School District of Philadelphia, Com. of Pa. v. Kurtz Bros.

• Decision Date: 18 March 1965
• Docket Number: Civ. A. No. 35747.
• Citation: 240 F. Supp. 361
• Parties: SCHOOL DISTRICT OF PHILADELPHIA, COMMONWEALTH OF PENNSYLVANIA, v. KURTZ BROS. et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

240 F. Supp. 361

SCHOOL DISTRICT OF PHILADELPHIA, COMMONWEALTH OF PENNSYLVANIA, v. KURTZ BROS. et al.

Civ. A. No. 35747.

United States District Court E. D. Pennsylvania.

March 18, 1965.

Donald Brown, Nochem S. Winnet, Philadelphia, Pa., for J. L. Hammett Co. and others.

Carl F. Barger, Pittsburgh, Pa., William U. Smith, Smith, Smith & Work, Clearfield, Pa., for Kurtz Bros. and Kurtz Bros., Eastern Division, Inc.

Frank B. Wallis, Walker B. Comegys, Jr., Boston, Mass., for J. L. Hammett Co. Charles F. Herr, Lancaster, Pa., for L. B. Herr & Son.

W. Bradley Ward, Kimber E. Vought, Philadelphia, Pa., for Garrett-Buchanan Co.

Benjamin M. Quigg, Jr., Russell C. Dilks, Morgan, Lewis & Bockius, Philadelphia, Pa., John Martin Jones, Jr., Piper & Marbury, Baltimore, Md., for Paul M. Adams Co.

C. Gordon Haines, Luther B. Ditch, Baltimore, Md., for A. & C. Co.

Bruce Hecker, New York City, for Webster Paper and Supply Co.

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

Dolores Korman, Philadelphia, Pa., for Philadelphia School Dist.

DAVIS, District Judge.

This action was instituted by the School District alleging anti-trust violations against twelve defendants. Presently before the Court are the motions of five defendants The A & C Company, Bopetro, Inc., Peckham, Little & Co., Inc., Webster Paper and Supply Co. and Bardeen's, Inc., to dismiss for lack of venue or lack of jurisdiction. The School District was allowed discovery going to the factual basis of the various motions and, after all parties had submitted briefs, an argument was held on December 30, 1964.

The heart of the objection by the defendants to this action is that the Eastern District of Pennsylvania is not the proper place for the School District to litigate its rights against them. Defendants argue that venue does not lie here since they are not inhabitants of the district, nor may they be found within the district, nor do they transact business in this district. See 15 U.S.C.A. § 22. Plaintiff does not argue that these defendants are inhabitants of this district since Pennsylvania is not the state of incorporation of any of these defendants. Also, Plaintiff does not urge that the defendants may be found within the district since they are not registered to do business in Pennsylvania, they do not maintain an office, nor is there any formal connection with the State of Pennsylvania.

Plaintiff does allege however, that these defendants have transacted business of a substantial character in this district and are therefore subject to venue here, relying on United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948) and Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1927). These cases have made it clear that the transacting business test of Clayton Act venue is much broader than the doing business concept which subjects a foreign corporation to the jurisdiction of a local court. A foreign corporation is transacting business within a district if, from a practical business viewpoint, the corporation is engaging in any substantial business operations there. See Sunbury Wire Rope Mfg. Co. v. United States Steel Corp., 129 F.Supp. 425 (E.D.Pa.1955).

For purposes of clarity, this opinion will deal with the defendants in three different categories.

I. THE A & C COMPANY

The exhibits submitted by the plaintiff and the defendant, The A & C Company (hereinafter referred to as A & C), answers to interrogatories show the following:

a) shipments of school supplies into this district for the years 1961, 1962 and 1963 varying in amount from $8,220.00 to $49,067.00;¹

b) a portion of these shipments had been made to the plaintiff;

c) solicitation of business in this district in person through a representative and by mail.

A continuous course of conduct which includes the shipment of goods and the solicitation of business does constitute transacting business. Gem Corrugated Box Corp. v. Mead Corp., 189 F.Supp. 584 (S.D.N.Y.1960).

The defendant A & C argues that their business in this district over a three year period amounted to only 2.7% of its total sales and therefore this business is not substantial. The dollar figure and the percentage of sales, together or separately, are merely ways of measuring the amount of total business carried on at a particular place, during a specific period of time or on a particular product. In viewing the amount of business transacted, it must be reflected in light of the products involved in the sales, the continuity with which the sales are conducted and the manner in which the sales are obtained. A single unsolicited sale by a small company, which amounted to a significant portion of its total sales for that year, might not amount to transacting business. On the other hand, a continuous series of solicited sales over a long period of time amounting to only a small percentage of total sales for a large company, does amount to transacting business.

In this case, the products are small items individually so that $50,000.00 in sales is substantial business. Therefore in light of the facts known to date, A & C must be considered transacting business in this district within the meaning of Section 12 of the Clayton Act.

II. BOPETRO, INC. and PECKHAM, LITTLE & CO., INC.

The exhibits submitted by the plaintiff and the defendants' answers to interrogatories show the following:

a) that an agent came into this district to solicit business between 1959 and 1964 for either or both of these defendants;

b) that shipments of school supplies were sent to this district during the years 1959 through 1964;

c) that it is completely unclear which defendant had an agent soliciting business and which defendant shipped goods, or both.

Without deciding whether one or both defendants are subject to venue in this district, this Court feels that the continuous shipments made into the district and solicitation by an agent on a regular basis subjects the responsible principal or principals to suit in this district.

Peckham, Little & Co., Inc. (hereinafter referred to as Peckham) argues that the plaintiffs' complaint fails to state a cause of action against it since this...