Petition — Charter Consolidated, Ltd. v. Barber

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IN THE

Supreme Court of the United , "

OCTOBER TERM, 1983 es i

CLERK

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CHARTER CONSOLIDATED, LTD., CHARTER CONSOLIDATED

INVESTMENTS, LTD., and CENTRAL MINING FINANCE, LTD.,

Petitioners,

—

—V).—

ANTHONY A. BARBER, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

SUPREME COURT OF PENNSYLVANIA

ROBERT L. CLARE, JR.

Counsel of Record

WERNER L. POLAK

JEREMY G. EPSTEIN

MADELEINE SCHACHTER

SHEARMAN & STERLING

Attorneys for Petitioners

Charter Consolidated, Ltd.,

Charter Consolidated

Investments, Ltd., and

Central Mining Finance, Ltd.

53 Wall Street

New York, New York 10005

(212) 483-1000

Of Counsel

WILLIAM M. WYCOFF

DAVID G. RIES

MICHAEL R. BUCCI

THORP, REED & ARMSTRONG

One Riverfront Center

Pittsburgh, Pennsylvania 15222

(412) 394-7711

March 26, 1984

QUESTIONS PRESENTED

1. Whether the due process clause of the Fourteenth

Amendment was violated by the exercise of in personam

jurisdiction over a foreign parent corporation based solely

upon the parent’s ownership of subsidiaries which were present

in the forum state.

2. Whether the due process clause of the Fourteenth

Amendment was violated by the exercise of in personam

jurisdiction over a foreign corporation whose only contacts

with the forum state consisted of occasional visits to the state

by employees, when such visits were unrelated to the cause of

action.

LISTING OF PARTIES

Respondents, in addition to Anthony A. Barber, include:

William A. Blauvelt, Eugene L. Bosworth, Kenneth Bow-

ser, Gaylon S. Clinton, Larry A. Commino, Charles L.

Croop, Merle Crowley, Jack A. Dalaba, Harry I.

Daugherty, Larry D. Daugherty, Carle Earle, Bruce A.

Fessenden, Frank E. Hamsher, Robert F. Haskins, Nor-

man E. Henton, Lawrence R. Jacks, Eugene M. Lewis,

Dean H. Meacham, Merritt M. Miller, Phillip Miller,

Verne M. Nichols, Edward V. Nolder, Albert L. Rees,

Christian G. Renner, Lawrence G. Roberts, Alton P.

Spencer, Leo H. Stout, Carlton L. Summers, Bert A.

Tucker, Donald F. Tucker, Patricia Barber, Irva M.

Blauvelt, Donna J. Bosworth, Shirley Bowser, Donna

Clinton, Lois A. Commino, Jean K. Croop, Joann Crow-

ley, Mary Alice Dalaba, Nancy A. (Mrs. Harry)

Daugherty, Gayle M. (Mrs. Larry) Daugherty, Gladys A.

Haskins, Mrs. Eugene Lewis, Mrs. L. R. Jacks, Charlene

Meacham, Shirley B. (Mrs. Merritt) Miller, Frances (Mrs.

Phillip) Miller, Agnes L. Nolder, Rita T. Rees, Janet

Renner, Isola M. Roberts, Marie L. Stout, Donna L.

Summers, Maxine L. (Mrs. Bert A.) Tucker, Beverly A.

(Mrs. Donald) Tucker, Richard J. Abbott, Thomas Astle,

Daniel E. Baker, Edward W. Rutler, Lynn Caulkins,

Ralph L. Crowe, Clifford L. Dawley, Homer Falk, Walter

Leroy Finster, David Groff, Ted B. Harris, Carl C.

Hoofftallen, Thomas H. Lamont, Harry L. Rossman,

Warren E. Tripp, Ronald Varney, Stafford F. Waterman,

Maxine L. Abbott, Hope M. Astle, Genevieve G. Butler,

Louise Caulkins, Florence Crowe, Mary R. Dawley, Glo-

ria Groff, Phyllis Hamsher, Mary J. Harris, Mary A.

Lamont, Doris Tripp, Norma E. Varney, Arlene P. Water-

man, Stanley E. Major, Helen June Baker, Beatrice B.

Major, Robert Teuscher, Gerald L. Barnes, Betty A.

Barnes, Mary L. Baker, Pittsburgh Corning Corporation,

PPG Industries, Inc., and Corning Glass Works, Inc.

iii

Other defendants, who are not joining this Petition, include:

Cape Asbestos Fibres, Ltd., Cape Asbestos South Africa

Proprietary, Ltd., Egnep (Pty) Ltd., Amosa, Ltd., North

American Asbestos Corp., Charles G. Morgan, Geofrey

Higham, Dr. Richard Gaze, Cape Board & Panels, Ltd.,

W. B. Arnold Co., and X, Y & Z Corporations.

Third-party defendants include:

Commonwealth of Pennsylvania, and American Flint

Glass Workers Union, AFL-CIO.

LISTING UNDER SUPREME COURT RULE 238.1

As required by Supreme Court Rule 28.1, set forth below is

a listing of the parent companies, subsidiaries (except wholly

owned subsidiaries) and affiliates of petitioners Charter Con-

solidated, Ltd., Charter Consolidated Investments, Ltd., and

Central Mining Finance, Ltd.:

Alexander Morrison (Builders) Limited

Anmercosa Sales Ltd.

Anglo American Corporation of South Africa

Limited (owns 41 percent of the equity capital

of Minerals and Resources Corporation Limited)

Anglo American Corporation Zimbabwe Limited

Beralt Tin and Wolfram Limited

Beralt Tin and Wolfram (Portugal) SARL

Cape Industries PLC

Cemboard Malaysia SDN BHD

Cleveland Potash Limited

Covenant Industries Limited

Eastern Cape Limited

Hunting Painting Contractors Limited

Johnson Matthey PLC

Minerals and Resources Corporation Limited (owns

35.7 percent of the equity capital of Charter

Consolidated PLC)

National Mine Service Company

Pandrol Avaux SA

Pandrol Canada Limited

Pandrol da America Latina Participacoes LTDA

Svenska Bromsbandsfabriken AB

Wheal Crofty Holdings Limited

. F

meee

TABLE OF CONTENTS

Sy PE Wackcvcbacdeves obudedantakeae®

i . ciabighssendedsoun bine aswemante

Listing Under Supreme Court Rule 28.1..............

SE Sues xatenhassn 6eNie peenenened

Nc succuekss been manemedeeabieeeeote

Constitutional Provisions and Statute Involved........

nk a ak vaigesne a8 6 ae

TR, Jc. che 0e$-eensdekdacen deus

ee eae

Reasons for Granting the Writ ......................

II.

The Pennsylvania Court’s Assertion Of Personal

Jurisdiction Over A Foreign Parent Corporation

On The Basis Of The Forum-Related Activities Of

Its Subsidiaries, Which Are Separate And Distinct

Corporate Entities, Conflicts With Well-Estab-

lished Principles Set Forth By This Court And

Violates The Due Process Clause Of The Four-

Ce ila as ckcntabeshstcne tune wen

The Pennsylvania Court Violated The Due

Process Clause Of The Fourteenth Amendment

When It Found That Five Isolated And Unrelated

Visits Constituted “Continuous And Substantial”

Business Activity Sufficient To Subject Charter To

The General Jurisdiction Of The Pennsylvania

RRS ci wouk concdvdlecesunss aseedan sabia

Appendix A

Order of the Supreme Court of Pennsylvania,

dated December 27, 1983 .......cccccccccccces

Appendix B

Order and Opinion of the Superior Court of

Pennsylvania, 464 A.2d 323, dated July 1, 1983..

Appendix C

Opinion of the Court of Common Pleas of Al-

legheny County, Pennsylvania, dated December

DPE SCAG Gees dee eons ohe bebeneesuee pene

Appendix D

Order of the Superior Court of Pennsylvania,

Gated September 13, 1963... ....cccccccccccces

Appendix E

Amended Order of the Court of Common Pleas

of Allegheny County, Pennsylvania, dated Janu-

i mE «np venccdccatwaebasecetacuueebaes

Appendix F

42 Pa. Cons. Stat. Ann. § 5301 (1981), and 42 Pa.

Cons. Stat. Ann. § 5322 (1976) ................

PAGE

32a

Vii

TABLE OF AUTHORITIES

I. Cases PAGE

Barber v. Pittsburgh Corning Corp., 464 A.2d 323 (Pa.

PG EEE 0 dconcdesdché cvencnvsivevcens accel passim

Barber v. Pittsburgh Corning Corp., No. 79-21544 (Pa.

CE Bae BO. Bahu SHED 0k ie cic cctnwawia neces passim

Beary v. Norton Simon, Inc., 479 F. Supp. 812 (W.D.

PL Es akbs aK0sscaobbadvesaueebaees Vavebicess 13

Bland v. Kentucky Fried Chicken Corp., 338 F. Supp.

Sf ip te a ne ee 11

Bolger v. Dial-A-Style Leasing Corp., 159 Colo. 44, 409

2 2 RY er oe err 10

Botwinick v. Credit Exchange, Inc., 419 Pa. 65, 213

Pe ef SR ee rey rine ee eer eRe 13

Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333

PE hich <6 senisedeadepacutrenutenne 8, 9, 10, 12, 13, 14

Consolidated Textile Corp. v. Gregory, 289 U.S. 85

SEP A Vice a bei cc wkbe WarbinnseccbudekMess seeks 10, 15

Crow Tribe of Indians v. Mohasco Indus., Inc., 406 F.

eh. Fee es es SPOE ns cinagncvaeds s cabhemeuabh 11

Croyle v. Texas Eastern Corp., 464 F. Supp. 377 (W.D.

a. SE o Gh Gass oa honens teueeakeneakeababhaames 11

Delaware Valley Surgical Supply Co. v. Geriatric and

Medical Centers, Inc., 450 Pa. 239, 299 A.2d 237

SEE ckdachcbd ic hedhibcenkcevebered ticadehadecs 11

Energy Reserves Group, Inc. v. Superior Oil Co., 460 F.

SE ee Cae, , TOTRe od o's a ccppense cnc ctagven 12, 13

Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d

See EE Sas os Vinee scan ck ebb caren s bumas 10

viii

PAGE

Frito-Lay, Inc. v. Procter & Gamble Co., 364 F. Supp.

ee Ga DEE FST she wkdvovcdbecsedccausadbeat 11

Hargrave v. Fibreboard Corp., 710 F.2d 1156 (Sth Cir.),

reh’g denied, Nos. 82-2231, 82-2236 (November 3,

PPR ickaciccestatekcbankdshncat ceungesee ale. 14

ielicopteros Nacionales de Colombia, S.A. v. Hall,

cert. granted, 51 U.S.L.W. 3649 (U.S. March 8, 1983)

PG BRET: uv ccie sencicas nopensctucctedecotecs 16

Indian Coffee Corp. v. Procter & Gamble Co., 482 F.

Supp. 1096 (W.D. Pa. 1980) ....cccccccccccccccces 11

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

CE 5 cd RRs hdeWekind sek wesakedeuse 12, 13, 15, 17, 18

Keeton v. Hustler Magazine, Inc., No. 85-485 (U.S.

ED is TOE ho 5 6des esse eodewncnccannssacasan 15, 18

McCulloch Corp. v. O’Donnell, 83 Nev. 396, 433 P.2d

TL 5 seks as ch ahudubiek ewes Gps keecanuitnes 10

Milliken v. Meyer, 311 U.S. 457 (1940). ..........005- 15

National Carbide Corp. v. Comm’r of Internal Revenue,

pL Perr re errr ee 13

Papercraft Corp. v. Procter & Gamble Co. , 439 F. Supp.

es Ss SPUR a eiicdveccancd ounces cdoeeances 11

People’s Tobacco, Ltd. v. American Tobacco Co., 246

Su EUs wep eh.ce's 0000060005060 ebaaeeasnens 10

Perkins v. Benguet Consolid. Mining Co., 342 U.S. 437

GS tink 00s wea caelds cc ccrobuueteuers -eeh skeet 8, i8

Periman v. Great States Life Ins. Co., 164 Colo. 493,

ry Gee CR 6 oboe ve eeendss cose cneabennas 10

Peterson v. Chicago, Rock Island & Pac. Ry. Co., 205

Sue DUNE D onc ccdacantenceaceléeausaniinneen 10, 15

PAGE

Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S.

DE Ghiwhbiadesesasceds ccvesceececdscees 10

Priess v. Fisherfolk, 535 F. Supp. 1271 (S.D. Ohio 1982) 11

Reul v. Sahara Hotel, 372 F. Supp. 995 (S.D. Tex. 1974) 11

Schoel v. Sikes Corp., 533 F.2d 930 (Sth Cir. 1976) .... = II

Turner v. Jack Tar Grand Bahama, Ltd., 353 F.2d 954

Cc tcn che cadesceccocscosteades 11

Uston v. Hilton Casinos, Inc., 564 F.2d 1218 (9th Cir.

cece oak aaa casbsedddgecececess 10

Walker v. Newgent, 583 F.2d 163 (Sth Cir. 1978), cert.

denied, 441 U.S. 906 (1979) see eeeeeeeeeeeseeeanes 10, 11

Westerdale v. Kaiser-Frazer Corp., 6 N.J. 571, 80 A.2d

SE Se 10

Westinghouse Elec. Corp. v. Super. Ct. of Alameda

County, 17 Ca. 3d 259, 131 Cal. Rptr. 231, 551 P2d

ES ER a a ne re 10

Wise v. State Bd. for Examination, Qualification &

Registration of Architects, 247 Ga. 206, 274 S.E.2d

544, appeal dismissed, 454 U.S. 804 (1981) ......... 10

II. Constitutional And Statutory Provisions

i MET [iE cccccccccsécccscccesece

es Te ED MEME cavccccccovcccccccsectoue

42 Pa. Cons. Stat. Ann. § 5301 (1981) ...........4.. passim

42 Pa. Cons. Stat. Ann. § 5322 (1976) .............. passim

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

CHARTER CONSOLIDATED, LTD., CHARTER CONSOLIDATED

INVESTMENTS, LTD., and CENTRAL MINING FINANCE, LTD.,

Petitioners,

—_Y <=

ANTHONY A. BARBER, et al.,

Respondents.

- -

PETITION FOR A WRIT OF CERTIORARI TO THE

SUPREME COURT OF PENNSYLVANIA

Petitioners respectfully pray that a writ of certiorari issue to

review the order of the Supreme Court of Pennsylvania,

entered in this proceeding on December 27, 1983.

OPINIONS BELOW

The order of the Supreme Court of Pennsylvania, denying

petitioners an allowance of appeal, appears as Appendix A

hereto. The opinion of the Superior Court of Pennsylvania,

reported at 464 A.2d 323, appears as Appendix B hereto. The

opinion of the Court of Common Pleas of Allegheny County,

Pennsylvania appears as Appendix C hereto.

The order of the Superior Court denying the petition for

rehearing and the amended order of the Court of Common

Pleas respectively appear as Appendix D and Appendix E

hereto.

STATEMENT OF JURISDICTION

The order of the Pennsylvania Supreme Court was entered

on December 27, 1983 (App. A at la). The jurisdiction of this

Court is invoked pursuant to 28 U.S.C. § 1257(3) (1983).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Section 1 of the Fourteenth Amendment to the United States

Constitution provides:

All persons born or naturalized in the United States, and

subject to the jurisdiction thereof, are citizens of the

United States and of the State wherein they reside. No

State shall make or enforce any law which shall abridge

the privileges or immunities of citizens of the United

States; nor shall any State deprive any person of life,

liberty, or property, without due process of law; nor deny

to any person within its jurisdiction the equal protection

of the laws.

Sections 5301 and 5322 of 42 Pa. Cons. Stat. Ann. are also

involved, and are reproduced in Appendix F hereto.

STATEMENT OF THE CASE

I. Procedural History

On August 21, 1979, current and former employees of the

Pittsburgh Corning Corporation (“Pittsburgh Corning”) and

their wives filed a complaint against Charter Consolidated,

Ltd. (“Charter”) and others seeking redress for injuries al-

legedly suffered from exposure to asbestos dust and fibers in

and around Pittsburgh Corning’s Port Allegheny, Pennsylva-

nia plant during the period 1964 to 1972. A First Amended

Complaint, dated February 4, 1980, added as defendants

Charter Consolidated Investments, Ltd. (“CCI”) and Central

Mining Finance, Ltd. (“CMF”), which are wholly owned

subsidiaries of Charter.'

On December 26, 1979, Charter filed preliminary objections

to the complaint, challenging the exercise of in personam

jurisdiction by the Pennsylvania Court of Common Pleas.

After extensive discovery, the trial judge overruled Charter’s

objections by a decision and order, dated December 31, 1981

(App. C at 20a). In order to permit an immediate appeal to the

Pennsylvania Superior Court, the lower court amended its

order on January 20, 1982 to state that a “substantial issue of

jurisdiction” was raised by petitioners’ preliminary objections

(App. E at 34a).

Charter appealed to the Superior Court on January 26,

1982. Oral argument was heard on January 13, 1983, and on

July 1, 1983, the lower court’s denial of the preliminary

objections was affirmed (464 A.2d 323; App. B at 2a). Char-

ter’s subsequent petition for reargument was denied on Sep-

tember 13, 1983 (App. D at 32a).

On October 13, 1983, Charter petitioned for allowance of an

appeal to the Pennsylvania Supreme Court. On December 27,

1983, the petition was denied per curiam (App. A at 1a).

In asserting jurisdiction over Charter, the Pennsylvania

courts relied on three theories. First, they found that Charter

had transacted business in Pennsylvania and the complaint

arose out of those transactions. Because Charter has never

been in the asbestos business, this finding depended on the

conclusion that Cape Industries Ltd. (“Cape”), Charter’s par-

tially owned subsidiary which was in this business, was Char-

ter’s alter ego.

The second theory of jurisdiction was that Charter carried

on a “continuous and systematic” part of its gencral business

in Pennsylvania. The court concluded that a Charter subsidi-

ary, Pandrol International, and its subsidiary, Pandrol, Inc.,

both manufacturers of rail fastenings, conducted business in

I Arguments in this Petition made on behalf of Charter should also be

deemed made on behalf of CCI and CMF.

Pennsylvania and that their activities, like Cape’s, could be

ascribed to Charter.

Finally, the courts determined that Charter was itself

engaged in continuous and systematic business activities in

Pennsylvania by virtue of certain visits to the Commonwealth

by Charter employees.

II. Statement of Facts

A. Charter and Its Subsidiary Companies

Charter, an English corporation, is a publicly held invest-

ment holding and finance company. Since its incorporation in

1964, it has invested in a variety of companies, most of which

are engaged in industrial, mining, and finance and investment

activities. Charter’s investment holdings vary from 100 percent

to a fraction of one percent. Charter has never engaged in the

mining, manufacturing, or marketing of asbestos, or in any

other asbestos-related activities. Charter owns several holding

companies, including CCI and CMF, which hold the shares of

the companies in which Charter invests. Charter also owns a

service company, Charter Consolidated Services Ltd. (“CCS”),

which provides various corporate and purchasing services and

employs Charter’s employees.

i. Cape

Charter owns 67.3 percent of the stock of Cape, an English

corporation formed in 1893. The balance of Cape’s shares are

publicly held and traded on the London Stock Exchange. Cape

owns subsidiaries engaged in a wide variety of businesses,

including the manufacture and building of insulation products,

insulation contracting, and the manufacture and distribution

of friction materials and automotive parts. Until 1979, Cape

owned, through its subsidiaries, companies engaged in the

mining and manufacturing of South African asbestos.

One of three companies that merged to form Charter in

1965 owned an indirect 16.7 percent interest in Cape’s shares,

and Charter inherited this interest. From 1965 to 1969, Charter

increased its interest in Cape to 25 percent through occasional

open market purchases made by its investment holding subsidi-

aries. In May 1969, Charter made a tender offer for 50 percent

of the outstanding Cape shares not already held by Charter. As

a result of the tender offer, Charter’s interest increased to

approximately 62 percent. From 1969 to 1978, Charter gradu-

ally increased its holdings in Cape to 67.3 percent as an

underwriter of Cape’s stock and through open market pur-

chases. The percentage of Charter’s indirect interest has not

changed since that time.

Cape was run independently of Charter before the 1969

tender offer, and it has continued to be managed independently

thereafter. Charter’s independence from Cape is demonstrated

by the following factors, among others:

(1) The two companies maintain separate offices, books

and records, and bank accounts.

(2) The two companies hold separate board meetings and

shareholders’ meetings.

(3) Cape is financially independent of Charter. Its consol-

idated asset value as of 1979 was $132,000,000, and its

debt/equity ratio in that year was 43.6 percent. Cape has

never borrowed from Charter, nor has Charter ever

guaranteed a loan to Cape.

(4) There has never been significant overlap between the

boards of Charter and Cape. The three directors Charter

has nominated to the Cape board since 1969 have never

constituted as much as 25 percent of the Cape board.

(5) Neither company trades upon or seeks identification

with the other’s name in its advertising or other dealings

with the public.

(6) Charter has never been involved in the day-to-day

management of Cape. It has never participated in deci-

sions concerning the hiring and firing of Cape employees;

portfolio investments; budgetary matters; advertising

practices or marketing strategies; the organization, opera-

tion and structure of Cape subsidiaries; or the mining,

marketing, prospecting or sale of asbestos.

(7) Cape was an established company in which Charter

gradually acquired an interest which now stands at 67.3

percent; it is not a creation of Charter.

2. Pandrol

Since 1965 Charter has owned, through a subsidiary, all the

shares of Elastic Rail Spike, Ltd., an English corporation,

which changed its name to Pandrol International in 1980.

Pandrol International is engaged in the manufacture and sale

of railway track fastenings and assemblies.

In 1975 Pandrol International established a sales office in

Pittsburgh, Pennsylvania to market its product in the United

States. The office was closed in 1978, and the company’s

authorization to do business in Pennsylvania was withdrawn.

In 1978 Pandrol International formed and incorporated a

wholly owned subsidiary, Pandrol, Inc., a Delaware corpora-

tion. Pandrol, Inc. established an office and built a manufac-

turing site in Bridgeport, New Jersey in 1979. Pandrol, Inc.

both manufactures and markets railway fastenings and as-

semblies in the United States.

The independence of both Pandrol International and Pan-

drol, Inc. from Charter is demonstrated by the following

factors:

(1) Both Pandrol International and Pandrol, Inc. main-

tain separate offices, books and records, and bank ac-

counts from those of Charter.

(2) The boards of Charter, Pandrol International and

Pandrol, Inc. meet separately.

(3) Charter does not have a majority of either Pandrol

board; it nominates three directors to Pandrol Interna-

tional’s eight member board, and makes no nominations

to, and has no directors in common with, the board of

Pandrol, fac.

(4) Neither Pandrol International nor Pandrol, Inc. has

any officers or employees in common with Charter.

(5) Charter has never participated in the day-to-day

management of either Pandrol International or Pandrol,

Inc. Neither company consults Charter about such deci-

sions as the hiring, dismissal or promotion of employees;

advertising practices; portfolio investments; marketing

strategy; product innovation; technical developments;

capital expenditures; or changes in corporate structure.

(6) Neither Pandrol company has ever traded upon, or

sought identification with, Charter’s name in its dealings

with the public.

B. Charter’s Contacts With Pennsylvania

Charter conducts no business in Pennsylvania and is not

qualified to do business there. It has never maintained an

office, bank account, telephone listing, or post office box in

the state. No Charter employees or officers reside in Pennsyl-

vania, and the company has no distributors, suppliers, or

agents there. Charter has never advertised or solicited business

in Pennsylvania. The only time the company paid taxes in the

state was in connection with a 1979 purchase of approximately

$10,000 worth of stock through a Philadelphia stock broker.

With the exception of this purchase of securities, Charter’s

only contacts with Pennsylvania consisted of visits by employ-

ees of CCS, Charter’s service subsidiary, on behalf of Charter’s

clients. CCS provides a variety of services for approximately

50 clients, including recruiting, secretarial, technical, buying,

and share registration services. During the year preceding the

filing of the complaint, CCS employees made the following

visits in connection with services it provided for Charter’s

clients:

(1) A CCS employee met with employees of a Boyertown,

Pennsylvania corporation in connection with the sale of

columbite by a Charter client.

(2) A CCS employee met with employees of a Pittsburgh

corporation to discuss the cancellation of orders for acid

plant compressors placed by a Charter client located in

Zaire.

oct:

(3) On behalf of another client, a CCS employee met in

Pittsburgh with officials of the United States Bureau of

Mines to discuss remote control devices.

(4) An authority on the properties of vanadium, em-

ployed by CCS, twice visited Pennsylvania on behalf of

another Charter client, to discuss business with two Penn-

sylvania corporations and to promote the Vanadium In-

ternational Technical Committee.

REASONS FOR GRANTING THE WRIT

In asserting jurisdiction over Charter, the Pennsylvania

courts departed from two long established doctrines of this

Court. First, they asserted jurisdiction over Charter, a foreign

parent corporation, by virtue of the forum-related activities of

two of its subsidiaries, Cape and Pandrol, even though Charter

did not control, dominate, or otherwise involve itself in the

business activities of either subsidiary. This conclusion consti-

tutes a clear rejection of Cannon Mfe. Co. v. Cudahy Packing

Co., 267 U.S. 333 (1925).

Second, the Pennsylvania courts asserted as a separate basis

of jurisdiction over Charter five isolated and unrelated visits to

Pennsylvania by CCS employees. All such visits were unrelated

to the cause of action. The courts concluded that such visits

amounted to “continuous and substantial” business activity

within the forum state. The conclusion that this level of

activity constitutes “doing business” within a state for jurisdic-

tional purposes is inconsistent with Perkins v. Benguet Consol.

Mining Co., 342 U.S. 437 (1952).

I. THE PENNSYLVANIA COURT’S ASSERTION OF PER-

SONAL JURISDICTION OVER A FOREIGN PARENT

CORPORATION ON THE BASIS OF THE FORUM-RE-

LATED ACTIVITIES OF ITS SUBSIDIARIES, WHICH

ARE SEPARATE AND DISTINCT CORPORATE ENTI-

TIES, CONFLICTS WITH WELL-ESTABLISHED PRIN-

CIPLES SET FORTH BY THIS COURT AND VIOLATES

THE DUE PROCESS CLAUSE OF THE FOURTEENTH

AMENDMENT. :

The Pennsylvania courts asserted jurisdiction over Charter

by ascribing to it the acts of two subsidiaries, Pandrol and

Cape, both of which maintained c~ntacts with Pennsylvania.

In reaching this conclusion, the courts “vierced the corporate

veils” of both Pandrol and Cape and fo'wnd each to be the

“alter ego” of Charter. In so doing, the Pv ansylvania courts

adopted a standard for “piercing the corpon ite veil” that is

contrary to longstanding precedents of this Court and clearly

violative of the due process clause of the Fournreenth Amend-

ment. The Pennsylvania rule, if allowed to siand, will mean

that any foreign parent corporation will be subject to the

jurisdiction of the courts of a forum state solely by virtue of its

subsidiary’s presence in the forum.

In reaching this conclusion, the Pennsylvania courts rejected

the authority of this Court’s decision in Cannon Mfg. Co. v.

Cudahy Packing Co., 267 U.S. 333 (Brandeis, J.). For nearly

60 years, Cannon has been the law throughout the United

States on the issue of the susceptibility of foreign parent

corporations to in personam jurisdiction.

In Cannon, the plaintiffs sought to obtain jurisdiction over

the defendant in North Carolina by virtue of the activities of

the defendant’s subsidiary in that state. Plaintiffs demon-

strated that the parent owned all of the capital stock of the

subsidiary and that the parent dominated the subsidiary “im-

mediately and completely.” The subsidiaries’ sole function was

to market the parent’s product, a function performed in other

states by divisions of the parent corporation. Justice Brandeis,

writing for a unanimous Court, held that there was no jurisdic-

tion over the parent in North Carolina. He noted that the

separate existence of the subsidiary was “in all respects ob-

served,” id. at 335, and that “[t]he corporate separation,

though perhaps merely formal, was ;rcal. It was not pure

fiction,” id. at 337.”

Federal and state courts have interpreted Cannon to hold

that a court is justified in asserting jurisdiction over a foreign

parent whose subsidiaries have contacts with the forum only if

it can be demonstrated that the subsidiary is the “alter ego” or

“mere instrumentality” of the parent. Escude Cruz v. Ortho

Pharmaceutical Corp., 619 F.2d 902, 905 (ist Cir. 1980);

Walker v. Newgent, 583 F.2d 163, 167 (Sth Cir. 1978), cert.

denied, 441 U.S. 906 (1979); Uston v. Hilton Casinos, Inc.,

564 F.2d 1218, 1219 (9th Cir. 1977); Wise v. State Bd. for

Examination, Qualification & Registration of Architects, 247

Ga. 206, 210, 274 S.E.2d 544, 547-48, appeal dismissed, 454

U.S. 804 (1981); Westinghouse Elec. Corp. v. Super. Ct. of

Alameda County, 17 Cal. 3d 259, 274, 131 Cal. Rptr. 231, 242,

551 P.2d 847, 858 (1976); Perlman v. Great States Life Ins.

Co., 164 Colo. 493, 496-97, 436 P2d 124, 125-26 (1968);

McCulloch Corp. v. O’Donnell, 83 Nev. 396, 399, 433 P.2d

839, 841 (1967); Bolger v. Dial-A-Style Leasing Corp., 159

Colo. 44, 48, 409 P.2d 517, 519 (1966); Westerdale v. Kaiser-

Frazer Corp., 6 N.J. 571, 575-76, 80 A.2d 91, 93 (1951). The

courts that have applied the Cannon standard have analyzed a

variety of factors in determining whether or not a subsidiary

can fairly be deemed the alter ego of its parent.

2 Among the decisions of this Court which contain conclusions similar

to that of Cannon are the following: Consolidated Textile Corp. v.

Gregory, 289 U.S. 85, 88 (1933) (the fact that the defendant corpora-

tion owned a subsidiary which was doing business in the forum was

deemed “unimportant” for jurisdictional purposes); People’s Tobacco,

Lid. v. American Tobacco Co. , 246 U.S. 79, 87 (1918) (“[t}he fact that

the [defendant] company owned stock in the local subsidiary compa-

nies did not bring it into the State in the sense of transacting business

there”); Philadelphia & Reading Rx Co. v. McKibbin, 243 U.S, 264,

268 (1917); Peterson v. Chicago, Rock Island & Pac. Ry Co., 205 U.S.

364 (1907).

This analysis involves a careful weighing of the facts and

close scrutiny of all aspects of the relationship between parent

and subsidiary. Among the factors which courts have consid-

ered are the following: whether the parent and subsidiary

maintain separate offices, Reul v. Sahara Hotel, 72 F. Supp.

995, 998-99 (S.D. Tex. 1974); separate bank accounts, Schoe/

v. Sikes Corp., 533 F.2d 930, 932 n.3 (Sth Cir. 1976); and

separate books and records, Frito-Lay, Inc. v. Procter &

Gamble Co., 364 F. Supp. 243, 247 (N.D. Tex. 1973); whether

board meetings and shareholders’ meetings are conducted

separately, Indian Coffee Corp. v. Procter & Gamble Co., 482

F. Supp. 1098, 1104 (W.D. Pa. 1980); Papercraft Corp. v.

Procter & Gamble Co., 439 F. Supp. 1060, 1062 (W.D. Pa.

1977); whether parent and subsidiary have similar names, or

make use of one another’s names in dealing with the public,

Indian Coffee, 482 F. Supp. at 1103; whether the subsidiary is

financially independent of the parent, Bland v. Kentucky Fried

Chicken Corp., 338 F. Supp. 871, 875 (S.D. Tex., 1971);

whether the parent and subsidiary have officers and directors

in common, Walker v. Newgent, 583 F.2d 163, 167; Priess v.

Fisherfolk, 535 F. Supp. 1271, 1278 (S.D. Ohio 1982); whether

the existence of the subsidiary antedates its acquisition by the

parent, Delaware Valley Surgical Supply Co. v. Geriatric and

Medical Centers, Inc., 450 Pa. 239, 244, 299 A.2d 237, 239

(1973); whether the parent has diverse stock holdings or is

created solely as a holding company for the subsidiary, Croyle

v. Texas Eastern Corp., 464 F. Supp. 377, 379 (W.D. Pa. 1979);

whether the parent dictates or controls the day to day business

decisions of the subsidiary, Turner v. Jack Tar Grand Bahama,

Lid., 353 F.2d 954, 956 (Sth Cir. 1965); Crow Tribe of Indians

v. Mohasco Indus., Inc., 406 F. Supp. 738, 742 (D. Mont.

1975).

The Pennsyivania courts, however, did not undertake the

careful analysis of the parent-subsidiary relationship that Can-

non and the cases that follow it require. In concluding that

Cape was the alter ego of Charter, the Pennsylvania Superior

Court relied on only three points: that Charter owned over two

thirds of Cape’s common stock; that Charter received approxi-

mately 16 percent of its income from Cape; and that the

placement of Charter executives on the Cape board enabled

Charter to participate in “Cape’s important business deci-

sions.” Opinion of Montgomery, J., 464 A.2d at 328-29, App.

B at 10a. Similarly, the Superior Court concluded that Pandrol

was Charter’s alter ego simply because Charter owned 100

percent of Pandrol International’s stock and because Charter

executives sat on Pandrol’s board. Jd. at 329, App. B at

10a-l la.

The Superior Court also made plain its disregard for the

Cannon decision. The court stated:

We find the reasoning of the Court in Energy Reserves

[Energy Reserves Group, Inc. v. Superior Oil Co., 460 F.

Supp. 483 (D. Kan. 1978)] to be logical and helpful, and

direct the reader to that case, especially including its

criticism of the holding in the Cannon Manufacturing Co.

v. Cudahy Packing Co. case, supra. In Energy Reserves

the Court found the assertion of jurisdiction in Kansas to

be proper over a foreign corporation, based solely upon

the business activities within the State of Kansas by a

subsidiary that was a separate corporation. The Court

explained the less stringent modern constitutional analysis

in such cases mandated under the /nternational Shoe

decision.

Id. at 332, App. B at 16a-17a.

In citing the Energy Reserves decision, the Superior Court

relied on a case that had explicitly rejected Carinon. The

Energy Reserves court held that “while the rule of Cannon,

and alte: cgo analysis generally, may in some situations retain

statutory value, they no longer have any bearing on the

constitutionality of jurisdiction over a defendant who is prop-

erly served.” 460 F. Supp. at 495.’

3 The Superior Court's reliance on Energy Reserves and i: consequent

rejection of Cannon is all the more remarkable because the Cannon

decision had been explicitly adopted by the Pennsylvania Supreme

There is no merit to the Superior Court’s suggestion that

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

undermined Cannon. Four years after the /nternational Shoe

decision this Court recognized the continued validity of Can-

non in National Carbide Corp. v. Comm'’r of Internal Reve-

nue, 336 U.S. 422, 438-39 n.21 (1949). Although /nternational

Shve and the cases that follow it require certain “minimum

contacts” before jurisdiction can be imposed upon a foreign

corporation, that decision does not define how that standard

should be applied to a parent corporation that had no direct

contacts with the jurisdiction. Jnternational Shoe itself in-

volved a foreign corporation that had limited contact with the

forum state; the question before this Court was whether such

contact, although minimal, was sufficient so that the assertion

of jurisdiction over the corporation did not offend due

process. In Cannon, the question addressed was quite dif-

ferent: what relationship between a foreign parent and a

domestic subsidiary would be sufficient to permit the assertion

of jurisdiction over the parent. Nothing in /nternational Shoe,

either explicitly or by implication, undermines the authority of

Cannon.

Because the Superior Court rejected Cannon, it undertook

none of the factual analysis that Cannon and its progeny

require. When the Charter-Cape and the Charter-Pandrol rela-

tionships are analyzed, it is immediately apparent that Char-

ter’s relationship with its subsidiaries is far less intimate than

the parent-subsidiary relationship which Cannon and its prog-

eny failed to find sufficient to confer jurisdiction over the

parent. (A review of the relationships between Charter and its

subsidiaries appears herein in the Statement of Facts, supra, at

4-7.) The Superior Court concluded that Cape was Charter’s

alter ego even though Cape is only 67.3 percent owned by

Charter, with the balance of its shares publicly held. Our

Court in Botwinick v. Credit Exchange, Inc., 419 Pa. 65, 213 A.2d 349

(1965), and a federal district court in Pennsylvania had specifically

declined to follow the Energy Reserves decision. Beary v. Norton

Simon, Inc., 479 F. Supp. 812, 815 (W.D. Pa. 1979).

research has reveaied no other case in which a court “pierced

the corporate veil” of a partially held subsidiary in order to

assert jurisdiction over its majority shareholder.‘

Under the Superior Court’s test, any foreign parent corpora-

tion will be deemed the alter ego of a domestic subsidiary and

thus subject to the jurisdiction of the forum state. By defini-

tion, a parent owns more than half of a subsidiary’s stock, and

it is rare that a parent does not have some representation on a

subsidiary’s board. The conclusion that a foreign parent cor-

poration is subject to jurisdiction solely by virtue of a subsidi-

ary’s presence in the forum is troubling not merely because it

represents a rejection of Cannon and 60 years of precedent.

This decision, now apparently the law of Pennsylvania, if

followed elsewhere, may act as a substantial disincentive to

foreign investment in the United States. If the jurisdiction of

the state courts is to be expanded in this fashion, it should be

done only with explicit authorization after a thorough re-evalu-

ation by this Court of the Cannon decision. It should not be

based upon the decision of an intermediate state appellate

court, relying principally upon the decision of a single federal

district judge.

This Court has very recently emphasized that parent and

subsidiary corporations must be seen as separate entities in

jurisdictional determinations:

[Jjurisdiction over an employee does not automatically

follow from jurisdiction over the corporation which em-

ploys him; nor does jurisdiction over a parent corporation

automatically establish jurisdiction over a wholly owned

4 In applying the alter ego test in a similar asbestos case, the United

States Court of Appeals for the Fifth Circuit refused to hold an

English parent corporation liable for the torts allegedly committed by

its wholly owned Pennsylvania subsidiary. Hargrave v. Fibreboard

Corp., 710 F.2d 1154 (Sth Cir.), reh’g denied, Nos. 82-2231, 82-2236

(November 3, 1983). The Fifth Circuit noted that the parent had

“complete authority” over the subsidiary’s policy decisions, but was

not subject to jurisdiction “merely because its subsidiary is present or

doing business there.” Jd. at 1159, 1160.

subsidiary. Consol. Textile Co. v. Gregory, 289 U.S. 85,

88 (1933); Peterson v. Chicago, R. I. & P. Railroad Co.,

205 U.S. 364, 391 (1907). Each defendant’s contacts with

the forum State must be assessed individually.

Keeton v. Hustler Magazine, Inc., No. 82-485, slip op. at 10-11

n.13 (U.S. March 20, 1984).

By similar reasoning, jurisdiction over a subsidiary does not

automatically confer jurisdiction over the parent. That, how-

ever, is the inescapable conclusion of the Superior Court’s

opinion. Such a conclusion is fundamentally inconsistent with

the due process clause of the Fourteenth Amendment. The

mere ownership of a subsidiary does not rise to the level of

“minimum contacts. . . such that the maintenance of the suit

does not offend ‘traditional notions of fair play and substan-

tial justice.’ Milliken v. Meyer, 311 U.S. 457, 463.” Interna-

tional Shoe, 326 U.S. at 316.

Traditional notions of corporate law, embraced by this

Court in Cannon and followed for 60 years, have held that

parent and subsidiary corporations are distinct entities, and

cannot be considered as one for jurisdictional purposes unless

certain well defined tests are met. The Superior Court’s deci-

sion eroded that doctrine, and therefore has serious implica-

tions for every corporation, both foreign and domestic, that

owns subsidiaries.

Il. THE PENNSYLVANIA COURT VIOLATED THE DUE

PROCESS CLAUSE OF THE FOURTEENTH AMEND-

MENT WHEN IT FOUND THAT FIVE ISOLATED AND

UNRELATED VISITS CONSTITUTED “CONTINUOUS

AND SUBSTANTIAL” BUSINESS ACTIVITY SUFFI-

CIENT TO SUBJECT CHARTER TO THE GENERAL

JURISDICTION OF THE PENNSYLVANIA COURTS.

The Superior Court found another basis for jurisdiction over

Charter. It concluded that five visits to Pennsylvania in the

year preceding the filing of the complaint, plus the purchase of

approximately $10,000 worth of stock through a Philadelphia

brokerage house, amounted to a “continuous and substantial”

course of business activity sufficient to subject Charter to the

jurisdiction of the courts of Pennsylvania. The issue raised by

this determination is already before this Court in Helicopteros

Nacionales de Colombia, S.A. v. Hall, cert. granted, 51

U.S.L.W. 3649 (March 8, 1983) (No. 82-1127): what level of

activity is sufficient to establish jurisdiction over a foreign

corporation when such activity is unrelated to the cause of

action.

As the Statement of Facts sets out more fully (at 7-8, supra),

Charter has had very little contact with the state of Pennsylva-

nia. It was not qualified to do business there, and it maintained

no offices, bank accounts, telephone listings, post office

boxes, or mailing addresses in the state. None of its employees

resided in Pennsylvania, and it had no distributors, suppliers

or agents in the state. Nor had it ever solicited business in

Pennsylvania.

The only contacts between Charter and Pennsylvania con-

sisted of one purchase of securities, already noted, and five

visits by employees of CCS, a Charter subsidiary, on behalf of

Charter’s clients. These visits were all unrelated to one another

and completely unrelated to the cause of action. One visit was

to discuss the sale of columbite; another was to discuss the

cancellation of an order for equipment; the third was for

discussions with officials of the U.S. Bureau of Mines. Two

other visits were made by an expert on vanadium. None of

these visits involved purchases or sales of merchandise.

To assert jurisdiction over Charter based on these few

contacts is clearly violative of the due process clause of the

Fourteenth Amendment. Furthermore, it ignores the long line

of authority in this Court that has drawn a sharp distinction

between “general jurisdiction,” which is based on a defen-

dant’s continuous and systematic activity within the forum

whether or not related to the cause of action, and “specific

jurisdiction,” which is based on a defendant’s acts within the

forum out of which the cause of action arises.

The distinction between the two bases of jurisdiction has

been recognized since International Shoe, 326 U.S. 310. In that

case, this Court stated:

“Presence” in the state in this sense has never been

doubted when the activities of the corporation there have

not only been continuous and systematic, but also give

rise to the liabilities sued on, even though no consent to

be sued or authorization to an agent to accept service of

process has been given. [Citations omitted]. Conversely it

has been generally recognized that the casual presence of

the corporate agent or even his conduct of single or

isolated items of activities in a state in the corporation’s

behalf are not enough to subject it to suit on causes of

action unconnected with the activities there. [Citations

omitted]. To require the corporation in such circum-

stances to defend the suit away from its home or other

jurisdiction where it carries on more substantial activities

has been thought to lay too great and unreasonable a

burden on the corporation to comport with due process.

Id. at 317. (Italics supplied.)

While relatively few contacts between the defendant and the

forum might furnish a sufficient basis for jurisdiction with

respect to a cause of action arising out of the defendant’s

in-state activities, a qualitatively different relationship is re-

quired where the cause of action did not arise out of the

defendant’s intrastate acts. Occasional visits do not furnish a

basis for jurisdiction if, as here, they are not related to the

cause of action.

The decision of this Court which has given most extensive

consideration to the level of activity necessary to constitute

“general jurisdiction” is Perkins v. Benguet Consol. Mining

Co., 342 U.S. 437. In Perkins, the plaintiff brought an action

in Ohio against a Philippine corporation for damages based on

the failure to pay dividends and to issue certain stock certifi-

cates. Each omission occurred outside Ohio. The record re-

vealed that the corporation was actively engaged in business

operations in Ohio, where its president maintained an office,

employed two secretaries, engaged in corporate correspon-

dence, conducted directors’ meetings, and maintained two

active corporate bank accounts. Under these circumstances,

this Court concluded that the defendant’s contacts were suffi-

ciently pervasive and substantial to permit the exercise of

jurisdiction over a cause of action which did not arise from the

activities conducted in the state.

The activities Charter conducted in Pennsylvania certainly

do not rise to the level of activity in which the defendant

engaged in Perkins. They are not even as extensive as the

magazine sales in Keeton v. Hustler Magazine Inc., No. 82-

485, slip op. at 8, which this Court suggested were probably

not “so substantial as to support jurisdiction over a cause of

action unrelated to those activities.” Charter’s visits obviously

do not amount to a “continuous and substantial” course of

business activity sufficient to constitute a general jurisdictional

presence in Pennsylvania. To hold othe: wise, as the Superior

Court did, is to disregard the entire line of authority that

begins with International Shoe. Such a holding does not

comport with due process and should not be upheld.

CONCLUSION

For the foregoing reasons, a writ of certiorari should issue to

review the order of the Supreme Court of Pennsylvania.

Dated: March 26, 1984

Respectfully submitted,

ROBERT L. CLARE, JR.

Counsel of Record

WERNER L. POLAK

JEREMY G. EPSTEIN

MADELEINE SCHACHTER

SHEARMAN & STERLING

Attorneys for Petitioners

Charter Consolidated, Ltd.,

Charter Consolidated

Investments, Ltd., and

Central Mining Finance, Ltd.

53 Wall Street

New York, New York 10005

(212) 483-1000

Of Counsel

WILLIAM M. WYCOFF

DAVID G. RIES

MICHAEL R. BUCCI

THORP, REED & ARMSTRONG

One Riverfront Center

Pittsburgh, Pennsylvania 15222

(412) 394-7711

APPENDICES

Appendix A la

THE SUPREME COURT OF PENNSYLVANIA

WESTERN DISTRICT

CARL RICE, Esq. 801 CITY-COUNTY BUILDING

PROTHONOTARY PITTSBURGH, PA.

IRMA T. GARDNER 15219

DEPUTY PROTHONOTARY

January 4, 1984

Michael R. Bucci, Jr., Esquire

Thorp Reed & Armstrong

One Riverfront Center

Pittsburgh, Pa. 15222

In Re: Charter Consolidated LTD, Charter Consolidated In-

vestments, et al. v. Anthony A. Barber, et al. No. 264

W. D. Allocatur Docket, 1983

Dear Mr. Bucci:

The Court has entered the following Order on your Petition

for Allowance of appeal filed in the above-captioned matter:

“27 December 1983

Petition denied.

Per Curiam”

Very truly yours,

/s/ Carl Rice

Carl Rice, Esq.

CR:bnl

cc: Stanley W. Greenfield, Esq.

Gerald C. Paris, Esq.

George E. McGrann, Esq.

Edmund L. Olszewski, Jr., Esq.

Brian Baxter, Esq.

Larry P. Gaitens, Esq.

George Cohen, Esq.

Richard A. Colasurd, Esq.

Hon. |. Martin Wekselman

2a Appendix B

ANTHONY A. BARBER, et al.,

PITTSBURGH CORNING CORPORATION, et al.,

COMMONWEALTH of Pennsylvania and

American Flint Glass Workers

Union, AFL-CIO.

Appeal of CHARTER CONSOLIDATED LTD.,

Central Mining Finance, Ltd., and

Charter Consolidated Investments Ltd.

Superior Court of Pennsylvania

—

Argued Jan. 13, 1983.

Filed July 1, 1983.

Reargument Denied Sept. 13, 1983.

aoa

Werner Polak, Pittsburgh, for appellants and William M.

Wycoff, Pittsburgh, submitted a brief, for appellants.

Stanley W. Greenfield, Pittsburgh, submitted a brief, and

George Cohen, Pittsburgh, for Barber et al., appellees.

George Edward McGrann, Pittsburgh, for PPG, appellee.

Befcre POPOVICH, MONTGOMERY and VAN der VoorT, JJ.

Appendix B 3a

MONTGOMERY, Judge:

The instant appeal arises from the lower court’s denial of

preliminary objections which challenged the in personam juris-

diction of the Pennsylvania courts over a foreigii corporation

named as a defendant in the action. After denying the prelimi-

nary objections, the trial court certified, pursuant to Rule

311(b)(2) of the Pennsylvania Rules of Appellate Procedure,

that a substantial issue of jurisdiction was presented, and the

matter is therefore properly before us for resolution at this

time. The issues involved have been the subject of thorough

briefs, and oral argument was expertly presented before us by

counsel for the respective parties.

The instant case was commenced in August, 1979, by the

filing of a Complaint in trespass and assumpsit in the Court of

Common Pleas of Allegheny County. The plaintiffs comprise

current and former employees of the Pittsburgh Corning Cor-

poration (hereinafter “Pittsburgh Corning”) and spouses of

such employees. The spouses’ claims are for loss of consortion.

The substance of the plaintiffs’ action is a claim that the

plaintiff employees contracted asbestosis, a serious respiratory

disease, as a result of their exposure to asbestos dust and fibers

in the course of their employment at Pittsburgh Corning’s Port

Allegheny Pennsylvania plant. The plaintiffs sought recovery

from two general classes of defendants. The first class includes

Pittsburgh Corning, Pittsburgh Plate Glass (hereinafter

“PPG”) and Corning Glass Works, Inc. (hereinafter “CG”),

the latter two defendants being joint owners of Pittsburgh

Corning. It was generally alleged by plaintiffs that this first

class of defendants was either directly or indirectly responsible

for the conditions of the employment in which the employee

plaintiffs suffered their alleged exposures to asbestos. The

second broad class of defendants included Charter Consoli-

dated, Ltd. (hereinafter “Charter”), the Appellant on this

appeal’, and various corporate entities which the parties re-

1 Charter Consolidated Investments, Ltd. and Central Mining Fi-

nance, Ltd. which are both subsidiaries of Charter, also filed prelimi-

nary objections in the lower court, on jurisdictional grounds, and both

4a Appendix B

ferred to as the Cape Industries Group or Cape Industries,

Ltd. We shall hereinafter refer to these defendants collectively

as “Cape”, unless a more specific designation of a particular

Cape constituent party becomes particularly relevant and re-

quires separate identification. This second general group of

defendants was alleged to have been directly or indirectly

involved in the mining and sale of asbestos to Pittsburgh

Corning. The members of the first class of defendants have

each appeared in the lawsuit to defend against the merits of the

claims asserted by plaintiffs. As to the second class of defen-

dants, the record shows no appearance in the case by Cape.

Charter entered an a, yearanc in the case and then filed its

preliminary objections to the Complaint, seeking to have the

action dismissed for lack of in personam jurisdiction as to

Charter.

The lower court postponed a decision on Charter’s prelimi-

nary objections and allowed the parties discovery with respect

to the jurisdictional question presented. Following the termina-

tion of discovery, the lower court held a hearing and accepted

briefs from the parties. Finally, the lower court overruled

Charter’s preliminary objections, and the instant appeal was

filed. The basic question presented by this appeal is whether

Charter, a foreign corporation, is subject to in personam

jurisdiction in the courts of our Commonwealth.

In our analysis of this appeal, we will of course be concerned

with the factual basis underlying the lower court’s assertion of

jurisdiction over Charter in this case. However, it is initially

appropriate that we review the law which governs the questions

of in personam jurisdiction over a foreign corporation which

are presented by this appeal.

have appeared before our Court as co-appellants with Charter in the

instant appeal. The record shows that both of the subsidiaries were

administrative tools used by Charter to hold the stock of Cape. No

separate arguments are offered on this appeal on behalf of either of the

subsidiaries. Accordingly, all of the discussion in this Opinion as to

Charter should be understood to refer to Charter Consolidated Invest-

ments, Ltd. and Central Mining Finance, Ltd. as well.

Appendix B Sa

The first reference to authority requires that attention be

directed to the statutory provisions which provide for the

jurisdiction of the Pennsylvania Courts over a foreign corpora-

tion. The so-called “long-arm” jurisdictional statutes were

amended by our legislature in 1972, and such amendments

were clearly intended to liberalize a somewhat restrictive Penn-

sylvania jurisdictional view which existed prior to. that time.

Garfield v. Homowack Lodge, Inc., 249 Pa.Super. 392, 378

A.2d 351 (1977). In reviewing the history of Pennsylvania

practice under long-arm rules in 1974, our Court recognized

that the 1972 amendments to the long-arm statute were de-

signed to “. . . remove all Pennsylvania statutory and, there-

fore, decisional impediments to the exercise of in personam

jurisdiction over foreign corporations.” See Proctor &

Schwartz, Inc. v. Cleveland Lumber Company, 228 Pa.Super.

12, 17, 323 A.2d 11, 14 (1974). The Court, in the same case,

noted that: “The statute reinforced through express language

the judicially stated public policy of Pennsylvania to extend in

personam jurisdiction ‘to the full measure consistent with due

process standards’.” (citations omitted) 228 Pa.Super. at 17,

323 A.2d at 14.

The Act of November 15, 1972, as amended, is now set

forth, in parts pertinent to the issues pre »nted in this appeal,

in 42 Pa.C.S.A. §§ 5301 and 5322. These provisions establish

jurisdiction over foreign corporations along two separate ap-

proaches. Section 5301 provides for jurisidiction over such an

entity that conducts “a continuous and systematic part of its

general business within [the] Commonwealth”, whether or not

the particular cause of action asserted arises “from [the] acts”

on which jurisdiction is based.’ Section 5322, especially in

2 __ Section $301 provides, in pertinent part:

(a) General rule.—The existence of any of the following relation-

ships between a person and this Commonwealth shail constitute a

sufficient basis of jurisdiction to enable the tribunals of this

Commonwealth to exercise general personal jurisdiction over such

person, or his personal representative in the case of an individual,

and to enable such tribunals to render personal orders against such

person or representative:

6a Appendix B

subsection (b), establishes jurisdiction over foreign corpora-

tions based upon acts from which the claims of the plaintiff

arise. This statutory provision specifically asserts that the

jurisdiction of our courts “to the fullest extent allowable under

the Constitution ... [may be] .. . based on the most

minimum contact with this Commonwealth allowed under the

Constitution.”*

(2) Corporations. —

(i) Incorporation under or qualification as a foreign corporation

under the laws of this Commonwealth,

(ii) Consent, to the extent authorized by the consent.

(iii) The carrying on of a continuous and systematic part of its

general business within this Commonwealth,

. . . . . .

(b) Scope of jurisdiction.—When jurisdiction over a person is

based upon this section any cause of action may be asserted against

him, whether or not arising from acts enumerated, in this section.

Discontinuance of the acts enumerated in subsection (a)(2)(i) and

(iii) and (a)(3)(i) and (iii) shall not affect jurisdiction or omission

occurring during the period such status existed.

3 Section 5322, provides more fully, in pertinent part:

(a) General rule.—A tribunal of this Commonwealth may exercise

personal jurisdiction over a person (or the personal representative

of a deceased individual who would be subject to jurisdiction under

this subsection if not deceased) who acts directly or by an agent, as

to a cause of action or other matter arising from such person:

(1) Transacting any business in this Commonwealth. Without

excluding other acts which may constitute transacting business in

this Commonwealth, any of the following shall constitute trans-

acting business for the purpose of this paragraph:

(i) The doing by any person in this Commonwealth of a series

of similar acts for the purpose of thereby realizing pecuniary

benefit or otherwise accomplishing an object.

(ii) The doing of a single act in this Commonwealth for the

purpose of thereby realizing pecuniary benefit or otherwise

accomplishing an object with the intention of initiating a series

of such acts.

(iii) The shipping of merchandise directly or indirectly into or

through this Commonwealth.

. . . . . .

(3) Causing harm or tortious injury by an act or omission in this

Commonwealth.

Appendix B 7a

With respect to the subject of im personam jurisdiction over

unregistered foreign corporations, we have recognized that the

change in policy represented by the 1972 legislative amend-

ments to our “long-arm” statute was merely coexistent with the

evolution of substantive jurisdictional due process expressed by

the United States Supreme Court. Certainly the landmark

modern decision of that Court in this area was the famous case

of International Shoe Co. v. Washington, 326 U.S. 310, 316,

66 S.Ct. 154, 158, 90 L.Ed. 95, 102(1945), where the Court

Stated:

“due process requires only that in order to subject a

defendant to a judgment in personam, if he be not present

within the territory of .he forum, he have certain mini-

mum contacts with it such that maintenance of the suit

does not offend ‘traditional notions of fair play and

substantial justice’.”

This “minimum contracts” analysis is one our courts have

followed since the issuance of the /nternational Shoe decision.‘

(4) Causing harm or tortious injury in this Commonwealth by

an act or omission outside this Commonwealth.

. . . . . .

(b) Exercise of full constitutional power over nonresidents.—In

addition to the provisions of subsection (a) the jurisdiction of the

tribunals of this Commonwealth shall extend to all persons who are

not within the scope of section 5301 (relating to persons) to the

fullest extent allowed under the Constitution of the United States

and may be based on the most minimum contact with this Com-

monwealth allowed under the Constitution of the United States.

based solely upon this section, only a cause of action or other

matter arising from acts enumerated in subsection (a), or from acts

forming the basis of jurisdiction under subsection (b), may be

asserted against him.

4 It has been recognized that the current Pennsylvania long-arm

legislation, discussed above, “. .. tracks the two jurisdictional

theories defined by the Court in international Shoe.” See Strick Corp.

v. A.J.F. Warehouse Distributors, Inc., $32 F.Supp. 951, 955 (E.D.Pa.

1982).

8a Appendix B

However, we cannot ignore subsequent explanations of mini-

mum constitutional requirements for the assertion of in per-

sonam jurisdiction, such as the Court’s declaration in Hanson

v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d

1283, 1298 (1958): “[I}t is essential in each case that there be

some act by which the defendant purposely avails itself of the

privilege of conducting activities within the forum State, thus

invoking the benefits and protections of its laws.” Also, we

cannot forget the requirement that the plaintiff’s cause of

action must arise from activities within the forum state by the

proposed defendant. See Garfield v. Homowack Lodge, Inc.,

supra.

In summarizing all of these concepts, our Court has es-

tablished a two step test for determining whether the exercise

of this state’s jurisdiction over a particular defendant was

constitutional. It was restated not long ago in Koenig v.

International Brotherhood of Boilermakers, 284 Pa.Super.

558, 568, 426 A.2d 635, 640 (1980):

“First, the defendant must have purposefully availed itself

of the privilege of acting within the forum state thus

invoking the benefits and protections of its laws...

Secondly, the cause of action must arise from defendant’s

activities within the forum state . . . Lastly, the acts of

the defendant must have a substantial enough connection

with the forum state to make the exercise of jurisdiction

over it reasonable. . .

If it appears that this test is not satisfied, the second step

is to decide whether the non-resident defendant’s activities

in Pennsylvania unrelated to the cause of action were

‘continuous and substantial.’ ” (citations omitted).

With these legal concepts in mind, it is next appropriate that

we review the record for facts germane to the jurisdictional

issue presented. The record established that Charter is an

English corporation engaged generally in a variety of commer-

cial transactions primarily in the fields of mining, manufac-

turing and finance. Its mining operations invoived mostly

Appendix B 9a

minerals from Africa. Its manufacturing, through various

subsidiaries to be more particularly discussed below, includes

asbestos insulation and building products, mining equipment

and railroad track fasteners. Its financial operations include

investments in other commercial entities, such as mining com-

panies. Charter also often acts as a business agent for other

companies in various fields.

Charter may best be described, in general, as a holding

company, which conducts virtually all of its business through

wholly owned or majority owned subsidiaries. These subsidi-

aries are within Charter’s four main divisions, which are

Mining, Industrial, Finance and Administration and Services.

Thus, for instance, Charter’s headquarters staff, including

executives, are formaily employed and paid by a wholly owned

subsidiary.

Charter’s Industrial Division is not a department of the type

one might envision in a more typical business entity, but

actually consists of a collection of subsidiaries, including two

groups of companies which are significant in the instant case

because of their involvement in business transactions in Penn-

sylvania. These are Cape and the Pandrol Group. The record

shows clearly that Charter conducts the affairs of its Industriai

Division by exercising control over the operations of its indus-

trial subsidiaries.

As noted, the transactions of Cape are highly significant in

the resolution of the jurisdictional issue presented by this

appeal. While Charter sought to divorce itself from Cape and

to depict it as an almost unrelated entity, the record clearly

refutes such a position. It shows that Cape is a principal

operating subsidiary of Charter which has provided 16.9% of

Charter’s income, according to answers to interrogatories. This

income was derived from Cape’s involvement as the owner of

asbestos mines in South Africa. Of greatest import in this case

has been the business involved in Cape's sales, between 1964

and 1972, of thousands of tons of asbestos to Pittsburgh

Corning for use at the Port Allegheny Pennsylvania facility

where the Plaintiffs have been employed. The lower court in

this case noted in its opinion that the parties stipulated to the

10a Appendix B

jurisdiction of the Pennsylvania courts over Cape, which is

clear under 42 Pa.C.S.A. §§ 5322.

Charter maintains that its relationship with Cape is not such

that Cape’s business transactions in Pennsylvania should be

significant in supporting the in personam jurisdiction of the

Pennsylvania courts over Charter. However, although Cape

may technically appear to be an independent business entity,

the record shows clearly the extent to which it comprises an

operating arm of Charter. As mentioned earlier, it has pro-

duced over one-sixth of Charter’s income. Charter in fact is the

owner of over two-thirds of the common stock of Cape and

has acquired all of its preferred shares. In the course of its

purchase of such firm control of Cape over several years, Cape

announced the following in a prospectus accompanying its

offer to buy fifty percent of all then outstanding shares:

“It is Charter’s purpose to make use of the wide experi-

ence of Cape’s management so that Cape can become the

main channel for the expansion of Charter’s industrial

activities of this type; this could not be satisfactorily

achieved unless Charter acquired a considerably larger

holding such as would give Charter control of Cape.”

The record makes it clear that since it acquired such a substan-

tial ownership of Cape, Charter has been well represented by

its own executives placed on Cape’s Board of Directors, and

has thereby participated in Cape’s important business deci-

sions. This total involvement by Charter in Cape’s affairs was

clearly significant to the lower court in its finding that through

Cape, Charter has engaged in business affairs in Pennsylvania

to a degree sufficient to assert in personam jurisdiction over

Charter.

Also significant to the same conclusion was Charter’s rela-

tionship to the Pandrol Group, and the Pennsylvania business

transaciions of Pandrol. There is no question that the Pandrol

Group has engaged steadily in business affairs in our Com-

monwealth. Pandrol International, Ltd., which is wholly

owned by Charter, and Pandrol, Inc., wholly owned by Pan-

drol Internationa! Ltd., have manufactured and sold various

Appendix B lla

types of railroad track equipment. For many years prior to the

filing of the instant suit, they have sold this equipment them-

selves or through an entity known as United Rail Anchor,

located in Pittsburgh. Pandrol International, Ltd. was not only

registered to do business in Pennsylvania from 1975 through

1978, but paid taxes and even maintained a bank account in

our State.

There appears to be no dispute of the conclusion that the

Pandrol Group has been actively engaged in business in Penn-

sylvania to the extent that it is subject to the in personam

jurisdiction of our courts.© Although Charter again seeks to

segregate itself from Pandrol in the face of this jurisdictional

problem, the facts simply do not support Charter’s position. It

is clear that Pandrol is not an independent entity, even if set up

as a separate business corporation under the law. Rather, it is

clearly a business division of its corporate owner, which con-

trols all of its operations. Charter does this not only through

its total ownership of Pandrol but also through placement of

its executives on Pandrol’s Board of Directors. Charter dic-

tates Pandrol’s policies just as another business entity would

control the activities and directions of one of its operating

divisions. It simply cannot be realistically maintained that

Charter and Pandrol are, in substance, independent entities.

In addition to the evidence in the record as to the activities

of Cape and Pandrol, the record also contains evidence of

direct participation in Pennsylvania business transactions by

Charter representatives and employees. In the course of discov-

ery in this case. Charter refused to supply information about

such contacts with our Commonwealth occurring more than

one year prior to the filing of this suit. Nevertheless, while so

limiting its responses, Charter still disclosed several significant

individual business forays into our Commonwealth by its

employees. Some of these contacts were of extended duration,

and involved meetings, sales, technical consultations, business

planning and even a securities transaction.

5 42 Pa.C.S.A. § 5301 clearly applies as to Pandrol.

12a Appendix B

More specifically, the record shows that during an eight

month period in 1979, Charter sold columbite to a customer in

Boyertown, Pennsylvania. These sales were made on behalf of

one of Charter’s clients from Nigeria. In connection with that

transaction, Charter’s manager of metals sales in its Mining

Division met in June, 1979, in Pennsylvania, with representa-

tives of the customer. In another case, a different Charter

representative, from its Mining Division, met in Pittsburgh in

April, 1979, with Pennsylvania customers to discuss orders for

acid plant compressors. The supplier in that case was a Charter

client situated in Zaire. Similarly, during the same month, a

third Charter representative met in Pittsburgh with representa-

tives of the U.S. Bureau of Mines, to discuss remote control

devices manufactured by another Charter client. In still

another transaction, a different Charter employee, Dr. Sage,

met in Pittsburgh in November, 1978 and again in March, 1979

with representatives of U.S. Steel and some from Foote

Minerals Company, for the purposes of discussing transactions

involving business and research projects. During 1979, Char-

ter’s Finance Division purchased 3000 shares of stock through

a Philadelphia stock brokerage. Such activities by Charter

agents, during the limited period covered by Charter’s re-

sponses in discovery, were also considered by the lower court to

lend weight to the conclusion that Charter should be subjected

to the in personam jurisdiction of our Courts, under 42

Pa.C.S.A. § 5301.

After thorough consideration of the record as a whole, we

conclude that the lower court was correct in its determination

on the in personam jurisdiction issue presented in this case. We

find that Charter’s involvements in Pennsylvania satisfy the

tests set forth in Koenig v. International Brotherhood of

Boilermakers, supra., and other cases so that an assertion of

Pennsylvania court jurisdiction over Charter is clearly constitu-

tional. More particularly, we first find it evident that Charter

has purposely availed itself of the privilege of acting within

Pennsylvania and thus invoked the benefits and protections of

our laws. Charter did this constantly and repeatedly over the

years preceding the filing of this suit in its conduct of recurring

Appendix B 3a

business affairs through its Cape and Pandrol operations as

well as the individual acts of various representatives. The

second requirement, that the cause of action must arise from

the defendant’s activities within the forum state, is clearly

satisfied. In light of the allegations of the Plaintiffs’ Com-

plaint, this occurred in its sale of asbestos to their employer.

The third requirement is that the acts of Charter must have

been substantial enough with regard to Pennsylvania so that

our courts’ exercise of jurisdiction over Charter is reasonable.

Again, there is no question that the activities of Charter,

through Cape, Pandrol and various individual representatives,

has been both continuous and substantial in Pennsylvania. The

extent of these commercial transactions makes the assumption

of jurisdiction completely reasonable and proper in this case.

Some mention of the contentions raised by Charter is appro-

priate. Charter contends that under the holdings of Cannon

Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333, 45

S.Ct. 250, 69 L.Ed. 634 (1925) and Botwinick v. Credit

Exchange, Inc., 419 Pa. 65, 213 A.2d 349 (1965), it cannot be

subjected to the jurisdiction of Pennsylvania courts because

Cape and Pandrol comprise independent corporations, not

subject to Charter’s direction and control. We find that Char-

ter’s reliance upon these precedents is misplaced in light of the

facts produced before the lower court in this case. Moreover,

we find that the modern trend in decisional law lends further

weight to the conclusion that jurisdiction was properly asserted

over Charter in this case. In Cannon, the Supreme Court held

that a Maine corporation could not be subjected to the juris-

diction of the courts of North Carolina despite its ownership of

all of the capital stock of another corporation which was

engaged in business affairs in North Carolina. The Court, in

an opinion by Justice Brandeis, refused to ignore the separate

formal corporate existence of each company. While the Su-

preme Court respected the separate incorporation of the sub-

sidiary, it is noteworthy that it specifically declared that its

ruling should not be taken as having uniform application:

“(S)uch use of a subsidiary does not necessarily subject the

l4a Appendix B

parent corporation to the jurisdiction” of North Carolina.

(emphasis supplied) 267 U.S. at 337, 45 S.Ct. at 251. In

Botwinick, our Pennsylvania Supreme Court, relying in part

upon Cannon, held that a New York corporation was not

“doing business” within Pennsylvania even though it had a

subsidiary which was a Pennsylvania corporation. The Court

found that the subsidiary, which had a separate corporate

existence, was not a mere instrumentality of the New York

corporation. While reaching that conclusion upon the facts

presented in that case, the Court in Botwinick nevertheless

acknowledged that a subsidiary’s activities might well cause its

parent to become subject to the jurisdiction of the courts in a

state where the subsidiary was engaged in business activities:

“There is a well recognized exception to these general

rules if the record demonstrates that the subsidiary is the

“alter ego” of the parent to the extent that domination

and control by the parent corporation renders the subsidi-

ary a mere instrumentality of the parent; under such

extreme circumstances the parent corporation may be held

to be doing business within the state under the facade of

the subsidiary.”

The lower court in the instant case determined, under the

standards of Botwinick, and the facts of record, that Charter’s

control over both Pandrol and Cape was of a sufficient degree

to consider each but an instrumentality of Charter. We agree

with such conclusions. It cannot be forgotten that Charter is

itself only a holding compar., which has chosen to perform all

its business functions through operational arms that happen to

be set up legally as separate corporations. Despite such sepa-

rate incorporation, Charter’s total control over Cape and

Pandrol is so clear, that to reach any other conclusion in this

case would be to blindly exhault form over substance. Charter

itself has made these separate corporations constituent parts of

its various operating divisions. As explained at length by the

lower court, Charter has retained and exercised full control

over these subsidiaries through their Boards of Directors. We

agree that the degree of control, of both Cape and Pandrol, is

Appendix B 1Sa

sufficient for the proper assertion of Pennsylvania jurisdiction

over Charter, even based upon the pronouncements of the

Botwinick court.

Charter’s arguments as to a lack of an alter ego relationship,

and reliance upon Botwinick, ignore other factors in the case.

These involve the activities of Charter’s own employees, for

various commercial purposes, in our Commonwealth in the

year prior to the filing of this suit. It is clear that the lower

court was justified in finding that these activities constituted “a

continuous and systematic part of its general business” of

sufficient magnitude to make it fair and reasonable to exercise

jurisdiction over Charter under 42 Pa.C.S.A. § 5301. We do

not have any particular mechanical rule which we follow in

these cases, but must determine on an ad hoc case by case basis

whether the “minimum contacts” of a foreign corporation

have been sufficient to justify the assumption of jurisdiction

over it by our courts. Proctor & Schwartz, Inc. v. Cleveland

Lumber Company, supra. The analysis of the substantiality of

the business transactions conducted cannot depend on any

comparative dollar volume test involving the defendant’s total

sales volume, as such a ratio test would invariably favor the

multimillion dollar corporations over those with smaller sales

volumes. Hendrickson v. Reg O Co., 657 F.2d 9, 12-13 (3rd

Cir.1981). It has been stated that the proper inquiry is whether

the defendant’s “conduct and connection with [the state] are

such that [it could] reasonably anticipate being haled into

court” there. World-Wide Volkswagen Corp. v. Woodson, 444

U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). We

find that Charter’s own business contacts in our Common-

wealth justify the assertion of jurisdiction over it, even without

regard to the evidence of domination and control of its

subsidiaries which are clearly engaged in business in our State.

This conclusion is mandated by the record, which demon-

strates that even within the limited period of time for which it

submitted responses in discovery, Charter’s own business con-

tacts with our State were quite diverse in nature, and broad in

scope. The record shows that in a single twelve month period,

several different Charter representatives, from at least three of

16a Appendix B

its separate operating divisions, visited our Commonwealth for

business transactions. These direct business involvements by

Charter were not limited to a single customer or business

project, but included five separate Pennsy!vania based cus-

tomers or concerns, and dealt with matters as diverse as sales

of minerals, acide plant compressors, and remote control

devices, and other business projects and research endeavors.

Further, during the same limited time period about which it

made disclosures, Charter was not only a seller, but also

purchaser, obtaining 3000 shares of stock in a transaction

through a Philadelphia broker. Based upon these transactions,

all within the year prior to the filing of this suit, we find no

merit in Charter’s claim that it had not itself engaged in

business in our Commonwealth sufficient to justify the asser-

tion of jurisdiction by our courts.

Earlier, we had noted that the modern trend in judicial

thought would favor the assertion of jurisdiction over Charter

in this case. The modern cases, of course, rely upon the

International Shoe Co. v. Washington “minimum contacts”

type of analysis. The lower court cited the case of Energy

Reserves Group v. Superior Oil Co., 460 F.Supp. 483

(D.C.Kan.1978) as an instructive case on the question of

whether a parent corporation may be subjected to the jurisdic-

tion of a state’s courts solely because of the activities of its

subsidiaries within that state. We find the reasoning of the

Court in Energy Reserves to be logical and helpful, and direct

the reader to that case, especially including its criticism of the

holding in the Cannon Manufacturing Co. v. Cudahy Packing

Co. case, supra. In Energy Reserves the Court found the

assertion of jurisdiction in Kansas to be proper over a foreign

corporation, based solely upon the business activities within

the State of Kansas by a subsidiary that was a separate

corporation. The Court explained the less stringent modern

constitutional analysis in such cases mandated under the /n-

ternational Shoe decision. We believe the “minimum con-

tracts” analysis, and a recognition of the commercial reality of

Charter’s domination and control of Cape and Pandrol, make

Appendix B 17a

it clear that Charter is subject to the jurisdiction of our

Pennsylvania courts.

Finally, we note that it is well-established as a rule that when

preliminary objections, if sustained, would result in the dis-

missal of an action, such objections should be sustained only in

cases which are clear and free from doubt. Botwinick v. Credit

Exchange, Inc., supra. Moreover, when deciding a motion to

dismiss for lack of personal jurisdiction the court must con-

sider the evidence in the light most favorable to the non-mov-

ing party. Lieb v. .tmerican Pacific International, Inc., 489

F.Supp. 690, 694 (E.D.Pa. 1980). With these concepts in mind,

it is clear that no basis exists in the instant case to disturb the

findings of the lower court on the question of jurisdiction

presented.

The order of the lower court denying preliminary objections

is affirmed, and the case is remanded for further proceedings.

Jurisdiction is not retained.

18a Appendix B

SUPERIOR COURT OF PENNSYLVANIA

PITTSBURGH DISTRICT

aad

ANTHONY A. BARBER, et al.

PITTSBURGH CORNING CORPORATION, et al.

Vv.

COMMONWEALTH OF PENNSYLVANIA and AMERICAN

FLINT GLASS WORKERS UNION, AFL-CIO

APPEAL OF CHARTER CONSOLIDATED LTD.,

CENTRAL MINING FINANCE, LTD., and

CHARTER CONSOLIDATED INVESTMENTS, LTD.

No. 139 PITTSBURGH 1982

ORDER

AND Now, this Ist day of JULY, 1983, it is ordered as

follows:

X__ Order Affirmed and case remanded for further

proceedings.

Order Reversed and Case Remanded with in-

structions.

Order Vacated and lower court directed to pro-

ceed in accordance with opinion filed herewith.

Appendix B 19a

___.... Order Modified as set forth in opinion filed

herewith.

_____.. Ordered as set forth in opinion filed herewith.

Costs to be taxed as provided by Chapter 27 of

the Pa. R. A. P.

____. Costs to be taxed as provided in opinion filed

herewith.

____. Judgment of Sentence Affirmed.

____. Appeal Quashed.

BY THE COURT

/s/ Irma T. Gardner

Deputy Prothonotary

NOTE: Unless another date is hereinafter set forth, the fore-

going Order was entered on the docket on the date set

forth above. Ordered entered:

20a Appendix C

IN THE

COURT OF COMMON PLEAS

OF ALLEGHENY COUNTY, PENNSYLVANIA

ANTHONY A. BARBER, et al. CIVIL DIVISION

Plaintiffs,

Vv. G.D. No. 79-21544

Issue No:

PITTSBURGH CORNING CORPORATION,

et al., Code 009—Trespass/Other

Defendants,

v. OPINION and ORDER OF COURT

COMMONWEALTH OF PENNSYLVANIA;

and AMERICAN FLINT GLASS Filed by:

WORKERS UNION, AFL-CIO WEKSELMAN, J.

Additional Defendants.

December 31, 1981

—+

‘

COPIES OF THIS OPINION AND ORDER OF COURT MAILED TO:

FRANK PETRAMALO, JR., ESQ. DR.. RICHARD GAZE, Defendant

STANLEY W. GREENFIELD, ESQ. CENTRAL MINING FINANCES, LTD.,

RICHARD M. COLASURD, Esq. Defendant

DAVID J. ARMSTRONG, ESQ. MR. GEOFRY HIGHAM, Defendant

GERALD C. PARIS, Esq. CAPE BOARD AND PANELS, LTD.,

ALEXANDER UNKOVIC, ESQ. Defendant

DAVID G. RIES, Esq. PTY, LTD., Defendant

LESTER W. RUBIN, ESQ. CAPE INDUSTRIES, LTD., Defendant

LARRY GAITENS, ESQ. CAPE ASBESTOS INDUSTRIES, LTD.,

LAURENCE J. COHEN, ESQ. Defendant.

EDWARD L. OLSZEWSKI, ESQ.

BRYAN BAXTER, ESQ.

Appendix C 2la

OPINION

I, MARTIN WEKSELMAN, J. December 31, 1981

The issue presented in this case is whether this court can

exercise jurisdiction over a foreign corporation through the

activities of its subsidiaries in this Commonwealth. It is the

opinion of this court that such jurisdiction does exist.

Defendant PPG Industries, Inc. (hereinafter “PPG”) and

defendant Charter Consolidated, Ltd. (hereinafter “Charter”)

have taken widely divergent approaches to the issue. PPG

urges this court to look at the economic and commercial

realities of the parent-subsidiary relationship of today’s

multinational corporations. It is its contention that such a

corporation should be viewed as a single economic entity

wherein it is the parent company which ultimately benefits

from the subsidiaries’ activities in this forum. Charter con-

tends that the more traditional approach of looking for controi

of the subsidiary by the parent should be followed.

After careful consideration, the court concludes that PPG’s

approach cannot be followed on the facts presented here. PPG

has cited several persuasive cases involving examination of the

overall parent-subsidiary relationship. The facts of those cases,

however, are so distinguishable from those here that the ra-

tionale and holdings cannot be followed.

Crucible v. Stora Kopparbergs Bergslags AB, 403 F. Supp. 9,

(W.D. Pa., 1975), involved a Swedish steel corporation parent

and an American subsidiary. The subsidiary purchased steel

from its parent and sold it in Pennsylvania. Through another

subsidiary, and using the same fcrmat, paper products were

shipped into this Commonwealth.

The court held that the parent corporation was subject to

Pennsylvania jurisdiction. The court did not believe it was

within the contemplation of the concepts of fairness and due

process to allow a manufacturer to insulate itself from the

courts of this state by using an intermediary to sell its prod-

ucts, or by professing ignorance of their ultimate destination.

Id. at 12. The court found that the American subsidiary was

merely a conduit for the parent’s product.

22a Appendix C

Similarly, the court in Bulova Watch Co. v. Hattori, 508 F.

Supp. 1322 (E.D.NY 1981), looked at the cumulative effect of

all the foreign parent’s activities in New York to determine

whether it was doing business there. The court placed particu-

larly great weight on the American subsidiary’s being the sole

outlet for the parent which was a producer of an extremely

limited number of products. The court believed that a key test

for finding an alter ego relationship was whether the subsid-

iary’s presence in the forum was a substitute for the parent’s.

Id. at 1342. It was the court’s conclusion that the subsidiary

was a mere substitute. If it did not advertise, provide service

and quality control centers, or develop marketing techniques,

the parent would have. /d. at 1344.

The facts of the case at bar, however, are altogether dif-

ferent. Charter is a highly diversified corporation. Its sulbsidi-

aries are not the marketing arm of a parent manufacturer.

Charter is a holding company and manufactures nothing,

although it has investments in companies that do. Cape Asbes-

tos, Ltd. (hereinafter “Cape”), Pandrol International, Ltd.

and Pandrol Incorporated manufacture and market their own

products and are not conduits for Charter’s products. Thus,

the rationale of Crucible and Bulova is not applicable to the

instant case. Therefore, the traditional approach espoused by

Charter will be applied.

On the basis of the facts presented by both parties, the court

concludes that this court has jurisdiction over Cape, Pandrol

International, and Pandrol Incorporated. The parties have

stipulated to this court’s jurisdiction over Cape.

Jurisdiction over Pandrol International, Ltd. exists by virtue

of 42 Pa.C.S. §5301(a)(2)iii) and 15 P.S. §2011(c). By virtue of

its contract with Unit Rail Anchor, Pandrol did business in this

Commonwealth. Under the terms of this contract, URA acted

as Pandrol’s sales agent for the sale of rail clips, tie plates, cast

shoulders, and insulators from 1969-74. URA’s offices were in

Pittsburgh. Jurisdiction over Pandrol is also established by its

having been registered to do business in Pennsylvania from

1975-78 (§5301(aX(2)i). In addition, Pandrol maintained a

bank account and paid taxes in this Commonwealth.

Appendix C 23a

Pandrol, Inc. is also subject to the jurisdiction of this court.

Since its formation in 1978, Pandrol Incorporated has had

such significant contacts with Pennsylvania as to constitute its

carrying on “a continuous and systematic part of its general

business” here. §5301(a)(2)(iii). In addition to being “continu-

ous and systematic,” Pandrol Incorporated’s contacts with this

forum have been substantial, thereby making our jurisdiction

over it reasonable and satisfying the requirements of due

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

66 S.Ct. 154 (1945); Goff v. Armbrecht Motor Truck Sales

Inc., __. Pa. Super. ___., 426 A.2d 628 (1980).

Pandrol Incorporated manufactures and sells rail fastening

clips which it manufactures in its New Jersey plant. Since 1979

it has sold approximately 5,000,000 clips, 200,000 of which

were to railroads in Pennsylvania. Testimony indicates the clips

sold in this Commonwealth would cover 15-17 miles of track.

While it may be contended that Pandrol’s sales in this Com-

monwealth were insubstantial, “the test of substantiality. . .

does not depend upon a comparison with the defendant’s total

sales. . . [SJubsiantiality. . . must be mreasured by objective

factors. . . The volume of sales here, although slight in terms

of its percentage of total sales, were not isolated or exceptional

occurrences, but were part of a regular course of dealing.”

Hendrickson v. Reg O Company, No. 80-2751, slip op. at 5-6.

(3rd Cir. filed Aug. 3, 1981). Moreover, . . . “[t]he fact that

the sales and other contacts are not expansive is simply a

reflection of the reality that the jurisdiction itself is a small

one, and market demands may not be great.” /d. at 11.

Further testimony indicates these sales were to eight of

Pandrol Incorporated’s seventeen major customers: Amtrak,

Bessemer and Lake Erie Railroad, Chessie System, Conrail,

Monongahela Connecting Railroad, Pittsburgh and Lake Erie

Railroad, SEPTA, and Union Railroad. Pandrol dealt with the

Bessemer through its Greenville, Pa., office, the P & LE

through its Pittsburgh headquarters, and Amtrak in Phila-

delphia. It also knew the other customers were owned by

Pennsylvania corporations and conducted their business in this

state. It is apparent to this court that Pandrol has undertaken

24a Appendix C

“purposeful activity intended to preserve and enlarge an active,

though small, market . . .” in Pennsylvania. /d. at 11.

Another major contact between Pandrol Incorporated and

Pennsylvania was its purchase of steel from Bethlehem Steel

Corporation. Although no monetary amounts were stated with

respect to these sales, it is known that Bethlehem Steel required

guarantees from Pandrol. These guarantees came from Central

Mining Finance, a wholly owned Charter subsidiary,

($500,000), and Charter ($850,000). [Schumaker Dep. p. 71.]

Pandrol Incorporated also had other contacts with Pennsyl-

vania. For example, it had another contract with Bethlehem

Steel for steel tie plates manufactured in Steelton, Pa. Those

were shipped directly to the railroads upon Pandrol placing an

order. A similar contract existed between Pandrol and Precise

Metals and Plastics, located in Pittsburgh, for insulators used

by the railroads in conjunction with Pandrol’s products.

Again, Pandrol placed the orders. Additional contracts existed

between Pandrol and U.S. Steel, Roebling, and Crucible for

steel manufactured in Pennsylvania, and Pandrol retained a

Philadelphia law firm as their attorneys.

In light of the facts just presented, it cannot be seriously

contended that Pandrol did not have substantial contacts with

this Commonwealth or that it did not carry on a continuous

and systematic part of its general business here. Although it

may be argued that defendant’s contacts when taken separately

are insufficient to confer jurisdiction over Pandrol, its conduct

and derivation of benefits from activities in this Common-

wealth are sufficient cumulatively to establish a jurisdictional

presence. Hendrickson, supra, at 5. Due process merely re-

quires that defendant’s contacts be such that it would be

reasonable to hold it accountable in our courts. By purposely

availing itself of the benefits and protections of our laws

through dealing with local corporations, Pandrol must have

had some notion that it might someday be haled before our

courts World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

286, 100 S.Ct. 559 (1980).

The determination of whether Charter can be held account-

able in our courts because of the conduct of its subsidiaries

Appendix C 25a

must, as stated earlier, be determined under what Charter

denotes as the “traditional concepts of jurisdiction” as first set

forth in Cannon Manufacturing Co. v. Cudahy Packaging

Co., 267 U.S. 333, 45 S.Ct. 250 (1925). In that case, Justice

Brandeis refused to hold that a parent was doing business in

North Carolina through the presence of its wholly owned

subsidiary there. The court noted that not only did the parent

own all of the subsidiary’s stock, but the same individuals ran

both companies and the parent exerted complete financial and

commercial control over ii.

It mattered little to Justice Brandeis that the subsidiary was

most likely incorporated to secure to the parent “some advan-

tage under the local laws.” To him, each company’s main-

tenance of its own books and records and independent

treatment of each other was conclusive. According to him, the

“corporate separation, though perhaps merely forma!, was

real.”

It is Charter’s contention that Cannon is still the law and

that since it has observed the corporate formalities of main-

taining separate books and records and meetings of directors

and stockholders, its subsidiaries should not be found to be its

alter ego.

In recent years the continued validity of Cannon has been

brought into doubt by a number of courts throughout the

nation. As mentioned earlier, the courts in both Crucible and

Bulova looked more to the economic realities of the situation

than the formalities of corporate structure. So, too, did the

District Court in Energy Reserves Group v. Superior Oil Co.,

460 F. Supp. 483-¢D-Kansas—1978). In that case the District

Court stated that the formal separation of corporate identities

did not raise a constitutional barrier to the exercise of jurisdic-

tion over a foreign corporation whose affiliated company (the

parent) had a substantial nexus with the forum. /d. at 480.

According to that court, Cannon is no longer followed. It

believed that /nternational Shoe, supra, dictated that it should

look to the fundamental fairness of haling a foreign corpora-

tion before it. Fundamental fairness turned upon contacts with

the forum, one of which was the foreign corporation’s

26a Appendix C

economic benefit from the affiliate’s conduct in the forum.

The court added that jurisdiction would not attach absent a

showing that the local corporation acted as the foreign corpo-

ration’s “agent or instrumentality.” Energy, supra, at 490.

(Emphasis added.)

Similarly, in Botwinick v. Credit Exchange, Inc., 419 Pa. 65,

213 A.2d 349 (1965), cited by Charter for the proposition that

Cannon is the law of Pennsylvania rather than the “economic

reality” approach of PPG, the continued validity of that case

was again brought into doubt. In Cannon Justice Brandeis

wrote that “[t]hrough ownership of the entire capital stock and

otherwise, the defendant dominates the [subsidiary] corpora-

tion, immediately and completely, and exerts its control both

commercially and financially. . . as it does over those selling

branches or departments of its business not separately incorpo-

rated.” 267 U.S. at 335. (Emphasis added.) In Botwinick, on

the other hand, Justice Jones stated that an alter ego relation-

ship would be found where a subsidiary is so dominated and

controlled by the parent that it is rendered a mere instrumen-

tality of the parent. /d. at 72.

In the case at bar, Pandrol International is the wholly owned

subsidiary of Charter. Charter has three representatives on

Pandrol’s eight-member board. Two of these gentlemen,

Messrs. Richardson and Higham, are members of the Charter

Executive Committee of its Board of Directors. The third, Mr.

Poole, is a manager of Charter. [Richardson Dep. p. 109.] The

five remaining directors are employed by Pandrol Interna-

tional; there are no outside directors.

Charter’s representatives on Pandrol’s board are non-execu-

tive directors and, therefore, have no management responsibili-

ties. By this Charter implies that its representatives are not

active per se in the day-to-day business of Pandrol. As direc-

tors of a corporation, however, they are responsible for Pan-

drol’s overall business. As is commonly known, directors are

elected by the stockholders to run the corporation. The direc-

tors in turn appoint (and dismiss) the officers who manage the

business’ daily affairs. Through their ability to appoint and

remove directors and officers, Charter is able to determine

Appendix C 27a

who will actually run the business, and can thereby exert a

great deal of influence over them. For example, Pandrol

International was not permitted to incorporate Pandrol Incor-

porated until the Charter Executive Committee gave its ap-

proval.

Through its ability to control who sits on Pandrol Interna-

tional’s board, Charter is able to determine who sits on

Pandrol Incorporated’s board. While Pandrol Incorporated

and Charter share no directors, two of .‘androl International’s

directors sit on its five-member board. Mr. Clough is Chief

Executive and Managing Director of Pandrol International.

Mr. Brown is an executive director of the parent. The remain-

ing three board members are employees of Pandrol Incorpo-

rated. Again, there are no outside directors. Thus, it was only

natural for Pandrol Incorporated to look to its parent, Pan-

drol International, and for Pandrol International to look to its

parent, Charter, for letters of credit and loan guarantees when

Pandrol Incorporated needed them to do business with Bethle-

hem Steel, as discussed supra.

Convincing testimony is presented by Charter indicating that

it had no knowledge of either Pandrol International’s or

Pandrol Incorporated’s day-to-day business. Nor did the sub-

sidiaries’ operating units feel controlled by Charter. Knowledge

of this sort is not required by Botwinick, however. All it

requires is that the parent exert such domination and control

that the subsidiary is rendered an instrumentality of the parent.

It is the court’s opinion that Charter’s domination and control

of each subsidiary as an overall business has been established

by virtue of the composition of the boards of directors.

In a similar manner, Charter has gained the control of Cape,

of which it is a 67.3% owner. Since 1969 Charter has had four

representatives on Cape’s 13-member board. All four are

members of Charter’s Executive Board and have included Mr.

Spiro—Deputy Chairman of Cape and Managing Director of

Charter; Mr. Dent—Chairman of Cape; Mr. Higham—Mr.

Dent’s successor as Managing Director of Cape; Mr. Richard-

son; and Mr. Stopford-Sackville. According to PPG, there are

only two outside directors on Cape’s board.

28a Appendix C

Convincing evidence of Charter’s control of Cape’s board

can be seen from two sources. In his deposition, quoted by

PPG at pages 49-50 of their brief and substantially undenied

by Charter [see Charter’s App. B, p. 7], Mr. R.H. Dent,

former Chairman of Cape, stated he resisted Charter’s efforts

to place more than two representatives on Cape’s board. He

testified that he felt two would be adequate to protect Char-

ter’s investment. Dent acknowledged that Charter had the

power to elect more directors or take other action if it felt its

interests were being jeopardized: “We knew that and they knew

that.”

The second source indicating Charter’s control of Cape is

Charter’s May 21, 1969 Tender Offer to purchase 50% of

Cape’s outstanding stock. In that offer, Charter explicitly told

Cape shareholders that its resultant 62.5% ownership of Cape

would give it control of Cape.

It is Charter’s purpose to make use of the wide experience

of Cape’s management so that Cape can become the main

channel! for the expansion of Charter’s industrial activities

of this type; this could not be satisfactorily achieved

unless Charter acquired a considerably larger holding

such as would give Charter control of Cape. (Emphasis

added.) Charter Appendix II,#13.

Although Cape officials testified that Charter did not con-

trol Cape and that Cape was run independently of Charter, the

domination of a board of directors can, and usually does,

result in substantial control of a corporation’s business,

whether perceived by its employees or not. The court con-

cludes, especially in light of the facts of this case where Cape

has refused to submit to the jurisdiction of this court, that the

facts indicate a sufficient degree of control of Cape by Charter

for this court to exercise its jurisdiction over Charter.

There still remains one more very significant contact be-

tween this forum and Charter. This involves the activities of

another wholly owned Charter subsidiary, Charter Consoli-

dated Services (hereinafter “CCS”). On several occasions in

1979, CCS employees visited Pennsylvania and carried on “a

Appendix C 29a

continuous and systematic part of its general business within

this Commonwealth.” §5301(a)(2)(iii). It is the court’s opinion

that these contacts with the Commonwealth were sufficiently

substantial so as to make it fair and reasonable for this court

to exercise its jurisdiction over CCS, especially in view of its

charging fees for the services conducted here. § 2011(c).

During 1979, CCS employees made five visits to this Com-

monwealth. Charter contends that these were made on behalf

of Charter’s “clients” and, therefore, cannot be considered as

having been made on behalf of Charter. Closer examination of

these “clients” reveals that two of the five were companies in

which Charter owned a substantial interest and three visits

involved Charter employees. The court believes that CCS

merely acted as a conduit for Charter and did nothing that

Charter would not have done itself had CCS not existed. In

this regard, CCS’s activities are comparable to those of the

American marketing subsidiaries in Crucible, supra, and Bu-

lova, supra. The court therefore concludes that CCS is Char-

ter’s alter ego and Charter is subject to this court’s

jurisdiction.

For example, in June, 1979, a CCS representative sold

columbite to a Boyerstown, Pa., corporation on behalf of

Amalgamated Tin Mines of Nigeria, a Charter client. The

actual agent for this sale was Charter Metal & Ore Co., Ltd., a

wholly owned subsidiary of CCS. Charter Metal and Ore does

not employ anyone; all of its personnel are employed by CCS.

The “employee” used to negotiate the columbite sale was a Mr.

Waller, the manager of the metal sales department of Charter

Consolidated, and an employee of Charter. [Rudland Dep., p.

120.]}

Another “CCS employee,” E.R. Snare, came to Pennsylva-

nia in April, 1975, to meet in Pittsburgh with employees of

Elliot Corporation. This was to discuss the sale of acid plant

compressors to Societe Miniere Tenke Fungurume, a Charter

client located in Zaire. Closer examination revealed that So-

ciete Miniere Tenke Fungurume was a joint venture between

Charter, which had a 14% interest, Standard Oil of Indiana

(28%) and Anglo American Corporation. This venture lasted

30a Appendix C

from 1965-79. [Rudland Dep., p. 124.] According to PPG

(Brief p. 15), Anglo American was the principal shareholder of

Charter (36%) until 1979, and that it had four employees on

Charter’s board. Charter is said to have had three representa-

tives on Anglo’s board.

More important, however, is the identity of the “CCS em-

ployee” who conducted these meetings, Mr. Charlton. Accord-

ing to Mr. Rudland [Dep. p. 123], Charlton was employed by

Charter and worked in its technical department.

Later in 1979 a CCS employee met in Pittsburgh with

officials of the U. S. Bureau of Mines to discuss remote

control devices. No evidence has been presented linking this

visit to Charter.

Twice in 1979, however, Dr. Sage visited Pennsylvania on

behalf of Highveld Steel and Vanadium Corp., Ltd. Dr. Sage

of discussing business and promoting the Vanadium Interna-

tional Technical Committee, of which he was chairman. In its

1972 annual report, Charter lists Highveld Steel and Vanadium

Corp., Ltd. as a principal investment (p. 37) and as a member

of the Anglo American Group of Charter.

As can be seen by CCS’s activities in this forum, at least

three of the five visits were on behalf of Charter itself. It was

Charter which stood to benefit and Charter employees were

present here conducting business on Charter’s behalf. The

court concludes that Charter purposely availed itself of the

privileges and benefits of our laws and could have reasonably

anticipated being haled before this court; it is, therefore,

subject to this court’s jurisdiction. World-Wide Volkswagen

Corp., supra, Hendrickson, supra.

“When the sustaining of preliminary objections will result in

dismissing the suit, . . . it should be done only in cases that

are clear and free from doubt.” Williams v. Rose, 403 Pa. 619,

622, 170 A.2d 577 (1961), Robinson v. Philadelphia, 400 Pa.

80, 161 A.2d 1 (1960). Even though Charter has supported its

objections with credible testimony, such testimony has not

totally convinced the court that Charter was not doing business

in this Commonwealth through its subsidiaries, and its prelimi-

nary objections will be overruled.

Appendix C 3la

ORDER OF COURT

AND Now, to-wit, this 3lst day of December, 1981, the

preliminary objections raising questions of jurisdiction of

Charter Consolidated, Ltd., Charter Consolidated Invest-

ments, Ltd., and Central Mining Finances, Ltd. are overruled

and those parties are granted leave to file such responsive

pleadings as they deem necessary within thirty (30) days of the

date of this Order.

BY THE COURT

/s/ 1. Martin Wekselman, J.

32a Appendix D

The Superior Court of Pennsylvania

Sitting at Pittsburgh

J. HANIEL HENRY 801 CITY-COUNTY BUILDING

PROTHONOTARY PITTSBURGH, PA.

IRMA T. GARDNER 15219

DEPUTY PROTHONOTARY

September 13, 1983

David G. Ries, Esquire

William M. Wycoff, Esquire

2900 Grant Building

Pittsburgh, Pennsylvania 15219

In Re: Anthony J. Barber, et al. vs. Pgh Corning Corp, et al.,

Appeal of Charter Consolidated, LTD., et al. No. 139

Pittsburgh, 1982

Gentlemen:

The Court has entered the following Order on your Applica-

tion for Reargument in the above-captioned matter:

“ORDER OF COURT

AND NOw, this 13th day of September, 1983, the application

for reargument filed by appellant Charter Consolidated, LTD.,

is hereby denied.

PER CURIAM”

Very truly yours,

/s/ Irma T. Gardner

Deputy Prothonotary

Appendix D 33a

ITG:kdc

cc: Stanley W. Greenfield, Esquire

Gerald C. Paris, Esquire

George E. McGrann, Esquire

Alexander Unkovic, Esquire

Brian H. Baxter, Esquire

Edmund L. Olszewski, Jr., Esquire

Larry P. Gaitens, Esquire

Frank Petramolo, Jr., Esquire

George H. Cohen, Esquire

Richard M. Colasurd, Esquire

Honorable I. Martin Wekselman

34a Appendix E

ORDER OF COURT

AND Now, to-wit, this 20 day of January, 1982, upon

consideration of the Motion for Amended Order of Charter

Consolidated, Ltd., Charter Consolidated Investments, Ltd.,

and Central Mining Finance, Ltd., it is hereby Ordered that the

Motion is granted and, for purposes of permitting an immedi-

ate appeal under Rule 311(b)(2) of the Pennsylvania Rules of

Civil Procedure, the Order of Court dated December 31, 1981

is amended by adding the following:

“A substantial issue of jurisdiction is presented by the

preliminary objections of Charter Consolidated, Ltd.,

Charter Consolidated Investments, Ltd., and Central

Mining Finance, Ltd.”

By THE COURT:

/s/ 1. Martin Wekselman, J.

Appendix F 35a

Section 5301 of the Pennslyvania long-arm statute, 42 PA.

CONS. STAT. ANN. § 5301 (1981), provides in pertinent part:

(a) General rule.—The existence of any of the following

relationships between a person and this Commonwealth shall

constitute a sufficient basis of jurisdiction to enable the tri-

bunals of this Commonwealth to exercise general personal

jurisdiction over such person, or his personal representative in

the case of an individual, and to enable such tribunals to

render personal orders against such person or representative:

(2) Corporations.—

(i) Incorporation under or qualification as a foreign

corporation under the laws of this Commonwealth.

(ii) Consent, to the extent authorized by the consent.

(iii) The carrying on of a continuous and systematic

part of its general business within this Commonwealth.

(b) Scope of jurisdiction.—When jurisdiction over a person

is based upon this section any cause of action may be asserted

against him, whether or not arising from acts enumerated in

this section. Discontinuance of the acts enumerated in subsec-

tion (a)(2)(i) and (iii) and (3)(i) and (iii) shall not affect

jurisdiction with respect to any act, transaction or omission

occurring during the period such status existed.

36a Appendix F

Section 5322 of the Pennsylvania long-arm statute, 42 PA.

CONS. STAT. ANN. § 5322 (1976), provides in pertinent part:

(a) General rule.—A tribunal of this Commonwealth may

exercise personal jurisdiction over a person (or the personal

representative of a deceased individual who would be subject

to jurisdiction under this subsection if not deceased) who acts

directly or by an agent, as to a cause of action or other matter

arising from such person:

(1) Transacting any business in this Commonwealth.

Without excluding other acts which may constitute trans-

acting business in this Commonwealth, any of the follow-

ing shall constitute transacting business of the purpose of

this paragraph:

(i) The doing by any person in this Common-

wealth of a series of similar acts for the purpose of

thereby realizing pecuniary benefit or otherwise ac-

complishing an object.

(ii) The doing of a single act in this Common-

wealth for the purpose of thereby realizing pecuniary

benefit or otherwise accomplishing an object with

the intention of initiating a series of such acts.

(iii) The shipping of merchandise directly or in-

directly into or through this Commonwealth.

(3) Causing harm or tortious injury by an act or omis-

sion in this Commonwealth.

(4) Causing harm or tortious injury in this Common-

wealth by an act or omission outside this Commonwealth.

(b) Exercise of full constitutional power over nonresi-

dents.—In addition to the provisions of subsection (a) the

jurisdiction of the tribunals of this Commonwealth shall ex-

tend to all persons who are not within the scope of section 5301

(relating to persons) to the fullest extent allowed under the

Constitution of the United States and may be based on the

Appendix F 37a

most minimum contact with this Commonwealth allowed

under the Constitution of the United States.

is based solely upon this section, only a cause of action or

other matter arising from acts enumerated in subsection (a), or

from acts forming the basis of jurisdiction under subsection

(b), may be asserted against him.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.