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D ock e t 97-3335

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. e du/thir dc ir c uit_1998/153Filed July 9, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 97-3335 & 97-3344

PENNZOIL PRODUCTS COMPANY,

Appellant,

v.

COLELLI & ASSOCIATES, INC.; PYRAMID TREATING INC; T.O.P. PRODUCTION & OILFIELD SERVICES INC.; COLELLI OIL WELL SERVICES INC.; CHEMICAL SOLVENTS, INC.

PYRAMID TREATING INC.;

T.O.P. PRODUCTION & OILFIELD
SERVICES, INC. CHEMICAL SOLVENTS, INC.,

Appellants in 97-3344

PENNZOIL PRODUCTS COMPANY

Appellant in 97-3335

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil Action No. 95-cv-00229E)

Argued March 26, 1998

Before: MANSMANN, ROTH and MCKEE, Circuit Judges

(Opinion filed: July 9, 1998)William M. Wycoff, Esquire

(Argued) Thorp, Reed & Armstrong
One Riverfront Center Pittsburgh, PA 15222

Attorney for Appellant

Timothy L. Kerwin, Esquire (Argued) Davis & Young 101 Prospect Avenue, West 1700 Midland Building Cleveland, OH 44115

Attorney for Appellee Colelli & Associates, Inc.

Shawn P. Martin, Esquire
Colelli & Associates
1370 Ontario Avenue 2000 Standard Building Cleveland, OH 44113

Attorney for Appellee Colelli & Associates, Inc.

Theodore O. Struk, Esquire Dickie, McCamey & Chilcote Two PPG Place, Suite 400 Pittsburgh, PA 15222-5402

Attorney for Pyramid Treating, Inc.

William W. Guthrie, Esquire
William W. Guthrie & Associates 416 Frick Building Pittsburgh, PA 15219

Attorney for T.O.P. Production & Oilfield Services, Inc.

2Edward J. Cass, Esquire

Virginia L. Heidloff, Esquire Gary L. Nicholson, Esquire Gallagher, Sharp, Fulton & Norman
1501 Euclid Avenue 6th Floor Bulkley Building Cleveland, OH 44115

Attorneys for Colelli Oil Well Services, Inc.

Edwin Allen Young, Esquire

1225 One Oxford Centre Pittsburgh, PA 15219

Attorney for Chemical Solvents, Inc.

OPINION OF THE COURT

ROTH, Circuit Judge.

This appeal arises from a diversity action brought by Pennzoil Products Company ("Pennzoil") against, amo ng others, Colelli & Associates, Inc. and Colelli Oil Well Services, Inc. (collectively "Colelli"). Colelli so ld to crude oil producers in Ohio a solvent, which was designed to reduce
the accumulation of wax in the shafts of oil wells. The oil producers sold the oil to refineries, one of which was Pennzoil's refinery in Pennsylvania. Pennzoil alleg es that
Colelli's solvent contained silicon and that the si licontainted oil caused damage to its refinery. The dist rict court granted Colelli's motion to dismiss for lack of per sonal jurisdiction and certified its order for interlocut ory appeal. Because we conclude that Pennsylvania's long-arm st atute extends personal jurisdiction to Colelli and that t he exercise of such jurisdiction complies with constitutional d ue process requirements, we will reverse and remand to the district court for further proceedings consistent w ith this opinion.

I.

Pennzoil is a Nevada corporation with its principal place of business in Texas. Pennzoil operates an oil refi nery in

3Rouseville, Pennsylvania, for which it purchases Pe nn grade

and Corning grade crude oil from producers in Ohio. The two Colelli entities are Ohio corporations with pri ncipal places of business in Ohio. Colelli is in the oil w ell maintenance business. It sells chemicals to oil pro ducers to
clean residue from their wells. Unlike most of the crude oil produced in the United States, Penn grade and Corni ng grade crude oil from the Ohio oil fields contain hi gh levels of paraffin (i.e., wax). The high wax content resul ts in the gradual accumulation of wax in the shafts of oil we lls. Wax build-up impedes oil flow and production. Colelli s old a paraffin solvent to Ohio oil producers which they i njected
into the oil wells to reduce the accumulation of wa x. As a result, however, the solvent also mixed with the oi l produced from those wells.

Approximately sixty percent of the Penn grade and Corning grade crude oil produced by the Ohio produc ers was sold and shipped to Pennsylvania refineries. On e of these was Pennzoil's Rouseville refinery. The other was a refinery owned by Witco in Bradford, Pennsylvania. The remaining oil was sold to a refinery in West Virgin ia. Cam C. Colelli, who founded and runs Colelli, has state d in deposition that he knew his customers (the producer s) would be shipping oil to Pennzoil's Rouseville refi nery. In fact, in 1994 (prior to the events that underlie th e present case), Pennzoil had complained of damage caused to its refinery by chlorides in Colelli solvents. Once the issue was brought to his attention, Cam Colelli worked with P ennzoil to alleviate the chloride problem. He sent samples of solvents to Pennzoil's laboratories for testing and attended a trade association seminar on the dangers of chlor ides in
crude oil solvents.

In September 1995, Pennzoil initiated a diversity a ction in the Western District of Pennsylvania against Col elli & Associates, alleging that the anti-paraffin solvent injected
into the Ohio oil wells contained silicon and that the silicon damaged its Rouseville refinery. The complaint also named Pyramid Treating, Inc. ("Pyramid") and T.O.P. Produ ction and Oilfield Services, Inc. ("T.O.P.") as defendant s. In April 1996, Pennzoil amended its complaint to add Colelli Oil Well Services and Chemical Solvents, Inc. ("Chemica l") as

4defendants. Like Colelli, the other defendants are Ohio

corporations with principal places of business in O hio.

In August 1996, Colelli moved to dismiss for lack o f personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. On February 7, 19 97, the district court granted Colelli's motion. Later that month, Pennzoil moved for modification of the February 7 o rder to permit an interlocutory appeal. Pyramid, T.O.P. and Chemical joined Pennzoil's motion. In May 1997, the district court granted Pennzoil's motion to permit the appeal. Subsequently, Pennzoil filed a petition for permission to appeal to this court, which was grant ed. Pyramid, T.O.P. and Chemical also filed a notice of appeal. The two appeals have been consolidated.

II.

Although the propriety of personal jurisdiction is in dispute, the district court clearly had subject-mat ter jurisdiction over this diversity action, pursuant t o 28 U.S.C. S 1332(a). Furthermore, since its order dismissed s ome, but not all, of the defendants, the order was not final and appealable under 28 U.S.C. S 1291. Nonetheless, the district court did grant permission for an interloc utory appeal. Therefore, we have jurisdiction to hear thi s appeal pursuant to 28 U.S.C. S 1292(b).

To the extent that a district court makes factualfi ndings in determining personal jurisdiction, we review for clear error. Mellon Bank (East) PSFS, National Associatio n v. Farino, 960 F.2d 1217, 1220 (3d Cir. 1992). However , a district court's decision that it possesses or lack s personal jurisdiction over certain defendants is an issue of law of which our review is plenary. Id. at 1221.

III.

There are specific analytical steps we must take in determining whether personal jurisdiction can be as serted over a nonresident defendant. Rule 4(e) of the Fede ral Rules of Civil Procedure is the starting point. This rule "authorizes personal jurisdiction over non-resident

5defendants to the extent permissible under the law of the

state where the district court sits." Farino, 960 F .2d at 1221 (citation omitted). The forum state in this ca se is Pennsylvania. That state's long-arm statute is codi fied at 42 Pa. Cons. Stat. Ann. S 5322.1 We have acknowledged that the statute permits Pennsylvania courts to exercise personal jurisdiction over nonresident defendants"t o the constitutional limits of the [D]ue [P]rocess [C]lau se of the [F]ourteenth [A]mendment." Farino, 960 F.2d at 1221 (citations omitted); see also Renner v. Lanard Toys Limited, 33 F.3d 277, 279 (3d Cir. 1994) (noting that "Pennsylvania's long-arm statute authorizes jurisdi ction to the fullest extent permissible under the Constituti on"). A district court's exercise of personal jurisdiction pursuant to Pennsylvania's long-arm statute is therefore valid as long as it is constitutional. Farino, 960 F.2d at 1221; see also Renner, 33 F.3d at 279 ("[T]his court's inquiry is solely whether the exercise of personal jurisdiction over the defendant would be constitutional.") (citation omit ted).

Next, we must determine whether the defendant's contacts with the forum state are sufficient to sup port general personal jurisdiction. Farino, 960 F.2d at 1221. When a state has general jurisdiction over a party, that party can be haled into court in that state "regard less of whether the subject matter of the cause of action h as any connection to the forum." Id. A nonresident's conta cts with
the forum must be "continuous and substantial" to establish general jurisdiction. Provident National Bank v. California Federal Savings & Loan Association, 819 F.2d 434, 437 (3d Cir. 1987) (citations omitted). Howeve r, no party in this case contends that there is a basis f or general

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1. Two portions of Pennsylvania's long-arm statute are pertinent to this case. First, the statute contains a "tort out/harm in" provision which extends personal jurisdiction to anyone who "[c]aus [es] harm or tortious injury in th[e] Commonwealth by an act or omission outside th[e] Commonwealth." 42 Pa. Cons. Stat. Ann. 5322(a)(4). Second, section 5322(b) of the statute states that jurisdiction ext ends "to all persons

who are not within the scope of section 5301 [relating to general jurisdiction]
to the fullest extent allowed under the Constitutio n of the United States and may be based on the most minimum contact with t his
Commonwealth allowed under the Constitution of the United States."

6jurisdiction in Pennsylvania -- so we are free to c onsider

solely whether the alternative form of personal jur isdiction is present: specific personal jurisdiction. Specifi c jurisdiction exists when the plaintiff's claim " `i s related to
or arises out of the defendant's contacts with the forum.' " Farino, 960 F.2d at 1221 (quoting Dollar Savings Ba nk v. First Security Bank of Utah, N.A., 746 F.2d 208, 21 1 (3d Cir. 1984)).

To make a finding of specific jurisdiction, a court generally applies two standards, the first mandator y and the second discretionary. These standards serve to ensure that defendants receive due process as required by the Fourteenth Amendment. First, a court must determine
whether the defendant had the minimum contacts with the forum necessary for the defendant to have "reasonab ly anticipate[d] being haled into court there." World- Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 29 7 (1980) (citations omitted). Second, assuming minimu m contacts have been established, a court may inquire whether "the assertion of personal jurisdiction wou ld comport with `fair play and substantial justice.' " Burger King Corporation v. Rudzewicz, 471 U.S. 462, 476 (1 985) (quoting International Shoe Company v. Washington, 326 U.S. 310, 320 (1945)). Although the latter standard need only be applied at a court's discretion, see Farino , 960 F.2d at 1222 (citing Rudzewicz, 471 U.S. at 476-77), we have generally chosen to engage in this second tier of a nalysis in determining questions of personal jurisdiction. See , e.g., Mesalic v. Fiberfloat Corporation, 897 F.2d 696, 70 1-02 (3d Cir. 1990) (considering notions of "fair play and s ubstantial justice" in deciding issue of personal jurisdiction ).

A.

1.

We will first consider the application of Pennsylva nia's long-arm statute to Colelli. Pennzoil and its co-ap pellants argue that the statute extends jurisdiction to Cole lli under its "tort out/harm in" provision. The statute provi des that personal jurisdiction extends to any person who "[c ]aus[es]

7harm or tortious injury in th[e] Commonwealth by an act or

omission outside th[e] Commonwealth." 42 Pa. Cons. Stat. Ann. 5322(a)(4).2 Pennzoil contends that specific jurisdiction arises from the alleged tortious injur y it suffered in Pennsylvania, which was caused by Colel li in Ohio. (Again, no party maintains that there is any basis for general jurisdiction.) The district court rejected this contention, concluding that section 5322(a)(4) only applies to intentional tortfeasors -- not reckless or negli gent tortfeasors as Pennzoil argued. Pennzoil Products C ompany v. Colelli & Associates, Inc., 953 F. Supp. 669, 67 5 (W.D. Pa. 1997). There is no foundation for this conclusi on. The
statute does not contain the modifier "intentional" in its

reference to out-of-state tortfeasors. The statute simply extends jurisdiction to anyone who causes harm or t ortious injury, intentionally or not, in Pennsylvania throu gh acts or omissions outside Pennsylvania. We find guidance on this point from the Supreme Court of Pennsylvania, which has interpreted the closely related provision of sectio n 5322(a)(3) (which addresses tortfeasors who cause i njury in the state by acts or omissions within the state) as extending jurisdiction regardless of "what kind of tort is al leged." Kubik v. Letteri, 614 A.2d 1110, 1113 n.4 (Pa. 1992 ) (citation omitted). If the type of tort is irreleva nt when committed within the state, there could be little r eason it
would matter when committed outside the state.

One court of appeals has confronted this exact issu e and
reached the same conclusion. In Robinson v. Giarmar co & Bill, P.C., 74 F.3d 253 (11th Cir. 1996), the court of appeals
for the Eleventh Circuit had to determine whether F lorida's long-arm statute extended jurisdiction to nonreside nt defendants who were being sued for negligent conduc t
outside of Florida which resulted in harm in Florid a.

___________________________________________________ ______________

2. We should be cognizant that section 5322(a) only sets forth "examples of sufficient contact" (e.g., transacting business within the state, committing a tort within the state, etc.). Dayhoff Inc. v. H.J. Heinz Company, 86 F.3d 1287, 1302 (3d Cir.), cert. denied , 117 S. Ct. 583 (1996). Since section 5322(b) "further expands the potential bases for jurisdiction" to the limits of the U.S. Constitutio n, id., the list of examples of sufficient contact in section 5322(a) c annot be considered
exhaustive.

8Although the language of Florida's long-arm statute was not

identical to Pennsylvania's, the Robinson court int erpreted it to "reach[ ] the situation where a foreign torti ous act cause[s] injury in [the forum state]." 74 F.3d at 2 57 (internal quotation marks and citation omitted). Th e court then concluded that the long-arm statute could be u sed to assert jurisdiction against parties whose "negligen ce ha[d] allegedly caused damage . . . in Florida." Id. We f ind Robinson to be supportive of our conclusion that a "tort out/harm in" provision of a long-arm statute cannot be restricted to intentional tortfeasors if its plain language gives no indication that it should be so restricted . Thus, based on the plain language of section 5322(a)(4), as well as the reasoning of Kubik and Robinson, we conclude th at the district court erred in ruling that Pennsylvania's "tort out/harm in" statute only extends to intentional to rtfeasors.3

The only way Colelli could argue that section 5322( a)(4) does not apply is by arguing that Pennzoil did not suffer an injury in Pennsylvania because it is not a Pennsylv ania corporation (i.e., the harm is only "felt" wherever the corporation is headquartered). That argument, howev er, would also be untenable because we already rejected it in Carty v. Beech Aircraft Corporation, 679 F.2d 1051 (3d Cir. 1982). In interpreting a long-arm statute very simi lar to section 5322(a)(4),4 we held that"when a commercial entity

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3. We acknowledge that, even if the "tort out/harm in" portion of Pennsylvania's long-arm statute did not extend to n onintentional tortfeasors, the statute could still potentially re ach Colelli because it extends to the due-process limits of the Constituti on. See Mellon Bank (East) PSFS, National Association v. Farino, 960 F. 2d 1217, 1221 (3d Cir. 1992) (citations omitted); Renner v. Lanard Toys Li mited, 33 F.3d 277, 279 (3d Cir. 1994). However, since the "tort out/ha rm in" provision describes the present situation so explicitly and s ince the district court partially based its ruling on an application of the "tort out/harm in" provision, we find it appropriate to consider the p roper bounds of that provision in hearing this appeal.

4. The long-arm statute (which was enacted in the U .S. Virgin Islands) in Carty v. Beech Aircraft Corporation extended jurisd iction to anyone who had "caus(ed) tortious injury in th[e] territory by an act or omission outside th[e] territory and regularly . . . solicit [ed] business or engage[d] in any other persistent course of conduct, or deriv e[d] substantial

9sues for tortious injury to its physical property, the `injury'

takes place for jurisdictional purposes where the p roperty has been damaged." Id. at 1065. Since Pennzoil clai ms to have suffered damage to its refinery equipment in Pennsylvania, that is where -- for jurisdictional p urposes -- we must conclude the alleged injury occurred.

For the foregoing reasons, we conclude that Pennsylvania's long-arm statute extends personal jurisdiction to Colelli.

2.

Although we conclude that Pennsylvania's long-arm statute extends jurisdiction to Colelli, we must st ill
determine whether the strictures of constitutional due process (i.e., minimum contacts and notions of "fai r play and substantial justice") would be observed by asse rting jurisdiction.5 We cannot presume that jurisdiction is proper simply because the requirements of a long-arm statu te have been met. Several courts of appeals have stressed t his point.

For example, in Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623 (11th Cir. 1996), the court of appeals for the
Eleventh Circuit had to determine whether Florida's longarm statute extended jurisdiction to several Canadi an

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revenue from goods used or consumed or services ren dered in th[e] territory." 679 F.2d 1051, 1062 (3d Cir. 1982) (int ernal quotation marks, citation and emphasis omitted). Thus, the statute i n Carty was not as far-reaching as the Pennsylvania statute but it ope rated under the same principle of extending jurisdiction to foreign tort feasors.

5. Since the "majority of states (and Puerto Rico) has enacted jurisdictional statutes that have been interpreted to extend to the limits of due process, [jurisdictional] analysis frequentl y is collapsed into a one-step inquiry: does jurisdiction satisfy due pro cess?" 4 Charles A. Wright & Arthur R. Miller, Federal Practice and Pro cedure S 1069 (2d ed. Supp. 1998). However, as noted earlier, Pennzoil's "tort out/harm in" argument and the district court's rejection of that argument indicate that we must consider both the proper application of Pen nsylvania's long-arm statute and the satisfaction of due process require ments -- not just the latter. See supra note 3.

10defendants. In rendering its decision, the Sculptch air court

described this two-part analysis:

First we must determine whether the Florida long-arm statute provides a basis for personal jurisd iction. If so,
then we must determine whether sufficient mi nimum
contacts exist between the defendants and th e forum state so as to satisfy "traditional notions of fair play and substantial justice" under the Due Proce ss Clause

of the Fourteenth Amendment.

94 F.3d at 626 (quoting Robinson, 74 F.3d at 256). Thus, according to Sculptchair, a court must engage in du e process analysis after it concludes that a state's long-arm statute extends jurisdiction to a defendant.

The court of appeals for the Sixth Circuit expresse d the same understanding of due process in Nationwide Mut ual Insurance Company v. Tryg International Insurance Company, Ltd., 91 F.3d 790 (6th Cir. 1996). In a ca se involving the application of Ohio's long-arm statut e to a Danish corporate defendant, the Nationwide Mutual c ourt concluded that "[a] valid assertion of personal jur isdiction must satisfy both the state long-arm statute, and constitutional due process." 91 F.3d at 793 (quotin g Reynolds v. International Amateur Athletic Federati on, 23 F.3d 1110, 1115 (6th Cir.), cert. denied, 513 U.S. 962 (1994)) (emphasis added). Similarly, the court of a ppeals for the Eighth Circuit has stated, "The federal court i n a diversity case must determine whether [a] defendant is subject to the court's jurisdiction under the state 's longarm statute, and if so, whether exercise of that ju risdiction comports with due process." Moog World Trade Corpor ation v. Bancomer, S.A., 90 F.3d 1382, 1384 (8th Cir. 199 6) (applying Missouri's long-arm statute). See also Jo be v. ATR Marketing, Inc., 87 F.3d 751, 753 (5th Cir. 1996) (considering both state's long-arm statute and constitutional due process requirements); Metropoli tan Life Insurance Company v. Robertson-Ceco Corporation, 84 F.3d 560, 567 (2d Cir.) (same), cert. denied, 117 S. Ct. 508 (1996); Viam Corporation v. Iowa Export-Import Trad ing Company, 84 F.3d 424, 427 (Fed. Cir. 1996) (same).

11B.

1.

The issue of minimum contacts is rather fact-sensit ive in that it turns on the "quality and nature of a defen dant's activity [in relation to the forum state]." Max Dae twyler Corporation v. R. Meyer, 762 F.2d 290, 298 (3d Cir. 1985) (citation omitted); see also Farino, 960 F.2d at 12 24-25 ("[Q]uestions of personal jurisdiction do not lend themselves to categorical determinations."). Nonetheless, desp ite the difficulty in formulating bright-line rules in this area, some basic precepts have evolved in the assessment of mi nimum contacts. For example, if a nonresident defendant's contact with the forum is simply "fortuitous" or "the resul t of a single transaction," Max Daetwyler, 762 F.2d at 295 , the minimum-contacts requirement has not been satisfied

. Furthermore, with regard to producers or sellers of goods, "the mere foreseeability that a product one sells m ay end up in the forum state" does not render the seller a menable to suit in the forum state. Renner, 33 F.3d at 279 (citing Woodson, 444 U.S. at 291, 295). A finding of minimu m contacts demands the demonstration of " `some act b y which the defendant purposely avail[ed] itself of t he privilege of conducting business within the forum S tate, thus invoking the protection and benefits of its la ws.' " Farino, 960 F.2d at 1221 (quoting Hanson v. Denckla , 357 U.S. 235, 253 (1958)).

In many products-liability cases (of which this cas e is a sort), the seller does not come in direct contact w ith the forum state but does so through intermediaries such as retailers or distributors. In response to this phen omenon, courts have developed the "stream of commerce" theo ry by which specific jurisdiction is asserted over a nonr esident defendant which injected its goods, albeit indirect ly, into the forum state and either "derived [a] substantial benefit from the forum state or had a reasonable expectatio n of [deriving a substantial benefit from it]." Max Daet wyler, 762 F.2d at 300. Clearly, the stream-of-commerce theory can appear somewhat abstruse without some definition of its key terms (e.g., When is a benefit "substantial"? W hen is an expectation "reasonable"?).

12In Asahi Metal Industry Company, Ltd. v. Superior C ourt

of California, Solano County, 480 U.S. 102 (1987), the Supreme Court attempted to elucidate the elements o f jurisdiction based on the stream-of-commerce theory

. Unfortunately, the Asahi Metal Court presented thre e different conceptions of purposeful availment throu gh the stream of commerce, none of which was endorsed by a majority of the Court.6 In Asahi Metal, a Californi a plaintiff injured in a motorcycle accident in California file d a products liability suit in California against Cheng Shin, the Taiwan corporation that manufactured the motorcycle 's tire tube, contending the tube was defective. Cheng Shin impleaded Asahi Metal Industry Company, Ltd., a Jap anese corporation, seeking indemnification because Asahi had manufactured the valve assemblies for Cheng Shin's tire tubes. The plaintiff and Cheng Shin settled, leavin g only the indemnity action between Cheng Shin and Asahi, whic h contested jurisdiction.

Asahi had not solicited any business in California and had no offices, agents or property there. It sold i ts tube assemblies to Cheng Shin in Taiwan and had no contr ol over the distribution system that brought its compo nents into products eventually sold in California. The Ca lifornia Supreme Court concluded that Asahi knew that some o f the valve assemblies would be incorporated into tire tu bes sold in California and benefited indirectly from the sal e of products incorporating the components in California . On this basis, the California Supreme Court sustained jurisdiction over Asahi.

The Supreme Court reversed that ruling, as all the Justices agreed that the exercise of personal juris diction over Asahi was disconsonant with notions of "fair p lay and substantial justice." Renner, 33 F.3d at 281 (discu ssing Asahi Metal generally).7 However, the Justices were divided on the level of minimum contacts necessary for afin ding of

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6. The voting breakdown among the Justices was 4-4- 1. See generally Asahi Metal Industry Company, Ltd. v. Superior Cour t of California, Solano County, 480 U.S. 102 (1987).

7. We synopsized the facts, as well as the various analytical frameworks, of Asahi Metal in Renner, 33 F.3d at 281-82.

13jurisdiction under the stream-of-commerce theory. F or this

reason, the Court issued three different methods of analysis. Justice O'Connor, writing for a plurality of four, concluded that placement of a product in the stream of commerce must be accompanied by some "[a]dditional conduct of the defendant [that] may indicate an int ent or purpose to serve the market in the forum State." As ahi Metal, 480 U.S. at 112. Justice O'Connor provided t he following examples of such conduct: "designing the product for the market in the forum State, advertising in t he forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the prod uct through a distributor who has agreed to serve as th e sales agent in the forum State." Id.

Justice Brennan, writing for another plurality of f our, disagreed that a finding of such "additional conduc t" was necessary. Noting that the stream of commerce does not consist of "unpredictable currents or eddies," Just ice Brennan stated that "[a]s long as a participant in this process is aware that the final product is being ma rketed in the forum State, the possibility of a lawsuit there cannot come as a surprise." Id. at 117 (Brennan, J., concu rring). This premise led him to conclude:

A defendant who has placed goods in the stre am of commerce benefits economically from the reta il sale of the final product in the forum State, and in directly benefits from the State's laws that regulate and facilitate commercial activity. These benefi ts accrue regardless of whether that participant direc tly conducts business in the forum State, or engages in a dditional
conduct directed toward the State.

Id. (Brennan, J., concurring) (emphasis added).

Justice Stevens, the ninth vote, presented a third viewpoint in his concurring opinion (which was join ed by Justices White and Blackmun, who also joined Justic e Brennan's concurrence). First, Justice Stevens obse rved that the Court's disquisition on minimum contacts w as superfluous since the reversal was based on concern s about "fair play and substantial justice." Id. at 1 21-22 (Stevens, J., concurring) (internal quotation marks and

14citation omitted). Nonetheless, he felt compelled t o voice his

distaste for the belief that "an unwavering line ca n be drawn between `mere awareness' that a component wil l find its way into the forum State and `purposeful availm ent' of the forum's market." Id. at 122 (Stevens, J., concu rring) (citation omitted). Justice Stevens posited, instea d, that a determination of purposeful availment must be made considering the following factors: "the volume, the value, and the hazardous character of the components [plac ed in the stream of commerce]." Id. (Stevens, J., concurr ing). He even went so far as to offer a rough estimate of th e type of volume that would suggest purposeful availment: "I would be inclined to conclude that a regular course of de aling that results in deliveries of over 100,000 units annuall y over a period of several years would constitute `purposefu l availment' . . . ." Id. (Stevens, J., concurring). Justice Stevens departed from the formulations of the two p lurality opinions because (1) he did not find Justice O'Conn or's factor of "additional conduct" to be dispositive or even relevant and (2) he considered the extent of the be nefit (e.g., in terms of value or volume) derived from the forum State, a factor irrelevant to Justice Brennan's analysis, to be highly dispositive.

Obviously, Asahi Metal does not erect any bright-li ne guideposts -- and that point is evidenced in the fe deral appellate court decisions that have come in its wak e. Some courts of appeals have boldly adopted one of the co nflicting conceptions of minimum contacts via the stream of commerce. Compare, e.g., Barone v. Rich Brothers In terstate Display Fireworks Company, 25 F.3d 610, 613-15 (8th Cir. 1994) (adopting a position consistent with that of Justice Brennan) and Ruston Gas Turbines, Inc. v. Donaldson Company, 9 F.3d 415, 420 (5th Cir. 1993) (same) wit h Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 683 (1st C ir. 1992) (adopting a position consistent with that of Justic e O'Connor) and Madara v. Hall, 916 F.2d 1510, 1519 ( 11th Cir. 1990) (same). Most courts of appeals, however, have avoided choosing one position over the other and ha ve instead decided cases based on facts in the record. See, e.g., Beverly Hills Fan Company v. Royal Sovereign Corporation, 21 F.3d 1558, 1566 (Fed. Cir. 1994); T obin v. Astra Pharmaceutical Products, Inc., 993 F.2d 528, 543 (6th

15Cir. 1993); Vermeulen v. Renault, U.S.A., Inc. , 98 5 F.2d

1534, 1548 (11th Cir. 1993);8Shute v. Carnival Crui se Lines, 897 F.2d 377, 382 n.3 (9th Cir. 1990), rev'd on other grounds, 499 U.S. 585 (1991). In our most recent st reamof-commerce case, Renner, we too did not have occas ion to choose between the O'Connor and Brennan positions

because we concluded that the factual record had to be developed through further discovery. 33 F.3d at 283

. Consequently, we remanded the case to the district court without adopting one position or the other on the i ssue of
minimum contacts based on the stream-of-commerce theory.

2.

After making a determination with regard to minimum contacts, a court has the option of evaluating whet her exercising jurisdiction comports with notions of "f air play and substantial justice." That is, even if a defend ant has the requisite minimum contacts with the forum state , other factors may militate against exercising jurisdictio n. These
"fairness factors" include: "the burden on the defe ndant, the forum State's interest in adjudicating the disp ute, the plaintiff's interest in obtaining convenient and ef fective relief, the interstate judicial system's interest i n obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies." Rudzewicz , 471 U.S. at 477 (quoting Woodson, 444 U.S. at 292) (int ernal quotation marks omitted).

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8. The court of appeals for the Eleventh Circuit ha s manifested some ambivalence in this regard in that it has issued op inions both embracing Justice O'Connor's standard and declining to adopt either standard. Compare Vermeulen v. Renault, U.S.A., Inc., 985 F.2 d 1534, 1548 (11th Cir. 1993) ("Because jurisdiction . . . over [the d efendant] in this case

. . . is consistent with due process under the more strin gent `stream of commerce plus' analysis adopted by the [O'Connor] p lurality, we need not determine which standard actually controls this case.") with Madara v. Hall, 916 F.2d 1510, 1519 (11th Cir. 1990) (conc luding that exercise of jurisdiction must satisfy the stream-of-commerce test articulated by the O'Connor plurality).

16As mentioned earlier, application of the "fair play and

substantial justice" prong is left to a court's dis cretion. See Farino, 960 F.2d at 1222. Nonetheless, we typically apply this second tier of the analysis in resolving issue s of personal jurisdiction. See, e.g., Mesalic, 897 F.2d at 701-02 (concluding that assertion of personal jurisdiction comported with notions of "fair play and substantia l justice"). Moreover, we have referred to its applic ation as mandatory, not discretionary. Id. at 701 ("Having
determined that there were sufficient minimum conta cts, we must determine whether the assertion of personal jurisdiction accords with notions of `fair play and substantial justice.' ") (citation omitted) (emphas is added). The very fact that the Supreme Court precedent most pertinent to this matter -- Asahi Metal-- was decid ed on this basis counsels its application to the present case. This final step (i.e., assessing the "fairness" of asser ting jurisdiction) concludes a court's jurisdictional an alysis.

C.

1.

We now turn to the issue of whether exercising jurisdiction over Colelli complies with the require ments of due process under the Constitution. Initially, we m ust
determine whether Colelli had minimum contacts with Pennsylvania by selling solvents to Ohio oil produc ers. Three facts are pertinent to this determination: (1 ) approximately sixty percent of the Penn grade and C orning grade crude oil produced by the Ohio oil producers was sold to Pennsylvania refineries; (2) Cam Colelli kn ew that oil produced by Colelli's Ohio customers was going to Pennzoil's refinery in Pennsylvania; and (3) in res ponse to the 1994 chloride problem, Cam Colelli sent samples of Colelli solvents to laboratory personnel at Pennzoi l's refinery to preclude future contamination problems. 9

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9. Both Pennzoil and Colelli contend that a fourth fact is relevant: i.e.,
Cam Colelli admitted that he had some concerns that silicon in Colelli solvents could cause problems for some refineries. Pennzoil argues that

17Keeping these facts in mind, we will apply the stre am-ofcommerce standards enunciated in Asahi Metal.

Looking first to Justice O'Connor's standard (which is more stringent than Justice Brennan's), the placeme nt of a product in the stream of commerce must be accompani ed by some "[a]dditional conduct of the defendant [tha t] may indicate an intent or purpose to serve the market i n the forum State." Asahi Metal, 480 U.S. at 112. Justice O'Connor proffered the following as examples of suc h additional conduct: "[1] designing the product for the market in the forum State . . . [2] establishing ch annels for providing regular advice to customers in the forum State." Id. Colelli's actions clearly conformed to Justice O'Connor's definition of "additional conduct." Sending solvent samples
to Pennzoil's laboratories demonstrated an intent t o "design" a product which could be used to serve the Pennsylvania refinery market. Furthermore, the reco rd indicates that Cam Colelli had a number of telephon e conversations with lab personnel at Pennzoil's refi nery to discuss testing procedures and methodology. Thus, C am Colelli had established "channels for providing reg ular advice to" Pennzoil's personnel in Pennsylvania. Al though Pennzoil was not technically a "customer" of Colell i's (since Colelli did not sell solvents directly to Pennzoil) , Colelli was obviously motivated by the fact that Pennzoil opera ted one of the two major refineries in the state to which t he Ohio producers sent sixty percent of their crude oil. Ca m Colelli admits that he knew Pennzoil held such a significan t portion of the Ohio producers' customer base;10 the

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the admission demonstrates knowledge of the dangers of silicon-tainted solvents. Colelli, on the other hand, argues that C am Colelli only thought that silicon could be problematic because it acts a s an anti-foaming agent, and not because he was aware of any potentia l for serious damage. Both of these arguments are irrelevant to o ur analysis because they address the merits of Pennzoil's claim, not th e issue of jurisdiction. Cam Colelli's beliefs about the potential degree of harm do not shed any light on where, no matter how slight or how severe, he thought that

harm would occur.

10. When asked how he knew that the Ohio producers would send oil to Pennzoil's refinery, Cam Colelli responded, "The oi l producers told me. There weren't that many refineries. Being that Penn zoil was the biggest, it was pretty obvious, in a sense." (Emphasis added .)

18"additional conduct" of ensuring that the solvents met

Pennzoil's requirements evinces a desire to satisfy that portion of the customer base. For these reasons, we
conclude that Justice O'Connor's touchstone of addi tional conduct is present in this case. According to Justi ce O'Connor's standard, Colelli had the minimum contac ts with Pennsylvania necessary for it to be haled into court in

that state.

Next, we apply the standard articulated by Justice Brennan. This standard is even more clearly satisfi ed than Justice O'Connor's.11 Colelli has "placed goods [i. e., solvents] in the stream of commerce [and] benefit[e d] economically from the . . . sale of the final produ ct[, i.e., crude oil, to refineries] in the forum State." Id. at 117 (Brennan, J., concurring). As such, Colelli "benefi t[ed] from [Pennsylvania]'s laws that regulate and facilitate commercial activity." Id. (Brennan, J., concurring)

. According to Justice Brennan's standard, therefore, Colelli had the minimum contacts necessary for Pennsylvania to exercise jurisdiction.12

In summary, regardless of whether one applies the O'Connor standard or the Brennan standard, Colelli purposely availed itself of the laws of Pennsylvani a by deriving financial benefits from its customers' sal e of crude oil to Pennsylvania refineries. The Ohio producers sent

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11. One may note that, since Justice O'Connor's sta ndard is more demanding than Justice Brennan's, any factual scena rio that satisfies the former will probably satisfy the latter as well . Still, since we have

not manifested a preference for either of the two stand ards, the demands of clarity counsel us to apply both standards explicit ly. The clear
satisfaction of both the O'Connor and the Brennan s tandards obviates any need to adopt one over the other.

12. Although it is not essential to our analysis, w e note that Colelli

even had minimum contacts under Justice Stevens' standar d. The relative
volume and value (two of the three factors central to Justice Stevens' position) of the silicon-laced oil forwarded to Pen nsylvania is not in dispute: sixty percent of the crude oil generated b y the Ohio producers found its way to Pennsylvania. Also, the "hazardous character" of the silicon (to property interests if not personal safe ty) is apparent from

the damage caused to Pennzoil's refinery. Asahi Metal, 480 U.S. at 122 (Stevens, J., concurring).

19most of their oil to Pennsylvania; Colelli indirect ly benefited

from the sale to Pennsylvania refineries; Cam Colel li was aware of that indirect benefit; and Colelli had exp ressed a desire to preserve its relationship with at least o ne Pennsylvania refinery (Pennzoil's) by conforming it s solvents to the refinery's specifications. For the reasons d iscussed above, these facts satisfy the criteria of both Jus tice
O'Connor and Justice Brennan.13 We therefore conclu de
that Colelli did have the minimum contacts needed t o support the exercise of personal jurisdiction in Pennsylvania.

2.

Finally, having determined that Colelli can be hale d into court in Pennsylvania, we must determine whether su ch an exercise of jurisdiction would respect notions of"f air play and substantial justice." Justice Brennan noted tha t cases are "rare . . . in which minimum requirements in th e concept of fair play and substantial justice . . . defeat the reasonableness of jurisdiction even [though] the de fendant has purposefully engaged in forum activities." Id. at 116 (Brennan, J., concurring) (quoting Rudzewicz, 471 U .S. at 477-78) (internal quotation marks omitted). The pre sent case is not one of those rare cases described by Ju stice

Brennan.

None of the "fairness factors" -- the burden on the defendant, the forum state's interest in adjudicati ng the dispute, the plaintiff's interest in obtaining conv enient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controve rsies and
the shared interest of the several states in furthe ring fundamental social policies -- suggest that exercis ing jurisdiction would be unreasonable in this case."Th is is not a case where a severe burden is placed on an alien defendant as in Asahi[ Metal]. Nor does this case i nvolve
one isolated occurrence where the defendant had no connection with the forum state, as in [Woodson]." Mesalic,

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13. Since the facts of this case satisfy the standa rds of both Asahi Metal pluralities, we do not have occasion to select one standard or the other
as the law of this circuit.

20897 F.2d at 702. Colelli, which comprises two Ohio

corporations, has been haled into district court in a state with which Ohio shares a border. Far from being iso lated,
Colelli's connection with the forum state has been bolstered by steady shipments of crude oil across that border

. Furthermore, the suit was brought in the Western Di strict of Pennsylvania, the district closest to Ohio. If w e were to deem litigation in the Western District of Pennsylv ania to be unreasonably onerous for Ohio defendants, we would create an unacceptable implication: i.e., that no foreign defendant could be haled into court in Pennsylvania -- becaus e any burden borne by Ohio defendants would be the same f or foreign defendants from other neighboring states an d even greater for foreign defendants who are not domicile d in a neighboring state. Thus, we conclude that Colelli w ould not endure an unreasonable inconvenience by litigating this matter in Pennsylvania. See Interfirst Bank Clifton v. Fernandez, 844 F.2d 279, 285 (5th Cir.) ("The situa tion is unlike that in Asahi[ Metal], where the defendant, a Japanese corporation, would have had to travel to California and contend with a foreign legal system. [The defendant in this case] was asked only to travel to a neighboring state.") (citation omitted), amended on other grounds, 853 F.2d 292 (5th Cir. 1988).

When the district court declined to exercise jurisd iction over Colelli, Pennzoil refiled this action against Colelli in district court in Ohio. Considering the fact that s everal Ohio corporations are involved, one cannot deny Ohi o's interest in this matter. Yet, Pennsylvania also has an interest in this dispute, since the only alleged ha rm occurred in Pennsylvania and relates to the oil ind ustry -- an industry which is important for any state econom y. Whatever the degree of Pennsylvania's interest in t his matter, it cannot be considered any less than Ohio' s. Finally, we cannot conceive of any judicial ineffic iency or impairment of a substantive social policy that woul d result from exercising jurisdiction in Pennsylvania.

Indeed, Colelli itself does not even explain with a ny specificity how exercising jurisdiction would offen d notions of "fair play and substantial justice." No claims o f exorbitant travel expenses, unavailability of evide nce,

21drains on judicial resources or countervailing stat e

interests have been made. Instead, Colelli merely a rgues that any exercise of jurisdiction without minimum c ontacts cannot comply with notions of "fair play and substa ntial justice." However, since we conclude that minimum contacts are present in this case, we reject this a rgument. Concomitantly, we conclude that exercising jurisdic tion would be in accord with notions of "fair play and substantial justice."

IV.

To recapitulate, we conclude that Pennsylvania's lo ngarm statute properly extends personal jurisdiction to Colelli and that the exercise of such jurisdiction satisfie s the requirements of constitutional due process. Accordi ngly, we will reverse the judgment of the district court and remand for further proceedings consistent with this opinio n.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

22