Wilshire Oil Company of Texas v. Riffe
| Decision Date | 15 April 1969 |
| Docket Number | No. 35-68.,35-68. |
| Parties | WILSHIRE OIL COMPANY OF TEXAS, Appellant, v. L. E. RIFFE, O. Homer Riffe and Thomas J. Masterson, Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Robert J. Woolsey, of Farmer, Woolsey, Flippo & Bailey, Tulsa, Okl. (Harry W. Colmery, of Colmery, Davis, Bennett, Leonard & McClure, Topeka, Kan., on the brief), for appellant.
John E. Shamberg, Kansas City, Kan., James R. Eagleton, Tulsa, Okl. (Charles S. Schnider and Jacob F. May, Jr., Kansas City, Kan., on the brief), for appellees O. Homer and L. E. Riffe.
Leo L. McCormick, of Downey, Sullivan, McCormick & Fitzgerald, Kansas City, Mo. (Larry Austin, of Wallace & Saunders, Overland Park, Kan., on the brief), for appellee Thomas J. Masterson.
Before MURRAH, Chief Judge, and HILL and SETH, United States Circuit Judges.
This action for damages was filed in the United States District Court for the District of Kansas by the appellant, Wilshire Oil Company of Texas, a Delaware corporation, against its former employees, L. E. Riffe and O. Homer Riffe, citizens of Oklahoma, and Thomas J. Masterson, a citizen of Kansas. The appellant seeks to recover certain fines, penalties and other expenditures it has incurred or will incur as the result of its involvement in various state and federal antitrust violations.
Jurisdiction being based upon diversity, and process having been served upon the Riffes in Oklahoma, their motion to dismiss the complaint for lack of personal jurisdiction was sustained because of the failure to meet the requirements of the Kansas long-arm statute.1 A similar motion to dismiss as to Masterson was granted on the ground that the complaint failed to state a claim i. e., antitrust fines and penalties cannot be recouped by a corporate violator from its employees. This appeal challenges the propriety of those rulings.
As the result of a merger consummated on December 31, 1960, Wilshire obtained the Riffe Petroleum Company, an Oklahoma corporation formerly owned by its president, L. E. Riffe.2 Following the merger, the corporation became an unincorporated division of Wilshire with its management and employees continuing essentially as before. L. E. Riffe, having become a vice president and director of Wilshire, was placed in charge of the new division. Thomas Masterson and Homer Riffe, brother of L. E. Riffe, continued in their capacity as asphalt salesmen in the States of Kansas and Missouri, respectively.
Thereafter, and pursuant to indictments returned in the federal district courts of Missouri and Kansas, Wilshire was charged with violating the federal antitrust laws in that from December 31, 1960, until about August 9, 1963, its Riffe Division conspired to fix the price of asphalt sold to the States of Kansas and Missouri. Wilshire pleaded nolo contendere in the Missouri court and was tried and convicted in the Kansas district court. In addition, a civil action by the State of Missouri involving the same conduct was settled out of court and a similar civil suit brought by the State of Kansas is still pending.
Wilshire contends that its payment of, and contingent liability for the payment of, certain sums as criminal fines, civil damages, settlements, expenses and attorneys' fees in the aforementioned suits, is due solely to the unauthorized activity of the three appellees and that it is therefore entitled to recover from them all of the amounts it has expended or may be required to expend as a result of their "faithless conduct."3 To this end it was alleged in counts one and two of the complaint that all three appellees participated in the Missouri conspiracy and were thus liable for the expenses absorbed by Wilshire in connection with the civil and criminal litigation in that state. As to the fines and other sums expended with regard to the Kansas conspiracy, counts three, four and five sought indemnification from Masterson and L. E. Riffe but did not seek to recover from Homer Riffe.
The first issue presented for our consideration requires a review of the trial court's determination that it lacked in personam jurisdiction over the Riffes because they did not have sufficient contacts with the forum state to satisfy the Kansas long-arm statute. It is conceded that the only basis for personal jurisdiction is the long-arm statute which provides, in pertinent part, for service of process upon nonresidents who transact "any business," commit "a tortious act," or own, use or possess "any real estate" within the state.4 The statute further provides that in suits in which jurisdiction is based thereon, "only causes of action arising from acts enumerated therein may be asserted against a defendant * * *." Accordingly, any attempt to ascertain the applicability of the statute must necessarily resolve two questions: (1) did the defendant transact any business, commit a tortious act, or own, use or possess any realty within the state; and (2) does the cause of action that is the basis of the suit arise from the performance of any of those activities? National Bank of America at Salina v. Calhoun, 253 F.Supp. 346, 349 (D.Kan.1966).
In answering the first of these two questions, the "minimum contacts test" of International Shoe and its progeny5 come to the fore. This is a result of the fact that even though International Shoe was concerned with whether nonresident personal service satisfied the requirements of due process, "`essentially the same factors which enter into a determination that * * * the long-arm statute authorizes the exercise of jurisdiction are involved in deciding whether the exercise of jurisdiction is constitutionally valid.'" Woodring v. Hall, 200 Kan. 597, 438 P.2d 135, 141 (1968). Hence, "it is essential in each case that there be some act by which the defendant purposefully avails itself 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 (1958).
It was demonstrated on the basis of the uncontradicted allegations in the complaint, certain affidavits, and other documents submitted on the question of jurisdiction,6 that the Riffes conducted the following activities within the forum state. Homer Riffe, in his capacity as an employee of Wilshire, attended maintenance lettings in Topeka, Kansas, during the year 1962, and as an officer of Riffe Petroleum Company (not to be confused with the Riffe Division of Wilshire), submitted a signed bid form to the State of Kansas in 1964. L. E. Riffe signed several bid forms submitted to the State of Kansas between the years 1962 and 1967. Some of the forms were executed by him in his capacity as an officer of Wilshire, while others were submitted on behalf of a corporation organized in September, 1963, to wit: the Riffe Petroleum Company. L. E. Riffe also owned an interest in the Reserve Pipe Line Company which transported oil to the Century Refining Company which, in turn, was the Kansas manufacturer of the asphalt Wilshire sold in that state. Finally, L. E. Riffe loaned a substantial sum of money to Thomas Masterson. This money was purportedly used to finance the latter's conspiratorial acts in the State of Missouri.
The foregoing activities were, for the most part, conducted by Homer Riffe and L. E. Riffe in their capacity as agents and employees of Wilshire. This led the district court to conclude that these agents, in performing these acts for their corporate principal, did not thereby render themselves personally amenable to service of process under the Kansas statute, i.e., they were not individually transacting business in Kansas in the sense specified in the statute. The court found with respect to the other alleged minimum contacts, that the contacts either did not take place within the forum, or if they did, they did not give rise to the cause of action asserted. We agree with this conclusion of the district court.
When Homer Riffe attended the maintenance lettings7 in Kansas, he was there merely to represent his employer. There has been nothing to indicate that his attendance at those meetings related to Wilshire's cause of action against him for his participation in the Missouri price-fixing conspiracy. Admittedly, the Kansas maintenance lettings may have been indicative of conspiratorial activity in Kansas. Wilshire has not, however, sought to charge Homer Riffe with liability for its Kansas expenditures. We therefore conclude that the cause of action against Homer Riffe did not arise out of these contacts which cannot provide a basis for the exercise of personal jurisdiction.
With regard to the 1964 bid signed by Homer Riffe as an officer of Riffe Petroleum Company, it is difficult to envision the relationship of that act to Wilshire's claim which is based upon activity occurring during the years 1961 through 1963. Additionally, there has been no showing that Wilshire was in any way involved with this bid submitted by the Riffe Petroleum Company. Furthermore, the signing of the bid form, and for that matter the attendance at the various maintenance lettings, were the acts of Homer Riffe as a corporate employee. As such they were not his personal acts and seemingly cannot constitute the transaction of business by Homer Riffe as an individual.8 Yet introduction of the fact that it is alleged that the acts were perpetrated in violation of the agent's fiduciary duty, militates against the utilization of this fiduciary shield.9 In any event, it is clear that Wilshire has failed to prove a sufficient nexus between the submission of the bid and its claim against Homer Riffe. Consequently, the district court correctly declined to exercise in personam jurisdiction over Homer Riffe.
As to the appellee, L. E. Riffe, it was shown that he owns, in his individual capacity, an interest in a pipeline company which operates within Kansas.10 This pipeline transported...
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