Intermountain Ford Tractor S. Co. v. Massey-Ferguson Ltd., C 160-61.

• Decision Date: 09 November 1962
• Docket Number: No. C 160-61.,C 160-61.
• Citation: 210 F. Supp. 930
• Parties: INTERMOUNTAIN FORD TRACTOR SALES COMPANY, a Corporation; Cassia Equipment Co., a Corporation, Elliotts Inc., a Corporation, Chisholm Brothers Farm Equipment Co., a Corporation, and Charles W. Bullen, doing business as Bullen Farm Equipment Company, Plaintiffs, v. MASSEY-FERGUSON LIMITED, a Corporation; Massey-Ferguson, Inc., a Corporation; Massey-Ferguson Finance Company of Canada, Limited, a Corporation; and Massey-Ferguson Finance Corporation, a Corporation, Defendants.
• Court: U.S. District Court — District of Utah

210 F. Supp. 930

INTERMOUNTAIN FORD TRACTOR SALES COMPANY, a Corporation; Cassia Equipment Co., a Corporation, Elliotts Inc., a Corporation, Chisholm Brothers Farm Equipment Co., a Corporation, and Charles W. Bullen, doing business as Bullen Farm Equipment Company, Plaintiffs, v. MASSEY-FERGUSON LIMITED, a Corporation; Massey-Ferguson, Inc., a Corporation; Massey-Ferguson Finance Company of Canada, Limited, a Corporation; and Massey-Ferguson Finance Corporation, a Corporation, Defendants.

No. C 160-61.

United States District Court D. Utah, Central Division.

November 9, 1962.

Rawlings, Wallace, Roberts & Black, Salt Lake City, Utah, Joseph L. Alioto, San Francisco, Cal., for plaintiffs.

Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, for defendants.

CHRISTENSEN, District Judge.

The plaintiffs are retail farm equipment dealers doing business in Idaho and Utah.

The defendant Massey-Ferguson Inc. is a Maryland corporation qualified to do business in most states of the United States, including Utah. It manufactures and distributes farm and industrial equipment and operates certain company stores in Utah and Idaho which are involved in plaintiffs' claim. Massey-Ferguson Finance Corporation, a Maryland corporation, is a wholly owned subsidiary of Massey-Ferguson Inc. The home offices of both Massey-Ferguson Inc. and Massey-Ferguson Finance Corporation are in Detroit, Michigan, although their principal officers reside in Canada. Massey-Ferguson Limited is a corporation organized under the laws of Canada. It is a manufacturer and supplier of farm and industrial equipment and owns all of the stock of Massey-Ferguson Inc. Massey-Ferguson Finance Company of Canada Limited is a subsidiary of Massey-Ferguson Limited. Neither of the Canadian companies is qualified to do business in the United States.

The plaintiffs charge in this suit that defendants have attempted to monopolize, and have entered into a combination and conspiracy to restrain and monopolize, trade in agricultural and industrial equipment to plaintiffs' damage, in violation of Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2) and Section 2(a) of the Clayton Act (15 U.S.C. § 13(a)).

Massey-Ferguson Limited and Massey-Ferguson Finance Company of Canada Limited, appearing specially for the purpose have moved the court to dismiss the action and quash the return of service of summons as to each, upon the grounds that neither defendant was an inhabitant of, or found or transacting business within, the district of Utah, and that it is not subject to suit nor to service of process within this district.

The motions obviously are well taken as to Massey-Ferguson Finance Company of Canada Limited, and therefore are granted without further discussion.

Massey-Ferguson Inc. as indicated is the solely owned subsidiary of Massey-Ferguson Limited. Except for three circumstances to be discussed hereinafter, the relationship between this parent company and its subsidiary appears substantially the same as that which was found to exist between Cudahy Packing Company, a Maine corporation, and Cudahy Packing Company of Alabama in Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 251, 69 L.Ed. 634.¹ In the absence of distinguishing circumstances the decision in the Cudahy case could well be controlling here against the plaintiffs' position.

Plaintiffs, however, advance three contentions which are said to preclude application of the Cudahy doctrine: (1) that the Canadian corporation was directly doing business within the district of Utah because as shipper it sent goods into the state which were directed not to its subsidiary as the purchaser but to the stores operated by the subsidiary or to other dealers; (2) that it entered into a conspiracy with its subsidiary either within the district or having an impact within the district and thus "transacted business" here; and (3) the Canadian company by commingled control was actually present in the district and transacted business here through its wholly owned subsidiary within the contemplation of 15 U.S.C. § 22. These contentions will be examined in order.

There is no merit to the claim that because shipping documents covering equipment sold by the Canadian company to its subsidiary showed the Canadian company to be the "shipper" and because on occasion the equipment went directly to the local stores or the customers of the subsidiary, the Canadian company itself was transacting business directly in the district of Utah. The evidence indicates that property shipped into Utah by the Canadian company was sold prior to shipment to the subsidiary and that shipments were made as directed by the latter. Ordinary business practices completely removed from the local scene could not be so magnified in their supposed local effect without subjecting almost every foreign manufacturer to the consequences of local operations merely because their products eventually reach local dealers or consumers. The most loose concept of liberalized venue and service requirements would not countenance such result. And besides, as I read the Cudahy case a similar argument was clearly rejected there.

On the second point, plaintiffs call attention to language in United States v. Scophony Corporation, 333 U.S. 795, 68 S.Ct. 855, 862, 92 L.Ed. 1091 (1948)² on the basis of which they urge that the charged conspiracy itself sufficiently would constitute the transaction of business within the district as to afford venue and permit service of process. This view is supported more or less by the following authorities cited by plaintiffs' counsel: Giusti v. Pyrotechnic Industries, 156 F.2d 351 (9 Cir. 1946); Steiner v. 20th Century-Fox Film Corporation, 232 F.2d 190 (9 Cir. 1956); R. J. Coulter Funeral Home v. National Burial Ins. Co., 192 F.Supp. 522 (D.C. Tenn.1960); DeGolia v. Twentieth Century-Fox Film Corporation, 140 F.Supp. 316 (D.C.Cal.1953); and Ross-Bart Port Theatre, Inc. v. Eagle Lion Films, Inc., 140 F.Supp. 401 (D.C.Va.1954); cf. Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106 (1953); and Bertha Building Corp. v. National Theatres Corp., 248 F.2d 833 (2 Cir. 1957). The Giusti thesis to the effect that a conspiracy entered into or having impact within a particular district itself could sustain venue in that district under the antitrust laws is not impressive.³ I cannot reconcile the broad but yet limited statutory rules on venue and service⁴ with the idea that in effect there are no limitations as to venue and service in antitrust matters so long as the action is brought where a conspiracy was entered into or resulting damages occurred. Nor can I accede to the proposition advanced by the plaintiffs on the basis of DeGolia v. Twentieth Century-Fox Film Corporation, supra, that since the defendants' possible participation in the conspiracy cannot be ascertained before trial, and as such participation will determine whether defendants are doing business in the state, the plaintiff's complaint should not be dismissed nor process quashed at this stage but should a trial of the issues fail to establish defendants' participation in the alleged conspiracy, defendants may apply for appropriate relief. That would mean that as to every alleged conspiracy, irrespective of any other suggestion of venue, a case could proceed against a foreign corporation with the same effect as if venue were properly laid, until at least the time of trial, and that the validity of service of process and the propriety of the venue would vary according to the final decision on the merits. It is my opinion that the statute does not contemplate that a conspiracy having impact within the district shall itself constitute the transacting of business for venue purposes nor could the defendant be considered as "found" within the district for the purpose of service of process merely by reason of such a conspiracy.

No cases have been cited nor have I discovered any closely reading upon the third point, but established principles essential to a decision are reflected in Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1929); United States v. Scophony Corporation, 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948) supra; United States v. National City Lines, 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584 (1948); People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587; Curtis Publishing Company v. Cassel, 302 F.2d 132 (10 Cir. 1962).

Massey-Harris-Ferguson, Limited v. Boyd, 242 F.2d 800 (6 Cir. 1957) is not of much help; recognized limitations of the remedy of mandamus precluded an authoritative decision upon the question with which we are concerned. On the other hand, the case apparently did not touch upon the effect of the "North American Operations Unit" hereinafter mentioned. It is true that the district judge ruled that for all intents and purposes there was only one corporation, the parent Canadian corporation, with the American company and affiliates being its adjuncts or instrumentalities, and that the activities and operations of the Canadian corporation were a continuous course of business of a substantial character within the Western District of Tennessee. But this ruling, if not inferentially questioned in the Court of Appeals, certainly was not confirmed.

In the latter connection, there is evidence before me which raises a serious question whether the formal segregation of operations between the Canadian parent corporation and its American subsidiary has not been overriden by a device which the companies in common adopted apparently in an effort to avoid the normal operational consequences and limitations of that very separation.

The affidavit of A. A. Thornbrough, in support of defendants' motion to quash service of process, sets out some basic facts concerning the integrated control of the two corporations,⁵ from which he concludes...