Meench v. Raymond Corp., Civ. A. No. 39364.

• Decision Date: 19 April 1968
• Docket Number: Civ. A. No. 39364.
• Parties: Harold F. MEENCH, Jr. v. The RAYMOND CORP.
• Court: U.S. District Court — Eastern District of Pennsylvania

283 F. Supp. 68

Harold F. MEENCH, Jr. v. The RAYMOND CORP.

Civ. A. No. 39364.

United States District Court E. D. Pennsylvania.

April 19, 1968.

Albert S. Fein, Philadelphia, Pa., for plaintiff.

Paul Auerbach, Philadelphia, Pa., for defendant.

OPINION

MASTERSON, District Judge.

Plaintiff's complaint in this action charges the defendant, hereinafter referred to as Raymond, with negligent manufacture and design of a fork-lift truck. The accident resulting from the alleged negligence occurred on July 28, 1964, in Pennsylvania, while the plaintiff was operating the truck. The subject-matter jurisdiction of this Court has been properly invoked pursuant to Title 28 U.S.C.A. § 1332. The federal venue requirements also have been complied with in accordance with Title 28 U.S.C.A. § 1391(a).

The defendant moves for summary judgment on the ground that service of process was improper because this court lacks personal jurisdiction over the defendant. It is proper to consider such a motion, when based upon an allegation of a lack of personal jurisdiction, as a motion to dismiss. Cf. Navios Corp. v. National Maritime Union of America, 236 F.Supp. 657, 659 (E.D.Pa., 1964); also, see generally, Moore, Federal Practice, Volume 6, ¶ 56.03, pp. 2054, 2055. Plaintiff contends that this Court has personal jurisdiction over Raymond either on the basis of the latter's own entry into Pennsylvania and/or on the basis of its presence here through the person of its alleged agent, F. J. Schindler Co., hereinafter referred to as Schindler, which has its principal place of business in Philadelphia. For reasons discussed below, this Court has concluded that it does not have personal jurisdiction over the defendant. The Court has decided, however, that it will not unconditionally dismiss the action but rather will withhold dismissal for ten days to permit the plaintiff to file a motion to transfer pursuant to Title 28 U.S.C.A. § 1404(a).

Since this is a diversity action the defendant's amenability to suit here is determined in accordance with the law of Pennsylvania. See, Rachelson v. E. I. duPont deNemours and Co., 257 F. Supp. 257, 258 (E.D.Pa., 1966); Arrowsmith v. United Press International, 320 F.2d 219, 221-224, 6 A.L.R.3d 1072 (C.A. 2, 1963); and, generally Moore, Federal Practice, Volume 2, ¶ 4.25(7), pp. 1176-1183, and p. 33 in Supplement. The law relevant to disposition of the case is Pennsylvania Business Corporation Law, Pa.Stat.Ann. Title 15 § 2852-1011, subdivisions B & C, 15 P.S. § 2011.¹ As authorized by Rule 4(d) (7) of the Federal Rules of Civil Procedure, the plaintiff served the defendant-corporation pursuant to this statute by serving his complaint upon the Secretary of the Commonwealth and sending a copy of the complaint to the premises of the F. J. Schindler Co. The issue to be decided now is thus the narrow one of whether the defendant's activities in Pennsylvania were such as to satisfy Pennsylvania's statutory standard of "doing business".²

At the hearing on defendant's motion counsel argued their respective contentions by reference to three affidavits and two oral depositions.³ The following relevant facts were adduced from this evidence:

(1) Raymond is incorporated in New York. See, Affidavit, Lamb, p. 1;

(2) Raymond is neither registered to do business in Pennsylvania nor does it have any offices or plants here. See, Affidavit, Lamb, p. 1;

(3) Raymond sells products in Pennsylvania, and in the rest of the United States. See, Deposition, Lamb, p. 7;

(4) Raymond does not have salesmen who either make contracts with dealers or sell directly to customers. See, Deposition, Lamb, p. 17.

(5) Raymond advertises in nationally-circulated trade journals. See, Deposition, Lamb, p. 20;

(6) Raymond sends all its dealers, including Schindler, catalogs describing its products. See, Deposition Lamb, p. 17, and Deposition, Schindler, pp. 8, 12;

(7) Raymond has a school at their plant in Greene, New York, to which they invite their dealers for the purpose of instructing them in the maintenance and use of their products. The school lasts only five days and ordinarily the dealers' representative will attend only once. Mr. Schindler did attend this school. See, Deposition, Schindler, p. 8, and Deposition, Lamb, pp. 15, 16;

(8) Raymond has a contract with F. J. Schindler Co. which establishes a protected dealership arrangement evidently authorizing Schindler to be the exclusive dealer of Raymond products in the Greater Philadelphia area. See, Deposition, Schindler, p. 4;

(9) Raymond itself does not directly sell to customers, but if it receives any inquiries about its products it forwards them to the local dealer such as Schindler. See, Deposition, Lamb, p. 11;

(10) Schindler represents two major lines of fork-lift truck manufacturers besides Raymond, and various other small manufacturers of similar handling equipment. See, Deposition, Schindler, pp. 2, 3;

(11) Raymond is listed in the Philadelphia phonebooks at the address of F. J. Schindler, and the two companies share the costs of this advertisement. See, Deposition, Schindler, pp. 5, 6;

(12) Raymond's employees have visited Schindler once or twice in the last four years for purposes of inventory checks. See, Deposition, Schindler, p. 7;

(13) Schindler occasionally purchases products from Raymond on a "floor-plan" arrangement under which it does not pay for them until they are sold, and, similarly, is not paid for them until it has sold them. See, Deposition, Schindler, pp. 14 and 16.

A consideration of these facts and of the relevant law of Pennsylvania indicates that the court does not have personal jurisdiction over the defendant.

Foreign corporations such as Raymond have been considered subject to the personal jurisdiction of Pennsylvania's courts on the basis that their Pennsylvania distributors are also their legal agents. The relevant standard is whether the foreign corporation exercises, "* * * substantial control over the business of the local distributor * * *", Florio v. Powder Power Tool Corp., 248 F.2d 367, 372 (C.A. 3, 1957). Language used in the Pennsylvania Supreme Court's most recent opinion on this issue, referring to "* * * close collaboration with its distributors * *", is to similar effect. Frisch v. Alexson Equipment Corp., 423 Pa. 247, 253, 224 A.2d 183 (1966).

The plaintiff contends that the requisite collaboration is manifested here by the occasional visits of certain of Raymond's employees to Schindler, the listing of the defendant's name in the Philadelphia phonebook at the Schindler address, the defendant's supplying of catalogs to Schindler, and the occasional use of floor-plan financing arrangements. See supra, facts 12, 11, 6, 13 respectively. Even when considered all together, however, these facts do not reflect such collaboration between Schindler and Raymond as to constitute the former an agent of the latter. Moreover, there are other facts which strongly indicate that Schindler represents Raymond in the capacity of an independent contractor, e. g. Schindler deals with a number of other products, Raymond exercises little control over Schindler's operation, and Schindler can not bind the corporation. These latter facts are most significant in determining the extent of collaboration between the corporation and its distributor. See generally, Cecere, supra, 208 Pa.Super. at p. 143, 220 A.2d 350; Rachelson, supra, 257 F.Supp. at pp. 258-259 and Rufo v. Bastian-Blessing Co., 405 Pa. 12, 17, 18, 173 A.2d 123 (1961); Miller v. Kiamesha-Concord, Inc., 420 Pa. 604, 618, 218 A.2d 309 (1966), and Namie v. DiGirolamo, 412 Pa. 589, 195 A.2d 517 (1963). Finally, the situation here is distinguishable from that in Frisch, supra, 423 Pa. at p. 252, 224 A.2d at p. 186, where the facts indicated that "* * * each distributor also develop(ed) sales and service outlets in Pennsylvania (for the corporation) * * *."

Raymond of course alternatively can be considered subject to personal jurisdiction here if it has actually sent into Pennsylvania for the purpose of doing business persons who are concededly its agents or employees. The standard for determining whether Raymond has so "entered" Pennsylvania is a strict one:

"* * * (The) distribution of products in Pennsylvania by the foreign corporation (is) * * * not sufficient basis for jurisdiction. * * * (T)he test * * * includes the `entry' into the Commonwealth by the foreign corporation by the physical presence of agents or property." Cecere, supra, 208 Pa.Super. at p. 147, 220 A.2d at p. 356.

Thus the Court in Cecere felt constrained to find that the defendant was not doing business in Pennsylvania despite the fact that it had sold lamps and other furniture here over a long period of time. Cecere, supra, 208 Pa.Super. at p. 144, 220 A.2d 350.

Employing this strict standard of "entry" it is clear that Raymond's activities in Pennsylvania are materially distinguishable from those of foreign corporations held in other cases to be subject to personal jurisdiction here. For example, in Frisch, supra, 423 Pa. at pp. 251, 252, 224 A.2d 183, the Court noted that the defendant occasionally sent its executives and other employees to Pennsylvania to visit customers, maintained two salaried employees in...