Petition — R. H. Macy & Co. v. United States District Court for the Eastern District of Michigan

*~ Supreme Court, U.S,

LED

OCT 20 1977

p: |

MICHAEL RODAK, JR., CLERK

IN THE

Suprene Court of the United

October Term, 1977

|

No @7-581

R. H. Macy & Co., Inc. and BAMBERGER’s,

a division of R. H. Macy & Co., Inc.,

Petitioner,

Vv.

Unitep States District Court ror THE Eastern District

oF MicuicgAN and MicroELECTRONIC SysSTEMS CORPORATION

or America, as Real Party in Interest,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Murray GARTNER

Attorney for Petitioner

1185 Avenue of the Americas

New York, New York 10036

(212) 730-7373

Dated: New York, New York

October 20, 1977

Of Counsel:

Epwarp A, Britu

Bensamin I. CoHEN

Pouetti F'REmIN

PrasHKER F'eLpMAN & GARTNER

1185 Avenue of the Americas

New York, New York 10036

and

Joun O’Meara

Dickinson Waricut McKeran

Cupiie & Moon

800 First National Building

Detroit, Michigan 48226

TABLE OF CONTENTS

PAGE

REA ep ONO ana Rte ROR PON TN BRO NOD PO 2

ERED Reet RRL OC RN LL 2

ATT a eT TEEN ROT RET 2

Statutory Provisions Involved... a ) 2

csc cuensncaasyscimcssousndnshccenensens 4

Reasons for Granting the Writ _. 3 8

I. In these diversity cases, the District Court,

and the Court of Appeals by its denial of

mandamus, clearly departed from the legal

standards articulated by this Court for the

constitutional exercise by States of im per-

sonam jurisdiction as applied by virtually all

GU FS GID sss cccicsineesecisssacesecectess cae 8

II. A writ of mandamus is the appropriate remedy

for correcting an overreaching by the District

Court of its jurisdiction which presages the

obliteration of State lines .............. oPeas 12

Conclusion ........ EE ee aM EMCEE See Tay PI 14

Appendices

A—Opinion of the District Court... .......... la

B—Opinion and Order of the Court of Appeals . 8a

II

CITATIONS

American Airlines, Inc. v. Forman, 204 F.2d 230 (3d

Cir. 1953)

Anderson v. Shiflett, 435 F.2d 1036 (10th Cir. 1971)

Anderson, Clayton & Co. v. Atlas Concrete Pipe, Inc.,

41 Mich. App. 58, 199 N.W.2d 531 (Ct. App. 1972)

Architectural Building Components Corp. v. Comfort,

528 P.2d 307 (Oklahoma 1974)

Artoe v. Mann, 36 Ill. App. 3d 204, 343 N.E.2d 647 (Ct.

App. 1976)

‘*Automatic’’ Sprinkler Corporation of America v.

Seneca Foods Corp., 361 Mass. 441, 280 N.E.2d

423 (1972) |

Branstrom & Associates, Inc. v. Community Memorial

Hospital, 296 Minn. 366, 209 N.W.2d 389 (1973)

Chassis-Trak, Inc. v. Federated Purchaser, Inc., 179

F.Supp. 780 (D. New Jersey 1960)

Colony Press, Inc. v. Fleeman, 17 Ill. App. 3d 14, 308

N.E.2d 78 (Ct. App. 1974)

Darby v. Superior Supply Co., 224 Tenn. 540, 458 S.W.

2d 423 (1970)

E. R. Callender Printing Co. v. District Court In and

For the Second Judicial District, 182 Colo. 25, 510

P.2d 889 (1973) (en banc)

Garrett v. R. H. Maey & Co., Inc., 360 F.Supp. 872

(E.D. Tennessee 1972) waa ae

Geneva Industries, Ine. v. Copeland Construction

Corp., 312 F.Supp. 186 (N.D. Illinois 1970)

Guardian Packaging Corp. v. Kapak Industries, Inc.,

316 F.Supp. 952 (D. Minnesota 1970)

PAGE

11

10, 11

11

11

10

10

11

10

10

II!

PAGE

Hanson v. Denckla, 357 U.S. 235 (1958) 20... 8

Holub Industries, Inc. v. Wyche, 290 F.2d 852 =

Cir. 1961) ..... De ac DRERE T

In-Flight Devices Corp. v. Van Dusen Air, Inc., 466

IN I TI oisciescacpacecercstsnncxsedecsteupeenssinrs 7, 8

Interdyne Co. v. SYS Computer Corp., 31 Cal. App.

3d 508, 107 Cal. Rptr. 499 (Ct. App. 1973) ............ 11

International Shoe Co. v. Washington, 326 U.S. 310

LSE SPRSERRECON SS ALPE Ce. ca SA RCE Sane VR . 8,13

Kerr v. United States District Court, 426 U.S. 394

RIESE SPn eT HR De Disease nen NS 5,13

Klein v. E.W. Reynolds Co., Inc., 355 F. — 886

RSE ER trap Sensi nau havea acinomae 9

M. Katz & Son Billiard Products, Inc. v. G. Correale

& Sons, Inc., 20 N.Y.2d 903, 285 N.Y.S.2d 871

ee 11

McGee v. International Life Insurance Company, 355

U.S. 220 (1957) pee 8

McQuay, Inc. v. Samuel Schlosberg, Inc., 321 F. Supp.

902 (D. Minnesota 1971) .._................. 9

Microelectronic Systems Corp. v. Bamberger’ s, 434

F.Supp. 168 (E.D. Michigan 1977)... 2

Misco-United Supply, Inc. v. Richards of Rockford,

Ine., 215 Kan. 849, 528 P.2d 1248 (1974) | 11

Neptune Microfloe, Inc. v. First Florida Utilities, Inc.,

261 Or. 494, 495 P.2d 263 (1972) < 11

NRM Corp. v. Pacifie Plastic Pipe Co., 36 Ohio ‘App.

2d 179, 304 N.E.2d 248 (Ct. App. 1973) , Siesta.

Oklahoma Publishing Co. v. National Sportsmen’s

Club, Inc., 323 F.Supp. 929 (W.D. Oklahoma 1971) 9

Iv

O. N. Jonas Co. v. B & P Sales Corp., 232 Ga. 256, 206

S.E.2d 437 (1974) satiia saunas

Oswalt Industries, Inc. v. Gilmore, 297 F.Supp. 307

8 ee emer he

Prentice Lumber Co. v. tino 156 Mont. 68, 474 P.2d

141 (1970) .sevoressevelejmebaianiaie

Rath Packing Co. v. Intercontinental Meai Traders,

Inc., 181 N.W.2d 184 (Iowa 1970) 000...

Shaffer v. Heitner, 97 S.Ct. 2569 (1977) ....................

Simpson Timber Co. v. Great Salt Lake Minerals and

Chemicals stil .» 296 F. —— 243 (D. Oregon

1969)

Transwestern General Agency v. a 526 P.2d

1186 (Utah 1974) ; eases

U-Anchor Advertising, Inc. v. Burt, 544 S.W.2d 500

(Texas Civil App. 1976), aff’d, —-- S.W.2d

, No. B-6516, Slip op. (Texas July 13, 1977)

United Adv ertising Agency, Inc. v. Robb, 391 F. SUPP.

626 (M.D. North Carolina 1975) .

Whittaker Corp. v. United Aircraft Corp., 482 F.2d

tet: 2) SP : eee

William R. Andrews Associates v. Sodibar Systems

of D.C., Ine., 28 N.C. App. 663, 222 S.E.2d 922 ten

App. 1976) ve aesnianateia

PAGE

11

11

11

IN THE

Supreme Court of the United States

October Term, 1977

SS ee

R. H. Macy & Co., Inc. and BAMBERGER’s,

a division of R. H. Macy & Co., Inc.,

Petitioner,

Vv.

Unitep States District Court ror THE Eastern District

or MicHicAN and MicroELEcTRONIC SysTEMS CORPORATION

or America, as Real Party in Interest,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Petitioner, R. H. Macy & Co., Inc.,' respectfully prays

that a writ of certiorari issue to review the order and deci-

sion of the United States Court of Appeals for the Sixth

Circuit denying petitioner’s application in both cases below

for a writ of mandamus to confine the m personam juris-

diction of the District Court within constitutional limits.

1. One of the actions below names Bambergers, an unincorpo-

rated division of R. H. Macy & Co., Inc., as defendant ; effectively

R. H. Macy & Co., Inc. is yo in both actions and the single

petitioner here.

Opinions Below

The opinion of the United States District Court for the

Eastern District of Michigan, 434 F. Supp. 168, appears in

Appendix A. The opinion of the Court of Appeals, as yet

unreported, appears in Appendix B.

Jurisdiction

The order of the Court of Appeals, denying petitioner’s

petition for a writ of mandamus to the District Court, was

entered on July 22, 1977; this Court’s jurisdiction is invoked

under 28 U.S.C. §§1254(1) and 2101.

Question Presented

Whether, in diversity actions, the United States District

Court for the Eastern District of Michigan so departed from

the accepted and usual standards of constitutional m per-

sonam jurisdiction by asserting jurisdiction over defendant,

who neither is a citizen of nor does business in Michigan

and had virtually no contacts with that State, that a writ

of mandamus should have been issued by the Court of

Appeals?

Statutory Provisions Involved

United States Code, Title 28:

§1651(a). Writs

The Supreme Court and all courts established

by Act of Congress may issue all writs necessary or

3

appropriate in aid of their respective jurisdictions and

agreeable to the usages and principles of law.

Michigan Comp. Laws Ann.:

§600.715. Same; limited personal jurisdiction

Sec. 715. The existence of any of the following re-

lationships between a corporation or its agent and the

state shall constitute a sufficient basis of jurisdiction to

enable the courts of record of this state to exercise lim-

ited personal jurisdiction over such corporation and to

enable such courts to render personal judgments

against such corporation arising out of the act or acts

which create any of the following relationships:

(1) The transaction of any business within the

state.

(2) The doing or causing any act to be done, or

consequences to occur, in the state resulting in an

action for tort.

(3) The ownership, use, or possession of any real

or tangible personal property situated within the

state.

(4) Contracting to insure any person, property,

or risk located within this state at the time of con-

tracting.

(5) Entering into a contract for services to be

performed or for materials to be furnished in the

state by the defendant.

Statement of the Case

These two actions involve a dispute between Micro-

electronic Systems Corporation of America (‘‘Micro’’),

a Michigan corporation, and R. H. Macy & Co., Ine.

(‘‘Macy’s’’), a New York corporation and Bamberger’s,

an unincorporated division of Macy’s. Invoking diversity

jurisdiction under 28 U.S.C. §1332(a), Micro commenced

separate actions in February 1976, in the United States

District Court for the Eastern District of Michigan, seek-

ing to recover a combined total of $67,823.68, plus interest,

for the purchase price of electronic watches allegedly sold

by Micro to Macy’s and Bamberger’s.

Macy’s and Bamberger’s jointly moved to dismiss the

complaints on the ground that—under Michigan’s ‘‘long-

arm’’ jurisdiction statute, Michigan Comp. Laws Ann.

§600.715, and the due process clause of the Fourteenth

Amendment—there was no in personam jurisdiction over

Macy’s.

On January 31, 1977, the District Court (Feikens, D.J.)

denied defendant’s motion in both cases. That court also

denied defendant’s motion to certify the question for inter-

locutory appeal, pursuant to 28 U.S.C. §1292(b).

On May 27, 1977, Macy’s petitioned for a writ of man-

damus to the District Court ordering dismissal of these

actions, on the ground of the District Court’s unconstitu-

tional assertion of jurisdiction. On July 22, 1977, the

Court of Appeals denied the petition in a one-sentence

opinion, citing only a decision of this Court that mandamus

would not issue to reverse a district court order for par-

5

ticular discovery. Kerr v. United States District Court,

426 U.S. 394 (1976) (Appendix B, p. 8a).

The underlying dispute derives from Micro’s alleged

sale of electronic watches to Macy’s and Bamberger’s dur-

ing the period July through September, 1975. Based on

the simple and undisputed facts presented to the court

in support of defendant’s motions to dismiss for lack of

jurisdiction, the District Court found, first, that neither

Macy’s nor Bamberger’s ‘‘carries on a continuous and

systematic part of its general business within Michigan,’’

and that the court therefore had no general in personam

jurisdiction over the defendants (Appendix A, p. 3a).

Next, considering the question of limited jurisdiction over

the defendant under the Michigan ‘‘long-arm’’ statute,

M.C.L.A. §600.715, the court succintly summarized the

events relevant to the sales transactions, none of which

occurred in Michigan, as follows:

‘‘Macy’s was first made aware of Micro’s watches

when Robert Waldman of Marketing East Industries

Corporation, a New York corporation acting as an

independent manufacturers representative, visited

Macy’s buyer, James Scoroposki, on behalf of Micro

and proposed the sale. After further discussion be-

tween Waldman and Scoroposki, Jerry Allen, Micro’s

national sales manager, came from Michigan to New

York and met with Waldman and Scoroposki to dis-

cuss details of the sale. Thereafter, Scoroposki gave

Waldman purchase orders for standard Microelec-

tronic watches which Waldman then forwarded to

Micro. Micro never formally confirmed the orders,

but it did ship Macy’s the watches.’

1. At least one contract for sale to Bamburger’s was con-

firmed by Jerry Allen in a letter dated July 11, 1975. Exhibit

A to Joseph Stanton affidavit. [footnote by court].

6

Macy’s only contact with Michigan was through

the ordering of goods by mail from a corporation in

Michigan * * *’” (Appendix A, pp. 3a-4a).

The uncontested facts before the District Court, nec-

essarily accepted by that court, additionally showed that no

merchandise was delivered to or inspected by Macy’s in

Michigan (See {]3, 5, of affidavit of Norman Merinstein,

Exhibit F to Petition for Writ of Mandamus; {{/3, 5, of af-

fidavit of James Scoroposki, Exhibit G to Petition for Writ

of Mandamus); title did not pass until inspection of and

acceptance by Macy’s (in New York or New Jersey) (See

Condition 8 of Exhibit H to affidavit of Norman Merinstein,

Exhibit F ‘» Petition for Writ of Mandamus) ; and no rep-

resentative of Macy’s entered Michigan or conducted any

negotiations with Micro’s personnel in Michigan relating

to the purchase of the watches. (See 3, 5, of affidavit of

Norman Merinstein, Exhibit F to Petition for Writ of

Mandamus; {{3, 5 of affidavit of James Scoroposki, Ex-

2. While the District Court did not rely on the finding that

Macy’s ordered goods by mail from the Michigan corporation as a

basis for its decision, that finding is nevertheless clearly erroneous.

The uncontested affidavits before the District Court show that the

watches were ordered by personal delivery of purchase orders to the

seller's own representative in New York and New Jersey, which were

then forwarded by that representative to Micro. (See 93-5 of affi-

davits of Robert Waldman, Exhibits F and G to Petition for Writ

of Mandamus; {8 of affidavit of Joseph Stanton, Micro’s Controller,

Exhibit H to Petition for Writ of Mandamus.) (References are to

the record in the Court of Appeals which petitioner has requested be

certified and transmitted to this Court.) The letter written by

Micro’s Vice President Jerry Allen on July 11, 1975, which is the

basis for the court’s statement that the goods were ordered by mail,

is plainly not a confirmation of a contract of sale, as the court states,

since it was written well before any of the purchase orders by Macy’s

or Bamberger’s. The undisputed evidence before the District Court

establishes that neither Macy’s nor Bamberger’s placed any orders

by mail, nor even wrote to Micro concerning the purchase of the

watches.

7

hibit G to Petition for Writ of Mandamus). In sum, it

was undisputed that every significant action related to the

purchase of the Micro watches occurred in either New York

or New Jersey, where both the plaintiff’s Vice-President

and its local sales representative sought out the defendants,

solicited their business, and finally consummated the sales

transactions which are the basis for these actions.

Petitioner agrees with the District Court that ‘‘ Mich-

igan, like several other jurisdictions, has interpreted its

long-arm statute (M.C.L.A. §600.715) as being the broadest

grant of jurisdiction consistent with the constitutional re-

quirements of due process.’’ (Appendix A, p. 4a). In the

face of the District Court’s acknowledgement that Macy’s

and Bamberger’s were ‘‘merely * * * passive out-of-state

buyer[s] of an in-state product’’ [Appendix A, p. 5a],®

however, the court’s decision that they were subject to the

court’s jurisdiction exceeds the limits of constitutional

power. The District Court, in effect, obliterated State lines

and the constitutional limits of State power in the final

paragraph of its opinion, by saying:

‘*Finally, in modern business practice, companies

buy and sell products in all parts of our country. Dis-

tance is no longer a factor in these relationships. In

a commercial sense business activity realistically is not

concerned with state boundaries. What seems to domi-

nate these relationships is the obtaining a good product

at the lowest cost that can be sold at a profit. Viewed

in this way it is reasonable to exercise jurisdiction in a

case such as this.’’ (App. A, p. 7a)

3. This distinction between “passive” and “‘active’’ buyers as the

touchstone for declining in personam jurisdiction as to the former and

for asserting it as to the latter, has been stated by the Court of Ap-

peals for the Sixth Circuit, Jn-Flight Devices Corp. v. Van Dusen

Air, Inc., 466 F.2d 220, 233 (6th Cir. 1972), as well as by a signifi-

cant number of other courts in other circuits. See pp. 9-11, below.

Reasons for Granting the Writ

I. In these diversity cases, the District Court, and the

Court of Appeals by its denial of mandamus, clearly

departed from the legal standards articulated by this

Court for the constitutional exercise by States of in

personam jurisdiction as applied by virtually all other

federal courts.

International Shoe Co. v. Washington, 326 U.S. 310

(1945), McGee v. International Life Insurance Co., 355 U.S.

220 (1957), and Hanson v. Denckla, 357 U.S. 235 (1958) are

the leading decisions by this Court on the constraints which

the due process clause of the Fourteenth Amendment im-

poses on the assertion by a State of in personam jurisdic-

tion over foreigners. Shaffer v. Heitner, 97 S.Ct. 2569,

2580 (1977), in extending the analysis of those cases to

quasi m rem jurisdiction, reaffirmed that ‘‘due process re-

quires only that in order to subject a defendant to a judg-

ment in personam, if he be not present within the territory

of the forum, he have certain minimum contacts with it such

that the maintenance of the suit does not offend ‘traditional

notions of fair play and substantial justice.’ ”’

The Court of Appeals for the Sixth Circuit, like the

First Circuit and other courts in other circuits, in applying

the principles set forth in /nternational Shoe and its prog-

eny, has distinguished between an out-of-State ‘‘ passive

buyer’’ and an ‘‘active buyer.’’ In-Flight Devices Corp.

v. Van Dusen Air, Inc., 466 F.2d 220, 233 (6th Cir. 1972).

A ‘‘passive buyer’’ is one ‘‘simply placing an order, accept-

ing the seller’s price and terms as stated in his product

advertising and agreeing only to pay a sum upon receipt

of the goods or service.’’ An ‘‘active buyer’’ is one who

9

‘‘vigorously negotiates, perhaps dictates, contract terms,

inspects production facilities and otherwise departs from

the passive buyer role.’’ Jd. at 233.

Since the District Court accurately characterized Macy’s

(and Bamberger’s) as someone ‘‘who merely acted as a

passive out-of-state buyer of an in-state product’’ (Ap-

pendix A, p. 5a), the Court of Appeals should have granted

the writ of mandamus.‘ In a similar factual situation, the

Court of Appeals for the First Cireuit held that, under the

Massachusetts ‘‘long-arm’’ statute, the United States Dis-

trict Court had no jurisdiction over two foreign corpora-

tions which had placed orders with a Massachusetts corpo-

ration, without any additional significant contacts with the

forum state. Whittaker Corp. v. United Aircraft Corp.,

482 F.2d 1079, 1084-1085 (1st Cir. 1973). Accord: Ander-

son v. Shiflett, 435 F.2d 1036 (10th Cir. 1971).

The same constitutional limitation has been affirmed by

virtually all the other United States District Courts that

have considered the question of in personam jurisdiction

under a State long-arm statute over a non-resident buyer

whose contacts with the forum were as passive and insub-

stantial as those involved in this case. United Advertising

Agency, Inc. v. Robb, 391 F. Supp. 626, 628-631 (M.D. North

Carolina 1975); Klein v. E. W. Reynolds Co., Inc., 355 F.

Supp. 886 (S.D.N.Y. 1973); Garrett v. R. H. Macy & Co.,

Inc., 360 F. Supp. 872, 877 (E.D. Tennessee 1972); Okla-

homa Publishing Co. v. National Sportsmen’s Club, Inc.,

323 F. Supp. 929, 930-931 (W.D. Oklahoma 1971); McQuay,

Inc. v. Samuel Schlosberg, Inc., 321 F. Supp. 902, 907 (D.

Minnesota 1971) ; Geneva Industries, Inc. v. Copeland Con-

4. That court denied the writ not because of any differing view

as to the constitutional limits of in personam jurisdiction, but because

of its erroneous view that mandamus was not available. See Point

II, below.

10

struction Corp., 312 F. Supp. 186, 188 (N.D. Illinois 1970) ;

Guardian Packaging Corp. v. Kapak Industries, Inc., 316 F.

Supp. 952, 955 (D. Minnesota 1970) ; Oswalt Industries Inc.

v. Gilmore, 297 F. Supp. 307, 313 (D. Kansas 1969) ; Chassis-

Trak, Inc. v. Federated Purchaser, Inc., 179 F. Supp. 780,

791 (D. New Jersey 1960). But cf. Simpson Timber Co. v.

Great Salt Lake Minerals and Chemicals Corp., 296 F.

Supp. 243 (D. Oregon 1969).

Not only is the District Court’s decision here, left stand-

ing by the Court of Appeals order, contrary to the above-

cited federal decisions which almost unanimously hold a

‘*passive’’ buyer immune from long-arm jurisdiction, it is

contrary, as well, to the nearly unanimous decisions of the

State courts which have considered this question. Indeed,

the District Court recognized that its decision was contrary

to the decisions of four State courts which held there was

no in personam jurisdiction over an out-of-State buyer in

similar circumstances (Appendix A, p. 5a, n.2).° E.R. Cal-

lender Printing Co. v. The District Court In and For the

5. As the District Court said (Appendix A, p. 6a) “|d]etermin-

ing the outer limits of in personam jurisdiction permitted by the due

process clause is a federal question” ; nevertheless, it found “persua-

sive” the decision of the Michigan Court of Appeals in Anderson,

Clayton & Co. v. Atlas Concrete Pipe, Inc., 41 Mich. App. 58, 199

N.W.2d 531 (Ct. App. 1972), that jurisdiction existed under the

Michigan long-arm statute. However, neither Anderson, Clayton &

Co. nor the other State court decision cited by the District Court,

Colony Press, Inc. v. Fleeman, 17 Ill. App. 3d 14, 308 N.E. 2d 78

(Ct. App. 1974), involved “passive buyers.” They involved buyers

who, unlike Macy’s, (1) initiated the transactions giving rise to the

lawsuit by first communicating with the forum-based seller in the

forum State; (2) placed their orders directly with the seller by phone

and mail; and (3) did not order standard catalog items from set

price lists but required the seller in each instance to deliver ial

orders designed to meet their particular specifications. Colony —

Inc. was, in fact, distinguished on this basis in a later case which held

there was no jurisdiction when an Illinois seller initiated the nego-

tiations in California. Artoe v. Mann, 36 Ill. App. 3d 204, %43

N.E.2d 647, 649 (Ct. App. 1976).

=. oot

11

Second Judicial District, 182 Colo. 25, 510 P.2d 889 (1973)

(en banc); O. N. Jonas Co. v. B & P Sales Corp., 232 Ga.

256, 206 S.E.2d 437 (1974); NRM Corp. v. Pacific Plastic

Pipe Co., 36 Ohio App.2d 179, 304 N.E.2d 248 (Ct. App.

1973) ; Architectural Building Components Corp. v. Com-

fort, 528 P.2d 307 (Okla. 1974). Our research reveals that

eleven additional State courts have also held that there is

no im personam jurisdiction over a buyer in the circum-

stances of Macy’s and Bamberger’s. Interdyne Co. v. SYS

Computer Corp., 31 Cal. App. 3d 508, 107 Cal. Rptr. 499

(Ct. App. 1973); Artoe v. Mamm, 36 Ill. App. 3d 204, 343

N.E.2d 647 (Ct. App. 1976) ; Rath Packing Co. v. Intercon-

tinental Meat Traders, Inc., 181 N.W.2d 184 (Iowa 1970) ;

‘** Automatic’’ Sprinkler Corporation of America v. Seneca

Foods Corp., 361 Mass. 441, 280 N.E.2d 423 (1972); Bran-

strom & Associates, Inc. v. Community Memorial Hospital,

296 Minn. 366, 209 N.W.2d 389 (1973); M. Katz & Sons

Billiard Products, Inc. v. G. Correale & Sons, Inc., 20 N.Y.

2d 903, 285 N.Y.S.2d 871 (1967); William R. Andrews Asso-

ctates v. Sodibar Systems of D.C., Inc., 28 N.C. App. 663,

222 S.E.2d 922 (Ct. App. 1976); Neptune Microfloc, Inc. v.

First Florida Utilities, Inc., 261 Or. 494, 495 P.2d 263

(1972); Darby v. Superior Supply Co., 224 Tenn. 540, 458

S.W.2d 423 (1970); U-Anchor Advertising, Inc. v. Burt,

544 S.W.2d 500 (Texas Civil App. 1976), aff'd, ——

S.W.2d ——, No. B-6516 slip op. (Texas July 13, 1977);

Transwestern General Agency v. Morgan, 526 P.2d 1186

(Utah 1974) ; cf. Misco-United Suppty, Inc. v. Richards of

Rockford, Inc., 215 Kan. 849, 528 P.2d 1248 (1974) ; contra:

Prentice Lumber Co. v. Spahn, 156 Mont. 68, 474 P.2d 141

(1970).

The decision of the District Court that there is in

personam jurisdiction over the defendant in both cases

12

crosses any reasonable line for the assertion of long-arm

jurisdiction, as established by the numerous federal and

State court decisions cited above. Indeed, it serves to

obliterate any line at all by its focus on ‘‘modern business

practice’’ which, in its view, is such that ‘‘[iJn a com-

mercial sense, business activity realistically is not con-

cerned with state boundaries.’’ (Appendix A, p. 7a). The

difficulty with that formulation is that, in a constitutional

sense, the courts must be concerned with state boundaries ;

by failing to observe such boundaries, the District Court

plainly exceeded its jurisdiction and announced a mis-

chievous doctrine. It should be suppressed by this Court

before it spawns unlimited and unwarranted extensions of

the reach of State judicial process, in violation of this

Court’s established doctrine that exercise of im personam

jurisdiction must be based on such contacts with the State

as lead to the judgment that it is fundamentally fair to

summon the defendant to that forum.

Il. A writ of mandamus is the appropriate remedy for

correcting an overreaching by the District Court of its

jurisdiction which presages the obliteration of State

lines.

The Court of Appeals denied the petition for a writ

of mandamus, pursuant to 28 U.S.C. §1651(a), on the

ground ‘‘that petitioners have failed to show the existence

of the exceptional circumstances which will justify the

granting of this extraordinary remedy.’’ It correctly

observed that a writ of mandamus is an ‘‘extraordinary

remedy’’ and requires ‘‘the existence of * * * exceptional

circumstances,’’ but failed to see that these cases meet

those tests. In the very case which the Court of Appeals

13

cited to justify its denial of the writ, Kerr v. United States

District Court, 426 U.S. 394, 402 (1976), this Court re-

cently said:

‘*As we have observed, the writ ‘has traditionally

been used in the federal courts only ‘‘to confine an

inferior court to a lawful exercise of its prescribed

jurisdiction or to compel it to exercise its authority

when it is its duty to do so.’’’ Will v. United States,

[389 U.S. 90 (1967)] supra, at 95, quoting Roche v.

Evaporated Milk Assn. 319 U.S. 21, 26 (1943).”’

Conformably to this Court’s statement of the tradi-

tional use of the writ, these are cases in which the writ

should have issued. The facts, as found by the District

Court, are uncomplicated and uncontradicted. Moreover,

on the jurisdictional question, nothing will be added by a

full trial. In view of the admitted and uncontradicted

course of events, no proof of greater contact with the

State of Michigan can be adduced, nor is any additional

proof necessary under the District Court’s decision. Un-

der virtually every decision under the due process clause,

however, the District Court, on these facts, far exceeded

the constitutional limits to its derivative State jurisdiction.

When such jurisdictional overreaching is so plain, it must

be corrected by the Court of Appeals on petition for

mandamus, or by this Court, else there is no established

use for the writ in confining the District Court ‘‘to a law-

ful exercise of its prescribed jurisdiction.’”

6. This Court has not since /nternational Shoe instructed the

lower courts on the use of the writ of mandamus to confine those

courts to their prescribed jurisdiction in diversity cases. Cf. Ameri-

can Airlines v. Forman, 204 F.2d 230, 232 (3d Cir. 1953); Holub

Industries, Inc. v. Wyche, 290 F.2d 852, 855 (4th Cir. 1961).

14

Conclusion

Because the District Court unconstitutionally ex-

tended the reach of State jurisdiction in these diversity

cases, and the Court of Appeals failed to confine the

court to its legal jurisdiction, this Court should now

issue a writ of certiorari to review the order of the

Court of Appeals for the Sixth Circuit.

Respectfully submitted,

Murray GarTNER

Attorney for Petitioner

1185 Avenue of the Americas

New York, New York 10036

(212) 730-7373

Dated: New York, New York

October 20, 1977

Of Counsel:

Epwarp A. Britu

Bensamin 1. Conen

Po.etti F'REIDIN

PraSHKER FELDMAN & GARTNER

1185 Avenue of the Americas

New York, New York 10036

and

Joun O’MEara

Dickinson Wricut McKean

Cupiip & Moon

800 First National Building

Detroit, Michigan 48226

APPENDICES

APPENDIX A

Opinion of the District Court

UNITED STATES DISTRICT COURT

Eastern District or MICHIGAN

SovuTHERN Drvision

a

Crvit Action No. 6-70293

MIcroELEcTRONIC SysteMs CoRPORATION OF AMERICA,

a Michigan corporation,

Plaintiff,

v.

BaMBERGER’s, a Division of R.H. Macy & Co., Inc.,

Defendant.

Civit Action No. 6-70294

MIcROELECTRONIC SystEMS CoRPORATION OF AMERICA,

a Michigan corporation,

Plaintiff,

v.

R.H. Macy & Co., Inc., a New York corporation,

Defendant.

MEMORANDUM OPINION

Plaintiff, Microelectronic Systems Corporation of Amer-

ica [Micro], brings these diversity actions against defend-

2a

Appendix A—Opinion of the District Court

ants, Bamberger’s, a Division of R. H. Macy &Co., Inc. and

R. H. Macy & Co., Ine. [Macy’s]. Plaintiff alleges that

each defendant ordered and received shipments of certain

electronic watches manufactured by plaintiff and that both

defendants failed to remit the sums owing to plaintiff for

their purchases. In each case suit is for the unpaid pur-

chase price and is based on the alternative theories of ac-

count stated, breach of contract and tort.

Defendant, in each case, moves for dismissal on the

ground that this court lacks personal jurisdiction over it.

Since the substance of the arguments presented in both

cases is the same, the court considers the two motions to-

gether. For convenience the court will write only of the

facts as they pertain to defendant Macy’s. The facts in

the case against Bamberger’s are substantially similar, and

all the reasoning applies by analogy.

As a United States District Court sitting in Michigan

this court looks to Michigan law to determine whether there

is personal jurisdiction over the defendant. Erie R.R. v.

Tompkins, 304 U.S. 64 (1938). Micro claims first that this

court has general personal jurisdiction over Macy’s under

M.C.L.A. §600.711 for the reason that Macy’s ‘‘carries on

a continuous and systematic part of its general business

within Michigan.’’ M.C.L.A. §600.711(3). Macy’s replies,

by affidavit of its Vice President-Legal, that it ‘‘is not

qualified to do business in the State of Michigan; maintains

no offices, has no telephone listing, and no employees in

the State of Michigan; and does not regularly ship goods

into or advertise goods for sale in the State of Michigan.’’

See Ely Kushel Affidavit. Micro does not refute these

es cre st

3a

Appendix A—Opinion of the District Court

statements but instead asks for opportunity to conduct dis-

covery in order to demonstrate that Macy’s has enough con-

tacts with Michigan to give this court general personal

jurisdiction over it. Since the burden is on the plaintiff to

show the court’s in personam jurisdiction over defendant,

Weller v. Cromwell Oil Co., 504 F.2d 927 (6th Cir. 1974),

Micro’s failure to controvert the defense affidavit compels

a finding of no general in personam jurisdiction over

Macy’s.

Micro claims also that this court has jurisdiction over

Macy’s under M.C.L.A. §600.715 which gives the court lim-

ited personal jurisdiction over a foreign corporation if

it transacts any business within Michigan; does or causes

any act to be done or consequences to occur in Michigan

resulting in an action for tort; owns, uses, or possesses any

real or tangible personal property situated in Michigan;

contracts to perform services or furnish materials in

Michigan. Since limited personal jurisdiction extends to

all causes of action arising out of the facts which give

jurisdiction, the question becomes whether, vel non, Macy’s,

a New York Corporation, had sufficient contact with

Michigan, as defined under M.C.L.A. §600.715, during the

course of its watch purchases from the Michigan corpora-

tion, Micro.

Macy’s was first made aware of Micro’s watches when

Robert Waldman of Marketing East Industries Corpora-

tion, a New York corporation acting as an independent

manufacturers representative, visited Macy’s buyer, James

Scoroposki, on behalf of Micro and proposed the sale. After

further discussion between Waldman and Scoroposki, Jerry

4a

Appendix A—Opinion of the District Court

Allen, Micro’s national sales manager, came from Michigan

to New York and met with Waldman and Scoroposki to

discuss details of the sale. Thereafter, Scoroposki gave

Waldman purchase orders for standard Microelectronic

watches which Waldm in then forwarded to Micro. Micro

never formally confirmed the orders, but it did ship Macy’s

the watches."

Micro contends that Macy’s purchase by mail of watches

manufactured in Michigan constitutes the transaction of

business in Michigan and gives this court jurisdiction over

Macy’s under M.C.L.A. §600.715(1).

Macy’s only contact with Michigan was through the

ordering of goods by mail from a corporation in Michigan,

but it is well settled that in a proper case a single contact

with the forum state not involving the physical presence of

the defendant can be enough to give jurisdiction over the

defendant. In-Flight Devices Corp. v. Van Dusen Air, Inc.,

466 F.2d 220 (6th Cir. 1972) ; Kiefer v. May, 46 Mich. App.

566 (1973) ; Hadad v. Lewis, 382 F. Supp. 1365 (E.D. Mich.

1974); Mad Hatter, Inc. v. Mad Hatters Night Club Co.,

399 F. Supp. 889 (E.D. Mich. 1975).

Michigan, like several other jurisdictions, has inter-

preted its long-arm statute (M.C.L.A. §600.715) as being

the broadest grant of jurisdiction consistent with the con-

stitutional requirements of due process. Sifers v. Horan,

385 Mich. 195 (1971); Schneider v. Linkfield, 389 Mich.

608 (1973); Stan Sax Corp. v. Siefen Compounds, Inc.,

68 Mich. App. 768 (1976). Several jurisdictions have

1. At least one contract for sale to Bamberger’s was confirmed

by Jerry Allen in a letter dated July 11, 1975. Exhibit A to Joseph

Stanton affidavit.

da

Appendix A—Opinion of the District Court

concluded that the due process limitations prevent a state

from taking jurisdiction over a defendant such as Macy’s

who merely acted as a passive out-of-state buyer of an

in-state product. The United States District Court for

the Eastern District of Tennessee, for example, recently

held that to permit Tennexsee to take jurisdiction over a

foreign corporation which had ordered Tennessee goods

by mail would offend the ‘‘traditional notions of fair play

and substantial justice’? mandated by the due process

clause. International Shoe Co. v. Washington, 326 U.S.

310, 316 (1945), quoted in Garrett v. R.H. Macy & Co., Inc.,

360 F. Supp. 872, 877 (1972),? citing Darby v. Superior

Supply Co., 458 S.W.2d 423 (Tenn. 1970).

Michigan, in contrast, has indicated that due process

considerations do not prevent taking jurisdiction over a

passive buyer. In Anderson, Clayton ¢ Co. v. Atlas Con-

crete Pipe, Inc., 41 Mich. App. 58 (1972), the Michigan

Court of Appeals gave full faith and credit to a Texas

judgment against a Michigan corporation. The Texas

court had concluded that it had jurisdiction over the pas-

sive Michigan buyer under Texas law which provided

that ‘‘. . . any foreign corporation . . . shall be deemed

doing business in this state by entering into contract by

mail or otherwise with a resident of Texas to be performed

in whole or in part by either party in this state ...”’

Texas Rev. Stat. Art. 2031b §4. The Michigan Court of

Appeals decided that the Texas statute accorded with the

2. For examples of other cases interpreting similar statutes and

finding no jurisdiction over a defendant buyer in similar circumstances,

see O.N. Jonas Co., Inc. v. B & P Sales Corp., 206 S.E.2d 437 (Ga.

1974) ; Architectural Building Components Corp. v. Comfort, 528

P.2d 307 (Okla. 1974) ; Callender Printing Co. v. The District Court

In and For the Second Judicial District, 510 P.2d 889 a 1973) ;

pn Corp. v. Pacific Plastic Pipe Co., 304 N.E.2d 248 (Ohio App.

1973).

6a

Appendix A—Opinion of the District Court

requirements of due process. Since the Michigan long-

arm statute is considered the broadest grant of jurisdic-

tion consistent with the requirements of due process, the

logical application of Anderson, Clayton & Co. would

allow this court to take jurisdiction over Macy’s in the

instant case. See also Colony Press, Inc. v. Fleeman, 308

N.E.2d 78 (Ill. App. 1974).

Determining the outer limits of in personam jurisdic-

tion permitted by the due process clause is a federal ques-

tion, and, therefore, the Michigan Court of Appeals de-

cision in Anderson, Clayton & Co. is not controlling, al-

though it may be persuasive. The United States Supreme

Court has defined the due process limitations on obtaining

in personam jurisdiction over a defendant in three cases:

International Shoe Co. v. Washington, 326 U.S. 310 (1945) ;

McGee v. International Life Insurance Co., 344 U.S. 220

(1957); Hanson v. Denckla, 357 U.S. 235 (1958). From

these cases the United States Court of Appeals for the

Sixth Circuit has developed three criteria for determining

the outer limits of constitutionally permitted in personam

jurisdiction :

First, the defendant must purposely avail himself of

the privilege of acting in the forum state or causing

a consequence in the forum state. Second, the cause

of action must arise from the defendant’s activities

there. Finally, the acts of the defendant or conse-

quences caused by the defendant must have a sub-

stantial enough connection with the forum state to

make the exercise of jurisdiction over the defendant

reasonable.

Southern Machine Company v. Mohasco Indus-

tries, Inc., 401 F.2d 374, 381 (6th Cir. 1968).

th 8

7a

Appendix A—Opinion of the District Court

See also In-Flight Devices Corp. v. Van Dusen Air, Inc.,

466 F.2d 220, 226 (6th Cir. 1972); King v. Hailey Chevrolet

Co., 462 F.2d 63, 67 (6th Cir. 1972); Davis H. Elliot Co. v.

Caribbean Utilities Co., 513 F.2d 1176, 1181 (6th Cir. 1975).

The court holds that it has jurisdiction over Macy’s.

Macy’s purposely availed itself of the privilege of acting

in Michigan when it entered into a contract with a Michi-

gan corporation at least a part of which was to be per-

formed in Michigan. The cause of action arises out of

the enforcement of that contract.

Finally, in modern business practice, companies buy

and sell products in all parts of our country. Distance is

no longer a factor in these relationships. In a commercial

sense business activity realistically is not concerned with

state boundaries. What seems to dominate these relation-

ships is the obtaining a good product at the lowest cost

that can be sold at a profit. Viewed in this way it is

reasonable to exercise jurisdiction in a case such as this.

Accordingly, defendants’ motions to dismiss for lack

of personal jurisdiction are denied. Appropriate orders

may be submitted.

/s/ Joun FEIrKENs

Joun FEIKENS

United States District Judge

Date: January 31, 1977,

Detroit, Michigan.

8a

APPENDIX B

Opinion and Order of the Court of Appeals

No. 77-1308

UNITED STATES COURT OF APPEALS

For THE Sixts Crcvit

EG

R. H. Macy & Co., Inc. and BamMBERGER’s,

Petitioners,

v.

Unrrep States District Court ror THE EasTERN

District or Micuican, at Derzort,

Respondent.

Before: CrLesrezze, Peck and Laivety, Circuit Judges.

This matter having come before the Court on Petition-

ers’ Petition for Writ of Mandamus and it appearing that

petitioners have failed to show the existence of the ex-

ceptional circumstances which will justify the granting of

this extraordinary remedy, Kerr v. U.S. District Court,

426 U.S. 394 (1976),

It is OrperEp that the Petition for Writ of Mandamus be

and it hereby is denied.

ENTERED BY ORDER OF THE CovuRT

Joun P. Hexuman, Clerk