Milwaukee Concrete Studios, Ltd. v. Fjeld Mfg. Co., Inc.

• Citation: 8 F.3d 441
• Decision Date: 19 October 1993
• Docket Number: No. 92-2603,92-2603
• Parties: , 1993 Copr.L.Dec. P 27,156, 27 Fed.R.Serv.3d 335, 28 U.S.P.Q.2d 1594 MILWAUKEE CONCRETE STUDIOS, LIMITED, Plaintiff-Appellant, v. FJELD MANUFACTURING COMPANY, INCORPORATED, and Janice Krueger, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 441

8 F.3d 441

62 USLW 2253, 1993 Copr.L.Dec. P 27,156,

27 Fed.R.Serv.3d 335,

28 U.S.P.Q.2d 1594

MILWAUKEE CONCRETE STUDIOS, LIMITED, Plaintiff-Appellant, v. FJELD MANUFACTURING COMPANY, INCORPORATED, and Janice

Krueger, Defendants-Appellees.

No. 92-2603.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 20, 1993.

Decided Oct. 19, 1993.

Craig S. Fochler, Douglas N. Masters (argued), John Michael Murphy, Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, Chicago, IL, Robert D. Silver, Park Ridge, IL, for plaintiff-appellant.

Alan M. Anderson (argued), Larkin, Hoffman, Daly & Lindgren, Bloomington, MN, Kathy L. Kuehl, Robins, Kaplan, Miller & Ciresi, Minneapolis, MN, for defendants-appellees.

Before CUMMINGS and ROVNER, Circuit Judges, and SHADUR, Senior District Judge. ^*

ROVNER, Circuit Judge.

This copyright infringement action poses an interesting question under the copyright venue statute, 28 U.S.C. § 1400(a). The issue is whether Fjeld Manufacturing Company ("Fjeld") or Janice Krueger ¹ "resides" or "may be found" in the Eastern District of Wisconsin. The district court said not and dismissed the action for improper venue. The court also sanctioned the plaintiff, Milwaukee Concrete Studios, Limited ("MCS"), $1,000 under Fed.R.Civ.P. 11 because of its erroneous representation that a key third party, Greeley Ornamental Concrete Products ("Greeley"), was located in Milwaukee, Wisconsin (in the Eastern District), rather than in Ellsworth, Wisconsin (in the Western District). MCS appeals both the venue determination and the imposition of Rule 11 sanctions. We agree that venue was improper and therefore affirm the dismissal of MCS' complaint, but we find no basis for sanctions, and we accordingly reverse that award.

I. FACTS

MCS manufactures concrete statuary, including birdbaths, fountains, and planters, and distributes these products throughout the United States. MCS' products are used primarily in commercial atriums, malls, and parks, and also in private homes and yards. MCS sometimes designs its own statuary and holds copyright registrations for more than 150 original designs. It filed this action under the Copyright Act of 1976, 17 U.S.C. § 101 et seq., alleging that Fjeld infringed the copyright on its "Oakwood Squirrel Birdbath" by importing an unauthorized copy from Canada (the "Canadian birdbath"). According to MCS, Fjeld delivered the Canadian birdbath to Greeley, another large manufacturer of concrete statuary located in Ellsworth, Wisconsin, so that Greeley could make a mold of the birdbath. Greeley then manufactured 500 infringing baths, which were sold throughout the State of Wisconsin. MCS sued Greeley for infringement in the Eastern District of Wisconsin, and it later filed this action against Fjeld in the same district.

Fjeld moved to dismiss the complaint for improper venue. ² MCS had alleged that venue in the Eastern District of Wisconsin was proper pursuant to 28 U.S.C. § 1400(a), which provides that:

Civil actions, suits, or proceedings arising under any Act of Congress relating to copyrights or exclusive rights in mask works may be instituted in the district in which the defendant or his agent resides or may be found.

Because Fjeld and Krueger reside in North Dakota, ³ the parties recognized that venue would lie in the Eastern District of Wisconsin only if Fjeld "may be found" there. Fjeld argued that it could not because it has no contacts with that district.

MCS responded with a memorandum the district court deemed sanctionable. MCS maintained that because Fjeld was subject to personal jurisdiction in the Eastern District under the Wisconsin long-arm statute, Wis.Stat. § 801.05, it also could be found there for purposes of section 1400(a). In advancing this argument, however, MCS repeatedly represented that Greeley was located in Milwaukee (in the Eastern District), rather than in Ellsworth (in the Western District). (See R. 9, at 3, 5, 8, and 10.) MCS apparently did not discover its error until shortly before Fjeld was to reply, when it submitted a one-page "supplement" acknowledging its "inadvertent error." (R. 11.) In its reply, Fjeld noted the error and argued that MCS had tied the defendants only to the Western District of Wisconsin, so that venue did not lie in the Eastern District under section 1400(a).

The district court found venue improper in the Eastern District. Milwaukee Concrete Studios, Ltd. v. Fjeld Mfg. Co., 782 F.Supp. 1314 (E.D.Wis.1991). Although the court agreed that the "may be found" requirement of section 1400(a) generally is equated with a party being subject to personal jurisdiction, it concluded that " 'amenability to personal jurisdiction' must relate to the district in which the action has been commenced." Id. at 1316 (district court's emphasis). Thus, the word "state" in Wisconsin's long-arm statute "must be substituted with the word 'district' in order to preserve the plain meaning of 28 U.S.C. § 1400(a)." Id. at 1316-17. The district court determined that Fjeld had not committed an "act or omission" in the Eastern District within the meaning of Wis.Stat. § 801.05(3); ⁴ instead, the relevant conduct had occurred at Greeley's place of business in the Western District. Id. at 1317. The district court also found that the requirements of section 801.05(4) were not satisfied because, although Fjeld had committed a foreign act that resulted in a local injury, there was no additional contact between Fjeld and the Eastern District, as section 801.05(4) requires. ⁵ Id. at 1318.

Having determined that venue was improper, the district court also sanctioned MCS $1,000 for its error in having relocated Greeley to Milwaukee. The district court reasoned that even if the error was inadvertent, it was nonetheless unreasonable because a "[r]easonable inquiry ... would have revealed that the allegation in the complaint that venue was proper in this district was neither 'well grounded in fact' nor 'warranted by existing law,' as Rule 11 requires." Id. at 1319. The court made MCS and its counsel jointly and severally liable for the sanction because both had signed the verified complaint. Id. The court also ordered that if MCS were to refile its action in a proper venue and prevail, it should recover no fees relating to this action. Id.

MCS filed a Fed.R.Civ.P. 59(e) motion to vacate the dismissal order and to alter or amend the $1,000 judgment, advancing two arguments. It maintained that it had not originally been mistaken as to Greeley's location because the complaint itself had alleged that Greeley was located in Ellsworth, Wisconsin. (See R. 1, at p 43.) MCS provided affidavits from its attorneys and its principals to establish that the subsequent error in its memorandum was inadvertent. ⁶ MCS also asserted that its position was warranted under a number of decisions that look to a defendant's contacts with a state in general, as opposed to contacts with a particular judicial district, in determining where a defendant is amenable to personal jurisdiction and therefore where it "may be found" for purposes of section 1400(a).

The district court denied MCS' motion but in doing so shifted the basis for Rule 11 sanctions. The district court conceded that due to "the absence of a contrary authoritative appellate decision construing § 1400(a) and the existence of ... authorities that at least colorably support the plaintiff's interpretation," MCS' position was warranted by existing law. Milwaukee Concrete Studios, Ltd. v. Fjeld Mfg. Co., 795 F.Supp. 277, 280 (E.D.Wis.1992). The district court nonetheless allowed the sanctions to stand, holding that "[i]rrespective of its interpretation of the law, the plaintiff was not entitled to miscast the facts in its response to the defendants' motion." Id. (district court's emphasis). The district court thus shifted the basis for sanctions from MCS' complaint to the factual error in its responsive memorandum. ⁷

II. ANALYSIS

A. Venue

Because venue determinations are often fact specific, they generally are reviewed under the deferential abuse of discretion standard. See, e.g., Home Ins. Co. v. Thomas Indus., Inc., 896 F.2d 1352, 1355 (11th Cir.1990). This case does not involve the discretionary interpretation of disputed facts, however, but application of the copyright venue statute to undisputed jurisdictional facts. The issue is therefore one of statutory interpretation and is subject to de novo review. See Hooker v. United States Dep't of Health and Human Servs., 858 F.2d 525, 528 n. 2 (9th Cir.1988); Central Valley Typographical Union, No. 46 v. McClatchy Newspapers, 762 F.2d 741, 745 (9th Cir.1985).

The parties agree that venue is proper in the Eastern District only if Fjeld may be found there. They also agree that section 1400(a)'s "may be found" clause has been interpreted to mean that a defendant is amenable to personal jurisdiction in a particular forum. See, e.g., Lipton v. Nature Co., 781 F.Supp. 1032, 1035 (S.D.N.Y.1992); Store Decor Div. of Jas Int'l, Inc. v. Stylex Worldwide Indus., Ltd., 767 F.Supp. 181, 185 (N.D.Ill.1991); Mihalek Corp. v. State of Michigan, 595 F.Supp. 903, 907 (E.D.Mich.1984), aff'd, 814 F.2d 290 (6th Cir.), cert. denied, 484 U.S. 986, 108 S.Ct. 503, 98 L.Ed.2d 502 (1987); Battle Creek Equip. Co. v. Roberts Mfg. Co., 460 F.Supp. 18, 21-22 (W.D.Mich.1978); Kogan v. Longstreet, 374 F.Supp. 47, 50 (N.D.Ill.1974) (Bauer, J.). MCS and Fjeld disagree, however, about whether Fjeld's amenability to personal jurisdiction under the Wisconsin long-arm statute would entitle MCS to file its action in any judicial district in the state, or only in the district where the allegedly infringing acts occurred. Resolution of that question is central here because although Fjeld clearly would be subject to personal jurisdiction in the Western District--having allegedly committed a tortious "act or omission" there when it imported the infringing birdbath and delivered it to Greeley (see ...