Petition — Mizokami Bros. of Arizona, Inc. v. Baychem Corp.

* Supreme Court, U. $

{ FILED

NOV 23 \977

IN THE

Supreme Court of the United States

Octroser TERM, 1977

MizoKAMI Bros. or Arizona, INc., an

Arizona Corporation, Petitioner

V.

BayYcHEM CorporaTION, a New Jersey corporation;

Bayer vE Mexico, 8.A., a corporation of the Uni

States of Mexico; and Bayer A.G., a corporation of

the Federal Republic of Germany, Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

F. Trowsrivcg vom Baur

1700 K § N.W.

Washington, D.C. 20006

Of Counsel:

Fiorence WEIGHT

Ricwarp M. Preston

vom ‘Baur, Cosurgn, Simmons & TURTLE

November 23, 1977

Passe ov Brecon 6. Anams Puuwtiwe, Inc. Wasumrerton, D.C.

Page

ee TN ng on kn nc 06bb0n000besee0nnenneseedes 1

pT er ee eee ye 2

QUESTIONS PRESENTED .......00 00 ec ce eeeeeeeeeeenees 2

Tue ConstiItuTIONAL Provision INVOLVED ...........- 3

Tue Statutory Provisions INVOLVED ..........600665: 3

Pecans GD GH GOD occ cc cccccceccecesseoeescees 5

The events which occurred in Arizona .......... 7

The convenience of witnesses favors Arizona .... 9

The Statutes of limitations have run ............ 10

The Decisions of the Courts Below .............. 10

The Court below erroneously described Baychem

as a ‘‘Foreign Opponent”’ of Petitioner ...... 12

Reasons ror GRANTING THE WRIT ...........-0000055 14

I. The Court below has decided federal questions

in conflict with applicable decisions of this Court

A. Under this Court’s Decisions, the District

Court had no power to dismiss a complaint

under 28 U.S.C. 1404(a) ..........eeeeees 14

B. The Circuits are in conflict as to whether a

District Court has power to dismiss a com-

plaint on the ground of Forum Non Con-

GHEE cc cccdcocccescscesncssenssneceece 15

C. The Decision below raises significant and re-

currin Damey = concerning efforts to in-

voke ral diversity jurisdiction ........ 16

D. In the alternative, in dismissing as to Bay-

chem, the Court below abused its Resetiie 16

ii Index Continued

Page

EK. The holding of the Court below that mini-

mum due process contacts of respondents

were not present in Arizona is in conflict

with decisions of this Court:

1, The events that occurred in Arizona con-

ferred jurisdiction under Arizona law ..

2. The decision below violated the minimum

contacts test laid down by this Court ...

3. Additional contacts of Bayer de Mexico

WED BORGES. oc icincivnucidssicbens see

II. On a Motion to dismiss for lack of personal

jurisdiction, the complaint and other material

should be construed favorably to the plaintiff . .

III. In the alternative, questions of Jurisdiction ia

personam should be postponed to the the trial .

ConcLusion

Cases:

18

22

18

Citations Continued iii

Page

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

TD, TD co cccccccvedscetecccvesesvissceses 15

McGee v. Setovunttonsh Life Ins. Co., 355 U.S. 220

L.Ed. 2d 225, 87 S.Ct. 818 ....... cece eeeeseceess 18

Montgomery Ward & Co. v. Schumacher, 3 FRD 368

(D.C. Cal, MOOD cccccccoceveseseccegccosesess 23

Norwood v. Kirkpatrick, 349 U.S. 29, 99 L.Ed. 789, 75

BH. Ot. G44 (19GB) onc cccrccccccccccccceees eeeees 14

Phillips v. Anchor Hocking Glass Corp., 100 Ariz. 251,

413 POd 788 (1068) ...ccsccvcccvccccccccsvecess 21

k v. Weissi C.A. 4, 1960), 276 F.2d 446..... 15

a ep a Diccnetentlons (D.C.

Vanity Fair Mills, Inc. v. T. Eaton Co. (C.A. 2, 1956),

234 REE REE Gee ey Py 15

Yerostathis v. A. Luisi, Ltd. (C.A. 9, 1967) 380 F.2d,

377

MISCELLANEOUS:

28 U.S.C. 1404(a) ....... seahinedéoduseneeeveenesces 4,18

15 Wright, Miller & Cooper, Federal Practice and Pro-

ure, Jurisdiction: § 3828 ........6.eseeeeeees 17

Wright and Miller, 5 Federal Practice Procedure : Civil

IDE (19GB) .ccccccccccccccccccccccsccccccers

IN THE

Supreme Court of the Anited States

OctorEeR TERM, 1977

No.

MIzoKAMI Bros. or Axtzona, INC., an

Arizona Corporation, Petitioner

v.

BaycHEeM CORPORATION, a New Jersey corporation;

Bayer ve Mexico, S.A., a corporation of the United

States of Mexico; and Bayer A.G., a corporation of

the Federal Republic of Germany, Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioner, Mizokami Bros. of Arizona, Inc., re-

spectfully prays that a Writ of Certiorari issue to

review the opinion, judgment and order of the United

States Court of Appeals for the Ninth Circuit in this

case.

The opinion of the Court of Appeals for the Ninth

Circuit is reported at 556 F.2d 975. It is set forth in

_ Appendix A-1. The District Court for the District of

9

—

Arizona did not write an opinion. It entered two

Judgments dismissing the complaint as to ali Respond-

ents, for lack of jurisdiction, which are set forth at

A-6-8.

JURISDICTION

The judgment of the Court of Appeals for the Ninth

Circuit was entered on July 7, 1977. A timely Motion

for rehearing was denied on 26 August, 1977, and this

Petition for Certiorari was filed within 90 days of that

date. The order denying the motion for rehearing is

set forth at A-5. This Court’s jurisdiction is invoked

under 28 U.S.C. 1254(1).

1. Whether a District Court, since the passage in

1948 of 28 U.S.C. 1404(a), has the power to dismiss

a Complaint on the ground of forum non conveniens?

2. In the alternative, whether the District Court

abused its discretion in dismissing the Complaint as to

Respondent Baychem on the ground of forum non

conveniens when (a) Petitioner is an Arizona corpo-

ration and a citizen of the United States; (b) Baychem

is a New Jersey Corporation doing business in Ari-

zona and a U.S. citizen; (c) the claim arose out of

events occurring in Arizona; (d) the convenience of

witnesses favors Arizona; (e) the statute of limitations

has run in Mexico, and also in Arizona due to delays

in the Courts below; and (f) there is no other forum in

which the action may be brought?

3. Whether there were minimum due process cor.-

tacts in Arizona of Respondents, Bayer de Mexico

and Bayer A.G., when Bayer A.G. purchased the Tam-

3

aron, an insecticide, from Baychem in the United

States and sold it to Bayer de Mexico, whose distrib-

utor sold it to Petitioner in Arizona for delivery in

Mexico, said Respondents knowing that some of the

said Tamaron would be shipped from Mexico into

Arizona on Petitioner’s bell peppers and would be

found in Arizona to violate U.S. iaw?

4. Whether there were minimum due process con-

tacts in Arizona when Bayer de Mexico and Baychem,

a New Jersey corporation doing business in Arizona,

were agents of each other?

5. Whether there were minimum due process con-

tacts in Arizona of Bayer A.G., when it dominated and

controlled its subsidiary, Baychem which does busi-

ness in Arizona, and when Bayer A.G. set the stand-

ards worldwide for the use of Tamaron on vegetables.

THE CONSTITUTIONAL PROVISION INVOLVED

The Fifth Amendment to the Constitution of the

United States provides in part:

‘‘No person shall . . . be deprived of life, liberty,

or property without due process of law;’’....

THE STATUTORY PROVISIONS INVOLVED

28 U.S.C. 1404(a) provides as follows:

§ 1404. Change of Venue:

‘“‘(a) For the convenience of parties and witnesses,

in the interest of justice, a district court may

transfer any civil action to any other district or

division where it might have been brough

4

28 U.S.C. 1332(a)(1) and (ec) provide in part as

follows:

‘*§ 1332; Diversity of Citizenship; Amount in Con-

troversy; Costs.

(a) The district courts shall have original juris-

diction of all civil actions where the matter in

controversy exceeds the sum or value of $10,000,

exclusive of interest and costs, and is between-—

(1) citizens of different States;

(2) citizens of a State, and foreign states or

citizens or subjects thereof ;’

‘*(e) For the purposes of this section and sec-

tion 1441 oi this title, a corporation shall be

deemed a citizen of any State by which it has been

incorporated and of the State where it has its prin-

cipal place of business:’’

The Arizona long-arm Statute, revolving around

whether Respondents caused ‘‘an event to oecur’”’ in

Arizona, provides as follows (Arizona Rules of Civil

Procedure, sec. 4(e) (2) (1956) ) :

**When the defendant is a resident of the state, or

is a corporation doing business in the state; or is a

person, partnership, corporation or unincorpo-

rated association subject to suit in a common name

which has caused an event to occur in this state out

of which the claim which is the subject of the com-

plaint arose, service may be had as herein pro-

vided, and when so made shall be of the same effect

* } ae service within the state.’’ (Emphasis

5

STATEMENT OF THE CASE

This is a diversity case founded on 28 USC 1332(a).

Petitioner, Mizokami Bros. of Arizona, Inc. is an

Arizona corporation with its principal place of busi-

ness in Nogales, Arizona and is a citizen of the United

States (6, 1096).* Among other things, it finances the

growing of crops in Mexico for importation into the

United States (7).

Respondents are part of the Bayer World Group.

Bayer A.G. is the parent company. Baychem is the

U.S. manufacturing subsidiary of Bayer A.G. It is a

New Jersey Corporation with its principal place of

business in New York, and has five plants in the United

States (648). It does business in Arizona (100, 236,

274, 275). Bayer de Mexico is the Mexican subsidiary

of Bayer A.G.

Bayer A.G. developed and patented the product

Tamaron, a chemical pesticide. It centrally dominated,

controlled, and set the standards for manufacture and

sale of Tamaron by Baychem and Bayer de Mexico

(10, 360, 706, 1023, 1310, 1311, 1325-1328). Bayer A.G.

dominated and controlled its subsidiary, Baychem

(1265-1270).

Baychem manufactured the active chemical ingre-

dients of Tamaron in the United States. Bayer A.G.

bought the chemical ingredients for Tamaron, and also

purchased Tamaron in finished form, from Baychem

and then resold the said ingredients and the Tamaron

to Bayer de Mexico (10, 11, 209, 289, 290, 298, 310, 313,

361, 776, 1004, 1005, 1015, 1269, 1410).

1 Parenthetical citations refer to the page number ia the record

on appeal to the Court below.

6

Baychem and Bayer de Mexico are the agents of each

other (10, 18, 26). Under the Agreement between the

Chemagro division of Baychem dated 15 January

1973, Bayer de Mexico was constituted the ‘‘mediator’’,

that is, the intercessor, interagent and agent of Chema-

gro with regard to the sale of Chemagro agricultural

products, including Tamaron, in Mexico. Also, under

the Agreement, Bayer de Mexico agreed to obtain or-

ders from purchasers in Mexico to buy Chemagro

products, but was not given the power to accept those

orders in Mexico. Indeed, the orders so obtained in

Mexico by Bayer de Mexico could only be accepted by

Chemagro in the United States (289, 290, 999, 1000,

1356-1359). Hence, Bayer de Mexico and Baychem be-

came the agents of each other in connection with the

sale of agricultural products in Mexico, including Tam-

aron. Thus, such acts of Bayer de Mexico and Baychem,

Chemagro became binding on each other.

In addition, Bayer de Mexico received instructions,

technical information, and ‘‘technical material’’ re-

garding the proper use of insecticides, including Tam-

aron, from Bayer A.G. and Baychem (11, 12, 25, 149,

210, 222, 773, 776).

Petitioner financed growers in Mexico, advancing

them funds for the growing of bell peppers and other

vegetables (7). During the growing season 1972-1973,

Petitioner advanced $1 million to finance the growing

of vegetables, including 250 acres of bell peppers in

Mexico destined for importation into Arizona (16, 1047,

1052, 1057). Title to the bell peppers vested at all

times in Petitioner. (7)

Petitioner purchased the Tamaron from Vamex,

Bayer de Mexico’s distributor, by checks drawn on an

7

Arizona bank, for delivery in Mexico (1049, 1060> All

the Respondents knew that such Tamaron was being

purchased by Petitioner for use on peppers grown for

export into Arizona and for consumption in the United

States and Canada, and that it was necessary for the

U.S. Environmental Protection Agency (EPA) to

establish tolerances for the use of Tamaron on bell

peppers (17-19). Indeed, Respondents both expressly

and impliedly warranted that Tamaron was suitable

for use on Petitioner’s bell peppers intended for im-

portation into Arizona (23, 27).

The Federal Insecticides, Fungicide, and Rodenti-

cide Act, 7 U.S.C. 135 et seq., and the Federal Food

Drug and Cosmetic Act, 21 U.S.C. 301, 331, prohibit

the shipment in interstate commerce of a pesticide for

which no tolerance for a specified commodity has been

established.

The Events Which Occurred in Arizona:

A railroad runs from Los Mochis, in the Mexican

State of Sinaloa, to Nogales, Mexico, which is across

the border from Nogales, Arizona. Petitioner’s bell

peppers were shipped in vans, that is, truck trailers

carried piggyback on that railroad from Los Mochis

to Nogales, Mexico. There three individual trailers

were unloaded from the train and were hauled by

tractors through the international gate and across the

border into Nogales, Arizona (779, 1193).

When Petitioner’s bell peppers containing Tamaron

arrived in these trailers in interstate commerce in

Nogales, Arizona, these events occurred in Arizona:

(a) In Nogales, Arizona, the FDA took samples of

Petitioner’s bell peppers located in Arizona, conducted

8

tests, and determined that there was no established

tolerance for the Tamaron contained in Petitioner’s

said bell peppers and that the shipments violated U.S.

laws (20, 21, 779, 780);

(b) In Nogales, Arizona, the FDA directed that

Petitioner’s bell peppers which had been imported into

Arizona be destroyed, and they were destroyed (20, 21,

779) ;

(c) In Nogales, Arizona, the FDA caused an em-

bargo to be placed by U.S. Customs on the further

importation of bell peppers into the United States

(20, 22, 779-781); and

(d) In Nogales, Arizona, the FDA notified Peti-

tioner, at his office in Nogales, Arizona, that an em-

bargo had been placed by U.S. Customs on the further

importation of peppers into Arizona, and that no fur-

ther peppers would be importable into Arizona (20,

21, 779).

(e) In Nogales, Arizona, Petitioner directed that

further exportation of peppers from Mexico to Arizona

cease immediately (20, 1069).

Meanwhile, in Nogales, Arizona, some reshipment

had taken place. The bell peppers that had arrived at

Petitioner’s warehouse in Nogales, Arizona were all

unloaded, and some were then re-loaded in trucks and

shipped to Canada (20, 1069). There they were rejected

by the Canadian authorities under Canada’s reciprocity

agreement with the U.S., were required to be destroyed,

and were destroyed (20, 1055, 1056, 1069, 1179-1184,

1193).

Because of the embargo caused in Arizona to be

placed prohibiting the importation of bell peppers into

9

the United States, a major part of Petitioner’s pep-

pers grown in Mexico could not be imported and had

to be destroyed (20, 1069).

Petitioner brought suit against Baychem, Bayer de

Mexico and Bayer A.G. in the United States District

Court for the District of Arizona on grounds of product

liability, misrepresentation, and breach of warranty,

and sought damages in the amount of $3,000,000.

The Convenience of Witnesses Favors Arizona:

The convenience of witnesses favors Arizona. First,

Petitioner and its main witnesses who have a general

knowledge of the case, Richard Kellett, Mike Mizokami

and Tom Mizokami are available there.

Second, all other witnesses who can testify to the

events which occurred in Arizona are located in Ari-

zona. Petitioner’s documents showing the bell pepper

crops imported into the United States, are located in

Arizona (1091). Also, Petitioner’s broker, William

Joffroy, who can testify as to transactions with the

FDA in Arizona, is located there (779).

Douglas Payne, the FDA supervisor is also located

in Arizona. He was in charge of the portable FDA

laboratory in Nogales, and made the determinations

that the Tamaron which had arrived in Arizona on

Petitioner’s bell peppers violated U.S. law (780, 1232).

The U.S. Government records showing the seizure of

the peppers in Arizona, are located in Arizona (1986).

Kellett and Mike Mizokami can also testify as to the

re-loading in Arizona of some of the bell peppers for

shipment to Canada, and their rejection by the Canadian

authorities, with resulting destruction.

10

As for the destruction of the peppers in Arizona and

Mexico, Kellett and Tom Mizokami directed their de-

struction (1069, 1072, 1076).

Baychem witnesses, such as Charles Roevner, Dr.

Andersen and others, are located in Arizona or the

United States. The technicians of the Harris Labora-

tory, which tested the Tamaron, are located in Arizona.

(781, 783).

Kellett, Mike Mizokami and Tom Mizokami visited

the growing area in Mexico frequently, and are fully

familiar with the events which took place there. They

are also familiar with the application of Tamaron on

the peppers in Mexico, the shipments of the bell pep-

pers into Arizona, etc. Copies of the Bayer de Mexico

literature recommending Tamaron on bell peppers are

already in the record. (36-43)

Some other testimony of events occurring in Mexico

may be needed. But in quantity and quality, testimony

as to events in Mexico will not compare with the evi-

dence of the controlling events which occurred in Ari-

zona that will be required.

The Statutes of Limitations Have Run:

Meanwhile, the short Statute of Limitations in Mex-

ico has run (1278, 1406). The four year Statute of

Limitations in Arizona has also run because of the

delays in the Courts below. 12 A.R.S. 544, 550,

The Decisions of the Courts Below:

Over 4 years have elapsed since the Complaint was

filed on 26 October 1973 (6). Over 18 months there-

after, on 27 May 1975, the District Court ‘‘dismissed’’

11

the complaint, with costs (1412, 1414). It wrote no

opinion (1412-1415).

The case then took over two more years to reach the

Court of Appeals for the Ninth Cireuit. On 7 July

1977, that Court affirmed the District Court in a short

opinion. It admitted that the case was novel as to Bay-

chem and that there was no precedent for its extreme

decision. It cited no precedent (A-3).

As to Baychem, the Court below affirmed the dismis-

sal of the Complaint against Baychem, on the ground

of forum non conveniens. It admitted that ‘‘a defend-

ant must carry an almost impossible burden in order

to deny a citizen access to the courts of this country’’.

Then, however, the Court below proceeded to make

astounding errors. Among others, it stated that ‘‘all

transactions between the parties, as well as the claim

itself, arose in Mexico’’. It further stated that ‘‘The

only effect alleged in Arizona was the loss to Mizokami

when the chemically treated vegetables failed to gain

entry into the United States.’’

Indeed, these are colossal errors. The undisputed

facts show that the claim arose, not in Mexico, but in

Arizona and because of a finding that Petitioner’s bell

peppers containing Tamaron, having arrived in Ari-

zona, were there held to violate U.S. laws. It was in

Arizona that the chemicals formulated by Respondents

exploded in a legal sense and created the catastrophe

out of which the claim arose. Moreover, in Arizona

Petitioner ordered the Tamaron from Vamex, the dis-

tributor or agent of Bayer de Mexico, paying by checks

drawn on an Arizona bank (1049, 1060).

The Court below also erroneously stated (A-1)

that Petitioner sustained losses ‘‘when United States

12

Customs Officers turned back a shipment of bell peppers

at the Mexican border’’. But no U.S. Customs Officer

ever turned back a shipment of Petitioner’s bell pep-

pers at the Mexican border or anywhere else. See p.

7, 8.

The Court also made the amazing statement (page

A-2) that ‘‘the business done in Arizona by Baychem

was unrelated to the claim’’. The fact is that Baychem

sold the very Tamaron in question to Bayer A.G. for

delivery to Bayer de Mexico, knowing that some of the

Tamaron so sold would be imported into Arizona on

Petitioner’s peppers. Moreover, Baychem was selling,

in Arizona as ‘*Monitor 4’, the very chemical sold in

Mexico as Tamaron. Monitor 4 had been registered in

the U.S. for certain other crops, but not for peppers.

Thus, Bayehem had not, in March 1973 been caught

for its failure to register Monitor 4 on bell peppers in

connection with its Arizona business (1233). Hence,

when Baychem was finally jolted into applying for a

registration of Tamaron, it also applied for the regis-

tration of Monitor 4 (966).

The Court Below Erroneously Described Baychem as a

“Foreign Opponent” of Petitioner:

The Court below also erroneously stated, in a ref-

erence to Petitioner (A-4), that “when their for-

eign operations lead to litigation they cannot expect

always to bring their foreign opponents into a United

States forum. . . (Emphasis added). The implication

is that Baychem is a ‘‘foreign opponent’’, of Petitioner.

But such a characterization is another astounding

error. Baychem is a New Jersey corporation doing

considerable business in Arizona and a citizen of the

United States. The Court below simply confused Bay-

13

chem, the U.S. subsidiary, with the corporations orga-

nized under the laws of foreign countries, Bayer A.G.

and Bayer de Mexico. Then, apparently on the theory

that Baychem was a corporation organized under the

laws of a foreign country, the Court below dismissed

the complaint as to Baychem on the ground of forum

non conveniens.

Moreover, it was not the ‘‘foreign operations,’’ but

the events caused by Respondents to occur in Arizona

that created liability and the litigation. These included

the event that the chemicals arriving in Arizona which

had been furnished by Respondents, were found to vio-

late U.S. law.

As to Bayer de Mexico. The Court below erroneously

held that Petitioner merely ‘‘alleges that Bayer de

Mexico knew or should have known that the chemical

would be used on crops intended for United States

markets, including Arizona. These allegations do not

provide the minimum contacts required by the Due

Process Clause for personal jurisdiction’’. On its face,

we submit that this cryptic statement is in error. In

addition, the Court below simply failed to absorb the

allegations of the Complaint. The Complaint alleged

that all the Respondents furnished chemical insecti-

cides to Petitioner in Mexico, knowing that Tamaron

would be imported into Arizona on Petitioner’s bell

peppers. Then when Respondents’ chemicals arrived

in Arizona aboard Petitioner’s bell peppers, they ex-

ploded in Arizona—not physically, but in a legal sense

—for in Arizona the chemicals were determined to vio-

late U.S. laws. These facts satisfy the due process

clause. See post, p. 18-22.

14

As to Bayer A.G., the Court below merely dismissed

the Complaint. It made no mention of the fact that all

the Tamaron in Mexico was furnished by Bayer A.G.

to Bayer de Mexico, knowing that some of it would wind

up on Petitioner’s bell peppers imported into Arizona,

and there violate U.S. law. Nor did it mention the

other undisputed facts set forth above, p. 5-9.

In addition, Bayer A.G. dominates and controls its

subsidiaries and agents, Bayechem and Bayer de Mex-

ico (10, 1265-1270). And Bayer A.G. set the standards

for the use on vegetables of Tamaron distributed by

Bayer de Mexico. See page 5.

REASONS FOR GRANTING THE WRIT

Il. THE COURT BELOW HAS DECIDED FEDERAL QUESTIONS

IN CONFLICT WITH APPLICABLE DECISIONS OF THIS

COURT

A. Under This Court's Decisions, The District Court Had No

Power to Dismiss a Complaint Under 28 U.S.C. 1404(a):

In dismissing the complaint against Baychem on the

ground of forum non conveniens, the decision of the

Court below is in conflict with this Court’s decision on

April 11, 1955, in Norwood vy. Kirkpatrick, 349 U.S. 29,

99 L. Ed. 789, 75 S. Ct. 544 (1955). That case held that

the power to dismiss cases on the ground of forum non

conveniens was eliminated by the enactment of 28

U.S.C. 1404(a). It said:

‘‘When Congress adopted § 1404(a), it intended

to do more than just codify the existing law on

forum non conveniens. As this Court said in Ex

parte Collett, 337 US 55-61, 93 L ed 1207-1211, 69

S Ct 944, 959, 10 ALR2d 921, Congress, in writing

§ 1404(a), which was an entirely new section, was

15

revising as well as codifying. The harshest result

of the application of the ola doctrine of forum

non conventens, dismissal of the action, was elimi-

nated by the provision in § 1404(a) for transfer.

When the harshest part of the doctrine is excised

by statute, it can hardly be called mere codifica-

tion.” (Emphasis added) 349 U.S. 32.

B. The Circuits Are in Conflict as to Whether a District Court Has

Power to Dismiss a Complaint on the Ground of Forum Non

Conveniens:

A conflict exists in the Circuits. In the Second,

Third, and Eighth Circuits some cases have followed

the holding in the Norwood case that under 28 USC

1404(a) there is no power to dismiss the case on the

ground of forum non conveniens. Collins v. American

Auto Ins. Co. of Missouri, 230 F.2d 416. (2d Cir.,

1956) B.M. Heede Inc. v. West India Machinery &

Supply Co., 272 F. Supp. 236 (DCNY, 1967). Har-

boldt v. Carpenter (C.A. 8, 1976), 536 F.2d 791. Kisco

v. Penn Central Transp. Co., 408 F. Supp. 984 (DC

ND Pa., 1976). ” _

Since April 11, 1955, the date of the Norwood deci-

sion, cases in the Ninth and Fourth Circuits, and some

cases in the Second Circuit, have dismissed complaints

on the ground of forum non conveniens where the par-

ties were foreign nationals and the claim arose in a

foreign country. Yerostathis v. A. Luisi, Ltd. (C.A. 9,

1967), 380 F.2nd, 377; Prack v. Weissinger (C.A. 4,

1960), 276 F.2d 446; Vanity Fair Mills, Inc. v. T.

Eaton Co. (C.A. 2, 1956), 234 F.2d 633 and see Levin

v. Mississippi River Corp. (D.C.N.Y., 1968), 289 Fed.

Sup. 353. But no case has ever dismissed 4 complaint

on that ground where, as in our case, both parties are

momar States citizens and the claim arose in the United

16

C. The Decision Below Raises Significant and Recurring Problems

Concerning Efforts to Invoke Federal Diversity Jurisdiction:

The decision below raises significant problems con-

cerning efforts to invoke Federal diversity jurisdiction.

The right of a citizen of the United States to sue an-

other citizen of the United States in a diversity case

where there is a foreign element, is now in serious

jeopardy. Unless precluded by this Court, now there

will be more motions to dismiss complaints where there

is a foreign element in cases between U.S. citizens, and

more appeals. Thus the decision below must necessarily

give rise to further litigation and confusion. Hence,

we submit that the questions raised should be settled

by this Court and unnecessary litigation prevented.

D. In the Alternative, In Dismissing as to Baychem, The Court

Below Abused Its Discretion:

The Court below admitted that its decision dismiss-

ing the complaint as to Baychem on the ground of

forum non conveniens was novel. See A-3. But it is

more than novel. It is utterly unsupported by prece-

dent or by principle. Moreover, it was based on the

misconception that Baychem was a “‘foreign oppon-

ent’’, rather than a New Jersey corporation doing busi-

ness in Arizona and a U.S. citizen.

In addition, the decision below is Gulf Oil Corpora-

tion v. Gilbert, 330 U.S. 501, 91 L. Ed. 1055, 67 8S. Ct.

839 (1947) in reverse. For, despite the existence of

overwhelming bases for jurisdiction, the decision be-

low arbitrarily extinguished Petitioner’s claim, leav-

ing Petitioner with no remedy at all.

Arguing in the alternative, even if, contrary to the

principle stated in Norwood quoted above, Federal

District Courts still have the discretion to dismiss a

17

case on the ground of forum non conveniens, the Court

below grossly abused any such discretion on these

facts: (1) Petitioner is an Arizona corporation and a

citizen of the United States; (2) Respondent Baychem

is a New Jersey Corporation doing a considerable

amount of business in Arizona and a citizen of the

United States; (3) the claim arose in Arizona; (4)

the convenience of witnesses favors Arizona; (5) the

Statute of Lim *tions has run in Mexico and in Ari-

zona; and (6) ‘| »re is no other forum in which the

action can be brought.

Second, it is in any event an abuse of discretion to

dismiss a case on the ground of forum non conveniens

when it is not absolutely certain that jurisdiction of

all parties and complete relief can be obtained in a

supposedly more convenient Court. As is stated in 15

Wright, Miller and Cooper, Federal Practice and Pro-

cedure, Jurisdiction: § 3828:

Dismissal on the basis of forum non conveniens

requires that there be in fact an alternative forum

in which the suit can be maintained. It must ap-

pear to a certainty that jurisdiction of all parties

ean be had and that complete relief can be ob-

tained in the supposedly more convenient court.

(Ten authorities cited)

In our case, there is a complete absence of any forum

other than the Federal Court in Arizona, in which the

suit may be brought against Respondents and com-

plete relief may be had. And the Statute of Limita-

tions has run in Mexico, and also in Arizona. See

p. 10. The Court below arbitrarily extinguished Peti-

tioner’s claim.

Third, a citizen of the United States is entitled to

special consideration in forum non conveniens cases.

18

Mobil Tankers Co. S.A. v. Mene Grande Oil Co. (C.A.

3, 1966) 363 F.2d 611, cert. den. 385 U.S. 945, 17 L.Ed.

2d 225, 87 S.Ct. 318; Burt v. Isthmus Dev. Co., (C.A. 5,

1955) 218 F.2d 353, cert. den. 349 U.S. 922, 99 L.Ed.

1254, 15 S.Ct. 661. Shulman v. Compagnie Generale

Transatlantique (D.C.N.Y. 1957) 152 F.Supp. 833.

Fourth, in arbitrarily extinguishing Petitioner’s

claim, the Court below emasculated 28 U.S.C. 1404(a) ;

and also the statutory provisions providing for federal

jurisdiction on the ground of diversity of citizenship,

28 U.S.C. 1332, ete. It went to an extreme not ap-

proached by any other case. It decided important ques-

tions which should be decided by this Court. It also

reflects the conflict in the circuits, which conflict will

affect numerous other litigants and create unnecessary

litigation.

E. The Holding of the Court Below That Minimum Due Process

Contacts of Respondents Were Not Present in Arizona Is in

Conflict With Decisions of This Court:

1. The events that occurred in Arizona conferred jurisdiction

under Arizona law:

The dismissal by the Court below of the action against

Bayer de Mexico and Bayer A.G. on the ground of

lack of in personam jurisdiction under the Arizona

long-arm statute is flatly inconsistent with the mini-

mum contacts test as laid down by this Court.

The law of Arizona provides for service of process

upon a foreign defendant provided that the defendant

has ‘‘caused an event to occur in this state out of which

the claim which is the subject of the complaint arose’’.

Rule 4(e)(2)(a), Rules of Civil Procedure, 16 A.RS.

See p. 4. Ordinarily, the exercise of jurisdiction

19

under this provision is reached by a two-stage analysis:

(1) Whether the defendant has caused an event to

occur in Arizona out of which the claim which is the

subject of the complaint arose; and (2) whether the

defendant has minimum contacts with Arizona such

that the exercise of personal jurisdiction over him will

be in conformity with the requirements of due process.

The lower court’s analysis of these questions was as

follows:

“Neither Bayer de Mexico nor Bayer AG did

business in Arizona, and neither acted within the

forum. The only effect alleged in Arizona was the

loss to Mizokami when the chemically treated

— failed to gain entry into the United

tates.

Plaintiff alleges that Bayer de Mexico knew or

should have known that the chemical would be

used on crops intended for United States markets,

including Arizona. These allegations do nct pro-

vide the minimum contacts required by the Due

Process Clause for personal jurisdiction.” (A-2).

First, with respect to the beginning of the analysis,

it does not state clearly whether the Court below held

that defendant caused an event to oceur in Arizona such

that the Arizona statute’s requirements were satisfied.

To the extent that the Court below concluded that de-

fendant did not cause an event to occur in Arizona, its

decision was in serious factual error (see p. 7-8).

Moreover, aside from the serious factual errors of

the Court below, to the extent that it concluded that

no event occurred in Arizona, its decision is also flatly

inconsistent with the Arizona Supreme Court’s inter-

pretation of its long-arm statute. Thus, in Phillips v.

20

Anchor Hocking Glass Corporation, 100 Ariz 251, 413

P2d 732 (Ariz Sup Ct., 1966), the Court stated that in

cases of tort or product liability, a manufacturer causes

an event to occur within the forum when he puts his

product into the stream of commerce and the product

eventually causes an injury to occur within the forum

State. The case arose when a baking dish manufactured

by defendant broke and injured plaintiff. The defend-

ant’s only contact with Arizona was the presence of the

product in the State when the injury occurred. The

Superior Court dismissed the complaint. But the Su-

preme Court reversed and remanded the case for con-

sideration whether the exercise of jurisdiction under

the statute was in conformity with the requirements

of due process.

This reasoning is equally applicable to the instant

ease. The Respondents put their product, Tamaron, into

the stream of commerce. Vegetables treated with the

chemical reached the forum State; were tested in Ari-

zona; and were there found to be in violation of Fed-

eral law. Then the FDA in Arizona caused an embargo

to be imposed on further importation of peppers. Thus,

all the Respondents caused events to occur in Arizona

out of which the claim arose within the meaning of the

statute as interpreted by the Arizona Supreme Court.

2. The decision below violates the minimum contacis test

laid down by this Court:

With respect to the second half of the analysis, the

decision of the Court below is inconsistent with the

minimum contacts test laid down by this Court. In-

deed, the minimum contacts test laid down by this

Court is clear. A forum may exercise jurisdiction over

a foreign defendant consistently with the requirements

21

of due process provided that the defendant has mini-

mum contacts with the forum such that maintenance

of the suit does not offend ‘‘traditional notions of fair

play and substantial justice.’’ International Shoe Co.

v. Washington, 326 U.S. 310, 316 (1945). Moreover, in

appropriate circumstances, a single contact by the de-

feudant with the forum may be sufficient to uphold

jurisdiction. McGee v. International Life Ins. Co., 355

U.S. 220 (1957).

Tn addition, other decisions that apply the minimum

contacts test to cases of tort or product liability have

held that when a manufacturer places a product into

the stream of commerce, the product reaches the forum

State, and injury occurs in the forum, it is consistent

with the requirements of due process to require the

manufacturer to defend his product in the forum State.

Gray v. American Radiator and Standard Sanitary

Corp. 22 Ill. 2d 432, 176 N.E.2d 761 (Sup Ct. IIL,

1961) Duple Motor Bodies Ltd. v. Hollingsworth, 417

F.2d 231 (9th Cir., 1969).

Moreover, in Phillips v. Anchor Hocking Glass

Corp., 100 Ariz 251, 413 P2d 732 (1966), supra, the

Arizona Supreme Court found that these principles

apply when jurisdiction is asserted under the Arizona

long-arm statute. Indeed, the Court went even further

than some jurisdictions and held that the foreseeability

of the product’s entry into the forum state was not a

necessary prerequisite to jurisdiction. It said:

‘*We do not think foreseeability itself is a neces-

sary prerequisite to fairness. Cf Note, Products

Liability and the Choice of Law, 78 Harv LR 1452.

Ordinarily, a manufacturer is primarily interested

in the consumption of his product, not where it is

consumed. If his product is defective he may be

22

held liable for the damage caused thereby whether

suit is brought in his state or plaintiff’s state. The

manufacturer should not necessarily be allowed to

divorce himself from liability for a defective prod-

uct solely because he cannot foresee where it will

be consumed.”’ 413 P2d at 737. (Emphasis added)

Tn the instant ease, all the Respondents put their

chemical product, 'Tamaron, into the stream of com-

merce; each Respondent had reason to foresee ( though

foreseeability is not necessary) that the chemical prod-

uet would be applied to vegetables grown for ex-

portation into Arizona. In fact, vegetables containing

the residue of their product were physically imported

into and present in Arizona and events occurred in

Arizona: the FDA there caused the peppe's physically

located in Arizona to be destroyed, and an embargo to

be imposed upon the further importation of peppers.

Thus, the elements needed to assert jurisdiction

under the Arizona statute consistently with the re-

quirements of due process were present. The holding of

the Court below that Plaintiff’s allegations did not

provide the minimum contacts required by the Due

Process clause is flatly inconsistent with the minimum

contacts test as laid down by this Court, and as inter-

preted by the highest court of the State of Arizona.

3. Additional contacts of Bayer de Mexico with Arizona:

In addition, Bayer de Mexico and Baychem are mu-

tual agents, and the actions of each are binding upon

the other. See p. 6. It is fundamental that the prin-

cipal is bound by and liable for the acts which his

agent does within the scope of his authority. Restate-

ment (Second) of Agency § 140 (1958).

23

ll. ON A MOTION TO DISMISS FOR LACK OF PERSONAL

JURISDICTION, THE COMPLAINT AND OTHER MATERIAL

SHOULD BE CONSTRUED FAVORABLY TO THE PLAINTIFF:

Motions to dismiss for lack of personal jurisdiction

or lack of a convenient forum are commonly decided,

as in our case, on the pleadings and special material

outside the pleadings. There has been no trial. Hence,

for the purpose of ruling on such motions, the plead-

ings and other material should be construed favorably

to the Plaintiff. Wright and Miller, 5 Federal Practice

and Procedure: Civil § 1363 (1969). Jensen v. McIner-

ney, 299 F. Supp. 1309 (D.C., Virgin Islands, 1969).

United States v. Orshek, 164 F.2d 741 (8th Cir., 1947).

Ill. IN THE ALTERNATIVE, QUESTIONS OF JURISDICTION IN

PERSONAM SHOULD BE POSTPONED TO THE TRIAL:

Finally, if there should be any question as to juris-

diction in personam over Respondents, decisions on

that question should be postponed to the trial when

discovery, so far resisted by Respondents, can be had

and all the facts can be developed, Montgomery Ward

& Co. v. Schumacher, 3 FRD 368 (D.C. Cal., 1944).

CONCLUSION

For the reasons stated,

1. The Petition should be granted and the judgments

below summarily reversed; or

2. -The Petition should be granted and the case set

for oral argument; or

3. The case should be summarily reversed as to

Baychem, and remanded to the District Court with

instructions to postpone, until the trial, decisions on

24

jurisdiction over Respondents Bayer de Mexico and

Bayer A.G,

Respectfully submitted,

I’. TrowBriIpGeE vom Baur

1700 K Street, N.W.

Washington, D.C. 20006

Of Counsel:

FLORENCE WEIGHT

Ricuarp M, Preston

~ vom Baur, Copurn, StmmMons & TURTLE

November 23, 1977

APPENDIX

A-l

Unirep States Court or Appgats

For Tue Nintnu Crrcuit

No, 75-2991

Mrzoxami Bros. or Arizona, Inc.,

an Arizona corporation,

Appellant,

v.

Baycuem Corporation, a Delaware and New Jersey corpo-

ration; Bayer pe Mexico, S.A., a corporation of the

United States of Mexico; Bayer AG, a corporation of

the Federal Republic of Germany; and Compania

Vamex pe Los Mocuis, 8.A., a corporation of the United

States of Mexico,

Appellees.

Opinion

(filed July 7, 1977)

Before: Ery and Goopwin, Circuit Judges, and Sotomon,*

District Judge.

Per Curiam:

Mizokami Bros. of Arizona, an importer of Mexican-

grown produce for sale in the United States and Canada,

sustained losses when United States Customs officers turned

back a shipment of bell peppers at the Mexican border

because the vegetables were contaminated with excessive

residues of the chemical Tamaron. Mizokami sued Bayer

AG and its corporate children, Bayer de Mexico and Bay-

chem, in the United States District Court for the District

of Arizona. The court dismissed the action against the first

*The Honorable Gus J. Solomon, Senior United States District

Judge for the District of Oregon, sitting by designation.

A-2

two defendants for want of in personam jurisdiction under

Arizona’s long-arm statute and against the third for rea-

sons of forum non conveniens. We affirm.

Baychem manufactured the Tamaron in Missouri for

Bayer AG, the world patent owner, who in turn sold it to

Bayer de Mexico. Eventually it was sold to Mexican farm-

ers who used it on crops bought by Mizokami. Neither

Bayer de Mexico nor Bayer AG did business in Arizona,

and neither acted within the forum. The only effect alleged

in Arizona was the loss to Mizokami when the chemically

treated vegetables failed to gain entry into the United

States.

Mizokami attempted to predicate long-term liability

against Bayer AG, the German parent of both Baychem

and Bayer de Mexico, on the theory that Baychem, a sub-

sidiary of Bayer AG, did business in Arizona. However,

the business done in Arizona by Baychem was unrelated

to the claim, and the mere existence of the parent-subsidy

relationship is not alone a sufficient basis for long-arm

jurisdiction of the parent. Lycoming Division of Aveo

Corp. ¥. Superior Court, 22 Ariz. App. 150, 524 P.2d 1323,

1326 (1974). Bayer AG was not alleged to have any other

connection with Arizona.

Plaintiff alleges that Bayer de Mexico knew or should

have known that the chemical would be used on crops in-

tended for United States markets, including Arizona. These

allegations do not provide the minimum contacts required

by the Due Process Clause for personal jurisdiction. See

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

Amba Marketing Systems, Inc. v. Jobar International, Inc.,

551 F.2d 784 (9th Cir. 1977); L. D. Reeder Contractors v.

Higgins Industries, Inc., 265 F.2d 768, 773-774 (9th Cir.

1959). To the extent that the district court grounded its

dismissal upon the failure of the complaint to allege facts

establishing in personam jurisdiction, the judgment must

be affirmed.

A-3

The dismissal of Mizokami’s action against Baychem on

the ground of forum nonconveniens must also be affirmed.

The determination of the appropriateness of the doctrine

is entrusted to the sound discretion of the trial court. Paper

Operations Consultants International, Ltd. v. SS Hong

Kong Amber, 513 F.2d 667 (9th Cir. 1975).

Ilere, an Arizona corporation seeks to maintain an action

in a court of the United States against a Delaware corpora-

tion which has its headquarters in Missouri. Such cases

are filed in the federal courts daily. But we have been cited

no case in which the facts are quite like those presently

before us. Numerous cases suggest that a defendant must

meet an almost impossible burden in order to deny a citizen

access to the courts of this country. We note particularly

Burt v. Isthmus Development Co., 218 F.2d 353 (5th Cir.),

cert. denied, 349 U.S. 922 (1955), wherein the court stated:

‘* * * * [C]ourts should require positive evidence

of unusually extreme circumstances, and should be

thoroughly convinced that material injustice is mani-

fest before exercising any such discretion to deny a

citizen access to the courts of this country. * * *’’ 218

F.2d at 357.

See also Leasco Data Processing Equipment Corp. v. Mar-

well, 468 F.2d 1326 (2d Cir. 1972) ; Olympic Corp. v. Societe

Generale, 462 F.2d 376 (2d Cir. 1972); Hoffman v. Gober-

man, 420 F.2d 423 (3d Cir. 1970); Mobil Tankers Co. v.

Mene Grande Oil Co., 363 F.2d 611 (3rd Cir.), cert. denied,

385 U.S. 945 (1966).

Despite the strong statements in favor of access, how-

ever, a United States citizen has no absolute right to sue

in a United States court. Vanity Fair Mills v. T. Eaton Co.,

234 F.2d 633 (2d Cir.), cert. denied, 352 U.S. 871 (1956).

Application of the forum non conveniens doctrine affords

wide discretion to the district court. Gulf Oil Corp. v. Gil-

bert, 330 U.S. 501 (1947).

A-4

The district court properly exercised its discretion in

the present case. The plaintiff corporation claimed a re-

lationship, not clearly defined, with certain Mexican grow-

ers. The complaint was of misrepresentations made to the

growers in Mexico with respect to a chemical manufactured

in Missouri and sold in Mexico by the defendants. All

transactions between the parties, as well as the claim itself,

arose in Mexico.

The plaintiff falls back on its United States citizenship

as the sole and only possible basis for suing these defend-

ants in a court of the United States. This is not enough.

In an era of increasing international commerce, parties

who choose to engage in international transactions should

know when their foreign operations lead to litigation they

cannot expect always to bring their foreign opponents into

a United States forum when every reasonable considera-

tion leads to the conclusion that the site of the litigation

should be elsewhere.

There was no abuse of discretion.

Affirmed.

A-5

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

(Caption Omitted in Printing)

Order

(filed August 26, 1977)

Appeal from the United States District Court

for the District of Arizona

Before: Ety and Goopwin, Circuit Judges, and So.omon,*

District Judge.

The court has considered appellant’s petition for rehear-

ing filed July 22, 1977; the petition is denied.

©The Honorable Gus J. Solomon, United States District Judge

for the District of Oregon, sitting by designation.

A-6

UNITED STATES DISTRICT COURT

FOR THE

DISTRICT OF COLUMBIA

Civil Action File No. 73-188 TUC JAW

Mizoxam1 Bros. or Arizona, Inc.,

an Arizona corporation,

vs.

Baycuem Corporation, A Delaware and New Jersey corpo-

ration; Bayer pe Mexico, 8.A., a corporation of the

United States of Mexico; Bayer AG, a corporation of

the Federal Republic of Germany; and Compania VAMEX

pe Los Mocuis, S.A., a corporation of the United States

of Mexico,

Judgment

(filed May 27, 1975)

This action came on for (hearing) before the Court, Hon-

orable James A. Walsh, United States District Judge, pre-

siding, and the issues having been duly heard and a decision

having been duly rendered, granting defendants’ Motion

to Dismiss,

It is Ordered and Adjudged that the plaintiff, MIzoKaMt

Bros. or Arizona, Inc., take nothing and that the action is

dismissed as to defendants Baycuem Corporation, a Dela-

ware and New Jersey corporation; Bayer pe Mexico, S.A.,

a corporation of the United States of Mexico and Bayer

AG, a corporation of the Federal Republic of Germany.

Dated at Tucson, Arizona, this 27th day of May, 1975.

W. J. Furstenav

Clerk of Court

/s/ Lovuisg CLELLAND

By: Louise Clelland,

Deputy Clerk

A-7

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

(Caption Omitted in Printing)

Judgment

(June 19, 1975)

This matter having come on for hearing on July 1, 1974

and again on May 24, 1975 on the respective motions on

behalf of defendants Bayer AG, a corporation of the Federal

Republic of Germany, and Bayer de Mexico, S8.A., a cor-

poration of the United States of Mexico, to quash the at-

tempted service of process herein against said defendants

for lack of personal jurisdiction over them and the motions

on behalf of said defendants and also Baychem Corporation

to dismiss this action pursuant to Rule 19(b) of the Federal

Rules of Civil Procedure on the ground of forum non con-

veniens, upon the basis of the affidavits submitted in respect

of said motions and, as well, the answers to interrogatories

and the entire record herein, including the submissions of

counsel for plaintiff and for each of said defendants and the

oral arguments presented by counsel for plaintiff and coun-

sel for each of said defendants at said hearings, and for the

reasons stated in the opinion of the Court expressed at the

conclusion of the hearing on May 24, 1975,

Ir Is Heresy Orperep, Apsupcep anp Decreep that the

attempted service of process herein against defendant Bayer

AG, a corporation of the Federal Republic of Germany,

and, as well, the attempted service of process against de-

fendant Bayer de Mexico, S.A., a corporation of the United

States of Mexico, is hereby quashed, the complaint herein

is hereby dismissed against said defendants and also against

Baychem Corporation and judgment, together with an award

for costs, is hereby entered in favor of each of said defend-

ants against plaintiff.

A-8

Done In Open Court this ........ day of June, 1975.

/s/ James A. WasH

United States District Judge

The foregoing Judgment lodged with the Court this 5th

day of June, 1975 and Copy mailed this 5th day of June,

1975, to:

Jounson, Hayes & DowpDaLu

Attn: John G. Stompoly

250 North Church Avenue

Tucson, Arizona 85701

and

vom Baur, Copurn, Simmons & TurTLE

Attn: F. Trowbridge vom Baur

1700 K Street, N.W.

Washington, D.C. 20006

Attorneys for Plaintiff

Brown, Vuassis & Bain

Attn: Jack E. Brown

222 North Central, 9th Floor

Phoenix, Arizona 85004

Attorneys for Defendant Bayer, AG

a corporation of the Federal

Republic of Germany

Cranpbuier, Tutiar, Upatt & RichmMonp

Attn: Jack I. Redhair

177 North Church, Suite 1110

Tucson, Arizona 85701

Attorneys for Defendant Baycuem CorporaTion,

a Delaware and New Jersey corporation

A-9

/s/ M. J. Meewan, For

Joun F. Moiioy

for Rosertson, Mo.ioy, Fickxett & Jongs, P.C.

P. O. Box 2268

Tucson, Arizona 85702

Attorneys for Defendant Bayer pe Mexico, 8.A.,

a corporation of the United States of

Mexico