligations created by the defendant have a realistic impact on the commerce of that state." Such "acts" become purposeful if the defendant "should have reasonably foreseen that the transaction would have consequences in that state."

In-Flight Devices, supra at 226 (quoting Southern Machine Co. v. Mohasco Industries, Inc., supra at 382-83). It is apparent that the In-Flight Devices Court recognized that this requirement of purposeful action is a preliminary requirement which is liberally construed, but in no way discharges the further duty under step three of the analysis to determine that the assertion of jurisdiction because of that purposeful activity is nevertheless fair and reasonable. Id. at 227-28. In considering the extreme case, the In-Flight Devices Court concluded as follows:

Certainly the intentional entering into a contractual relationship with a resident of the forum state is sufficient to protect against the Hanson v. Denckla problem and so to meet the purposeful action requirement.²

Thus, the Sixth Circuit recognized that the simple fact of known residence of one party to a contract in the forum state would meet the first prong of the test for long-arm jurisdiction.³

The facts of the present dispute, however, present no such extreme case. In addition to the fact that the defendant entered into a contract with an Ohio resident, the defendant also contacted the plaintiff in Ohio by mail and telephone on a number of occasions with regard to the contract. The initial contact with the plaintiff and the ultimate acceptance of the contract were made in telephone calls initiated by the defendant and placed to the plaintiff in Ohio. The performance of the contract of employment was chiefly to take place in New York, but it also required that the plaintiff leave his established position of employment and place of residence in Ohio. Such a departure would have an unavoidable impact upon the commerce of Ohio which differs in kind from the simple case where a forum resident contracts with an out of state resident to perform wholly out of state services, but the forum resident maintains his residence or place of business within the forum. In the latter case, the only impact upon the state is the creation of a duty owed to one of its residents. In the instant case, that impact exists plus the effect of the plaintiff withdrawing his human capital from the state.

There can be no doubt that the defendants' actions were purposeful or that the consequences in the state were foreseeable. The plaintiff asserts that he had had a nine year relationship with the defendant corporation, that the defendants' Vice-President sought him out concerning the employment, and that the plaintiff had no intention at that time to seek another job. The plaintiff has set forth facts which show that this is not a case in which an employer makes known to the world a job opening and receives an application from a distant state. Rather, the defendant affirmatively contacted the plaintiff in the forum state, offering a position which it knew would require the plaintiff to leave his former employment.⁴ The Court therefore finds that the defendant corporation engaged in purposeful...