Washington v. Norton Mfg., Inc.

• Decision Date: 24 January 1979
• Docket Number: No. 78-2404,78-2404
• Citation: 588 F.2d 441
• Parties: Lawrence WASHINGTON, Plaintiff-Appellant, v. NORTON MANUFACTURING, INC., Defendant-Appellee, ABC Corporation, Defendant. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 441

588 F.2d 441

Lawrence WASHINGTON, Plaintiff-Appellant, v. NORTON MANUFACTURING, INC., Defendant-Appellee ABC Corporation, Defendant.

No. 78-2404

Summary Calendar. ^*

United States Court of Appeals, Fifth Circuit.

Jan. 24, 1979.

Louis R. Koerner, Jr., Terry A. Bell, New Orleans, La., for plaintiff-appellant.

Daniel, Coker, Horton, Bell & Dukes, Forrest W. Stringfellow, Gulfport, Miss., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before BROWN, Chief Judge, and COLEMAN and VANCE, Circuit Judges.

COLEMAN, Circuit Judge.

This case involves (1) the validity of a service of process upon the defendant corporation's sole resident Mississippi employee and (2) whether the District Court had jurisdiction over the defendant on the ground that the corporation was "doing business" within the State of Mississippi.

The facts of the case, insofar as they are relevant to the issues presented, may be briefly recited. Plaintiff Washington is a Louisiana resident and citizen. He worked for some five years for Avondale Shipyards, Inc. as the operator of a grinding or sanding machine, which was equipped with grinding stones or wheels assertedly manufactured by the defendant. Apparently as a result of constant inhalation of dust particles at work, Washington became permanently disabled. Basing his suit upon diversity of citizenship, ¹ he sued Norton Company (Norton) ² in the Southern District of Mississippi to recover damages allegedly caused by the defendant's negligence.

In February 1978, after the Court had quashed two earlier attempts to serve process, and some seventeen months after the plaintiff filed suit, Washington learned that Norton had a sales representative residing in Mississippi. He then attempted to serve process on that representative, Donald W. Churchill. Washington then gave notice to take the deposition of Churchill. He also filed interrogatories to discover facts relevant to the issue of the Court's jurisdiction over Norton. Norton promptly moved for a protective order on the grounds that deposing Churchill would unduly prejudice and burden the company. At an expedited hearing, the District Judge quashed the service of process on Norton, through Churchill, but it granted Washington an additional thirty days to again attempt service of process in a lawful manner, provided $500 was paid to defendant's counsel as a sanction. The order further directed that the complaint would be dismissed if the sanctions were not paid. Washington did not pay the sanctions, and he appealed before the expiration of the thirty days. ³

Washington's principal complaint on appeal is that the District Judge abused his discretion by not allowing adequate discovery on the threshold issue of In personam jurisdiction. It is clear that, in a proper case, the District Judge has broad discretion to allow discovery on jurisdictional issues, See 8 C. Wright & A. Miller, Federal Practice and Procedure § 2009 (1970); and the judge may determine these issues by receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery.

In this case, the trial judge determined that the issue of In personam jurisdiction over Norton could be decided upon affidavits and an oral hearing. Those affidavits revealed the following facts. Churchill, a sales representative, is the sole employee of Norton residing in Mississippi. Churchill moved to Mississippi on October 1, 1976. Prior to that time Norton had no employees in the state. The Norton Company has no separate offices in the state, and Churchill operates from an office in his own home. He is neither a managing agent nor a corporate officer, and Norton has not authorized him to make any charges to the company. He is not authorized to negotiate contracts, and he has not been appointed as an agent to receive service of process. There are no exclusive distributors for Norton products in Mississippi, but there are some distributors who handle Norton products as well as other lines. Churchill does not write orders for Norton, but the other distributors normally place orders with the company at locations in Massachusetts and North Carolina. Norton does not manufacture any grinding wheels in Mississippi, nor has it ever in the past. The company has no place of business in the state, nor does it have a company telephone number or bank account. It keeps no corporate records in the state, owns no property in the state, and has never paid any taxes to the state.

Service of process is a mechanism for bringing notice of the commencement of an action to defendant's attention and to provide a ritual that marks the court's assertion of jurisdiction over the lawsuit. In the federal courts, the standards governing the validity of service of process are contained in Rule 4 of the Federal Rules of Civil Procedure. In this case, service could have been accomplished in accordance with Rule 4(d)(3) ⁴ or 4(d)(7). ⁵ Therefore, if Washington served process upon "an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process," Fed.R.Civ.P. 4(d)(3), that service of process would have been sufficient to give Norton notice of the initiation of the litigation. Federal, not state, standards define who such agents are; See 4 C. Wright & A. Miller, Federal Practice and Procedure § 1103; Cf. National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964) (use of federal standard to determine whether agent had been appointed to receive service of process under Rule 4(d)(1)); but it should be noted that a valid service of process does not necessarily confer In personam jurisdiction over a defendant in a federal district court. In a diversity case, the federal court is bound by state law concerning the amenability of a person or a corporation to suit, so long as state law does not exceed the limitations imposed by the Due Process Clause of the Fourteenth Amendment. See, e. g., Wilkerson v. Fortuna Corp., 5 Cir. 1977, 554 F.2d 745; Walker v. Savell, 5 Cir. 1964, 335 F.2d 536; 4 C. Wright & A. Miller, Federal Practice and Procedure § 1075 (1969). States are not required to assert jurisdiction to the extent permitted by the Due Process Clause if they do not choose to do so, Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), and Mississippi has not chosen to extend its jurisdiction to the limits permitted by the Constitution.

Washington's initial effort to obtain jurisdiction over Norton failed because the Mississippi "long arm" statute ⁶ cannot be invoked by a non-resident plaintiff to establish jurisdiction over a corporation which is merely "doing business" within Mississippi. We have recently considered this statute at length and have upheld it against constitutional attack. Breeland v. Hide-A-Way Lake, Inc., 5 Cir., 585 F.2d 716 (1978). After his first effort to serve process failed, Washington tried to serve process on a Norton employee in Louisiana. The trial judge properly found no federal or state authority for such a procedure and correctly quashed that service of process. Finally, Washington served process on Churchill, who was Norton's only employee then resident in the State of Mississippi, asserting that Norton is amenable to suit in the state courts (and hence in the federal courts because of diverse citizenship) under the Mississippi "doing business" statute, which provides:

Any corporation claiming existence under the laws of any other state or of any other country foreign to the United States, found doing business in this state, shall be subject to suit here to the same extent that corporations of this state are, whether the cause of action accrued in this state or not.

Miss.Code Ann. § 79-1-27 (1972).

This statute also has a counterpart which controls the service of process in the state courts. ⁷ As we have seen, however, the plaintiff need follow this state procedure only if he cannot find an employee of Norton who fulfills the requirements of Rule 4(d)(3).

This case might well go off on whether Churchill was a "general agent" within the meaning of Rule 4(d)(3). Since, however, the judgment of the District Court must be affirmed for lack of jurisdiction over Norton, we need not pause to decide the "general agent" point.

Shortly after the Marshal's return of service, Norton appeared and contested the validity of the service of process, as well as personal jurisdiction. Specifically, Norton stated that it was not "doing business" within the state and was not subject to suit there. Norton has pressed this issue at every step of the litigation and has certainly not waived the defense of lack of jurisdiction over the person. See Fed.R.Civ.P. 12(h). Therefore, having passed up the validity of the service of process, we take up the issue of whether Norton was "doing business" within the state. If it was not "doing business", as that term has been defined by the Mississippi Supreme Court, the trial court properly dismissed the complaint. If there is some doubt, more discovery would have been in order. We are convinced that the issue was not in doubt and that Norton was not "doing business" within Mississippi.

In contrast to the relatively plentiful authority construing the Mississippi long arm statute, ⁸ there is a dearth of precedent on the doing business statute. It appears, however, that the Mississippi Supreme Court would construe the "doing business" provisions of two statutes, §§ 13-3-57 and 79-1-27, in the same manner. In a very recent case, the State Supreme Court upheld a chancery court ruling that it had obtained jurisdiction over a nonresident corporation under the long arm statute because the corporation was "doing business" within the state, even though the tort had been committed in Louisiana. Arrow Food Distributors, Inc. v. Love...