Petition — White v. Arthur Murray, Inc.

4 TTlep

: SEP 23 i97e

No. 76-432 MICHAL ROBAL,

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1975

RENA B. WHITE

BEATRICE RICE

MYN CLEARY

GWENDOLYN LANDENBERGER

FRANCES W. KENNEDY

Petitioners,

Ve.

ARTHUR MURRAY, INC.

PETITION FOR WRIT OF CERTIORARI

TO THE

SUPREME COURT OF THE STATE OF UTAH

William H. Henderson

208 Metropolitan Law Bldg.

431 South Third East

Salt Lake City, UT 84111

: Attorney for Petitioners

Joseph C. Fratto

206 Metropolitan Law Bldg.

431 South Third East

Salt Lake City, UT 84111

Of Counsel.

INDEX

Page

Opinions Below......cesecseceessesesse 2

SUP Cs bo ebdmash dob 06300 6b 0 Obs 2

Constitutional Privilege Involved.... 3

Question Presented.......eecseeeeeees F

SUMCOMGS ss o'cc ee ecb eessbbetecdoosecseon 3

Reasons For Granting The Writ........ 7

Appendix A. .cccswcccceecceocccesersese AD

APPONGIX Bow scavcsccccsvccccccsscscce £6

Appendix C...cccccrcccescsccccccces -- 19

Appendix Decweeadescvvecnouoevcetecenes 21

*

Citations

Cases:

International Shoe Co. v.

owe 310

*e ev#ee#weeenenree#@e#ee#*t#eeeee#ee#e##e#te#e 8

State v. Phillips 540 P. 2d 936

*enereeenerteeenw#ee #eee#ee 7, 8

White v. Arthur Murra Inc.

545 P. ad 439 Tue 1976). 2, 10

Statutes:

26 U.S.C. L287(S).ncsevscevessese 2

28 U.S.C. DIGLES he oc 06 cece cevese 2

Utah Code 78-27-22 to 78-27-24...

eee eeeveeen eee eeenee 3, 4, 9, 19-20

Articles:

"The Utah Supreme Court and the

Rule of Law: Phillips and the

Bill of Rights in U ", Utah

Law Review, Vol. 1975, Fall,

Number 3, p- BSODeccevecscevsecesoers 8

"After The Ball", Wall Street

Journal, Pacific Coast Ed.,

March 10, WOTBccccocseseccse 9, 21-22

| IN THE |

SUPREME COURT OF THE UNITED STATES

OCTOBER, 1975

No.

RENA B. WHITE

BEATRICE RICE

MYN CLEARY

GWENDOLYN LANDENBERGER

FRANCES W. KENNEDY

Petitioners,

Vv.

ARTHUR MURRAY, INC,

PETITION FORK A WRIT OF CERTIORARI

TO THE

SUPREME COURT OF THE STATE OF UTAH

Rena B. White, Beatrice Rice, Myn

Cleary, Gwendolyn Landenberger and Frances

W. Kennedy, petition for a Writ of Certio-

rari to review the decision of the Supreme

Court of the State of Utah entered in this

case May 5, 1976, (Rehearing denied June

28, 1976) affirming the judgment of the

District Court of Utah, Third Judicial

(1)

(2)

District, that it did not have personal

jurisdiction over Arthur Murray, Inc, under

Utah Statutes (Utah Code 38-27-22 to 78-27-

24).

OPINIONS BELOW

The opinion of the Supreme Court of the

State of Utah (App. A, infra pp.10-15) is~-

reported in 549 P. 2d 439 (May 5, 1976).

The District Court’s Order, Judgment and

Decree quashing the service of summons on

Arthur Murray, Inc. and dismissing petition-

ers' complaints (App. B, infra pp. 16-18) is

unreported.

JURISDICTION

The decision of the Supreme Court of

Utah was entered May 5, 1976. On May 20,

1976, petitioners were granted extention of

time for filing a Petition for Rehearing to

June 24, 1976, pursuant to Rule 76(f) Utah

Rules of Civil Procedure. On June 24, 1976,

a Petition for Rehearing was duly filed

pursuant to Rule 76(e) Utah Rules of Civil

Procedure.

We invoke the jurisdiction of the Sup-

reme Court under 28 USC 1257(3) and 28 USC

2101(c).

(3)

CONSTITUTIONAL PRIVILEGE INVOLVED

The Due Process clause of Section l,

Amendment XIV to the Constitution of the

United States.

3 QUESTION PRESENTED

Whether the Supreme Court of Utah denied

petitioners due process of law when it

affirmed the decision of the lower court

quashing service of summons on Arthur

Murray, Inc. and dismissing petitioners'

complaints in the face of Utah Statutes

providing jurisdiction of Utah's courts

"over non-resident defendants to the fullest

extent permitted by the due process clause

of the Fourteenth Amendment _to the United

States Constitution" (Utah Code 78-27-22 to

78-27-24) (App. C, infra, pp. 19-20).

STATEMENT

_ The constitutional question of the right

of petitioners under the due process clause

of Amendment Fourteen to assert jurisdic-

tion over Arthur Murray, Inc. in Utah's

courts was presented at every stage of the

proceeding.

The complaints of petitioners (identical

in pertinent parts) allege fraudulent, pre-

tensive and coersive conduct of Arthur

1s (4)

Murray, Inc. in the sale of courses of danc-

ing instruction to the petitioners and prays

for damages for same. The complaints allege

that Arthur Murray, Inc. supervised, contro-

lled and directed, and participated in this

conduct, and by such conduct subjected it-

self to jurisdiction of the District Court

of Utah under Utah's so-called "long arm

statutes" (78-27-22 to 78-27-24).

Utah Statutes (78-27-22 to 78-27-24

Utah Code) in pertinent part provides for

jurisdiction of Utah courts over non-.

residents, if non-residents transact any

business in the state or contracts to supply

services or goods in the state (78-27-24).

The Legislative mandate is that the statutes

"should be applied so as to assert juris-

diction over non-resident defendants to the

fullest extent permitted by the due process

Clause of the Fourteenth Amendment to the

United States Constitution.

After due service of process on Arthur

Murray, Inc., and on December 9, 1974,

Arthur Murray, Inc. moved to quash service

of summons on the grounds that it was a

Delaware corporation with its principal

place of business at Coral Gables, Florida,

and had never done business in Utah and was

be oe ee ee eee a , ease Se ate eee) eye an.” es >, i, Oe,

* % “yh Sa J - - TAs °

(5)

not doing business. in Utah at the time and

that it did not have an office, agent or

employee within Utah, and that the court

lacks jurisdiction over Arthur Murray, Inc.

On June 27, 1975, hearing was had on

the Motion. At the hearing (and on the

Hearing for Motion for New Trial on Septem-

ber 11, 1975) the following uncontradicted

contacts between Arthur Murray, Inc. and

its Salt Lake City franchise dance studio

were shown by deposition and affidavits:

1. Arthur Murray, Inc. specifically

directed its Salt Lake City dance studio in

its fraudulent and coersive sales of dancing

lessons to petitioners, including such

minute directions as telling them:

"a. What to say.

bs. How to say it.

c. When to say it. .

d. How to overcome or reply to

negative statements.

e. When to say. nothing.

££. When to change the subject."

2. Arthur Murray, Inc.'s representa-

tive regularly visited its Salt Lake City

studio to sign and approve certificates of

awards to petitioners, There were many

such’ awards and all petitioners received

(6)

some. A representative of Arthur Murray,

Inc. regularly visited its Salt Lake City

studio to supervise and control the sales

of courses of dancing instruction.

3. Arthur Murray, Inc. directed its

Salt Lake City studio in the sale of loss

leader sales to entrap customers. It

supplied the instructions and the advertise-

ments and they were followed by the Salt Lake

studio.

4. Arthur Murray, Inc. exercised over-

riding control of all activities of the Salt

Lake studio. Arthur Murray, Inc.'s fran-

chise agreement with its Salt Lake studio

provided for tight control.

Arthur Murray, Inc. did not profer one

iota of evidence contradicting these

contacts (indeed, control) of its Salt Lake

dance studio; nor any evidence whatsoever

at the hearings.

Pursuant to subdivision 2 or Rule 2l,

Rules of the Supreme Court of the United

States, we are requesting the District

Court of Utah (the court possessed of the

record) to transmit all evidence adduced at

the District Court hearings relating to

contracts between Arthur Murray, Inc. and

its Salt Lake City franchised dance studio,

wht ak i “aie fe oy Ee Se ee gee) RR, ae a pens Pe ee ee Ce ee oh ee ee” kk Seek. ara ae

(7)

namely:

Deposition of Paul Curry

Affidavit of Marie LaTour

Arthur Murray Executive Manuel

Arthur Murray Franchise Agreements

Affidavit of Petitioners

The denial of due process to petitioners

by the Supreme Court of Utah's affirmance of

the lower court's judgment, quashing service

of summons and dismissing the complaints,

was raised by petitioners in their "Brief

of Appellants" (filed December 2, 1975),

Appellants Reply Brief "C" (filed March 19,

1976), and Petition for Rehearing (filed

June 24, 1976) in the Supreme Court of Utah.

REASONS FOR GRANTING THE WRIT

The refusal of the Supreme Court of Utah

to apply the due process clause of the

Fourteenth Amendment, denies the benefits

of said amendment to every person in the

State of Utah.

The hostility of the Supreme Court of

Utah to the Fourteenth Amendment is demon-

strated in State v. Phillips 540 P. 2d 936

(Utah 1975) wherein the court challenges

the validity of the adoption of the amend-

ment.

(8)

We believe that issue presented by this

petition is the most unique in decades.

Edwin Brown Firmage, Esq., professor of

Law, University of Utah, in his Law Review

article "The Utah Supreme Court and the

Rule of Law: Phillips and the Bill of

Rights in Utah", points out that the Utah

Supreme Court in Phillips is denying to the

people of Utah the benefits of the due

process clause of the Fourteenth Amendment.

"...the Utah Supreme Court defied or

demonstrated ignorance of over half a cen-

turn of United States Supreme Court case

law, holding to the contrary."

The Utah Supreme Court's denial of the

due process clause of the Fourteenth Amend-

ment in the instant cases is even more

aggravated than in Phillips.

For here, the Supreme Court of Utah;

1. Turns its back on this court's

decision in International Shoe Co. v.

Washington, 326 U.S. 310 (1945) pronouncing

the minimum contacts doctrine of due process.

1 Utah Law Review, Vol. 1975, Fall,

Number 3, p. 593.

(9)

2. ‘Turns its back on the mandate of

Utah's Legislature that Utah's Courts apply

the minimum contacts doctrine "to the

fullest extent permitted by the due process

clause of the Fourteenth Amendment to the

United States Constitution" (Utah Code

78-27-27).

3. Turns its back on the uncontradicted

evidence in this case showing contacts

between Arthur Murray, Inc. and its Salt

Lake City franchise, far beyond the require-

ments of the minimum contacts doctrine.

4. Turns your petitioners out of court

in their actions alleging the sordid fraud-

ulent practices of franchisers of dance

studios that have become a national scandal.”

The Petition for Writ of Certiorari

should be granted.

Respectfylly submitted,

° D

f : Attorney for Petitioners

2 after the Ball", Wall Street Journal

Pacific Coast Ed., March 10, 1972 (pertinent

parts quoted in App. D, infra, pp 21-22 ).

(10)

APPENDIX A

THE SUPREME COURT OF THE STATE OF UTAH

Nos. 14286

14287

14288

14289

14290

RENA B. WHITE, et al

Plaintiffs and Appellants

Vv.

ARTHUR MURRAY, INC.

Defendant and Respondent

[May 5, 1976]

TUCKETT, Justice:

The plaintiffs appeal from an order of

the district court dismissing their com-

plaints on the ground that the court had

not acquired jurisdiction over the defendant.

While the plaintiffs filed separate com-

plaints, each alleging cause of action for

fraud against the defendant, the ruling

complained of by the district court is

common to each case and is dealt with here

as though it were one appeal. Plaintiffs

(11)

are residents of Salt Lake County and filed

_ their separate complaints in _1e District

Court of Salt Lake County and caused service

of summons to be made upon the defendant in

the state of Florida. Defendant is a corp-

oration organized and existing under the

laws of the state of Delaware with its

peincipal office and place of business in

Coral Gables, Florida.

After the service of summonses and

copies of the complaints upon the defendant

in the state of Florida, the defendant

appeared specially to move the court to

dismiss the complaints on the ground and

for the reason that the court had not

acquired jurisdiction over the defendant.

After a hearing on the motion, the

court below found that the defendant has

never qualified to do business in the state

of Utah, nor has it ever done business in

this state. The court further found that

an Arthur Murray Dance Studio was operated

in Salt Lake City, Utah, but that the studio

was operated by a franchisee of the defen-

dant, and except for isolated visits by

auditors of the defendant, Arthur Murray,

Inc., has not maintained an office in, done

business in, had an agent, employee or

(12)

officer or other representative in the state

of Utah, neither before, during or since the

times referred to in plaintiffs' complaints.

The court granted the defendant's motion to

quash the service of summons served on behalf

of each of the plaintiffs. During the times

mentioned in the plaintiffs' complaints an

Arthur Murray Dance Studio was operated in

Salt Lake City and was in frct operated by

a franchisee or franchisees who were not

made parties to these proceedings. The

contract entered into by the franchisee and

the defendant contains the following pertin-

ent language:

(a) The franchisee will include

provision in each enrollment agreement

or contract entered into with a student

relating to the taking of dancing les-

sons or the payment therefore substan-

tially as follows: This agreement is

made by student with the franchised

owner of the studio in which he or she

is enrolling and said franchisee is

solely responsible for the performance

of this contract and the dancing lessons

provided for herein. As student, I

understand and agree that this contract

is made by me solely with the above

(13)

studio, as seller and does not directly

or indirectly constitute an agreement

with or an obligation of Arthur Murray,

Inc., or any of its employees.

see *

(c) Franchisee agrees to use at

all times the words "a franchised studio"

whenever "Arthur Murray Studio", "Arthur

Murray Dance Studio", "Arthur Murray

School of Dancing", or any variation

thereof is used in the franchisee's

advertising or printed matter. The

franchisee agrees to use in his appoint-

ment cards, receipts, etc., wherever the

name "Arthur Murray" appears, the phrase

"Arthur Murray Dance Studio,"

"franchisee," (the blank to be filled in

with the franchisee's name).

(d) The franchisee will immediately

have the phrase "Arthur Murray Dance

Studio" | "owner and franchisee"

(the blank to be filled in with the

franchisee's name) painted on the outer

door of entrance to the franchisee's

studio or studios.

The defendant did furnish to the fran-

chisee instructional material, various forms

(14)

of advertising and promotional materials,

including dance competitions. For its

services the defendant charged the franch-

isee a percentage of the income received

from students who paid for dancing instruc-

tion. Auditors from the defendant's office

checked the books of the franchisee on an

annual or biannual basis to determine

whether the defendant was receiving the

agreed percentage. The defendant carried

on no other activity in the state of Utah,

not did it supervise or engage in the

management of the dance studio.

In order for the Utah court to acquire

jurisdiction over the defendant it could

only be accomplished on the basis of Section

78-27-24, U.C.A. 1953, which provides in

part as follows: |

Any person . . .whether or not a

citizen or a resident of this state,

who in person or through an agent does

any of the following enumerated acts,

submits himself, and if an individual,

his personal representative, to the

jurisdiction of the courts of this

state as to any claim arising from:

(1) The transaction of any busi-

ness within this state;

(15)

(2) Contacting to supply services

or goods in this state;

(3) The causing of any injury

within this estate whether tortious or

by breach of warranty; ... .

The activity of the defendant in this

State does not meet the requirements of the

above section which has been construed and

dealt with in a number of decisions by this

court.

We are of the opinion that the devision

of the district court in determining that

it had not acquired jurisdiction over the

defendant is amply supported by the record,

and the decision is affirmed. Defendant

is entitled to costs.

WE CONCUR:

F. Henri Henriod,

Chief Justice

J. Allan Crockett, o We dett, Justice

Justice Justice

MAUGHAN, Justice, concurs in the result.

1. Durham-Bush, Inc. v. Bill Hartmann

Plumbing & Heating, Inc., 30 Utah 2d 177,

515 P. 2d 92; Foreign Study League v.

Holland-America Line, 27 Utah 2d 442, 497

P. 244; Hill v. Zale Corporation, 25 Utah

2d 357, 482 P. 2d 332; Union Ski Company v.

Union Plastics Corp., No. 14065, __—P. 2d

(16) (17)

1. Arthur Murray, Inc., is a corpora-

tion organized and existing under and by

virtue of the laws of the State of Delaware,

and has its principle place of business in

Coral Gables, Florida. Arthur Murray, Inc.

APPENDIX B

THE DISTRICT COURT OF SALT LAKE COUNTY

STATE OF UTAH

Nos. 222923

222924

pro ese has never qualified to do business nor has

222927 it ever done business in the State of Utah.

2. That during the time periods refer-

red to in plaintiffs' complaint, an Arthur

Murray dance studio was operated in Salt

Lake City, Utah, but that at all times

referred to in plaintiffs' complaint, said

dance studio was operated by a; franchisee

of Arthur Murray, Inc. and that but for

isolated visits into the State of Utah by

the auditors of Arthur Murray, Inc., Arthur

Murray, Inc has not meintained an office in,

done business in, had an agent, employee or

officer or other representative in the

State of Utah either before, during or

since the time periods referred to in

plaintiffs' complaint.

NOW THEREFORE, upon motion of the

defendant, Arthur Murray, Inc.:

IT IS HEREBY ORDERED, ADJUDGED AND

DECREED :

The motion of Arthur Murray, Inc., to

quash the service of the summons of each

RENA B. WHITE, et al

Plaintiffs

Vv.

ARTHUR MURRAY, INC.

Defendant

ORDER

The motion of Arthur Murray, Inc., to

quash service of summons, having come on

regularly for hearing on the 27th day of

June, 1975, at the hour of 2:00 p.m. before

the Honorable Stewart M. Hanson, Sr., with

William Henderson appearing on behalf of

the plaintiffs, and Philip R. Fishler

appearing on behalf of the defendant, and

the above entitled matters having been con-

solidated for purposes of this hearing, the

Court after hearing arguments of counsel

and being fully advised finds as follows:

(18)

plaintiff be and is hereby granted, and

further that each of the plaintiff's |

complaints is hereby dismissed.

Dated this llth day of July, 1975.

BY THE COURT

Stewart M. Hanson, Sr.

Judge

(19)

APPENDIX C

Relevant Provisions

UTAH CODE

78-27-22 to 78-27-24

78-27-22. Jurisdiction over non-resi-

dents~-Purpose of act.--It is declared, as

a matter of legislative determination, that

the public interest demands the state pro-

vide its citizens with an effective means

of redress against nonresident persons, who

through certain significant minimal contacts

with this state, incur obligations to citi-

zens entitled to the state's protection.

This legislative action is deemed necessary

because of technological progress which has

substantially increased the flow of commerce

between the several states resulting in

increased interaction between persons of

this state and persons of other states.

The provisions of this act, to ensure

maximum protection to citizens of this

state, should be applied so as to assert

jurisdiction over nonresident defendants to

the fullest extent permitted by the due

process clause of the Fourteenth Amendment

(20)

to the United States Constitution.

78-27-23. Jurisdiction over nonresidents

--Definitions.--As used in the act:

(1) The words "any person" mean any

individual, firm, company, association, or

corporation.

(2) The words "transaction of business

within this state" mean activities of a non-

resident person, his agents, or representa-

tives in the state which affect persons or

businesses within the state of Utah.

78-27-24. Jurisdiction over nonresidents

--Acts submitting person to jurisdiction. --

Any person, not withstanding section 16-10-

102, whether or not a citizen or resident

of this state, who in person or through an

agent does any of the following enumerated

acts, submits himself, and if an individual,

his personal representative, to the juris-

diction of the courts of this state as to

any claim arising from:

(1) The transaction of any business

within this state;

(2) Contracting to supply services or

goods in this state;

(3) The causing of any injury within

this state whether tortious or by breach

of warranty;

(21)

APPENDIX D

The Wall Street Journal

Pacific Coast Edition

(Excerpt )

AFTER THE BALL

Many Irate Consumers Assail Selling

Tactics of Dance Instructors

Critics Claim Some Studios Exploit

Ulterior Motives Of Pupils For Big Profits

"Gigolos & Rich Old Ladies’

os aan and out of court, a growing

number of angry consumers are claiming

that they have been bilked by dance studios.

And these complaints have created consid-

erable concern in the offices of various

regulatory authorities, including the Fed-

eral Trade Commission.

(22)

The so-called dance-studio game is by

no means a new problem for the FTC. More

than a decade ago, stories about dance

school swindles--in which light-footed,

money-hungry entrepreneurs prey upon the

lonely and the aged--were aplashed across

the front pages of the nation's newspapers,

and the FTC moved in on some of them. As

the headlines faded, however, the swindlers

waltzed on.

"They never did even slow up", says an

FTC attorney. "They've just gone around

and around and around."

The two largest studio chains, Arthur.

Murray, Inc. and the Fred Astaire organiza-

tion, vehemently deny any intentional wrong-

doing--although they concede the possibility

of exploitation is omnipresent. "The nature

of the business leads itself to exploitation,

and we try to limit it,"' says Chester F.

Casanave, head of the Astaire organization.

"Ninety percent of the schools in the country

are well run and well operated, and the

organization highly resents those people

who dor.'t take care of the store."

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on

September o2_: 1976, he deposited in the

mail in a United States Post Office, first

class postage prepaid, addressed to Strong

& Hanni, Counsel of Record for Arthur

Murray, Inc,., at their post office address,

three copies of the foregoing Petition For

Writ of Certiorari.

¢

L H. N N

Attorney for Petitioners