Howse v. Zimmer Mfg. Co., Inc.
| Decision Date | 26 March 1985 |
| Docket Number | No. 84-1611,84-1611 |
| Citation | 757 F.2d 448 |
| Parties | Randall S. HOWSE, Plaintiff, Appellant, v. ZIMMER MANUFACTURING CO., INC., Defendant, Appellee. |
| Court | U.S. Court of Appeals — First Circuit |
Mark L. Donahue, Braintree, Mass., with whom Richard E. Blumsack, Somerville, Mass., was on brief, for plaintiff, appellant.
Robert S. Kutner, Boston, Mass., with whom Casner, Edwards & Roseman, Boston, Mass., was on brief, for defendant, appellee.
Before CAMPBELL, Chief Judge, BOWNES and TORRUELLA, Circuit Judges.
This is an appeal from a decision of the United States District Court for the District of Massachusetts granting a motion of defendant Zimmer Manufacturing Company to dismiss for lack of personal jurisdiction under Mass.Gen.Laws ch. 223, Sec. 38. 586 F.Supp. 915 (1984). For the reasons stated, we vacate and remand.
In January 1981, plaintiff Randall S. Howse was involved in a motorcycle accident in Rota, Spain, and suffered a broken hip. A resident of Massachusetts both before and after his Navy service, Howse was at this time in the United States Navy. Howse underwent surgery to repair his hip at the United States Naval Hospital in Rota, during which a Jewett Nail and Plate allegedly manufactured by defendant Zimmer Manufacturing Company ("Zimmer") was inserted into Howse's hip. During later treatment at the United States Naval Hospital in Newport, Rhode Island, doctors discovered that the Jewett Nail and Plate was malpositioned and that two of the screws intended to hold it in place were missing. Plaintiff claims that, as a result, the fracture had set improperly, causing a malunion of the bone and a difference in the length of his legs.
Zimmer is a Delaware corporation with its principal place of business and home office in Indiana. Zimmer manufactures surgical implants, including the Jewett Nail and Plate. Zimmer is not registered to do business in Massachusetts and has not appointed a registered agent in Massachusetts. Zimmer does not manufacture or assemble any products in Massachusetts, nor does it have an office, telephone, telephone listing, bank account, or postal address in Massachusetts. Zimmer has no employees who maintain a residence or place of business in Massachusetts. Zimmer has not entered into a written distributorship agreement or franchise agreement with any person to sell its products in Massachusetts, and has no agents or employees who regularly solicit customers in Massachusetts.
Zimmer distributes its products in Massachusetts through Docherty Associates, Inc., a Massachusetts corporation, located in Concord, Massachusetts. At the direction of Jack Docherty, its majority shareholder and president, Docherty Associates does business as Zimmer Docherty Associates. Docherty Associates is Zimmer's exclusive sales representative in Massachusetts; its regular clientele includes all of the hospitals in Massachusetts. In addition to four employees, Docherty has six salesmen who sell its products on a commission basis. In 1983, Docherty Associates sold nearly $4 million worth of Zimmer's goods in Massachusetts, and typically carried an inventory of Zimmer goods with a value of $380,000. 1 Zimmer has no control over Docherty Associates' day-to-day operations. Docherty Associates acts as an independent contractor, and has no written franchise agreement with Zimmer. Neither Docherty Associates nor any employee of it is paid a salary by Zimmer. Docherty Associates files no annual or yearly sales reports with Zimmer, although Jack Docherty testified that "[t]hey know what I'm doing." Docherty pays for its own promotional materials and advertisements, including advertisements under the name of Zimmer Docherty Associates. Zimmer sends Docherty regular announcements of new products, which Docherty then makes available to its users--mostly surgeons--and salesmen. Zimmer conducts optional training sessions for salesmen at its headquarters in Indiana.
Although no administrative individual from Zimmer has visited Docherty Associates, Zimmer is "always" sending its product and sales representatives to Docherty Associates in Massachusetts to aid in the development of new products and specific need products; Docherty Associates acts as a liaison between Zimmer's employees and the various surgeons who work in Massachusetts, and voluntarily provides Zimmer with information about new developments coming from the Massachusetts medical community as well as about Docherty's own views and objectives.
Zimmer does business with Docherty on a commission basis. Customers wishing to purchase Zimmer's goods place their orders with Docherty, who either fills them directly from his inventory or relays them to Zimmer's home office, in which case Zimmer fills them directly. Payment for the product is always made directly to Zimmer in Indiana.
The issue in this appeal is whether the district court erred in holding that it had no personal jurisdiction over Zimmer under Mass.Gen.Laws ch. 223, Sec. 38.
Section 38 of Mass.Gen.Laws ch. 223 provides as follows Sec. 38. Foreign corporations
In an action against a foreign corporation, except an insurance company, which has a usual place of business in the commonwealth, or, with or without such usual place of business, is engaged in or soliciting business in the commonwealth, permanently or temporarily, service may be made in accordance with the provisions of the preceding section relative to service on domestic corporations in general....
Howse contended before the district court and contends on appeal that Zimmer is "engaged in or soliciting business in the commonwealth" of Massachusetts.
The district court held that Massachusetts courts had defined solicitation for the purposes of chapter 223, section 38, too narrowly to permit it to exercise jurisdiction over Zimmer on that ground. In so holding, the district court relied on our analysis of Massachusetts precedent in Caso v. Lafayette Radio Electronics Corp., 370 F.2d 707 (1st Cir.1966), in which we concluded,
From these cases we derive two propositions about the Supreme Judicial Court's treatment of jurisdiction over foreign corporations: (a) despite the language of Mass.G.L. c. 223, Sec. 38, and despite the court's intimations to the contrary, it has never extended jurisdiction over a corporation whose activities in the state amounted to no more than the constitutionally permissible "minimum contact"--it has regularly found more than "mere solicitation"; (b) even when it has found solicitation plus some other activity, it has not extended jurisdiction when the cause of action did not arise out of the activities in Massachusetts. On the other hand, where the corporation's activities more closely approximated the regular conduct of a domestic corporation--that is to say, where the defendant was clearly "doing business" in Massachusetts--the court has allowed jurisdiction for a transitory cause of action.
We are satisfied that, generally speaking, the Massachusetts courts would assert jurisdiction over a foreign corporation served under section 38: (a) whenever the corporation's activities affect the commerce of Massachusetts substantially so that the state has an interest in regulating the general conduct of those activities ("doing business"), or (b) whenever the corporation's activities in Massachusetts have so affected the particular transaction at issue that it is appropriate to hear the claim in a Massachusetts court. We are not satisfied that jurisdiction would obtain in the absence of both these conditions.
Id. at 711-12 (citations omitted).
Howse contends that Massachusetts courts no longer construe the "soliciting business" language so conservatively--specifically, that they permit a corporation that merely solicits business in Massachusetts to be sued in Massachusetts for a tort not arising out of that corporation's Massachusetts activities. We disagree.
Howse purports to rely on two cases, Walsh v. National Seating Co., 411 F.Supp. 564 (D.Mass.1976), and Campbell v. Frontier Fishing & Hunting, Ltd., 10 Mass.App. 53, 405 N.E.2d 989 (1980), in questioning the continued vitality of Caso. Neither provides support for such a conclusion. Walsh is not a Massachusetts state case, and the district court there expressly declined to reach the issue of whether mere solicitation sufficed to support the exercise of personal jurisdiction over the defendant Motor Coach Industries, Inc. The court in Walsh noted in passing that the fear underlying the Massachusetts cases on which Caso rests--that the exercise of jurisdiction over corporations that merely solicit business in Massachusetts would violate the due process clause--proved to be unfounded after International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny. This observation, however, is hardly a new one. Caso itself discusses several Massachusetts cases decided after International Shoe, such as Wyshak v. Anaconda Copper Mining Co., 328 Mass. 219, 103 N.E.2d 230 (1952), and Jet Manufacturing Co. v. Sanford Ink Co., 330 Mass. 173, 112 N.E.2d 252 (1953), which reflect doubts concerning the constitutional basis of the original decision restricting section 38 jurisdiction, Thurman v. Chicago, Minneapolis & St. Paul Railway, 254 Mass. 569, 151 N.E. 63 (1926). None of these cases, however, upheld the exercise of jurisdiction over a corporation that merely solicited business in Massachusetts. Walsh simply repeats the doubts already expressed in Caso about the present interpretation the Massachusetts courts would give section 38 without adducing any new precedent or argument to indicate that the Caso court's reading of Massachusetts precedent was unsound.
Campbell, likewise, does not support Howse's contention. In Campbell, the defendant was an organizer of fishing expeditions; plaintiff's...
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