Hayashi v. Sunshine Garden Products, Inc., 6484.

• Decision Date: 15 February 1967
• Docket Number: No. 6484.,6484.
• Citation: 285 F. Supp. 632
• Parties: Shibo HAYASHI et al., Plaintiffs, v. SUNSHINE GARDEN PRODUCTS, INC., a California corporation, et al., Defendants.
• Court: U.S. District Court — Western District of Washington

285 F. Supp. 632

Shibo HAYASHI et al., Plaintiffs, v. SUNSHINE GARDEN PRODUCTS, INC., a California corporation, et al., Defendants.

No. 6484.

United States District Court W. D. Washington, N. D.

February 15, 1967.

Ferguson & Burdell, Charles S. Burdell, Thomas J. Greenan, Seattle, Wash., for plaintiffs.

Bogle, Gates, Dobrin, Wakefield & Long, Robert W. Graham, Ronald T. Schaps, Peter D. Byrnes, Seattle, Wash., for defendant, Red Wing Peat Corp.

MEMORANDUM OPINION FOLLOWING AND SUPPLEMENTAL TO ORAL DECISION OF NOVEMBER 14, 1966

LINDBERG, Chief Judge.

This matter comes before the court on the motion of Red Wing Peat Corporation, a Texas corporation (herein called Red Wing) to dismiss this action as to it, or in lieu thereof to quash service of summons on it on the following grounds:

1. The court lacks jurisdiction over the person of this defendant;

2. Venue as to this defendant was improperly chosen because Red Wing does not reside in, is not found in, does not have an agent in, is not an inhabitant of, and does not transact business in the Western District of the State of Washington; and

3. Service of process on this defendant, which was procured on defendant in the State of Ohio, is insufficient.

The case is an antitrust action and the product involved is peat, which is used in gardening. The complaint alleges that the several defendant corporations conspired to monopolize the sale and distribution of peat products in certain western states, including Washington. Most of the peat is produced in Canada and sold through distributorships so the product is therefore an object of interstate and foreign commerce.

Red Wing has its principal place of business in Sylvania, Ohio. It does not now nor has it ever engaged in business of any kind in the state of Washington and neither does it have any agents, employees, officers or directors in this state, according to the affidavit of its executive vice-president, Averill D. Trott. The sole basis for plaintiff's claim that Red Wing transacts business in the state of Washington is its complete ownership of the stock of its subsidiary, Western Peat Moss, Ltd., also a defendant in this action. Western Peat Moss, Ltd. is a Canadian corporation alleged to be doing business in this district by means of its participation in a complicated set-up involving various Canadian peat producers operating with and through Western Peat Moss, Ltd. to control the price of peat moss sold in the United States, and particularly in Washington in cooperation with the exclusive distributor of such peat moss, the California-based Sunshine Garden Products, Inc.

Red Wing contends that venue in this district is improper because Red Wing is neither "found" in this district, nor does it "transact business" in this district, nor does it have an agent in this district. Before process served on Red Wing outside of the state of Washington can be valid, venue must be properly established in the Western District of Washington. The plaintiff alleges that the defendant is present in this district because its wholly-owned subsidiary is present; and such wholly-owned subsidiary is in fact controlled and operated by its parent, Red Wing.

Once venue has been properly challenged, as it has been in this case with the affidavit of Mr. Trott, the burden is upon the plaintiff to prove proper venue pursuant to section 12 of the Clayton Act. Fooshee v. Interstate Vending Co., 234 F.Supp. 44 (D.Kan.1964); Wentling v. Popular Science Publishing Co., 176 F.Supp. 652 (D.Penn.1959).

Plaintiff has attempted to meet this burden by stating that Red Wing wholly owns Western Peat Moss, Ltd., and that the President of the subsidiary is also the President of Red Wing. In addition, Mr. John B. Fleming, who is listed as the Assistant Secretary-Treasurer and Director of Red Wing, appeared before the Tariff Commission in proceedings involving both Red Wing and Western Peat Moss, Ltd. This same Mr. Fleming was closely connected with the alleged set-up between the Canadian peat moss producers, through Canadian Peat Moss,...