Reliance Steel Products Co. v. Watson, Ess, Marshall & Enggas

• Citation: 675 F.2d 587
• Decision Date: 01 April 1982
• Docket Number: No. 81-2522,81-2522
• Parties: RELIANCE STEEL PRODUCTS COMPANY, Appellant, v. WATSON, ESS, MARSHALL & ENGGAS. . Submitted Under Third Circuit Rule 12(6)
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 587

675 F.2d 587

RELIANCE STEEL PRODUCTS COMPANY, Appellant, v. WATSON, ESS, MARSHALL & ENGGAS.

No. 81-2522.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit Rule 12(6) April 1, 1982.

Decided April 15, 1982.

Herbert A. Fogel, Philadelphia, Pa., for appellant.

George P. Williams, III., Carl A. Solano, Philadelphia, Pa., for appellee; Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., of counsel.

Before GIBBONS, SLOVITER and BECKER, Circuit Judges.

OPINION OF THE COURT

GIBBONS, Circuit Judge.

Reliance Steel Products Company (Reliance), a Pennsylvania corporation, appeals from a judgment dismissing its complaint against Watson, Ess, Marshall & Enggas (Watson), a Missouri law partnership, on the ground of lack of personal jurisdiction over a non-resident defendant. We affirm.

This suit was originally brought in the Court of Common Pleas of Philadelphia County against Watson for breach of contract and negligent legal representation. The suit was subsequently removed to the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1441, where the defendant immediately raised the jurisdictional defense and discovery commenced with regard to that issue.

Reliance sought to establish that Watson was subject to the court's jurisdiction under the Pennsylvania "long-arm" statute, 42 Pa.C.S. § 5301, et seq.

After deposing James F. Duncan, a partner in the defendant firm, it became apparent that Reliance would not carry its burden of proving that the activities of the defendant brought it within the scope of the Pennsylvania long-arm statute. See DiCesare-Engler Productions, Inc. v. Mainman Ltd., 81 F.R.D. 703, 705 (W.D.Pa.1979); Amba Marketing Systems, Inc. v. Jobar Intern., Inc., 551 F.2d 784, 787 (9th Cir. 1977); see also Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877, 881 (3rd Cir. 1981), cert. granted sub nom. Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinea, --- U.S. ----, 102 S.Ct. 502, 70 L.Ed.2d 377 (U.S.1981).

Reliance then sought further discovery through a series of interrogatories which questioned Watson's activities in all forums. However, the district court limited the scope of those interrogatories to "activities occurring within or concerning Pennsylvania or citizens of Pennsylvania." After a hearing on the jurisdictional issue, the district court entered judgment in Watson's favor, holding that the defendants had never availed themselves of the privilege of acting in Pennsylvania, that the cause of action arose from the defendant's activities outside Pennsylvania, and that their acts did not have a substantial enough connection with Pennsylvania to make the exercise of jurisdiction reasonable.

Reliance alleges that the Eastern District of Pennsylvania could assert personal jurisdiction over Watson under Fed.R.Civ.P. 4(e) and the Pennsylvania long-arm statute, 42 Pa.C.S. §§ 5301-5308 and §§ 5321-5322. Specifically, the plaintiff relies on § 5322(a)(4) which permits jurisdiction over a non-resident defendant when the claim arises out of an act or omission occurring outside of Pennsylvania, but causing harm or tortious injury within the state.

More generally, the plaintiff claims that the district court could have asserted personal jurisdiction to "the fullest extent allowed under the Constitution"; the minimum contacts standard expressed in International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); and urges us to forego any other analysis.

However, our examination must go further, for there are two steps to be undertaken when personal jurisdiction is asserted over a non-resident defendant on bases other than consent, or general presence personally or by an agent. The initial determination that must be made is whether the claim or cause of action which is being pursued arises from the defendant's forum related activities or from non-forum related activities. Schwilm v. Holbrook, 661 F.2d 12 (3rd Cir. 1981). The focus must be on the relationship of the transaction giving rise to the law suit to the forum where the plaintiff seeks to litigate it. Paolino v. Channel Home Centers, Inc., 668 F.2d 721, 724 (3rd Cir. 1981).

If the claim pursued arises from forum related activity, the court must determine whether there are enough contacts with the forum arising out of that transaction in order to justify the assertion of jurisdiction over the out-of-state defendant. Such examination of affiliating circumstances is only appropriate in the analysis of the forum related claim.

If the claim pursued arises from non-forum related activity, the plaintiff must demonstrate that in other respects the defendant has maintained "continuous and substantial" forum...