# Petition — Rudolf Wolff & Co. v. Neiman

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1980
- **Citation:** 449 U.S. 920

## Text

In THE

Supreme Court of the United RODAK, JR., CLERK

OCTOBER TERM, 1980

RUDOLF WOLFF & CO., LTD.,

Petitioner,
—against—

DAVID NEIMAN, d/b/a THE LONDON GROUP (1974),
Respondent.

On Writ or CERTIORARI TO THE UNITED STATES
Court oF APPEALS FOR THE SEVENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

Exuiot Paskorr
405 Lexington Avenue
New York, New York 10174
Tel: (212) 682-4567
Attorney of Record for Petitioner
Of*Counsel : Rudolf Wolff & Co., Ltd.

TownLey & UPpIKE and

Auuan E. Lapinus
115 South La Street
Chicago, Illinois 60603
Tel: (312) 781-2200
Attorney for Petitioner
Rudolf Wolff é Co., Ltd.
VeEppER, Pricz, KAUFMAN
& KaMMHOLZ

a

IN THE

Supreme Court of the United States

October Term, 1980
No. 80-

,%
v

RupoutpeH Wotrr & Co., Lrp.,
Petitioner,
—against—
Davip Neman, d/b/a THE Lonpon Group (1974),
Respondent.

On Writ oF CERTIORARI TO THE UNITED STATES
Court oF APPEALS FOR THE SEVENTH CIRCUIT

a
v

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

Questiors Presented

l(a). In matters of international commerce, has the
Seventh Circuit created a lesser measure of due process
available to an alien by permitting Illinois to assert ‘‘long
arm’’ jurisdiction over an English Company premised upon
the amalgamation and comingling of (1) contacts of the
alien found to be insufficient for ‘doing business’’ with (2)
a single forum contact of the alien which, im and of itself,
does not rise to a constitutionally substantial ‘‘transaction
of business’”’ in the forum?

(b). Alternatively, in a due process analysis may a
Court, having found that an alien’s contacts with the forum

fall short of ‘‘doing business’’ there, tack on those insuffi-
cient ‘‘doing business” contacts to a single insufficient con-
tact (two hour meeting in the forum) in order to amalga-
mate contacts for jurisdictional sufficiency?

2. Whether in matters of international commerce, a
State’s (Illinois) assertion of in personam jurisdiction over
an alien (English Company) by reason of its Long Arm
Statute requires a cautious analysis test as suggested by
the Second Circuit, weighing as viable components of
‘*due process’’ the State’s particular interest in adjudicat-
ing the dispute as against the burdens imposed upon the
alien of defending in the American forum?

3. Whether the Seventh Circuit’s premise that it is just
as inconvenient for the alien English Company to defend
in Illinois as would be for the Illinois citizen to prosecute
his action in England, without regard to an analysis of (a)
choice of law, (b) place of contemplated performance, (c)
residence of witnesses with personal knowledge, (d) loca-
tion of relevant documents and (e) whether the alien
(English Company)! could have reasonably expected that
it would be required to defend itself in an American court-
room, reaches the measure of due process available to an
alien consistent with the Fourteenth Amendment to the
United States Constitution?

1 The following persons or entities were parties to the proceedings
before the United States Court of Appeals for the Seventh Circuit :

1. David Neiman d/b/a The London Group (1974), a citizen
of the State of Illinois;

2. Rudolph Wolff & Co., Ltd., an English Company ; organized
under the laws of the United Kingdom;

3. James Gourlay, an English resident ;

4. Ingleram Investments, Lid., an English Company.

iil

TABLE OF CONTENTS

PAGE

Ce ey rs er (i)
CD: BN 5 5. vaio ob chads oc Kia aa ba eee eees |
NE ropa at Nine shee ceaen areas coe’ 1
Constitutional Provision and Statute Involved ..... |
a Be Perey Terre eT error rr re 2
Bi. FRCL TORN oi ee li ees eeiinas 2
B. The Decisions of the District Court .......... 5)
C. Opinion of the Court of Appeals ............ (j
Reasons for Granting the Writ .................. 10

1. Supreme Court Guidance Is Urgently Needed
Jn Present Times Of International Commerce
So That Alien Persons Engaging In Comrer-
cial Transactions With American Citizens
Abroad Can Predict, With Some Reasonable
Assurance, The Consequences Of Their Acts 10

ll. In Matters Of International Commerce The
Seventh Circuit’s Due Process Analysis Is
In Conflict With ‘The Second Circuit’s
Cautious Analysis Test ................ Me 13

I1l. In Matters Of International Commerce The
Burdens Of Defending In A Distant Or In-
convenient Forum Must Be Carefully
Weighed As A Component Of Due Process .. 17

IEA AM tet RES Ie PB ab TAPS ee U Noy ed AOU Pa LAIN 19

een WE EN ee ee tk rae 21

iv

TABLE OF AUTHORITIES

PAGE
Cases

Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d

Cir.) cert. denied, 423 U.S. 1018 (1975) .......... 14, 15
Charia v. Cigarette Racing Team, Inc., 583 F.2d 184,

(TE GA BG oc ckbe es ahaenoecenpusae c cersess 14
Chicago Silver Exchange v. United Refinery, Inc., 394

P. UG. L508 CBs. Bik ROTOR kc one ixecessndves 9, 14
Duple Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d

231 (9th Cir. 1969) (dissenting opinion) ....... 16-17
Hanson v. Denckla, 357 U.S, 235 (1958) ........... 10, 12
International Shoe Co. v. Washington, 326 U.S. 310

CE. has Ki. FS WOR dENG pane k waaade es tases 9,10
Leasco Data Processing Equipment Corp. v. Maxwell,

O68 FOG THOS (FR Cie. TUTE ociids tevin cs ceveiyes 16
Long 3. Victor Products Corporation, 297 F.2d 577

ee | eer a Seep rrr errr rer ery carr 14
McGee v. International Life Ins. Co., 355 U.S. 220

CRUSE Xi cv scialnss dep anke weer aes ee aes hvieces 10, 11
Milliken v. Meyer, 311 U.S. 457 (1940) ............ 10
Perkins v. Benquet Consolidated Mining Co., 342 U.S.

We. SEED ss asa cased heisivsusbeseeenecaee 11 n.10
Tommills Brokerage Co. v. Loeb, Rhoedes & Co., 411

fh Fe Ble Pre eee ry te 9,14
World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

S06. GE EG. Ba GRD (IED i kde ck ve canes 10, 13, 17

Xedit Corp. v. Harvel Industries Fidelipac, 456
P Bee, TEs Cae. MAUS 5 0 ceed has cheese 14

PAGE
Constitution, Statutes and Rules

United States Constitution Amendment XIV ...... 1, 10, 17

re 1

Ill. Rev. Stat., Ch. 110, §17(1)(a) 0.00... cee eee. 1, 2 n.3, 3

NE a ota eececcesébeesnue set 2n.3

i Ev cca ens cceccsecessucesses 3 n.4

Miscellaneous Authorities

Restatement (Second) of Conflict of Laws § 24, Com-
ie aad bet kbs op 6o whe aeuies 19

Restatement (Second) of Conflict of Laws § 37,
ee in ile 6 wd b'n bic 0.0045 cop awake 17

Von Mehren & Trautman, Jurisdiction to Adjudi-
cate: A Suggested Analysis, 79 Harv.L.Rev. 1121
ae i wack pueceetcentyehestaws 19 n.13

es

Opinions Below

The opinions of the United States District Court for the
Northern District of Illinois rendered on March 16, 1978
and, following reconsideration, on April 20, 1979 have not
been officially reported and are contained in the annexed
appendix? at pages Al4-A25. The opinion of the United
States Court of Appeals for the Seventh Circuit is reported
at 619 F.2d 1189 (7th Cir. 1980) and is reproduced in the
appendix at pages Al-A13.

Jurisdiction

The Seventh Cireuit’s judgment was entered on April
23, 1980 (App. A26). Petitioner’s timely petition for re-
hearing in bane was denied on May 22, 1980 (App. A27).
The jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).

Constitutional Provision and Statute Involved

The constitutional provision involved is the Due Process
Clause articulated in Section I of the Fourteenth Amend-
ment to the United States Constitution, U.S. Const. amend
XIV, as applicable to Section 17 of the Illinois Long Arm
Statute, ITT. Rev. Stat., Ch. 110 §17(1)(a), which recites
in pertinent part that:

(1) Any person, whether or not a citizen or resident
of this State, who in person or through an agent does
any of the acts hereinafter enumerated thereby sub-
mits such person . . . to the jurisdiction of the

2 Reference to the Appendix annexed to Wolff’s Petition For a
Writ of Certiorari herein shall appear as (App. page designation).

courts of this State as to any cause of action arising
from the doing of any such acts:

(a) The transaction of any business within this
State.

(3) Only causes of action arising from acts enum-
erated herein may be asserted against a defendant
in an action in which jurisdiction over him is based
upon this Section. (Emphasis Supplied) ?

Statement of the Case

A. Preliminary Statement

This is a diversity action, pending in the United States
District Court for the Northern District of Illinois in which
plaintiff, David Neiman (‘‘Neiman”), a citizen of Illinois
seeks damages from petitioner Rudolf Wolff & Co., Ltd.
(‘‘Wolff’’), a United Kingdom corporation, located in
London, England, for its alleged failure to deliver to plain-
tiff in London silver bullion purchased on the London
Silver Market (App. Al, A33).

Petitioner Wolff does not transact or do business in
Illinois; does not maintain an office or telephone listing in
Illinois; does not have any employees or agents in Illinois;
and does not own any property in Illinois (App. A111-
A112).

3 The Ill. Rev. Stat., Ch. 110, § 17, has provided a model for a
multitude of State Long Arm Statutes. Accordingly, the issues which
beg to be resolved before this Court concerning the unprecedented
analysis of due process by the Court of Appeals for the Seventh
Circuit, extend well beyond the Illinois statute involved herein. £.g.,
The New York Civil Practice Law & Rules § 302(1)(a) is sub-
stantively identical to Ill. Rev. Stat., Ch. 110 §17, yet the Court of
Appeals for the Seond Circuit, in a case bearing remarkable similarity
to that at bar, has suggested a cautious analysis approach to trans-
actions having an international context. See Point II, infra at page 17.

Jurisdiction was purportedly asserted over petitioner
pursuant to the Illinois Long Arm Statute, Ill. Rev. Stat.,
Ch. 110 § 17(1) (a).

During the summer of 1974, Neiman solicited his own
broker, William E. Casselman, for information concerning
silver trading on the London Silver Market (App. A4, A22
6, A43). Thereafter, on October 14, 1974, James Gourlay,*
an English resident passing through Chicago on other
business, lunched with Neiman and his broker Casselman
at a Chicago restaurant for two or three hours (App.
A4, A43-A44, A92). Neiman and Gourlay engaged in social
dialogue, discussed in general terms the nature of silver
trading on the London markets, including a loan agree-
ment of a Swiss financier.*

In November of 1974, Neiman placed his first order for
London silver bullion by telephoning his broker Casselman,
a resident of Stuart, Florida, instructing Casselman to
purchase silver for the London Group, a purported limited
partnership (App. A45-A46). On November 6, 1974, Cassel-
man from Stuart, Florida wrote to Gourlay in London,
England to initiate the first silver bullion transaction (App.
A76). Thereafter, Neiman called Casselman in Florida and

4In order to obviate the factual issue of apparent authority, peti-
tioner advised the District Court that, for purposes of its motion to
dismiss the Complaint pursuant to Fed.R.Civ. P.12(b) (2), it could
be assumed arguendo that Gourlay purported to represent petitioner
during the single meeting in Chicago with plaintiff on October 14,
1974. Both the District Court and the Seventh Circuit accepted that
premise for purposes of the motion.

5 The Swiss financier, I. Rochester (Finance), Ltd. was to finance
the silver bought by Neiman payable in British sterling with the
London silver acting as security for the loan. In this context, before
Neiman had any right to demand or expect delivery of the silver in
J.ondon, the financier’s security interest or lien would have to be
satisfied in London as would Neiman’s obligation to deliver an equiva-
lent amount of silver to Wolff in London.

asked him to purchase 748,000 ounces and then 2,000,139
ounces of silver bullion by contacting Wolff in London,
England (App. A49). Subsequently, Neiman contacted
Wolff directly by initiating telephone calls from Chicago to
London (App. A50).

Neiman’s contracts to purchase London silver bullion and
sell back an equivalent amount of London silver were to be
performed exclusively in England on the London Silver
Market without any activity contemplated in Illinois. The
silver was located, stored and to be delivered in London,
England (App. A77-A78), The silver was to be paid for in
British sterling, financed entirely by a Swiss financier, I.
Rochester (Finance) Ltd. The debt to the Swiss financier
was to be repaid in London out of the British sterling
proceeds of Neiman’s London silver trading (App. A77,
A113, A129).

The gravamen of Neiman’s Complaint is Wolff’s alleged
failure to deliver silver bullion to him in London when in
March of 1975 Neiman was in London and demanded de-
livery (App. A338, A61-A62, A77, A81-A82). During Nei-
man’s meetings in London with his solicitors and those of
Wolff, petitioner came to doubt Neiman’s financial responsi-
bility © and demanded full cover for Neiman’s contracts to
deliver London silver in the future, a position Wolff had
the right to take pursuant to custom and usage in London
silver trading and the Rules of the London Silver Market
(App. A77-A78, A109, A115). Following Neiman’s failure
to cover the loan by the Swiss financier (App. A168-A170,
A115) or to provide the cover for his future obligations,

6 It should be noted that Neiman through the date of this petition
has not paid even one American dollar to Wolff or anyone else while
purporting to purchase and sell 16,601,000 ounces of London silver
bullion. The record amply demonstrates the absence of Neimans’s
financial responsibility (App. A40-A42).

cr

Wolff refused to deliver the silver to Neiman in London
until the encumbrances against it were satisfied; the litiga-
tion at bar ensued.

B. The Decisions of the District Court

The District Court, in a memorandum decision of March
16, 1978, reviewed Neiman’s own deposition testimony and
held that Wolff’s luncheon meeting with Neiman in Chicago
did not qualitatively possess ‘‘minimum contacts’’ so that
it could be said that Wolff, by its voluntary acts, invoked
the benefits and protections of Illinois law. Recognizing
that the gravamen of plaintiff’s complaint is that Wolff
failed to deliver silver bullion to plaintiff in London, the
District Court was not unmindful that ‘‘minimum contacts’’
must be viewed as to ‘‘what is fair and reasonable in the
circumstances of a particular case’’ Wolff’s motion to dis-
miss for lack of jurisdiction over its person was granted
(App. A17).

During the year following the order of dismissal as
against Wolff, Neiman took the deposition of five non-party
witnesses, William Casselman, Ronald Richter, Moshe
Shaltiel, Joseph Klein, Edward Hansen and Marshall
Persky. Upon those depositions, Neiman moved for recon-
sideration and argued that Wolff was “doing business”
in Illinois. The District Court, although denying the
motion for reconsdieration, did so following its careful
analysis of Neiman’s new deposition evidence. The District
Court reviewed the depositions of the foregoing witnesses
and correctly determined that all but one Illinois resident
had solicited Wolff to engage in London commodities trans-
actions for their own investment motivation (App. A24, A86,
A99-A100, A102, A105-A106, A124). Neiman, on his own
deposition, admitted tha: he was desirous of trading in
London silver and initiated the meeting with Gourlay
(App. A4).

The District Court was also aware of the requirement
that where jurisdiction is asserted over a non-resident upon
its transaction of business under a Long Arm Statute, the
cause of action must arise out of the transaction of business.
Accordingly, the District Court did not amalgamate the
volume of London transactions which the few other Illinois
residents had done with Wolff in London as a consequence
of their own solicitation of Wolff in order to trade in
London commodities as part of their personal investment
desires (App. A99-A100, A102, A105-A106, A124).

C. Opinion of the Court of Appeals

The Court of Appeals affirmed the dismissal of Neiman’s
common law tort claim, but reversed the judgment dis-
missing the breach of contract claims against petitioner
Wolff and defendant Gourlay.

Wolff’s limited contacts with Illinois over the years were
reviewed by the Court of Appeals for purposes of determin-
ing whether jurisdiction could be asserted on either “doing
business” presence or as “a transaction of business.”
Gourlay in late 1973 or early 1974 had visited Chicago and
met with Casselman, Persky and Klein and discussed a
tax shelter program. Persky and Klein upon deposition
stated they were not solicited by Gourlay. To the contrary,
they solicited Wolff since it was their own desire to trade
in London metals (App. A86, A99, A102).’

7 Notwithstanding the unambiguous testimony of Messrs. Persky
and Klein that Gourlay had not solicited them to trade in London,
the Court of Appeals at footnote 1 of its opinion resolved the “factual!
disputes” in favor of Neiman. The remarkable error of the resolution
of the facts in Neiman’s favor is that no dispute exists since all per-
sons who were prseent at that 1973 meeting agree that there was no
solicitation.

Neiman never even heard or knew of Persky or Klein until subse-
quent to this litigation. Accordingly, the Court of Appeals errone-
ously created a factual issue of solicitation of Persky and Klein by
Gourlay in 1973 and resolved it in Neiman’s favor when no such
dispute existed (App. A3n.1).

The opinion then noted, and presumably relied on, that
Casselman during 1974 had placed twenty four London
silver transactions with Wolff in London for his customers.
Unfortunately, the Court of Appeals missed that part of
Casselman’s testimony where he explained that only Neiman
and one other person were Illinois residents. His other
clients had no relationship to Illinois and, in fact, traded in
London commodities after Casselman had moved to Florida
(App. A95, 97).

The opinion described how Gourlay on two occasions had
met with Ronald Richter, an Illinois resident, for less than
one hour and concluded “eash-and-carry transactions in-
volving forty-nine million dollars worth of silver and option
contracts for silver worth hundreds of millions of dollars” *
(App. A6). Again, the Court of Appeals failed to note and
perhaps consider in its measure of due process that Richter
had initiated the calls to Gourlay because he wished to trade
in London silver; and that during Richter’s calls to London,
virtually all of the terms were negotiated on the telephone
(App. A106). In essence, Gourlay’s two visits with Richter
in Illinois, each lasting les" an one hour, were an insub-
stantial part of Richter’s .ransactions of London business
with Wolff.

Lastly, the Court of Appeals detailed the October 14,
1974 meeting between Neiman, Casselman and Gourlay in
Chicago, Illinois. That two or three hour luncheon, arranged
while Gourlay was passing through Illinois on other busi-
ness, was the only contact attributable to Wolff on which

8 Richter’s trading in London options are unquestionably unrelated
to Neiman’s London silver cash and carry transactions. It cannot be
denied that Neiman’s cause of action does not arise from Richter’s
London option transactions. Notwithstanding, the Court of Appeals
seems to have amalgamated Richter’s option trading with Neiman’s
~~ silver trading to support “a transaction of business” presence
in Illinois,

Neiman’s action arises. Although the Court’s opinion
correctly describes that Gourlay, Neiman and Casselman
differ in their respective accounts of that luncheon, it is
significant that Casselman and Gourlay independently agree
that Gourlay did not solicit Neiman’s business but only
responded to his questions. Neiman’s own version does not
state that he was solicited and concedes that not even a
single proposal for specific silver purchases was. discussed
(App. A5, A45, A92, A119).°

The opinion correctly concludes that Wolff’s isolated,
sporadic transactions with residents of Illinois and mere
occasional solicitation does not reach “doing business”
presence required for the assertion of in personam jurisdic-
tion over the alien Wolff (App. A6-A7).

However, it is at this analytical juncture, that the Court
of Appeals departs from the teachings of this Court and,
ignoring the clear testimony by the non-party witnesses of
their solicitation of Wolff (App. A99-A100, A102, A105-
A106, A124), amalgamates their unrelated London com-
modities transactions with Wolff in London, which were
unknown to Neiman and from which Neiman’s claims do not
arise, with the two hour luncheon between Gourlay and
Neiman. The Court of Appeals’ erroneous analysis and
unprecedented theory of amalgamating contacts insufficient
for “doing business” with a contact insufficient for juris-
dictional presence as a “transaction of business” is revealed
in its opinion by the following language:

9 The preliminary nature of the October 14, 1974 luncheon is evi-
denced by the fact that even after Casselman, a resident of Stuart,
Florida (App. 76), had instructed Wold to trade in London silver
(App. A45), Neiman’s counsel two months later in December of
1974, wrote to Wolff in London indicating that the transactions were
merely contingent and not binding on Neiman unless he formed a
limitec geste capitalized with at least $1,000,000 (App. A54-
A57). The limited partnership was never formed, a fact never re-
vealed to Wolff (App. A53, A58-A59).

. when the luncheon meeting is considered with
Gourlay’s solicitation of Casselman and other ACLI
brokers in late 1973 or early 1974, Gourlay’s conduct
in Illinois was sufficient to permit the district court
to exercise personal jurisdiction over Gourlay and
his principal, Wolff (App. A9). (Emphasis Supplied)

There is little doubt that the two hour luncheon held on
October 14, 1974 between Neiman and Gourlay in Chicago,
in and of itself does not satisfy “minimum contacts” under
the Illinois Long Arm Statute. International Shoe Co. v.
Washington, supra; Tommills Brokerage Company v. Loeb
Rhodes & Company, 411 F.2d 764 (7th Cir. 1969) ; Chicago
Silver Exchange v. United Refinery, 334 F. Supp. 1332,
1335 (N.D. Ill. 1975).

Accordingly, the Court of Appeals has, by this decision,
created a lesser standard of due process which affords the
amalgamated whole (jurisdictional sufficiency under the
Fourteenth Amendment) a value which is greater than the
sum of its parts (contacts which are insufficient for “doing
business” or a “transaction of business”), to the constitu-
tional detriment of an alien.

Because the Court of Appeals has gone well beyond this
Court’s due process guidelines so as to permit the trans-
atlantic assertion of in personam jurisdiction over Wolff,
it has become impossible for any alien to predict the con-
sequences of its conduct and comprehend when and where
its conduct will subject it to suit in the United States.

As previously noted, the Court of Appeals reversed the
judgment of dismissal over Wolff and Gourlay and re-
manded the action to the District Court.

10

Reasons for Granting the Writ

Supreme Court Guidance Is Urgently Needed In
Present Times Of International Commerce So That
Alien Persons Engaging In Commercial Transactions
With American Citizens Abroad Can Predict, With
Some Reasonable Assurance, The Consequences Of
Their Acts.

This case involves a jurisdictional issue transcending
national boundaries, affecting international commerce, and
the ability of an alien to understand and predict the con-
sequences of its acts with an American citizen consistent
with due process afforded under the Fourteenth Amend-
ment to the United States Constitution, U.S. Const. amend
XIV. This Court’s articulated guidance on balancing the
constitutional guarantee of due process as against a state’s
assertion of in personam jurisdiction over a non-resident,
has measured due process within the sovereign and terri-
torial context of interstate federalism between citizens of
different states. Milliken v. Meyer, 311 U.S. 457 (1940);
International Shoe Co. v. Washington, 326 U.S. 310 (1945) ;
McGee v. International Life Ins. Co., 355 U.S. 220 (1957) ;
Hanson v. Denckla, 357 U.S. 235 (1958); World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L.Ed.2d
490 (1980).

This Court has never directly set forth the parameters
of due process available to an alien, not “doing business”
in the forum, concerning a dispute between an American

11

citizen end an alien who performs commercially for the
American citizen outside of the United States.'®

Without this Court’s guidance on this issue of paramount
import to all aliens like Wolff, engaged in business rela-
tions with Americans, the Seventh Circuit’s opinion, prem-
ised upon the unprecedented comingling or amalgamation
of due process concepts of “doing business” with those
arising from “a transaction of business”, results in a new
but constitutionally impaired standard of due process. This
new standard confuses or lessens the degree of predictability
which allows aliens to structure their conduct with some
reasonable assurance as to where that conduct will and will
not render them subject to suit.

The Courts below have accepted as established precedent
that the Due Process Clause, as the bulwark against state
jurisdictional expansion, resulting in inconvenient or dis-
tant litigation, has been substantially relaxed. This trend
favoring State expansion was first articulated by this Court
in McGee v. International Life Ins. Co., 355 U.S. 220, (1957)
where it observed:

Today many commercial transactions touch two or
more States and may involve parties separated by
the full continent. With this increasing nationaliza-
tion of commerce has come a great increase in the

i0 Approximately twenty-eight (28) years ago this Court in Per-
kins v. Benquet Consolidated Mining Co., 342 U.S. 437 (1952), ad-
dressed an issue of jurisdictional due process asserted by a State
over a Philippine company. However, that decision did not reach
the issues raised by this petition since the alien defendant was found
to have been continuously and systematically “doing business” in the
State of Ohio. In the instant petition, the Seventh Circuit specifically
held that petitioner was not continuously and systematically present
in Illinois to be “doing business” there, yet amalgamated or tacked
those insufficient contacts on to Neimen’s independent and unrelated
two hour meeting which was, in and of itself, insufficient for jurisdic-
tional presence.

amount of business conducted by mail across state
lines. At the same time modern transportation and
communication have made it much less burdensome
for a party sued to defend himself in a State where
he engages in economic activity.

Id. at 222-223,

This Court’s decision in Hanson v. Denckla, 357 U.S. 235
(1958) contains language which buttresses this discernible
trend of State expansion of its right to adjudicate disputes
involving its citizens within its own courts:

As technological progress has increased the flow of
commerce between the States, the need for jurisdic-
tion over non-residents has undergone a similar in-
crease. At the same time, progress in communications
and transportation has made the defense of a suit
in a foreign tribunal less burdensome... .

Id. at 250.

However, the foregoing observations of this Court have
always been made in controversies involving interstate
federalism between American citizens of different States
and not in any case requiring an alien defendant to be
hauled into an American forum, across an ocean, to defend
itself. Assuming arguendo than an alien is not present in
the United States by reason of “doing business,” there has
been no direct voice by the Supreme Court on how to
balance the components of due process where the alien
defendant is required to cross an ocean to defend itself in
an American forum. The Seventh Cireuit, in weighing the
components of due process, has ignored the eritical distine-
tion between litigation involving citizens of different states
and litigation between an American citizen and an alien
domiciled to a different continent.

Accordingly, to permit the Seventh Cireuit’s decision to
stand in the face of this Court’s concern for the burdens

13

imposed upon a non-resident domestie corporation required
to litigate in a distant or inconvenient forum, World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L.Ed 2d
490 (1980), shall result in manifest injustice to aliens who,
like petitioner Wolff, are performing commercially in a
foreign country for an American citizen. It becomes im-
possible for that alien to predict or understand, with reason-
able assurance, when and where its conduct will result in
causing it to litigate in an American forum by reason of a
lesser measure of due process available to it under the
United States Constitution.

In Matters of International Commerce The Seventh
Circuit’s Due Process Analysis Is In Conflict With The
Second Circuit’s Cautious Analysis Test.

A reading of the Seventh Cireuit’s opinion below leads
one to conclude that American citizens who trade in foreign
-—non-United States—securities or commodities markets
may successfully assert, by virtue of a State Long Arm
Statute, in personam jurisdiction over the alien broker
should a dispute involving the foreign trade arise.

The Seventh Cireuit’s decision has erroneously permitted
the amalgamation and tacking of insufficient jurisdictional
contacts so as to create a purported compound of constitu-
tional sufficiency. This Court has never suggested, as the
Seventh Circuit has done, that the distinet coneepts of juris-
dictional presence of “doing business” and a “transaction
of business” may be comingled or amalgamated.

Moreover, the decision has repealed by implication the

statutory requirement that the cause of action arise from
the alien’s acts in the forum, Ill Rev. Stat., Ch. 110 § 17,

14

when the Court included in its “transaction of business”
analysis activities wholly unrelated to and independent of
Neiman’s trading in London silver unique to his own invest-
ment strategy. Subsection (3) of the Illinois statute, limits
jurisdictionally relevant contacts to those out of which
plaintiff’s claims arise, Chicago Silver Exchange v. United
Refinery, 394 F. Supp. 1332 (N.D. Ill, 1975) and is essential
to the constitutional assertion of jurisdiction over non-
resident defendants who do not engage in a continuous and
systematic course in business in Illinois, i.e., who are not
“doing business” in Illinois. The “arising from” language
common to State Long Arm Statutes, is to insure that there
is a close relationship between a non-resident’s jurisdic-
tional activities and the cause of action against which he
must defend. Xedit Corp. v. Harvel Industries Fidelipac,
456 F. Supp. 725 (8.D.N.Y. 1978).

By amalgamating the contracts of petitioner with Illinois
as they involved unrelated persons and independent trans-
actions of one year earlier (App. A9), together with the
single contact of the two hour luncheon involving Neiman’s
claim, the Court of Appeals has rejected the heretofore
unquestionable rule, embraced by other Circuits, that a
non-resident defendant’s isolated and sporadic transactions
in the forum are jurisdictionally insufficient unless they
are the very transactions out of which plaintiff’s claims
arise. Charia v. Cigarette Racing Team, Inc., 583 F.2d 184,
189 (5th Cir. 1978); Long v. Victor Products Corporation,
297 F.2d 577 (8th Cir. 1961); Tommills Brokerage Co. v.
Loeb, Rhoedes & Co., 411 F.2d 764 (7th Cir. 1969).

The suggested premise of the Seventh Cireuit’s decision
is in direct conflict with the analysis provided by Judge
Henry Friendly writing for the Second Circuit in Bersch
v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir.) cert. denied,
423 U.S. 1018 (1975).

15

In Bersch, the issue before the Second Cireuit was
whether Americans trading in Canadian securities on the
Canadian Securities Market may constitutionally assert in
personam jurisdiction over the Canadian broker when liti-
gating a dispute concerning the foreign securities in an
American forum. The operative facts revealed that the
Canadian broker visited New York investment houses four
or five times “in an apparent attempt to drum up trade”
and had two meetings in New York at which, among other
things, the subject of the Canadian securities underwriting
[IOS offering] was discussed. Id. at 99 fn. 56).

The Bersch decision bears remarkable similarity to that
involving the petitioner and Neiman. The Canadian broker
attended two breakfast meetings in New York where one
of its partners met with the IOS chief attorney and one of
the principal architects of the IOS offering. The concept
of the securities offering was discussed, as was the capital
structure of the corporation dividend policy, terms, and
timing of the issue with no detailed recommendations and
no final decisions being made. In rejecting in personam
jurisdiction premised upon these meetings, Judge Friendly
found the injuries to American citizens being too tenuous
to permit the wrongs as “arising from” the two breakfast
meetings. Supra at 999. On the issue whether the Canadian
broker was otherwise present in New York, the Court took
a cautious analysis view of international transactions and
opined:

[The Canadian broker’s] current business so far as
the United States is concerned, consists of buying
and selling for Americans securities traded on Cana-
dien markets and arranging with American brokers
for its Canadian customers to buy or sell securities
traded in American markets. This is not doing busi-
ness within the United States; if it were, every securi-

16

ties dealer of any significant size anywhere in the
world would be “doing buisn»ss” here. Supra at 998.

In any comparison between the Seventh Circuit decision
and that of the Second Circuit, the unfortunate result is
that the alien is thoroughly confused and unable to under-
stand the consequences of his acts with an American citizen
and when performing commercially on foreign soil will
subject him to suit in an American forum despite the wholly
foreign nature of the transaction.

Petitioner believes that in matters of international com-
merce, the cautious analysis view of the Second Circuit,
articulated in Leasco Data Processing Equipment Corp. v.
Mazwell, 468 F.2d 1326, 1341 (2d Cir. 1972) and relied on in
Bersch, supra, should prevail over the unprecedented Sev-
enth Circuit theory of amalgamating insuffiicent jurisdic-
tional contacts. The importance of this Court’s direct voice
and resolution of the issues raised is evidenced by the con-
tinued expansion of international commerce and manifest
conflict between Circuits resulting in a state of confusion for
aliens who perform commercially in their own nations for
American citizens. If the Seventh Cireuit’s decision is per-
mitted to stand, without benefit of this Court’s review, Nei-
man, an American citizen having paid neither a single dollar
nor a single British pound to anyone and having duped an
English company into trading 16,601,000 ounces of London
silver for Neiman’s non-existent partnership (App. A53-
A54, A79), shall have the power to compel that English
company into defending itself in an American court involv-
ing exclusively London transactions and substantive issues
turning on English law. This result, in the face of “tradi-
tional notions of fair play and substantial justice”, brings
to mind Judge Ely’s caricature of “Blind Justice with arms
of rubber” stretching half way around the world. Duple

17

Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d 231, 236 (9th
Cir. 1969) (dissenting opinion).

In Matters of International Commerce The Burdens
Of Defending In A Distant Or Inconvenient Forum
Must Be Carefully Weighed As A Component Of Due

Process.

Although it appears that the Due Process Clause of the
Fourteenth Amendment to the United States Constitution,
U.S. Const. amend. XIV, protects “the defendant against
the burdens of litigating in a distant or inconvenient
forum.” World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 62 L.Ed.2d 490, 498 (1980), the Seventh Circuit
has voided that component of due process, at least when
weighing the burdens of defense imposed upon an alien.

In addressing the issue of the burden of defense imposed
upon Wolff, the Seventh Cireuit has opined that the in-
terest of the forum state and issue of convenience are
“secondary factors” (App. All n.8). Its conclusion that
Illinois has an interest in adjudicating this dispute because
Neiman is a citizen of Illindis is overly simplistic. Aside
from Neiman’s citizenship, this is not a case involving
dangerous instruments where [Illinois might have some
greater interest in protecting its citizens. Restatement
(Second of Conflict Laws § 37, Comment a (1971). Rather,
this is a case involving peculiarly London transactions,
governed by the Rules of the London Silver Market and
where all witnesses, other than plaintiff, are likely to be
English residents.

With respect to the factor of convenience, the Seventh
Circuit makes no attempt to discuss (1) choice of law; (2)
nature of the commercial transactions; (3) place of con-
templated performance; (4) residence of witnesses; (5)

18

location of relevant documents; and (6) whether Wolff
could have reasonably expected that it would be required
to defend itself in an American courtroom. Rather, the
Seventh Circuit shifts the burden of inconvenience to Nei-
man and states “[a]lthough it may be inconvenient for
defendants, an English corporation and citizen, to defend
in Illinois, it would also be inconvenient for plaintiff to sue
overseas.” (App. All n.8). This analysis, as it is designed
to do, entirely negates the inconvenience component of due
process when a defendant happens to be an alien. It is
respectfully submitted that this Court did not intend to
create components of due process that can be so easily
negated in the case of an alien as to be substantively non-
existent.

The record, upon Neiman’s own deposition testimony re-
veals that Neiman initiated the London transactions in-
volved at bar; the London transactions were governed by
the Rules of The London Silver Market and custom and
usage of London silver trading (App. A109, A115); the
transactions contemplated complete performance in Lon-
don, including storage of the metal, payment and delivery
to occur there; the transactions were financed by a Swiss
financier and payable in British sterling in London (App.
A77, A113, A120) ; Neiman’s demand for delivery and repre-
sentations of his ability to perform occurred in London
(App. A33, A61-62, A77, A81-A82); all witnesses for both
Neiman and Wolff are English residents (App. A65-A68, A73,
A83) ;** all relevant documents are located in London; and

11 Neiman must prove his alleged performance on his future obliga-
tions to deliver an equivalent quantity of silver to Wolff in London by
calling as a witness Mr. Edgar of Sharps, Pixley London, England,
who Neiman testified agreed to cover his future obligations to Wolff ;
Mr. Edgar's testimony shall also be relied on by Wolff.

Additionally, since Neiman denies that his London solicitors had
authority to represent to Wolff that Neiman would cover his future
obligation to Wolff (App. A67, A77), those London solicitors,
Coward Chance, are necessary witnesses for Wolff.

19

finally, Neiman should have contemplated that any dispute
arising from the silver transactions would be resolved in
London. Wolff, of course, believed the same. Under no
reasonable construction of “fair play and substantial jus-
tice” could Wolff have contemplated or foreseen that it
would have to stand trial in an Illinois courtroom defend-
ing a lawsuit concerning Neiman’s London silver transac-
tions for which he has not paid even a single dollar or
British pound. See Restatement (Second) of Conflict of
Laws § 24, Comment b (1971)."

Conclusion

If the Seventh Circuit’s decision is permitted to stand, it
effectively negates due process as available to aliens who
commercially perform in their own country for American
citizens. Moreover, as against the States’ ever expanding
effort to assert jurisdiction by virtue of Long Arm Statutes,
it would create a dual standard of due process, one em- |
braced by the Second Circuit consistent with this Court’s
teachings and one created by the Seventh Circuit amalga-
mating insufficient jurisdictional contacts into an artificial
compound of jurisdictional sufficiency. Justice, fairness and
the furtherance of international commerce commend that
this Court offer its direct voice on this issue of manifest
import to all aliens."

12 The Restatement, supra at § 24, comment b suggests use of juris-
dictional factors which measure what is “fair and just” and in “the
best interest of international and interstate systems.”

13Von Mehren & Trautman, Jurisdiction to Adjudicate: A Sug-
gested Analysis, 79 Harv.L.Rev. 1121, 1127 (1966) appropriately
points out that “in establishing bases for jurisdiction in the interna-
tional sense, a legal system cannot confine its analysis solely to its own
ideas of what is just, appropriate and convenient. To a degree it must
take into account the views of other communities concerned. Conduct
that is overly self-regarding with respect to the taking and exercising
jurisdiction can disturb the international order and produce political,
legal and economic reprisals,”

20

For the foregoing reasons, the petition for a writ of
certiorari should be granted.

Respectfully submitted,

Exuiot Paskorr
405 Lexington Avenue
New York, New York 10174
Tel: (212) 682-4567
Attorney of Record for Petitioner
Rudolf Wolff & Co., Ltd.

and

ALLAN E, Lapivus
115 South La Street
Chicago, Illinois 60603
Attorney for Petitioner
Rudolf Wolff & Co., Ltd.
Of Counsel:

TownLey & Uppikr
Vepper, Prick, KAurMAN
& KAMMHOLZ

21

Certificate of Service

I Heresy Certiry Txar on this [GPP ives of August, 1980,
three copies of the Petition For A Writ of Certiorari were
served, by first-class mail, postage pre-paid on:

Edward T. Joyce, Esq.

Attorney of Record for Respondent
David Neiman

77 West Washington Street

Chicago, Illinois 60602

William J. Harte, Esq.

Attorney for Respondent
David Neiman

111 West Washington Street

Suite 2025

Chicago, Illinois 60602

Theodore Low, Esq.

Attorney for Defendant
James Gourlay

11 South La Salle Street

Chicago, Illinois 60603

I Furruer Certiry pursuant to Rule 28.3 of this Court

Attorney of Recond for Petitioner
Rudolf Wolff & Co., Ltd.

Townley & Updike

405 Lexington Avenue

New York, New York 10174

Tel: (212) 682-4567

APPENDIX

A(i)

APPENDIX
TABLE OF CONTENTS
Documents PAGE
CE OE RI CE ois bison eect earese eeees Al
ee GS I a gt as ace ke sivneceke eer Al4
District Court Memo On Reconsideration ......... A23
Court of Appeals Judgment .................045- A26
Court of Appeals Order Denying Rehearing ....... A27
First Amended Complaint a ea ceeuuesene A28
Certain Pages of Neiman’s Deposition Transcript .. A39

Letter dated November 6, 1974 From William E.
Casselman (Stuart, Florida) to James Gourlay
CNL SIND bw bce dn cee dbo sobs Owe BED A76

Letter dated May 20, 1975 from Coward Chance
(London, England) to Radcliffes & Co., (London,

oP res Per eye wore ear A777
Neiman’s Answers to Certain of Wolff’s Interroga-
I kanes kbar Ne Lk Ae eee we Re Ne Lee we A78

Certain Pages of Casselman’s Deposition Transcript A84
Certain Pages of Klein’s Deposition Transcript .... A98
Certain Pages of Persky’s Deposition Transeript .. A101
Certain Pages of Richter’s Deposition Transcript .. A103
Rules of the London Silver Market ............... A108
Affidavit of Francis Holford dated October 16, 1975 A110
Affidavit of James Gourlay dated October 17,1975 .. A117
Affidavit of Moshe Shalteil dated August 25, 1976 .. A122

Al

iu the
United States Court of Appeals

For the Seventh Cirrntt

Nos. 79-1622 and 79-1802
DAVID NEIMAN d/b/a LONDON GROUP (1974),
Plaintiff-A ppellant,
Vv.

RUDOLF Wo LFF & Co., LTp., JAMES GOURLAY and
INGLERAM INVESTMENTS, LTD.,

Defendant-A ppellees.

Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 75-C-2531—Thomas R. McMillen, Jada.

ARGUED FEBRUARY 15, 1980—DECIDED APRIL 23, 1980

Before CUMMINGS, SPRECHER, and TONE, Circuit
Judges.

TONE, Circuit Judge. This is a diversity action assert-
ing claims arising out of silver transactions on the Lon-
don Silver Market. Jurisdiction over the person of the
defendants is asserted under the Illinois long-arm
statute, Ill. Rev. Stat., ch. 110, § 17, applicable by virtue
of Rule 4(e), Fed. R. Civ. P. B on depositions,
documents, and affidavits, the court dismissed the action
for lack of jurisdiction, holding that the defendants’ con-
tacts with Illinois were insufficient to subject them to
that state’s jurisdiction. We reverse that decision with
respect to two defendants.

A2

Nos. 79-1622 & 79-1802

Plaintiff David Neiman is a citizen of Illinois. Defen-
dant Rudolf Wolff and Company Lid., is a United
Kingdom vg with its office in London. Defen-
dant James Gourlay is a British citizen.

Wolff is in the business of trading in metals, including
silver. It acts as broker and principal in transactions on
the London Silver Market. It has had no connection with
Illinois other than the events described below.

Gourlay, who lives and works in London, was formerly
employed by Wolff and later was engaged in the
business of advising and counseling with respect to
metal trading. For purposes of the present appeal. the
parties stipulate that Gourlay was acting as Wolffs
agent with respect to the events involved in this case.

Plaintiff withdrew its claim against a third defendant.
Ingleram Investments, Ltd., during oral argument in
this court.

Because the district court has decided the defendants’
motion or on the basis of written materials, Neiman
need only show a prima facie case for personal juris-
diction. O’Hare International Bank v. Hampton, 437
F.2d 1173, 1176 (7th Cir. 1971); Data Disc, Inc. v.
Systems Technology Associates Inc., 557 F.2d 1280, 1285
& nn.l & 2 (9th Cir. 1977). In addition, Neiman is
entitled not only to the acceptance of all undenied
factual assertions in his submissions, but also to the
resolution in his favor of all disputes about relevant
facts. United States Railway Equipment Co. v. Port
Huron & Detroit Railroad, 495 F.2d 1127, 1128 (7th Cir.
1974); O’Hare International Bank v. Hampton, supra,
437 F.2d at 1176.

Some time in late 1973 or early 1974 Gourlay visited
Chicago and called on William E. Casselman, a com-
modities broker, whom Gourlay /had known in a prior
business relationship. Casselman was with a Chicago
firm called ACLI. After Casselman had asked Gourlay,
whom he had not seen in a few years, what he was doing
and Gourlay had responded that he was “working on a
tax shelter program,” Gourlay went on to say, according
to Casselman’s deposition testimony, “[W]e have devised

A3
Nos. 79-1622 & 79-1802

a method of getting an interest deduction that looks. . .
like it’s a feasible situation.” Gourlay explained the tax
shelter program to Casselman and two or three of the
latter’s business associates in the ACLI firm.’ The
device around which the program was built was
known as a “cash-and-carry” transaction and was later
ne lained by Gourlay in an affidavit filed in this case as
ollows:

A “cash-and-carry” transaction is a_ straddle in
which one purchases a quantity of silver for im-
mediate delivery; the purchase price is wholly
financed by a third party financier in a non-
recourse loan secured by the purchased silver and
repaid with the proceeds of the sale of that silver on
the due date of the loan; and, the buyer at the time
of the purchase immediately sells the silver for
delivery on the loan’s due date.

Casselman understood Gourlay to say that he con-
templated that the cash-and-carry transactions he had in
mind would be carried out through Wolff. According to
Casselman, Gourlay also said that he and an associate
had arranged financing for the transactions with I.
Rochester, a Swiss banking firm. Thereafter, Casselman
stated, he had several telephone conversations with
Gourlay about the tax shelter program in which Gourlay
supplied additional information.

During 1974 Casselman placed orders for various
customers that resulted in approximately twenty-five

1 Casselman testified that Gourlay also explained the tax
shelter to Marshall Persky and prenaiy fe oseph Klein at
ACLI during that visit. Both Persky and Klein denied discuss-
ing any business with Gourlay in Chicago at that time. Persky
did testify, however, that he learned of cash-and-carry silver
from Casselman about the time of Gourlay’s visit and that he
orders with Gourlay, presumably for customers, in late
1973, 1974, and 1975. Klein, who first met Gourlay in London
in 1969, also testified to having conducted six cash-and-carry
transactions at some point during this time period, but did not
say that he learned of the shelter through either Gourlay or
Casselman. As we have said, factual disputes are resolved in
favor of Neiman.

A4

Nos. 79-1622 & 79-1802

cash-and-carry transactions. All were handled through
Gourlay with Wolff, some were financed by I Rochester,
and some were actively solicited by Casselman. Marshall
Sabee fe another ACLI broker to whom, according to
Casselman, Gourlay explained the cash-and-carry trans-
actions during his visit to Chicago, testified by way of
deposition that he entered into cash-and-carry transac-
tions through Gourlay in late 1973, 1974, and 1975.°

In the summer of 1974 David Neiman approached
Casselman to discuss the possibility of using silver
trading as a tax shelter. Casselman told Neiman about
the device Gourlay had worked out and answered many
questions asked by Neiman about that device. Cas-
selman also said that Gourlay was planning to be in
Chicago in the fall of 1974 and could meet with Neiman.
Neiman asked Casselman to arrange a meeting. Some
time thereafter, and before the luncheon meeting that
was ultimately held, Casselman gave Neiman a copy of
the form of loan agreement used for the I. Rochester
financing.

The luncheon meeting between Neiman, Gourlay, and
Casselman was arranged for October 14, 1974, during a
visit Gourlay was making to Chicago for other reasons.
The accounts of the meeting presented in the depositions
of Neiman and Casselman and the affidavit of Gourlay
vary significantly. Neiman testified that in addition to
asking many questions about the tax shelter device,
silver des the Wolff firm, and Gourlay’s rela-
tionship to Wolff, Neiman discussed with Gourlay
the I. Rochester loan agreement form and asked for two
specific changes on the form, which Gourlay said could
be made.? Neiman also testified that ne and Gourlay dis-
cussed Wolff's commission rate, Neiman asking that it
be reduced and Gourlay stating that it could not be

¢ As stated in note 1, Persky denied discussing any business
with Gourlay in Chicago at that time, but testified that he
learned of cash-and-carry silver from Casselman about the
time of Gourlay’s visit.

’ Neiman also testified that Casselman’s stated reason for
proposing to Neiman that_he meet with Gourlay was to work
out differences in the I. Rochester loan agreement form.

A5

Nos. 79-1622 & 79-1802

reduced. Neiman concedes that no specific amounts of
silver purchases were discussed but asserts that he did
tell Gourlay that he would Py substantial orders if the
transactions could be handled as Gourlay had outlined.

Neiman also testified that after lunch, while he and
Gourlay were sharing a taxicab, he told Gourlay that if
the changes he wanted in the I. Rochester form of loan
agreement were made, Neiman “thought we had a very
large thing going.”

Gourlay’s version of the meeting, as stated in his af-
fidavit, was that he explained the cash-and-carry trans-
action and “pointed out to Neiman that its attractive-
ness would depend on his individual financial and
tax circumstances, and suggested that the situation
could only be evaluated by him and his tax and financial
advisers.” Gourlay states that no proposals were made
by any of the parties.

The version Casselman gave in his deposition was that
Neiman asked many questions about the tax shelter
device and silver trading. He could not recall any dis-
cussion about the loan agreement form or the nature of
the Wolff firm and its business. Casselman testified that
Gourlay did not solicit business from Neiman but mere-
ly answered his questions.

In November 1974 Neiman, in the name of “the Lon-
don Group,” placed four orders for cash-and-carry trans-
actions with Gourlay. The orders were a through
Casselman, who by then had moved to Florida. During
the next few months Neiman pes three more orders
directly with Gourlay on behalf of the London Group. As
a result of these orders seven cash-and-carry transac-
tions were concluded on the London Silver Market for
the purchase and sale for future delivery of a total of
16,601,000 ounces of silver. All the transactions were
handled by Wolff and financed by I. Rochester in the
manner Gourlay had described in his conversations with
Casselman and his associates and in his conversation of
October 14, 1974 with Casselman and Neiman. The
purchases were confirmed by written confirmation
notices sent by Wolff to Neiman. These are the transac-
tions out of which the claims in suit arise.

A6
Nos. 79-1622 & 79-1802

Neiman has also presented evidence that Wolff,
through Gourlay, had other contacts with Illinois during
this period. Specifically, Ronald Richter testified by way
of deposition about two meetings with Gourlay in
Chicago, in October, 1974 and October, 1975. At these
two meetings, each of which lasted less than an hour,
Richter and Gourlay concluded cash-and-carry transac-
tions involving $49 million worth of silver and option
contracts for silver worth hundreds of millions of
dollars. The terms of the cash-and-carry transactions
had been worked out prior to the meeting, but Gourlay
wanted to meet Richter and persons who knew Richter
before concluding the transactions. In addition, smaller
details were settled and the terms were rhaps
clarified. Richter had only casually mentioned option
contracts over the sh igen prior to the meetings.
Gourlay then successfully solicited Richter’s business
during their meetings.

Neiman’s amended complaint alleges claims for
breach of contract against Wolff and Gourlay and an
alternative claim for breach of warranty of authority
against Gourlay. Also alleged is a claim against both
defendants for what is designated as “common law
fraud” but is later described as a conspiracy “to deprive
Neiman of the benefits of his contracts with Wolff.” We
consider first the issue of jurisdiction over the claims
sounding in contract.

I,

Plaintiff's argument that, by reason of the events
described above, Gourlay and Wolff were doing business
in Illinois in 1974 in the traditional sense, requires little
discussion. Mere occasional solicitation does not subject
a defendant to the state's jurisdiction generally, 7.¢., as
to claims not arising from the solicitation. Lindley v. St.
Louis-San Francisco Ry., 407 F.2d 639, 642-43 (7th Cir.
1968); Scheidt v. Young, 389 F.2d 58 (3d Cir. 1968); Long
v. Victor Products Corp., 297 F.2d 577 (8th Cir. 1961).
Nor do isolated, sporadic transactions with residents of
the forum state. See Charia v. Cigarette Racing Team.
Inc., 583 F.2d 184, 189 (5th Cir. 1978). Nor does the

A7

Nos. 79-1622 & 79-1802

acceptance elsewhere of orders resulting from the
solicitation, which necessarily includes mailing confir-
mations into the state. See Bersch v. Drexel Firestone,
Inc., 519 F.2d 974, 998-99 (2d Cir.), cert. denied, 423 U.S.
1018 (1975). Accordingly, the assertion of personal
Faabe nesee over Gourlay and Wolff must rest on the II-
inois long-arm statute, § 17 of the Illinois Civil Practice

Act.

II.

We hold that personal jurisdiction exists with respect
to the contract claims under § 17(1Xa), which confers
jurisdiction over a cause of action arising from “(t]he
transaction of any business within this State.” First, the
Illinois courts have applied the quoted provision to
sustain jurisdiction in circumstances analogous to those
at bar. In Kropp Forge Co. v. Jawitz, 37 Ill. App. 2d 475,
186 N.E.2d 76 (1962), defendant, after extensive negotia-
tion by telephone, traveled to agents premises in
Illinois for a quick inspection of the machinery to be
sold. This was held sufficient for jurisdiction as “activity
in furtherance of’ the contract by the defendant in
Illinois.4 See also United Air Lines, Inc. v. Conductron
eRe 69 Ill. App. 3d 847, 26 II]. Dec. 344, 387 N.E.2d 1272
(1979). Compare Koplin v. Thomas, Haab & Botts, 73 Ill.
App. 2d 242, 219 N.E.2d 646 (1966) with Koplin v. Saul
Lerner Co., 52 Ill. App. 2d 97, 201 N.E.2d 763 (1964). In
fact, since §17(1Xa) reaches as far as federal due
process allows, its scope “is measured by federal
standards.” Fisons, Ltd. v. United States, 458 F.2d 1241,
1250 (7th Cir. 1972), cert. denied, 405 U.S. 1041 (1972);
Lakeside Bridge & Steel Co. v. Mountain State Construc-
tion Co., 597 F.2d 596, 598-99 (7th Cir. 1979), cert.
denied, 100 S. Ct. 1087 (1980).

In our opinion, the foregoing activities of Gourlay in
Illinois satisfy the due process requirement, as stated
in Hanson v. Denckla, 357 U.S. 235, 253 (1958), of

‘ This alternative holding is to be accorded precedential
—— See Woods v. Interstate Realty Co., 337 U.S. 535, 537
).

A8 Nos. 79-1622 & 79-1802

“some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the
forum state, thus invoking the benefits and protections
of its laws.” See also World-Wide Volkswagen Corp. v.
Woodson, 100 S. Ct. 559, 567 (1980); Lakeside Bridge &
Steel Co. v. Mountain State Construction Co., supra. The
defendants here, unlike the defendant in Lakeside, 597
F.2d at 601, themselves conducted activities within the
forum state. Whether these activities make exercise of
personal jurisdiction reasonable is, therefore, the focus
of our inquiry.

If we credit Neiman’s version of the October 14, 1974
luncheon meeting with Casselman and Gourlay, as we
must for present purposes, that meeting was a signifi-
cant contact by the defendants with Illinois. Although
this conversation, even by Neiman’s own testimony, did
not constitute the entire dealings between the parties or
the entry into a completed contract, neither of these
results is necessary to satisfy the requirements of due
process. The conversation did constitute the bulk of the
parties’ negotiations about terms of the arrangement. A
defendant’s participation in the state in substantial
Peceeenety negotiations leading to the contract in issue

as been held a sufficient basis for long-arm _jurisdic-
tion, National Gas Appliance Corp. v. AB Electroluz,
270 F.2d 472 (7th Cir. 1959), cert. denied, 361 U.S. 959
(1960), even under New York’s long-arm statute, which
does not extend as far as due process allows, Liquid
Carriers Corp. v. American Marine Corp., 375 F.2d 951
(2d Cir. 1967). Although this luncheon meeting was not
as prolonged a negotiation as those in National Gas
Appliance and Liquid Carriers, a defendant’s oribig 8
tion in one or two brief meetings in the forum state has
been held sufficient for the exercise of personal jurisdic-
tion when significant negotiation of important terms of
the transaction occurs.’ Since, according to Neiman’s

® See Moser v. Boatman, 392 F. Supp. 270, 274 (E.D.N.Y.

1975) (personal jurisdiction existed where defendants, in two

short meetings in forum state, “were actively involved in at

least preliminary ... contractual negotiations in [forum

state] where agreement on at least a number of the essential
(Footnote continued on following page)

A9
Nos. 79-1622 & 79-1802

version of the luncheon meeting, the discussion resulted
in agreement on important terms of the arrangement,
this contact with Illinois was very significant.

Even if we credit Gourlay’s version of the luncheon
meeting, his conduct amounted to circumspect solicita-
tion of business from Neiman. Gourlay, by his own ac-
count, conferred with Neiman at the October 14 meeting
about cash-and-carry silver transactions Neiman pro-

ed to make. Gourlay explained the transactions to
eiman with a view to interesting Neiman in engaging
in the transactions, although cautioning him to do so
only if they would suit Neiman’s tax and financial objec-
tives.

Whichever version we credit, when the luncheon
meeting is considered with Gourlay’s solicitation of
Casselman and other ACLI brokers in late 1973 or early
1974, Gourlay’s conduct in Illinois was sufficient to per-
mit the district court to exercise personal jurisdiction
over Gourlay and his principal, Wolff. Gourlay’s
statements to the brokers when he called on Casselman
at ACLI were plainly aimed at interesting them in
securing investors in silver transactions on the London
Silver Market from which he and Wolff would make a
or His statements to Neiman had the same purpose.

his purpose was achieved: numerous transactions were
entered into, among them the seven Neiman transac-
tions out of which the claims at bar arose. The efforts of

5 continued

terms was apparently reached.”); Mendelson v. Fleischmann,
386 F. nae 436 (S.D.N.Y. 1973); ECC Corp. v. Slater Elec.,
Inc., 336 F. Supp. 148 (E.D.N.Y. 1971). But see Viers vr.
Mounts, 466 F. Supp. 187, 191 (W.D. Va. 1979).

_ When a meeting in the forum state has been viewed as an
insignificant porfion of the negotiations concerning only minor
details of the agreement, however, it has been held not to be
sufficient to give a court personal jurisdiction over a defen-
dant. See National Spinning Co. v. Talent Network, Inc., 481
F. Supp. 1243 (S.D.N.Y. 1979); Luxury Air Service, Inc. v.
Cessna Aircraft Co., 78 F.R.D. 410 (N.D. Ga. 1978); Verner +.
ha Towing & Transp. Co., 258 F. Supp. 169 (S.D.N.Y.
).

Al10
Nos. 79-1622 & 79-1802

Gourlay to obtain orders through brokers in Illinois
from customers generally, and not merely from Neiman,
and the resulting orders placed by ‘brokers for
customers other than Neiman are relevant to the due
process issue under the Fe Court’s analysis in a
tort context in World-Wide Volkswagen, supra.* The
Neiman transactions were “not simply . . . isolated oc-
currence{s], but [arose] from the efforts of [Wolff] to
serve, directly or indirectly, the market for its product
in other States.” 100 S. Ct. at 567. Moreover, Neiman’s
orders themselves cannot be regarded as a casual, for-
tuitous result of Gourlay’s two trips to Illinois.?7 Neiman

6 See Hardy v. Pioneer Parachute Co., 531 F.2d 193, 195 (4th
Cir. 1976) (No unconstitutional burden is imposed on a
foreign corporation by requiring it to defend a suit in a forum
located in a state where it has advertised and sold a product
whose use gave rise to the cause of action.”): rg yet v. Jor-
dan Volkswagen, Inc., 428 F. Supp. 195 (W.D.N.C. 1977).
Perhaps Boing a bit further is Restatement (Second) of Conflict
of Laws § 36, Comment e (1971) (3 36 is provision for in-
ividual defendants parallel to § 49 fo
defendants, which is applicable here):

It is . . . reasonable that a state should exercise judicial
jurisdiction over a foreign [corporation] as to causes of
action arising from an act done . . . in the state for
pecuniary profit and having substantial consequences
there even though the act is an isolated act not con-
stituting the doing of business in the state.

See also Vencedor Mig. Co. v. ler Indus.. Inc., 557 F.2d
886, 891 (Ist Cir. 19 PAS te C.J.) (“After McGee [v. Inter-
national Life Ins. Co., 355 U.S. 220 aegelle it seems fair to say
that one who solicits in a state may be sued there if the trans-
action he has sought s sour.”); Sahatjian v. Woodlets, Inc..
466 F.Supp. 945 (D. Mass. 1979); cf. also Peebles v. Murray,
411 F.Supp. 1174, 1178 (D. Kan. 1976) (transaction of business
for purposes of long-arm statute occurs “when an individual is
within or enters this state in person or by agent and, through
dealing with another within the state, effectuates or attempts
to effectuate a purpose to improve his economic conditions and
satisfy his desires.”).

7 Thus, this case is unlike Aaye-Martin v. Brooks, 267 F.2d

394 (7th Cir.), cert. denied, 361 U.S. 832 (1959). See Scovill
7) hoe v. Dateline Elec. Co., 461 F.2d 897, 900 (7th Cir.

r nonresident corporate

All
Nos. 79-1622 & 79-1802

placed the orders through Gourlay with Wolff as a
result of Gourlay’s activities in Illinois. Those activities
were an important factor in the formation of the con-
tracts out of which plaintiff's contract claim arises.’ Ac-
cordingly, Gourlay’s activities in Illinois were substan-
tial enough and important enough to the subject matter
of the action to satisfy the minimum contacts require-
ment of due process.®

* The interest of the forum state and convenience, two fac-
tors not explicitly discussed in text, are often considered as
part of a due process minimum contacts analysis. See Af-
tanase _v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir.
1965); Restatement (Second) of Conflict of Laws § 36, Comment
e (1971) (§ 36 is parallel to § 49, which is applicable here).
However, these have been viewed as secondary factors. Aaron
Ferer & Sons Co, v. Atlas Scrap Iron & Metal Co., 558 F.2d
450, 456 n.10 (8th Cir. 1977). In the case at bar the former,
which depends upon the relation of the plaintiff to the forum
state, favors the exercise of jurisdiction here since Neiman is
an Illinois resident. Although it may be inconvenient for
defendants, an English corporation and citizen, to defend in
Illinois, it_ would also be inconvenient for plaintiff to sue
overseas. Given defendants’ purposeful acts in Illinois, we do
not find any inconvenience to amount to a denial of due
process.

Similarly, even though the fact that forum state law is to
govern a contract is often viewed as a factor favoring personal
Jurisdiction, we do not find that the fact that these sales were,
according to the conditions printed on the reverse side of the
confirmation notices, apparently to be governed by the rules
and regulations of the London Silver Market requires us to
deny personal! jurisdiction.

% See Scovill Mfy. Co. v. Dateline Elec. Co., 461 F.2d 897 (7th
Cir. 1972) (in contract action, personal jurisdiction existed
over defendant-seller. where defendant started attending
semiannual] trade show in.:forum state in 1967, where dis-
cussions on sale began at July 1968 show, where negotiations
elsewhere completed the contract, and where further dis-
cussions about details of production occurred at January 1969
and July 1969 trade shows). See alsv Bastille Properties, Inc.
v. Hometels of America, Inc., 476 F. Supp. 175, 176-77
(S.D.N.Y. 1979); American Contract ate Ine. v. Cliff-
side, Inc., 458 F.Supp. 735 (S.D.N.Y. 1978); Xedit Corp. +.
Harvel Industries Corp., F'idelipac, 456 F. Supp. 725, 727-28
(Footnote continued on following page)

Al2
Nos. 79-1622 & 79-1802

Ill.

Plaintiff alternatively asserts a tort claim labeled as
common-law fraud but described as a conspiracy between
Gourlay and Wolff “to deprive Neiman of the benefits of
his contracts with Wolff.” Whether the tort claim is
treated as a fraud claim or as a redundant clai:» for in-
ducing breach of contract, no facts have been pleaded or
shown elsewhere to support the claim or jurisdiction
over it. The order of dismissal is affirmed with
to the tort claim, without prejudice to plaintiff's right to
seek to amend the pleadings to conform to the proof if

* continued

S.D.N.Y. 1978); Northwest Animal Hospital. Inc. r.
arnhardt, 444 F. Supp. 10 (W.D. Okla. 1977). Fieldcrest

Mills, Inc. v. Mohasco Corp., 442 F.Supp. 424 (M.D.N.C.

1977); Scott Paper Co. v. Scott's Liquid Gold, Inc,, 374 F.Supp.

~~ (D. Del. 1974); H.K. Corp. v. Lauter, 336 F.Supp. 79 (ND.
37a. bs

This case is distinguishable from Bersch vr. Drerel Firestone.
Inc., 519 F.2d 974, 999-1000 (2d Cir.), cert. denied, 423 U.S.
1018 (1975). The main difference between Bersch and the case
at bar is that Neiman’s orders were the purposeful objective
of both Gourlay’s earlier visit to Casselman and his lu :cheon
meeting with Neiman. In Bersch, no connection was shown
between the earlier solicitation trip and the later grant of the
IOS Canadian underwriting to Crang. Also, at least the first
breakfast meeting was not set with the IOS underwriting in
mind. In addition, the New York long-arm statute, unlike that
of Illinois, does not reach to the full extent permitted by con-
stitutional due process. Compare Longines-Wittnauer Watch
Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2¢ 8,
209 N.E.2d 68 (1965). cert. denied, 382 U.S. 905 (1966) with
Braband v. Beech Aircraft Corp., 72 Ill.2d 548, 557, 21 Ill.
Dec. 888, 892, 382 N.E.2d 252, 256 (1978). cert. denied. 442
U.S. 928 (1979) (quoting Nelson vr. Miller, 11 Ill. 2d 378. 389.
143 N.E.2d 673, 679 (1957)).

Defendants also urge that we follow Wessel Co. rv. Yofier &
Beitman Management Corp., 547 F.Supp. 939. 941 (N.D. TIL.
1978), and find that the facts here constitute not “the transac-
tion of business in Illinois {out the transaction of business
with an Illinois |[resident).” Wessel Co. is clearly dis-
er, eee however, since the only contacts defendant had
with Illinois were interstate phone calls and mail concerning
the transaction at issue.

Al3

Nos. 79-1622 & 79-1802

evidence adduced later shows the existence of a claim in
tort as to which defendants are subject to Illinois long-
arm jurisdiction.

The judgment is affirmed with respect to the tort
claim and reversed with respect to claims sounding in
contract as to defendants Gourlay and Wolff, and the
case is remanded for further proceedings consistent with
this opinion. The judgment is affirmed as to defendant
Ingleram. Plaintiff shall recover one-half of its costs
against Gourlay and Wolff. Ingleram shall recover its
costs against plaintiff.

AFFIRMED IN PART; REVERSED AND REMANDED IN PART.

A true Copy:
Teste:

Clerk of the United States Court of
Appeals for the Seventh Circuit

USCA 4512—Midwest Law Printing Co., Inc., Chicago—4-23-x0—350

Al4

District Court Opinion

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DAVID NEIMAN d/b/a
LONDON GROUP (1974), °

Plaintiff,
No. 75 C 2531

Vv.

RUDOLF WOLFF & CO., LTD.,
an English Corporation;
INGLERMAN INVESTMENTS,
LTD., an English
Corporation; and JAMES
GOURLAY,

tl i

Defendants.
' MEMORANDUM OPINION AND ORDER

This matter is before the Court on
defendant Rudolf Wolff & Co., Ltd.'s
("Wolff") Motion to Dismiss pursuant to
Rule 12(b) (2), Federal Rules of Civil
Procedure. Jurisdiction is invoked pur-

suant to 28 U.S.C. §§1331 and 1391.

Al5

DISTRICT COURT OPINION

Plaintiff is a citizen and resident
of the United States and the State of
Illinois. Defendant Wolff is a corpora-
tion incorporated under the laws of the
United Kingdom, and is a resident of
London, England, and the State of New
York. Defendant acts as a broker and

principal in London metal trading.

Plaintiff seeks damages for defen-
dant's alleged nonperformance of certain
London silver bullion contracts and for
common law fraud. Plaintiff contends that
many of the activities giving rise to his
claim took place in Illinois. Plaintiff
seeks to assert personal jurisdiction
over defendant under the Illinois long
arm statute, Ill. Rev. Stat. ch. 110,

§17.

Al6

DISTRICT COURT OPINION

*

Defendant asserts that all meaning-
ful contacts concerning the transaction
in question occurred in London and that
it transacted no business in Illinois
sufficient to satisfy the "minimum con-

tacts" test set forth in International

Shoe Co. v. State of Washington, 326 U.S.

310 (1945), and Hanson v. Denckla, 357

U.S. 235 (1958). Defendant therefore
moves to dismiss pursuant to Rule 12(b)
(2), asserting the lack of personal jur-

isdiction.

In order for long-arm jurisdiction
to exist the foreign defendant must have
voluntarily performed some act by which
it intentionally availed itself of the
privilege of conducting activities within
Illinois or by which it may be said to

have invoked the benefits and protection

Al7

DISTRICT COURT OPINION

of Illinois law. Defendant must have

"done business" here to such an extent
that it would be equitable to require

it to defend in this state. See,

E. Walton & Co., Inc. v. Interastra, S.A.,

67 F.R.D. 410, 411 (N.D. Ill. 1975).

There is no set formula or rule of
thumb for determining whether there are
sufficient minimum contacts short of
ascertaining what is fair and reasonable
in the circumstances of a particular case.

Hutter Northern Trust v. Door County

Chamber of Commerce, 403 F.2d 481 (7th

Cir. 1968). Some of the aspects courts
have considered when determining the pre-
sence or lack of minimum contacts are
whether defendant has offices or does
business in the state, solicits clients,

has a telephone listing, or sends mail or

Al18
DISTRICT COURT OPINION

makes telephone calls into the state.

Defendant contends it is not auth-
orized to do business in Illinois, has
no offices in Illinois, does not adver-
tise or solicit clients in Illinois,
and has no telephone listing in the state.
Defendant supports these statements with
the affidavit of its Secretary, Francis
Holford. Defendant admits for purposes
of this motion that a second defendant,

James Gourlay, purported to be defendant

Wolff's agent. Defendant Wolff contends
the fact that trading in London silver

was “generally discussed" by Gourlay and
plaintiff at a Chicago luncheon does not

cure the jurisdictional deficiency.

Plaintiff counters that Gourlay
"negotiated every aspect of the trades

which are the subject of this litigation,"

Al9

DISTRICT COURT OPINION

at the luncheon and that those actions
constituted solicitation of business

in Illinois. Plaintiff supports this
allegation with his own deposition and
affidavit, relying in particular on his
statement that he was told by a broker
for a member company of the Chicago
Board of Trade that one of the purposes
of Gourlay's visit to Chicago was to
discuss changes plaintiff wished to make
in certain standard documents presented

to plaintiff by this broker.

Both parties rely on plaintiff's
deposition to support their character-
ization of the discussion during the
October, 1974 luncheon. Thus, the Court
is faced with a dispute as to the inter-

pretation of undisputed statements.

A20

DISTRICT COURT OPINION

Assuming arguendo that preliminary
negotiations occurred at «he luncheon,
the Court must also decide whether those
negotiations were "substantial." See

Lehigh Valley Industries, Inc. v.

Birenbaum, 527 F.2d 87, 91 (2d Cir. 1975).

The Court finds that plaintiff's
testimony concerning the luncheon does
not clearly establish that a "lengthy
negotiating session" occurred. The
overall picture of the luncheon presented
by plaintiff's own deposition is not
sufficient to establish substantial
negotiations by which defendant invoked
the benefit and protection of Illinois
law. Moreover, plaintiff did not state
in his deposition that the meeting was
Gourlay's sole purpose for being in

Illinois.

A21

DISTRICT COURT OPINION

Plaintiff further argues that even
if jurisdiction in the case must be
gleaned from letters, telegrams and phone
calls there are sufficient contacts to
confer jurisdiction without offending
traditional notions of fair play and sub-
stantial justice inherent in due process.
For purposes of this argument this Court
disregards all communications initiated
by plaintiff from Illinois. It is the
acts of defendant which are relevant, not
the unilateral actions of plaintiff.

See Rosenthal v. Dodick, 365 F. Supp.

847, 850 (N.D. Ill. 1973). Defendaiit's
only communications to this state were
confirmations of executed transactions
which defendant sent to Illinois, and a

telex cable from defendant.

A22

DISTRICT COURT OPINION

Since the gravamen of plaintiff's
Complaint is that defendant failed to
deliver silver bullion to plaintiff in
London, this Court finds that the con-
tacts asserted above do not sufficiently
show that defendant invoked the benefit

and protection of Illinois law.

CONCLUSION

Accordingly, the Motion to Dismiss of
defendant Rudolf Wolff & Co., Ltd., is here-
by granted.

ENTER:

Alfred Y. Kirkland,
Judge

Dated: March 16, 1978

A23
District Court Opinion On Reconsideration

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

Coe, ye ee
§ C 2531

David Neiman v. Rudolf Wolff
et al. April 20, 1979

mm
=

Plaintiff's Motion for Reconsideration

is denied.

Plaintiff has presented no new evi-
dence sufficient to change this Court's
opinion of March 16, 1978 that defendant
Wolff is not doing business in Illinois.
Defendant is not authorized to do business
in Illinois, and plaintiff's evidence fails
to disclose any continuous and systematic
business activity in Illinois by defendant.
Although the depositions submitted by
plaintiff show that a large volume of

business was transacted between Illinois

A24
DISTRICT COURT OPINION ON RECONSIDERATION
residents and defendant, they do not
establish that defendant had systematic
contacts with this state as a result of
that business. Rather, the depositions
indicate that all but one of the Illinois

residents solicited defendant to be their

executing broker for London commodities

transactions.

Plaintiff also has failed to estab-
lish that his cause of action arose out
of the transaction of business in Illinois
by defendant. See Ill. Rev. Stat. Ch.
110 §17(1) (a). The fact that plaintiff
asked a "jillion questions" of defendant
at.a luncheon in Illinois does not change
this Court's earlier determination that
substantial negotiations did not occur at
that luncheon, and that the luncheon did
not amount to an adequate jurisdictional

contact by defendant.

DISTRICT COURT OPINION on RECONSIDERATION
Finally, plaintiff's argument that

defendant committed a tort in Illinois
simply because an injury to plaintiffs
"pocketbook" occurred in Illinois is
without merit. Even assuming for pur-
poses of this motion that plaintiff's
alleged injury was caused by defendant's
activity, the situs of injury alone is
not in this case a sufficient minimum

contact by defendant to subject defendant

to this Court's jurisdiction.

Accordingly, plaintiff's Motion for

Reconsideration is denied.

A26
JUDGMENT OF COURT OF APPEALS

Opinion by Judge Tone
Untied States Court of Appeals »°
FOR THE SEVENTH CIRCUIT

Chicago, Illinois 60604

April 23, 19 80

Before

Hon. WALTER J. CUMMINGS, Circuit Judge
Hon. ROBERT A. SPRECHER, Circuit Judge

Hon. PHILIP W. TONE, Circuit Judge

DAVID NEIMAN d/b/a LONDON GROUP (1974),

Plaintiff-Appellant,
Appeal from the
Nos. 79-1622 and 79-1802 Unload Grane
RUDOLF WOLFF & CO., LTD., JAMES GOURLAY and District Court
INGLERAM INVESTMENTS, LTD., for the Northern
Defendants-Appellees. | District of 11 lino
Eastern Di

No. 75-C-253]
Thomas R. McMillen

This cause came on to be heard on the transcript of the record from the

United States District Court for the Northern District o!

I}linois , Eastern Division, and was argued by counsel
On consideration whereof, it is ordered and adjudged by this court tha’
the judgment of the said District Court in this cause appealed from be, anc

the same is hereby, AFFIRMED IN PART; REVERSED AND REMANDED IN PART, 17
accordance with the opinion of this court filed this date. Plaintiff sna?)
recover one-half of its costs against Gourlay and Wolff. Ingleram shal!

recover its costs against plaintiff.

A27

ORDER DENYING REHEARING

EP

Anited States Court of Appeals

For the Seventh Circuit
Chicago, Illinois 60604

May 22 | y9_80,

Before

Hon. WALTER J. CUMMINGS, Circuit Judge

Hon. ROBERT A. SPRECHER, Circuit Judge *

Hon.

DAVID NEIMAN, d/b/a/ LONDON GROUP

(1974),
Plaintiff-Appellant,
Nos. 79-1622, 79-1802 vs. ,
RUDOLF WOLFF & CO., LTD, JAMES GOURLAY
and INGLERAM INVESTMENTS, LTD.,
Defendants-Appellees. |

) Appeal from the United

States District Court
for the Northern Dis-
trict of Illinois,
Eastern Division.
No. 75-C-2531
Thomas R. McMillen, Judge.

On consideration of the petition for rehearing and sugeges-
tion for rehearing en banc filed in the above-entitled cause by
defendant-appellee Rudolf Wolff & Co., Ltd., no judge in active
service has requested a vote thereon, and all of the judges on
the original panel* have voted to deny a rehearing. Accordingly,

IT IS ORDERED that the aforesaid petition for rehearing be,

and the same is hereby, DENIED.

+

* The panel which decided the appeal consisted } & >}

What time did you first meet Mr. James Gourlay?

A44 [ 235)
DEP. TRANSCRIPT - DAVID NEIMAN

was also present?

A TI am not sure.

Q What ds your best recollection?

a I would say that that wos my best recollectior,
but I am not positive of it.

Q At your luncheon meetinn with Mr. Gourlay
and Mr. Kasselimon, who first spoke about the subject
of silver transactions?

A I don't recall.

Q Do you recall whether you asked Mr. Courlay
any questions reletive to tradins silver on the London
Bullion Market?

A Yes.

Q Do you recall what you asked hin?

A Yes. i cold him the standard form loan
agreenert was unacceptable, generally.

Q Who had brought up the subject of a standard
Zoan form agreement?

A ZI had been given a copy of onc.

Q By whom?

A By Mr. Kasselinan.

Q When were you given that docunent? Did it
precede --

~ Some time in July, Aurust, September.

A45 [ 153)
DEP. TRANSCRIPT - DAVID NEIMAN

What was your next communication with Mr,
Kassellman relative to silver transactions with
Rudolf Wolff? Was it face to face or over the tele.
phone. in writinr, or by letter?

A I'm not sure, but I believe we had lunch
@rain, Mr.Kassellman and myself; and I said, “Where
are the changes to the documents, the loan documents?’

And, he said, “Look, I worked for Wolff &
Company for many years, and they are 80 slow on their
paper work as to drive you crazy, but they are coo?
when thoy say they will do something, they will do it.

In terns of an actuol silver transaction,

I called Bill Kassellman someplace in Florida anc
placed one order one Gay and then some more another
day and some more another day. Then, as I still
was waiting for the document chanres because I ap.
getting the samo documents that I objected to, and
finally, Mr. Kassellman said, “Look, why don't you
call James directly." He said, "It's very difficult
to Geol with hin.” He said, “Wolff & Company just
is extremely slow on their papor work.”

Q Mr. Neiman, in your testimony, you used
the term "Documents”,and previously you testified

that there was a sinrle document.

A46

DEP, TRANSCRIPT - DAVID NEIMAN 36)
A I would assume that that is corroct..
Q So that your instructions to Mr. Kassclinan

to couse a $150,000 interest deduction anc seven sont’
lonr term goin was the initial silver transaction
ongared by David Neiman or the London Group to the
beot of your recollection?

, A No, it resulted in that, but I made my
own calculation, and said, "Put it within this frane-
work." Kasscllman did his own convertin-s.

Q Prior to this framework of $159,090 interest
Aeduction and seven month long term gain, you had
not entered into any other oilver transactions for
spot or future with Rudolf Wolff & Company?

JA No.

Q Do you recall whether “Mr. Kasscliman
provided you with a covy of any sarees or writin,
which he may have sent to Rudolf Wolff?

A Yes.

MR. PASKOPF: I want to ask you to mark this
Plaintiff's Exhibit No. 9, for identification,

(Document marked as requested.)
BY “RR, PASKOPY: |
Q fia Neiman, I show you a copy of a letter

Gated November 6, 1974 on the letterhead of Stotler 3

_

A47
DEP. TPANSCRIPT - DAVID NEIMAN |. l)se)

Company, Stewart National Bank Buildine, Stewart,
Plorics, from William ©. Kasseliman to Janes Qourlay
which says, “Dear Janes, For the London Oroup 1974,
care of David Weiman,”" with your adéress “Work our
@ £150,000 interest deduction and a seven month loner
term gain” -- will you please look at this documer:,
Mr. Neimar?
A Yeo. There is orly one exception to that.
It's adéresscc¢é to James Gourlaoy, Rudolf Welfl & Conpar,
q Well, I am sure the document will be pers

cof the record so that there in no probler how it's

accressec.
B Correct.
C So that docunent represents the firs: writte.

communication confirming your initial transactior.
with Rudolf Wolff & Company in Londor?

A No, sir.

q What does that represent?

A That represents instructions to Wolff &
Company to do something. That's no confirmation at
@ll. Thies is worthless as it sits by iteel!.

Q All right,,.Mr. Neiman, you did authorize
Mr. Kasseliman to so instruct Rudolf Wolff & Company

in London, is that correct?

A48
DEP. TRANSCRIPT - DAVID NEIMAN -f1se

A I did. I did.

Q Have you soen the handwritinc?

A I have.

Q Was that handwritinr on that document when
you received it?

A Yes.

Q Were you to reccive a commission for placingr
this business from Rudolf Voiff & Company?

h I thought of it but on advise of Counse:,
they said "Don't do it. Do not receive any commission
beceuse in the future it could prevent a conflict
of interest."

Q Mr. Neiman, I am askins you what your
arranzerment wo. or rather your instructions were
to Mr. Kasseliman at the tire that you advised hin
to communicate with Rudolf Wolff?

A That is correct.

Q When you ssy, “That is correct,” can you
tell me what those instructions were? Were your
instructions that you were to receive a three percert
conmission on the initial transaction?

A Correct.

Q When 614 you first advise either “r.

Kassellzan or someone else that you, David Noinman,

A49
DEP. TRANSCRIPT - DAVID NEIMAN [164 ]

Group 1974 would purchase 1,008,000 ounces of silver?

A Correct.

6 When was that determination made?

A In December, I believe.

q I ask you the same question with respect

to the purchase of 2,139,000 ounces of silver; did
you make that determination?

A The exact number of ounces?

c Yes, sir.

a Is that what yop have been asking me all
throurph here?

Q Yes, sir.

A Then I have to change the answers.
q Please do.
A

The exact amounts were determined by Wolff &

Company.
Q Based uvon what instruction and fron whom?
A On an approximate interest deduction for

the period involved.

Q Could you describe in detail what you dic
ané the method by which you issue instructions to
either Mr. Kassellman or Rudolf Wolff & Company
with respect to the transactions upon which your

complaint is premised?

jibe |
A50
DEP. TRANSCRIPT - DAVID NEIMAN

A To Mr. Kesseliman.

c Wos that instruction with respect to the
ultimate purchase or the purported purchese of
748,000 ounces of silver?

A Correct.

Q The next purchose scers to be one of 1,908,900»
Ounces of silver?

A Correct.

Q How was that information given to Rudolf
Wolff? Was it throurh Mr. Kassellman?

A Throurth Mr. Kasseliman.

Q The next purchase involves 2,002,135 ounces
of silver. Was thit throurh Mr. Kasselinsn’

A Correct.

Q The next purchase involves 1,060,352 ounce’
of silver?

A That was not the noxt purchase.

Q What was the next purchase?

A 10,666,000 ounces.

Q How was that information givon to Rudolf
Wolff & Company?

A By telephone.

Q Did you call Rudolf Wolff & Company?

A Correct.

A51l
DEP. TRANSCRIPT - DAVID NEIMAN [167 )

Where 61d you make that eall from?
I don't recall.

Was it from Chicaro, Tllinois?

It was from Chicaro.

Was it from your hone?

r DD > © F BO

Possibly. It could have been from ry hore
or from Mr. Ettlinrer's office.

G Prom that point on, did you then communicate
with Rudclf Wolff & Company directly by telephone?

B£ [Ps telephone and Tel-Ex.

Q Do you have copies of those Tel-Fx's that
you sent to them with you?

A Yes.

MR. JOYCE: They have been delivered to you.

THE WITNESS: There are only two more trans-
actions.

BY MR. PASKOPP:

q Mr. Neiman, would you show me the Tel-I'x's
which constitute the communications with Rudolf Wolff &
Company from among, the documents that you have produced?

A Let me see. The orders were given by telephore

Q So you are now telling me that you did not
issue instructions by Tel-Ex but only telephone,

instructions relative to the orders for spot purchssé

A52
DEP. TRANSCRIPT - DAVID NEIMAN [ 168 }

and future salic?

A Correct. There are only two more. It was
the 10,666,000 and the 1,365,000.

Q At the time you issued these instructions
or caused instructions to be issued to Rudolf Wollf? &
Company, were your purchases of silver and future
Solics of silver contigent upon anything?

A No, sir.

Q In your own mind, di¢ you feel odlicated
to complete those transactions with Rudolf Wolff &
Companys?

A wh, yes.

q At all times?

A At all tines.

Q When @id you Geternine that there would not
be an offerinr of limited partnership interests in
the London Oroup 1974?

A In March of 1975.

Q What caused you to make that deterrination?

A My evaluation that interest rates were poinrc
to fall and with the falling of the interest rates,
there would be a profit for which there was no purpese
in hevins any partners.

c Are you saying that when there is a profit

A53 { 173]
DEP. TRANSCRIPT - DAVID NEIMAN

Q Was Rudolf Wolff & Conpany, Ltd. ever
apprise of the fact that the limited partnership
wos not so organized?

A Wo, not to my knowledce.

MR. JOYCE: Iam foing to odfect somewhst be-
latedly to the last two questions because it's rether
Clear from the record that sone form of partnership
was ormanizec and dealt with Rudolf Wolff & Company.

MN. PASXOVFP: Your objection is noted, but
the witness' testimony is taken on its facc.

DY MR. PASYOFPP:

Q Mr. Neimen --
A May I add somethin; to that?
Q Mr. Neiman, I would appreciate it if you

would respond to py questions. You will have an
Opportunity to add anything you wish.

MR. JOYCE: Well, are you completing your answer?

THE WITNESS: TI am completing my answer.

MR. JOYCD: He's permitted to complete his
answer.
BY MR. PASKOFF:

Q You are completing, your answer to what
question?

A To your question whether or not an offerin"

A54

DEP. TRANSCRIPT - DAVID NEIMAN [174]
was wade.
Q That was not my question, but ro ahead

and conplete your answer.

A The offerinr was never -- an offerinr, as
I understand an offerinr under Rule 14f, wes never
made.

Q But Mr. Neinan, was it your understancirnr
in Decender of 1974 that the silver purchases an¢
silver future sales made by the London Groun 1574
with Rudolf Wolff or without obligation to either
the London Group or yourself?

A It was clearly --

“aR. JOYCE: What do you rean by “Obtifiratics *

MR. PASKOPP: That neither the Londen Crozur
nor Mr. Neiman was oblirated to conplete those
transactions.

MR. JOYCE: Okay, you can answe> the question.

THE WITNESS: Absolutely. I was under odliratior.
BY MR. PASKOTF:

Q Both with respect to the spot purchases
and the future sales?

A Correct.

Q Mr. Neiman, Gid you authorize Mr. Sernard

Zeisberr of Gottlieb & Schwartz to write the Rudolf

A55 »
DEP. TRANSCRIPT - DAVID NEIMAN {a7s ]

Yolff & Company Ltd. and state "You have silreacy
effectcd certain of the contemplated silver purchases
and silver future sales for the sccount of the
partnership without, however, obdliratine the partner-
ship or “ir. David YIcinan, the provosed general partner,
to conplete such transactions unless the partnership
43 orgenized and then only to the extent the vertner-
ship Praises capital an set forth above throush the
sale of Linites partnership interes 3D >» © > DD

I don't recall.

Q Do you know whether Mr. Edgar hac @ pedal
like Sharpe-Pizley?

A No, but he was head of the Silver tracing
Gepartment.

Q Ie Sharps-Pizley & brokerage fire?

A Among other things, yes. They are dealers
end brokers.

G Could you relate to ne the subdstance of
your conversation with mr. Edger?

A ZI explained the long hassle that had been
g0ing on since April, and I saia, *y Want to elose
the positions out. 1 have the Confirmetions. Wil}
you handle it?r*

i] Are you, sir, are you referring to the Spot

positions er the future positions?

[188 )}
A65

DEP. TRANSCRIPT - DAVID NEIMAN

MR. JOYCE:

If he sold it on the short side,

they ove his money.

BY MR.
a

Mr. Neimen?

A That if wolff agreed,

the positions

What was the

PASKOFP:

arrangement with Sharps-Pixley,

they would take over

for wpe and handle it as brokers.

G Bo that Sharps-Pizley would then take over

the forward or short?

a And

. Did

a No.

~ bid

nanédle the spot sales.

Mr. Edgar confirm that arrangenent

you meet Mr. Edgar face to face tc

é Wo.

io} Was that the subdject of the single telephone
call?

b I think it was the sudject of two telephone
calls.

Gq and, there is nothing in writing relating

to this conversation with Mr.

A Be.

Edger et Sharpe-Pixley?

Mr. Eagar avere e? the amount of Britienr

A66
DEP. TRANSCRIPT - DAVID NEIMAN

Q Di4 you engare counsel in London to represent
you?

4 I did.

oO oe

Q

cing that

with?

Q
A
~
A

~

In March.

of 1975?

Correct.

Where is that bank located?

London.

Did they offer to provide you with a finan-
you requested?

They turned it down completely.

What other bank or banks did you communicate

Barcley's.

Ir. London, England?

Correct.

Do you recall the person with whom you spoke?
Chuck Love.

Had you done business with him before?

No. We have mutual acquaintances.

Did Barclay's offer to satisfy the financial

requiremcnts that you asked for?

MR. JOYCE: Reread that last question.

(Record read as requested.)

THE WITNESS: For what purpose?

BY MR. PASKOFF:

+

Por the purpose of satisfying the security

A76

\f Moveaber 6, 1974
\) NEIMAN'S FIRST SILVER ‘TRANSACTION
YA

— NV stuant NATIONAL BANK BUILDING, STUART, FLA. 33494 - 305-283-2420

{ iN ? 7
Nol auld Oomypetty

SOUTHEAST “'N COUNTRY ELEVATOR HIDGING DIVISIUN .

saves Courlay

Rudolf Wolff and Company

Knollys House

11] Byward Street

London, England EC3RS5CD

Dear Janes,

For The Lonédun Group-1974, c/o David Nieman, 2150 Lincoln Parkvay, West Chica

Illinois, 60614, work out a $150,000 inieres: deduction and a 7 montn sone te

Beasie

‘Pay the 22 commission to Stotler and Company.

Rincere)y

Williem E. Casselman

Newin Qurke Hv

G0 ned St

fll

be dle

A77

Rete ee he bbc”

ia ies Roycx House
Ro smoot ton NEIMA LICITO
Arent sutman TO WOLFF'S “Ridermanbury —
a eens SOLICITORS London ecav 7p
mecsenseen = Aw suse ; TELEPHONE 01-600 5688
yer ie Au Gan TELZEORAMs & CARLYS
eae aati COCHANOOY LONDON £C2
Sossecs. AO warms va.ex 6812884

——— tow onustiie susan

(CORB AST 20 04 BatO8eD EAP VRAAPWOrel 8P88415 OD 60 Aw TELkn 2047)
@t AEPLY PLEASE OVOTE

Q/AM _ PLR.366/PJO —*_—.. 20th May 1975.
DEPT ee pd? §

“aqgnvis ¢

\ 4
For the attention of Mr. C. L. Simon rors!
Le cree —

Dear Sirs,

ondon Group 1974
Thank you for your letter of 15th May.

Because your delay in responding positively to
the suggestions made in our letter of 7th May for the
Gelivery of certain of our clients' silver purchases is,
we are advised, causing our clients significant damage
we are instructed to inform you of the following:

(i) Our clients demand immediate delivery of the
whole of their long silver positions, totalling 16,601,000
ounces.

(ii) Our clients will procure the immediate dis-
charge of the interest of I. Rochester (Finance) Limited
("Rochester") in these positions by repaying all loans
made by that company at the agreed premium of 1 per cent.

(441) Interest on each loan will be paid to Rochester
five days be” »* the original maturity date, pursuant to
Rochester'. ~-e2lex of 16th January.

(iv) ' all cover of all short positions, totalling
16,601,° 4 ounces, will be provided to your client.
(v) You will shortly be advised of the time and

place at which the necessary funds will be tendered to
Rochester and your client.

A78

Conuinusuon trom Coward Lnance Dee 20th May 197!
NEIMAN'S SOLICITORS TO WOLFF'S SOLICITORS

In the event that your client fails to attend
or fails to dcliver warrants for 16,601,000 ,of silver
upon tender of such funds, we have instructions to conm-
mence legal proceedings. We understand that legal and
administrative proceedings will also be commcmed by
our clients in the United States.

Yours faithfuliy,

Cor. C2

Messrs. Radcliffes & Co.,
10, Little College Steet,
Westminster,

London SW1P 3SJ.

A79
NEIMAN'S ANSWERS TO INTERROGATORIES

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DAVID NEIMAN d/b/a
LONDON GROUP (1974),

Plaintiff,
NO. 75 C 2531

Vv.

RUDOLF WOLFF & CO., LTD.,

ee ee eee ee ee ee ee ee

Defendant.

PLAINTIFF'S ANSWERS TO DEFENDANT'S
INTERROGATORIES

NOW COMES the plaintiff, David Neiman d/b/a LONDON GROUP
(1974), by his attorneys, James P. Chapman, Edward T. Joyce
and Martha M. Jenkins, and in answer to defendant's Interrog-
atories, states as follows:

Interrogatory No. 1: State whether, at any time prior
to the filing of the complaint in this action, The London
Group (1974) (hereinafter “London Group"), was organized or
formed as:

(a) a partnership;

(b) a corporation;

(c) an unincorporated association;

(d) a sole proprietorship;

(e) any other business entity; and

(f) the state and statutes under which it was organized.

ANSWER TO INTERROGATORY NO. 1: London Group was not organ-

ized as a corporation. The exact legal status of the London
Group is not clear. It is either a sole proprietorship or
limited partnership. The London Group was organized pursuant
to and its conduct is governed by the laws of the State of I1ll-

inois.

A80
NEIMAN'S ANSWERS TO INTERROGATORIES

.
(a4) the substance of each oral communication.

ANSWER TO INTERROGATORY NO. 7: See answer to Interroga-

tory No. 6.

Interrogatory No. 8: With respect to each written comrun-
ication referred to in Interrogatory "6," identify each document:

(a) sent by David Neiman to others;

(b) sent by the London Group to others;

(c) received by David Neiman from others; and
(d) received by the London Group from others.

ANSWER TO INTERROGATORY NO. 8: See answer to Interrogatory

No. 6.

Interrogatory No. 9: Identify all persons who, on be-
half of David Neiman or the London Group, communicated instruct-
ions to defendant, either orally or in writing, to purchase the
silver bouillon described at Paragraph "3" of the complaint and
to sell the silver bouillon as described in defe dants' answer
as exhibits "1" - "5" thereto.

ANSWER TO INTERRROGATORY NO. 9: William Kasselman of

Stotler & Co.; Coward Chance; and David Neiman.

Interrogatory No. 10: With respect to each oral commsnica-
tion referred to in Interrogatory "9," state:

(a) whether the oral communication for each purchase
or sale was telephonic or face to face:

(b) the identity of all persons present during any
part of any such oral communication;

(c) the date and place of each oral communication: and

(d) the substance of each such oral communication.

ANSWER TC INTERROGATORY NO. 10: All communications between

William Kasselman and the defendant were, to plaintiff's belief,
through telex or telephone. Plaintiff does not have copies of said telexes.
Further, plaintiff communicated with defendant via telephone, telex ans face to
face cammmnication. The only face to face canmunication was between Davis
Neiman, on behalf of London Group, and James Gourlay, on behalf

of the defendant. It took place in London, England at the off-

ice of James Gourlay at Rudolf Wolff & Co., Ltd. and at Mr. Gaurlay'’s

A81
NEIMAN'S ANSWERS TO INTERROGATORIES

club. With the exceptior. of one or two clerks who were not parties to the
conversation, no one else was present. The meeting took place late in

March, 1975. After the meeting, Mr. Neiman instructed Mr. Gourlay that he
wished to sel] the spot silver and purchase covering contracts for his future
silver. Mr. Gourlay, on behalf of Rudolf Wolff & Co., Ltd., refused to follow
Mr. Neiman's instructions. Coward Chance contacted defendant and its attorneys
both orally and in writing. Copies of said written conmmications have been
delivered to counsel for defendant.

Interrogatory No. ll: With respect to each written comnun-
ication referred to in Interrogatory "9," identify each document:

(a) sent by or for David Neiman to others;

(b) sent by or for the London Group to others;

(c) received by or for David Neiman from others; and
(d) received by or for the LondonGroup from others.

ANSWER TO INTERROGATORY NO. 1]:

(a) through (ad) All instructions by David Neiman, in his
own name or in the name of London Group, were by telex or through letters from
Coward Chance, copies of which have been delivered to counsel for defendant.

Interrogatory No. 12: State the facts and identify the
documents which formed the basis of David Neiman's knowledge
that the spot silver purchased by the London Group (identified
as Exhibits "A" through "F" in the complaint) would be used as
security for the financing of the London Group's spot silver
purchases from defendant and security for the London Group's con-
tract... to deliver silver in the future to defendant (identified
as Exhibits "1" through "5" in the answer).

ANSWER TO INTERROGATORY NO. 12: Plaintiff does not now believe and

never did believe that the spot silver was security for the financing of the
London Group's contract to deliver silver in the future. David Neiman had con-
versations with Messrs. Kasselman and Gourlay in which they advised him regard-
ing the facts stated in Interrogatory No. 12. Further, Mr. Kasselman gave him
written documents containing an example of the transaction. The documents are
attached hereto.

Interrogatory No. 13: Identify all persons who communicat-
ed with the defendant, either orally or in writing, that David
Neiman or the London “roup could or would satisfy the security
interest or encumberance existing on the spot silver bouillon.

A82
NEIMAN'S ANSWERS TO INTERROGATORIES

ANSWER TO INTERROGATORY NO. 13: _ David Neiman, 2300
Lincoln Park West, Chicago, Illinois, and Coward Chance, London,
England.

Interrogatory No. 14: With respect to each oral cormzen:ca-
tion referred to in Interrogatory "13," state:

(a) whether each oral communication was telephonic or
face to face;

(b) the identity of all persons present during any part
of each oral communication;

(c) the date and place of each oral communication: and

(ad) the substance of each oral communication.

ANSWER TO INTERROGATORY NO. 14: Mr. Neiman had oral com-

munications face to face with Mr. Gourlay during March, 1975.
Mr. Neiman explained to Mr. Gourlay that he wanted to sell spot
silver and purchase covering contracts for his future obliga-
tions. Further discussions were had between Mr. Neiman, his
attorneys, Coward Chance, Mr. Gourlay, and Rudolf Wolff é& Co.'s
attorneys, Radcliffes & Co. The meeting took place at Raj-
cliffes & Co.'s offices. Representatives of I. Rochester F:--
ance, Berwin Leighton, were also present. The conversa::2-

was substantially the same as the conversation which Mr. Ne:ma>
had with Mr. Gourlay.

Interrogatory No. 15: With respect to each writter cor-
munication referred to in Interrogatory "13," identify each
document:

(a) sent by or for David Neiman to others in any way
relating to the satisfaction or release of the
security interest or encumberance upon the spo:
silver;

(b) sent by or for the London Group to others in ary
way relating to the satisfaction or release of the
security interest or encumberance upon the spot
silver;

(c) received by or for David Neiman from others in
any way relating to the satisfaction or release

A83
NEIMAN'S ANSWERS TO INTERROGATORIES

of the security interest or encumberance upon the
spot silver; and

(ad) received by or for the London Group from others in
any way relating to the satisfaction or release of

the security interest or encumberance upon the
spot silver.

ANSWER TO INTERROGATORY NO, 15: Numerous letters and

telexes were sent to defendant and its agents by plaintiff
and Coward Chance. Likewise, numerous letters and telexes were
sent hy defendant and its counsel to plaintiff and Coward Chance.

Copies of said documents have been delivered to counsel for de-

fendart.

'" ‘Interrogatory, No. 16: Identify all persons with whom —
David Neiman, or the London Group or others acting on their
behalf, communicated, either orally or in writing, for the

purpose of arranging the satisfaction or release of the security
interest or encumberance upon the spot silver.

ANSWER TO INTERROGATORY 0. 16: Sharps, Pixley, London,

England, Harris & Co., and several Merchants Banks for refinancing.

Interrogatory No. 17: With respect to each oral communica-
tion referred to in Interrogatory "16," state:

(a) whether each oral communication was telephonic
or face to face;

(b) the identity of all persons present during any
part of each oral communication;

(c) the date and place of each oral communication;
and

(ad) the substance of each oral communication.

ANSWER TO INTCRROGATORY NO. 17: Communications with

Sharps, Pixley were oral. None were face to face. On informa-
tion and belief, the only persons present were Mr. Neiman and
a Mr. Edgar for Sharps, Pixley. Mr. Neiman had one conversa-

tion with Sharps, Pixley during March, 1975 in London, England

@

A84
DEP. TRANSCRIPT - WILLIAM CASSELMAN

It) THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

}
DAVID NEIMAN, d/b/a LONDON
GROUP (1974), )

Plaintiff, ]

Vv. ) No. 75 C 2531

RUDOLF WOLFF & CO., et al, )

Defendants. )

Washington, D. C.

August 31, 1978

Deposition of:
WILLIAM E. CASSELMAN, SR.,
awitness called for examination pursuant to subpoena, by
counsel for the Plaintiff, at the offices of William E. Cassei=
II, Esquire, at 888 - 17th Street, N.W., Suite 204, Washingtsn,
D. C., beginning ie ‘eoeeineely 10:30 o'clock a.m., before

Judith B. Moore, Notary Public, when were present:

) A85
DEP. TRANSCRIPT - WILLIAM CASSELMAN [12]

some background questions, but you seem to be going very far
afield here from the activities of Gourlay and Inglerman in
the Northern District of Illinois, to ask about his office
arrangement in London.
S0 I will make that into an objection.
BY MR. JOYCE:
Q Do you know if the physical suite that Mr. Gourlay

was in was the same suite as Rudolf Wolff & Co.?

A They were on the same floor.
Q Were they separated by a wall, do you know?
A Yes, definitely. He had a separate extrence to

his offices.
Q Now, did you see Mr. Gourlay in 1974?
Yes.
Did you see him in Chicago in 1974?

Yes.

Probably *.

A

Q

A

Q On how many occasions did you see him in Chicago?
A

Q Oo you recall the first occasion, when it was?

A

It might have been '73 when I first saw him in

Chicago, when I was at the ACLI.

And the gecond time I saw him in the summertime

A86 ;
DEP. TRANSCRIPT - WILLIAM CASSELMAN

[ a3)

of ‘74.

The first meeting, I'm not sure -- I was at Acil

-and I moved from ACLI to Stotler in April ‘74, so it coulc have

been late ‘73, early ‘74.

Q ‘What was the purpose of your meeting with I>.

‘Gourlay during late '73 or early ‘74?

A He just came in to see me.
Q Why was he in to see you?
AR Well, after all, he was my boss at one tine ans

he was an ole friend and he came in to see me at AC...

Q Where was Gourlay your boss?

A When I was managing director of Rudelt Welt.
in New York. I responded to him on the London sice.

Q During 1973, when you met with i. Goursey in
Chicago, did he ask you to send any business to Rudoss Weiss &
Co.?

R No, he wasn't actively soliciting business
because he knew ACLI were clearing members of London then-
selves.

Q Now, you met Gourlay again in 1974; is that

right?

A Right’.

A87

DEP. TRANSCRIPT - WILLIAM CASSELMAN [ 16]
Q Do you know how Neiman knew about Gourlay?
A I think that he probably had heard about Gourlay,

probably from myself, but I'm not sure of that.

Q Now, on the occasion of Gourlay's visit in 1974,
did he ask you to send any business to Rudolf Wolff & Co.,
Ltd.?

A No, he didn’t because he was not actively solicit-
ing business for Rudolf Wolff & Co., at the time. He was no
longer an active partner in the day-to-day business of Rudolf

Wolft 6&6 Co.

Q Do you know why Neiman and Gourlay met --
A Yes.
Q — in 1974?

Why adid they meet?
A To discuss the silver cash and carry.
Q Do you know how Neiman came to know Mr. Gourlay
and Rudolf Wolff in relationship to the silver cash and carry?
a As I say, I have to assume it's because I told
Dave about it.
MR. VIVIANI: Dave being?

THE WITNESS: Neiman. I'm sorry.

A88
DEP. TRANSCRIPT - WILLIAM CASSELMAN [20

time and how they divided the spoils up and so forth, and who
was employed and who they saw, I never knew.

Whether he was any longer a partner or not, I
assumed he was a stockholder, but I didn't know.

Q When you introduced Gourlay to Neiman in '74,
aid you think that Gourlay would put the trades that were being
Giscussed through Wolff?

A Yes, very definitely, because I wouldn't --
I certainly wouldn't have proposed any business that wasn't put
through a reputable house.

Now, he could just as‘well have put them through
Maccatta or any other house, but as long as it's a repztable
house.

Q Did you think that Gourlay was meeting Neiman
as an agent of Rudolf Wolff?

MR. PASKOFF: I will object to the form of the
question. That calls for a legal conclusion. I would ask his
counsel to instruct him not to answer it unless you can rephrase
the question.

BY HR. JOYCE:

Q During 1974 when you introduce2Z Neiman to Gourlay,

gid you think that Gourlszy was soliciting Neiman's business

4

17

gone off on his own in other areas and that -- I knew he was

A89 [ 21)
DEP. TRANSCRIPT - WILLIAM CASSELMAN

on behalf of Wolff?
A I don't think so and I'll tell you why. There

had been a rift in the family and Gourlay had more or less

getting ready to do something, Until he showed up in '73 or
'74, I didn't know what it was that he was going to do.

Q Well, in '74 why didn't you just direct Neiman
to Wolff yourself instead of going through Gourlay?

MR. PASKOFF: I will object to the form of the
question. It calls for speculation.

BY MR. JOYCE:

Q Do you want to answer it, sir?

THE WITNESS: Shoule I answer it?

MR. VIVIANI: I wonder if you can save that
question and we can meet that perhaps later in the deposition,
if you could just move on. I'm just asking that out of courtesy
and we could discuss it at the very end.

If you can make a note of the question so we
car. have an opportunity to discuss it with Mr. Casselman.

BY HR. JOYCE:

Q Have you ever heard of a company known as

Inglcrman Investment Compsny, Ltd.?

(as)
A90 | qi
DEP. TRANSCRIPT - WILLIAM CASSELMAN
I'm not sure but I don't think he did.
Q Now, after you gave Hr. Neiman information about

this tax shelter did he continue to discuss it with you,

between the time of your first discussion about the shelter anc

the time you met with Gourlay?
A Well, as you know, Dave, being as eccentric as
he is, had nine jillion questions, all of which I couldn't
answer, and rather than me calling London every 15 minutes,
I said, "Well, look, Gourlay is going to be over here sometime

this summer. Why don't you save them all for him?"

Q What did Neiman say?
a "All right. Fine. We'll have lunch."
Q Now, did Gourlay tell you why he was in Chicago

on tie occasion of your meeting?
MR. LOW: Objection. Asked and answerec.
BY MR. JOYCE:

Q Mr. Casselman?

A No, he didn't come flat out and say, “I'm here
to do this or that or so forth." He let me know when he was
going to be in Chicago. I told him -- to the best of my
knowledge, it's tho only client he met of mine there at all.

I -- jute because I said, “You know, this fellow has questions

A91 . [as]
DEP. TRANSCRIPT - WILLIAM CASSELMAN

BY MR. JOYCE:
Q Now, calling your attention to the luncheon between
‘Mr. Casselman, yourself, Gourlay and Neiman, do you recall
when that luncheon took place?

A It took place after the grain market closed in
Chicago, which would place it at about 1:30. It was at Binyon's
Restaurant. I don't recall whether it was May, June or July.

Q Could it have been in October, 1974?

A It could have been October, because I didn't move
to Florida until late October, early November.

Q Now, the only people present at this luncheon
were yourself, Neiman and Gourlay; is that right?

A Correct.

Q Now, during the course of this luncheon, €o you
recall whether Mr. Gourlay and Mr. Neiman discussed the
possibility that a profit could be derived from the transaction
Gepicted in Exhibit No. 1, which profit was not associated with
the tax laws?

MR, PASKOFF: I will object to the form of the
question, for a number of purposes, lir. Joyce.
Pirst of all, I think you are putting your own

words into a characterization of what Mr. Gourlay may have done

A92

' [52]
DEP. TRANSCRIPT - WILLIAM CASSELMAN

Q Do you recall if Mr. Weiman asked Mr. Gourlay
whether changes could be made in that form agreement?

A That might have been one of the many questions
that Dave had asked him but I can't specifically come out and
say “Yes, that is one of the ," because ator
is the important guy in these trades. As you know, they have

an open line between New York and London and speed is of the

essence.
MR. PI SKOFF: I have no further questions.
MR. JOYCE: I have one or two.
REDIRECT EXAHIWATION
BY MR, JOYCE:
Q The two percent cormission you were to rece:ve

on these tax shelter transactions --

(72 ]
A97

DEP. TRANSCRIPT - WILLIAM CASSELMAN

Q Do you recall who you gave it to at Stotler?

4 I would assume I sent it to somebody in account-
ing.

Q . Would it have been Ed Hanson?

A Could have been.

Q Was it sent to Chicago?

& Yes, I'm sure it was. I was already in Florida.

Q The transactions depicted in the bound volumes 3
through 8 were originated in Chicago, Illinios; is that correct,

Mr. Casselman?

MR. PASKOFF: I will object to the form of the
question.

THE WITNESS: No. ‘The majority of this business
was done after I moved to Florida. You will note here that
here is May ‘75 through March, '76. I really concentrated on
this business after I got to Florida, on the London business.

BY MR. JOYCE:

Q Well, now, who originated the order, you or the

Chicago office?
a I originated the order.

Q And when you were in transactions that occurred

-~ November lst, ‘74, would they have been from Chicago?

10

11

14

16

2. a oe oe}

A98
DEP. TRANSCRIPT - JOSEPH KLEIN

IN THE UNITED STATES DISTRICT COvAT
WONTEERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DAVID NEIMAN 4/b/a
LONDON GROUP (1974),
Plaintiff,
vs. NO. 75¢ 2531
RUDOLPH WOLFE & COMPAKT,

LTD., JANES GOURLAY, and .
INGLORAM INVESTMENTS, LTD.,

ee Fe ee ee ee ee eee

Defendants.

The Ciscovery deposition of JOSLIPE ELIIN catied
for exaninetion pursuant to subpoena and pursuent to

the Rules 67? Civil Procedure for the Unitcd Stetes

District Courts perteining to the teking cf depocitcioz.
taken before MARIE A. CRISSIE, a notary pubdlic within
and for the County of Cook and Stete of Iilénoic,

at 141 West Jackson Boulevard, Suite 4100, Chiceg>,
Illinois, on the 26th Gey of Septender, 1s7@, as

the hour of 3:00 o*elock p.n,.

: A99 [22]
DEP. TRANSCRIPT - JOSEPH KLEIN

with Gourlay and his company, and you responded in
the affirmative by his company; do you mean Rudolph
Wolfe & Company, Limited?

A To the best of my knowledge, I dealt with
“Wolfe, yes.

MR. LOW: No other questions.

EXAMINATION
BY MR. PASKOPP: |

q Mr. Klein, how tong heve you been in
the comnodities business?

AR I have been in the commccities enc securities
business for 51 years. You heard me, I am 68.

Q With vespect to the transactions reflected
in Exhibits 1 through 6, did Rudolph Wolfe & Corpeny,
Limited, solicit your business for those trensections?

MR. JOYCE: I would object to the form of the
question since it calls for a conclusion es opposed to
facts. It is improper for this gentleman to make the
conclusion. He can tell you what Rudolph Wolfe &
Company did or didn't do, but it is up to the court
to decide whether they solicited his business.

MR. PASKOF?: Tou may answer,

THE WITNISS: Wo, they did not.

19

21

A100 . [26]
DEP. TRANSCRIPT - JOSEPH KLEIN

TRE WITNESS: I was buying cash silver. I was
operating @ cash and carry operation. I bought cash
silver end I sold the future against it, and I put
and sold the put ageinst it. So, my position was -
even as to market risk, and I ras attempting to, over
that period, to pay charges Bgeinst storage, insurcnce,
et cetera, and then hopefully to liquidate in the
futures’ merket, siz months later.

MR. PASKOPP: I have no further questions,

EXAMINATION
BY MR. JOTCE:

Q Mr. Klein, in the trensactions reflected
by Exhibits 1 through 6, did you finance eny pertion
of these ieokwbascsons through I. Rochester (Pinencc )
Limited?

A Yes, I did.

G2) Acival bars can be siceated and « weight lat rendered, in which case the storage a charged ata
gate ’> be agreed.

The silver be held by the Broker without allocat special bars; jo this case storage
bah et fag A bpm papier y om tg °
) Insurance on silver is normally covered by the Broker and the cost of such insurance is included

fm the storage charge.

22. The Loodos Brokers reserve to themselves the right to suspend or vary these conditions, oranyofthen |
with or without sotice, if in their opinion they consider that circumstances have rendered such « course desirable

. Lowpon, Ist May, 1969.
AB conditions previous te this date are bereby canceled.

Allo.
HOLFORD AFFIDAVIT

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DAVID NEIMAN d/b/a
LONDON GROUP (1974),

Plaintiff, Civil Action No. 75 C 2531
eagainst- $
RUDOLF WOLFF AND CO. LTD., =—_o—_e
Defendant.

STATE OF NEW YORK »
Coury OF NEW YORK) _

FRANCIS HOLFORD, being duly sworn, deposes and
itis : °

1. I em a resident and citizen of the United
Kingdom and Secretary of defendant Rudolf Wolff and Co.
Ltd. ("Wolff"), a United Kingdom corporation located ir
London, England. As such, I have personal knowledge of the
matters contained in this affidavit, except where otherwise
expressly stated. | |

2. I make this affidavit in support of defendant's
motion to dismiss the complaint on the grounds of: (1) lack
of personal jurisdiction over Wolff, which has not transacte:

Alll
HOLFORD -AFFIDAVIT

ery br siness in the State of Tllinois and does not have suffi-
‘.etent minimum contacts with that state to permit this Court
to exercise personal jurisdiction over it; and (2) the
gnsufficiency of the purported ‘pervice of process ynon

Wolff by delivery of @ summons and complaint to Rudolf

woift & Company, a New York partnership which 4s not @

branch office of Wolff.

3. Wolff is a corporation organized and existing
pursuant to the laws of the united Kingdom. Its principal
- place of business is in London, England. Wolff is engaged
as principal and broker in the business of trading ‘metals on

various London and other exchanges. .

Wolff does not advertise or otherwise
solicit customers in the State of Illinois
or the United States.

Wolff does not maintain any office or
registered agent in the state of Illinois oF
the United States.

Wolff has no assets 4n the Stete of

Zllinois.

All2
HOLFORD AFFIDAVIT

Wolff has never paid or been assessed

any taxes in the State of Illinois. k

Wolff has never been party to any action
or proceeding in the State or Federal Courts
4n the State’ of Illinois.

he (2) Rudolf Wolff & Company (the in y. Partner-
ship") is « general partnership organized pursuant to the laws
of the State of New Fork, whose only place of business is in
New York City. Wolff has no direct ownership or other dnterest
‘Gn the N.Y. Partnership; however, & a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_0269%3A1. Public record. Not legal advice.