Mead Corp. v. Stuart Hall Co., Inc.

• Decision Date: 29 May 1987
• Docket Number: No. C-3-86-359.,C-3-86-359.
• Citation: 679 F. Supp. 1446
• Parties: The MEAD CORPORATION, Plaintiff, v. The STUART HALL COMPANY, INC., Defendant.
• Court: U.S. District Court — Southern District of Ohio

679 F. Supp. 1446

The MEAD CORPORATION, Plaintiff, v. The STUART HALL COMPANY, INC., Defendant.

No. C-3-86-359.

United States District Court, S.D. Ohio, W.D.

May 29, 1987.

Armistead W. Gilliam, Jr., Dayton, Ohio, Edward W. Goldstein, Michael Macklin, Houston, Tex., for plaintiff.

B. Joseph Schaeff, Timothy W. Hagan, Dayton, Ohio, Harlan P. Huebner, Los Angeles, Cal., for defendant.

RICE, District Judge.

Before the Court is the Defendant's Motion to Dismiss or in the Alternative to Stay or Transfer (Doc. # 4). For the reasons that follow, the Defendant's motion is overruled in its entirety.

On August 8, 1986, at 3:53 p.m. Eastern Daylight Time (EDT), The Mead Corporation (Mead) filed the instant action against The Stuart Hall Company, Inc. (Stuart Hall) seeking a declaratory judgment, pursuant to 28 U.S.C. § 2201 and 2202, that the trade dress used in connection with Mead's proposed Cambridge line of stationery products does not infringe any trademark or trade dress rights of Stuart Hall. On the same day, at 3:30 p.m. Central Daylight Time (CDT) (4:30 p.m. EDT), Stuart Hall filed a similar action in the United States District Court for the Western District of Missouri, alleging that Mead's Cambridge line infringes upon Stuart Hall's registered trademark for its Executive line of stationery products. Stuart Hall's Complaint also alleged common law unfair competition and dilution of its trademark and trade dress rights. Stuart Hall Company, Inc. v. The Mead Corporation, No. 86-6123-CV-SJ-6.

By Memorandum and Order of November 7, 1986, Judge Howard F. Sachs of the Western District of Missouri ordered that Stuart Hall's action be transferred to this Court. In so ruling, Judge Sachs concluded that the instant action filed by Mead was "first filed" and that in the interest of judicial economy, the first filed case should be given precedence. The transfer was stayed, however, while Stuart Hall sought, unsuccessfully, to have Judge Sachs reconsider his transfer order or to have him certify his decision for interlocutory appeal to the Court of Appeals for the Eighth Circuit. Judge Sachs denied both requests. On April 8, 1987, after Stuart Hall's Petition for a Writ of Mandamus was denied by the Eighth Circuit, Judge Sachs' Order was given effect and Stuart Hall Company, Inc. v. The Mead Corporation, No. 86-6123-CV-SJ-6, was transferred to the Southern District of Ohio, where it was docketed as Case No. C-3-87-184 (A copy of Judge Sach's decision is attached hereto).

Stuart Hall has moved this Court for an Order dismissing it from the instant action on the grounds that this Court lacks personal jurisdiction over it. Alternatively, Stuart Hall seeks to have this Court exercise its discretion and decline to entertain Mead's declaratory judgment action. Further in the alternative, Stuart Hall moves that the instant case be transferred to the Western District of Missouri, pursuant to 28 U.S.C. § 1404(a).¹

I. DISCUSSION

Stuart Hall's first argument for dismissal is that it is not subject to personal jurisdiction in Ohio. Mead's Complaint alleges that personal jurisdiction over Stuart Hall is provided by the Ohio long arm statute, Ohio Rev.Code § 2307.382, which provides in pertinent part:

A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:

(1) transacting any business in this state.

....

(B) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him.

The Sixth Circuit has developed a three-part test to determine whether the application of the Ohio long arm statute provides sufficient contact between a non-resident defendant and the forum state so as to support personal jurisdiction. That test provides:

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.

R.L. Lipton Distributing v. Dribeck Importers, Inc., 811 F.2d 967 (6th Cir.1987); Welsh v. Gibbs, 631 F.2d 436 (6th Cir.1980); In-flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220 (6th Cir.1972).

With respect to the first stage of the analysis, whether the defendant purposefully availed himself of the privilege of acting in the forum state, the Supreme Court's recent decision in Asahi Metal Industry Co. v. Superior Court of California, Solano County, ___ U.S. ___, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), is instructive. In Asahi Metal Industry, the court wrote that:

The "substantial connection" between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum state. The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum state. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum state, for example, designing the product for the market in the forum state, advertising in the forum state, establishing channels for providing regular advice to customers in the forum state, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum state.

107 S.Ct. at 1033 (citations omitted) (emphasis in original).

From the materials attached to Stuart Hall's motion and Mead's memorandum contra,² there can be little doubt that Stuart Hall has purposefully availed itself of the privilege of acting in Ohio. While it is clear that Stuart Hall is not licensed to do business in Ohio and maintains no offices or property within Ohio, it is equally clear that Stuart Hall does sell its Executive product line in Ohio through manufacturer's representatives. Stuart Hall provides promotional materials to its representatives, controls the prices charged to its customers, and determines which customers are entitled to credit extensions. Further, approximately ten to twelve times during the past year and one-half, Stuart Hall executives have visited its manufacturer's representatives and accompanied the representatives on customer calls. These actions by Stuart Hall are "purposefully directed" toward the state of Ohio. Asahi Metal Industry, 107 S.Ct. at 1033.

The second stage of the Sixth Circuit's test requires that the cause of action arise out of the defendant's activities in the state. Mead's action is brought pursuant to the Declaratory Judgments Act and seeks a declaration that its line of stationery products does not infringe upon the registered trademark held by Stuart Hall. As indicated above, Stuart Hall sells its product within the state of Ohio, thus giving rise to Mead's declaratory judgment action.

Finally, the defendant's actions must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable. Where a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528 (1985). Among the factors a court may consider in determining whether the exercise of jurisdiction is reasonable are whether the defendant could foresee a foreign suit and whether the defendant has physical contacts with the forum. In-flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220, 235 (6th Cir.1972). In light of Stuart Hall's business activities within the state of Ohio, including physical contacts within Ohio,³ the Court concludes that Stuart Hall could reasonably have foreseen being sued in an Ohio court. The exercise of personal jurisdiction over Stuart Hall is, therefore, reasonable. Accordingly, Stuart Hall's Motion to Dismiss on the basis of lack of personal jurisdiction is overruled.

As an alternative to dismissal for lack of personal jurisdiction, Stuart Hall contends that this Court should exercise its discretion and decline to entertain Mead's declaratory judgment action. Among the arguments made by Stuart Hall in support of this position is that its action filed in the Western District of Missouri was filed prior to Mead's action. This argument, however, was considered and rejected by Judge Sachs when he, in ordering that Stuart Hall's action be transferred to this Court, concluded that Mead's action was first filed. This Court, based upon the reasoning and citations of authority as set forth in Judge Sach's decision, agrees that Mead's action for declaratory judgment was the first filed.

Stuart Hall further argues that because its action filed in Missouri contains issues which are not present in the Ohio action, this Court should dismiss the instant case and permit Stuart Hall to proceed with its Missouri action. This argument, however, overlooks the fact that the Missouri action has been transferred to this Court. The two cases will be consolidated. Stuart Hall will, therefore, be able to raise all of its claims in this Court.

Finally, Stuart Hall argues that Mead's action was brought in anticipation of Stuart Hall's action and, therefore, it should be dismissed as an improper use of the declaratory remedy. The anticipatory use of the declaratory remedy is merely an equitable consideration which the Court may take into account. See Ven-Fuel, Inc. v. Department of the Treasury, 673 F.2d 1194 (11th Cir.1982); Amerada Petroleum Corp. v. Marshall, 381 F.2d 661 (5th Cir. 1967). See also Grand Trunk Western Railroad Co. v. Consolidated Rail...