Sporting Goods Distributors, Inc. v. Whitney

• Decision Date: 11 August 1980
• Docket Number: No. 79-0029.,79-0029.
• Citation: 498 F. Supp. 1088
• Parties: SPORTING GOODS DISTRIBUTORS, INC., an Alabama Corporation, Plaintiff, v. James WHITNEY, Defendant.
• Court: U.S. District Court — Northern District of Florida

498 F. Supp. 1088

SPORTING GOODS DISTRIBUTORS, INC., an Alabama Corporation, Plaintiff, v. James WHITNEY, Defendant.

No. 79-0029.

United States District Court, N. D. Florida, Gainesville Division.

August 11, 1980.

Timothy M. Grogan, Michael Gillion, Mobile, Ala., for plaintiff.

Nancy E. Yenser, Gainesville, Fla., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

HIGBY, District Judge.

Sporting Goods seeks to enforce an Alabama judgment against Whitney, to recover money allegedly advanced to Whitney pursuant to an employment contract, and to recover the value of goods Whitney allegedly kept when his employment with Sporting Goods terminated. Theories advanced are breach of contract, that the money and goods are due on account, that they were a loan, and that keeping the goods was a conversion. In addition to asking for payment of the money due and the goods' value, Sporting Goods in its conversion count seeks punitive damages. The citizenship of the parties is diverse, and over $10,000.00 is in dispute. The court has jurisdiction. 28 U.S.C. § 1332(a). The parties have stipulated that all causes of action are governed by Florida law, except the judgment enforcement action which is ruled by Alabama jurisprudence. There are two major disputes between the parties. They disagree upon the terms of their oral agreement. And they disagree upon the validity of the Alabama judgment.

FINDINGS OF FACT

James Whitney worked as a salesman for Sporting Goods Distributors, Inc., from December of 1975 through April of 1978. He met Sporting Goods' representative Logan Sharpless in Zephyrhills, Florida. In Zephyrhills the two men negotiated an oral contract of employment. Whitney agreed to sell Sporting Goods' products in south and central Florida and to help collect accounts he sold. He was to pay his own expenses. In exchange for Whitney's services, Sporting Goods agreed to pay Whitney a commission on all sales made and collected. The percentage ranged fifteen percent on regularly priced merchandise to three percent on sale merchandise to two percent on guns. Freight costs and discounts were deducted from prices before the commission was figured. The agreement was strictly for recompense by commission. Sporting Goods did not agree to provide Mr. Whitney a salary, expenses or any other remuneration. It did, however, allow Mr. Whitney to make draws against his anticipated commissions. The draws were in effect loans against commissions to be paid. Mr. Whitney chose to receive a $200.00 a week draw.

Mr. Whitney functioned essentially as a conduit for Sporting Goods. He received orders from customers and forwarded the orders to Sporting Goods. Except for rare instances of unusual merchandise, Sporting Goods in turn shipped the merchandise directly to the consumer. If necessary, Mr. Whitney sometimes collected the accounts. But customers usually paid Sporting Goods direct.

Some items were too small or too bulky for Sporting Goods to profitably ship to its customers. These items Sporting Goods sent Whitney, who, in turn, delivered them to the customers. When the relationship ended in April of 1978, Mr. Whitney had some of this merchandise. He also had merchandise which had been shipped to him for use as samples in his selling. Whitney was willing to return the merchandise but did not because he could not obtain a receipt before or at the exact time of return. His overly cautious position was due to distrust of his former employer.

The parties agree the relationship ended in April, 1978. At that time Mr. Whitney owed Sporting Goods $9,218.57 in draws which had not been paid by commissions earned. Between April, 1978, and the date of the trial in this matter, collections were made on accounts Mr. Whitney sold. Those collections entitled him to commissions of $219.73, reducing Whitney's obligation to Sporting Goods for draws to $8,998.84. In April, 1978, Whitney had $2,797.29 worth of Sporting Goods' property in the form of samples, items he held for delivery, and some returns. By the time of trial, he had returned all but $722.45 worth of the property. At the trial's close, Mr. Whitney returned $68.95 more worth of the property, leaving unaccounted for only $653.50 worth.

Sporting Goods was and is an Alabama corporation headquartered in Mobile, Alabama. Mr. Whitney was and is a Florida citizen. During his employment with Sporting Goods Mr. Whitney traveled only twice to the corporation's Mobile headquarters. The trips were for instruction, merchandise inspection, and to pick up samples. All were instigated by Sporting Goods. All his other dealings with Sporting Goods, such as forwarding orders, were through the mails or by telephone.

Before bringing this action Sporting Goods sued Whitney in the Circuit Court of Mobile County, Alabama. Mr. Whitney was served a copy of the complaint, pursuant to the Alabama Rules of Civil Procedure, by certified mail. Mr. Whitney received the complaint but did not respond because he thought service was not effective unless made by a law enforcement officer. Eventually on January 30, 1979, the Alabama Circuit Court entered a default judgment for Sporting Goods against Whitney. The judgment awarded $12,015.86 under Count III which sought to recover the commissions and property discussed earlier. Under Count V, which sought damages for conversion of the property, the court awarded $25,000.00 in punitive damages.

CONCLUSIONS OF LAW

Sporting Goods' first cause of action seeks to enforce its Alabama default judgment against Whitney. Whitney's defense alleges Alabama's exercise of jurisdiction over him denied him the Due Process guaranteed by the Fourteenth Amendment to the United States Constitution. Whitney was served pursuant to Alabama Rule of Civil Procedure 4.2(a)(2). The rule specifically allows service of process upon any nonresident defendant when that person has had sufficient contacts with Alabama such that service of process upon him would be constitutionally permissible. Service under the statute is as far-reaching as due process permits. Semo Aviation, Inc. v. Southeastern Airways Corp., 360 So.2d 936 (Ala.1978). So the only issue in this attack upon Alabama's jurisdiction over Mr. Whitney is the "federal question of whether subjection of a nonresident . . . to the jurisdiction of Alabama courts comports with federal due process." DeSotacho, Inc. v. Valnit Industries, Inc., 350 So.2d 447, 449 (Ala.1977).

The basic test for determining the constitutionality of a state court's exercise of its jurisdiction over an unwilling nonresident defendant is whether the defendant's contacts with the forum state are such that requiring the defendant to defend a particular suit in the forum state would be reasonable. Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977); International Shoe Company v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Exercise of jurisdiction is constitutional if the defendant has had minimum contacts with the forum state such that exercise of jurisdiction would not offend traditional notions of fair play and substantial justice. Mann v. Frank Hrubetz & Co., Inc., 361 So.2d 1021 (Ala.1978). "The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, 1298 (1958). See also, Kulko v. California Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978); Product Promotions, Inc. v. Cousteau, 495 F.2d 483 (5th Cir. 1974); Lakeside Bridge and Steel Co. v. Mountain State Construction Co., Inc., 597 F.2d 596 (7th Cir. 1979).

Five basic factors should be considered. They are: (1) the nature and quality of the defendant's contacts with the forum state, (2) the quantity of the contacts, (3) the relationship of the cause of action to the contacts, (4) the interests of the forum state in providing the tribunal which resolves the dispute, and (5) the convenience of the...