OSC CORPORATION v. Toshiba America, Inc., 72-1372.

• Decision Date: 04 February 1974
• Docket Number: No. 72-1372.,72-1372.
• Citation: 491 F.2d 1064
• Parties: O.S.C. CORPORATION and O.S.C. Corporation of California, Appellants, v. TOSHIBA AMERICA, INC. and Tokyo Shibaura Electric Co., Ltd., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

491 F.2d 1064 (1974)

O.S.C. CORPORATION and O.S.C. Corporation of California, Appellants, v. TOSHIBA AMERICA, INC. and Tokyo Shibaura Electric Co., Ltd., Appellees.

No. 72-1372.

United States Court of Appeals, Ninth Circuit.

February 4, 1974.

Willard D. Horwich (argued) Beverly Hills, Cal., for appellants.

Peter J. Garland (argued) of Knapp, Gill, Hibbert & Stevens, Los Angeles, Cal., Wender, Murase, White & Briger, New York City, for appellees.

Before BARNES and CHOY, Circuit Judges, and SCHWARTZ,^* District Judge.

OPINION

PER CURIAM:

This is an appeal from an order of the District Court dismissing appellants' claim against one defendant, Tokyo Shibaura Electric Co., Ltd., pursuant to Rule 12 of the Federal Rules of Civil Procedure, on grounds of improper venue and lack of personal jurisdiction in the District Court.

Appellants, O. S. C. Corporation and O. S. C. Corporation of California, have their principal place of business in Los Angeles, California. O.S.C. Corporation acts as a purchasing company and O.S.C. Corporation of California acts as a sales company. Appellants brought an antitrust action against Toshiba America, Inc. (hereinafter "Toshiba") and the sole appellee, Tokyo Shibaura Electric Co., Ltd. (hereinafter "Tokyo Shibaura") seeking damages, injunctive relief, forfeiture of inventory and a count for breach of contract. (R 1-11).

Toshiba is a New York corporation, with its principal place of business in New York City, which has branch offices and warehouses in Chicago, Illinois and Los Angeles, California. Toshiba is a wholly-owned subsidiary of appellee, Tokyo Shibaura. Toshiba sells electronic desk calculators at wholesale. These calculators are made in Japan.

The record shows and appellants concede the fact that the sale of the electronic calculators made by Tokyo Shibaura to Toshiba takes place in Japan. Toshiba imports such products into the United States, and sells and delivers such products to purchasers from Toshiba in the United States.

The dismissal of appellants' claims against Tokyo Shibaura for improper venue was under the statutory authority of 15 U.S.C. § 22.

15 U.S.C. § 22 states:

"Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found."

Appellants contend in this appeal that by selling its electronic calculators to Toshiba, Tokyo Shibaura "transacts business" in the Central District of California because Toshiba makes sales and deliveries of such calculators there, and that sales and deliveries of the products of Tokyo Shibaura find their way into Los Angeles, California through the presence of a branch office of a wholly-owned subsidiary. These transactions, it is argued, on the part of Tokyo Shibaura, constitute a practical everyday business or commercial concept of doing or carrying on business of a substantial character. United States v. Scophony Corporation of America, 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948).

We reject appellants' arguments on the venue issue, observing that to find otherwise would do violence to the due process limitations imposed by the Fourteenth Amendment of the United States Constitution on the question of what constitutes "transacting business." (See e. g., International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).)

The record does show as appellee alleges and appellant agrees that:

"1. Tokyo Shibaura has never registered to do business in California;

2. Tokyo Shibaura does not own or lease any property in California;

3. Tokyo Shibaura has no bank account in California;

4. Tokyo Shibaura has never sold its electronic calculators to either plaintiff and in fact it sells only to Toshiba, in Japan pursuant to letter of credit;

6. Tokyo Shibaura does not sell electronic calculators in California;

7. Tokyo Shibaura has no officer, director, employee or other representative in California for any business purpose;

8. Tokyo Shibaura has no agent, salesman or resident representative in California, nor has it any dealers or jobbers in California;

9. Tokyo Shibaura has not solicited any business in California; and

10. Tokyo Shibaura has no branch office, warehouse, or other place of business in California." (R. 41-43.)

Appellants' sole basis for alleging that Tokyo Shibaura transacts business in the Central District of California is stated in Plaintiffs' Answer to Interrogatories that it is believed by the plaintiffs (appellants here) that shipments are directly made by Tokyo Shibaura to Toshiba in the Central District of California. We have scanned the record and find no evidentiary basis for this allegation, nor have we been referred to any facts in support for such assertion although a request was made therefor on oral argument.

In Hayashi v. Sunshine Garden Products, Inc., 285 F.Supp. 632 (W.D.Wash. 1967), aff'd 396 F.2d 13 (9th Cir. 1968), we affirmed a finding that where a foreign corporation had no offices within the jurisdiction of the District Court and did not conduct any business within the state, the mere fact that a wholly-owned subsidiary did business within the state and had some common officers with the parent was insufficient to establish venue in the absence of a showing that the foreign corporation in fact controlled and managed the subsidiary to subject the foreign corporation to venue in the district. We held in Hayashi that the burden was on the plaintiff under the venue provisions of section 12 of the Clayton Antitrust Act, 15 U.S.C. § 22.

Appellants contend that the test of 15 U.S.C. § 22 is not the corporate separateness of the parent and subsidiary, but rather the everyday concept of transacting business. They rely on Sunbury Wire Rope Mfg. Co. v. United States Steel Corp., 129 F.Supp. 425 (E. D.Pa.1955), and contend that there is no difference in substance to the facts in the present case and suggest we follow Sunbury's holding. However, we find that the present factual situation can be readily distinguished from that in Sunbury. In Sunbury, substantial merchandise of the defendant (a Michigan corporation which had never registered to do business in Pennsylvania) found its way into the Eastern District of Pennsylvania. The defendant had no agent for service of process in Pennsylvania, nor did it have any officers, resident salesmen, telephone listings or bank accounts in Pennsylvania. However, as part of its sales transactions, it had delivered a substantial amount of its product in the Eastern District of Pennsylvania as a result of orders solicited and obtained elsewhere.

Stressing the "delivery" end of the sale of the product the court concluded that a delivery by the defendant of almost $600,000 worth of a company's product into the Eastern District of Pennsylvania within less than two years as part of sales transactions, constitutes the transacting of business in the district. The court relied on the "practical everyday business or commercial concept" test of United States v. Scophony, supra. However, in Sunbury, the delivery was made directly by the defendant into the Eastern District of Pennsylvania. Here, Tokyo Shibaura sells to Toshiba, its wholly-owned subsidiary, in Japan, and delivers to Toshiba which in turn delivers electronic calculators to customers in the Central District of California. Appellants even admit such distinction between Sunbury and the present case in testimony in the District Court (R.T....