Petition — American Dental Assn. v. Myers
Supreme Court brief1983
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82-1508 | WAR Mb 1003
No.
Ab EXAM OES LeSTEVAS,
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In the
Supreme Court of the Anited States
Octoser TrerM, 1982
AMERICAN DENTAL ASSOCIATION, and
DR. JOSEPH P. CAPPUCCIO,
Petitioners,
Vs.
DONALD R. MYERS,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
THIRD CIRCUIT
Peter M. Srikas
200 East Randolph Drive
Suite 7300
Chicago, Illinois 60601
(312) 861-1400
Counsel of Record s
Of Corzxsel
Cray H. Prrmures
Joun N. ScHo.nick
Peterson, Ross, Scoiorrs & SEmei
200 East Randolph Drive
Suite 7300
Chicago, Illinois 60601
(312) 861-1400
The Scheffer Press, Inc.—(312) 263-6850
i
QUESTIONS PRESENTED
1. Whether the defendant or the plaintiff has the
burden of proof with respect to venue when the de-
fendant timely objects to venue pursuant to Rule 12(b)
(3) of the Federal Rules of Civil Procedure, and the
plaintiff fails to make any showing that the defendant
has a substantial nexus with the Virgin Islands.
2. Whether venue lies, pursuant to 15 U.S.C. $22, in
the Virgin Islands against a non-profit association such
as the American Dental Association when it promulgates
an ethics rule in Chicago, Illinois and neither does
business nor has any substantial contaets with the Vir-
gin Islands.
3. Whether personal service of process upon an in-
dividual within the Virgin Islands standing alone con-
fers personal jurisdiction over the individual, even though
it is unecontroverted that he has no continuing contacts
with the Virgin Islands.
ii
RULE 28.1 STATEMENT
The American Dental Association has no parents or
affiliates within the apparent meaning of Supreme Court
Rule 28.1.
TABLE OF CONTENTS
PAGE
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Pema. OE Cane: CANE a cccnsnecctscsnsanrsectovepsceciessssepseemsnascins 2
Reasons for Granting the Writ oo... eee pay ah
I. The Decision of the Third Cireuit Clearly
Conflicts with Decisions of This Court and
of Other Cirenit Courts of Appeals Regard-
ing the Burden of Proof in Objections to
Lf RR ACU ARONA, 36 [Piel Lie ct cats FA Ie ma 6
A. Conflict with This Court’s Decisions, .... 6
B. Conflict with Other Cireuits. .........0..00 7
(. The Decision of the Third Cireuit De-
parts from a Well Established Rule with
Respect to the Consideration of Venue
Objections Thereby Requiring This Court
to Exercise Its Power of Supervision. .. 8
If. The Opinion of the Majority on What Con-
stitutes “Transacting Business” for a Non-
Profit Corporation Conflicts with a Decision
of the Fourth Circuit Court of Appeals and
Involves a Significant Question of Federal
DMIW.. iidsszscssccsunepnsensbresssaveigssacicandteanearcelstanizuspnneurctanies 11
iv
PAGE
III. The Third Cireuit’s Holding That Personal
Jurisdiction May Be Based on Mere Per-
sonal Service Over Dr. Cappuecio, Who Had
No Other Continuing Forum Contacts, Con-
stitutes a Violation of Constitutional Due
Process Which Should Be Corrected by This
RNIN Sk dccthoscsasbassebadbdbadictotmanendiainneaneeice meee opien 15
RPNUIINIIION © ceecesbssechaeunsusttnencasdsaseddcmapsciasanemnssolicasiaseamsireieetian 18
MNES ccencenatineiaridetbananc Innes nuaadnerneastnestaibacaininocniiuciaes la
TABLE OF AUTHORITIES
Cases
PAGI
Airola v. King. 505 F. Supp. 30 (D. Ariz. 1980)... 9
Amateur-Wholesale Electronics vy. R. 1. Drake Co.,
515 F. Supp. 580 (S.D. Fla. 1981) .......cccccccsccsesssessseees 9
Aro Mfg. Co., Inc. v. Automobile Body Research Corp.,
302 F.2d 420 (Ist Cir, 1965), cert. denied, 383 U.S.
I > pastaccnencsaeai dances Sst epee vcrtsccnedibsdaniadaceses 7
Bartholomew vy. Virginia Chiropractors Ass’n, Inc.,
612 F.2d 812 (4th Cir. 1979), cert. denied, 446 U.S.
I seretiat hin pitch Dealialoe deka oaicenciasacseeulsoins 7, 12, 13, 14
Besuner vy. Faberge, Inc., 379 ¥. Supp. 278 (N.D. Ohio
ce grt he lee aT Bnet IR ne Ed eRe EEE NE SY 10
Call Carl, Inc. v. BP O'l Corp., 391 F. Supp. 867 (D.
MN NUNN © pucis-chueniansscitataninasiaciateescinhcshbesidicasban Rbdsadaiabi 10
Cascade Steel Rolling Mills, Inc. y. C. Itoh & Co.
(America), Inc., 499 F. Supp. 829 (D. Or. 1980)... 9
Conaway Enterprises, Inc. vy. Dyna Industries, Ine.,
567 F. Supp. 577 (W.D. Pa. 1962)... ccccccccscsssccsessscsssses 10
E. W. Kalkin, Inc. v. Linens & Things, Ltd., No. 82
) Geen Core Bee CRG TR, TOD occccccocesccssceccscecmnssess 9
4
PAGE
Fooshee v. Interstate Vending Co., 234 F. Supp. 44
SI sess aiencssinilepeininincntonedonennenneene 10
Fumneleap Inc. v. Orion Industries, 392 F. Supp. 938
Nass ac cs tnes csatartasineiiennecndebiesenanbebonieinicents 10
Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) ..14, 18
Grantham vy. Challenge-Cook Bros., tnc., 420 F.2d 1182
IIIT IIIT sna scocscsinanasitbiobieesnseheotoonctbesisepeinsnnameresancenss 8
Grappone, Inc. v. Subaru of America, Ine., 403
Be I. BD CE NBD. TOTO) ccccnccererssessecsoncvsnccsnscesseccocces 10
Hawkins v. National Baskethall Ass'n, 288 F. Supp.
SPIER PL, UMUIED " sitasccsnsnsscnsesscesnndeonseutbseneenveneocesnenesenete 10
Hayashi vy. Siunshine Garden Products, Inc., 285
F. Supp. 632 (W.D. Wash. 1967), aff'd sub nom.
Hayashi v. Red Wing Peat Corp., 396 F.2d 13 (9th
acc ct sa neibedaiidediiniihianenemniomsinaneninesebens 10
Hodaqdon vy. Needham-Skyles Oil Co., 1982 Fed. See.
Bax BUG. FOO, GBT CINTA. TRGB) cnccsseccccscssccssescecscscesseeses 9
Hodson v. A. H. Robins Co., Inc., 528 F. Supp. 809
TI class nc nnlenvtnininicstneeneubonanaseecsenesteontes
Hoffacker yv. Bike House, 540 F. Supp. 148 (N.D. Cal.
ate Satake cick cet tacisapdeteamsisiieseininnitcieieitinndnensaubtocianens 9
International Shoe Co. v. Washmgton, 326 U.S. 310
Air iia ic scl acaaceedgciecnonlonnanivisoienabinenidsiadinmnnnes 15, 16, 17
K. J. Schwartzhaum, Inc. v. Evams, Inc., 44 F.R.D.
IE Ti MENON. ssiecisodespovncsinianicnnebdnetiimsnabeenaniontinennse 10
Leroy v. Great Western United Corp., 443 U.S. 173
Iai ce anti apihdenmncenicoliennintnihainneeeensacons 5, 6, 7, 18
Lieb v. American Pacific Int'l, Inc., 489 F. Supp. 690
SAI UN OD <tesstosnsenecisonssersisisnsincntmaningeantinentvecieousensescese 10
Mowrey v. Johnson & Johnson, 524 F. Supp. 771
II Ps BINED aniceerrosnniiaoasaensacsnessinaiiavetanstcninanicomensesen 10
vi
PAGE
Myers vy. American Dental Ass'n, 695 F.2d 716 (3d
SII icici deialatas tcc iadeisdbedmnigcaavestnencokssshassoesseentecdsaeniostn 2,6
National Distillers & Chemical Corp. y. Department
of Energy, 487 F. Supp. 34 (D. Del. 1980) oo... 10
Pennoyer v. Neff, 95 U.S. 714 (1877) vce 15, 16
Pfeiffer y. International Academy of Biomagnetic
Medicine, 521 F. Supp. 1331 (W.D. Mo. 1981). ........ 9
Phillips v. Baker, 121 F.2d 752 (9th Cir. 1941) wo... 8
Piper Aircraft Co. vy. Reyno, 454 U.S. 235 (1981)... 5
Pocahontas Supreme Coal Co., Inc. vy. National Mines
Corp., 90 F.R.D. 67 (S.D.N.Y. 1981) .u....ccccssecseeee 9
Rush v. Savchuk, 444 U.S. 320 (1980) wo. 15,17
Ryan vy. Glenn, 52 F.R.D. 185 (N.D. Miss. 1971)... 10
Sarf v. Arnovitz, 19 B.R. 78 (F.D.N.Y. 1982) .....0... HW)
Shaffer v. Heitner, 433 U.S. 186 (1977) oc. 15, 16, 17
Smokey’s of Tidsa, Inc. v. American Honda Motor Co.,
Inc., 453 ¥. Supp. 1265 (B.D. Okla. 1978) oo. . 10
Stanley Works vy. Globemaster, Inc., 400 F. Supp. 1325
cick sceepennesinshtvonbeasavehiis 10
Sugarloaf Assocs. vy. Unity Savings Ass'n, Nos.
82-0811, 82-2838 (FE.D. Pa. Oct. 28, 1982) 0... 10
Wentiing v. Popular Science Publishing Co., 176
ey NE EE NAY, WU UII) csrenssccasossascsenssonccansensece 10
World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
IIE sos aseas upiiiedbdisinsiscansesaddssaannsacsonscesecsily Waly AE
Yazawa v. J & F Import-Exrport Int'l Co., No. 81
Sy Cie cees Bets BU, B21, TOBE) nccscssccsssovssscccresosncnces i)
vii
PAGk
Strarutes Anp Rutes
Ur EO TU dnsekindinicntiaesnteniastvsinideenenteneis 2, 4, 6, 11, 14, 18
SUR s. BRUNET: ascinisinssicssieusncensanesenioseiensiiabandapeceiaidcsinie 4
aE SEs: ORIN <chsscissesveinesnss cimvenbitesnesninsindabicibediensibanteniha 4
Rules of the United States Supreme Court
PI: OUR sicsincdinicsicanansiacictencessnasiorastaiammsiencnseads 7,9, 10
Apprt10onaL AUTHORITIES
15 Wright, Miller & Cooper, Federal Practice & Pro-
II, “SIUIIIED seseninpactien idsistastaccateoncenisercneiisebadtonbsismabondis 8
Ehrenzweig, The Transient Rule of Personal Juris-
diction: The “Power” Myth and Forum Conveniens,
Se Base CE) dnctensutsasmaaeeircinanns 16
In THe
SUPREME COURT OF THE UNITED STATES
Octoner Term, 1982
AMERICAN DENTAL ASSOCIATION, and
DR. JOSEPH P. CAPPUCCIO,
Petitioners,
Us.
DONALD R. MYERS,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
THIRD CIRCUIT
—_— -—-
Petitioners pray that a writ of certiorari issue to re-
view the judgment and opinion of the United States
Court of Appeals for the Third Cireuit entered in this
proceeding on December 10, 1982, and the denial of the
petition for rehearing on January 10, 1983.
OPINIONS BELOW
The District Court entered a Memorandum and Order
which has not been reported and is reproduced at Ap-
pendix (hereinafter App.) la-6a,
= on
The majority opinion of the Court of Appeals affirm-
ing in part and reversing in part the District Court as
well as the concurring and dissenting opinion of Judge
Garth are reported at 695 F.2d 716, 731 (3d Cir. 1982).
The opinions are reproduced at App. 7a-67a.
JURISDICTION
The judgment of the Court of Appeals was entered on
December 10, 1982. (App. 7a). A timely petition for
rehearing in bane was denied on January 10, 1983. (App.
68a). The jurisdiction of this Court is invoked under
28 U.S.C. §1254(1).
STATUTES INVOLVED
15 U.S.C. §22 provides as foliows:
Any suit, action, or proceeding under the antitrust
laws against a corporation may be brought not only
in the judicial district whercof it is an inhabitant,
but also in any district wherein it may be found or
transacts business; and all process in such cases
may be served in the district of which it is an in-
habitant, or wherever it may be found.
STATEMENT OF THE CASE
Petitioner the American Dental Association (“ADA”),
a voluntary professional dental association, is an Illinois
not-for-profit corporation with its principal place of busi-
ness in Chicago, Illinois, and one additional office in Wash-
ington, D.C. (Affidavi of Thomas H. Boerschinger, Ap-
pendix filed in the United States Court of Appeals (here-
inafter Cir. App.) 17). It has no office or employees in
the Virgin Islands. (Jd.).
Dr. Joseph P. Cappuccio (“Dr. Cappuccio”) is a former
president of the ADA, and he is a dentist residing and
—
practicing in Baltimore, Maryland. (Affidavit of Lois Mil-
ler, Cir. App. 20). It is uneontroverted that Dr. Cappue-
cio has not engaged in any business or any persistent
course of conduct within the Virgin Islands.
Respondent, a dentist who conducts his practice in the
Virgin Islands, Puerto Rico and Massachusetts, has
brought this action in the District Court of the Virgin
Islands alleging that ADA and Dr. Cappuccio had vio-
lated the Sherman Act and the Virgin Islands Anti-Mo-
nopoly Act through ADA’s alleged promulgation in Chi-
cago, Illinois, of certain sections of ADA’s Principles of
Ethies and Code of Professional Conduct. (Complaint, Cir.
App. 5). Dr. Cappuccio was served with the complaint
and summons while he was in the Virgin Islands. (U.S.
Marshals Service Process Receipt and Return, Cir. App.
13).
ADA has never held its Annual Session, its primary
meeting, in the Virgin Islands and during its entire his-
tory has only held two small meetings in the Virgin I[s-
lands. (Affidavit of Howard I. Wells, Cir. App. 19). Of
ADA’s 130,000 members only 19 reside in the Virgin Is-
lands, and of the approximately $14,000,000 in dues col-
lected from members in 1980 ADA collected merely $2,400
from members residing in the Virgin Islands. (Miller
Affidavit, Cir. App. 20). ADA receives no advertising
revenues from advertisers who reside in the Virgin Is-
lands. (Affidavit of Frank Cordero, Cir. App. 21).
ADA’s witnesses, particularly those concerning the for-
mulation, drafting, promulgation or interpretation of the
challenged ethical principles, either reside in Chicago or
are ADA officers with offices in Chicago. (Boerschinger
Affidavit, Cir. App. 17). All of ADA’s documentary evi-
~
dence is physically located at ADA’s principal office in
Chicago, Illinois.
in the trial court, ADA and Dr. Cappuccio filed a Mo-
tion to Dismiss the Complaint (Cir. App. 14), together
with a supporting memorandum (Cir. App. 22) and affi-
davits (Cir. App. 17-21). This motion contended that
personal jurisdiction was absent and that venue in the
Virgin Islands was improper. The District Court denied
the motion. The trial court held that although it did not
have venue pursuant to 15 U.S.C. §22, both because the
ADA was not a resident and because “no overt act oc-
curred in this jurisdiction’? (App. 3a), venue was prop-
er only under 28 U.S.C. §1391(b) on the theory that the
alleged antitrust injury took place in the Virgin Islands.
However, the District Court certified the questions of
venue and personal jurisdiction pursuant to 28 U.S.C.
§1292(b) and thereafter the Third Cireuit Court of Ap-
peals allowed the interlocutory appeal.
In a two to one decision the Third Circuit affirmed the
District Court’s decision as to the ADA but reversed in
part as to Dr. Cappuccio. (Maj. opinion at App. 7a,
dissent at App. 34a). Although the majority opinion
upheld the District Court as to ADA, it did so in a high-
ly unusual fashion. It thoroughly discredited the District
Court in that it found that the District Court misinter-
preted 28 U.S.C. §1391(b) but then ignored the clear intent
of the District Judge with reference to whether ADA
was subject to venue under 15 U.S.C. §22. The trial
judge’s analysis was that since there was no way to sus-
tain venue under 15 U.S.C. 422, the only manner in which
it could hold the ADA in the case was pursuant to 28
U.S.C. §$1391(b). An examination of the trial court memo-
randum and the majority opinion and dissenting opinion
pox Pes
of the Court of Appeals makes it apparent that the
majority strained in order to continue to subscribe to
the notion that the concept of venue is a broad, liberal
concept which benefits plaintiffs at the expense of defen-
dants. It did this in spite of recent admonitions of this
Court to the contrary in somewhat related areas. See
Leroy v. Great Western United Corp., 443 U.S. 173
(1979) (venue); World-Wide Volkswagen Corp. v. Wood-
son, 444 U.S. 286 (1980) (jurisdiction); Piper Avrcraft
Co. v. Reyno, 454 U.S. 235 (1981) (forum non
conveniens).
This Petition is being filed to permit this Court to
establish definitive standards with reference to venue for
the inferior federal courts.
eo § a=
REASONS FOR GRANTING THE WRIT
I. THE DECISION OF THE THIRD CIRCUIT CLEAR.
LY CONFLICTS WITH DECISIONS OF THIS
COURT AND OF OTHER CIRCUIT COURTS OF
APPEALS REGARDING THE BURDEN OF PROOF
IN OBJECTIONS TO VENUE.
A. Conflict with This Court’s Decisions.
The majority decision of the Third Cireuit Court of
Appeals in this case, Myers y. American Dental Ass’n,
695 F.2d 716, 718 (3d Cir. 1982) (App. 7a), is in direet
conflict with the decision of this Court in Leroy v. Great
Western United Corp., 443 U.S. 173 (1979), with respect
to the purpose of statutory venue and with respect to the
party having the burden of proving venue.
The majority of the Third Cireuit held that “the defen-
dant should ordinarily bear the burden of showing im-
proper venue in connection with a motion to dismiss.”
(App. 20a-2la). Thus, the majority placed the burden of
proof with respect to venue upon petitioners in this
matter. This determination, as to who has the burden
of proof on motions to dismiss for improper venue,
provided the majority the underlying basis upon which
it affirmed the District Court’s denial of petitioners’
venue motion, in spite of the fact that the majority
discredited the theory upon which the District Court
found venue and despite the fact that respondent did
not even argue Section 22 venue in the trial court. See
Dissenting Opinion at App. 42a.
This principle adopted by the majority of the Third
Cireuit flies in the face of this Court’s characterization
of venue:
= oe
In most instances, the purpose of statutorily
specified venue is to protect the defendant against
the risk that a plaintiff will select an unfair or incon-
venient place of trial. For that reason, Congress has
generally not made the residence of the plaintiff a
basis for venue in nondiversity cases. (Leroy v. Great
Western United Corp., 443 U.S. 1738, 183-184 (1979)
(emphasis in original) ).
By placing the burden of proving the inappropriateness
of respondent’s choice of forum on petitioners the Third
Cireuit has destroyed the congressional protection ac-
corded petitioners, and all other defendants, as reaffirmed
by this Court. In practice it also makes it impossible
for a defendant to sustain the burden since it makes the
defendant prove a negative.
The Third Circuit’s holding is also contrary to an
express statement of this Court as to which party must
demonstrate the appropriateness of venue. It is quite
clear that this Court ordinarily requires the plaintiff
to “justify its choice of forum.” Leroy vy. Great Western
United Corp., 443 U.S. at 183. This Court should, there-
fore, review the decision of the Third Cireuit Court
of Appeals in order to bring the Third Circuit in line
with the extant venue principles of the Supreme Court.
B. Conflict with Other Circuits.
In addition, there is no question that the decision
of the Third Circuit majority is in direct conflict with
the venue rules adopted by four other Circuit Courts
of Appeals thus triggering the application of Supreme
Court Rule 17.1(a). In the cases of Aro Mfg. Co., Inc.
v. Automobile Body Research Corp., 352 F.2d 400 (lst
Cir. 1965), cert. denied, 383 U.S. 947 (1966), Bartholomew
v. Virginia Chiropractors Ass’n, Inc., 612 F.2d 812 (4th
=
Cir. 1979), cert. dened, 446 U.S. 938 (1980), Grantham
v. Challenge-Cook Bros., Inc., 420 F.2d 1182 (7th Cir.
1969), and Phillips v. Baker, 121 F.2d 752 (9th Cir. 1941),
the First, Fourth, Seventh and Ninth Circuits respec-
tively have squarely held that the plaintiff must bear
the burden of proving the propriety of venue when
challenged by the defendant.
This irreconcilable c aflict was expressly recognized
by Judge Garth in his dissent below. (App. 39a). Judge
Garth embraced the “better view,” which is also sup-
ported by Professors Wright and Miller. See 15 Wright,
Miller & Cooper, Federal Practice & Procedure 43826
at 168.
There exists a definite need for uniformity of decision
among the Circuits with respect to the allocation of the
burden of proof on venue objections. The decision of
the Third Circuit stands basically alone in direct contra-
diction to the rule adopted by four other Circuits. This
Court should grant this Petition in order to resolve this
conflict concerning a rule of law which is fundamental to
the consideration of venue objections.
©. The Decision of the Third Circuit Departs from
a Well Established Rule with Respect to the
Consideration of Venue Objections Thereby Re-
quiring This Court to Exercise Its Power of
Supervision.
The Third Circuit’s decision drastically distorts the
law of venue. The majority opinion will have a significant
impact on the disposition of venue motions by lower
courts. No doubt many venue objections will turn on the
resolution of the question of which party bears the
burden of proof. This was certainly the critical factor
=
in the instant matter, as Judge Garth recognized in his
dissent below, where respondent had adduced and the
District Court had found absolutely no facts otherwise
justifying respondent’s choice of forum. (App. 52a-53a).
The importance of the Third Cireuit’s decision with
respect to the proper administration of justice and, in
particular, of the Federal Rules of Civil Procedure is
obvious.
This Petition presents a glaring example of a decision
by the Third Cireuit Court of Appeals which “has so
far departed from the accepted and usual course of
judicial proceedings, or so far sanctioned such a course
by a lower court, as to call for an exercise of this court’s
power of supervision.” Supreme Court Rule 17.1(a). That
the allocation of the burden of proof with respect to
venue objections to the plaintiff is the “accepted and
usual course of judicial proceedings” is obvious from
even a casual review of the decisions of those trial courts
which have addressed the issue. See, e.g., E. W. Kalkin,
Inc. v. Linens & Things, Ltd., No. 82 C 4021 (N.D. II.
Oct. 25, 1982); Sarf v. Arnovitz, 19 B.R. 78 (E.D.N.Y.
1982); Hodgdon vy. Needham-Skyles Oil Co., 1982 Fed.
Sec. L. Rep. 999, 031 (D.D.C. 1982); Hoffacker v. Bike
House, 540 F. Supp. 148 (N.D. Cal. 1981); Hodson v. A.
H. Robins Co., Inc., 528 F. Supp. 809 (E.D. Va. 1981);
Pfeiffer v. International Academy of Biomagnetic Medi-
cine, 521 F. Supp. 1331 (W.D. Mo. 1981); Amateur-
Wholesale Electronics vy. R. L. Drake Co., 515 F. Supp.
580 (S.D. Fla. 1981); Pocahontas Supreme Coal Co., Inc.
v. National Mines Corp., 90 F.R.D. 67 (S.D.N.Y. 1981);
Yazawa v. J & F Import-Export Int'l Co., No. 81 C 0153
(N.D. Til. Aug. 11, 1981); Atrola v. King, 505 F. Supp.
30 (D. Ariz. 1980); Cascade Steel Rolling Mills, Ine. v.
ee
C. Itoh & Co. (America), Inc., 499 F. Supp. 829 (D. Or.
1980) ; Smokey’s of Tulsa, Inc. vy. American Honda Motor
Co., Inc., 453 F. Supp. 1265 (.D. Okla. 1978); Grappone,
Inc. v. Subaru of America, Inc., 403 F. Supp. 123 (D.
N.H. 1975); Stanley Works v. Globemaster, Inc., 400
F. Supp. 1325 (D. Mass. 1975); Call Carl, Inc. v. BP
Ou Corp., 391 F. Supp. 367 (D. Md. 1975); Besuner v.
Faberge, Inc., 379 F. Supp. 278 (N.D. Ohio 1974); Ryan
v. Glenn, 52 F.R.D. 185 (N.D. Miss. 1971); K. d.
Schwartzbaum, Inc. v. Evans, Inc., 44 F.R.D. 589 (S.D.
N.Y. 1968); Hayashi v. Sunshine Garden Products, Inc.,
285 F. Supp. 632 (W.D. Wash. 1967), aff’d sub nom.
Hayashi v. Red Wing Peat Corp., 396 ¥.2d 13 (9th Cir.
1968); Fooshee vy. Interstate Vending Co., 234 F. Supp.
44 (D. Kan. 1964). These courts have overwhelmingly
held that the burden of proof is to be carried by the
plaintiff after a timely objection has been made by the
defendant.
In fact, the majority of the District Courts within
the Third Cireuit had previously followed the proper
rule that the plaintiff must prove the propriety of his
choice of venue once objected to by the defendant. See,
e.g., Conaway Enterprises, Inc. v. Dyna Industries, Inc.,
547 F. Supp. 577 (W.D. Pa. 1982); Sugarloaf Assocs.
v. Unity Savings Ass’n, Nos. 82-0811, 82-2838 (18.D. Pa.
Oct. 28, 1982); Mowrey v. Johnson d&: Johnson, 524 F.
Supp. 771 (W.D. Pa. 1981); Lieb v. American Pacific Int’l,
Inc., 489 F. Supp. 690 (12.D. Pa. 1980); National Distillers
& Chemical Corp. v. Department of Energy, 487 F. Supp.
34 (D. Del. 1980); F'unnelcap Inc. v. Orion Industries,
392 IF. Supp. 938 (D. Del. 1975); Hawkins vy. National
Basketball Ass’n, 288 F. Supp. 614 (W.D. Pa. 1968);
Wentling v. Popular Science Publishing Co., 176 F. Supp.
—
652 (M.D. Pa. 1959). Despite such longstanding adher-
ence of these lower courts to the “accepted and usual”
rule, a majority of the Third Cireuit has decided that
the courts of that Circuit must no longer follow the
better reasoned and well established view. Therefore,
the decision of the Third Cireuit not only sanctions,
but mandates, that the trial courts of the Circuit depart
from their “accepted and usual course of judicial pro-
ceedings.”
This Court should grant this Vetition in order that
it may exercise its power of supervision over the Third
Cireuit in order to conform the Third Cireuit’s decision
to the “accepted and usual course of judicial proceed-
ings.” Moreover, the Court should review the decision
of the Court of Appeals to prevent the extraordinary
inconvenience to petitioners of having to litigate this
matter in the Virgin Islands, where petitioners have no
significant contacts, as demonstrated by the factual record
made in the trial court.
II. THE OPINION OF THE MAJORITY ON WHAT
CONSTITUTES “TRANSACTING BUSINESS” FOR
A NON-PROFIT CORPORATION CONFLICTS
WITH A DECISION OF THE FOURTH CIRCUIT
COURT OF APPEALS AND INVOLVES A SIG.
NIFICANT QUESTION OF FEDERAL LAW.
The Dissenting Opinion stated the issue involved here
as follows:
A corporation “transacts business” in a district
for purposes of section 12 of the Clayton Aet (15
U.S.C. §22) only if in the “ordinary and usual sense”
it transacts business of a “substantial character”
Eastman Kodak Co. of New York vy Southern Photo
Materials Co., 273 U.S. 359, 373, 47 S.Ct. 400, 403,
a 12
71 L.Ed. 684 (1927); United States v. Scophony
Corp., 333 U.S. 795, 807, 68 S.Ct. 855, 861, 92 L.Ed.
1091 (1948) (“The practical everyday business or
commercial concept of doing or carrying on business
‘of any substantial character’ [is] the test of
venue’’); Bartholomew vy. Virginia Chirvupractic
Ass’n., 612 F.2d 812, 815 (4th Cir. 1979); Sherman
College of Straight Chiropractic vy. American Chiro-
practic Ass’n., 5384 F. Supp. 488, 440-41 (N.D. Ga.
1982); Health Care Equalization Committee of the
Iowa Chiropractic Sociey v. Iowa Medical Society,
501 F. Supp. 970, 980 (S.D. Towa 1981); Athletes
Foot of Delaware, Inc. vy. Ralph Iabonati Co., Ine.,
445 F.Supp. 35, 43 (D.Del. 1977); Bogus v. American
Speech & Hearing Ass’n., 389 F. Supp. 327, 328-29
(E.D. Pa. 1975), rev’d on other grounds, 582 F.2d
277 (3d Cir. 1978); Friends of Animals, Ine. v.
American Veterinary Medical Ass’n., 310 F. Supp.
620, 622 (S.D.N.Y. 1970); Philadelphia Housing
Authority vy. American Radiator and Standard Sani-
tary Corp., 291 F. Supp. 252, 256 (.D. Pa. 1968).
This “transacts business” standard was intended by
Congress to be broader than the “may he found”
standard, Eastman Kodak Co., supra, 273 U.S. at
372-73, 47 S.Ct. at 402-403; United States v. National
City Lines, Inc., 334 U.S. 573, 579, 68 S.Ct. 1169,
1172, 92 L.Ed. 1584 (1948), but certainly more than
a few isolated and peripheral contacts with the par-
ticular judicial district must be present to constitute
business of a substantial character. Golf City, Ine.
v. Wilson Sporting Goods Co., Inc., 555 F.2d 426, 488
(5th Cir. 1977); Stern Fish Co. v. Century Seafoods,
Inc., 254 IF. Supp. 151, 153 (F.D. Pa. 1966). (Dissent-
ing Opinion, App. 53a-54a (emphasis added)).
In Bartholomew v. Virginia Chiropractors Ass’n, Inc.,
612 F.2d 812, 815-816 (4th Cir. 1979), cert. denied, 446
U.S. 938 (1980), the Fourth Circuit Court of Appeals
cn aed
squarely held that venue did not lie as against defendant
American Chiropractic Association (“ACA”), of Des
Moines, Iowa, in the Western District of Virginia. In
making its decision, the Court relied upon the following
facts:
(1) Only 53 of ACA’s 8,875 members lived in
Virginia;
(2) ACA’s sole office was in Towa but that it trained
Virginia members in Des Moines, Iowa to work
on Virginia peer review panels;
(3) No directors or employees of ACA resided in
Virginia; and
(4) The only sales made in Virginia by ACA were
of pamphlets, journals and other educational and
public relations materials, but that ACA did
solicit advertising time on Virginia television
stations.
In the case at bar, the following facts are uncontested:
(1) Only 22 of ADA’s approximately 130,000 mem-
bers reside in the Virgin Islands (see Affidavit
of Lois Miller, Cir. App. 20);
(2) ADA has no office in the Virgin Islands (see
Affidavit of Thomas H. Boerschinger, Cir. App.
17);
(3) The ADA trustee who represents the Virgin
Islands resides in Arlington, Virginia, not the
Virgin Islands, and no ADA directors or em-
ployees reside in the Virgin Islands (Affidavit
of Lois Miller, Cir. App. 20); and
(4) No advertising from ADA’s publications arises
from the Virgin Islands (Affidavit of Frank
Cordero, Cir. App. 21).
In Bartholomew, the Court found that ACA solicited
advertising time on Virginia television stations and that
ie tice
ACA actually trained, in Des Moines, Towa, the individ-
uals who returned to Virginia to comprise the Virginia
peer review panels of which plaintiff complained and,
nevertheless, rejected plaintiff’s choice of venue. In con
trast plaintiff here only alleges that he received a copy
of the “Journal of the American Dental Association’’ in
the Virgin Islands that informed him of the ethical rules
on specialty announcements that he disagrees with, and
thus there is no ADA nexus sufficient to support venue
in the Virgin Islands.
As the Court aptly stated in Bartholomew in deserib-
ing ACA’s contacts with Virginia:
ACA’s solicitation of advertising time and its dis-
semination across Virginia boundaries of correspond-
ence, informational materials, public service educa-
tional programs by mail, radio, television and news-
paper (free of cost to ACA) was not transacting
business in the State within the meaning of Section
12 of the Clayton Act, 15 U.S.C. 622. Likewise the
transmittal of such items into Virginia by mass
media for subsequent telecasting, broadeasting or
publishing was not within the Act’s domain. [Cita-
tions omitted.| Otherwise, every State in the Union
into which such programs were aimed or thrust by
media or mail would provide an acceptable forum for
suit based on ‘‘transact{ing| business’’ therein. (612
F.2d at 816 (emphasis added)).
Since there is both a conflict among the Third and
Fourth Cireuit Courts of Appeals and an important rea-
son to delineate the scope of Section 22 as applied to
professional associations heeause of the decision of this
Court in Goldfarb vy. Virginia State Bar, 421 U.S. 773
(1975), this Court should grant this Petition to provide
the much needed guidance on such a significant question
of federal law.
a eee
Ill. THE THIRD CIRCUIT’S HOLDING THAT PER.
SONAL JURISDICTION MAY BE BASED ON
MERE PERSONAL SERVICE OVER DR. CAP.
PUCCIO, WHO HAD NO OTHER CONTINUING
FORUM CONTACTS, CONSTITUTES A _ VIO-
LATION OF CONSTITUTIONAL DUE PROCESS
WHICH SHOULD BE CORRECTED BY THIS
COURT.
Personal jurisdiction over a defendant may, of course,
be obtained by the trial court only if there exists ‘‘mini-
mum contacts’’ between the defendant and the forum.
See International Shoe Co. v. Washington, 326 U.S. 310
(1945); Shaffer v. Heitner, 433 U.S. 186 (1977); World-
Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) ;
Rush v. Savchuk, 444 U.S. 320 (1980). The mere fact that
in the instant matter Dr. Cappuccio was_ personally
served with process within the territorial limits of the
Virgin Islands fails to supply sufficient minimum con-
tacts which would satisfy modern notions of due process
adopted by this Court. The momentary presence of a
defendant within a particular jurisdiction and service of
process upon him, without more, is now an insufficient
basis for personal jurisdiction even when it involves the
Article I authority of the District Court in the Virgin
Islands and a claim based on Virgin Islands territorial
law.
In Pennoyer v. Neff, 95 U.S. 714 (1877), this Court
held that the presence of a defendant within the state
was a necessary prerequisite to a court’s assertion of
personal jurisdiction over him. Thus, personal jurisdic-
tion following Pennoyer was based upon the court's phys-
ical power over either persons or property. See Shaffer
v. Heitner, 433 U.S. at 199. As a result of the decision in
Pennoyer, it was generally thought that a defendant’s
am 16 a
presence within a state, no matter how transitory, cou-
pled with service on that defendant was sufficient to es-
tablish jurisdiction. See Ehrenzweig, The Transient Rule
of Personal Jurisdiction: The ‘‘Power’’ Myth and Forum
Conveniens, 65 Yale L.J. 289, 292 (1956).
The concepts of presence and physical power which had
been embraced by the Court in Pennoyer were substan-
tially discarded in /nternational Shoe Co. v. Washington,
326 U.S. 310 (1945). Rejecting the “power’’ concept, the
Court stated that due process requires that the defendant
have ‘‘certain minimum contacts with [the forum] such
that maintenance of the suit does not offend ‘traditional
notions of fair play and substantial justice.’’’ 320 U.S.
at 316. The inquiry into personal jurisdiction no longer
focused on presence but on whether the defendant’s con-
tacts with the forwn make it ‘‘reasonable’’ to require
the defendant to defend the suit there. 326 U.S. at 317.
In Shaffer v. Heitner, 433 U.S. 186 (1977), the Su-
preme Court overruled Pennoyer to the extent that it had
held that mere presence within the territorial confines of
the forum state was sufficient to obtain jurisdiction over
the defendant. Rather the Supreme Court held that ‘‘all
assertions of state-court jurisdiction must be evaluated
according to the standards set forth in /nternational Shoe
and its progeny.’’ 433 U.S. at 212. Thus, this Court ex-
pressly held that the assertion of personal jurisdiction
was to be subject in all cases to the “minimum contacts’’
test, stating that ‘‘/ijt is clear, therefore, that the law of
state-court jurisdiction no longer stands securely on the
foundation established in Pennoyer.’’ 433 U.S. at 206.
This Court has recently reaffirmed “minimum contacts’’
as the touchstone of persena! jurisdiction, pursuant to
ain AO en
which the relationship among the defendant, the forum
and the litigation must be considered. See World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. at 291. More-
over, the Court has reaffirmed Shaffer's mandate that
assertion of personal jurisdiction in all cases must be
evaluated according to the standards of International
Shoe. See Rush v. Savchuk, 444 U.S. at 327.
It could not be plainer that one found and served in
the forum must be judged by the ‘‘minimum contacts’
test. That is the lesson of Shaffer, World-Wide Volks-
wagen and Rush vy. Savchuk. If “minimum contacts” are
not present, due process prohibits the exercise of per-
sonal jurisdiction by the forum. Mere personal service
while physically present in the forum does not alone
provide the efficient minimum contacts, even though
presence may bear upon whether sufficient jurisdictional
contacts exist. See Shaffer vy. Ieitner, 443 U.S. at 207.
In light of the decision by this Court in Shaffer and
its reaffirmation, in World-Wide Volkswagen Corp. v.
Woodson and Rush y. Savchuk, of the principles enuncia-
ted in /nternational Shoe as the sole test of whether per-
sonal jurisdiction comports with due process, it is clear
that the ‘‘transient rule’? adopted by the Third Circuit
in this matter cannot stand. Accordingly, this Court
should grant this Petition in order to ensure that the
‘‘minimum contacts’’ test is properly applied by the in-
ferior federal courts, and to lay to rest the vestige of
the “power’’ concept of personal jurisdiction.
=
CONCLUSION
This Court in Goldfarb established the principle that
professional associations in certain circumstances may be
liable under the antitrust laws. Since that decision, nu-
merous professional associations have been sued for al-
leged violations of the antitrust laws, thus making it im-
portant that this Court delineate the scope of ‘‘transact-
ing business’? for purposes of venue pursuant to 15
U.S.C. $22.
The majority opinion of the Third Cireuit has held the
ADA subject to venue in a jurisdiction many miles from
Chicago, Illinois contrary to the protection afforded to
defendants by this Court in Leroy, as well as contrary to
established federal case law on the implementation of
venue objections.
Petitioners respectfully request that this Court take
this case in order to define the scope of venue and the re-
spective burdens of proof once venue has been timely
raised. In addition, petitioners request that the Court also
—
take this case in order to determine the question of per-
sonal jurisdiction involving Dr. Cappuceio.,
Respectfully submitted,
Peren M, SriKAs
200 Kast Randolph Drive
Suite 7300
Chicago, Hlinois GO6O1
(312) 861-1400
Counsel of Record
Of Counsel
Cuay H. Pairs
Joun N. ScHounick
Peterson, Ross, Scutorns & Semen
200 East Randolph Drive
Suite 7300
Chicago, Hlinois GO601
(312) 861-1400
— |
APPENDIX
In The
DISTRICT COURT OF THE VIRGIN ISLANDS
Division of St. Thomas and St. John
DONALD R. MYERS,
Plaintiff,
vs.
AMERICAN DENTAL ASSOCIATION, ET. AL.,
Defendants.
Civil No. 68-80
MEMORANDUM AND ORDER
CHRISTIAN, Chief Judge
This antitrust action is before the Court on a plethora
of motions raised by the American Dental Association
(ADA), the Virgin Islands Dental Association (VIDA)
and the individually named defendants. The ADA and
VIDA assert that venue does not lie in the Virgin Islands
but if we find that it does lie here then this forum is
inconvenient to the majority of the witnesses. See Fed.
R. Civ. P. 12(b)(3); 28 U.S.C. $1404(a) (1976). Doctors
Pomerantz and Kirshner contend that plaintiff failed to
state a claim against them upon which relief inay be
granted. Fed. R. Civ. P. 12(¢); see Fed. R. Civ. P. 12(b)
(6). In addition the ADA moves to dismiss the claims
against Doctors Kerr, Cappucio and Chavoor due to plain-
tiff’s failure to state a claim. Relief will be granted
and denied in part.
Plaintiff is a dentist and oral surgeon licensed to prac-
tice his profession in the Virgin Islands, Puerto Rico and
Massachusetts. He maintains that the defendants in order
=
to restrain trade agreed, combined and conspired to pro-
mulgate and enforce a code of ethics and professional
conduct for dentists who belong to the ADA and its con-
stituent societies. Dr. Myers avers that certain rules
of the code restrains his practice of dentistry and oral
surgery.
VENUE
The ADA and VIDA contend that venue cannot lie
in the Virgin Islands in the case at bar. They base their
assertions on 15 U.S.C. §22’ and 28 U.S.C. 1391(b).*
Under the general federal venue statute in non diversity
cases venue will lie where the cause of action arose or
where the defendants reside. In addition, the antitrust
acts expand venue to any district where a corporation
transacts business. The defendants maintain that Dr.
Myers failed to meet any of the venue standards and
therefore the case must be transferred or disinised. We
cannot agree.
The District Court of the Virgin Islands has more ex-
pansive jurisdiction than its stateside counterparts. As
a territorial court is |sic| is not limited to the constraints
placed on federal courts by Article LI Section 2 of the con-
stitution. In essence a federal territorial court wears two
- 'Seetion 22 provides:
Any suit, action, or proceeding under the antitrust
laws against a corporation may be brought not only
in the judicial district whereof it is an inhabitant,
but also in any district wherein it may be found or
transacts business; and all process in such cases may
be served in the district of which it is an inhabitant,
or wherever it may be found.
*Section 1391(b) provides:
(b) A civil action wherein jurisdiction is not founded
solely on diversity of citizenship may be brought only
in the judicial district where all defendants reside,
or in which the claim arose, except as otherwise pro-
vided by law.
nies
hats—one when it sits as a federal court and another
when it hears local matters. In the case sub jidice we
are wearing both hats simultaneously.
Certainly plaintiff’s canse of action based on the local
antimonopolies law, 11 V.LC. 41501 et. seq. is properly
before this Court. In Godfrey v. International Moving
Consultants, 1980 STT Supp. 498 (D.V.I. 1980) we held
that the federal venue provisions do not apply to the
District Court of the Virgin Islands when it is deciding
local matters. We cannot as readily circumvent the venue
provisions however, when the court is exercising federal
jurisdiction.’
Because the ADA and some of the individual defen-
dants do not reside here, venue will only lie in this
Court if the cause of action arose in the Virgin Islands.
Defendants rely on the “weight of the contacts test’’ to
support their contention that the action arose outside
the territory. That test provides that ‘‘if some overt
act pursuant to the conspiratorial meetings took place
in a district and it was a significant and substantial
element of the offense, then venue would lie in the dis-
trict.’’ Philadelphia Housing Authority v. American Ra-
diator and Standard Sanitary Corp., 291 F. Supp. 252,
260-61 (I.D.Pa. 1968); see Friends of Animals, Ine, v.
American Veterinary Med. Ass’n., 310 F. Supp. 620 (S.D.
N.Y. 1970). The core around which the threads of plain-
tiff’s complaint winds is the ADA’s adoption of the code
of ethics which restricted Dr. Myers’ practice. That code
was formulated and adopted by the ADA in Illinois. Once
the ADA embraced the eode VIDA’s charter required
it to do likewise. Thus defendants make a strong show-
ing that no overt act occurred in this jurisdiction.
*For an interesting discussion concerning venue and
article I courts see Graham v. Brotherhood of Firemen,
338 U.S. 232 (1949). (The District Court of the District
of Columbia).
——
Plaintiff’s choice of venue however is proper. Again
it is justified in part by the special status of the District
Court of the Virgin Islands. Dr. Myers’ federal cause of
action is based on the Sherman Antitrust Act, 15 U.S.C.
§1 et. seq. Because in most circumstances sections 1 and
2 of the Act do not apply in the Territories of the United
States, plaintiff must specifically rely on 15 U.S.C. §3.*
Section 3 provides that restraints of trade affecting the
Territories of the United States are illegal. The ADA’s
promulgation of the code of ethies in Illinois and VIDA’s
compulsory adoption ot if [sic] affected Dr. Myers’ prac-
tice in St. Thomas. Thus, even though many of the
overt acts of the alleged conspiracy occurred in Illinois
the injurious effects could be found in the Virgin Islands.
Furthermore, civil antitrust actions arise where the
damages occur. The injury that flows from an illegal con-
spiracy sounds in tort. Thus the antitrust claim can be
tried where the injury (i.e. the business damage) oceurs.
Albert Levine Assoc, y. Bertoni & Cotti, S.p.A., 314 F.
Supp. 169, 171 (S.D.N.Y. 1970),
*$3. Trusts in Territories or District of Columbia
illegal; combination a felony.
Every contract, combination in form of trust or other-
wise, or conspiracy, in restraint of trade or commerce
in any Territory of the United States or of the District
of abana, or in restraint of trade or commerce hetween
any such Territory and another, or between any such
Territory or Territories and any State or States or the
District of Columbia, or with foreign nations, or between
the District of Columbia and any State or States or
foreign nations, is declared illegal. Every person who
shall make any such contract or engage in any such com-
bination or conspiracy, shall be deemed guilty of a felony,
and, on conviction thereof, shall be punished by fine not
exceeding one million dollars if a corporation, or if any
other person, one hundred thousand dollars or by im-
prisonment not exceeding three years, or by both said
punishments, in the diseretion of the court.
—. eo
In summary, venue properly lies in this forum. Firstly,
plaintiff’s claim based upon local law invokes our article
T jurisdiction. Secondly, Dr. Myers brought snit under
a federal statute aimed at preventing illegal combina-
tions in restraint of trade in the territories. The restraint
of trade caused injury in the Virgin Islands and there-
fore the cause of action arose here, Defendants’ motions
hased on improper venue will be denied.
Defendants also assert that the Virgin Islands is an
inconvienent [sic] forum to try this ease. See 28 U.S.C,
§1404(2). Based on the affidavits proffered by plaintiff it
is clear that any forum would be inconvenient to some of
the witnesses. We foresee no undue hardship or injustice
to the parties by requiring them to try this action before
us. Accordingly, defendants’ motion based on forum non
conveniens will be denied,
MOTION TO DISMISS
The ADA, Dr. Pomeranz and Dr. Michael Kirshner,
move for judement on the pleadings asserting that there
is no cause of action against the individually named
defendants. See Fed. R. Civ. P. 12(c). Because the par-
ties proffered affidavits in support of their position the
Court will treat the motion as one for summary judg-
ment. Sve Fed. R. Civ. PL 56.
When considering a summary judgment motion the
Court must resolve all inferences and factual disputes
against the moving party unless the motion is supported
by affidavits or other evidence that lead to only one
conclusion, Chirinas de Alvarez vy. Creole Petroleum
Corp., 613 F. 2d 1240 (3d Cir. 1980). Indeed once the
moving party produces evidence that no material ques-
tions of fact exist then the adverse party must also
produce evidence to support his claim and may not rest
on the pleadings alone, Poponne yv. Nearn, 1980 STT
Supp. 89 (D.V.1. 1980). Plaintiff submitted two affidavits
in support of his claims. In those affidavits he failed to
show that Doctors Pomeranz, Kirshner, Kerr, and Cha-
~— oo
voor violated the antitrust acts in their individual capa-
city. As to these parties summary judgment will be
granted. Dr. Myers did implicate Dr. Capuecio in an
alleged conspiracy and therefore as a matter of law the
Court cannot dismiss the claims against him.
ORDER
The premises considered and the Court being duly
advised
IT IS ORDERED that the motion of defendants to
dismiss the action for improper venue be, and the same
is hereby, DENIED;
IT IS FURTHER ORDERED that the motion of de-
fendants to transfer the action due to forum non con-
veniens he, and the same is hereby, DENTED;
TT IS FURTHER ORDERED that the motion of Doe-
tors Pomeranz and Kirshner to he dismissed from the
action he, and the same is hereby, GRANTED;
IT TS FURTHER ORDERED that the motion of the
American Dental Association to dismiss Doctors Kerr
and Chavoor from the action be, and the same is hereby,
GRANTED;
IT TS FURTHER ORDERED that the motion of
American Dental Association to dismiss Doctor Capuecio
from this case be, and the same is hereby, DENIED.
Dated: March 24, 1981
ENTER:
/s/ Almerie L, Christian
Almerie LL. Christian
Chief Judge
ATTEST:
/s/ Frank Blackinan
Frank Blackman
Clerk of the Court
—
UNITED STATES COURT OF APPEALS
For The Third Cireuit
No. 81-2573
DONALD Ro MYERS
vs,
AMERICAN DENTAL ASSOCIATION, ET AL,
OPINION OF THE COURT
ROSENN, Circuit Judge.
This interlocutory appeal poses the question whether
a dentist practicing in the Virgin Islands may properly
bring suit in that jurisdiction alleging antitrust viola-
tions under the Sherman Act, 15 U.S.C. § 1 et seq., and
the Virvin Islands Anti-Monopoly Law, 11 V.LC, § 1501
et seq., against the American Dental Association (ADA)
and certain nonresident individual defendants. The plain-
tiff, Dr. Donald R. Myers, challenges a rule promulgated
hy the ADA and subsequently implemented by the Virgin
Islands Dental Association (VIDA) whieh requires a
dentist who announces an area of specialization to limit
his practice to that area, Defendants moved to dismiss
the action on several grounds, including lack of per-
sonal jurisdiction over the individual defendants and im-
proper venue as to all of the defendants. The district
court granted the motion to dismiss as to several of the
individual defendants but denied the motion as to ADA
and Dr. Joseph P. Cappueecio, a past president of the
ADA. The court certified for appeal under 28 U.S.C.
§ 1292(h) the question of personal jurisdiction and venue
and this court granted leave to appeal. We affirm the
district court as to ADA but reverse in part as to Dr.
Cappuceio.
.
ADA, organized as an Illinois not-for-profit corpora-
tion, is a professional association of dentists. It has its
principal place of business in Chicago and an office in
—
Washington, D.C. ADA has no offices or employees in
the Virgin Islands.
VIDA is a constituent society of the ADA. Although
the record is sparse’ as to the precise nature of the
relationship between ADA and VIDA, and as to the
activities engaged in by the two organizations, several
points emerge. Defendants represent that VIDA is large-
ly autonomous from its parent organization. Nonethe-
less, certain bonds link the two organizations. Under
ADA’s by-laws. members of a constituent society such
as VIDA must also be dues paying members of ADA.
By virtue of that relationship, VIDA was required to
adopt the Principles of Ethics and Code of Professional
Conduct (Code) promulgated by ADA and was _ pro-
hibited from adopting any local rules inconsistent with
the Code.
At the core of this case is dissatisfaction with one of
the Code’s provisions. Plaintiff, a dentist licensed in
the Virgin Islands, Puerto Rico, and Massachusetts, ob-
jects to a provision of the Code which states:
A dentist who chooses to announce specialization .. .
shall limit the practice exclusively to the announced
special area(s) of dental practice ... .
Complaining that practitioners in areas with small pop-
ulations cannot develop an adequate practice if limited
solely to their area of specialization, plaintiff seeks to
hold himself out both as a general dentist and as an
oral surgeon. He commenced the instant lawsuit in fed-
eral district court alleging violations of federal and
Virgin Islands antitrust law and seeking injunctive re-
lief, declaratory relief, and damages. Service was aceom-
plished on the individual defendants while they were
attending the annual meeting of VIDA in the Virgin
*Defendants have moved to strike certain portions of
plaintiff’s brief on the ground that it raises certain
matters not of record. By separate order we grant de.
fendants’ motion.
— a
Islands. Dr. Cappuccio and the other individual defen-
dants were served under Fed.R.Civ.P. 4(d)(1) by the
United States Marshal serving summons and complaint
on each of them in the Virgin Islands. Service on ADA
was effectuated by similarly serving Dr. Kerr in his
capacity as the president of ADA under Fed.R.Civ.P.
4(d)(3). Defendants moved to dismiss, primarily on
the ground of improper venue. The district court granted
the motion to dismiss, which it treated as a motion
for summary judgment, against the individual defendants
Pomeranz, Kirshner, Kerr, and Chavoor; the court denied
the motion to dismiss with respect to ADA and _ in-
dividual defendant Cappuccio.
II.
A.
On appeal, both Dr. Cappuccio and ADA challenge
the district court’s exercise of personal jurisdiction over
them. An initial question posed only by ADA’s jurisdic-
tional challenge concerns whether ADA timely raised
its defense of lack of personal jurisdiction before the dis-
trict court. Our review of the pleadings before the dis-
trict court Jeads us to conclude that ADA has waived
its right to assert the defense.
In response to the complaint in this action defendants
filed a pleading entitled “Motion to Dismiss for Im-
proper Venue.” The motion requests that the action be
dismissed against the individual defendants on three
grounds: improper venue, lack of (personal) jurisdic-
tion, and failure to state an actionable claim. As to ADA,
however, the motion requests dismissal only on the
ground of improper venue. This division of defenses
is mirrored in defendants’ memorandum of law’ sup-
porting their motion to dismiss.
In their next pleading to the district court, “Reply
Memorandum in Support of Defendant American Dental
Association’s Motion to Dismiss for Improper Venue,”
defendants again fail to raise the question of lack of
-- }0a —
personal jurisdiction over ADA. And in their subse-
quent pleading, “Motion of Defendant American Dental
Association to Strike Plaintiff's Opposition to Defen-
dant’s Motion and Aeeompanying Affidavits, or, in the
Alternative, Response in Support of Defendant Ameriean
Dental Association’s Motion to Dismiss for Improper
Venue,” their last pleading prior to the district court’s
decision on their motion, defendants make only 2 pass-
ing reference to the issne of personal jurisdiction, a
reference which appears to concede jurisdiction with
respect to plaintiff’s federal antitrust claims.’
It is only in their motion to have the district court’s
decision certified for interlocutory appeal, “Motion of
Defendants American Dental Association and Dr. Cap-
puceio to Amend Order Denying Motions to Dismiss in
Order to Certify for Appeal Pursnant to 28 U.S.C, © 1292
(b),” that defendants for the first time raise as a de-
fense lack of personal jurisdiction over ADA? Plain-
tiffs did not object, however, to this untimely injection
of the jurisdictional defense. The district court there-
after certified, and we granted leave to appeal, the
questions of venue and personal jurisdiction. At oral
argument we requested the parties to file supplemental
briefs addressing whether ADA waived its right to
raise the defense of lack of personal jurisdiction.
*In a section of the Memorandum stated “Venue Is
Not Proper Under Local Law” defendants observe,
“Plaintiff cannot even assert jurisdiction absent his fed-
eral claim.”
* Defendants attempted to anticipate objections to their
tardiness in raising the jurisdictional question by point-
ing out in their motion that “the question of venue is
interwoven with that of personal jurisdiction. . . . It
should be emphasized that the motions of ADA and
Dr. Cappuecio are for dismissal for improper venue
and lack of jurisdiction.” We reject as bootstrap their
representation that the motions pertaining to venue ex-
pressly or implicitly raised the issue of jurisdiction.
—~-lla
The starting point of our analysis is Fed.R.Civ.P.
12(g) & (h), quoted in the margin.t The aim of Rule 12
“is to afford an easy method for the presentation of
defenses but at the same time prevent their use for
purposes of delay.” 2A J. Lueas & J. Moore, Moore's
Federal Practice § 12.02. at 2225 (2d ed. 1982). To ef-
fectuate that goal, Rule 12(¢) requires a party who
raises a defense by motion prior to answer to raise
all such possible defenses in a single motion. They can-
not be raised in a second, pre-answer motion. Rule 12(h)
imposes a higher sanction with respect to the failure
to raise the specifie defenses of lack of personal juris-
diction, improper venue, insufficiency of process, and in-
sufficiency of service of process. If a party files a pre-
answer motion but fails to raise one of the defenses
enumerated above, the party waives the omitted de-
fense and cannot subsequently raise it in his answer
or otherwise. 2A J. Lucas & J. Moore, supra, § 12.23.
*Fed.R.Civ.P. 12(¢) & (h) provides in pertinent part:
(x) Consolidation of Defenses in Motion. A
marty who makes a motion under this rule may
join with it any other motions herein provided for
and then available to him. If a party makes a mo-
tion under this rule but omits therefrom any de-
fense or objection then available to him which this
rule permits to be raised by motion, he shall not
thereafter make’a motion based on the defense or
objection so omitted, except a motion as provided
in subdivision (h)(2) hereof on any of the grounds
there stated.
(h) Waiver or Preservation of Certain Defenses.
(1) A defense of lack of jurisdiction over the
person, improper venue, insufficiency of process, or
insufficiency of service of process is waived (A) if
omitted from a motion in the cireumstanees de-
seribed in subdivision (g), or (B) if it is neither
made by motion under this rule nor included in a
responsive pleading or an amendment thereof per-
mitted by Rule 15(a) to be made as a matter o!
course.
— 12a —
Defendants maintain that their second pleading, Mo-
tion to Strike Plaintiff’s Opposition to Defendants’ Mo-
tion and Accompanying Affidavits, or, In the Alternative,
Response in Support of American Dental Association’s
Motion to Dismiss for Improper Venue, “expressly
broadened [their] earlier motion to dismiss to include
lack of personal jurisdiction over ADA.” They argue
that the second pleading should be treated as amending
the initial motion to dismiss and conclude that Rule
12(g) was therefore not violated. Defendants point to
several cases which they represent as permitting such
amendments. Neifeld v. Steinberg, 488 F.2d 428 (3d
Cir. 1971); Sunrise Toyota, Ltd. vy. Toyota Motor Co.,
55 FLR.D. 519 (S.D.N.Y. 1972); Roller Derby Associates
v. Seltzer, 54 F.R.D. 556 (N.D.DL. 1972); Marlin vy. Lain
Ou & Gas Co., 36 F.Supp. 252 (1.D.11. 1941); iutual
Life Insurance Co. v. Egeline, 30 F.Supp. 738 (N.D.Cal.
1939).
Defendants’ contention regarding the state of the plead-
ings is erroneous. As noted above, defendants’ second
pleading docs not raise the question of lack of personal
jurisdiction over ADA with respect to plaintiff's federal
antitrust claims.’ Nor are the cases cited by defendants
helpful. All of them involved situations where a pre-an-
swer motion was amended or supplemented prior to ar-
gument before the district court. In the present case, in
contrast, the defense of personal jurisdiction was not
raised before the district court until a/fer arguinent and
after the court rendered its decision on the motion.
*In their supplemental brief, filed at this court’s re-
quest, defendants cite to the district court’s opinion ap-
pearing at 68 and 76-78 of the appendix as raising
the defense of lack of personal jurisdiction over ADA.
Those citations are unavailing. The first involves a plain
reference not to ADA but to the individual defendants;
the second incorporates a section in which defendants
concede that personal jurisdiction exists with respect to
plaintiff’s federal antitrust claim. See supra note 2.
— 13a —
Defendants also note that plaintiff joined the issue of
personal jurisdiction over ADA and did not raise the is-
sue of their waiver of the defense before the district
court. Defendants thereby argue, in effect, that plaintiff
waived his riznt to raise the issue of defendants’ waiver.
A similar situation was addressed in Pila v. G.R. Leas-
ing & Rental Corp., 551 F.2d 941 (1st Cir. 1977). In Pia,
the defendant failed to raise before the district court the
defense of insufficiency of service of process, which, like
the defense of lack of personal jurisdiction, is controlled
by the stringent waiver provision of Rule 12(h). On ap-
peal to the First Cireuit, the court concluded that under
Rule 12(¢) & (h) the failure to raise the defense below
was ‘‘a fundamental and incurable matter,’’ 551 F.2d at
943, and rejected the defendant’s argument that the ob-
jection to the waiver was itself waived because not raised
helow. Accord, Lockett v. General Finance Loan Co., 623
F.2d 1128, 1132 n. 5 (Sth Cir. 1980).
We believe that the course adopted by Judge Campbell
in Pila for defenses that are subject to 12(h) waiver is
the proper one. The federal rules single out four defenses
which must be raised by the defendant’s initial responsive
pleading in order to be preserved. Such a rule reflects a
strong policy against tardily raising defenses that go not
to the merits of the case but to the legal adequacy of the
initial steps taken by the plaintiff in his litigation, namely
his service of process on the defendant and his choice of
forum for the action. Unless the defendant objects on
those grounds at the outset, he forfeits his right later to
raise them as a defense. The rule benefits the court as
well as the opposing party by requiring a litigant to raise
certain technical objections. the basis of which should be
apparent from the ontset of the action, before the litiga-
tion has moved forward. Unlike the situation where a
court on its own raises a defense which Rule 12 requires
a party to raise in its initial responsive pleading, see
Zeison v. Thomforde, 412 F.2d 56 (3d Cir. 1969), it may
sometimes he appropriate for an appellate court to en-
force sua sponte the waiver provisions of Rule 12.
— l4a—
In the case at bar, ADA’s motion to dismiss proceeded
before the district court solely on the basis that venue
was improper. The defense of lack of personal jurisdic-
tion over ADA was raised only after the district court
had ruled on defendant’s motion to dismiss. Accordingly,
we hold that under Rule 12(g) & (h), notwithstanding
plaintiff’s failure to object in the district court, ADA by
its failure timely to include in its motion to dismiss an
objection to the court’s exercise of personal jurisdiction
over it has waived its right to challenge the district
court’s exercise of personal jurisdiction.
B.
Defendants did timely raise the defense of lack of per-
sonal jurisdiction over the individual defendants, includ-
ing Dr. Cappuccio, the sole individual defendant not dis-
missed from the case by the district court. Before this
court defendants renew their claim that personal jurisdie-
tion does not exist over Dr. Cappuccio. Reduced to its
essence, defendant’s argument is that the sole basis for
personal jurisdiction over Dr. Cappuccio was the service
of process on him during his transitory presence within
the forum, a basis which defendants argue is inadequate
under current Supreme Court decisions, Rush v. Savchuk,
444 U.S. 320, 100 S.Ct. 571, 62 L.1d.2d 516 (1980): World-
Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100
S.Ct. 580, 62 L.1d.2d 490 (1980): Shaffer v. Meitner, 433
U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977); and Inter-
national Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct.
154, 90 L.Ed. 95 (1945). We find defendants’ argument un-
persuasive.
Regardless of whether, as defendants maintain, the
“power” theory of jurisdiction, which recognizes a state’s
power to affect the legal relations of property or persons
within its borders, is so discredited that the mere tran-
sient physical presence of a defendant within a jurisdie-
tion will not support a court’s exercise of personal juris-
diction over him. we have no diffieulty in coneluding that
Tha -
on the facts of this case the assertion of personal juris-
diction over Dro Cappuceio is fully consistent with the
“minimum contacts” standard as it has been defined by
the Supreme Court.” Dr. Cappuceio’s presence in- the
Virgin Islands at the time of service of process was not a
mere fortuity, Rather, according to plaintiff's second af-
fidavit, Dr. Cappueeio had for some eight years been an
ADA trustee for the Virgin Islands and as sueh regularly
participated in the annual ieetings of VIDA, At. these
meetings Dro Cappuccio endeavored to carry out ADA
poliey with VIDA. Furthermore, it is alleged that Dr,
Cappuccio came to the Virgin Islands to urge adoption
of the Code of Ethies which is at the center of the dispute
underlying this action, Having purposefully entered the
district to advance the interests of the ADA in the Vir-
gin Islands, Dr. Cappuecio rendered himself subject) to
the jurisdiction of the Virgin Islands’ courts at least with
respect to disputes related to his presence there, The
instant litigation is one such lawsuit. We therefore hold
that the district court inay assert personal jurisdiction
over Dr. Cappuceso, who, properly served, had intentional-
lv entered within its territory for the purpose of engag-
ing in an activity upon which the lawsuit is predicated,
HT,
Defendants also object that venue does not lie in
the District of the Virgin Islands. A private antitrust
plaintiff bringing federal antitrust claims has at his dis-
posal two statutory sources of venue, The general venus
statute, 28 U.S.C. § 1291(b), permits an action not based
on diversity of citizenship to be brought either in the
“We therefore need not decide whether International
Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90
L.Ed. 95 (1945), and its progeny would ever bar a state’s
exercise of jurisdiction over a transient defendant where
jurisdiction has been initiated by proper service of process
upon him in its territory and a reasonable opportunity
to be heard.
— 16a—
judicial district where all defendants reside, or in the
district in which the claim arose. In addition, Section 12
of the Clayton Act, 15 U.S.C. § 22 provides that an ae-
tion against a corporation under the antitrust laws may
be brought ‘‘not only in the judicial district whereof it
is an inhabitant, but also in any district wherein it may
be found or transacts business.’’ We proceed to evaluate
plaintiff’s choice of venue with respect to his federal
claim under these two alternatives. We also evaluate
plaintiff’s choice of venue with respect to his Virgin
Islands anti-monopoly claim under the relevant insular
statute.
A.
The district court held that venue before it was ap-
propriate under 28 U.S.C. § 1391(b), concluding that
‘(t]he restraint of trade caused injury in the Virgin
Tslands and therefore the cause of action arose here.’’
The court also held that with respect to plaintiff’s claims
under Virgin Islands law, venue was appropriate un-
der the court’s Article I jurisdiction. Defendants argue
that laying venue in the Virgin Islands for p'aintiff’s
federal antitrust claim is precluded by the Supreme
Court’s decision in Leroy v. Great Western United Corp.,
443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979). We
agree that venue under section 1391(b) is barred.
The Court in Leroy examined the purposes of section
1391(b) and concluded that “[i]n most instances, the pur-
pose of statutorily specified venue is to protect the de-
fendant against the risk that a plaintiff wil! select an un-
fair or inconvenient place of trial.’’ Jd. at 183-84, 99 S.Ct.
at 2716-2717 (footnote omitted). It therefore rejected the
notion that Congress intended in providing for venue
‘fwhere the claim arose’’ to lay venue at the place of
plaintiff’s residence. Rather, as the Court noted, the
provision for venue where a claim arises was added to
close a “venue gap’’ that had sometimes existed when
a plaintiff sought to sue multiple defendants who did not
reside in the same district. At most, the court concluded,
17a
the broadest interpretation of the language of $1391
(b) that is even arguably acceptable is that in the
unusual case in which it is not clear that the claim
arose in only one specific district, a plaintiff may
choose between those two (or conceivably more) dis-
tricts that with approximately equal plausibility—in
terms of the availability of witnesses, the accessibili-
ty of other relevant evidence, and the convenience of
the defendant (but not of the plaintiff)—may be as-
signed as the locus of the claim.
Td. at 185, 99 S.Ct. at 2717 (footnote omitted). See also
Caribe Trailer Systems, Inc. vy, Puerto Rico Maritime
Shipping Authority, 475 F.Supp. 711, 719 (D.D.C.1979)
(“To hold that a cause of action necessarily arose in the
district in which the plaintiff was injured is a ‘simplistic
rationale to which antitrust actions are not suscept-
ible.’ ’’).
Tn the case at bar the district court erroneously con-
cluded that an antitrust claim, in essence a form of tort
alleging business injury, can be brought under section
1391(b) where the injury oceurs, ie. at the plaintiff’s
residence. Defendants’ affidavits establish that none of
its potential witnesses are located in the Virgin Tslands,
and that the deliberations that led up to adoption of the
Code did not take place there. Under Leroy, Chicago and
not the Virgin Islands is the proper situs for a venue
based on where the cause of action arose. We therefore
conclude that venue does not lie in the Virgin Islands by
virtue of 28 U.S.C. § 1391(b). Accordingly, becanse no
other statutory source of venue exists with respect to
the federal antitrust claims against Dr. Cappuecio, the
district court’s denial of defendants’ motion to dismiss
the complaint as to him for improper venue is reversed.
As to plaintiff’s Virgin Islands anti-monopoly claims,
however, his choice of venue with respect to his claim
against Dr. Cappuccio is sustainable. 4 V.I.C. § 78(a)
provides in relevant part ‘‘All civil actions shall be ini-
tiated in the judicial division where the defendant resides
— 18a —
or where the cause of action arose or where the defen-
dant may be served with process.’’ Thus, the Virgin Is-
lands general venue statute offers the plaintiff the option
of laying venue wherever the plaintiff is able to assert
jurisdiction with respect to his Virgin Islands anti-mo-
nopoly claim. We conclude that exercising its Article I
jurisdiction as a local court, the district court can hear
plaintiff’s local law claim against Dr. Cappuccio.
B.
The second statutory source of venue for federal anti-
trust actions is section 12 of the Clayton Act, 15 U.S.C.
§ 22. The district court, having found venue under sec-
tion 1391(b), did not discuss section 22 in its memoran-
dum opinion. Similarly, the parties on appeal did not
focus their attention on this section. In dissenting as to
this issue, Judge Garth believes it is improper for us
to decide whether section 22 provides an alternative basis
for venue in this case without remanding to the district
court for findings of fact. In this connection, he also as-
serts the burden of proof of venue is upon the plaintiff.
(1)
Preliminarily, we note that subject matter jurisdiction
is undisputed in this case, and we have concluded, see
supra p. 721, that the court has personal jurisdiction over
the American Dental Association. The venue issue, there-
fore, unlike the jurisdictional issue, is not whether the
court has authority to hear the case but simply where
the case may be tried. Because federal courts are courts
"In an effort to find some basis for imposing the bur-
den on the plaintiff to prove proper venue, the dissent
in this case atiempts to analogize venue with jurisdiction.
See conc. & diss. op. at 732. But the cases reiterate that
“{jjurisdiction and venue are not to be confused. The
former connotes the power to decide a case upon the
merits; the latter connotes locality—the place where the
suit should be heard.’’ Standard Stoker Co. vy. Lower, 46
F.2d 678, 683 (D.Md.1931). Stated in other terms, venue
age
of limited jurisdiction, a presumption arises that they are
without jurisdiction until the contrary affirmatively ap-
pears. TJ'anzymore v. Bethlehem Steel Corp., 457 F.2d
1320 (3d Cir. 1972); United States ex rel. Gittlemacker v.
Philadelphia County, 413 F.2d 84 (3d Cir. 1969), cert. de-
nied, 396 U.S. 1046, 90 S.Ct. 696, 24 L.Ed.2d 691 (1970).
By contrast, a motion to dismiss for improper venue is
not an attack on jurisdiction but only an affirmative dila-
tory defense. Because of the nature of the motion, ‘‘it
is not necessary [as contrasted with jurisdiction] for the
plaintiff to include allegations showing the venue to be
proper.’ Fed.R.Civ.P. Form 2, Advisory Committee note
3. It logically follows therefore that on a motion for dis-
missal for improper venue under Rule 12 the movant has
the burden of proving the affirmative defense asserted by
it. United Rubber, Cork, Linoleum & Plastic Workers v.
Lee Rubber & Tire Corp., 269 F.Supp. 708, 715 (D.N.J.
1967), aff’d, 394 F.2d 362 (3d Cir.), cert. denied, 393 U.S.
835, 89 $.Ct. 108, 21 L.Ed.2d 105 (1968).* In dissenting,
* (Continued)
concerns not the authority of the court to hear and ad-
judicate the case but relates to the convenience of the liti-
gants, Panhandle Eastern Pipe Line Co. v. Federal Power
Commission, 324 U.S. 635, 639, 65 S.Ct. 821, 823, 89 L.Ed.
1241 (1945), and to the proper place where the power to
adjudicate may be exercised. See United States ex rel.
Rudick vy. Laird, 412 F.2d 16, 20 (2d Cir.),cert. denied,
396 U.S. 918, 90 S.Ct. 244, 24 L.Ed.2d 197 (1969); Farm-
ers Elevator Mutual Insurance Co. v. Austad & Sons, Inc.,
343 F.2d 7, 11 (8thCir.1965). See generally C, Wright
Handbook of the Law of Federal Courts § 42, at 149 (2d
ed. 1970). As Judge Craven has noted, “The distinction
between jurisdiction and venue is of hornbook importance
and cannot be overemphasized.’’ Wheatley v. Phillips,
228 F.Supp. 439, 440 (W.D.N.C.1964). Any attempt,
therefore, to shift the burden of proof to the plaintiff
on this basis is without merit or authority.
* See also United States v. Orshek, 164 F.2d 741, 742
(8th Cir. 1947) ; United States v. Aetna Casualty & Surety
Co., 38 F.R.D. 418, 421 (N.D. Cal.1965) ; Goldberg v. Wharf
Constructors, 209 F.Supp. 499, 505 (N.D.Ala.1962).
— 20a —
Judge Garth asserts, however, that when a venue objec-
tion is raised by the defendant, the plaintiff has the bur-
den to establish proper venue. Although he cites cases
to support this view, these cases confuse jurisdiction with
venue or offer no reasons to support their position. Aro
Manufacturing Co. v. Automobile Body Research Corp.,
352 F.2d 400 (Ist Cir. 1965), cert. denied, 383 U.S. 947,
86 S.Ct. 1199, 16 L.Ed.2d 210 (1966), relied on in the dis-
sent, is a case involving territorial jurisdiction and not
venue.” Cases that hold the burden of establishing venue
is upon the plaintiff reach this result without distinguish-
ing between jurisdiction and venue.'’ We agree with Pro-
fessor Moore that this view is “unsound’’ and the defen-
* Likewise, Bartholomew vy. Virginia Chiropractic Ass'n,
612 F.2d 812 (4th Cir.1979), cert. denied, 446 U.S. 938,
100 S.Ct. 2158, 64 L.Ed.2d 791 (1980), cited by the dis-
sent, also relies, although indirectly, on Aro. Grappone,
Inc. v. Subaru of America, Inc., 403 F.Supp. 123 (D.N.
H.1975), directly relies on Aro, the jurisdiction case.
“There is no doubt that when a defendant’s motion to
dismiss raises a question concerning the court’s power
to entertain the action (i.e., jurisdiction), the burden of
proof with respect to that issue falls on the plaintiff.
See, e.g., McNutt v. General Motors Acceptance Corp.,
298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936)
(jurisdictional amount); Adams vy. American Bar Asso-
ciation, 400 F.Supp. 219, 222 (B.D.Pa.1975) (service of
process). But with those dilatory defenses that do not
concern the court’s authority to adjudicate, the defen-
dant bears the burden of proof. This is true with respect
to motions to dismiss for forum non conveniens, sce Aig-
ner v. Bell Helicopters, Inc., 86 F.R.D. 532, 548 (N.D.IIIL
1980); failure to join an indispensable party, see Meyer-
ding v. Villaume, 20 F.R.D. 151, 153 (D.Minn, 1957);
failure to exhaust remedies, see Dorn v. Meyers Park-
ing System, 395 F.Supp. 779, 786 (F.D.Pa.1975); and
failure to state a claim, see Canty v. City of Richmond,
Virginia, Police Department, 383 F.Supp. 1396, 1402 (E.D.
Va. 1974), aff’d, 526 F.2d 587 (4th Cir. 1975), cert. dented,
423 U.S. 1062, 96 S.Ct. 802, 46 L.Ed.2d 654 (1976).
— 2la —
dant should ordinarily bear the burden of showing im-
proper venue in connection with a motion to dismiss. See
1 J. Moore, Moore’s Federal Practice §0.140[1), at 1319-20
(2d ed.1982).""
The special antitrust venue statute, 15 U.S.C. 4 22, pro-
vides that in an action against a corporation under the
antitrust laws, venue will lie, inter alia, in any «district
where a corporation ‘‘transacts business’’ or “may be
found.’’** The motion to dismiss for improper venue was
" Judge Garth, citing to 15 C. Wright, A. Miller & E.
Cooper, Federal Practice and Procedure 4 3826 (1976),
urges that the “better view’’ is that ‘‘in venue, as in
jurisdiction, the plaintiff must bear the burden of proving
proper venue.’’ Cone. & Diss. op. at 733. The ‘better
view”’ referred to in Wright, Miller & Cooper, however,
is a quotation from a district court opinion, Ryan v.
Glenn, 52 F.R.D. 185, 192 (N.D.Miss.1971), and that opin-
ion, like other cases relied on by the dissent, offers no
reasons to support its view.
15 U.S.C. 4 22 provides in pertinent part: ‘‘Any suit,
action, or proceeding under the antitrust laws against a
corporation may be brought not only in the judicial dis-
trict whereof it is an inhabitant, but also in any district
wherein it may be found or transacts business... .”’
ADA is neither an inhabitant of, nor is found in, the
Virgin Islands. A corporation is an inhabitant of its state
of incorporation, in this case Illinois. Amateur-Wholesale
Elecs. v. R.L. Drake Co., 515 F.Supp. 580, 583 (S.D.Fla.
1981). And to be found in a district, a corporation must
by the carrying on of business by its officers or agents be
present there in a continuous and systematic way. Grap-
pone, Inc. v. Subaru of America, Ine., 403 F.Supp. 123,
128 (D.N.1H.1975). ADA’s activities in the Virgin Islands
do not rise to this level. To be “found’’ within the juris-
diction requires more contact than to transact business.
Stern Fish Co. v. Century Seafoods, Inc., 254 F.Supp.
151 (B.D.Pa.1966); Amateuwr-Wholesale Elecs. v. RU,
Drake Co., 515 F.Supp. 580 (S.D.Fla.1981). The ‘trans-
acts business’? term in the venue provision of the Clay-
i si be a
— pan
predicated on both this section and on section 1391(b).”
Judge Garth asserts that both in the district court and
on appeal the plaintiff resisted this challenge to venue
in the Virgin Islands on the basis of section 1391(b)
and that language of section 22 relating to being “found”
in the Virgin Islands but not on the basis that ADA
“transacts business” in the Virgin Islands. There is no
doubt, however, that all of section 22 was brought to
the attention of the district court. Defendant’s reply
memorandum, in support of its motion in the distriet
court to dismiss for improper venue, specifically noted
that “[tjhe primary statute governing venue in federal
antitrust matters” is 15 U.S.C. § 22. Defendant devoted
considerable attention in its written brief to the distriet
court to an analysis of the faets and law in) support
of its contention ‘‘that ADA does not transact business
in the Virgin Islands.” Although the distriet court con-
cluded erroneously that venue was proper under section
I391(b), and Myers naturally focused on vindicating the
district court’s view on appeal, we are not precluded
from affirming the order of the district court if it has
* (Continued)
ton Act has a much broader meaning than the “doing
business’’ language of the general venue statute. Sherman
College vy. Amerwan Chiropractors Ass’n, 534 F.Supp.
438, 440 (N.D.Ga.1982).
We note in passing that ADA, in its motion to dismiss,
did not object to service of process on the basis that it
violated 15 U.S.C. § 22 for failure to serve in Chicago
or wherever ADA ‘‘may be found.’’
‘In its memorandum opinion dismissing the ADA’s
venue motion, the district court stated: “The ADA and
VIDA contend that venue cannot lie in the Virgin Islands
in the case at bar. They base their assertions on 15
U.S.C. § 22 and 28 U.S.C. § 1391(b).” (Footnotes
omitted. )
— 23a
reached the right result, although for a wrong reason.”*
Because the burden is upon the movant (and not, as the
dissent repeatedly urges, upon the plaintiff) to show
that venue is improper under any permissible theory,
we must consider whether the district court’s decision
in plaintiff's favor may be affirmed on the ground that
the ADA transacted business in the Virgin Islands.
(2)
The Supreme Court first construed the phrase “trans-
acts business” of 15 U.S.C. 4 22 in Rastman Kodak Co.
v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct.
400, 71 Lied. GS4 (1927). As the Court noted, the purpose
of the statute was to expand the fora in which venue
would lie for antitrust actions by providing for venue
not only in those jurisdictions where the corporation’s
continuous presence would support a conclusion that it
was “found” there, but also in those districts where
“in fact, in the ordinary and usual sense, it ‘transacts
business’ therein of any substantial character.” Jd. at 373,
47 S.Ct. at 403. This construction, the Court observed
in United States vy. Scophony Corp. of America, 333
U.S. 795, 68 S.Ct. $55, 92 Lied. 1091 (1948), “gave the
**In the review of judicial proceedings the rule is
settled that if the decision below is correct, it must be
affirmed, although the lower court relied upon a wrong
ground or gave a wrong reason.” Helvering v. Gowran,
302 U.S. 238, 245, 58 S.Ct. 154, 157, 82 L.Ed. 224 (1937).
See also Bernitsky v. United States, 620 F.2d 948, 950
(3d Cir.) (“[1]t is well established that we are free to
affirm the judgment of the district court on any basis
which finds sufficient support in the record.’’), cert. denied,
449 U.S. 870, 101 S.Ct. 208, 66 L.Ed.2d 90 (1980); PAAC
v. Rizzo, 502 F.2d 306, 308 n. 1 (3d Cir. 1974), cert.
denied, 419 U.S. 1108, 95 S.Ct. 780, 42 L.Ed.2d 804 (1975).
—
words ‘transacts business’ a much broader meaning for
establishing venue than the concept of ‘carrying on busi-
ness’ denoted by ‘found’ under the preexisting statute
and decisions.’’ Jd. at 807, 68 S.Ct. at 861.
Eastman Kodak and Scophony were decided in the
context of suits against ongoing businesses organized for
profit. The instant litigation, however, involves a suit
against a not-for-profit professional membership organi-
zation. We must therefore decide under what cireum-
stances such an organization may be said to “transact
business” so as to render it subject to the venue provi-
sior of the Clayton Act. Professional associations are
commonly devoted to the advancement and enforcement
of standards of conduct and competence for their mem-
bers. Common sense suggests that such an organization
is transacting business when it engages in activities on
a significant scale which further the association’s pur-
poses and objectives. In particular, when a_ national
professional organization, such as the American Dental
Association, polices the qualifications of inembers resid-
ing in a judicial district, or sets standards which it
attempts to enforce that directly pertain to the dental
practice of its members and the treatinent of their pa-
tients, the organization’s activities should provide a basis
for venue in the district in which they oceur.
A number of courts have grappled with the appliea-
bility of the “transacts business’? component of 15
U.S.C. § 22 to various membership organizations. The
decisions have not been uniform in approach or result.
**Compare Levin v. Joint Comm. on Accreditation of
Hlosps., 354 F.2d 515 (D.C. Cir. 1965); Courtesy Chev-
rolet, Inc. v. Tennessee Walking Horse Ass’n, 344 F.2d
860 (9th Cir. 1965); Sherman College of Straight Chiro-
practic v. American Chiropractic Ass’n, 534 F.Supp. 438
— Ba—
Nonetheless, a review of the decisions reveals that a num-
ber of courts have found venue to he proper on the
basis of conduct by the organization intended to imple-
ment its professional objectives. For exainple, in Bogus
v. American Speech & Hearing Association, 389 F.Supp.
327 (2.D. Pa. 1975), rev'd on other grounds, 582 F.2d
277 (3d Cir. 1978), the court held that the defendant
association transacted business in the district by virtue
of its practice of accrediting its members for practice,
its evaluation of acadeim/‘e and clinical service programs,
and its holding of accreditation workshops.
The workshops, certification, and accreditation are
the means hy which defendant attempts to fulfill its
*® (Continued)
(N.D. Ga. 1982); Health Care Equalization Comm, v.
Iowa Medical Soc’y, 501 F.Supp. 970 (8.D. Lowa 1980) ;
Bartholomew vy. Virginia Chiropractors Ass’n, 451 F.
Supp. 624 (W.D. Va. 1978), rev’d, 612 F.2d 812 (4th
Cir. 1979), cert. denied, 446 U.S. 938, 100 S.Ct. 2158, 64
L.Ed.2d 791 (1980); Bogus v. American Speech & Hear-
ing Ass’n, 389 F.Supp. 327 (1.D. Pa. 1975), rev’d on
other grounds, 582 ¥.2d 277 (3d Cir. 1978) (membership
organizations held to be transacting business within dis-
trict sufficiently to support venue under 15 U.S.C. § 22),
with Bartholomew vy. Virgina Chiropractors Ass’n, 612
F.2d 812 (4th Cir. 1979), cert. denied, 446 U.S. 938, 100
S.Ct. 2158, 64 L.Ed.2d 791 (1980); ef. Golf City, Ine. v.
Wilson Sporting Goods Co., 555 ¥'.2d 426 (5th Cir. 1977) ;
Academy of Ambulatory Foot Surgery v. American
Podiatry Ass'n, 516 F.Supp. 378 (S.D.N.Y. 1981);
Friends of Animals, Inc. v. American Veterinary Medical
Ass’n, 310 F.Supp. 620 (S.D.N.Y. 1970); Wentling v.
Popular Science Publishing Co., 176 F.Supp. 652 (M.D.
Pa. 1959); Elizabeth Hospital, Inc. v. Richardson, 167
F.Supp. 155 (W.D. Ark. 1958) aff’d, 269 F.2d 167 (8th
Cir.), cert. denied, 361 U.S. 884, 80 S.Ct. 155, 4 I,.Ed.2d
120 (1959); Midwest Fur Producers Ass'n v. Mutation
Mink Breeders Ass'n, 102 F.Supp. 649 (D.Minn. 1951)
(membership organizations held not to be transacting
business under 15 U.S.C. § 22).
— 26a —
goal of maintaining high standards for professionals
providing speech and hearing services and are
sufficient to mect the venue requirement that defen-
dant “transacts business” in this District.
Id. at 330 (footnote omitted). The court reached its con-
clusion notwithstanding that the defendant had repre-
sented that only 1.4% of its current membership resided
in the district, and only one representative of any of its
accreditation units had been in the district in the last
four years. Id, at 329.
Similarly, in Levin yv. Joint Commission on Accredita-
tion of Hospitals, 354 F.2d 515 (D.C. Cir. 1965), the
court of appeals reversed the district court’s dismissal
for improper venue. The court concluded that whether
the Joint Commission transacted business in the District
of Columbia was not to be determined by a comparison
of the volume of its activities in one place with its total
operations—“considerably less than one percent of the
Joint Commission’s total activities” took place in the
District of Columbia—but upon whether the Commis-
sion’s field inspection of hospitals in the district furth-
ered its objective of establishing and enforcing standards
for hospital operation. See also Courtesy Chevrolet, Ine.
v. Tennessee Walking Horse Association, 344 F.2d 860,
865 (9th Cir. 1965) (activity of the association’s repre-
sentatives in implementing in California licensing stan-
dards that were established in Tennessee for the raising
of horses contributed to a finding that the defendant
association transacted business so as to be subject to suit
in California); Sherman College of Straight Chiropractic
v. American Chiropractic Association, 534 Supp. 4388
(N.D. Ga. 1982) (sponsorship of three or four seminars
over a five-year period to fulfill goal of maintaining
high standards for professionals constitutes transacting
business under 15 U.S.C. § 22),"°
‘Not all courts have embraced this analysis. See, ¢.g.,
Bartholomew v. Virginia Chiropractors Ass’n, 612 F.2d
812 (4th Cir. 1979), cert. denied, 446 U.S. 938, 100 S.Ct.
as Ya a
Conversely, some of the cases in’ which membership
organizations were held not to be transacting business
in the district in which their members resided emphasize
that the defendant organizations exercised little or no
control over the activity of their members in the forum
district. Thus in Midwest Fur Producers Association
v. Mutation Mink Breeders Association, 102) F.Supp.
649 (D.Minn. 1951), the activity of the trade association
sued by plaintiff was primarily limited to contracting
with magazines of national circulation to place advertise-
ments and to contracting to sell members’ products for
a set commission. All of the association’s activity was
conducted outside of the forum state, the sole connection
with it being the benefits that acerued to the members.
And in Friends of Animals, Inc. v. American Veterinary
Medical Association, 310 F.Supp. 620 (S.D.N.Y. 1970),
the court refused to aseribe to a national association
the membership activities of a constituent local society in
determining whether the national transacted business in
the district where members of the loeal society were not
* (Continued)
2158, 64 L.Bd.2d 791 (1980); Academy of Ambulatory Foot
Surgery v. American Podiatry Ass'n, 516 F.Supp. 378
(S.D.N.Y. 1981). To the extent that they are not factually
distinguishable froin the ease at bar we find these latter
decisions unpersuasive. Both evaluate the activity of
membership organizations inter alia by reference to the
amount of commercial activity engaged in by the organi-
zations, and by comparing the relative number of mem-
bers within the district to the organization’s total mem-
bership. Whether a professional membership organization
is transacting business in a district should be determined
with reference to its purposes—ineluding the assurance
of professional standards of conduct—and not by refer-
ence to commercial standards. And this court has in
another context highlighted the fallacy of using a ratio
test to evaluate the substantiality of a national corpora-
tion’s activity in a particular district. See Hendrickson
v. Req O Co., G57 F.2d 9, 12-13 (8d Cir, 1981).
_
required to be members of the national and the local
society was not required by the national to adopt par-
ticular bylaws. The activities of the national itself in the
district were found to be so insubstantial as not to render
it amenable to suit there.
In the face of a Congressional statute that has ex-
panded the veuue provisions under the antitrust laws,
the dissent has laboriously endeavored to construct a
theory that would inexplicably undo Congress's liberal-
izing intentions by narrowly construing the “transacts
business” language of the statute. Judge Garth asserts
that in the not-for-profit associational context, the cases
that have held the association transacted business within
the meaning of section 22 did so on the basis of facts
“which established a continuing licensing, accreditation
or qualitative evaluation function on the part of the
Association.” Cone. & diss. op, at 740) (emphasis in
original). We beleve such a standard is neither soundly
conceived nor necessarily supported by an objective read-
ing of the cases. We fail to see why the statutory phrase
“transacts business” would restriet venue over non-profit
corporate businesses to the performance of a “licensing,
accreditation or qualitative evaluation function.” It is
true that in some cases where venue was held to be
proper, the defendant association has been involved in
accreditation or evaluation. See, ¢.g., Levin v. Joint Com-
mission on Acereditation of Hospitals, supra, 354 V.2d
at 517. But we are not convinced that aetivities of this
nature are a prerequisite to a finding that the association
transacts business. Indeed, in the Levin ease, supra, the
court’s decision that venue was proper in the Distriet
of Columbia did not turn on the specifie nature of the
Commission’s business (i.¢., accreditation). The relevant
factor was that the field inspections performed in the
district were “an essential aspect” of the Commission's
business and furthered its purposes. /d. at 517. Likewise,
in Courtesy Chevrolet, supra, relied on by the dissent,
the court’s decision was not predicated upon the regis-
— 29a —
tration activity of the Tennessee Walking Horse Asso-
ciation, but upon whether the totality of acts gave evi-
dence of activity in the district implementing “an essen-
tial objective of the Association.” 344 F.2d at 865.
Health Care Equalization Committee of the Towa
Chiropractic Society vy. Iowa Medical Society, 501 F.
Supp. 970 (S.D.lowa 1980), is also cited by the dissent
to support its theory. But we believe this ease actually
supports the majority’s construction of section 22. In
Health Care Equatization Committee, the court held that
venue in Towa was proper under 15 U.S.C. § 22 as to
defendant, American Medical Association, even though
the court found that AMA itself was not involved in
acereditation or evaluation. The court’s view was that
various activities of the AMA’s Committee on Quackery
in the forum state constituted the transacting of busi-
ness of “substantial character” within the district in the
“ordinary and usual sense. The nature of the contacts,
their direct reallionship to plaintiff's cause of action, and
the facet that it is alleged the AMA made the practice
of chiropractic a target, made it reasonable to subject
the AMA to suit here” by the Chiropractic Society. 7d. at
983 (citations omitted),
Thus, these cases do not support the theory that an
Association “transacts business” only when engaged in
“a continuing licensing, acened'tation, or qualitative eval-
uation function.” Cone. & diss. op. at 740 (emphasis in
original). On the contrary, these eases reflect a common
sense construction of the phrase “transacts business”
predicated upon an enalysis of the “essential objective”
of the association and the occurrence of business activity
in furtherance of that objeetive."
"In such a construction we are reminded that the
hrase “is not to be given a technical or legalistic mean-
ing.” Stern Fish Co. v. Century Seafoods, Inc., 254 F.
Supp. 151, 153 (E.D.Pa. 1966).
=
Judge Garth’s theory of “transacting business” not
only narrows Congress’ expansive policy for venue in
antitrust cases, but would render the proceedings judici-
ally inefficient and costly to the parties. He would deny
a readily available forum to an aggrieved citizen of the
Virgin Islands in a court that clearly has jurisdiction
over the parties and the subject matter. The plaintiff,
on basically the same operative facts, would be compelled
to proceed on his local anti-monopoly claims in the Virgin
[slands and on his federal claims separately in Illinois,
a district far removed from the place of ADA’s legis-
lative target—certain dentists practicing in the Virgin
Islands. This is a case touching on the livelihood of the
dentists in the Virgin Islands where the plaintiff is not
engaged in forum shopping. There is no sound reason,
when the local court has jurisd’ction over the parties
and the subject matier, to split the trial proceedings
into two and try one in a distant point on the mainland
where the local community can learn of it only by report.
“There is a local interest in having localized controversies
decided at home.” Gulf Oil Corp. ve Gilbert, 220 USS. 501,
509, 67 S.Ct. $39, 842, 91 Ld. 1055 (1946).
The dissent also urges that “[i]n the section 22 eon-
text, ... the district court’s failure to furnish findings
or reasons is fatal.” Cone. and diss. op. at 728 (footnote
oinitted). I’or the proposition, it cites to /7'C v. British
Oxygen Co., 529 F.2d 196, 200 (3d Cir. 1976) (en bane).
British Oxygen, however, involved an application for an
interlocutory injunction where Med.R.Civ.P. 52(a) speeifi-
‘*Of the other cases cited in the dissent, three involved
trial by the court on the merits without a jury. United
States v. Ohio Barge Lines, Inc., 607 V.2d 624 (3d Cir.
1979); Pepi, Inc. v. Helcar Corp., 458 ¥'.2d 1062 (3d Cir.
1972); O’Neill vy. United States, 411 F.2d 139 (3d Cir.
1969). A fourth, Kreda y. Rush, 550 F.2d 888 (3d Cir.
1977), involved a motion to disqualify counsel for conflict
of interest. None of the cases involved a motion to dis-
miss for improper venue under Fed.R.Civ.P. 12(b).
— dla --
cally requires the trial court to set forth the findings
of fact and conclusions of law constituting the grounds
of its action. Rule 52(a), however, also provides that
these requirements “are unnecessary on decisions of
motions under Rules 12 or 56.” Rule 12(b)(3) involves
motions raising the defense of improper venue. There-
fore, findings of fact are not required in this situation.
See Mitchell y. Occidental Insurance, Medicare, 619 F.2d
28, 30 (9th Cir. 1980); Bus. Semel Associates, Inc. v.
United Fireworks Manufacturing Co., 355 F.2d 827, 830
n. 3 (D.C.Cir. 1965)..." Thus, the suggestion of Judge
" Although the dissent acknowledges that it can find
no case to support its position that the district court
must find facts or discuss its reasons for its choice of
section 22 venue, it suggests that “in analogous circum-
stances this court has uniformly imposed such a require-
ment so that appellate review would be possible.” At
736. | disagree, First, unlike the cases to which he refers,
Judge Garth recognizes that there is no “factual con-
troversy” here about the facts relevant to venue. ADA
itself provided detailed affidavits describing its activities
in the forum and did not dispute the affidavits Myers
offered. Second, the administrative agency cases to which
Judge Garth points, unlike the procedural dispute now
before us, were resolved on the merits by the agencies
involved. Iurthermore, in administrative agency cases
we must, under our scope of appellate review, ascertain
whether substantial evidence supports the agency’s find-
ings, Cotter v. Harris, 642 F.2d 700 (8d Cir. 1981) or,
with respect to certain agencies, whether the agency’s
review board has discharged its obligation to determine
whether the administrative law judge’s initial decision
was supported by substantial evidence, Sun Shipbuilding
& Dry Dock Co. v. McCabe, 593 ¥.2d 234 (8d Cir. 1979).
With respect to disability matters, we have noted that
both the Administrative Procedure Act governing adimin-
istrative adjudication generally and regulations appli-
cable to decisions of ALJ’s in disability matters “require
that the administrative law judge specify the reasons
or basis for the decision.” Cotter v. Harris, supra, 642
F.2d at 705.
—_
Garth that “at the very least, a remand to the district
court to correct this fault, is essential,” conc. & diss. op.
* (Continued)
The dissent also points to cases dismissed under Rule
37 or settled and dismissed under Rule 23 of the Federal
Rules of Civil Procedure. These cases also involve a final
determination of the disputes and not a purely procedural
issue as we have here. For instance, in Quality Prefabri-
cation, Inc. v. Daniel J. Keating Co., 675 ¥.2d 77, 81
(3d Cir. 1982), we required some articulation on the
record of the bases for the district court’s decision to
dismiss a complaint with prejudice under Fed.R.Civ.P.
37(b) for failure to provide discovery. It was the severity
of the “ultimate sanction” of a dismissal with prejudice
that led us to require a statement of reasons. Similarly,
we have required such an explanation when a district
court approves a class action settlement and dismisses
the complaint, see Bryan vy. Pittsburgh Plate Glass Co.,
494 F.2d 799, 804 (3d Cir.), cert. denied, 419 U.S. 900,
95 S.Ct. 184, 42 L.fed.2d 146 (1974). In these cases, a
statement of reasons was deemed essential to permit us
to review a final order denying the plaintiff his day in
court. By contrast, the instant case involves an inter-
locutory appeal denying a motion to dismiss for improper
venue and the effect of this decision is hardly of the same
consequence.
The dissent also discusses Interspace Corp. v. City of
Philadelphia, 438 F.2d 401, 404 (3d Cir. 1971), but glosses
over the precise holding of that case: that a statement
of reasons is not required when a district court rules
on a motion for class certification under Rule 23. Simi-
larly, in Plum Tree, Inc. v. Stockment, 488 F.2d 754, 756
(3d Cir. 1973), involving a motion under 28 U.S.C.
§ 1404(a) for transfer of venue, although we advised
that “it would be helpful” if the district court provided
a statement of explanation, we declined to require such
a statement. Furthermore, in Plum Tree, venue was pos-
sible in either of two jurisdictions, and a statement of rea-
sons was helpful in reviewing the decision to transfer
“wed ease to the alternate forum. No transfer is involved
ere.
== $8 .
at 738, is without foundation. Not only does the Rule not
require a remand, but no purpose would be served by
so doing when, as here, the facets are in affidavit form
and there is no controversy concerning the facets appli-
cable to section 22.*°
(3)
Against this background, we conclude that although
the record before us is sparse, it supports the conelusion
that the activity undertaken by ADA to bring about
acceptance of and compliance with its professional code
of eth'es in the Virgin Islands constitutes the transaction
of business of sufficiently substantial character to support
the plaintiff's choice of venue there. Plaintiff's affidavits
establish that certain officers of ADA eame to the Virgin
Islands to attend the business meeting of VIDA, among
*” (Continued)
Finally, Allis Chalmers Corp. v. Philadelphia Electric
Co., 521 F.2d 360 (3d Cir. 1975), cited by the dissent,
involves the court’s appellate jurisdiction. We required
reasons for a district court’s Rule 54(b) certification in
order to ascertain whether the appeal before us was
from a final or interlocutory order and thus whether
we had jurisdiction. We considered that a statement of
reasons was vital for a jurisdictional determination. Here,
we have no question of jurisdiction.
* Judge Garth would require “an extensive factual
basis” for the venue determination. Cone. & diss. op. at
742. No authority is offered for such a position. Rather,
courts have stated that “only one act may be enough
to fulfill the venue requirements of the statute.” Courtesy
Chevrolet, Inc. v. Tennessee Walking Horse Ass'n, 344
F.2d 860, 865 (9th Cir. 1965). See Golf City, Ine. v. Wil-
son Sporting Goods Co., 555 F.2d 426, 437 (5th Cir.
1977) (“Certainly the conducting of a golf tournament
by a corporation in a particular judicial district would
constitute the transaction of business in that district
within the meaning of the Clayton Act.”) (dictum). The
extensiveness of the factual record is unimportant if the
substantial character of the transaction is established.
—- 34a —
other reasons, to ensure that VIDA adopted ADA’s newly
promulgated Code of Professional Conduct. Moreover,
as noted above plaintiff-affiant has averred that as ADA
trustee of the Virgin Islands and Puerto Rico, Dr.
Cappuecio regularly participated in VIDA’s annual meet-
ings for eight consecutive years to ensure that VIDA
took no action inconsistent with ADA policy. The main-
tenance of high professional standards within the dental
profession by adopting and enforeing a code of conduct
is at the heart of the type of business transacted by
this professional membership organization. Plaintiff
claims that the damaging impact of this objective was
directly felt in the Virgin Islands and was visited upon
him personally there. The plaintiff was a direct target
of ADA’s Code of Conduct. These allegations are un-
disputed. We therefore hold that ADA’s direet, con-
tinual supervision in the Virgin Islands of VIDA to
ensure enforcement of ADA’s professional Code made it
reasonable to subject ADA to plaintiff's choice of venue
in the District of the Virgin Islands with respect to
plaintiff's federal antitrust claim. We also hold that, as
with Dr. Cappuecio, plaintiff's choice of venue is proper
with respect to his Virgin Islands anti-monopoly elaim
against ADA,
IV.
In summary, the order of the district court denying
defendants’ motion to dismiss the complaint as to Dr.
Cappuecio will be reversed as to the federal antitrust
claim and will be affirmed as to the Virgin Islands anti-
monopoly claim. The order will be affirmed as to the
district court’s denial of the motion to dismiss ADA as
a defendant for improper venue. The case will be re-
manded to the district court for further proceedings
not inconsistent with this opinion.
GARTH, Circuit Judge, concurring and dissenting.
Tf it were not for the Majority’s holding that Myers
had properly placed venue in the Virgin Islands pur-
— 35a —
suant to 15 U.S.C § 22) because the ADA “transacted
business” in that locale, I would have joined the Ma-
jority opinion which among other things rejects section
1391(b) venue and holds that personal jurisdiction was
obtained over the two defendants.
I cannot agree, however, with the Majority’s strained
attempt to find venue with respect to the ADA on the
basis of 15 U.S.C. § 22, That holding distorts the en-
tire focus of the ADA’s appeal, which disclaimed venue
under section 22 as well as under section 1391(b), but
which concentrated on the section 1391(b) argument, be-
cause Myers’ entire emphasis and the district court’s em-
phasis was on section 1391(b) venue. Indeed, before us
on appeal, no one urged or even mentioned section 22
venue.
In such a setting it is understandable that the Ma-
jority ignored the absence of faet findings or reasoned
articulation by the district court. Obviously, because no
one ever claimed section 22 venue, the district court had
no occasion to make the findings of fact or to furnish
reasons which would be crucial for a determination of
whether the ADA “transacted business” in the Virgin
Islands. Accordingly, the Majority was without benefit
of district court findings or the reasons which could
support the distriet court’s conclusions, both of which are
essential for appellate review. Despite this lack no re-
mand was ordered to cure this deficiency. Rather, the
Majority has seen fit to make its own findings as an
initial fact finder. It has done so, in order to support
an unwarranted conclusion—that venue lies in the Vir-
*15 U.S.C § 22 provides that:
Any suit, action, or proceeding under the anti-
trust laws against a corporation may be brought
not only in the judicial district whereof it is an in-
habitant, but also in any district wherein it may be
found or transacts business; and all process in such
cases may be served in the district of which it is an
inhabitant, or wherever it may be found.
~~ 36a —
gin Islands because the ADA transacted business there
within the meaning of 15 U.S.C § 22. Thus, while in my
opinion, the record developed by plaintiff is so inade-
quate that an outright reversal is called for, at the very
least, the failure of the district court to find faets or
identify its reasons pertaining to “transacting business”,
requires us to remand for that purpose.
Of even greater significance, the Majority holds that
the ADA, the defendant, had the burden of proving that
it had not “transacted business” in the Virgin Islands,
when as a matter of law it was the plaintiff who was
charged with the burden of proving venue and who
failed to carry his burden. Additionally, | suggest that
the Majority has employed an incorrect standard in de-
fining “transacting business” within the meaning of 15
U.S.C. § 22.
For all these reasons, | dissent.
5.
When a plaintiff seeks to assert his rights in a federal
court, as Myers has done in this case, he must prove
that that court, and not another court in a different lo-
cality or in a state system, has the authority to hear
the case. KVOS, Ine, v. Associated Press, 299 U.S, 269,
57 S.Ct. 197, 81 L.Ed. 183 (1936); ARO Manufacturing
Co. v. Automobile Body Research Corp., 352 V.2d 400,
403 (Ist Cir. 1965), cert. denied, 383 U.S. 947, 86 S.Ct.
1199, 16 L.Ed.2d 210 (1966). A plaintiff therefore is re-
quired to include a statement of jurisdiction in his com-
plaint. Fed.R.Civ.P.Rule 8(a)(1). Venue, however, is not,
strictly speaking, a matter of jurisdiction, and a plain-
tiff is therefore not required to include allegations es-
tablishing proper venue. Fed.R.Civ.P. Form 2, Advisory
Committee, note 3 (improper venue is an affirmative
dilatory defense, therefore plaintiff need not include al-
legations showing the venue to be proper). Since venue
is a privilege personal to the defendant, the defendant
must object if he thinks venue improper.
— 37a -—
However, unlike affirmative exculpatory defenses,
which touch the merits of the cause of action and which
the defendant must prove, it does not follow that the
defendant also has the burden of proving improper ven-
ue, which is an affirmative dilatory defense. While there
exists some authority for the proposition that the bur-
den is on the objecting defendant to establish that venue
is improper, see Maj. op. at 723-724, “the better view,
and the clear weight of authority is that, when objection
has been raised [by the defendant], the burden is on
the plaintiff to establish that the district he chose is a
proper venue.” 15 C. Wright, A. Miller & E. Cooper,
Federal Practice and Procedure § 3826 at 168 (1976 &
Supp.1982). Ryan v. Glenn, 52 F.R.D. 185, 192 (N.D.
Miss.1971) (“Although there is a sharp split of authority
on this point, the better view is that the burden of
proving proper venue rests with plaintiffs”); Hawkins
v. National Baskethall Ass'n, 288 F.Supp. 614, 615
(W.D.Pa.1968).*
The Majority opinion, however, claims that because
venue is not “jurisdiction,” and because the defendant
must raise an objection to venue in the first instance,
it “logically follows” that, on a motion to dismiss for
improper venue under Fed.R.Civ.P.Rule 12(b)(3), “the
movant |here the defendant] has the burden of proving
* See also Bartholomew v. Virginia Chiropractic Ass’n,
612 F.2d 812 (4th Cir.1979); Grantham v. Challenge-
Cook Bros., Inc., 420 F.2d 1182, 1184 (7th Cir.1970);
ARO Mfg. Co. vy. Automobile Body Research Corp.,
swpra; Hodson v. AH. Robins Co., Inc., 528 F.Supp.
809, 812 (E.D.Vir.1981); National Distillers and Chemi-
cal Corp. v. Dept. of Energy, 487 F.Supp. 34, 37 n. 9
(D.Del.1980) ; Grappone, Inc. v. Subaru of America, Inc.,
403 F.Supp. 123 (D.N.H.1975); Funnelcap Inc. v. Orion
Industries, 392 F.Supp. 938, 942 (D.Del.1975); Beswner
v. Faberge, [nc., 379 F.Supp. 278, 280 (N.J.Ohi01974) ;
United Industrial Corp. v. Nuclear Corp. of America, 237
F.Supp. 971, 979 (D.Del.1964); Bruner v. Republic Ac-
ceptance Corp., 191 F.Supp. 200 (E.D.Ark.1961
— 38a ~
[that venue was not proper}.” Maj. op. at 724. Although
authority is cited to support this view, the cases whieh
are cited either offer no reasons to support their posi-
tion, or they confuse venue, a dilatory defense, with af-
firmative exculpatory or substantive defenses.
While the party asserting an exculpatory defense, i.e.
such as those listed in Fed.R.Civ.P.Rule 8(c),’ should
have the burden of proving the defense asserted be-
cause such a defense goes to the merits of the cause of
action, the same is not true where an affirmative dila-
tory defense is raised. Affirmative dilatory defenses,
like the defense of lack of jurisdiction, touch only the
court’s legal authority to entertain the complaint. Such
defenses do not affect the merits, as exeulpatory de-
fenses do, Affirmative dilatory defenses, such as venue,
exert no preclusive effect. As such, there is no reason
to impose on a defendant, the burden of proving an af-
firmative dilatory defense, Rather, because the plaintiff
has traditionally had the burden of proving that a
court has authority to hear his case, Tanzymore v. Beth-
lehem Steel Corp., 457 ¥.2d 1320 (3d Cir.1972); United
States ex rel, Gitllemacher vy. Philadelphia County, 413
F.2d 84 (3d Cir.1969), cert. denied, 396 U.S. 1046, 90
S.Ct. 696, 24 L.Bd.2d 691 (1970), (see Maj. op. at 728-
724), it must follow that the plaintiff also has the bur-
den of proving proper venue, once a venue defense is
raised.
* Fed.R.Civ.P.Rule 8(¢) provides in part:
In pleading to a preceding pleading, a party shall
set forth affirmatively accord and _ satisfaction, ar-
bitration and award, assumption of risk, contribu-
tory negligence, discharge in bankruptcy, duress,
estoppel, failure of consideration, fraud, illegality,
injury by fellow servant, laches, license, payment,
release, res judicata, statute of frauds, statute of
limitations, waiver, and any other matter constitu-
ting an avoidance or affirmative defense,
— 39a
As [ have noted, those cases cited by the Majority
that hold that the burden of establishing venue is upon
the defendant, reach this result without distinguishing
between affirmative dilatory defenses and affirmative ex-
culpatory or substantive defenses, the latter of which
are the only defenses ineluded in’ Fed.R.Civ.P. 8(e).
(Maj. op. at 724). Significantly, the defense of improper
venue is not to be found in Rule 8(e), nor is it “a mat-
ter constituting an avoidance or affirmative defense”
within the meaning of Rule 8(e). Aceordingly, I find
little logic in Professor Moore’s unsupported assertion
that the rule that plaintiff has the burden of establishing
venue, when contested, is “unsound.” Sec 1 J. Moore,
Moore's Federal Practice, © O0140{a) at 1319-20 (1982)
and Maj. op. at 724. Rather, reason dictates that, when
objection is raised, it is the plaintiff who has the bur-
den to establish that the venue he has chosen is proper.
15 C. Wright, A. Miller & KE. Cooper, Mederal Practice
and Procedure, \ 3826 at 166-68 (1976 and Supp.1982).
Indeed in the 15 U.S.C. § 22 context, the authorities
are uniform in concluding that such is the case, i.e.,
that it is the plaintiff who must earry the burden of
establishing proper venue. Bartholomew, supra, 612 V.2d
811; ARO Mfg. Co., supra, 352 2d 400; Grappone, Inc.
v. Subaru of America, supra, 403 F.Supp. 123; United
Industrial Corp. v. Nuclear Corp. of America, supra, 237
F.Supp. 971; Bruner v. Republic Acceptance Corp., su
pra, 191 F.Supp. 200; Wentling v. Pomdar Science Pub-
lishing Co., 176 F.Supp. 652, 656 (M.D.Pa.1959); Pfeiffer
v. United Booking Office, 93 F.Supp. 368, 365 (NDT.
1950).
Thus, contrary to the Majority’s view, which has eri-
ticized reliance on cases involving dilatory defenses (at
723-724), such reliance is completely appropriate when
analyzing ou whom the burden of proof falls with re-
spect to proving venue. It is for that reasow that ARO
Manufacturing Co., supra, and those eases relying upon
ARO Manufacturing, are appropriate precedents sup-
= em
porting “the better view” that in venue, as in jurisdie-
tion, the plaintiff must bear the burden of proving prop-
er venue, 15 C. Wright, A. Miller & E. Cooper, l’ederal
Practice and Procedure, supra, § 3826.
“TIT suggest that the Majority Opinion has miscon-
eeived the thrust of the analogy which IT have drawn be-
tween jurisdiction and venue. See Maj.Op. at 724 n. 7.
T am quite aware of the difference hetween the power
of the court to entertain an action and the place where
it may be heard.
My discussion does not seek to equate the two con-
cepts but only to point out that both jurisdiction and
venue are dilatory defenses which require the plaintiff
to bear the burden of proving both. As such they do
not go to the merits of the cause of action. Both being
dilatory defenses, I have argued that cases discussing
burden of proof in a jurisdictional context, are appro-
priate authorities to rely upon in determining burden of
proof in a venue context. Thus, just as the burden of
proving jurisdiction rests upon the plaintiff as the Ma-
jority concedes, (see Maj.Op. at 724-725 n. 10), so too
must the plaintiff bear the burden of establishing prop-
er venue. Bartholomew vy. Virginia Chiropractic Ass’n,
612 F.2d 812 (4th Cir.1979); ARO Manufacturing Co. v.
Automobile Body Research Corp., 352 ¥.2d 400 (1st Cir.
1965), cert. denied, 383 U.S. 947, 86 S.Ct. 1199, 16 L.Ed.
24 210 (1966); 15 C. Wright, A. Miller & KE. Cooper,
Federal Practice and Procedure, \ 3826. Indeed, Bar-
tholomew, supra, is the only court of appeals authority
addressing 15 U.S.C. § 22 burden of proof in a not-for-
profit membership organization context. And, Bartholo-
mew holds that the burden of proving venue is squarely
on the plaintiff.
Thus, the distinction as to where the burden of proof
lies—a distinction which the Majority seeks to draw
between jurisdiction, venue and various other defenses
(which are characterized by the Majority as “dilatory”),
is not compelling. Without conceding in the least that
the defenses characterized by the Majority as “dilatory
defenses” are indeed dilatory defenses, | note that in
support of its argument, the Majority refers to the de-
fense of forum non conveniens,
— 4la —
In this case, plaintiff Myers not only rejected 15
U.S.C. § 22 venue in favor of section 1391(b) venue
by not urging section 22 venue, but he adduced no
sworn proofs which could support any claim that the
ADA “transacted business” in the Virgin Islands. Thus,
Myers has clearly failed to carry his burden. This fact
alone is enough, in the face of the ADA’s venue chal-
lenge, to reverse the district court, or at least, to re-
quire a remand to that court for a statement of its
reasons or for fact finding in the context of section 22.
* (Continued)
I have discussed burden of proof in that context in
n. 5, infra, in which I point out that the issue for reso-
lution in a 28 U.S.C. § 1404(a) motion is wholly dif-
ferent than the issue in a 15 U.S.C. § 22 motion. In
a 15 U.S.C. § 22 motion, as we have here, the question
is whether Congress has specifically authorized the plain-
tiff to bring an action in the chosen locale. Satisfaction
of the statutory criteria is mandated at the outset, or
the action must he dismissed,
In a 28 U.S.C. § 1404(a) context, the plaintiff has a
choice of legally permissible fora. It is with reeogni-
tion of the fact that an action has been brought in a
permissible locale under the statute, that a defendant
must seek to prove that, in the court’s discretion, it
would he more convenient to try the case elsewhere,
even though there is no bar as a matter of law to trying
the action in the locale chosen by the plaintiff.
It is in that setting that it is appropriate that the
defendant, who must prove the inconvenience of the
legally established venue, bear the burden of doing so.
The very statement of, and considerations affecting,
these two disparate types of venue, reveal that prin-
ciples affecting burden of proof in the one case have
no relation to the other. The same is true with respect
to the other examples of ‘‘dilatory defenses’’ found in
n. 10 of the Majority Opinion, none of which can be
analogized sufficiently to the 15 U.S.C. § 22 context to
carry the weight needed in order to support the Ma-
jority’s argument that the ADA, rather than pe is
charged with the burden of proving 15 U.S.C. § 22 venue.
— 42a —
A.
Before the district court, the ADA challenged venue
in the Virgin Islands both on the basis of 15 U.S.C.
§ 22 and the general venue provisions in 28 U.S.C. 4
1391(b). Myers, in his Affidavit in Opposition to Mo-
tion of Defendant American Dental Association to dis-
miss for improper venue, never addressed the challenge
to 15 U.S.C. § 22 “transacting business” venue. Myers’
only claim was that venue was proper under section
1391(b) and that defendant ADA was “found” in’ the
Virgin Islands within the meaning of 15 U.S.C. & 22.
Myers asserted no more than that his claims oecurred
in the Virgin Islands (Myers’ Motion, Pawe 1, App. 31);
that the ADA could be found in the Virgin Islands
(Myers’ Motion Page 2, App. 32), and that the VIDA
was not an autonomous body, only largely autonomous,
Id. Consistent with the absence of sworn assertions
which could support a claim of “transacting business,”
was the absence of a section 22 argument in Myers’
brief on appeal. (Myers’ Brief at 46-47),
The district court’s opinion on venue is conclusive
evidence of the facet that Myers did not depend upon
section 22 venue and that no consideration was given
to the elements of such venue, The distriet court prop-
erly recited that ADA claimed that neither section 22
nor section 1391(b) afforded venue in the Virgin Is-
lands. However, with the exception of just one sen-
tence in the district court opinion which stated “. . . the
anti-trust acts expand venue to any district where a
corporation transacts business,” the district court opin-
ion is totally barren of any section 22 discussion, fact
finding or reasons why section 22 venue was estab
lished. The opinion stresses the local Virgin Islands
antitrust law, section 1391(b) venue (a decision which
the Majority here properly overrules) and the fact that
the Virgin Islands is not an inconvenient forum for
trial under 28 U.S.C. § 1404(a). The entire opinion
— 48a —
of the district court is reproduced in the margin re-
vealing the absence of any section 22 discussion, ra-
tionale, or findings.’
_ *Following is the district court’s entire venue opin-
ion:
VENUE
The ADA and VIDA contend that venue cannot
lie in the Virgin Islands in the case at bar. They
base their assertions on 15 U.S.C. § 22 and 28 U.S.C.
§ 1391(b). Under the general federal venue stat-
ute in non diversity cases venue will lie where the
cause of action arose or where the defendants re-
wide. In addition, the antitrust acts expand venue
to any district where a corporation transacts busi-
ness. The defendants maintain that Dr. Myers failed
to meet any of the venue standards and therefore
the case must be transferred or dismissed. We can-
not agree.
The District Court of the Virgin Islands has
more expansive jurisdiction than its stateside coun-
terparts. As a territorial court is is [sic] not limited
to the constraints placed on federal courts by Ar-
ticle ITI Section 2 of the constitution. In essence a
federal territorial court wears two hats—one when
it sits as a federal court and another when it hears
local matters. In the case sub judice we are wearing
both hats simultaneously.
Certainly plaintiff's cause of action based on the
local antimonopolies jaw, 11 V.LC. § 1501 et seq.
is properly before this Court. In Godfrey v. Inter-
national Moving Consultants, 1980 STT Supp. 498
(D.V.1.1980) we held that the federal venue pro-
visions do not apply to the District Court of the
Virgin Islands when it is deciding local matters. We
cannot as readily circumvent the venue provisions
however, when the court is exercising federal juris-
diction.
Because the ADA and some of the individual de-
fendants do not reside here, venue will only lie in
this Court if the cause of action arose in the Vir-
gin Islands. Defendants rely on the “weight of the
— 44a —
The disinterest in section 22 venue exhibited by Myers
before the district court was similarly exhibited before us
on appeal. One may look long and hard at Myers’ appel-
late submissions, including his supplemental brief, and
still not find an argument predicated on section 22 venue.
While the fact that a plaintiff never claims, urges, or
argues a particular theory and furnishes no evidence
which could support such a theory may not be conclusive
in every circumstance, | suggest that a ruling must be
* (Continued)
contacts test” to support their contention that the
action arose outside the territory. That test pro
vides that “if some overt act pursuant to the con-
spiratorial meetings took place in a district and it
was a significant and substantial element of the of-
fense, then venue would lie in the district.” Phila-
delphia Housing Authority v. American Radiator
and Standard Sanitary Corp., 291 F.Supp. 252, 260-
61 (E.D.Pa.1968); see Friends of Animals, Inc. vy.
American Veterinary Med. Ass’n, 310 F.Supp. 620
(S.D.N.Y.1970). The core around which the threads
of plaintiff's complaint winds is the ADA’s adop-
tion of the code of ethics which restricted Dr. Myers’
practice. That code was formulated and adopted by
the ADA in Illinois. Once the ADA embraced the
code VIDA’s charter required it to do likewise.
Thus defendants made a strong showing that no
overt act occurred in this jurisdiction.
Plaintiff’s choice of venue however is proper.
Again it is justified in part by the special status
of the District Court of the Virgin Islands. Dr.
Myers’ federal cause of action is based on the
Sherman Antitrust Act, 15 U.S.C. § 1 et seq. Be-
cause in most circumstances sections 1 and 2 of
the Act do not apply in the Territories of the Uni-
ted States, plaintiff must specifically rely on 15
U.S.C. § 3. Section 3 provides that restraints of
trade affecting the Territories of the United States
are illegal. The ADA’s promulgation of the code of
ethics in Illinois and VIDA’s compulsory adoption
ot [sic] if [sic] [of it] affected Dr. Mvers’ practice
— 45a —
rendered against such a plaintiff when he has the burden
to prove that theory. Myers has failed to carry his
burden here and, without more, it appears manifest to me
that we cannot provide missing findings of fact, nor can
we supply the reasons for section 22 venue which the
district court failed to articulate, nor should we substitute
our theories for those which have not been espoused
by Myers.
* (Continued)
in St. Thomas. Thus, even though many of the
overt acts of the alleged conspiracy occurred in II-
linois the injurious effects could be found in the
Virgin Islands.
Furthermore, civil antitrust actions arise where the
damages occur. The injury that flows from an il-
legal conspiracy sounds in tort. Thus the antitrust
claim can be tried where the injury (i.e. the busi-
ness damage) occurs. Albert Levine Assoc. v. Ber-
iON Cotti, S.p.A., 314 F.Supp. 169, 171 (S.D.N.Y.
In summary, venue properly lies in this forum.
Firstly, plaintiff’s claim based upon local law in-
vokes our article I jurisdiction. Secondly, Dr. Myers
brought suit under a federal statute aimed at pre-
venting illegal combinations in restraint of trade
in the territories. The restraint of trade caused in-
jury in the Virgin Islands and therefore the cause
of action arose here. Defendants’ motions based on
improper venue will be denied.
Defendants also assert that the Virgin Islands is
an inconvienent [sic] [inconvenient] forum to try
this case. See 28 U.S.C. § 1404(a). Based on the
affidavits proffered by plaintiff it is clear that any
forum would be inconvenient to some of the wit-
nesses. We foresee no undue hardship or injustice
to the parties by Ss them to try this action
before us. Accordingly, defendants’ motion based on
forum non conveniens will be denied.
District Court Opinion, Appellant’s Appendix 81-84
(footnotes omitted).
= ee
B.
It is undisputed that the particular facts and circum-
stances must be found and assessed in each case in order
to determine whether the defendant corporatien is
“transacting business” in the district where the plaintiff
has sought to establish venue. Bruner v. United Accept-
ance Corp., 191 F.Supp. 200 (14.D. Ark. 1961). Cf. Ioff-
man Motors Corp. v. Alfa Romeo S.p.A., 244 F.Supp.
70 (S.D.N.Y. 1965). Little would be gained by belaboring
this point, unless as here, the district court failed to find
the facts specifically or failed to state reasons for its
conclusion. In such cireumstances, this court is in no
position to review the district court’s venue ruling.
While it is true that neither the Majority nor I have
found any case dealing directly with the need for the
district court to find facts or to discuss its reasons for
its choice of section 22 venue, it is clear that in analo-
gous circumstances this court has uniformly imposed
such a requirement so that appellate review would be
possible. We have done so even though no such mandate
was to be found in the governing statute, regulation, or
rule. For example, in the context of bargaining orders
imposed by the NLRB after finding violations of the
National Labor Relations Act, Judge Rosenn, writing
for the court, explained that the Board was required to
articulate its reasons so that we, as a court, could
properly exercise our reviewing function and could
“guarantee the integrity of the administrative process.”
NLRB vy. Armcor Industries Inc., 535 F.2d 239, 245 (3d
Cir. 1976). Accordingly this court required, even in the
absence of statute, regulation, or rule that the Board
had to make “specifie findings” and had to “clearly
explicate the basis for its decision to issue a bargaining
order.” Id. at 245.
The same requirements have been made in other ad-
ministrative contexts for the same reasons, i.¢., that such
an articulation is essential for intelligent court review.
— 47a —
See e.g., Sun Shipbuilding & Dry Dock Co. v. McCabe, 593
F.2d 234 (3d Cir. 1979) (requiring an ALJ to make
findings of fact); Cotter v. Harris, 642 F.2d 700 (3d
Cir. 1981) (requiring ALJ in determining disability un-
der Social Security Act to make findings of fact and
articulate reasons). If the requirements which we have
imposed for fact finding and articulation of reasons have
been imposed upon administrative agencies so that the
court can properly fulfill its review function, certainly
we cannot require less when we are called upon to review
a judicial determination. And, indeed, we have not.
We have required district courts to articulate the
grounds for their decision when they dismiss a complaint
with prejudice under Fed.R.Civ.P.Rule 37, even though
Rule 37 is silent as to such a requirement. Quality Pre-
fabrication y. Daniel J. Keating Co., supra, 675 F.2d at
81. Similarly, an articulation of reasons has been re-
quired upon entry of final judgment under Fed.R.Civ.P.
54(b), Allis-Chalmers Corp. vy. Philadelphia Electric Co.,
521 F.2d 360, 364 (3d Cir. 1975), and upon approval
of a class action settlement, Bryan vy. Pittsburgh Plate
Glass Uo., 494 F.2d 799, 804 (3d Cir.), cert. denied, 419
U.S. 900, 95 S.Ct. 184, 42 L.Ed.2d 146 (1974). Of greatest
relevance for this case, however, is our requirement that
district courts articulate the basis for their decision on
a transfer of venue motion under 28 U.S.C. § 1404(a)
where the evidence and agruments are in doubt.’ Plum
°T recognize that in a Plum Tree, Inc. v. Stockment,
488 F.2d 754 (3d Cir. 1973), 28 U.S.C. 1404(a) context,
the burden of proof is appropriately upon the defendant
because in such a circumstance, where a plaintiff has
properly laid his action in a venue permissible under
§ 1404(a), any motion by the defendant to change venue
to a venue of the defendant’s choice requires the defen,
dant to produce evidence or considerations proving his
position. Thus, a 28 U.S.C. § 1404(a) decision is relevant
only after a determination has been made as to compli-
ance with the mandate of, in this case, 15 U.S.C. § 22—
— 4a —
Tree, Inc. v. Stockment, 488 F.2d 754, 756 (3d Cir. 1973).
“Furthermore, in making findings of fact on a transfer
order, it would be helpful if the district court specifically
related the evidence upon which it relies to the factors
stated in 28 U.S.C. § 1404(a).” Id. at 756. See Impervious
Paint Industries, Ltd. vy. Ashland Oil, Inc., 444 F.Supp.
465, 466 (E.D. Pa. 1978) (Plum Tree, supra, requires a
district court to “demonstrate its record” and find facts
before transferring under 28 U.S.C. § 1404(a)).
Similarly, the Supreme Court has required considera-
tion and articulation of those factors crucial to a district
court’s venue determination. Gwf Oil Corp. vy. Gilbert,
supra, 330 U.S. 501, 508, 67 S.Ct. 839, 848, 91 L.iéd. 1055;
see DeMateos v. Texaco, Inc., 562 F.2d 895, 900 (3d Cir.
1977) (listing the seven factors found in Lauritzen v.
Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ied. 1254 (1953)
which must be considered by the district court).
With these principles as a background, it is difficult
for me to understand why the Majority not only ignores
such salutory requirements but, in order to substantiate
its untenable determination that a remand is unneces-
sary, seeks refuge in a literal reading of Fed.R.Civ.P.
52(a). See Maj. op. at 729 (formal findings of fact “are
unnecessary on decisions of motions under Rule 12
or 56”).
* (Continued)
a statute prescribing the legal standards to be satisfied
in determining venue. Indeed, the Supreme Court has
stated that “the doctrine of forwm non conveniens can
never apply if there is absence of jurisdiction or mistake
of venwe.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504,
67 S.Ct. 839, 840, 91 L.Ed. 1055 (1946) (emphasis
supplied).
Hence, the fact that the burden of proving venue is
placed on a defendant in a § 1404(a) context can give
little comfort to the Majority in a 15 U.S.C. 4 22 context.
— 49a —
While it is true that we do not require formal findings
of fact on decisions of Rule 12 motions, one of which
includes venue, we have nevertheless acknowledged that
“where, ... the district court is presented with conflict-
ing positions of substance... ; it is a salutary practice
to give the litigants, either orally or in writing, at least
a minimum articulation of the reasons for its decision.”
Interpace Corp. vy. City of Philadelphia, 438 F.2d 401,
404 (3d Cir. 1971). In Interpace, supra, this court refused
to issue a writ of mandamus vacating certain class
actions. The majority, while recognizing the need for an
articulation by the district court of its reasons, none-
theless held that the class action rule (Fed.R.Civ.P. 23)
did not require specific findings in the context of that
ease. Judge Adams forcefully disagreed with the ma-
jority’s interpretation of Rule 23 and stressed, as I do
here in a venue context, that an appellate court cannot
review a district court’s naked determinations without
findings or an articulation of the underlying basis of
the decision.
It is not surprising therefore that in order to be in
a position to assess the propriety of a district court’s
judgment, we have departed from the strict and literal
terms of Rule 52(a) in order to achieve this worthwhile
end. Thus we have required the district courts to state
their grounds for decision in a number of discretionary
areas wherever “values of consistency and predictability,
reviewability, and deterrence [citations] outweigh the
values of economy and efficiency that may be promoted
by allowing inarticulate decisions.” Quality Prefabrica-
tion v. Daniel J. Keating Co., 675 F.2d 77, 81 and n, 6
(3d Cir. 1982). This rule not only makes possible the
effective review of district court decisions but is consis-
tent with the purpose of Rule 52(a) and with the intent
of the Advisory Committee on Rules, which drafted the
final sentence of the Rule. Indeed it has heen argued
that Rule 52(a) should be read as a whole to require
findings of fact whenever a decision rests on factual
— 50a —
determinations; //orizons Titanium Corp. v. Norton Co.,
290 F.2d 421, 424 n. 3 (Ist Cir. 1961); 5A J. Moore,
Moore’s Federal Practice ¥ 52.08 (1982); sce Williamson
v. Tucker, supra, 645 F.2d at 410-11 (noting Fifth Cireuit
rule requiring the articulation of grounds for decision
on motions to hold party in civil contempt).
In this case it is essential to know the basis of the
district court’s 15 U.S.C. § 22 decision. As I have previ-
ously indicated, the district court disposed of this issue
with no discussion, no reasons, no findings, and indeed
on no ascertainable grounds. It is understandable there-
fore why the Majority does not refer to any such rea-
soned explanation, for there is none. Rather, the Ma-
jority, claiming that because the facts are in affidavit
form and “there is no controversy concerning the facts
“The Majority Opinion has criticized my contention
that a district court should furnish a Court of Appeals
with findings of fact, or at least, with a reasoned articu-
lation of its basis for decision, so that intelligent review
is possible. Maj.Op. at 729-733 n. 19. The Majority’s
criticism has taken the form of distinguishing those
eases cited in support of this argument. Those cases
reflect that, in many different contexts, such findings
or reasons hav been precisely what we have required.
Indeed, those cases, and the contexts which have given
rise to them, all have one common feature: in each, we
have insisted that even in the absence of any rule, regu-
lation or statute requiring findings or reasons, the dis-
trict court or the agency must furnish findings or rea-
sons, so that meaningful review can be effected.
I am fully aware that the cases to which I have re-
ferred in order to illustrate this principle, are not 15
U.S.C. § 22 cases. See text, swpra at 735-737. However,
the doctrine of reviewability announced in those cases
stands uncontradicted by any meaningful analysis, and
it is therefore just as applicable in the present context
as it is in the myriad situations in which it has already
been applied by this court.
— dla —
applicable to 4 22,” Maj. op. at 730, concludes that no
purpose would be served by a remand. The short answer
to this assertion is that on review, this court is not a
fact finder, nor can it supply reasons for the district
court. Moreover, even a cursory review of the affidavits
would reveal that in so far as “transacting business” is
concerned, the only reason that there is no factual con-
troversy, is that Myers never responded to the ADA’s
detailed affidavits! I address that subject in Part II A.
of this separate opinion.
I submit that if we require the district courts to
specify the grounds for their decision when making a
venue transfer under 28 U.S.C. § 1404(a), we can require
no less when district courts must determine whether
venue is proper in the first instance under 15 U.S.C.
§ 22. Such a requirement is essential to our function
of review and places no great burden on the district
courts, especially when, as here, the district court had
already prepared a memorandum opinion (see note 4,
supra). Onee made, such findings, reasons, and conelu-
sions, of course, are subject to our rules on review.
See O'Neill vy. U.S., 411 F.2d 129, 146 (3d Cir. 1969). If
the findings, reasons, or conclusions are insufficient to
permit review, as they are in this ease, a remand is
required, at the very least, to cure that deficiency. Plum
Tree, Inc., supra; O'Neill, supra.
It is apparent from the district court’s discussion that
its entire emphasis was on section 1391(b) venue, The
Majority correctly disposes of that issue because of the
teaching of Leroy yv. Great Western United Corp., 448
U.S. 173, 99 S.Ct. 2710, 61 L.ed.2d 464 (1979) which
does not depend upon fact finding or reasons. Therefore
in the section 1391(b) context little hinges on the dis-
trict court’s failure to furnish either. In the section 22
~~
context, however, the district court’s failure’ to furnish
findings or reasons is fatal. As we have said innumer-
able times, it is not the proper role of this court to make
findings of fact in the first instance. ’'TC vy. British
Oxygen Co. Ltd., 529 F.2d 196, 200 (3d Cir. 1976) (en
banc). Because of the complete lack of evidence support-
ing section 22 venue and the failure of Myers to carry
his burden in this respect, I believe that the district
court’s ruling should be reversed outright. As I have
mentioned earlier, however, at the very least, a remand
to the district court to correct this fault, is essential.
United States v. Ohio Barge Lines, Inc., 607 F.2d 624,
632 (3d Cir. 1979); Kreda v. Rush, 550 F.2d 888, 890
(3d Cir. 1977); FTC v. British Oxygen Co., Ltd., supra,
529 F.2d at 200; Pepi, Inc. v. IHelear Corp., 458 F.2d
1062, 1064-65 (3d Cir. 1972); O'Neill vy. UWS., 411 F.2d
139, 146 (3d Cir. 1969); cf. Chalfant v. The Wilmington
Institute, 574 F.2d 739, 751-52 (3d Cir. 1978) (Garth,
J., dissenting).
II.
Because it is evident that Myers has failed to earry
his burden, no matter what the proper test for “trans-
acting business” may be, had T been in the Majority,
and if the Majority held, as [ believe it should have,
that section 22 venue was unavailable there would have
been no need to discuss section 22 cases which define
“transacting business.” My concern here, however, is
* My reference to the district court’s failure to furnish
findings or reasons is not intended as a criticism of the
district court. As I have taken pains to point out earlier
in light of Myers’ actions in pressing only his § 1391(b)
venue argument it would have been surprising if the
district court had nevertheless insisted upon making find-
ings under § 22. My only purpose in emphasizing the
lack of such findings made by the district court is to
oint out this court’s improvidence in seeking to provide
acts and reasons and thus supply that, which the district
court was unable to, and did not supply.
—
that the district courts of this Cireuit may seize upon
and follow the Majority’s discussion—a discussion which
has been predicated upon a virtually non-existent record
and which | suggest is flawed--and thus may be drawn
into future error. [t is for that reason, despite my con-
viction that the ADA’s motion to dismiss on venue should
have been granted, that | address the subject of ‘‘trans-
acting business” within the meaning of section 22.
A.
A corporation “transacts business” in a distriet for
purposes of section 12 of the Clayton Act (15 U.S.C.
§ 22) only if in the “ordinary and usual sense” it trans-
acts business of a “substantial character” Lastman Ko-
dak Co. of New York y. Southern Photo Materials Co.,
273 U.S. 359, 373, 47 S.Ct. 400, 403, TL Led. 684 (1927) ;
United States vy. Scophony Corp., 333 U.S. 795, 807, 68
S.Ct. 855, 861, 92 L.Ed. 1091 (1948) (“The practical
everyday business or commercial concept of doing or
carrying on business ‘of any substantial character’ [is]
the test of venue’’); Bartholomew v. Virginia Chiroprac-
tic Ass’n., 612 F.2d 812, 815 (4th Cir. 1979); Sherman
College of Straight Chiropractic v. American Chiroprac-
tic Ass'n, 534 F.Supp. 438, 440-41 (N.D. Ga. 1982);
Health Care Equalization Committee of the lowa Chiro-
practic Society vy. lowa Medical Socicty, 501 F.Supp.
970, 980 (S.D.Iowa 1981); Athletes Foot of Delaware,
Ine. v. Ralph Libonati Co., Inc., 445 F.Supp. 35, 43 (D.
Del. 1977); Bogus vy. American Speech & Hearing Ass’n.,
389 F.Supp. 327, 328-29 (1.D.Pa. 1975), rev’d on other
grounds, 582 F.2d 277 (3d Cir. 1978); Friends of
Animals, Inc. vy. American Veterinary Medical Ass’n., 310
F.Supp. 620, 622 (S.D.N.Y. 1970); Philadelphia Housing
Authority vy. American Radiator and Standard Sanitary
Corp., 291 F.Supp. 252, 256 (f.D.Pa. 1968). This “trans-
acts business” standard was intended by Congress to be
broader than the “may he found” standard, Hastman
Kodak Co., supra, 273 U.S. at 372-73, 47 S.Ct. at 402-403;
— 54a —
United States v. National City Lines, Inc., 384 U.S. 573,
579, 68 S.Ct. 1169, 1172, 92 L.ed. 1584 (1948), but cer-
tainly more than a few isolated and peripheral con-
tacts with the particular judicial district must be pres-
ent to constitute business of a substantial character. Golf
City, Inc. v. Wilson Sporting Goods Co., Inc., 555 F.2d
426, 438 (5th Cir. 1977); Stern Fish Co. v. Century Sea-
foods, Inc., 254 F.Supp. 151, 158 (F.D.Pa. 1966). See
also Bogus v. American Speech and Hearing Ass’n.,
supra, 389 F.Supp. at 330. Ultimately, this court’s con-
clusion about the ADA’s business presence in the Dis-
trict of the Virgin Islands must stem from a common
sense determination of whether, as a “broader business
conception,” the ADA engages in any substantial busi-
ness operations in the district. U.S. vy. Scophony Corp.
of America, supra, 333 U.S. at 807, 68 S.Ct. at 861;
Academy of Ambulatory Foot Surgery v. American
Podiatry Ass’n., 516 F.Supp. 378, 382 (S.D.N.Y. 1981).
In reaching that determination [ cannot ignore the
fact that the ADA is not the conventional commercial
profit making organization whose business transactions
have traditionally been deseribed by sales and purchases.
Rather, it must be determined under what cireumstances
a not-for-profit membership organization such as_ the
ADA may be said to “transact business” within the
meaning of section 22.
While my overall thesis is that section 22 cannot
be viewed in a vacuum but must have factual content
nourished by district court findings of fact, in this part
of my discussion IT am obliged to refer to those undis-
puted facts which appear in affidavits filed by the ADA.
To complete the entire factual context presented to the
district court and to this court, I also include the two
“factual circumstances” upon which the Majority relies
in upholding section 22 venue.
The following are excerpts from affidavits submitted
by the ADA:
— 55a —
1, ADA’s headquarters and principal place of busi-
ness are located in Chicago, Illinois, with one ad-
ditional office in Washington, D.C. ADA has no
office and no employees in the Virgin Islands. (Af-
fidavit of T. Booersehinger, § 2);
2. Dr. Asher G. Chavoor, the member of the ADA’s
Board of Trustees who represents the Virgin Islands,
resides in Arlington, Virginia and practices in Wash-
ington, D.C., not the Virgin Islands; (Affidavit of
L. Miller, ADA Membership Supervisor, {| 6);
3. Of ADA’s approximately 130,000 members, only
19 resided in the Virgin Islands as of December 8,
1979 (Affidavit of I. Miller, {| 2);
4. ADA’s Annual Session, its major activity each
year, has never been held in the Virgin Islands (Af-
fidavit of H. Wells, ™ 2);
5. No advertising in ADA’s Journals originates
from advertisers located in the Virgin Islands (Af-
fidavit of F. Cordero, | 2);
6. ADA officials travel to the Virgin Islands only
on sporadie occasions on ADA business and, in faet,
ADA has only held two small meetings in the Vir-
gin Islands (Affidavit of HTH. Wells, § 3);
7. Under ADA’s constitution and bylaws, the VIDA
is largely autonomous in the eonduct of its acti-
vities (Affidavit of T. Boerschinger, { 3);
8. Only $2,400 in membership dues out of $14,000,-
000 collected nationally by the ADA came from
members in the Virgin Islands in 1980, or 0.01714%
of total membership revenues. (Affidavit of L. Miller,
7 3).
The affidavits submitted by Myers are not addressed
to section 22 conduct, but rather to personal jurisdie-
tional concepts. Nevertheless, it appears of reeord in
Myers’ affidavit that for some cight years Dr. Cap-
puccio participated in the VIDA’s annual meetings to
“make sure that the local association toed the line with
respect to ADA policy.” (App. 51; Maj. op. at 730).
— 56a —
In addition, that same affidavit can be read as claiming
that three of ADA’s officers had visited the Virgin Is-
lands on ADA business, and that Dr. Kerr, the 1980
President of the ADA, addressed the VIDA at its 1980
annual meeting and urged the passage of bylaws in-
corporating the ADA Code of Professional Conduct (App.
52; Maj. op. at 730).
These latter assertions by Myers are all that can be
gleaned from his affidavits as acts which in any way
pertain to the ADA’s transaction of business in the
Virgin Tslands. Indeed the Majority opinion depends
wholly on those two circumstances to support its holding
that the ADA “transacts business” sufficient to support
Myers’ choice of venue in the Virgin Islands. In so hold-
ing, the Majority states that “enforeing a Code of Con-
duct is at the heart of . .. a professional membership
organization[’s business],” and “ADA‘’s direct continual
supervision in the Virgin Islands of the VIDA to en-
sure enforeement of ADA’s professional Code subjects
it to plaintiff's choice of [federa] anti-trust] venue in
the District of the Virgin Islands.” (Maj. op. at 730-
731). [T cannot agree.
I suggest that the authorities dealing with section 22
venue in the context of not-for-profit professional or-
ganizations do not support the Majority’s conclusion
and that the Majority has erred in a significant respect
when it departs from the test established by those au-
thorities for determining the transaction of business
under 15 U.S.C. § 22. I also suggest that based on the
meager record before us there is no evidence which
could even support a finding that the ADA “transacted
business” in the Virgin Islands. See, e.g., FTC v. British
Oxygen Co., supra, 529 F.2d at 200.
B.
My examination of the authorities in this not-for-
profit associational context reveals the following.
— 57a —
1. Every case that has held that an Association
“transacted business” within the meaning of section 22
did so on the basis of facts which established a con-
tinuing licensing, accreditation or qualitative evaluation
function on the part of the Association. Only one case
(Sherman College, supra, (American Chiropractic Ass’n.))
holds otherwise. I discuss that case infra.
Levin v. Joint Commission on Accreditation of Hospi-
tals, supra, 354 F.2d at 517 (“The business of the Joint
Commission is that of accrediting hospitals. Field in-
spections are an essential aspeqt of that business.”)
Courtesy Chevrolet, Inc. v. Tennessee Walking Horse
Breeding and Exhibitors’ Ass’n. of America, 344 F.2d
860 (9th Cir. 1965) (The association is the sole body in
the U.S. in which this breed of horses may be regis-
tered. Horses not so registered are not recognized as
pure breeds and may not compete in shows. The Asso-
ciation supplies judges for the competition from which a
horse’s value is determined); Sherman College of Straight
Chiropractic vy. American Chiropractic Ass’n., supra, 534
F.Supp. at 441 (National Board of Chiropractic Exam-
iners) (That Board designs and scores the national chiro-
practic examination, sends the results to the state li-
censing board, and administers the test in the judi-
cial district semi-annually); Bogus v. American Speech
@ Hearing Ass’n., supra, 389 F.Supp. at 329 (Associa-
tion is the accrediting agent for college and university
programs. “The workshops, certification, and accredita-
tion are the means by which defendant attempts to
fulfill its goal of maintaining high standards for pro-
fessionals providing speech and hearing services and are
sufficient to meet the venue requirement that defen-
dant ‘transacts business’ in this District”); Health Care
Equalization Committee of the Iowa Chiropractic Society
v. Iowa Medical Society, supra, 501 F.Supp. at 983
(AMA’s Committee on Quackery transacts business in
Iowa by its direct involvement in its study of aspects
of the practice of chiropractic and its relation to the
practice of medicine in Towa).
— 58a —
2. The only Court of Appeals which did not discuss
the concept of licensing, accreditation or evaluation but
which considered section 22 venue in an associational
context, found no transaction of business even where the
Association had prepared materials for dissemination
through the radio, television or newspaper media. Par-
tholomew v. Virginia Chiropractors Ass’n., 612 F.2d
812 (4th Cir. 1979). That court considered a variety of
factors in holding that the Association had not trans-
acted business. Consideration of these factors was sum-
marized as follows:
Enumeration of the points of contact ACA | Ameri-
ean Chiropractic <Ass’n.] has with Virginia, even,
without limiting the discussion to the Western Dis-
trict, will entirely raze all imprint of its venue-pres-
ence. Virginia accounted for only 53 of the 8875
national members, .06 percent of its membership.
ACA never qualified to do business in Virginia (only
in Delaware) and its sole office was in Towa. In
Virginia, there were no offices, no officers, no agents,
no property, no purchases, no seminars or work-
shops, and no sales save of pamphlets, journals, and
other educational and public relations materials
generating very little revenue. All transactions were
by mail. No membership meetings were convened in
Virginia; no directors or employees resided there.
Id. at 816.
3. Other cases which refused to find a transaction
of business also looked to the factors of residence, mem-
bership, meeting activities, dues payment, seminars, and
the like which Bartholomew, supra, 612 F.2d at 815-17
had also considered. Golf City Inc. v. Wilson Sporting
Goods Co., supra, 555 F.2d 428; Academy of Ambulatory
Foot Surgery v. American Podiatry Ass’n., 516 F.Supp.
at 380-81; Health Care Equalization Committee of the
Iowa Chiropractic Society v. lowa Medical Society, supra,
501 F.Supp. 970; Friends of Animals v. American Ve-
terinary Medical Ass’n., swpra, 310 F.Supp. at 624.
— 50a —
4. Those cases where the findings did not support
an imputation of the local association’s activities to
the national association, held that the national associa-
tion did not “transact business” for venue purposes
within the meaning of section 22. Golf City Inc. v. Wilson
Sporting Goods Co., supra, 555 F.2d 428. (PGA did not
transact business in the district merely because members
of the local society sat on the Board of the national
organization and the logo of the PGA appeared on
membership applications of the local organization. For
the actions of the local to be ascribed to the national
organization, there must be such a total disregard for
the separate corporate entities that the two can be
viewed as a single entity); Academy of Ambulatory Foot
Surgery v. American Podiatry Ass’n., supra, 516 F.
Supp. at 380-81 (no imputation of the local’s activities
where the local was separately incorporated, was financial-
ly self-sufficient, maintained its own dues structure, mem-
bers of the local had to be members of the national,
the local’s constitution and by-laws paralleled those of
the national, and where the disciplinary decisions of the
local were reviewable by the national organization) ;
Friends of Animals v. American Veterinary Medical
Ass’n., supra, 310 F.Supp. at 624 (no imputation where
constituent societies could not solicit membership or col-
lect dues for national organization, the constituent socie-
ties were free to adopt by-laws and constitutions with-
out national approval and membership in the national
organization was not required); and St. Elizabeth Hos-
pital, Inc. vy. Richardson, 167 F.Supp. 155, 159 (W.D.
Ark. 1958) aff’d on other grounds, 269 F.2d 167 (8th
Cir. 1959) (no imputation of activities of local medical
societies to American Medical Association, merely be-
cause the local societies were obliged to follow the con-
stitution and by-laws of the national organization).
5. The only case to hold that an association had “trans-
acted business” where the most significant contact with
a district consisted of a series of three to four seminars
a “een
held by the national organization over a period of five
years was Sherman College of Straight Chiropractic v.
American Chiropractic Ass’n., supra, 534 F.Supp. 438
(American Chiropractic Ass’n.), a case which, in light of
the other authorities cited, appears to be out of the main-
stream of authority, but is in any event inapposite to the
case sub judice.
From this review, the following principles and stan-
dard clearly emerge:
A. “Transacting business” cannot be determined with-
out an extensive factual basis, i.e., evidence in the reeord
from which findings can be made.
B. The business activities of an association musi be
of a substantial character and unless its activity demon-
strates a total disregard for the separate corporate enti-
ties in its relationship with a local association, the local
association’s activities will not be imputed to the national
association and the national association will not be held
to have transacted business in the foreign locale.
C. The type of business, if it is not of a conventional
commercial character, must be of a nature whereby the
very licensing, accreditation and evaluative determinations
with respect to qualifications of the subject of the associ-
ation, must be conducted by the national associetion.
D. The plaintiff bears the burden of establishing sec-
tion 22 venue.
E. The standard by which a non-professional associa-
tion’s conduct must be measured in determining whether
it transacts business within the meaning of section 22 in
the district where the plaintiff has brought suit, may
therefore be stated as follows:
Where a national not-for-profit membership organiza-
tion (directly or through its societies, which act as
its agent), either conducts traditional business activi-
ties of a substantial character which by themselves
—bla-—
would support a holding of “transacting business” in
a conventional sense; or, where such an association
conducts regular evaluation, licensing or aceredita-
tion functions of a substantial character, such activity
will constitute the transaction of business supporting
venue under 15 U.S.C. § 22.
It is apparent from this recapitulation that the ADA
has not transacted business in the Virgin Islands and the
Majority’s holding that it has, must be deemed erroneous,
because contrary to the Majority’s holding, mere enforce-
ment of a professional code, even if such enforcement
is undertaken by a national organization, or encourage-
ment that such a code be adopted, without more, cannot
suffice to satisfy section 22’s requirement.
C.
First. as I have earlier demonstrated, the only relevant
evidence which appears of record has been that furnish-
ed by ADA and no findings of fact have ever been made
with respect to any evidence. It must be remembered that
the evidence is undisputed that the ADA has only nine-
teen ont of 120.000 members resident in the Virgin Is-
lands; that the ADA has no offices or employees in the
Virgin Isiands: that the ADA’s Annual Session has never
been held in the Virgin Islands: that no advertising in
the ADA’s Journals originates from advertisers located
in the Virgin Islands: that only 0.01714% of total ADA
membership revenues ($2,400 out of $14,000,000) origi-
nate in the Virgin Islands; and that once the VIDA
adopts a constitution and by-laws in conformity with that
of the ADA, the VIDA is autonomous. See p. 9-10 swpra,
for text of affidavits.
Second, the ADA does not license, evaluate or accredit
any members of the VIDA. Nor can it be said that VIDA’s
actions may he imputed to the ADA so as to establish
venue in the Virgin Islands through the actions of the
VIDA. The standard established for such impu
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