Harley-Davidson Motor Co. v. Motor Sport, Inc.

• Decision Date: 15 April 1997
• Docket Number: No. 96-C-1038.,96-C-1038.
• Citation: 960 F.Supp. 1386
• Parties: HARLEY-DAVIDSON MOTOR COMPANY, Plaintiff, v. MOTOR SPORT, INC., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

960 F.Supp. 1386

HARLEY-DAVIDSON MOTOR COMPANY, Plaintiff, v. MOTOR SPORT, INC., Defendant.

No. 96-C-1038.

United States District Court, E.D. Wisconsin.

April 15, 1997.

Peter J. Stone, Foley & Lardner, Milwaukee, WI, for plaintiff.

Russell M. Lein, K. Scott Wagner, Hale & Lein, Milwaukee, WI, for defendant.

DECISION AND ORDER

MYRON L. GORDON, District Judge.

The plaintiff, Harley-Davidson Motor Company, filed this diversity action on September 10, 1996, asking for a declaratory judgment that Harley-Davidson has not violated its distributorship agreement with the defendant, Motor Sport, Inc., that Harley-Davidson has not violated any duties or responsibilities it may have toward Motor Sport, and that Harley-Davidson's relationship with Motor Sport is non-exclusive. Motor Sport subsequently filed a motion to dismiss pursuant to Rules 12(b)(2), (3) & (6), Federal Rules of Civil Procedure; it is this motion to dismiss that is presently before the court.

In support of its motion, Motor Sport has submitted two affidavits of Jose Fossas, the president of Motor Sport. Harley-Davidson has submitted the affidavit of Darrell Fink, the director of "Latin American Operations" for Harley-Davidson.

I. Factual Background

Harley-Davidson, a manufacturer, distributor, and seller of motorcycles and motorcycle parts, is a Wisconsin corporation with its principal place of business in Milwaukee. (Fink aff. ¶ 2.) Motor Sport, a corporation formed under the laws of Puerto Rico, distributes and sells manufactured brand products in Guaynabo, Puerto Rico. (First Fossas aff. ¶ 2.) Among the products sold by Motor Sport are Harley-Davidson motorcycles, parts, and accessories. (First Fossas aff. ¶ 3.) Motor Sport began to sell Harley-Davidson products in or about 1975. (Fink aff. ¶ 3; First Fossas aff. ¶ 3.) The last written agreement regarding the distribution relationship between Harley-Davidson and Motor Sport expired on December 31, 1981. (First Fossas aff. ¶ 4.) The parties have nevertheless continued to do business until the present day. (First Fossas aff. ¶ 4; Fink aff. ¶ 5.) All terms and negotiations regarding the distribution relationship between Harley-Davidson and Motor Sport have been executed in Puerto Rico. (First Fossas aff. ¶ 7.)

Motor Sport, when ordering Harley-Davidson products, submits its orders to the plaintiff's office in Milwaukee. (Fink aff. ¶ 7.) Harley-Davidson's Wisconsin employees and employees of Motor Sport, in connection with these orders, communicate through the telephone, facsimile, and mail. (Fink aff. ¶ 7.) The engines, transmissions, and parts for each of the Harley-Davidson motorcycles sold by Motor Sport are manufactured at Harley-Davidson plants in Tomahawk, Wauwatosa, and Milwaukee, Wisconsin. (Fink aff. ¶ 7.) The motorcycles are subsequently assembled in York, Pennsylvania and shipped to Motor Sport in Puerto Rico. (Second Fossas aff. ¶ 8; Fink aff. ¶ 7.)

Harley-Davidson prepares and mails its invoices for Motor Sport products in Milwaukee. (Fink aff. ¶ 8.) Until 1997, Motor Sport sent its payments for new motorcycles to Harley-Davidson in Milwaukee, and Harley-Davidson deposited these payments in bank accounts maintained in Wisconsin. (Fink aff. ¶ 8; Second Fossas aff. ¶ 11.) Motor Sport and its customers submit sales and warranty registration forms for new motorcycles, in addition to warranty claims for reimbursement, to Harley-Davidson in Milwaukee. (Fink aff. ¶ 9.) Harley-Davidson's Wisconsin office processes these forms and claims. (Fink aff. ¶ 9.) Harley-Davidson has provided 90-day financing and cooperative advertising on behalf of Motor Sport. (Fink aff. ¶ 11.) These programs are initiated at Harley-Davidson's headquarters in Milwaukee. (Fink aff. ¶ 11.) Harley-Davidson did not grant any cooperative advertising to Motor Sport during 1996. (Second Fossas aff. ¶ 12.)

Employees at Harley-Davidson's Wisconsin office and Motor Sport employees communicate about other matters, including forecasting and market potential. (Fink aff. ¶ 7.) Harley-Davidson's Wisconsin office also faxes or mails monthly credit reports to Motor Sport; each report generates one or two contacts between Motor Sport and Harley-Davidson in Wisconsin. (Fink aff. ¶ 8.) Not all communications between the defendant and the plaintiff, however, are with Harley-Davidson's Milwaukee office. Motor Sport has also had contact with Harley-Davidson's Connecticut, Florida, and Brazil offices. (Second Fossas aff. ¶ 7.)

In 1995 and 1996, Motor Sport's purchases of Harley-Davidson products totaled approximately $1,000,000 each year. (Second Fossas aff. ¶ 9.) In 1996, Harley-Davidson received orders in Wisconsin from Motor Sport for parts and accessories in the amount of $154,420.24; in 1995, Harley-Davidson received orders in Wisconsin from Motor Sport in the amount of $133,768.30. (Fink aff. ¶ 12.) These parts and accessories were invoiced and shipped in Wisconsin. (Fink aff. ¶ 12.) The remaining balance of Motor-Sport's purchases from Harley-Davidson during 1995 and 1996 were motorcycles that were manufactured in Wisconsin and assembled and shipped in York, Pennsylvania. (Second Fossas aff. ¶ 49.)

In June, 1996, one of Motor Sport's mechanics, Giherimo Moya, attended a special Spanish language service school sponsored by Harley-Davidson in Milwaukee. Mr. Moya was in Milwaukee for the ten day duration of the service school. (Fink aff. ¶ 13.) Harley-Davidson subsequently made a job offer to Mr. Moya, which Mr. Fossas states that Mr. Moya accepted. (Second Fossas aff. ¶ 13.) Mr. Fossas believes that Mr. Moya is now employed by Harley-Davidson's Milwaukee office. (Fink aff. ¶ 13.)

II. Analysis

A. Personal Jurisdiction

Motor Sport first asserts that the court should dismiss Harley-Davidson's complaint pursuant to Rule 12(b)(2), Federal Rules of Civil Procedure, which allows for such a dismissal when the court does not have personal jurisdiction over one of the parties.

A federal court sitting in a diversity case has personal jurisdiction over the parties only if a court of the state in which the federal court sits would have such jurisdiction. Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.1995), cert. denied, ___ U.S. ___, 116 S.Ct. 2523, 135 L.Ed.2d 1047 (1996). When determining whether it has personal jurisdiction, a federal court in Wisconsin must resolve two questions. The court first must determine whether the Wisconsin long arm statute, Wis. Stat. § 801.05, applies to the non-resident defendant. Mid-America Tablewares, Inc. v. Mogi Trading Co., 100 F.3d 1353, 1358-59 (7th Cir.1996); see In re All-Star Ins. Corp., 110 Wis.2d 72, 76, 327 N.W.2d 648, 650 (Wis.1983). Second, if the long-arm statute does apply, the court then is obliged to decide whether its exercise of jurisdiction over the defendant comports with the due process requirements of the Fourteenth Amendment. Mid-America Tablewares, 100 F.3d at 1358-59.

1. Wisconsin Long-Arm Statute

The burden rests on the plaintiff to prove that the Wisconsin long-arm statute applies to the nonresident defendant. State ex rel. N.R.Z. v. G.L.C., 152 Wis.2d 97, 104, 447 N.W.2d 533, 535 (Wis.1989). The statute, however, is to be liberally construed in favor of exercising jurisdiction. Federated Rural Elec. Ins. Corp. v. Inland Power and Light Co., 18 F.3d 389, 391 (7th Cir.1994); Lincoln v. Seawright, 104 Wis.2d 4, 9, 310 N.W.2d 596, 599 (Wis.1981). Furthermore, Wisconsin's statute, unlike some other state's long-arm statutes, is intended to reach to the fullest extent allowed under the due process clause. Daniel J. Hartwig Assoc., Inc. v. Kanner, 913 F.2d 1213, 1217 (7th Cir.1990); N.R.Z., 152 Wis.2d at 105, 447 N.W.2d at 535.

Harley-Davidson maintains that Wis. Stat. § 801.05(1)(d) allows this court to assert personal jurisdiction over Motor Sport. This section of the statute provides that personal jurisdiction exists if the defendant, when the plaintiff commences the action, is "engaged in substantial and not isolated activities within this state, whether such activities are wholly interstate, intrastate, or otherwise." Wis. Stat. § 801.05(1)(d). A defendant is engaged in substantial activities within the state when such activities are "systematic and continuous." Capitol Indem. Corp. v. Certain Lloyds Underwriters, 487 F.Supp. 1115, 1117 (W.D.Wis.1980).

The plaintiff also alleges that other sections of the state long-arm statute, specifically Wis. Stat. §§ 801.05(5)(a),(b),(c) & (d), apply to Motor Sport. An out-of-state defendant is subject to jurisdiction under the statute when the action arises out of a promise made by the defendant to the plaintiff "to pay for services to be performed in this state by the plaintiff," Wis. Stat. § 801.05(5)(a), or when the action arises out of services actually performed by the plaintiff for the defendant within the state "if such performance within this state was authorized or ratified by the defendant," Wis. Stat. § 801.05(5)(b). Furthermore, the statute exerts jurisdiction over a defendant in an action where the defendant made a promise, to the plaintiff or for the plaintiff's benefit, "to deliver or receive within this state or to ship from this state goods, documents of title, or other things of value," Wis. Stat. § 801.05(5)(c), or where the action relates to "goods, documents of title, or other things of value shipped from this state by the plaintiff to the defendant on the defendant's order or direction," Wis. Stat. § 801.05(5)(d).

Liberally construing the long-arm statute in favor of finding personal jurisdiction, I find that at least two of the statute's sections apply to Motor Sport. First, the evidence now before the court clearly shows that Motor Sport was engaged in substantial, systematic, and continuous activities within Wisconsin. See Wis. Stat. § 801.05(1)(d). For more than twenty years, the defendant has consistently maintained its distributorship relationship with the plaintiff through telephone, mail, and...