Reynolds Metals Co. v. Columbia Gas System, Inc., Civ. A. No. 87-0446-R.

• Decision Date: 16 September 1988
• Docket Number: Civ. A. No. 87-0446-R.
• Citation: 694 F. Supp. 1248
• Court: U.S. District Court — Eastern District of Virginia
• Parties: REYNOLDS METALS COMPANY, Plaintiff, v. COLUMBIA GAS SYSTEM, INC., et al., Defendants.

694 F. Supp. 1248

REYNOLDS METALS COMPANY, Plaintiff, v. COLUMBIA GAS SYSTEM, INC., et al., Defendants.

Civ. A. No. 87-0446-R.

United States District Court, E.D. Virginia, Richmond Division.

September 16, 1988.

Thomas G. Slater, R. Noel Clinard, Michael J. Lockerby, Hunton & Williams, Richmond, Va., William F. Young, James F. Bowe, Jr., Hunton & Williams, Washington, D.C., for plaintiff.

Dana D. McDaniel, John S. Graham, III, Ann Adams Webster, John D. Epps, Browder, Russell, Morris & Butcher, P.C., Richmond, Va., John E. Beerbower, Cravath, Swaine & Moore, New York City, for defendants.

MEMORANDUM

MERHIGE, District Judge.

This matter comes before the Court on the motion of defendants, Columbia Gas System, Inc. ("System") and Columbia Gas System Service Corporation ("Service Corp."), under Fed.R.Civ.P. 12(b)(2) and (3) for their dismissal from the case for lack of personal jurisdiction and for improper venue. The same defendants have moved in the alternate for summary judgment in their favor on all claims. The issues have been extensively briefed, oral arguments have been heard, and the matter is now ripe for disposition. The Court has jurisdiction over this case pursuant to 28 U.S.C. §§ 1331 and 1337, and the doctrine of pendent jurisdiction.

Background

This motion arises in an antitrust action involving inter- and intrastate sales and transportation of natural gas. Plaintiff has alleged violations of §§ 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2) as well as violations of the Virginia Antitrust Act (59.1-9.17 1987). Plaintiff has named as defendants various companies within the Columbia and Commonwealth gas production and transportation system, a vertically integrated, multi-state enterprise.

According to movants' characterizations, System is a registered public utility holding company, operated pursuant to the Public Utility Holding Company Act of 1935, and owns 100 percent of the stock of the supply and transportation operating companies involved in this lawsuit. Service Corp. is a mutual service company, authorized by the same Act and approved by the Securities and Exchange Commission ("SEC"). Service Corp.'s role is to provide efficient, centralized support services to affiliated members of the system, subject to oversight by the SEC.

Service Corp. was recently brought into this case by an amendment to plaintiff's complaint on April 14, 1988. By contrast, System, although currently a defendant by virtue of the same amendment, has prior involvement in the case. System was a named defendant in plaintiff's original complaint of June 26, 1987. On September 23, 1987, 669 F.Supp. 744, this Court dismissed System as a defendant finding, prior to any significant factual development via discovery, that venue in Virginia was inappropriate as to System and that plaintiff had failed to state a claim against System upon which relief could be granted. Subsequently, on April 14, 1988, System once again became a named defendant after the Court granted leave to plaintiff to amend its complaint. The Court at that time was satisfied that evidence newly adduced by plaintiff would overcome motions for dismissal by System and Service Corp.

Discussion

1. Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction

The arguments made by the parties in support of and in opposition to this motion compel the court to clarify the true nature of the motion. Defendants System and Services Corp. have centered their arguments in this rule 12(b)(2) motion on the application of section 12 of the Clayton Act ("section 12") to the facts at hand. Section 12, titled "District in which to sue corporation," states that:

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. 15 U.S.C. § 22 (1982).

Plaintiff, in turn, has responded with arguments focusing on interpretation of section 12. Both sides effectively characterize this 12(b)(2) motion as one involving "personal jurisdiction."

In the Court's view, counsel's characterization is inappropriate, for the instant motion does not encompass issues of "personal jurisdiction" as that term is commonly understood. In its common usage, personal jurisdiction connotes satisfaction vel non of the federal constitutional due process standards set out in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and that case's progeny. By contrast, the arguments of the parties to this motion solely reflect statutory interpretations of section 12. Regrettably, the Court is not prepared at this time to rule on the issue of personal jurisdiction, in the constitutional due process sense, as to System and Services Corp.

The parties appear to agree that in the context of section 12, the necessary analyses for the 12(b)(2) "personal jurisdiction" motion and the accompanying 12(b)(3) "venue" motion, infra, are one and the same. In Sportmart v. Frisch, 537 F.Supp. 1254, 1257 (N.D.Ill.1982) (citing United States v. Scophony Corporation, 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948)), the court stated: "it is established that, as far as the Court's power over a non-resident corporate defendant is concerned, the jurisdiction and venue analyses are virtually congruent, since both are controlled by general due process principles." See also Call Carl, Inc. v. BP Oil Corporation, 391 F.Supp. 367, 370 (D.Md.1975) (characterizing a section 12 analysis as one involving venue and personal jurisdiction). Further, according to the court in Sportmart, "if venue is proper, then personal jurisdiction may be obtained over the defendants by extra-territorial service of process." Id. (emphasis added).

In the Court's view, this characterization of section 12's analytical framework states too much to the extent that the Sportmart court refers to due process principles. It is true that the text of section 12, supra, provides for both venue and extra-territorial service of process. The Court also acknowledges that where venue is found to be proper, extra-territorial service of process is permissible. The provision for extra-territorial service of process referred to in section 12, however, is analagous to a state long-arm statute in that section 12 provides a statutory grant of personal jurisdiction. As with applications of state long-arm statutes to effectuate extra-territorial service of process, application of section 12's provision for extra-territorial service must in every case satisfy constitutional due process principles. Satisfaction of the requisite due process standards are tested by the familiar "minimum contacts" analysis of International Shoe and its progeny.

The Supreme Court in Scophony made specific reference to this statutory-constitutional distinction and concluded its analysis of the section 12 matter before it without addressing constitutional concerns. See 333 U.S. at 804, 68 S.Ct. at 860; accord First American First v. National Ass'n of Bank Women, 802 F.2d 1511, 1515 (4th Cir.1986). According to the Scophony Court: "We deal here with a problem of statutory construction, not one of constitutional import ... The issue is simply how far Congress meant to go, and specifically whether it intended to create venue and liability to service of process through the occurrence within a district of the kinds of acts done here on Scophony's behalf." 333 U.S. at 804, 68 S.Ct. at 860. The Court carefully refused to equate the statutory analysis with the due process analysis under the principles of International Shoe, a case the Court had decided only three years earlier. Id. at 804 n. 13, 68 S.Ct. at 860 n. 13.

This statutory-constitutional distinction does not foreclose a due process review of the application of section 12 extra-territorial service of process. The Court merely states that in the absence of a full briefing on due process concerns, it deems it inappropriate to equate the "transacts business" venue standard of section 12 with the minimum contacts due process standard despite any apparent similarities between the two standards.

In the Court's view, this Rule 12(b)(2) motion, to the extent it goes to the statutory provision of personal jurisdiction in section 12, turns on the finding vel non, below, of venue under section 12.

II. Rule 12(b)(3) motion to dismiss for lack of venue

The Court takes note that throughout its argument in opposition to this motion, plaintiff refers to evidence adduced in support of its earlier, successful motion to amend the complaint and add System and Service Corp. as defendants. In that earlier motion, plaintiff satisfied the Court that sufficient facts were asserted, which if proved, would implicate System and Service Corp. in the activities alleged to constitute the antitrust law violations underlying this case. The memorandum accompanying the Court's earlier order allowing amendment of the complaint stated that "the Court cannot...