Sunn Classic Pictures, Inc. v. Budco, Inc.

• Decision Date: 02 October 1979
• Docket Number: Civ. A. No. 79-369.
• Citation: 481 F. Supp. 382
• Parties: SUNN CLASSIC PICTURES, INC. v. BUDCO, INC. v. RAY HACKIE, INC.
• Court: U.S. District Court — Eastern District of Pennsylvania

481 F. Supp. 382

SUNN CLASSIC PICTURES, INC. v. BUDCO, INC. v. RAY HACKIE, INC.

Civ. A. No. 79-369.

United States District Court, E. D. Pennsylvania.

October 2, 1979.

Sheryl L. Auerbach, Philadelphia, Pa., for plaintiff.

Harry Norman Ball, Philadelphia, Pa., for defendant.

Bancroft D. Haviland, Philadelphia, Pa., for third-party defendant.

MEMORANDUM AND ORDER

BECHTLE, District Judge.

Presently before the Court is the motion of third-party defendant Ray Hackie, Inc. ("Hackie"), to dismiss the third-party complaint of Sunn Classic Pictures, Inc. ("Sunn"), for lack of in personam jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). Jurisdiction is based upon diversity of citizenship, 28 U.S.C. § 1332. For all of the following reasons, the motion to dismiss will be denied.

This action concerns a suit by Sunn, a motion picture film distributor incorporated in Delaware, against Budco, Inc. ("Budco"), a film theater chain incorporated in Pennsylvania, for rental fees allegedly due for the exhibition of the motion picture "Beyond and Back" at theaters owned by Budco. Budco responded with a counterclaim against Sunn, alleging injuries suffered due to the alleged failure of Sunn to deliver a complete print of another film "The Lincoln Conspiracy" ("the film") to one of Budco's theaters in Pennsylvania. Sunn contends that Budco's failure to examine the incomplete print of the film, and to discover the inaccuracy, caused the injuries alleged. Subsequently, Sunn timely joined Hackie, a corporation with its principal place of business in Los Angeles, California, as a third-party defendant for any damages Budco might recover against Sunn based on the allegations contained in Budco's counterclaim. Sunn has also filed a counterclaim to Budco's counterclaim, admitting that the print of the film was incomplete but denying liability.

Hackie's factual and legal position in this suit is succinctly stated in its motion, which states:

Hackie is a California corporation which represents independent producers and distributors of motion pictures in the mounting, storage and preparation for delivery of film prints in the Los Angeles and San Francisco areas. Hackie also prepares film prints for shipping and delivers them, so prepared, to its customers. In this case, Hackie dealt with Technicolor, Inc., in California, which employed Hackie to mount and store prints of "The Lincoln Conspiracy" in California and then to deliver them to Comet Freight Systems, the agent for Sunn, in California. Hackie did not duplicate or ship a print of "The Lincoln Conspiracy" to the Southgate Theatre. Hackie only did business in California. Hackie has not done business in Pennsylvania, is not authorized to do business in Pennsylvania, and has never delivered or caused any film prints to be delivered in this state. In short, Hackie has not had any contact with this jurisdiction.

Memorandum in Support of Motion to Dismiss for Lack of In Personam Jurisdiction Over the Third-Party Defendant, at 3.

The precise issue now before this Court is whether the Court has in personam jurisdiction over third-party defendant Hackie under the Pennsylvania long-arm statute, 42 Pa.C.S.A. § 5301 et seq. (Purdon 1978), and whether such statutory jurisdiction is in accordance with the due process minimal contacts requirements of International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and progeny.

Hackie's only contact with the Commonwealth was a letter it received on or about September 23, 1977, from Sunn notifying Hackie that prints of the film "The Lincoln Conspiracy" would be sent to various distribution services, including the Pittsburgh Film Service of McKees Rock, Pennsylvania. See Exhibit A, attached to Plaintiff's Answer to Third-Party Defendant's Motion to Dismiss. The Court finds this contact to be sufficient for the Court to exercise in personam jurisdiction over the third-party defendant under the Pennsylvania long-arm statute and also satisfies the due process requirement of minimal contacts within the forum state.

A. Statutory Requirements

Section 5322(a)(4) of the Pennsylvania long-arm statute states:

(a) General rule. — A tribunal of this Commonwealth may exercise personal jurisdiction over a person (or the personal representative of a deceased individual who would be subject to jurisdiction under this subsection if not deceased) who acts directly or by an agent, as to a cause of action or other matter arising from such person:

* * * * * *

(4) Causing harm or tortious injury in this Commonwealth by an act or omission outside this Commonwealth.

42 Pa.C.S.A. § 5322(a)(4) (Purdon 1978).

In the instant action, the harm caused within the Commonwealth was the receipt of the incomplete print of the film by the Southgate Budco movie theater in Pennsylvania which was mounted and packaged by Hackie. The incompleteness of the print allegedly caused Budco to lose profits and injure its reputation due to its inability to show the scheduled film to the public. The act or omission of the defendant outside the Commonwealth occurred in California where Hackie allegedly failed to properly duplicate and mount on reels the master negative of the film prior to distribution. Therefore, this Court finds that § 5322(a)(4) is directly applicable in the instant action as to third-party defendant Hackie, thereby providing the Court with jurisdiction under the Pennsylvania long-arm statute.

B. Due Process Requirements

Finding statutory jurisdiction, the Court is still faced with the question of whether the substantive due process requirement of minimal contacts, as set forth in International Shoe Co. v. State of Washington, supra, and progeny, is satisfied. If the requisite minimal contacts are shown, that will in turn provide this Court with a second jurisdictional basis under the Pennsylvania long-arm statute through § 5322(b), which provides:

(b) Exercise of full constitutional power over nonresidents. — In addition to the provisions of subsection (a) the jurisdiction of the tribunals of this Commonwealth shall extend to all persons who are not within the scope of section 5301 (relating to persons) to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States.

42 Pa.C.S.A. § 5322(b) (Purdon 1978). See Hicks v. Kawasaki Heavy Industries, 452 F.Supp. 130, 133 (M.D.Pa.1978).

The initial due process requirement under Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), is whether the defendant has purposefully availed itself of the privilege of doing business in the forum state. The test is whether business operations set in motion by a corporation "have a realistic impact on the state's commerce or otherwise were reasonably foreseeable consequences in that state." Johnson, et al. v. Turner v. Newall, Ltd., et al., No. 78-464, slip op. at 4 (E.D. Pa., July 2, 1979). See also Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 382-383 & n.24 (6th Cir. 1968). In the instant action, Hackie, through the September 23, 1977, letter from Sunn, could have reasonably foreseen that its business activities would have an impact on Pennsylvania's commerce.

This is not a situation where goods arrived in Pennsylvania completely fortuitously or business activities involving Pennsylvania were clearly tenuous. See Middle Atlantic States Engr., Inc. v. Camden City Municipal Utilities Authority, 426 F.Supp. 299, 300-301 (E.D.Pa.1977); Kitzinger v. Gimbel Bros., Inc., 240 Pa.Super. 345, 355, 368 A.2d 333 (1976).

As the court in Johnson, supra, stated:

A foreign corporation which knowingly introduces an allegedly dangerous instrumentality into the stream of commerce flowing into Pennsylvania should not be insulated by narrow notions of "doing business" from answering in this state's courts. This is true even if the shipment was made F.O.B. at some point outside the state. See Hicks v. Kawasaki Heavy Industries, supra; Crucible, Inc. v. Stora Kopparbergs Bergslags A.B., 403 F.Supp. 9 (W.D.Pa.1975); Kitzinger v. Gimbel Bros., Inc., 240 Pa.Super. 345, 368 A.2d 333 (1976); Deere v. Zilber, 234 Pa.Super. 273, 338 A.2d 615 (1974).

Slip op. at 4 (footnote omitted).

Hackie knew that the film prints would be distributed in Pennsylvania by the clear notice it received in the September 23, 1977, letter from Sunn. Furthermore, as the court in Snyder v. The Harbor Sales Co., Inc., et al., No. 78-2541 (E.D.Pa., April 18, 1979), held:

. . . the exact commercial linkage may not have been known by the distant seller but, by reason of normalcy of the manner in which the product was to be distributed, it was "reasonable" to expect that the manufacturer would have foreseen that the product would take such a course before it came into the hands of the ultimate purchaser.

Slip op. at 3 (emphasis added).

Finally, Hackie's failure to directly ship or sell the goods itself to a Pennsylvania corporation is unimportant, since indirect shipment of goods into a forum state is sufficient to satisfy the minimal contacts requirement. See Hicks v. Kawasaki Heavy Industries, supra, 452 F.Supp. at 134; Benn v. Linden Crane Co., 370 F.Supp. 1269, 1277 (E.D.Pa.1973); Kitzinger v. Gimbel Bros., Inc., supra, 240 Pa.Super. at 352, 368 A.2d 333.

Hackie refers this Court to the recent Pennsylvania Superior Court decision in Davis v. C & NW Transp. Co., et al., 405 A.2d 959 (1979). In Davis an action was brought against an Illinois independent contractor who had loaded railway cars with automobiles under a contract with Chrysler Corporation. The railway cars were owned and controlled by C & NW Transportation Company. When one of the railway cars arrived in Pennsylvania, plaintiff sustained injuries unloading the railway car which was allegedly defective. The Superior Court held that the defendant had not purposefully...