Gearhart v. WSAZ, Inc.

• Decision Date: 09 March 1957
• Docket Number: No. 364.,364.
• Citation: 150 F. Supp. 98
• Parties: Calvin GEARHART, Plaintiff, v. WSAZ, Inc., Defendant.
• Court: U.S. District Court — Eastern District of Kentucky

150 F. Supp. 98

Calvin GEARHART, Plaintiff, v. WSAZ, Inc., Defendant.

No. 364.

United States District Court E. D. Kentucky, Catlettsburg Division.

March 9, 1957.

COPYRIGHT MATERIAL OMITTED

W. H. Dysard, E. Poe Harris, Ashland, Ky., for plaintiff.

Campbell, McNeer & Woods, by L. E. Woods, Jr., Selden S. McNeer, Jr., Huntington, W. Va., John L. Smith, Catlettsburg, Ky., for defendant.

SWINFORD, District Judge.

This case was tried by a jury and resulted in a verdict for the plaintiff in the sum of five thousand dollars.

The record is before the court on various motions filed by the defendant attacking the verdict and asking that a judgment in favor of the defendant be entered. I will consider these motions in the order in which they are presented.

The first motion which the defendant files is a renewal of its defense that the action should be dismissed because the court does not have jurisdiction of the person of the defendant.

In order to properly consider this motion and the other motions which will be later discussed it is necessary to give the background and matters of which the court may take judicial cognizance which do not specifically appear in the record. One of the things of which the court takes cognizance is the geographic location and situation of the respective parties. These facts and related matters disclosed by the record are pertinent and important to the application of the law and the ultimate determination of the motions presented.

All of the circumstances out of which this action arose took place in what is known as the Tri-State area of Kentucky, Ohio and West Virginia, a highly industrial section of the Ohio River valley. Boyd County, Kentucky, is adjacent to West Virginia. Catlettsburg, the county seat, is separated from West Virginia only by the Big Sandy River. Boyd County is densely populated. It also contains the City of Ashland which is the home of Armco Steel Corporation. Directly east of the City of Ashland, which has an estimated population of 31,000, is the City of Catlettsburg with a population of approximately 6,000. The area, immediately adjacent, in West Virginia is very similar to Boyd County, Kentucky, in that it is densely populated and highly industrialized. The cities of Kenova, Ceredo and Huntington have a combined population of more than 100,000. In summation it might be said that from the western boundary of Ashland, Kentucky, to the eastern boundary of Huntington, West Virginia, there is one industrial city of approximately 140,000 people.

Located about 15 miles from the City of Catlettsburg, Huntington is the home of the defendant, a broadcasting and telecasting corporation. The defendant holds a dominant position from the standpoint of dissemination of news in the western part of West Virginia and the whole northeastern part of Kentucky. It is a very powerful broadcasting and telecasting station. In the matter of television it has no competition and its Channel 3 is the only station that is received throughout a section of Kentucky, including the County of Boyd. It reaches several hundred thousand people.

The defendant is a West Virginia corporation which has not qualified to do business in Kentucky. It operates its stations from the City of Huntington, West Virginia. None of the facilities used in this connection are located inside the State of Kentucky. It has no office in Kentucky; it has no employees or agents who reside in Kentucky. The principal source of income to the defendant is derived from advertising over its radio and television stations. Less than four per cent of the total advertising revenue of the defendant for the year preceding the matters complained of in this action represented advertising sold to persons and firms located in Kentucky. The defendant says that most of its advertising was sold through agents located outside of Kentucky; that only infrequently and irregularly had an employee traveled in Kentucky and solicited advertising from Kentucky firms; and that the amount of such advertising so solicited was only 1.03% of the total advertising revenue.

The plaintiff instituted this action in the Circuit Court of Boyd County and executed service of process on the defendant by serving the process upon the Secretary of State of the Commonwealth of Kentucky pursuant to the provisions of KRS 271.610. Upon petition of the defendant the action was removed to the federal court on the ground of diversity of citizenship. 28 U.S.C.A. § 1441.

It cannot be disputed that the jurisdiction of the federal court in cases of diversity of citizenship is a derivative jurisdiction. This court only acquires jurisdiction of the subject matter of the action or the parties if the Boyd Circuit Court in which it was originally filed had jurisdiction of the defendant. Lambert Run Coal Co. v. Baltimore & Ohio R. Co., 258 U.S. 377, 42 S.Ct. 349, 66 L.Ed. 671; Simpson v. Southwestern Railroad Co., 5 Cir., 1956, 231 F.2d 59.

KRS 271.385 provides that every foreign corporation, except foreign insurance companies, carrying on business in this state, shall at all times have an office in this state and an authorized agent upon whom process can be served. Where this statute is not complied with, a foreign corporation so doing business is deemed to have made the Secretary of State its agent for the service of process in any civil action instituted in the courts of this state against such corporation involving a cause of action arising out of or connected with the doing of business by such corporation in this state. KRS 271.610(2).

The jurisdiction of this court rests upon a determination of the question of whether or not the defendant was doing business in the State of Kentucky at the time of the acts of which the plaintiff complains.

Television and radio broadcasting are in interstate commerce. The programs broadcast by the defendant were received by persons possessing television and radio sets, not only within the borders of the home state of the defendant, but in Kentucky and other states and very pointedly in the County of Boyd, City of Catlettsburg, Kentucky, which was the home of the plaintiff. There is no way by which these broadcasts could be confined to the State of West Virginia. The defendant was advertising things for sale and claimed to reach a listening and seeing public of many hundreds of thousands of people. It was on this fact, we must assume, that it made its charges for advertising on which it says it relies for its principal income and in fact for its very existence. I do not believe that it could be said that a radio or telecasting company could be said to be doing business in all the states to which its broadcasts and telecasts reached, but where the buying public, which is sought by its customers as advertisers, was in the immediate locality of the places of business of the things advertised, a strong case could be made out on that fact alone, especially where the defendant was within a distance of less than twently miles from the jurisdiction of the court where the plaintiff sought redress for an alleged tort.

One of the standards suggested as a criterion in determining the question of what is and what is not "doing business" in the case of International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 158, 90 L.Ed. 95, is to estimate the inconvenience "which would result to the corporation from a trial away from its `home' or principal place of business".

The record discloses that over a considerable period of time the defendant sought out and contracted with various merchants and business people in Kentucky for advertising over its stations. It entered into written contracts. It had representatives solicit advertising in person and engaged business people in written contracts extending over weeks and months.

It is a basic principle of justice that the jurisdiction of a court to render a personal judgment is limited and dependent upon the presence of the defendant within the territorial jurisdiction of the court. This principle was established in Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565. In order for this court to acquire jurisdiction of the defendant it must be disclosed by the record that the presence of the defendant in the territorial jurisdiction of this court is more than the casual presence of an agent or isolated incidents of activity in the state on the defendant's behalf. Frene v. Louisville Cement Co., 77 U.S.App.D.C. 129, 134 F.2d 511, 146 A.L.R. 926.

The opinion in the Frene case sets forth that the fundamental underlying principle of the "doing business" concept is the maintenance within the jurisdiction of a regular course of business activities. See also an opinion of this court in Brandeis Machinery & Supply Co. v. Matewan Alma Fuel Corp., D.C., 147 F.Supp. 821.

It is admitted by the defendant that it solicited business in Kentucky, but that the amount of business so solicited amounted to only 1.03% of the total advertising revenue during the year preceding the tort complained of. While the small amount of business percentagewise is a circumstance to be considered, it is not sufficient to justify the court in dismissing the action in the light of all the circumstances. The percentage is small, but it may run into thousands of dollars, depending, of course, upon the amount of overall business done. It does not necessarily follow that the solicitation for business was not regular, continuous and persistent, rather than merely casual. Nippert v. City of Richmond, 327 U.S. 416, 66 S. Ct. 586, 90 L.Ed. 760.

On July 13, 1951, this court handed down an opinion in the case of Star Elkhorn Coal Co. v. Red Ash Pocahontas Coal Co., D.C., 102 F.Supp. 258. In that case the exact question here presented was discussed. The court said the term "doing business" has been so frequently discussed and so variously applied that authority can be found for any position a court takes in a given state of facts. That...