Maybelline Co. v. Noxell Corp.

• Decision Date: 10 March 1987
• Docket Number: No. 86-2087,86-2087
• Citation: 813 F.2d 901
• Parties: MAYBELLINE CO., Appellee, v. NOXELL CORPORATION; SSC & B: Lintas Worldwide, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 901

813 F.2d 901

2 U.S.P.Q.2d 1126

MAYBELLINE CO., Appellee, v. NOXELL CORPORATION; SSC & B: Lintas Worldwide, Appellants.

No. 86-2087.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 15, 1986.

Decided March 10, 1987.

Robert B. Hoemeke, St. Louis, Mo., for appellants.

Helene Jaffe, New York City, for appellee.

Before ROSS, WOLLMAN, and MAGILL, Circuit Judges.

WOLLMAN, Circuit Judge.

Maybelline Co. brought this action against Noxell Corporation and SSC & B: Lintas Worldwide seeking to enjoin alleged false representations in violation of section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a) (1982), concerning Noxell's product "Cover Girl Clean Lash Mascara." Noxell markets Clean Lash as a waterproof mascara. Maybelline's complaint alleged that Clean Lash was not a waterproof mascara and that the Clean Lash advertising campaign and product packaging, both of which promoted Clean Lash as a waterproof mascara, were false and deceptive. Noxell and SSC & B's attempt to have the action dismissed or transferred for improper venue was refused by the district court, which, after a preliminary injunction hearing, agreed with Maybelline. Noxell and SSC & B, the advertising agency for Noxell's Clean Lash campaign, appeal the district court's order granting a preliminary injunction enjoining the dissemination of Clean Lash advertising and the shipment of Clean Lash, and requiring Noxell to send a letter to its customers directing them to withhold sales of Clean Lash. Maybelline Co. v. Noxell Corp., 643 F.Supp. 294 (E.D.Ark.1986). The district court denied a motion for a stay of its order pending this appeal. On September 5, 1986, we granted a similar motion. Because we find that the district court erred in failing to grant Noxell and SSC & B's motion to dismiss or transfer for improper venue, we reverse the decision of the district court without reaching the merits of the determination whether Clean Lash is a waterproof mascara. ¹

Venue in this action is governed by 28 U.S.C. Sec. 1391 (1982). Section 1391(b) ² provides that venue is proper in the judicial district where all defendants reside or in which the claim arose. Section 1391(c) ³ establishes that the residence of a corporation for venue purposes includes the judicial district where it is "doing business." ⁴ Thus, venue is proper in the Eastern District of Arkansas if Noxell and SSC & B are doing business there or if Maybelline's claim arose there.

I

In Bredberg v. Long, 778 F.2d 1285, 1289 (8th Cir.1985), this court stated that "[t]here is no general agreement as to whether it is sufficient under Sec. 1391(c) to meet due-process jurisdictional standards for 'doing business,' or whether a higher level of activity within the district must be demonstrated." Because the activity in that case did not meet even the lower due process jurisdictional standard, the court was not compelled to select between the two viewpoints. We are now confronted with a case in which sufficient activity exists to justify the assertion of jurisdiction, and thus venue, under due process standards. Therefore, we must decide between the two views noted in Bredberg and determine whether due process standards are appropriate in the venue context or whether a higher level of activity than that necessary for jurisdiction should be required for venue.

The district court found, and Maybelline argues, that venue is proper if a corporation is doing sufficient business in a district to satisfy the constitutional test for service of process. Under this rationale, when a defendant has the contacts with the district required by the due process clause of the fourteenth amendment for a state to assert personal jurisdiction over the defendant, see International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), venue is proper as well. This view has been adopted by at least one court of appeals, ⁵ see Houston Fearless Corp. v. Teter, 318 F.2d 822, 825 (10th Cir.1963), a smattering of district courts, see, e.g., Transload & Transport, Inc. v. Tennessee Valley Towing, Inc., 609 F.Supp. 185, 186 (M.D.La.1985); Cable News Network, Inc. v. American Broadcasting Cos., 528 F.Supp. 365, 367 (N.D.Ga.1981); Galonis v. National Broadcasting Co., 498 F.Supp. 789, 791 (D.N.H.1980), and several well-respected commentators. See 1 J. Moore, J. Lucas, H. Fink, D. Weckstein & J. Wicker, Moore's Federal Practice p 0.142[5.-1-3], at 1409-13 (2d ed. 1986) [hereinafter Moore's ]; 15 C. Wright, A. Miller & E Cooper, Federal Practice and Procedure Sec. 3811, at 123 (2d ed. 1986) [hereinafter Wright, Miller & Cooper]. These authorities have adopted the same test for both jurisdiction and venue apparently for the sake of uniformity and simplicity. See Galonis, 498 F.Supp. at 791 ("uniformity in applying Sec. 1391(c) is desirable"); 1 Moore's p 0.142[5.-1-3], at 1411 (same); 15 Wright, Miller & Cooper Sec. 3811, at 123 (using same test for both jurisdiction and venue is "simplest test"). One commentator, although recognizing that "[t]he considerations relevant to personal jurisdiction and to venue are not entirely congruent," stated that "there is a great advantage in having one standard of 'doing business' for both doctrines rather than complicating an already-complicated matter by having two different standards." 15 Wright, Miller & Cooper Sec. 3811, at 120-21.

Noxell and SSC & B argue, however, that a higher standard for "doing business" is necessary in the venue context. They contend that venue is proper only if a corporation is doing enough business in a district to satisfy the constitutional test for when a state can require a corporation to qualify to do business in the state. Thus, when a defendant's business in a district is sufficiently intrastate and localized that the state, consistent with the commerce clause, could require it to qualify to do business there, see Allenberg Cotton Co. v. Pittman, 419 U.S. 20, 33, 95 S.Ct. 260, 267, 42 L.Ed.2d 195 (1974), venue is proper. This view also has been adopted by respectable authorities, including two courts of appeals, see Eli Lilly & Co. v. Home Ins. Co., 794 F.2d 710, 721 (D.C.Cir.1986) (citing Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 760 F.2d 312, 316 n. 7 (D.C. Cir.1985)), cert. denied, --- U.S. ----, 107 S.Ct. 940, 93 L.Ed.2d 991 (1987); Johnson Creative Arts, Inc. v. Wool Masters, Inc., 743 F.2d 947 (1st Cir.1984), and, with some differences, ⁶ a number of district courts. See, e.g., Lubrizol Corp. v. Neville Chem. Co., 463 F.Supp. 33, 36-37 (N.D.Ohio 1978); Damon Coats, Inc. v. Munsingwear, Inc., 431 F.Supp. 1303, 1309 (E.D.Pa.1977); P.C. Prods. Corp. v. Williams, 418 F.Supp. 331, 332 (M.D.Pa.1976), appeal dismissed, 556 F.2d 568 (3d Cir.1977). These authorities have required a higher level of activity for venue than for jurisdiction because "the considerations underlying personal jurisdiction are not the same as those underlying venue." Wool Masters, 743 F.2d at 949. In Wool Masters, the leading case adopting this view, the court stated:

The minimum contacts test for personal jurisdiction is based on the minimum amount of "fairness" required in order to comport with due process. Venue limitations generally are added by Congress to insure a defendant a fair location for trial and to protect him from inconvenient litigation.

Id. (emphasis in original).

We agree with Wool Masters and the other authorities holding that the standards for personal jurisdiction and venue should not be the same because the two doctrines rest on differing considerations. Principles of uniformity and simplicity are important, but we would be remiss to invoke them in a manner that disrespects the considerations underlying venue. The personal jurisdiction standard is concerned with where a case may be heard consistent with due process; venue is a statutory requirement that reflects "Congress' decision concerning where a case should be heard." Wool Masters, 743 F.2d at 951 (emphasis in original). Although both doctrines embody fairness considerations, the personal jurisdiction standard also includes an element of "interstate federalism" that may override fairness. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292-94, 100 S.Ct. 559, 564-65, 62 L.Ed.2d 490 (1980); see Insurance Corp. v. Compagnie des Bauxites, 456 U.S. 694, 702 n 10, 102 S.Ct. 2099, 2104 n. 10, 72 L.Ed.2d 492 (1982); Hanson v. Denckla, 357 U.S. 235, 251, 78 S.Ct. 1228, 1238, 2 L.Ed.2d 1283 (1958). Venue, on the other hand, is more clearly directed at fairness and convenience to the defendant. Leroy v. Great W. United Corp., 443 U.S. 173, 183-84, 99 S.Ct. 2710, 2716, 61 L.Ed.2d 464 (1979). The authorities adopting the personal jurisdiction standard take the position that if a corporation's activities in a district make it fair to subject the corporation to service of process of the state in which the district is located, it is not unfair to require the corporation to defend a suit there. See, e.g., 1 Moore's p 0.142[5.-1-3], at 1413. We, however, are of the view that "[t]he fact that a particular court's assertion of personal jurisdiction is not so 'unfair' as to deny a defendant due process does not necessarily mean that to hold trial there is 'fair' in the sense contemplated by Congress in the venue statute." Wool Masters, 743 F.2d at 952. Therefore, we conclude that "doing business" for venue purposes should be subject to a higher standard than that for personal jurisdiction.

We also agree with Wool Masters that, given the circumstances surrounding Congress' 1948 adoption of revisions to the Judicial Code, the commerce clause standard is an appropriate measure for "doing business" under section 1391(c). In the days before the corporate venue statute, the Supreme Court held that corporations could be sued in the state in which they were incorporated, because it was their "residence," Seaboard Rice Milling Co. v. Chicago, Rock Island & Pac. Ry., 270...