Weinstein v. Norman M. Morris Corp.
| Decision Date | 24 March 1977 |
| Docket Number | Civ. A. No. 76-71791. |
| Parties | Hyman WEINSTEIN, d/b/a Bright Star Enterprise, an Individual, Plaintiff, v. NORMAN M. MORRIS CORPORATION, a New York Corporation, Omega Louis Brandt Et Frere S.A. and Societe Suisse Pour L'Industrie Horlogere Management Services, S.A., Confederation of Switzerland Corporation, Defendants. |
| Court | U.S. District Court — Western District of Michigan |
A. Stewart Kerr, Kerr, Wattles & Russell, Detroit, Mich., for plaintiff.
Michael B. Lewiston, Bodman, Longley, Bogle & Dahling, George E. Ward, Travis, Warren, Nayer & Burgoyne, Detroit, Mich., for defendants.
Defendants Omega Louis Brandt Et Frere S.A. and Societe Suisse Pour L'Industrie Horlogere Management Services S.A., hereinafter referred to as "Omega" and "S.S.I.H." have moved to dismiss the complaint against them pursuant to Federal Rule of Civil Procedure 12(b)(2) and (5), claiming lack of personal jurisdiction. The motion asserts these defendants' absence of contacts with the Eastern District of Michigan and the State of Michigan; it is supported by affidavits of Gerard Mandelbaum, the defendants' general counsel in the United States.1
The plaintiff relies on three bases in asserting that the Swiss defendants are within the reach of personal jurisdiction of this Court.
First, the plaintiff contends that 28 U.S.C. Sec. 1391(d) provides authority for the exertion of personal jurisdiction over the Swiss defendants. This section provides:
An alien may be sued in any district.
Section 1391(d), as its title indicates, is a venue statute and not a statute creating personal jurisdiction in federal district courts. The effect of Sec. 1391(d) is to permit a resident plaintiff to bring an action against an alien in any district where valid service can be made upon the alien. See Olin Mathieson Chemical Corp. v. Molins Organizations, Limited, 261 F.Supp. 436, 441, 442 (E.D.Va.1966), (action by American patent holder against English manufacturer for infringement, service of process valid under Virginia long-arm statute; alien corporation found to have sufficient contacts with Virginia to permit personal jurisdiction); Seilon, Inc. v. Brema S.P.A., 271 F.Supp. 516 (N.D.Ohio, 1967), (action by an American corporation against three Italian corporations for breach of contract; sufficient contact with Ohio found to validate service of process made under the Ohio long-arm statute). The alien corporation must, however, have sufficient minimum contacts with the forum to satisfy due process requirements. Seilon, Inc. v. Brema S.P.A., 271 F.Supp. at 520; Olin Mathieson Chemical Corp. v. Molins Organizations, Limited, 261 F.Supp. at 442.
The plaintiff contends that the decision of the United States Supreme Court in Brunette Machine Works v. Kockum Industries, 406 U.S. 706, 92 S.Ct. 1936, 32 L.Ed.2d 428 (1972) supports plaintiff's position that Sec. 1391(d) provides a basis for this Court's exercise of personal jurisdiction over the Swiss defendants. In Brunette, an Alabama corporation doing business in Oregon brought an action for patent infringement against a Canadian corporation in an Oregon federal district court. The Canadian defendant moved for dismissal because of improper venue under 28 U.S.C. Sec. 1400(b), which limits civil actions for patent infringement to districts where (1) the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business.
Brunette is, however, clearly distinguishable and inapplicable to the issues in the instant case. Valid service of process had been obtained in that case pursuant to the State of Oregon's long-arm statute. 406 U.S. at 707, 92 S.Ct. 1936. Thus, the issue before the Court in Brunette was the propriety of venue in a suit involving an alien where valid service of process could be effected in the forum. The holding of the Court was not that Sec. 1391(d) authorized personal jurisdiction over aliens by any district court, but rather that venue would be proper in any district where valid service of process (pursuant to a state long-arm or a federal jurisdictional statute) could be effected on the alien. Thus, Brunette in no way involved personal jurisdiction, but rather proper venue, once valid service had been made.
The plaintiff also relies on Scriptomatic, Inc. v. Agfa-Gevaert, Inc., 1973-1 Trade Cas. Paragraph 94,594 (S.D.N.Y.1973). In Scriptomatic, a Danish corporation was joined as a defendant in a suit by an American corporation for damages resulting from the defendants' alleged violations of the Clayton Act. The Danish corporation, Eskofot, was the manufacturer of offset platemaking devices which were distributed in the United States by another defendant, Agfa-Gevaert, a New York corporation. The plaintiff was engaged in the manufacture of competing offset platemaking devices and had been a national distributor of Agfa's offset platemaking supplies. In 1972, plaintiff Scriptomatic's national distributorship of Agfa supplies was terminated. Scriptomatic alleged that the termination was the culmination of a conspiracy by the defendants to monopolize the offset duplicating equipment and supplies market in the United States. Eskofot moved for dismissal on the basis of lack of personal jurisdiction. In its motion, Eskofot conceded that "if this court finds jurisdiction over its person, venue is proper as to Eskofot as an alien within the meaning of 28 U.S.C. Sec. 1391(d)." 1973 Trade Cas. at p. 94,632.
The issue before the Court in Scriptomatic was the validity of service to exert personal jurisdiction over the Danish defendant. 1973-1 Trade Cas. at p. 94,633. The Court recognized that Fifth Amendment due process principles governed its decision:
. . . Personal jurisdiction over Eskofot may be asserted in this action for alleged violations of Sections 1 and 2 of the Sherman Act "to but, of course, not beyond the bounds permitted by the due process clause of the Fifth Amendment" citing Leasco Data Processing Equipment Corporation v. Maxwell, 468 F.2d 1326, 2d Cir. 1972). The Court must therefore inquire whether the moving defendants have "certain minimum contacts with this forum, such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice'." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). 1973-1 Trade Cas. at p. 94,633.
The Court in Scriptomatic then discussed Eskofot's activities and contacts with the United States. Eskofot had sold over $1,000,000 worth of its products in the United States, was extremely "close" in terms of contractual relationship with its American distributor so as to suggest substantial control over the operation of the American corporation, and had, through phone conversations to the United States, attempted to "transact business" with the plaintiff in the United States and when this was not successful, allegedly threatened the plaintiff with legal action. 1973-1 Trade Cas. pp. 94,634, 94,635. The court then applied an aggregate contacts test, aggregating all of Eskofot's contacts with the United States and found them sufficient to meet minimum due process requirements. After considering these contacts with the United States, that court stated:
The court holds that the evidence before the court establishes sufficient contacts of Eskofot with the United States to make it entirely reasonable for the court to assert personal jurisdiction over Eskofot with respect to the federal antitrust and patent claims made by Scriptomatic against it. 1973-1 Trade Cas. p. 94,635.
The basis of the aggregate contacts test, the court reasoned, is that where an alien corporation "transacts business" (within the meaning of 15 U.S.C. Sec. 22) within the United States, its contacts with the United States as a whole should be the basis of the due process test of personal jurisdiction. The court held that if an alien corporation has sufficient minimum contacts with the United States as a whole, it follows that an alien may be sued in any district in which it has a contact under the venue provisions of Sec. 1391(d). Scriptomatic applies a "federal contacts" due process test, rather than a "forum contacts" due process test. However, there was at least some contact with the forum. Defendants' affidavits establish that the Swiss defendants have no contacts with the forum. Further, they establish that defendants have no contacts in any State in the United States which in the aggregate could meet due process requirements.
The second basis upon which plaintiff asserts the validity of the service of process is that the Swiss defendants are "transacting business" within this District and that service is valid under 15 U.S.C. Sec. 22. Plaintiff claims the following activities of the Swiss defendants meet the "transacting business" test:
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