Court Opinion

ID: 9451317
Source: CourtListenerOpinion
Date Created: 2023-08-04 17:13:33.447366+00
Date Added: 2024-06-11T17:32:39.771989
License: Public Domain

BURGER, Circuit Judge
(dissenting):
The majority stretches the “longarm” concept beyond both the statute and reasonable need. Neither the language relied on nor its history furnishes a basis for finding venue proper here. I therefore respectfully dissent.
The statute we are called upon to construe provides, “Any suit, action or proceeding under the antitrust laws against a corporation may be brought * * * in any district wherein it may be found or transacts business * * *.” Clayton Act § 12, 38 Stat. 736, 15 U.S.C. § 22 (1964).
The majority holding rests on two “contacts” of United Fireworks Mfg. Co. with the District of Columbia. First, it points to the “substantial” volume of sales by United to Semel, a District of Columbia corporation. The majority stresses these sales but the affidavit of appellant’s General Manager is undisputed that all negotiations leading up to these sales and all deliveries of merchandise took place in Dayton, Ohio. Moreover, these deliveries were not just ordinary F.O.B. shipments, with the seller arranging for shipment, or at least transporting the goods to the shipping firm depot, and the buyer merely paying the costs, as the majority opinion seems to suggest. United did not transport or arrange transportation of the goods from its own plant in Dayton; Semel made all arrangements for shipment from that point. The only other “contact” the majority finds with the District is telephone conversations between United's officers in Dayton and Semel employees in Washington. The majority relies on these tenuous “contacts”1 to show that United “transacts business” in Washington, D. C., in the face of undisputed evidence that it has no agents here, and *834has never solicited business or advertised its products here. Price lists have been mailed into the District only when requested by prospective customers.
Section 12 authorizes suit “in any district wherein [a corporate defendant] * * * transacts business * * *.” (Emphasis added.) In holding that venue is proper merely on the basis of “contacts” such as those described above, the majority bypasses the crucial word “wherein.” As I read it, the statute contemplates venue when business is transacted in this jurisdiction, not in Ohio with persons in Washington. A golf ball sometimes circles the cup, in “contact” with the goal, but it is not in unless it enters physically. I cannot stretch the simple words of the statute to cover sales negotiated outside the District of Columbia and delivered outside the District under every sense in which the word “delivered” can be employed, especially the common meaning. United would have fulfilled these contracts even if the fireworks had never reached the District of Columbia but had been transported elsewhere, which appellant was free to do. The eventual destination of the goods is hardly more relevant to finding transaction of business than fruits of a search are to finding it valid. The majority claim that the telephone calls demonstrate commercial concern and thus bring United within the District. Yet it is hard for me to understand how these calls, which did not involve solicitation of business or contract negotiations, can be said to have brought ap-pellee’s business “of any substantial character” into the District of Columbia. While these communications reached a frequency of 22 a month during the peak season, they may have fallen off to one or even none in other months. Indeed the record does not show that United initiated a single telephone call to Semel, and if this is the fact, Semel would surely have shown it. I cannot read Section 12 as enabling a person to subject a corporation to suit in a foreign jurisdiction by purchasing the corporation’s products at its home, then going into the foreign jurisdiction and making some telephone calls to the seller.
The statutory history reveals little. The only evidence of intent which can be gleaned from the congressional debates is a broad purpose to expand venue beyond that authorized in Section 7 of the Sherman Act, 26 Stat. 210. Indeed, the members of the House of Representatives who debated this section seem to have been quite unclear even on the meaning of the Sherman Act provision. See, e. g., 51 Cong.Rec. 9414-9417 (1914). Yet this broad purpose can hardly help us in deciding a specific case of venue. It clearly does not carry to the logical extreme of allowing suit wherever an injured party resides or decides to bring his suit, for Congress rejected that alternative when it was proposed by some members. See, e. g., 51 Cong.Rec. 9146 (remarks of Representative Cullop), 9466 (remarks of Representative Dickinson), 9467 (remarks of Representative Sumners), 9607-9608 (remarks of Representative Sumners) (1914). I must respectfully suggest that the intent of Congress cannot turn on an absurdly sweeping speech of one of the 531 members of Congress that the venue provision allows suit almost anywhere including the purchaser’s home jurisdiction. If the statute said or implied this, the majority would not need to strain so valiantly to find “contacts.” The legislative history simply does not lead to the result reached by the majority.2
The majority relies largely on cases in other circuits construing Section 12. Yet it can point to only two District Court decisions sustaining venue on the basis of “contacts” even remotely as skimpy as those in the present case. Those two *835cases, Lower Colorado River Authority v. Westinghouse Elec. Corp., 219 F.Supp. 743 (W.D.Tex.1963), and Sunbury Wire Rope Mfg. Co. v. United States Steel Corp., 129 F.Supp. 425 (Ed.D.Pa.1955), would indeed support the majority’s conclusion if it were not for the fact that the deliveries here were not merely F. O.B. but took place in every known sense in Dayton, Ohio, with appellant not only paying for but even arranging for shipment from appellee’s plant.
The majority stresses the Supreme Court cases of United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L. Ed. 1091 (1948), and Eastman Kodak Co. of New York v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1926), while acknowledging that on the facts of those cases they are not in point. All the Supreme Court has told us is to use common sense in interpreting “transacts business”: “ ‘a corporation is engaged in transacting business in a district * * * it in fact, in the ordinary and usual sense, it “transacts business” therein of any substantial character.’ ” Scophony, 333 U.S. at 807, 68 S.Ct. at 861, quoting Eastman Kodak, 273 U.S. at 373, 47 S.Ct. at 403. (Emphasis added by the Supreme Court in Scophony.) Under Eastman Kodak “[t]he practical, everyday business or commercial concept of doing or carrying on business ‘of any substantial character’ became the test of venue.” Scophony, 333 U.S. at 807, 68 S.Ct. at 862.
The majority also cites two Courts of Appeals cases which cite Sunbury Wire Rope Mfg. Co., supra. Yet neither of those cases embodies “contacts” as fragile as those in the case before us. In Brandt v. Renfield Importers, Ltd., 278 F.2d 904 (8th Cir. 1960), the Court of Appeals for the Eighth Circuit held that venue was properly laid as to all three liquor company defendants in the Eastern District of Missouri. This holding was based largely upon the facts that the distillers had taken out Missouri Out-state Liquor Solicitor’s Licenses and they had each “selected sole and exclusive distributors who apparently perform for the [distillers] * * * every function of distributing [their] * * * products that agents hired and paid for the purpose could accomplish.” Id. at 910. (Emphasis added.) The sole and exclusive distributorships carried with them careful planning by the distillers of advertising in the exclusive territory. In Green v. U. S. Chewing Gum Mfg. Co., 224 F.2d 369 (5th Cir. 1955), the Court of Appeals for the Fifth Circuit held venue was proper in a district into which the defendant sold and delivered a large amount oí ball chewing gum to at least two regular customers.3 The complaint alleged that the defendant had conspired with distributors within the district to divide the area into exclusive territories. This exclusivity is vastly more significant than any factor relied on here.
The limits of the expanded venue authorized by Section 12 have been recognized and stated by Judge Christensen in language applicable to our facts:
Ordinary business practices completely removed from the local scene could not be so magnified in their supposed local effect without subjecting almost every foreign manufacturer to the consequences of local operations merely because their products eventually reach local dealers or consumers. The most loose concept of liberalized venue and service requirements would not countenance such result.
*836Intermountain Ford Tractor Sales Co. v. Massey-Ferguson Ltd., 210 F.Supp. 930, 932, (D.Utah 1962). That case involved equipment shipped directly into the local district by the Canadian defendant. The court refused to base venue upon such shipments, because “[t]he evidence clearly indicates that property shipped into Utah by the Canadian company was sold prior to shipment * * Ibid. (Emphasis added.)4 The great weight of authority before and after Soophony, supra, accords with Judge Christensen and supports the District Court’s dismissal in the present case. See Ohio-Midland Light & Power Co. v. Ohio Brass Co., 221 F.Supp. 405 (S.D.Ohio 1962); Friedman v. United States Trunk Co., 204 F. Supp. 366 (S.D.N.Y.1962); Friedman v. United States Trunk Co., 30 F.R.D. 148 (S.D.N.Y.1962); Bruner v. Republic Acceptance Corp., 191 F.Supp. 200 (E.D. Ark.1961); Dazian’s, Inc. v. Switzer Bros., 111 F.Supp. 648 (N.D.Ohio 1951); Seaboard Terminals Corp. v. Standard Oil Co., 35 F.Supp. 566 (S.D.N.Y.1940); Seaboard Terminals Corp. v. Standard Oil Co., 24 F.Supp. 1018 (S.D.N.Y.1938); cf. McManus v. Capital Airlines, 166 F. Supp. 301 (E.D.N.Y.1958); Windsor Theatre Co. v. Loew’s, Inc., 79 F.Supp. 871 (D.D.C.1948).
The basic question here is whether a corporation still has the right to restrict its business “transactions” to a chosen geographical area and thus to avoid being subjected to suit in far-away localities. I think it still has that right5 and I do not see how any seller could go farther to exercise that right than United has done. United simply has not been “transacting business * * * in the ordinary and usual sense” in this jurisdiction.

. Two other D.C. customers purchased a total of $2820.93 worth of goods. In addition, employees of appellee made five visits to the District of Columbia none for the purpose of sales; two of them were in connection with this litigation, and three were in connection with hearings of the Senate Subcommittee on Juvenile Delinquency. United received an assignment of accounts receivable from appellant. The majority correctly refuses to rely to any extent on these even more tenuous “contacts.” Cf., Fandel v. Arabian American Oil Co., 120 U.S. App.D.C. 193, 345 F.2d 87 (1965).

. See generally United States v. National City Lines, 334 U.S. 573, 582-588, 68 S.Ct. 1169, 92 L.Ed. 1584 (1948). When, as, and if Congress wants to allow suits under the Clayton Act at the plaintiff's “home base,” it has adequate staff facilities to articulate that concept in a few simple words. Until it does, we have no basis legislating it because of a speech on the floor of Congress.

. That the Fifth Circuit itself considers shipment and delivery into the district important is shown in the following articulation of its rule by Judge Rives, author of the Green opinion: “[T]his Court is committed to the proposition that a corporation doing a purely interstate business, which ships into a judicial district and delivers and sells substantial quantities of its products, ‘transacts business’ in that district within the meaning of [Section 12] * * Hartley & Parker, Inc. v. Florida Beverage Corp., 307 F.2d 916, 918 (5th Cir. 1962).

. Although Intermountain Ford, supra, did involve the question of the propriety of venue as to a parent corporation whose subsidiary did business within the relevant district, as the majority opinion recognizes, the language quoted above was addressed to the contention that venue was proper because “the Canadian corporation was directly doing business in the district of Utah because as shipper it sent goods into the state which were directed not to its subsidiary as the purchaser but to the stores operated by the subsidiary or to other dealers * * 210 F.Supp. at 932. Although Judge Christensen found venue proper in Intermountain Ford, it was only on the basis of the commingled control between parent corporation and subsidiary, so that the Canadian parent corporation exercised “direct control” over the subsidiary’s stores within the district of Utah. Id. at 938. He held that Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634 (1925), did not control the facts before him. Id. at 937-938.

. It is not necessary, in order to avoid subjecting oneself to suit in a particular foreign state, to limit one’s business to purely intrastate operations, as the majority opinion suggests in its footnote 1. Surely not every interstate business is subject to suit under Section 12 in every district into which its products may be carried by others in substantial quantities.