Hitt v. Nissan Motor Company, Ltd.

• Decision Date: 21 July 1975
• Docket Number: No. 74-1647-Civ-CA.,74-1647-Civ-CA.
• Parties: Richard E. HITT, Plaintiff, v. NISSAN MOTOR COMPANY, LTD., et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

399 F. Supp. 838

Richard E. HITT, Plaintiff, v. NISSAN MOTOR COMPANY, LTD., et al., Defendants.^*

No. 74-1647-Civ-CA.

United States District Court, S. D. Florida.

July 21, 1975.

Sager & Burns, Miami, Fla., for plaintiff.

Blackwell, Walker, Gray, Powers, Flick & Hoehl, Miami, Fla., for defendants.

MEMORANDUM OPINION AND ORDER DENYING MOTIONS OF DEFENDANT NISSAN MOTOR COMPANY, LTD. TO QUASH SERVICE AND DISMISS THE COMPLAINTS FOR LACK OF IN PERSONAM JURISDICTION AND VENUE

ATKINS, District Judge.

This matter is before the Court on Motions of defendant Nissan Motor Company Ltd. (Nissan Japan) to quash service and dismiss the complaints for lack of in personam jurisdiction and venue in all above captioned actions¹ with the exception of the New York action^**Scharf v. Nissan Motor Co., Ltd., et al., 73-121-Civ-CA, the two New Jersey actions Supreme Title Co. v. Nissan Motor Company, Ltd., et al., 74-1652-Civ-CA and P. D. Q., Inc. and Scharf v. Nissan Motor Company, Ltd., 74-1543-Civ-CA and the Minnesota action Chesler v. Nissan Motor Company, Ltd., et al., 75-61-Civ-CA.

Defendant Nissan-Japan does not challenge the service of process in any of the subject actions except the California action Ingram v. Nissan Motor Co., Ltd. et al., 74-1698-Civ-CA and the Missouri action Hitt v. Nissan Motor Co., Ltd., et al., 74-1647-Civ-CA. The dispute as to service of process may be disposed of promptly.

In each of these actions, the summons and a copy of the complaint were served personally on Nissan-Japan in care of Frederick W. Rose, registered agent, 794 Broad Street, Newark, New Jersey, and mailed to the President of defendant Nissan-Japan, 6 — Chome, Chuo Ku, Tokyo, Japan, by registered mail return receipt requested and the returns have been received by the California and Missouri Courts. Therefore, since § 12 of the Clayton Act 15 U.S.C. § 22 (1970), supplemented by Rules 4(d)(3), 4(e), and 4(i)(1)(D), F.R.Civ.P., authorize service in this manner, service of process was proper in the California and Missouri actions.

VENUE

Section 12 of the Clayton Act, 15 U. S.C. § 22 1970 contains the provisions for venue and service of process in private antitrust actions and it provides:

Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

Section 12, in its present form, was enacted in 1914 to enlarge the venue and jurisdiction provisions of Section 7 of the Sherman Act. It added the phrase "transacts business" to the already existing criteria "found" or "doing business."²

The phrase "transacts business" has been given a liberal construction in line with the Congressional policy of enabling a person allegedly injured by violations of the antitrust laws to have redress in his home district.³ Consequently, fewer local contacts are necessary to find that a corporation is transacting business under Section 12 than doing business under the former Section 7 of the Sherman Act.⁴ The test for venue under Section 12 is the practical everyday business or commercial concept of doing or carrying on business of any substantial character.⁵

Substantiality of business is to be valued from the standpoint of the average businessman rather than that of the corporate giant to avoid the situation whereby "a large corporation could, with impunity, engage in the same act which would subject a smaller corporation to jurisdiction and venue.⁶ Thus, the Congressional intent was to substitute "practical, business conceptions for the previous hair splitting legal technicalities."⁷

In 1948, the United States Supreme Court in United States v. Scophony

Corp. of America, supra, held that a British corporation was both "found" and "transacting business" in the New York district within § 12 of the Clayton Act and there was no due process violation in finding that there was jurisdiction over the British corporation. Scophony was a civil antitrust proceeding based upon alleged violations of Sections 1 and 2 of the Sherman Act. Due to problems with exporting currency out of England during wartime, Scophony, Ltd., was unable to continue development, manufacture and sale of television equipment in England. Consequently, through a series of contractual arrangements with existing American corporations, Scophony, Ltd., a British corporation, formed American Scophony to exploit the American market, utilize Scophony, Ltd.'s patents and sell its products. Shareholder Scophony, Ltd. retained the right to choose three of five directors and the President, Vice-President and Treasurer of American Scophony. The American shareholder corporations were allowed to choose two of the five directors and the Secretary and Assistant Secretary of American Scophony but the presence of one of these two directors was necessary for a quorum. Hence, the minority shareholder American corporations retained a veto power over the operations of American Scophony which eventually led to a corporate deadlock. Scophony, Ltd. originally had intended to establish itself in the United States as a manufacturer and seller of television equipment but when that plan failed it turned to licensing and exploiting its patents by a means described by the Court as a joint adventure with other companies. It was through these activities described as a "continuous course of business" within the district that the Supreme court held that Scophony, Ltd. was "transacting business" of a substantial character. Id. 333 U.S. at 810, 68 S.Ct. 855, 92 L.Ed. 1091. The Court also noted that agents of Scophony, Ltd. were present within the district to carry on the British corporation's affairs related to resuscitating its business and putting it on a normal course again. The Court noted that when the entire course of events was viewed as a whole, Scophony, Ltd. had not created and maintained American Scophony as an investment but merely as another means of transacting business in the United States. Since Scophony, Ltd.'s ultimate objective of exploiting the American market had remained the same, the Court decided that a mere change in the methods of achieving this objective did not serve to isolate the company from jurisdiction or process under the antitrust laws. Id., 333 U.S. at 810-811, 68 S.Ct. 855, 92 L.Ed. 1091.⁸

Scophony, supra, is helpful in analyzing the element of control. In Scophony, the minority shareholders American corporations retained a veto power over the operations of American Scophony since one of the directors chosen by the American corporation was necessary for a quorum and consequently, Scophony, Ltd.'s stock control was far from complete. No such countervailing force is present in the case sub judice. Nissan-Japan is the 100% owner of Nissan-USA and thereby chooses Nissan-USA's entire board of directors who in turn select all of its officers. Furthermore, there has been a significant exchange of officers and directors and overlap of directors between Nissan-Japan and Nissan-USA during the jurisdictional period. See jurisdictional facts below. American Scophony was established to exploit the American market when Scophony, Ltd. could no longer directly engage in business in this country. Nothing prevented Nissan-Japan from entering the American market through a selling branch or department but instead it formed Nissan-USA to serve as exclusive distributor of manufacturer Nissan-Japan's products in the continental United States. Thus, Nissan-USA is a mere conduit or vehicle for entering and exploiting the American market. Nissan-Japan, like Scophony, Ltd., does not control the day-to-day activities of its American subsidiary. However, Nissan-Japan, like Scophony, Ltd., does have representatives within the districts. It is a distinction without merit that the representatives of Scophony, Ltd. were cloaked with significant powers to effectuate the goals and purposes of Scophony, Ltd. within the district while those of Nissan-Japan are of a lesser stature within that corporation. The representatives of Nissan-Japan within the forums were still not merely shareholders' or investors' agents seeking information for the purposes of dealing with the stock but were present on a continuing basis to give Nissan-USA technical advice directly related to the sales and servicing of Nissan-Japan's products in the United States. Indeed, Nissan-Japan has provided an automotive engineer for whom space was furnished by Nissan-USA in its Carson, California headquarters as a "courtesy" to Nissan-Japan. Further, Nissan-Japan had technical employees in the United States who gave advice on "technical questions" to Nissan-USA. At least thirteen officers and/or employees of Nissan-Japan resided in the United States while receiving salaries from Nissan-Japan. Thus, due to the sphere of control exercisable over Nissan-USA by Nissan-Japan, the exchange of officers and employees, and the common directors during the jurisdictional period, the § 12 venue test as applied in Scophony is met. Accordingly, Nissan-Japan was "transacting business" within the forums under § 12 of the Clayton Act.

Interestingly, the Scophony Court appeared to strain to distinguish the "manufacturer-seller" cases like Cannon, supra, which involved the restrictive "presence" or "doing business" standard⁹ no longer the test for venue under § 12 at the time Scophony was decided. This was necessitated since the more restrictive standard was and still is the test for service under § 12. Because service is not presently at issue, it is unnecessary for this Court similarly to strain to distinguish such cases because the less restrictive "transacts business" venue language is the standard presently being applied. This Court does hold, however, that Nissan-Japan was...