Thill Securities Corporation v. New York Stock Exchange

Citation283 F. Supp. 239
Decision Date12 April 1968
Docket NumberNo. 63-C-264.,63-C-264.
PartiesTHILL SECURITIES CORPORATION, on its own behalf, and on behalf of all securities brokers and dealers in the United States similarly situated, Plaintiff, v. The NEW YORK STOCK EXCHANGE, Defendant.
CourtUnited States District Courts. 7th Circuit. United States District Court of Eastern District of Wisconsin

COPYRIGHT MATERIAL OMITTED

E. Campion Kersten, Arlo McKinnon, and Lewis D. Thill, Milwaukee, Wis., for plaintiff.

Victor M. Harding and Robert V. Abendroth, Milwaukee, Wis., for defendant; Milbank, Tweed, Hadley & McCloy, New York City, of counsel.

OPINION AND ORDER

REYNOLDS, District Judge:

I. MATTER FOR DECISION

Before this court is a motion by defendant, the New York Stock Exchange, to dismiss this action. The motion raises two issues:

1. Has the defendant been properly served so that this court has acquired jurisdiction over its "person"?

2. If this court does have jurisdiction, is this district the one in which the action should be tried or, to use the conventional terminology, is venue properly laid in this district?

II. FACTS

The plaintiff in this case, Thill Securities Corporation, is a broker-dealer in securities but is not a member of the defendant, the New York Stock Exchange. Plaintiff purports to bring this claim as a class action on behalf of itself and all those similarly situated. See Rule 23, Federal Rules of Civil Procedure. The complaint alleges that defendant violated federal antitrust laws in several respects. It demands treble damages under the Clayton Act, 15 U.S.C. § 15, payable to the whole class, amounting to twenty-one million dollars.

On October 18, 1963, the complaint in this action was filed. It was served on the defendant by delivery to one of its officers at the Exchange's offices, 11 Wall Street, New York City. On December 13, 1963, the pending motion was filed, and the case was assigned to Judge Kenneth P. Grubb of this district. Pursuant to a schedule established by the court, the parties filed briefs and affidavits on the questions raised by the motion. After several communications between court and counsel, the judge advised counsel that he was not disposed to decide these issues on affidavits alone and suggested that they consider using additional discovery procedures to support their respective positions. Since that time, the parties have made extensive use of the discovery devices available under the Federal Rules of Civil Procedure.

After the case had been reassigned to this branch, a status conference was held on October 11, 1966. In 1967 the issues raised by the two pending motions were briefed afresh and are before me on that basis.

III. QUESTION OF JURISDICTION

The first issue raised by the pending motion is whether this court acquired jurisdiction over the New York Stock Exchange when one of the Exchange's officers was served with a summons in New York.1

A. Federal Law

If the New York Stock Exchange were a corporation, resolution of this issue would be comparatively simple. In that event, the court could rely on a provision of the Clayton Act which, after referring to "Any suit, action, or proceeding under the antitrust laws against a corporation," provides that "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. However, it is clear that this section, which is entitled "District in which to sue corporation," applies only to corporations, not to unincorporated associations like the Exchange. E. g. McManus v. Tato, 184 F.Supp. 958 (S.D.N.Y.1959).

In the absence of an applicable federal statute, the second sentence of Rule 4(e) of the Federal Rules of Civil Procedure guides federal district courts:

"* * * Whenever a statute * * * of the state in which the district court is held provides * * * for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state, * * * service may * * * be made under the circumstances and in the manner prescribed in the statute or rule."

In effect, the Rule directs this court to look to the laws of Wisconsin in resolving questions concerning extraterritorial service of process. 2 Moore, Federal Practice, Par. 4.322, at 1232 (2d ed. 1967).2

B. State Law

Section 262.06(7) of the Wisconsin Statutes provides for a manner of serving process on unincorporated associations identical to the one employed by plaintiff in this case which is applicable "where the claim sued upon arises out of or relates to association activities within this state sufficient to subject a defendant to personal jurisdiction under s. 262.05(2) to (10)." Thus, § 262.06(7) points to § 262.05(2) to (10) as the governing provisions for determining when a Wisconsin court has acquired jurisdiction over an unincorporated association by extraterritorial service of process.

Section 262.05 of the Wisconsin Statutes is entitled "Personal jurisdiction, grounds for generally." Of the subsections of § 262.05, several are arguably applicable.3 However, the one most closely in point seems to be subsection (4) of § 262.05 which provides for the acquisition of jurisdiction over a defendant

"In any action claiming injury to person or property within this state arising out of an act or omission outside this state by the defendant, provided in addition that at the time of the injury either:
"(a) Solicitation or service activities were carried on within this state by or on behalf of the defendant; or
"(b) Products, materials or things processed, serviced or manufactured by the defendant were used or consumed within this state in the ordinary course of trade."

In this case, plaintiff, a Wisconsin corporation, alleges "injury" to its "property"; namely, its business, "within this state," arising out of "act(s)" or "omission(s)" by defendant. Clearly, little else is required, though few cases in point have arisen under the post-1960 version of § 262.05 which is involved here. See Sun-X Glass Tinting of Mid-Wisconsin, Inc. v. Sun-X International, Inc., 227 F. Supp. 365 (W.D.Wis.1964); cf. Wisconsin Metal & Chemical Corporation v. DeZurik Corporation, 222 F.Supp. 119 (E.D.Wis.1963); but see Travelers Insurance Company v. George McArthur & Sons, 25 Wis.2d 197, 130 N.W.2d 852 (1964).

In this situation, the official "Revision Notes" for § 262.05(4), prepared by Professor G. W. Foster, Jr., of the University of Wisconsin Law School who served as reporter for the Wisconsin Judicial Council in the preparation of the revised Chapter 262, furnish perhaps the best guidance to the meaning of that provision. The "Revision Notes" for § 262.05(4) state:

"Three jurisdictional facts are required by this subsection: (i) an act or omission outside the state by the defendant or his agent; (ii) an injury to person or property within the state which is claimed to arise out of the foreign act or omission; and (iii) some additional contact, not necessarily related to the injury sued on, which links the defendant to the state. * * *
"The jurisdictional facts required by this subsection call for proof of two contacts between the defendant and the state: (i) the occurrence in the state of the injury which the defendant is claimed to have caused; and (ii) some additional contact not necessarily related to that injury. * * *
* * * * * *
"If the occurrence in the state of the injury sued on is not a sufficient contact, very little more by way of additional contact is required for the exercise of personal jurisdiction in these cases. This concept that personal jurisdiction may be grounded on the contacts made up of the local injury plus something more (often very little more) has grown recently and rapidly out of the older `doing business' concept.
* * * * * *
"In recent cases involving injury sustained in the state as a result of an act done elsewhere, reliance has been placed on various types of added contacts to sustain jurisdiction. These contacts have included solicitation of business, servicing equipment within the state and, in some cases, little more than the fact that the defendant enjoyed pecuniary benefit from the efforts of others in the state who sold goods manufactured by the defendant. Sub. (4) relies on such added contacts as those just stated to furnish a basis for jurisdiction in cases where a local injury arises out of some foreign act. * * *"

It would surely surprise the informed layman to be told that no "solicitation or service activities" are carried on in Wisconsin "by or on behalf of" the New York Stock Exchange, or that no "products, materials, or things processed, serviced, or manufactured" by the Exchange "were used or consumed" in Wisconsin "in the ordinary course of trade." In fact, evidence presented to this court indicates clearly that the Exchange does carry on "solicitation and service activities" in Wisconsin, does service materials used in Wisconsin, and does have contacts with Wisconsin sufficient to satisfy the very slight requirements for "jurisdictional grounds" under Wisconsin law. (See pp. 246-248 of this opinion.) Since these contacts must be related in detail in the next section of this opinion, it is unnecessary to discuss them here. For the moment, it is sufficient to say simply that this court concludes that the defendant Exchange has been validly served and is subject to the jurisdiction of this court.

IV. QUESTION OF VENUE

The second issue raised by the pending motion is whether venue in a treble damage action by a Wisconsin plaintiff against the New York Stock Exchange is properly laid in this district.

Section 4 of the Clayton Act, 15 U.S.C. § 15, governs venue in treble damage actions under the antitrust laws against unincorporated associations. E.g. Noerr Motor Freight Inc. v. Eastern R.R. Presidents Conference, 113 F.Supp. 737 (E.D.Pa.1953). According to this statute, venue lies in a district "in which the defendant resides or is found or has an agent * * *." 15 U.S.C. § 15. It is agreed that the New...

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