1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-9-1998

Pennzoil Prod v. Colelli & Assoc Inc.

Precedential or Non-Precedential:

Docket 97-3335

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Recommended Citation

"Pennzoil Prod v. Colelli & Assoc Inc." (1998). 1998 Decisions. Paper 153.

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Filed 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. 

 2 
 Edward 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, among 

others, Colelli & Associates, Inc. and Colelli Oil Well 

Services, Inc. (collectively "Colelli"). Colelli sold 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 alleges that 

Colelli's solvent contained silicon and that the silicontainted oil caused damage to its refinery. The district court 

granted Colelli's motion to dismiss for lack of personal 

jurisdiction and certified its order for interlocutory appeal. 

Because we conclude that Pennsylvania's long-arm statute 

extends personal jurisdiction to Colelli and that the exercise 

of such jurisdiction complies with constitutional due 

process requirements, we will reverse and remand to the 

district court for further proceedings consistent with this 

opinion. 

I. 

Pennzoil is a Nevada corporation with its principal place 

of business in Texas. Pennzoil operates an oil refinery in 

 3 
Rouseville, Pennsylvania, for which it purchases Penn grade 

and Corning grade crude oil from producers in Ohio. The 

two Colelli entities are Ohio corporations with principal 

places of business in Ohio. Colelli is in the oil well 

maintenance business. It sells chemicals to oil producers to 

clean residue from their wells. Unlike most of the crude oil 

produced in the United States, Penn grade and Corning 

grade crude oil from the Ohio oil fields contain high levels 

of paraffin (i.e., wax). The high wax content results in the 

gradual accumulation of wax in the shafts of oil wells. Wax 

build-up impedes oil flow and production. Colelli sold a 

paraffin solvent to Ohio oil producers which they injected 

into the oil wells to reduce the accumulation of wax. As a 

result, however, the solvent also mixed with the oil 

produced from those wells. 

Approximately sixty percent of the Penn grade and 

Corning grade crude oil produced by the Ohio producers 

was sold and shipped to Pennsylvania refineries. One 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 Virginia. Cam 

C. Colelli, who founded and runs Colelli, has stated in 

deposition that he knew his customers (the producers) 

would be shipping oil to Pennzoil's Rouseville refinery. In 

fact, in 1994 (prior to the events that underlie the 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 Pennzoil 

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 chlorides in 

crude oil solvents. 

In September 1995, Pennzoil initiated a diversity action 

in the Western District of Pennsylvania against Colelli & 

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. Production 

and Oilfield Services, Inc. ("T.O.P.") as defendants. In April 

1996, Pennzoil amended its complaint to add Colelli Oil 

Well Services and Chemical Solvents, Inc. ("Chemical") as 

 4 
defendants. Like Colelli, the other defendants are Ohio 

corporations with principal places of business in Ohio. 

In August 1996, Colelli moved to dismiss for lack of 

personal jurisdiction pursuant to Rule 12(b)(2) of the 

Federal Rules of Civil Procedure. On February 7, 1997, the 

district court granted Colelli's motion. Later that month, 

Pennzoil moved for modification of the February 7 order 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 granted. 

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-matter 

jurisdiction over this diversity action, pursuant to 28 U.S.C. 

S 1332(a). Furthermore, since its order dismissed some, 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 interlocutory 

appeal. Therefore, we have jurisdiction to hear this appeal 

pursuant to 28 U.S.C. S 1292(b). 

To the extent that a district court makes factualfindings 

in determining personal jurisdiction, we review for clear 

error. Mellon Bank (East) PSFS, National Association v. 

Farino, 960 F.2d 1217, 1220 (3d Cir. 1992). However, a 

district court's decision that it possesses or lacks 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 asserted 

over a nonresident defendant. Rule 4(e) of the Federal Rules 

of Civil Procedure is the starting point. This rule

"authorizes personal jurisdiction over non-resident

 5 
defendants 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 case is 

Pennsylvania. That state's long-arm statute is codified 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"to the 

constitutional limits of the [D]ue [P]rocess [C]lause 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 jurisdiction to 

the fullest extent permissible under the Constitution"). 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 omitted). 

Next, we must determine whether the defendant's 

contacts with the forum state are sufficient to support 

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 "regardless of 

whether the subject matter of the cause of action has any 

connection to the forum." Id. A nonresident's contacts 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). However, no 

party in this case contends that there is a basis for general 

_________________________________________________________________ 

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 extends "to all persons 

who 

are not within the scope of section 5301 [relating to general 

jurisdiction] 

to the fullest extent allowed under the Constitution of the United States 

and may be based on the most minimum contact with this 

Commonwealth allowed under the Constitution of the United States." 

 6 
jurisdiction in Pennsylvania -- so we are free to consider 

solely whether the alternative form of personal jurisdiction 

is present: specific personal jurisdiction. Specific 

jurisdiction exists when the plaintiff's claim " `is related to 

or arises out of the defendant's contacts with the forum.' " 

Farino, 960 F.2d at 1221 (quoting Dollar Savings Bank v. 

First Security Bank of Utah, N.A., 746 F.2d 208, 211 (3d 

Cir. 1984)). 

To make a finding of specific jurisdiction, a court

generally applies two standards, the first mandatory 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 "reasonably 

anticipate[d] being haled into court there." World-Wide 

Volkswagen Corporation v. Woodson, 444 U.S. 286, 297 

(1980) (citations omitted). Second, assuming minimum 

contacts have been established, a court may inquire

whether "the assertion of personal jurisdiction would 

comport with `fair play and substantial justice.' " Burger 

King Corporation v. Rudzewicz, 471 U.S. 462, 476 (1985) 

(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 analysis in 

determining questions of personal jurisdiction. See, e.g., 

Mesalic v. Fiberfloat Corporation, 897 F.2d 696, 701-02 (3d 

Cir. 1990) (considering notions of "fair play and substantial 

justice" in deciding issue of personal jurisdiction). 

A. 

1. 

We will first consider the application of Pennsylvania's 

long-arm statute to Colelli. Pennzoil and its co-appellants 

argue that the statute extends jurisdiction to Colelli under 

its "tort out/harm in" provision. The statute provides that 

personal jurisdiction extends to any person who "[c]aus[es] 

 7 
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).2 Pennzoil contends that specific 

jurisdiction arises from the alleged tortious injury it 

suffered in Pennsylvania, which was caused by Colelli 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 negligent 

tortfeasors as Pennzoil argued. Pennzoil Products Company 

v. Colelli & Associates, Inc., 953 F. Supp. 669, 675 (W.D. 

Pa. 1997). There is no foundation for this conclusion. 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 tortious 

injury, intentionally or not, in Pennsylvania through 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 section 

5322(a)(3) (which addresses tortfeasors who cause injury in 

the state by acts or omissions within the state) as extending 

jurisdiction regardless of "what kind of tort is alleged." 

Kubik v. Letteri, 614 A.2d 1110, 1113 n.4 (Pa. 1992) 

(citation omitted). If the type of tort is irrelevant when 

committed within the state, there could be little reason it 

would matter when committed outside the state. 

One court of appeals has confronted this exact issue and 

reached the same conclusion. In Robinson v. Giarmarco & 

Bill, P.C., 74 F.3d 253 (11th Cir. 1996), the court of appeals 

for the Eleventh Circuit had to determine whether Florida's 

long-arm statute extended jurisdiction to nonresident 

defendants who were being sued for negligent conduct 

outside of Florida which resulted in harm in Florida. 

_________________________________________________________________ 

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. Constitution, id., the list of 

examples of sufficient contact in section 5322(a) cannot be considered 

exhaustive. 

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

identical to Pennsylvania's, the Robinson court interpreted 

it to "reach[ ] the situation where a foreign tortious act 

cause[s] injury in [the forum state]." 74 F.3d at 257 

(internal quotation marks and citation omitted). The court 

then concluded that the long-arm statute could be used to 

assert jurisdiction against parties whose "negligence ha[d] 

allegedly caused damage . . . in Florida." Id. We find 

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 that the 

district court erred in ruling that Pennsylvania's "tort 

out/harm in" statute only extends to intentional tortfeasors.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 Pennsylvania 

corporation (i.e., the harm is only "felt" wherever the 

corporation is headquartered). That argument, however, 

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 similar to 

section 5322(a)(4),4 we held that"when a commercial entity 

_________________________________________________________________ 

3. We acknowledge that, even if the "tort out/harm in" portion of 

Pennsylvania's long-arm statute did not extend to nonintentional 

tortfeasors, the statute could still potentially reach Colelli because it 

extends to the due-process limits of the Constitution. See Mellon Bank 

(East) PSFS, National Association v. Farino, 960 F.2d 1217, 1221 (3d Cir. 

1992) (citations omitted); Renner v. Lanard Toys Limited, 33 F.3d 277, 

279 (3d Cir. 1994). However, since the "tort out/harm in" provision 

describes the present situation so explicitly and since the district court 

partially based its ruling on an application of the "tort out/harm in" 

provision, we find it appropriate to consider the proper 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 jurisdiction 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 derive[d] substantial 

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

takes place for jurisdictional purposes where the property 

has been damaged." Id. at 1065. Since Pennzoil claims to 

have suffered damage to its refinery equipment in 

Pennsylvania, that is where -- for jurisdictional purposes -- 

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 still 

determine whether the strictures of constitutional due 

process (i.e., minimum contacts and notions of "fair play 

and substantial justice") would be observed by asserting 

jurisdiction.5 We cannot presume that jurisdiction is proper 

simply because the requirements of a long-arm statute have 

been met. Several courts of appeals have stressed this 

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 Canadian 

_________________________________________________________________ 

revenue from goods used or consumed or services rendered in th[e] 

territory." 679 F.2d 1051, 1062 (3d Cir. 1982) (internal quotation marks, 

citation and emphasis omitted). Thus, the statute in Carty was not as 

far-reaching as the Pennsylvania statute but it operated under the same 

principle of extending jurisdiction to foreign tortfeasors. 

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 frequently is collapsed into a 

one-step inquiry: does jurisdiction satisfy due process?" 4 Charles A. 

Wright & Arthur R. Miller, Federal Practice and Procedure 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 Pennsylvania's long-arm 

statute and the satisfaction of due process requirements -- not just the 

latter. See supra note 3. 

 10 
defendants. In rendering its decision, the Sculptchair court 

described this two-part analysis: 

 First we must determine whether the Florida long-arm 

 statute provides a basis for personal jurisdiction. If so, 

 then we must determine whether sufficient minimum 

 contacts exist between the defendants and the forum 

 state so as to satisfy "traditional notions of fair play 

 and substantial justice" under the Due Process 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 due 

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 expressed the 

same understanding of due process in Nationwide Mutual 

Insurance Company v. Tryg International Insurance 

Company, Ltd., 91 F.3d 790 (6th Cir. 1996). In a case 

involving the application of Ohio's long-arm statute to a 

Danish corporate defendant, the Nationwide Mutual court 

concluded that "[a] valid assertion of personal jurisdiction 

must satisfy both the state long-arm statute, and 

constitutional due process." 91 F.3d at 793 (quoting 

Reynolds v. International Amateur Athletic Federation, 23 

F.3d 1110, 1115 (6th Cir.), cert. denied, 513 U.S. 962 

(1994)) (emphasis added). Similarly, the court of appeals for 

the Eighth Circuit has stated, "The federal court in 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 jurisdiction 

comports with due process." Moog World Trade Corporation 

v. Bancomer, S.A., 90 F.3d 1382, 1384 (8th Cir. 1996) 

(applying Missouri's long-arm statute). See also Jobe v. ATR 

Marketing, Inc., 87 F.3d 751, 753 (5th Cir. 1996) 

(considering both state's long-arm statute and 

constitutional due process requirements); Metropolitan 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 Trading 

Company, 84 F.3d 424, 427 (Fed. Cir. 1996) (same). 

 11 
B. 

1. 

The issue of minimum contacts is rather fact-sensitive in 

that it turns on the "quality and nature of a defendant's 

activity [in relation to the forum state]." Max Daetwyler 

Corporation v. R. Meyer, 762 F.2d 290, 298 (3d Cir. 1985) 

(citation omitted); see also Farino, 960 F.2d at 1224-25 

("[Q]uestions of personal jurisdiction do not lend themselves 

to categorical determinations."). Nonetheless, despite the 

difficulty in formulating bright-line rules in this area, some 

basic precepts have evolved in the assessment of minimum 

contacts. For example, if a nonresident defendant's contact 

with the forum is simply "fortuitous" or "the result 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 may end 

up in the forum state" does not render the seller amenable 

to suit in the forum state. Renner, 33 F.3d at 279 (citing 

Woodson, 444 U.S. at 291, 295). A finding of minimum 

contacts demands the demonstration of " `some act by 

which the defendant purposely avail[ed] itself of the 

privilege of conducting business within the forum State, 

thus invoking the protection and benefits of its laws.' " 

Farino, 960 F.2d at 1221 (quoting Hanson v. Denckla, 357 

U.S. 235, 253 (1958)). 

In many products-liability cases (of which this case is a 

sort), the seller does not come in direct contact with the 

forum state but does so through intermediaries such as 

retailers or distributors. In response to this phenomenon, 

courts have developed the "stream of commerce" theory by 

which specific jurisdiction is asserted over a nonresident 

defendant which injected its goods, albeit indirectly, into 

the forum state and either "derived [a] substantial benefit 

from the forum state or had a reasonable expectation of 

[deriving a substantial benefit from it]." Max Daetwyler, 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"? When is an 

expectation "reasonable"?). 

 12 
In Asahi Metal Industry Company, Ltd. v. Superior Court 

of California, Solano County, 480 U.S. 102 (1987), the 

Supreme Court attempted to elucidate the elements of 

jurisdiction based on the stream-of-commerce theory. 

Unfortunately, the Asahi Metal Court presented three 

different conceptions of purposeful availment through the 

stream of commerce, none of which was endorsed by a

majority of the Court.6 In Asahi Metal, a California plaintiff 

injured in a motorcycle accident in California filed 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 Japanese 

corporation, seeking indemnification because Asahi had 

manufactured the valve assemblies for Cheng Shin's tire 

tubes. The plaintiff and Cheng Shin settled, leaving only the 

indemnity action between Cheng Shin and Asahi, which 

contested jurisdiction. 

Asahi had not solicited any business in California and 

had no offices, agents or property there. It sold its tube 

assemblies to Cheng Shin in Taiwan and had no control 

over the distribution system that brought its components 

into products eventually sold in California. The California 

Supreme Court concluded that Asahi knew that some of the 

valve assemblies would be incorporated into tire tubes sold 

in California and benefited indirectly from the sale 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 jurisdiction 

over Asahi was disconsonant with notions of "fair play and 

substantial justice." Renner, 33 F.3d at 281 (discussing 

Asahi Metal generally).7 However, the Justices were divided 

on the level of minimum contacts necessary for afinding of 

_________________________________________________________________ 

6. The voting breakdown among the Justices was 4-4-1. See generally 

Asahi Metal Industry Company, Ltd. v. Superior Court 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. 

 13 
jurisdiction under the stream-of-commerce theory. For 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 intent or 

purpose to serve the market in the forum State." Asahi 

Metal, 480 U.S. at 112. Justice O'Connor provided the 

following examples of such conduct: "designing the product 

for the market in the forum State, advertising in the forum 

State, establishing channels for providing regular advice to 

customers in the forum State, or marketing the product 

through a distributor who has agreed to serve as the sales 

agent in the forum State." Id. 

Justice Brennan, writing for another plurality of four, 

disagreed that a finding of such "additional conduct" was 

necessary. Noting that the stream of commerce does not 

consist of "unpredictable currents or eddies," Justice 

Brennan stated that "[a]s long as a participant in this 

process is aware that the final product is being marketed in 

the forum State, the possibility of a lawsuit there cannot 

come as a surprise." Id. at 117 (Brennan, J., concurring). 

This premise led him to conclude: 

 A defendant who has placed goods in the stream of 

 commerce benefits economically from the retail sale of 

 the final product in the forum State, and indirectly 

 benefits from the State's laws that regulate and 

 facilitate commercial activity. These benefits accrue 

 regardless of whether that participant directly conducts 

 business in the forum State, or engages in additional 

 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 joined by 

Justices White and Blackmun, who also joined Justice 

Brennan's concurrence). First, Justice Stevens observed 

that the Court's disquisition on minimum contacts was 

superfluous since the reversal was based on concerns 

about "fair play and substantial justice." Id. at 121-22 

(Stevens, J., concurring) (internal quotation marks and 

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

distaste for the belief that "an unwavering line can be 

drawn between `mere awareness' that a component will find 

its way into the forum State and `purposeful availment' of 

the forum's market." Id. at 122 (Stevens, J., concurring) 

(citation omitted). Justice Stevens posited, instead, that a 

determination of purposeful availment must be made 

considering the following factors: "the volume, the value, 

and the hazardous character of the components [placed in 

the stream of commerce]." Id. (Stevens, J., concurring). He 

even went so far as to offer a rough estimate of the type of 

volume that would suggest purposeful availment: "I would 

be inclined to conclude that a regular course of dealing that 

results in deliveries of over 100,000 units annually over a 

period of several years would constitute `purposeful 

availment' . . . ." Id. (Stevens, J., concurring). Justice 

Stevens departed from the formulations of the two plurality 

opinions because (1) he did not find Justice O'Connor's 

factor of "additional conduct" to be dispositive or even 

relevant and (2) he considered the extent of the benefit (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-line 

guideposts -- and that point is evidenced in the federal 

appellate court decisions that have come in its wake. Some 

courts of appeals have boldly adopted one of the conflicting 

conceptions of minimum contacts via the stream of 

commerce. Compare, e.g., Barone v. Rich Brothers Interstate 

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) with Boit 

v. Gar-Tec Products, Inc., 967 F.2d 671, 683 (1st Cir. 1992) 

(adopting a position consistent with that of Justice 

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 have 

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); Tobin v. 

Astra Pharmaceutical Products, Inc., 993 F.2d 528, 543 (6th 

 15 
Cir. 1993); Vermeulen v. Renault, U.S.A., Inc. , 985 F.2d 

1534, 1548 (11th Cir. 1993);8Shute v. Carnival Cruise 

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 streamof-commerce case, Renner, we too did not have occasion 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 issue 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 whether 

exercising jurisdiction comports with notions of "fair play 

and substantial justice." That is, even if a defendant has 

the requisite minimum contacts with the forum state, other 

factors may militate against exercising jurisdiction. These 

"fairness factors" include: "the burden on the defendant, 

the forum State's interest in adjudicating the dispute, the 

plaintiff's interest in obtaining convenient and effective 

relief, the interstate judicial system's interest in 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) (internal 

quotation marks omitted). 

_________________________________________________________________ 

8. The court of appeals for the Eleventh Circuit has manifested some 

ambivalence in this regard in that it has issued opinions both embracing 

Justice O'Connor's standard and declining to adopt either standard. 

Compare Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1548 (11th 

Cir. 1993) ("Because jurisdiction . . . over [the defendant] in this case 

. . . 

is consistent with due process under the more stringent `stream of 

commerce plus' analysis adopted by the [O'Connor] plurality, we need 

not determine which standard actually controls this case.") with Madara 

v. Hall, 916 F.2d 1510, 1519 (11th Cir. 1990) (concluding that exercise 

of jurisdiction must satisfy the stream-of-commerce test articulated by 

the O'Connor plurality). 

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

substantial justice" prong is left to a court's discretion. See 

Farino, 960 F.2d at 1222. Nonetheless, we typically apply 

this second tier of the analysis in resolving issues 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 substantial 

justice"). Moreover, we have referred to its application as 

mandatory, not discretionary. Id. at 701 ("Having 

determined that there were sufficient minimum contacts, 

we must determine whether the assertion of personal

jurisdiction accords with notions of `fair play and

substantial justice.' ") (citation omitted) (emphasis added). 

The very fact that the Supreme Court precedent most

pertinent to this matter -- Asahi Metal-- was decided on 

this basis counsels its application to the present case. This 

final step (i.e., assessing the "fairness" of asserting 

jurisdiction) concludes a court's jurisdictional analysis. 

C. 

1. 

We now turn to the issue of whether exercising 

jurisdiction over Colelli complies with the requirements of 

due process under the Constitution. Initially, we must 

determine whether Colelli had minimum contacts with

Pennsylvania by selling solvents to Ohio oil producers. 

Three facts are pertinent to this determination: (1) 

approximately sixty percent of the Penn grade and Corning 

grade crude oil produced by the Ohio oil producers was 

sold to Pennsylvania refineries; (2) Cam Colelli knew that oil 

produced by Colelli's Ohio customers was going to 

Pennzoil's refinery in Pennsylvania; and (3) in response to 

the 1994 chloride problem, Cam Colelli sent samples of 

Colelli solvents to laboratory personnel at Pennzoil's 

refinery to preclude future contamination problems.9 

_________________________________________________________________ 

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 

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

Looking first to Justice O'Connor's standard (which is 

more stringent than Justice Brennan's), the placement of a 

product in the stream of commerce must be accompanied 

by some "[a]dditional conduct of the defendant [that] may 

indicate an intent or purpose to serve the market in the 

forum State." Asahi Metal, 480 U.S. at 112. Justice

O'Connor proffered the following as examples of such 

additional conduct: "[1] designing the product for the 

market in the forum State . . . [2] establishing channels 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 to 

"design" a product which could be used to serve the

Pennsylvania refinery market. Furthermore, the record 

indicates that Cam Colelli had a number of telephone 

conversations with lab personnel at Pennzoil's refinery to 

discuss testing procedures and methodology. Thus, Cam 

Colelli had established "channels for providing regular 

advice to" Pennzoil's personnel in Pennsylvania. Although 

Pennzoil was not technically a "customer" of Colelli's (since 

Colelli did not sell solvents directly to Pennzoil), Colelli was 

obviously motivated by the fact that Pennzoil operated one 

of the two major refineries in the state to which the Ohio 

producers sent sixty percent of their crude oil. Cam Colelli 

admits that he knew Pennzoil held such a significant 

portion of the Ohio producers' customer base;10 the

_________________________________________________________________ 

the admission demonstrates knowledge of the dangers of silicon-tainted 

solvents. Colelli, on the other hand, argues that Cam Colelli only thought 

that silicon could be problematic because it acts as an anti-foaming 

agent, and not because he was aware of any potential for serious 

damage. Both of these arguments are irrelevant to our analysis because 

they address the merits of Pennzoil's claim, not the 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 oil producers told me. 

There weren't that many refineries. Being that Pennzoil 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 additional 

conduct is present in this case. According to Justice 

O'Connor's standard, Colelli had the minimum contacts 

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 satisfied than 

Justice O'Connor's.11 Colelli has "placed goods [i.e., 

solvents] in the stream of commerce [and] benefit[ed] 

economically from the . . . sale of the final product[, i.e., 

crude oil, to refineries] in the forum State." Id. at 117 

(Brennan, J., concurring). As such, Colelli "benefit[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 Pennsylvania by 

deriving financial benefits from its customers' sale of crude 

oil to Pennsylvania refineries. The Ohio producers sent 

_________________________________________________________________ 

11. One may note that, since Justice O'Connor's standard is more 

demanding than Justice Brennan's, any factual scenario that satisfies 

the former will probably satisfy the latter as well. Still, since we have 

not 

manifested a preference for either of the two standards, the demands of 

clarity counsel us to apply both standards explicitly. The clear 

satisfaction of both the O'Connor and the Brennan standards obviates 

any need to adopt one over the other. 

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

even 

had minimum contacts under Justice Stevens' standard. The relative 

volume and value (two of the three factors central to Justice Stevens' 

position) of the silicon-laced oil forwarded to Pennsylvania is not in 

dispute: sixty percent of the crude oil generated by the Ohio producers 

found its way to Pennsylvania. Also, the "hazardous character" of the 

silicon (to property interests if not personal safety) is apparent from 

the 

damage caused to Pennzoil's refinery. Asahi Metal, 480 U.S. at 122 

(Stevens, J., concurring). 

 19 
most of their oil to Pennsylvania; Colelli indirectly benefited 

from the sale to Pennsylvania refineries; Cam Colelli was 

aware of that indirect benefit; and Colelli had expressed a 

desire to preserve its relationship with at least one 

Pennsylvania refinery (Pennzoil's) by conforming its solvents 

to the refinery's specifications. For the reasons discussed 

above, these facts satisfy the criteria of both Justice 

O'Connor and Justice Brennan.13 We therefore conclude 

that Colelli did have the minimum contacts needed to 

support the exercise of personal jurisdiction in 

Pennsylvania. 

2. 

Finally, having determined that Colelli can be haled into 

court in Pennsylvania, we must determine whether such an 

exercise of jurisdiction would respect notions of"fair play 

and substantial justice." Justice Brennan noted that cases 

are "rare . . . in which minimum requirements in the 

concept of fair play and substantial justice . . . defeat the 

reasonableness of jurisdiction even [though] the defendant 

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 present 

case is not one of those rare cases described by Justice 

Brennan. 

None of the "fairness factors" -- the burden on the

defendant, the forum state's interest in adjudicating the 

dispute, the plaintiff's interest in obtaining convenient and 

effective relief, the interstate judicial system's interest in 

obtaining the most efficient resolution of controversies and 

the shared interest of the several states in furthering 

fundamental social policies -- suggest that exercising 

jurisdiction would be unreasonable in this case."This is not 

a case where a severe burden is placed on an alien 

defendant as in Asahi[ Metal]. Nor does this case involve 

one isolated occurrence where the defendant had no 

connection with the forum state, as in [Woodson]." Mesalic, 

_________________________________________________________________ 

13. Since the facts of this case satisfy the standards of both Asahi Metal 

pluralities, we do not have occasion to select one standard or the other 

as the law of this circuit. 

 20 
897 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 isolated, 

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 District 

of Pennsylvania, the district closest to Ohio. If we were to 

deem litigation in the Western District of Pennsylvania 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 -- because any 

burden borne by Ohio defendants would be the same for 

foreign defendants from other neighboring states and even 

greater for foreign defendants who are not domiciled in a 

neighboring state. Thus, we conclude that Colelli would 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 situation 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 jurisdiction 

over Colelli, Pennzoil refiled this action against Colelli in 

district court in Ohio. Considering the fact that several 

Ohio corporations are involved, one cannot deny Ohio's 

interest in this matter. Yet, Pennsylvania also has an 

interest in this dispute, since the only alleged harm 

occurred in Pennsylvania and relates to the oil industry -- 

an industry which is important for any state economy. 

Whatever the degree of Pennsylvania's interest in this 

matter, it cannot be considered any less than Ohio's. 

Finally, we cannot conceive of any judicial inefficiency or 

impairment of a substantive social policy that would result 

from exercising jurisdiction in Pennsylvania. 

Indeed, Colelli itself does not even explain with any 

specificity how exercising jurisdiction would offend notions 

of "fair play and substantial justice." No claims of 

exorbitant travel expenses, unavailability of evidence, 

 21 
drains on judicial resources or countervailing state 

interests have been made. Instead, Colelli merely argues 

that any exercise of jurisdiction without minimum contacts 

cannot comply with notions of "fair play and substantial 

justice." However, since we conclude that minimum 

contacts are present in this case, we reject this argument. 

Concomitantly, we conclude that exercising jurisdiction 

would be in accord with notions of "fair play and 

substantial justice." 

IV. 

To recapitulate, we conclude that Pennsylvania's longarm statute properly extends personal jurisdiction to Colelli 

and that the exercise of such jurisdiction satisfies the 

requirements of constitutional due process. Accordingly, we 

will reverse the judgment of the district court and remand 

for further proceedings consistent with this opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 22