Smokey's of Tulsa v. Am. Honda Motor Co.

• Decision Date: 07 July 1978
• Docket Number: No. 77-309-C.,77-309-C.
• Citation: 453 F. Supp. 1265
• Parties: SMOKEY'S OF TULSA, INC., in behalf of itself and others similarly situated, Plaintiff, v. AMERICAN HONDA MOTOR CO., INC., and Honda Motor Co., Ltd., Defendants.
• Court: U.S. District Court — Eastern District of Oklahoma

453 F. Supp. 1265

SMOKEY'S OF TULSA, INC., in behalf of itself and others similarly situated, Plaintiff, v. AMERICAN HONDA MOTOR CO., INC., and Honda Motor Co., Ltd., Defendants.

No. 77-309-C.

United States District Court, E. D. Oklahoma.

July 7, 1978.

Lawrence A. G. Johnson, Tulsa, Okl., for plaintiff.

Floyd Walker, Tulsa, Okl., Roland D. Smoot, Los Angeles, Cal., for defendants.

ORDER ON MOTION TO DISMISS FOR IMPROPER VENUE, INSUFFICIENCY OF PROCESS, INSUFFICIENCY OF SERVICE OF PROCESS AND LACK OF IN PERSONAM JURISDICTION

MORRIS, Chief Judge.

Plaintiff sues for injuries allegedly sustained in its property and business by reason of defendants' alleged violations of 15 U.S.C. § 72 and sections 1 and 2 of the Sherman Act. Defendant Honda Motor Company, Ltd. has filed a motion to quash service of process and to dismiss for lack of in personam jurisdiction, improper venue, insufficiency of process, and insufficiency of service of process. Defendant's motion is accompanied by a detailed affidavit and a brief. Plaintiff has filed a response but has not filed an opposing affidavit. The defendant has filed a reply brief.

Defendant's attack on venue focuses on the antitrust venue statute, 15 U.S.C. § 22, because the "transacting business" test set forth therein is more lenient than the venue provisions contained in 15 U.S.C. § 72, and defendant argues, if venue is improper under section 22 it is necessarily improper under section 72. The parties have not contended that the general venue statute, 28 U.S.C. § 1391 supplements the special antitrust venue statute, 15 U.S.C. § 22, and that question is accordingly not before the court. See O. S. C. Corp. v. Toshiba America, Inc., 491 F.2d 1064, 1068 (9th Cir. 1974); Grappone, Inc. v. Subaru of America, Inc., 403 F.Supp. 123, 133 (D.N.H. 1975).

There are apparently no cases which have interpreted the venue provisions of section 72 and the only reported case under that section sustained venue and jurisdiction under the antitrust laws and thereupon retained jurisdiction over the related antidumping counts under the doctrine of pendent venue. Zenith Radio Corp. v. Matsushita Electric Industrial Co., 402 F.Supp. 262, 328 n. 38 (E.D.Pa.1975). Defendant has chosen to follow the Zenith approach in its brief and the parties have limited their contentions with respect to venue to the proper interpretation of section 22. The court will accordingly decide the venue question raised in this case solely on the basis of section 22.

Before turning to the venue issue, however, the court will address defendant's related contention that the exercise of in personam jurisdiction over the defendant would "offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). It is clear that once it has been determined that a defendant has transacted business in the particular district involved within the meaning of 15 U.S.C. § 22 and is therefore subject to venue under the antitrust laws, his activities qualifying as transacting business under section 22 likewise fully satisfy the constitutional due process test of "minimum contacts," as announced by the United States Supreme Court in International Shoe, and as applied in McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), and in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). See, e. g., Steinway v. Majestic Amusement Co., 179 F.2d 681, 684 (10th Cir. 1949); Zenith Radio Corp. v. Matsushita Electric Industrial Co., 402 F.Supp. 262, 328-29 (E.D.Pa.1975). Thus, the jurisdictional issue hinges upon the determination regarding venue, to-wit: if venue is proper so is in personam jurisdiction; if venue is improper and the action is dismissed as to this defendant on account thereof, the jurisdiction question becomes moot and need not be resolved. Indeed, defendant does not argue the jurisdictional question in its brief other than to quote the "fair play and substantial justice" phrase from International Shoe.

While defendant's motion to dismiss is based not only on lack of personal jurisdiction and improper venue, Rule 12(b)(2) & (3) Fed.R.Civ.P., but as well on insufficiency of process and insufficiency of service of process, Rule 12(b)(4) & (5) Fed.R.Civ.P., defendant does nowhere contend that the manner of service of process had upon it in this case is improper. Service was effected upon defendant's president in Tokyo, Japan by certified air mail with return receipt pursuant to Rule 4(i)(1)(D) Fed.R.Civ.P. 15 U.S.C. § 22 authorizes service upon a corporation "in the district of which it is an inhabitant, or wherever it may be found." Thus, when venue is properly laid in a judicial district under section 22 extraterritorial service of process running from the district where the action was filed to wherever the corporation may be found, including foreign countries, is proper. Zenith Radio Corp. v. Matsushita Electric Industrial Co., 402 F.Supp. 262, 329 (E.D.Pa.1975) and cases cited therein. Thus, in the absence of any allegations of defective service, resolution of the sufficiency of process and service of process question is dependent upon the court's determination with respect to venue. If venue is proper under section 22 so is process; if venue is improper and the action is dismissed as to this defendant on account thereof the process issue becomes moot.

The antitrust venue statute provides:

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. (Emphasis added).

15 U.S.C. § 22. Defendant in support of its motion urges Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925), which holds that a parent corporation cannot be said to be transacting business in a district merely because its wholly owned subsidiary transacts business there and because the two corporations have common officers, unless the court finds that the parent corporation in fact controls and manages the day-to-day business activities of the subsidiary. Defendant also urges O. S. C. Corp. v. Toshiba America, Inc., 491 F.2d 1064 (9th Cir. 1974), Williams v. Canon, Inc., 432 F.Supp. 376 (C.D.Cal.1977), and Weinstein v. Norman M. Morris Corp., 432 F.Supp. 337 (E.D.Mich. 1977).

Plaintiff on the other hand relies on U. S. v. Scophony Corporation of America, 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948), in which the court upheld venue under the antitrust laws (15 U.S.C. § 22) where supervision and control by officers, directors and agents of an English corporation over an affiliated American corporation pursuant to licensing agreements and other elaborate arrangements went far beyond the normal exercise of shareholders' rights. Subsequent cases have relied on Scophony to find venue under section 22 when, having examined the factual record before them, they have concluded that the parent corporation is by its conduct in relation to its subsidiary "transacting business" in the district. Tiger Trash v. Browning-Ferris Industries, Inc., 560 F.2d 818 (7th Cir. 1977), cert. denied, 434 U.S. 1034, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978); Grappone, Inc. v. Subaru of America, Inc., 403 F.Supp. 123 (D.N.H. 1975); Zenith Radio Corp. v. Matsushita Electric Industrial Co., 402 F.Supp. 262 (E.D.Pa.1975); Hitt v. Nissan Motor Co., 399 F.Supp. 838 (S.D.Fla.1975); Call Carl, Inc. v. BP Oil Corp., 391 F.Supp. 367 (D.Md. 1975), cert. denied, No. 77-356, 434 U.S. 923, 98 S.Ct. 400, 54 L.Ed.2d 280 (1977); Flank Oil Co. v. Continental Oil Co., 277 F.Supp. 357 (D.Colo.1967); Waldron v. British Petroleum Co., 149 F.Supp. 830 (S.D.N.Y. 1957).

The key question in each case is: What acts were done by or for the parent corporation in the district? As the Supreme Court put it in Scophony:

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. (Emphasis added.)

333 U.S. at 804, 68 S.Ct. at 860. Having set forth the question to be decided, the court then made a detailed examination of the facts and determined that:

1. Scophony is a British corporation with its principal place of business in London, England. It manufactures and sells television apparatus. Because of the outbreak of the war in 1939 it had to cease its commercial ventures in England. It "sent personnel to the United States, opened an office in New York City, and began demonstrations of its product and other activities preliminary to establishing a manufacturing and selling business in this country." 333 U.S. at 797, 68 S.Ct. at 857.

2. Late in 1941 Scophony was in financial distress because of restrictions imposed by the British government on the export of currency. It needed new capital from American sources. Arthur Levey, a director of Scophony, and one of its founders, undertook negotiations in New York with two companies in the motion picture and television industry. These negotiations culminated in the execution of three interlacing contracts. One was a so-called master agreement and two were supplemental agreements. The alleged Sherman Act violations centered around these agreements. 333 U.S. at 797 and 798, 68 S.Ct. 855.

3. The master agreement was executed by Scophony, a man named William George Elcock, as mortgagee of all of Scophony's assets, and two American companies. The contracts provided for the formation of a new Delaware corporation, American Scophony. The shares were owned by Scophony and by the two American companies. Pursuant to the master and supplemental

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