Magid v. Marcal Paper Mills, Inc.

• Decision Date: 06 July 1981
• Docket Number: Civ. A. No. 80-365.
• Citation: 517 F. Supp. 1125
• Parties: Benjamin MAGID, Plaintiff, v. MARCAL PAPER MILLS, INC., Defendant.
• Court: U.S. District Court — District of Delaware

517 F. Supp. 1125

Benjamin MAGID, Plaintiff, v. MARCAL PAPER MILLS, INC., Defendant.

Civ. A. No. 80-365.

United States District Court, D. Delaware.

July 6, 1981.

COPYRIGHT MATERIAL OMITTED

E. Leigh Hunt, Wilmington, Del., for plaintiff.

David A. Drexler, and Francis S. Babiarz, of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for defendant.

OPINION

WRIGHT, Senior District Judge.

In this action, plaintiff Benjamin Magid is suing his former employer, Marcal Paper Mills, Inc. ("Marcal"), to recover damages for termination of his employment in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. Plaintiff attempted to effect service of process on Marcal under the corporate long-arm statute, 8 Del.C. § 382. Marcal subsequently moved to dismiss, pursuant to Rule 12, Fed. R.Civ.P., for improper service of process and consequent lack of personal jurisdiction, and for improper venue. In the alternative, Marcal moved to transfer this action to the District of New Jersey pursuant to 28 U.S.C. § 1404.

I. Factual Background

Marcal is a New Jersey corporation with its principal office in Elmwood Park, New Jersey. Marcal produces paper products which it usually sells to wholesalers or local headquarters of large chain store organizations; it does not ordinarily sell to retailers. Though Marcal does not ship goods to any warehouses or headquarters in Delaware and is not authorized to do business in Delaware, it does deliver a very small percentage of its products to one Delaware wholesaler, and supervises the sale of its products in stores in Delaware. Supervision of northern Delaware sales is carried out by Marcal's Ardmore, Pennsylvania office which also covers Philadelphia and southern New Jersey; Marcal does not, however, station employees or have a telephone listing in Delaware.

Plaintiff Magid, a Pennsylvania resident, was employed by Marcal and worked out of the Ardmore office as a salesman, set-up man, and sales supervisor from 1961 until his discharge in 1979. He at various times visited Delaware stores to set-up displays and encourage retailers to purchase Marcal products, supervised an employee who covered Delaware stores, and supervised the one Delaware wholesale account, in addition to carrying out his duties with respect to Marcal's Pennsylvania stores. The parties disagree as to the extent of Magid's work in Delaware and as to the exact nature of his sales activity in Delaware stores.¹ The decision to discharge Magid was made at Marcal's main office in New Jersey.

II. Legal Issues

The Court must first resolve the issue of in personam jurisdiction.

A. 8 Del.C. § 382

In this federal question case, service of process was made under 8 Del.C. § 382,² pursuant to Rule 4(d)(7), Fed.R.Civ.P. The Court must now determine whether Marcal is amenable to service under this statute, and if so, whether exercise of jurisdiction would violate the Due Process Clause of the Fourteenth Amendment. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Under 8 Del.C. § 382, process can be served on Marcal, a foreign corporation not licensed to do business in Delaware, only if (1) it transacts business generally in Delaware and (2) the civil action in question arises or grows out of any business transacted by Marcal in this state. Simpson v. Thiele, Inc., 344 F.Supp. 7 (D.Del.1972). Addressing the second requirement first, this Court is guided by its previous holding that the "arising out of" requirement should be construed narrowly since it is "a legislatively imposed limitation on the constitutionally permissible breadth of long-arm jurisdiction." Fehl v. S.W.C. Corp., 433 F.Supp. 939, 944 (D.Del.1977). Under this narrow construction, this Court in La Chemise Lacoste v. General Mills, Inc., 53 F.R.D. 596 (D.Del.1971), aff'd, 487 F.2d 312 (3d Cir. 1973), found that the claim of trademark infringement did not arise out of the foreign corporation's transaction of business in Delaware since in Delaware the corporation sold only items not bearing the contested trademark. Likewise, in Simpson, the Court held that plaintiff's suit for damages resulting from an injury incurred while using a machine manufactured by defendant did not arise out of any business transacted in Delaware since the machine was both manufactured and delivered to plaintiff in Pennsylvania. In contrast, a sale in Delaware, among other places, of goods bearing the contested trademark has been held to be an adequate Delaware nexus to ground a trademark infringement suit. Scott Paper Co. v. Scott's Liquid Gold, Inc., 374 F.Supp. 184 (D.Del.1974).

Although Marcal sells the bulk of its goods to suppliers outside the state, Marcal's products are sold in Delaware stores, and Magid's employment did involve activity in Delaware. However, his suit alleges age discrimination by Marcal in discharging him. The challenged action, the decision to discharge, was made in New Jersey, and arises out of Magid's relationship to his employer, not out of his or his company's sales activity in Delaware. Neither party contends that Magid's discharge was related to his work in Delaware, and the Court so finds. The existence of some connection between Delaware and the subject of this lawsuit does not suffice; in view of the fact that the cause of action did not grow out of any business transacted here by Marcal, Marcal is not amenable to service of process under 8 Del.C. § 382.

B. 10 Del.C. § 3104

Plaintiff alleges a second statutory basis of jurisdiction, Delaware's general long-arm statute, 10 Del.C. § 3104, in accord with Rule 4(d)(7) and (e), Fed.R.Civ.P., although the service of process on Marcal did not make reference to this statute. Defendant not only contests its amenability to service under this statute, but also alleges that plaintiff did not comply with the technical formalities of § 3104. Since plaintiff would have time under the statute of limitations to correct defective service, the Court will proceed to determine whether jurisdiction can be had under this statute. The Court will first consider, as above, whether § 3104 provides for jurisdiction in this case, and, if so, whether exercise of that jurisdiction meets the constitutional requirements of due process.

1. The Delaware Long-Arm Statute

Section 3104 provides for exercise of personal jurisdiction over nonresidents who commit any of a number of acts. Plaintiff relies upon two particular provisions, subsections 1 and 4 of § 3104(c):

(c) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident, or his personal representative, who in person or through an agent:

(1) Transacts any business or performs any character of work or service in the State;

....

(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State.

Since subsection (c)(1)'s provision for jurisdiction where the cause of action arises out of the transaction of business is almost identical to that in 8 Del.C. § 382, the discussion above controls; jurisdiction over Marcal cannot be had under this provision. Subsection (c)(4), however, is an expansion beyond 8 Del.C. § 382. Defendant argues that § 3104(c)(4) is not applicable because age discrimination is not a "tortious injury" and Marcal does not regularly do or solicit business or engage in any other persistent course of conduct in Delaware.

Delaware state courts have yet to interpret this particular section of this recently-enacted statute; however, § 3104 is closely modeled upon § 1.03 of the Uniform Interstate and International Procedure Act (the "Procedure Act"), 13 Uniform Laws Annotated § 1.01 et seq., see Eudaily v. Harmon, 420 A.2d 1175 (Del.1980). Section 3104(c)(4) is modeled on § 1.03(a)(4) of the Procedure Act which is not directly derived from any specific state act.³ However, the Illinois long-arm statute adopted in 1955 contains similar language,⁴ and § 1.03(a)(4) of the Procedure Act can be considered modeled in part after the Illinois Act. Likewise, the language of § 3104(c)(4) can also be considered derivatively drawn from the Illinois Act. In accordance with the Delaware state court practice in cases where a statute contains language similar to that in a statute of a foreign state, this Court will proceed on the presumption that the Delaware legislature also intended to adopt the construction placed on the Illinois statute by Illinois courts. Opinion of the Justices, 181 A.2d 215, 217-218 (Del.1962); Stauffer v. Standard Brands, Inc., 40 Del.Ch. 202, 178 A.2d 311, 315 (1962), aff'd, 41 Del.Ch. 7, 187 A.2d 78 (1962).

The Illinois Act specifies that any person submits to the jurisdiction of the state courts as to any cause of action arising from his commission of a tortious act within the state; § 3104(c)(4) of the Delaware Act provides for jurisdiction of any person who causes tortious injury in or outside of the state by an act or omission outside the state. In Poindexter v. Willis, 87 Ill.App.2d 213, 231 N.E.2d 1, 3 (1967), the court held that the term "tortious act" was not restricted to the technical definition of a tort, "but includes any act committed in this state which involves a breach of duty to another and makes the one committing the act liable to respondent in damages." In United States Dental Institute v. American Ass'n of Orthodontists, 396 F.Supp. 565, 571 (N.D.Ill.1975), an antitrust action was held on this theory to be a tortious act. Moreover, in Overby v. Johnson, 418 F.Supp. 471 (E.D.Mich.1976), the court, when faced with a Michigan statute which predicated personal jurisdiction on the doing of an act resulting in an action for tort, defined a "tort" as the breach...