Petition for Writ of Certiorari — DeHavilland Aircraft of Canada, Ltd. v. Maunder

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84-512] | sep 26 1984

No. ALEXANDER L. STEVAS.

LERK

In THE

Supreme Court of the Anited States

OctoserR TERM, 1984

DeHAVILLAND AIRCRAFT OF CANADA, LTD.,

Petitioner,

vs.

CRISPIN MAUNDER and SAMUEL J. BETAR, Public

Administrator of Cook County, Administrator

of the Estate of RAGHUBIR DUTT LAW, Deceased,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF ILLINOIS

Huey C. Grirrin *

RicHarp EK. MvuELLER

Tuomas J. STREUBER

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0700

* Attorney of Record Attorneys for Petitioner

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

i

QUESTIONS PRESENTED FOR REVIEW

1) Does this Court’s decision in Cannon Mfg. Co. v.

Cudahy Co., 267 U.S. 333 (1925)—holding that the forum

state presence and activities of a wholly-owned subsidiary

do not constitute the presence and activities of the parent

for purposes of asserting in personam jurisdiction over

the parent—still have ‘‘vitality’’?

2) Regardless of the status of Cannon, did the Illinois

Supreme Court’s upholding of Illinois jurisdiction over

the Canadian Petitioner, for a product made in Canada

and an accident occurring in Africa having nothing to do

with Illinois or with Petitioner’s subsidiary in Illinois,

violate Petitioner’s constitutional rights under the due

process clause of the Fourteenth Amendment of the United

States Constitution?

ii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW .. i

TABLE OF AUTHORITIES .....0.scaccseces iv

GAN URPEN TEAM can ckssncnacseexsaneoear ‘

Pith 0) yy err errr rrr rr err erry

APPLICABLE CONSTITUTIONAL

ie gt ere ee ree rr ery rrr ere

STATEMENT OF THE CASE ...............

Non-Illinois Accident Involving Non-Illiiois

CRUD 5 kcneuncaccecedsuesanenseneueeans 3

Fo Pe es

Subsidiary Corporation Dismissed From Suits . 5

Service Of Process On Employee Of Sub-

GN SOURS onc cadectiiiascdeeassongeuens 5

Due Process—Jurisdictional Issue Raised By

oe a eS errr ee 5

Facts Pertaining To Petitioner—DeHavilland

Aisoreie GE CORBA. BA. <6 cineca bdducaadens 6

Facts Pertaining To Subsidiary Corporation—

DeHavilland Canada, Inc. (Not A Party) ..

i mS Ot ee ee

Illinois Appellate Court ..................

Illinois Supreme Court ...................

© co co

ill

REASONS RELIED ON FOR ALLOWANCE

OF THE WRIT:

I.

THE CONFLICT AMONG THE STATES AND

CIRCUITS ON THE VITALITY OF THE

CANNON DECISION SHOULD BE SETTLED

HE BME GRPUPEEE wo cis scccnccewcsncscnces 10

The Conflicting State And Federal Case Law

Over The “Vitality” Of Cannon Demonstrates

The Need For This Court’s Review ...... 12

Il.

REGARDLESS OF THE STATUS OF CANNON,

SUBJECTING PETITIONER CANADIAN COR-

PORATION TO ILLINOIS JURISDICTION FOR

A CAUSE OF ACTION ARISING IN AFRICA

AND HAVING NOTHING TO DO WITH ILLI-

NOIS, CONFLICTS WITH PRIOR DECISIONS

OF THIS COURT AND VIOLATES PETI-

TIONER’S RIGHT TO DUE PROCESS OF LAW

UNDER THE FOURTEENTH AMENDMENT . 15

Conflict With Prior Decisions Of This Court . 15

SEE cow Rcd ncnvdnansssecsececcesecs 17

APPENDIX

Decision Of Illinois Supreme Court, Rendered

FF og Ae ee App. 1

Decision Of Illinois Appellate Court, Rendered

Om Pemruery 16, IBGS .....cccccccccces App. 14

Decision Of Illinois Circuit Court, Rendered On

i cc Pek wees OAC NOR eso reese App. 22

iv

TABLE OF AUTHORITIES

Cases

ASC Industries, Inc. v. Keller Industries, Inc., 296

F. Supp. 1160 (D.C. Conn. 1969) .......... 14

Boryk v. deHavilland Aircraft Co., 341 F.2d 666

OE STUD havc cen snncccvececasveccess 13

Brunswick Corp. v. Suzuki Motor Co., Ltd., 575

F. Supp. 1412 (E.D. Wis. 1983) ............ 14

Calder v. Jones, ..... US. ....., 79 L. Ed. 804, 104

i ee 2 PPP ree 15, 16

Cannon Mfg. Co. v. Cudahy Packing Co., 292 Fed.

WED CUr eR. TEAL. TER 00 e vesiciccccnecswcancs 10

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

i ERE rre rer erTTryTer tr re Tro te passim

Crow Tribe v. Mohasco Indus., 406 F. Supp. 738

TF. MU Wek dncekaebsdcnnacdcetanves 12

DeWalker v. Pueblo International, Inc., 569 F.2d

Se Ge a hn 68 Kdcbuneee cis cnscccs 12, 13

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

460 F. Supp. 483 (D. Kan. 1978) .......... 13, 14

Farkas v. Texas Instruments, Inc., 429 F.2d 849

Ce Gi UE hoch nks cess eccecnencss cases 12

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

Supp. 143 (W.D. Tex. 1973) ............... 13

Harris v. Deere and Co., 223 F.2d 161 (4th Cir.

SEE chk ddahkencndakd ban Wekes cheeneseEs és 12

Helicopteros Nationales de Columbia v. Hall, .....

US. ....., 80 L. Ed.2d 404, ..... S. Ct. ..... (1984) . 15, 16

Hitt v. Nissan Motor Co., Ltd., 399 F. Supp. 838

GR. Fs HO aS hace vase caas ices cuasss 13

Internaticnal Shoe Co. v. Washington, 326 U.S.

De? SE Wi wiwn’ ce Ceadeub webs cesiunes wes 15

V

Keeton v. Hustler Magazine, ..... i) , 2 A

Ed.2d 790, 104 S. Ct. 1478 (1984) .........

McPheron v. Penn Central Transp. Co., 390 F.

Supp. 943 (D. Conn. 1975) ................

Shaffer v. Heitner, 483 U.S. 186 (1977) .......

Smith v. Piper Aircraft Corp., 425 F.2d 823 (5th

RRR Roan rete cian Sn

Wells Fargo & Co. v. Wells Fargo Exp. Co., 556

ee | ene

Williams v. Canon, Inc., 432 F. Supp. 376 (C.D.

Se NE Ni Gnas cbs a vhs ha Rea WebRss

a MUU novisankccenes<ctakeubewes

Constitutional Provisions and Statutes

U.S. Const. Amend. XIV ....................

errr men

16

12

15

12

13

12

16

nN ©

In Tue

Supreme Court of the United States

Ocroser Term, 1984

DeHAVILLAND AIRCRAFT OF CANADA, LTD.,

Petitioner,

vs.

CRISPIN MAUNDER and SAMUEL J. BETAR, Public

Administrator of Cook County, Administrator

of the Estate of RAGHUBIR DUTT LAW, Deceased,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF ILLINOIS

Petitioner, DeHavilland Aircraft of Canada, Ltd., a

Canadian corporation, prays that a Writ of Certiorari issue

to review the judgment and opinion of the Illinois Su-

preme Court. The Illinois Supreme Court reversed the

Circuit Court of Cook County and held that the Illinois

presence and activities of Petitioner’s subsidiary enabled

Illinois to properly assert in personam jurisdiction over

Petitioner in a case where Petitioner manufactured an

airplane in Canada that crashed in Africa giving rise to

claims on behalf of citizens of India and Great Britian.

alin

OPINIONS BELOW

The Opinion of the Illinois Supreme Court appears at

102 Ill.2d 342 and 466 N.E.2d 217 and 80 Ill. Dec. 765

(1984) and is printed in the Appendix hereto (App. 1-13).

The Appellate Court opinion is reported at 112 Ill. App.3d

879, 445 N.E.2d 1303 (1983) and is also printed in the Ap-

pendix (App. 14-21). The Circuit Court’s order granting

Petitioner’s .Jotion to Dismiss for lack of personal juris-

diction is not reported, but is also printed in the Appen-

dix (App. 22-25).

JURISDICTION

The Opinion and judgment of the Illinois Supreme Court

was entered on June 29, 1984. This Petition for Certiorari

is timely filed within 90 days of that date, 28 U.S.C.

§2101(c). The statutory provision granting jurisdiction to

the Court is contained in 28 U.S.C. §1257 as follows:

“$1257. State courts; appeal; certiorari

Final —— or decrees rendered by the highest

court of a State in which a decision could be had.

may be reviewed by the Supreme Court as follows:

* * *

(3) By writ of certiorari, where the validity of a

treaty or statute of the United States is drawn in

—— or where the validity of a State statute is

wn in question on the ground of its being repug-

nant to the Constitution, treaties, or laws of the

United States, or where any title, right, privilege or

immunity is specially set up or claimed under the

Constitution, treaties or statutes of, or commission

held or authority exercises under, the United States.”

alin

APPLICABLE CONSTITUTIONAL PROVISION

The constitutional provision applicable to this case is

contained in Section 1 of Amendment XIV of the United

States Constitution as follows:

“Constitution of the United States, Amendment XIV:

Section 1. 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 im-

munities of citizens of the United States; nor shall

any State deprive any person of life, liberty, or prop-

erty, without due process of law; nor deny to any

~_- within its jurisdiction the equal protection of

the laws.”

STATEMENT OF THE CASE

Non-Illinois Accident Involving

Non-Illinois Citizens

These wrongful death and injury claims, brought on

behalf of citizens of India and Great Britian, have no fac-

tual connection with Illinois whatsoever.

1) The accident occurred on May 3, 1976 in Zambia,

Central Africa during a demonstration flight for the Zam-

bian Air Force (R. C3).*

° hw record references are to the Betar case unless otherwise

noted.

ellis

2) The injured respondent, Crispin Maunder, is a

British citizen who at the time of the occurrence was the

commercial manager for Autair Helicopters Cafrical Lim-

ited of Luseka, Zambia (Maunder, R. C8).

3) The decedent, Raghubir Dutt Law, was a citizen of

India and a member of the Zambian Air Force. (R. C8).

His widow and children are all Indian nationals (R. C2).

4) The aircraft involved, a “Twin Otter”, was manufac-

tured by Petitioner DeHavilland Aircraft of Canada, Ltd.

(“Ltd.””) in Downsview, Ontario, Canada (R. C77, C180)

and carried Canadian Registration No. C-6-DWA (R. C77).

5) The plane was never in Illinois or even in the United

States for any purpose at any time (R. C77).

6) The complaints alleged negligent operation of the

plane in Zambia by Amos Pudsey, an alleged agent of De-

Havilland Aircraft of Canada, Ltd., and defective design

and/or manufacture of the plane by Ltd. in Canada (R.

C4-C9).

Litigation

Canada

On May 6, 1977, Mr. Law’s widow Urmela Law, a

citizen of India and a resident of Zambia (R. C559), filed

suit against DeHavilland Aircraft of Canada, Ltd. in the

Supreme Court of Ontario, Canada (No. 12969) (R.

C552-C560).

Illinois

On March 17, 1977, Crispin Maunder, a citizen of Bri-

tian residing in Africa, filed an action for personal injuries

in the Circuit Court of Cook County (Cause No. 77 L

~

5215) (Maunder, R. C2-C8). On April 28, 1977, suit was

also filed in the Circuit Court of Cook County by the

Public Administrator of Cook County ox behalf of the

estate of Raghubir Dutt Law and his dependents, all of

whom were Indian nationals (Cause No. 77 L 8087) (R.

C2-C3).

Subsidiary Corporation

Dismissed From Suits

In their attempt to obtain Illinois jurisdiction over De-

Havilland of Canada, Ltd. for this accident having nothing

to do with Illinois, respondents named as an additional

defendant, DeHavilland Canada, Inc., a subsidiary of Peti-

tioner and a Delaware corporation with its principal place

of business in Rosemont, Illinois. However, the subsidiary

company had nothing to do with the airplane involved in

this occurrence and it was subsequently voluntarily dis-

missed from both suits (R. C565).

Service Of Process On Employee

Of Subsidiary Only

No service of process in ei her case was ever obtained

upon any officer or employee of Petitioner. Instead, the

Circuit Court summons and complaint was left with Bar-

bara Schuett, an office employee of the subsidiary cor-

poration working in Rosemont. (Betar, R. C14, C265;

Maunder, R. C25).

Due Process—Jurisdictional Issue

Raised By Motions To Dismiss

Both the Maunder and Betar cases were originally

removed to the Federal District Court for the Northern

District of Illinois. The Maunder case was quickly re-

- =

manded since the federal court lacked jurisdiction over

a suit between aliens, i.e., a British subject and a Cana-

dian corporation (Maunder, R. C43). The Betar case was

originally dismissed by the federal district court for lack

of personal jurisdiction over the Canadian defendant

(R. C55-C63). On appeal, the Seventh Circuit Court of Ap-

peals did not reach the basic jurisdictional issue. Rather,

it held that the Betar case too should have been remanded

since the Illinois Public Administrator had no “stake” in

the action and thus the suit was also between aliens, i.e.,

citizens of India against a Canadian corporation. Betar v.

DeHavilland Aircraft of Canada, Ltd., 603 F.2d 30 (7th

Cir. 1979), cert. denied, 444 U.S. 1098 (1980) (Betar, R.

C44).

On remand to the Illinois Circuit Court, DeHavilland

Aircraft of Canada, Ltd. renewed its motion to quash ser-

vice of summons and to dismiss both cases for lack of per-

sonal jurisdiction (R. C52). Discovery was undertaken with

respect to the jurisdictional issue and the parties were

permitted to file affidavits, depositions and other docu-

ments in support of their positions.

Facts Pertaining To Petitioner—

DeHavilland Aircraft of Canada, Ltd.

Petitioner DeHavilland Aircraft of Canada, Ltd., is a

Canadian corporation with its plant in Downsview,

Ontario, Canada (R. C340, C346). Its corporate offices and

principal place of business are in Ontario (R. C76). Peti-

tioner has no offices, plants, factories or other place of

business in Illinois (R. C76). It has no officers, directors

or employees living, residing or stationed in the State of

Illinois (R. C402). It is not qualified, authorized or other-

wise licensed or entitled to do business in Illinois (R.

=

C403). It does not own, lease or use any real estate in

the State of Illinois (R. C76, C401). It does not hold any

licenses, charters, or permits granted or issued by the

State of Illinois or by any Illinois agency or by any county

or municipal government in Illinois (R. C76, C514). It pays

no Illinois taxes and has no registered agent of any other

authorized agent for receipt of process in Illinois (R. C402,

C514).

Facts Pertaining To Subsidiary Corporation—

DeHavilland Canada, Inc. (Net a Party)

DeHavilland Canada, Inc., a Delaware corporation with

its principal place of business in Rosemont, Illinois, is a

wholly-owned subsidiary of DeHavilland Aircraft of

Canada, Ltd. (R. C105). The subsidiary’s sole business is

the sale of aircraft parts for DeHavilland airplanes (R.

C204), C483). It purchases these parts both from Peti-

tioner in arms-length transactions (R. C59) and from 80

other independent parts suppliers throughout the coun-

try (R. C251, C252, C439, C561-C564). The subsidiary has

kept its separate corporate identity at all times. It has its

own management, its own Chicago auditors, keeps its own

corporate records, pays its own taxes and its own operating

expenses, and funds its own separate pension plan for its

own employees (R. C522, C524, C549, C553-C554).

The subsidiary maintains its own parts inventory and

its own warehouse in Rosemont, Illinois from which it ships

parts directly to its customers (R. C55). Purchase deci-

sions and prices on parts purchased and resold by the sub-

sidiary are set exclusively by the subsidiary’s manager

and director Mr. Jay Cox (R. C195-C236, C250-C251, C256,

C260, C544-C548).

=

Illinois Circuit Court

The Circuit Court granted Petitioner’s motion to dismiss

with a written order providing in part as follows:

“The instant litigation involves the crash in Africa

of a plane manufactured in Canada causing the death

of two residents of India. Jt cannot be said that these

facts are clearly ‘within the ambit of the state’s

legitimate protective policy”. The contacts with this

state involve a separate subsidiary corporation which

supplies parts for DeHavilland aircraft, however, no

activities of this subsidiary are in any way involved

in the basic litigation. There is no contention that the

subsidiary supplied parts for the plane involved in

the crash. There is some evidence that the parent

exercised some control of the subsidiary both in start-

ing up the business and with respect to the line of

authority, however, the evidence does not show that

the subsidiary was a mere sham or alter ego. Fur-

— the subsidiary did not manufacture or sell air-

craft.

“Analyzing the nature and quality of the contacts

with the State of Illinois, this court cannot say that

it would be fair and reasonable to require DeHavil-

land Aircraft, Ltd., a Canadian Corp., to defend this

action in Illinois.”” (R. C703-C794) (Emphasis added.)

Illinois Appellate Court

On February 16, 1983, the Illinois Appellate Court

reversed the Circuit Court’s dismissal order and held that

the Canadian defendant’s contacts with its Illinois resi-

dent subsidiary were sufficient “minimum contacts” for

general jurisdiction purposes (App. 19-20), thus subjecting

Petitioner to Illinois jurisdiction for all causes of action

arising everywhere and anywhere. Maunder v. DeHavilland

-

Aircraft of Canada, Ltd., 112 Ill. App.3d 879. 445 N.E.2d

1303 (1983).

‘Hinois Svyreme Court

The Illinois Supreme Court affirmed the Appellate

Court’s reversal of the Circuit Court on the basis of the

Illinois activities, not of Petitioner, but of its subsidiary

(“Ine.”): “Ine. has been operating in Illinois for 13 years

and these operations have been continuous and systema-

tic” (102 I1].2d at 350), and Petitioner “through Inc., was

doing business in Illinois” (102 IIl.2d at 352) (emphasis

added.)

Aware that its decision basing jurisdiction on the ac-

tivities of Petitioner’s subsidiary was contrary to this

Court’s holding in Cannon Mfg. Co. v. Cudahy Packing

Co., 267 U.S. 333 (1925), the Illinois Supreme Court

disposed of Cannon by stating (102 IIl.2d at 353):

“Although Cannon has not been expressly overruled,

its vitality has been \imited by the subsequent deci-

sions in International Shoe and its progeny.” (Em-

phasis added)

Petitioner, DeHavilland Aircraft of Canada, Ltd., now

seeks this Court’s review of the Illinois Supreme Court’s

decision. The determination of the continuing “vitality”

of Cannon should be made by this Court, not the IIli-

nois Supreme Court.

wiles,

REASONS RELIED ON

FOR ALLOWANCE OF THE WRIT

i.

THE CONFLICT AMONG THE STATES AND CIRCUITS

ON THE VITALITY OF THE CANNON DECISION

SHOULD BE SETTLED BY THIS COURT.

While the Illinois Supreme Court stated that this Court’s

decision in Cannon Mfg. Co. v. Cudahy Co., 267 U.S. 333

(1925) has “limited vitality’’ (102 U.S. at 353), the Illinois

court interpreted Cannon in a way that leaves it with

“no vitality”.

In Cannon, this Court held that North Carolina could

not assert jurisdiction over Cudahy, a Maine corporation

not licensed to do business in North Carolina, even though

Cudahy had a wholly-owned Alabama subsidiary (with

many common officers and directors)* licensed and doing

business in North Carolina as “the instrumentality em-

ployed to market Cudahy products within the State” (267

_U.S. at 335). Moreover, in Cannon it was established that:

1) The subsidiary bought the parent’s products and

resold them to dealers in the state (267 U.S. at 335).

2) The products were shipped directly from the

parent to the in-state dealers (267 U.S. at 335).

3) Through ownership of the capital stock or other-

wise, the parent ‘“dominated”’ the subsidiary corpora-

tion “immediately and completely;” (267 U.S. at 335)

4) The parent “exerts its control both commercial-

ly and financially in substantially the same way, and

* See Cannon Mig. Co. v. Cudahy Packing Co., 292 Fed. 169,

172, 176 (W.D. N.C. 1928).

wiles

mainly through the same individuals, as it does over

those selling branches or departments of its business

not separately incorporated which are established to

market the Cudahy products in other states” (267

U.S. at 335);

Even with this evidence of “ownership,” “control,” and

“domination” (not present in the case at bar), this Court

held that the formal separateness maintained between the

two corporations was sufficient to prevent the acts of the

subsidiary from being considered the acts of the parent

for purposes of personal jurisdiction. The Court reasoned

(at 335-338):

“The existence of the Alabama Company as a

distinct corporate entity is, however, in all respects

observed. Its books are kept separate. All transactions

between the two corporations are represented by ap-

propriate entries in their respective books in the same

way as if the two were wholly independent corpora-

tions ...

* * *

“The defendant wanted to have business transactions

with persons resident in North Carolina, but for rea-

sons satisfactory to itself did not choose to enter the

State in its corporate capacity. It might have con-

ducted such business through an independent agency

without subjecting itself to the jurisdiction. Bank of

America v. Whitney Central National Bank, 261 U.S.

171. It preferred to employ a subsidiary corporation.

* * *

“(W]hatever might be other legal consequences of the

concentration, we cannot say that for purposes of

jurisdiction, the business of the Alabama

in North Carolina became the business of the defen-

dant.”” (Emphasis added)

This Court has never overruled or “limited’’ Cannon’s

holding that the presence and activities of a wholly-owned

subsidiary are not attributable to the parent company “for

purposes of jurisdiction” (Cannon, 267 U.S. at 338).

The Conflicting State And Federal Case Law

Over The ‘‘Vitality’’ Of Cannon Demonstrates

The Need For This Court’s Review

In recent years, Cannon has been followed in numerous

jurisdictions including the First, Fourth and Fifth Circuits:

1. DeWalker v. Pueblo International, Inc., 569

F.2d 1169 (1st Cir. 1978) (activities of wholly-owned

New York subsidiary not attributable to parent Dela-

ware corporation);

2. Farkas v. Texas Instruments, Inc., 429 F.2d 849

(1st Cir. 1970) (Massachusetts lacked jurisdiction over

parent corporation whose subsidiary was doing busi-

ness within the state);

3. Harris v. Deere and Co., 223 F.2d 161 (4th Cir.

1955) (Illinois defendant corporation not chargeable

with activities of wholly-owned North Carolina sub-

sidiary corporation selling defendant’s products);

4. Smith v. Piper Aircraft Corp., 425 F.2d 823 (5th

Cir. 1970) (Georgia activities of Florida distributor not

attributable to Piper, a Pennsylvania corporation);

5. Williams v. Canon, Inc., 482 F. Supp. 376 (C.D.

Cal. 1977) (activities of wholly-owned US subsidiary

doing business in California not attributable to Japanese

corporation);

6. McPheron v. Penn Central Transp. Co., 390 F.

Supp. 943 (D. Conn. 1975) (activities of Connecticut

holding company not attributable to parent Pennsy]-

vania corporation);

7. Crow Tribe v. Mohasco Indus., 406 F. Supp. 738

(D. Mont. 1975) (Montana court lacked jurisdiction

=

over nonresident parent corporation where formal

a was maintained between it and its sub-

ary doing business within the state);

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

F. Supp. 248 (W.D. Tex. 1973) (Texas had no jurisdic-

tion over Procter & Gamble Co., even though a wholly-

owned subsidiary, with common officers and directors,

Procter & Gam le Distrib. Co., did substantial busi-

ness and sales of Gamble products in Texas).

Illustrative of the holdings in these cases is this adher-

ence to Cannon in DeWalker v. Pueblo International,

Inc., supra, 569 F.2d at 1172:

“In determining whether a parent is ‘doing busi-

ness’ in a state for purposes of personal jurisdiction,

the Supreme Court has held that a separately incor-

porated subsidiary operating in a state ordinarily

may not be considered to be the parent for purposes

of determining whether the parent is doing business

there (citing Cannon).”’ Suchen added)

In contrast, the following courts, including the Second

and Ninth Circuits, have expressly or impliedly rejected

Cannon:

1. Wells Fargo & Co. v. Wells Fargo Exp. Co.,

556 F.2d 406, 423 (9th Cir. 1977) (activities and

presence of Nevada subsidiary attributable to Liech-

tenstein corporation);

2. Boryk v. deHavilland Aircrajt Co., 341 F.2d 666

(2d Cir. 1965) (Deiaware subsidiary’s New York ac-

tivities attributable to British parent);

3. Energy Reserves Group, Inc. v. Superior Oul

Co., 460 F. Supp. 483 (D. Kan. 1978) (parent corpora-

tion’s Kansas activities attributable to British sub-

sidiary);

4. Hitt v. Nissan Motor Co., Ltd., 399 F. Supp.

838 (S.D. Fla. 1975) (activities of U.S. subsidiary at-

tributable to Japanese parent);

eile

5. ASC Industries, Inc. v. Keller Industries, Inc.,

296 F. Supp. 1160, 1163 (D.C. Conn. 1969) (activities

of wholly-owned Connecticut subsidiary attributable

to Florida parent);

6. Brunswick Corp. v. Suzuki Motor Co., Ltd., 575

F. Supp. 1412 (E.D. Wis. 1983) (forum state activities

of subsidiary attributed to Japanese parent in uphold-

ing Wisconsin jurisdiction over parent).

An example of the view of these cases is this statement

in Energy Reserves Group, Inc. v. Superior Oil Co.,

supra, 460 F. Supp. at 490:

“The Court secondly holds that formal separation

of corporate identities does not raise a constitutional

barrier to the exercise of jurisdiction over a non-

resident whose affiliated corporation has a substan-

tial nexus with the forum. This follows from the con-

clusion that the time-honored doctrine of Cannon

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

333, 45 S.Ct. 250, 69 L.Ed. 634 (1925), must no longer

be followed. The Court finds Cannon to be limited

in scope or modified in holding by International Shoe

and its hg og Reliance on the rule of Cannon is

unsound when extraterritorial service is authorized

by statute and when personal jurisdiction is predi-

cated on the due process standards of International

Shoe.”” (Emphasis added)

It is thus apparent that the status of the Cannon rule

is an issue of national and international significance on

which this Court’s guidance is urgently needed, not only

by Petitioner, but by all parent corporations and their sub-

sidiaries. The issue is squarely presented by the facts of

this case and should be resolved at this time for the bene-

fit of state and federal courts everywhere.

i

REGARDLESS OF THE STATUS OF CANNON, SUB-

JECTING PETITIONER CANADIAN CORPORATION TO

ILLINOIS JURISDICTION FOR A CAUSE OF ACTION

ARISING IN AFRICA AND HAVING NOTHING TO DO

WITH ILLINOIS, CONFLICTS WITH PRIOR DECISIONS

OF THIS COURT AND VIOLATES PETITIONER’S RIGHT

TO DUE PROCESS OF LAW UNDER THE FOURTEENTH

AMENDMENT.

The guiding constitutional principles applicable to the

jurisdictional issue presented herein are embodied in the

“minimum contacts” standard first announced by this

Court in International Shoe Co. v. Washington, 326 U.S.

310 (1945) and recently reiterated in Calder v. Jones, .....

US. ....., 79 L. Ed. 804, 104 S. Ct. 1482 (1984), citing

Shaffer v. Heitner, 433 U.S. 186, 204 (1977) and stating:

“In judging minimum contacts, a Court properly

focuses on the relationship among the defendant, the

forum and the litigation.” (104 S. Ct. at 1486)

In the instant case, the litigation has no relationship at

all with the Illinois forum or with any activities of the

Petitioner or its subsidiary in Illinois. Upholding jurisdic-

tion on the facts of this case, simply does not comport

with any jurisdictional-due process formula ever announced

by this Court. Moreover, the recent decisions of this Court

relied upon by the Illinois Supreme Court are directly con-

trary to upholding Illinois jurisdiction over Petitioner in

this case.

Conflict With Prior Decisions Of This Court

The Illinois Supreme Court cited this Court’s decision

in Helicopteros Nationales de Columbia v. Hall, ..... US.

‘atom , 80 L. Ed.2d 404, ..... S. Ct. ..... (1984). But in Hall,

=

this Court held that Texas could not constitutionally assert

in personam jurisdiction over a Columbian corporation for

an accident which occurred in Peru, even though the

foreign corporation did substantial business in Texas and

that business had at least an indirect connection with the

occurrence, i.e., the helicopter involved in the accident was

one of many purchased in Texas by the Columbian defen-

dant and the contract pursuant to which plaintiff's de-

cedent was being transported at the time of the accident

was negotiated by defendant in Texas (104 S. Ct. at 1870,

1874).

The instant case does not have even such tangential con-

nections with I!linois. Nothing about this case has any-

thing to do with Illinois or with any Illinois activity of

Petitioner or its subsidiary.

The Illinois Supreme Court also cited Calder v. Jones,

sensi USS. ....., 79 L. Ed.2d 804, 104 S. Ct. 1482 (1984) and

Keeton v. Hustler Magazine, ..... USS. ....., 79 L. Ed.2d

790, 104 S. Ct. 1478 (1984). But in these libel cases, this

Court upheld a finding of a long-arm jurisdiction over

defendants since the libel actually occurred and caused

injury in the forum state. (104 S. Ct. at 1478-1479, 1486-

1487).

In the case at bar, no tort occurred in Illinois, no in-

jury occurred there, and long-arm jurisdiction was not

even asserted.

On the facts of this case, there is simply no basis on

which Petitioner could or should have “reasonably antici-

pate[d] being haled into court” in Illinois, World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980),

and the due process clause “in its role as guarantor

against inconvenient litigation” should serve to protect

Petitioner from having to defend this case in Illinois

(Woodson, 444 U.S. at 292).

=_ =

If the Illinois Supreme Court’s holding is correct, a

foreign corporation may now be sued in the state where

its subsidiary is located for each and every conceivable

accident and event no matter where it occurs and no

matter that it has absolutely no connection with the sub-

sidiary or with any of the subsidiary’s activities. Such an

unprecedented result ignores the basic principles of juris-

dictional due process, and certainly should not become the

law of any state without this Court’s review.

CONCLUSION

To decide the continued vitality of a landmark decision

and thereby resolve the conflict and confusion among the

states, circuits and districts on the parent/subsidiary juris-

dictional issue and also to align the Illinois Supreme

Court’s decision in this case with the basic principles of

jurisdictional due process, Petitioner DeHavilland Aircraft

of Canada, Ltd. respectfully requests that a Writ of Cer-

tiorari issue to review the judgment and Opinion of the

Illinois Supreme Court herein.

Respectfully submitted,

Hucu C. GrIFFin *

RICHARD E. MUELLER

THOMAS J. STREUBER

LORD, BISSELL & BROOK

115 South LaSalle Street

Chicago, Illinois 60603

(312) 443-0700

* Attorney of Record Attorneys for Petitioner

APPENDIX

App. 1

Decision Of Illinois Supreme Court

Rendered On June 29, 1984

(No. 58108.—Affirmed and remanded.)

CRISPIN MAUNDER, Appellee, v. DEHAVILLAND AIRCRAFT

OF CANADA, LTD., Appellant.—SAMUEL J. BETAR, Adm’r,

Appellee, v. DEHAVILLAND AIRCRAFT OF CANADA, LTD.,

Appellant.

JUSTICE CLARK delivered the opinion of the court:

This appeal requires us to determine whether the cir-

cuit court of Cook County has jurisdiction over DeHavil-

land Aircraft of Canada, Ltd., a foreign corporation. More

specifically, we are asked to determine whether the defen-

dant was doing business in Illinois in order to be amenable

to service of process and subject to the laws of this State.

These consolidated actions to recover for personal in-

jury and wrongful death are based on the crash of an

airplane designed and manufactured by defendant, De-

Havilland Aircraft of Canada, Ltd. (Ltd.). The airplane

crash occurred on May 3, 1976, in Lusaka, Zambia, dur-

ing a demonstration flight for the Zambian Air Force and

caused the death of Raghubir Dutt Law, a citizen of

India and a member of the Zambian Air Force. Mr. Law’s

widow and children are also Indian citizens. Plaintiff

Crispin Maunder, an English citizen and a passenger

in the aircraft, was injured in the same crash. In April

1977, Samual J. Betar, public administrator of Cook Coun-

ty, was appointed administrator of the estate of decedent

Law by the probate division of the circuit court of Cook

County. On April 28, 1977, Betar filed suit in the circuit

App. 2

court of Cook County against Ltd. and DeHavilland

Canada, Inc. (Inc.), a Delaware corporation with its prin-

cipal office and principal place of business in Rosemont,

Illinois. Inc. is a wholly owned subsidiary of Ltd. and sells

and distributes parts for airplanes manufactured by Ltd.

On March 17, 1977, Crispin Maunder filed suit in the

circuit court of Cook County against Inc. and Ltd. Ser-

vice in the Law and Maunder suits was effectuated by

leaving copies of the complaint and summons with an em-

ployee of Inc. in the Rosemont office.

On May 27, 1977, the defendants filed petitions to

remove both causes to the United States District Court

for the Northern District of Illinois. Inc. was voluntarily

dismissed from both causes, leaving Ltd. as the sole defen-

dant. A protracted procedural battle ensued in Federal

court. Both causes were eventually remanded to the cir-

cuit court of Cook County because there was no diver-

sity of citizenship between aliens Maunder (England), Law

(India) and Ltd. (Canada). Betar v. DeHavilland Aircraft

of Canada, Ltd. (7th Cir. 1979), 603 F.2d 30, cert. denied

(1980), 444 U.S. 1098, 62 L. Ed. 2d 785, 100 S. Ct. 1064.

On May 20, 1981, the circuit court granted Ltd.’s mo-

tion to dismiss, noting:

“Analyzing the nature and quality of the contacts

with the State of Illinois, this court cannot say that

it would be fair and reasonable to require DeHavil-

land Aircraft Ltd., a Canadian Corp., to defend this

action in Illinois.”

The appellate court reversed the circuit court’s order

and remanded the cause to the circuit court, ruling that

Ltd.’s Illinois subsidiary, Inc., provided sufficient contacts

to invoke the jurisdiction of Illinois courts. (112 Ill. App.

3d 879.) We granted defendant’s petition for leave to ap-

App. 3

peal. (87 Ill. 2d R. 315(a).) We now affirm the decision

of the appellate court.

Ltd.’s corporate offices and principal place of business

are in Downsview, Ontario. Ltd. has manufactured “Twin

Otter” propeller-driven planes for many years, and these

pianes are used all over the world for short passenger

flights. The record reveals that there were 885 DeHavil-

land Ltd. aircraft operating in the United States in 1982.

In 1971, Ltd. established a subsidiary corporation, De-

Havilland Canada, Inc., to facilitate Ltd.’s business opera-

tions in the United States. Inc. is a wholly owned sub-

sidiary of Ltd., and all of Inc.’s stock is owned by Ltd.

The salaries of Inc.’s directors are paid by Ltd., and Ltd.

guaranteed Inc.’s lease in Rosemont. The record reveals

that an average of eight telephone calls per day were

made from Inc.’s office to the parent’s office in Ontario.

The subsidiary’s sole business is the sale of aircraft parts

for DeHavilland aircraft. The manual of Inc. provides the

following descriptions of the relationship between Ltd. and

Inc.:

“DeHavilland Aircraft of Canada has incorporated a

subsidiary company in the United States of America.

The registered name and address of the Company is:

DEHAVILLAND CANADA INC.

5321 North Pearl Street

Rosemont Illinois 60018

The Company is controlled by the Parent Company

and will operate under the authority of the Vice

President [of] Sales. The function of this Company

is to provide Product Support to the American users

of the Parent Company’s products.”

Ltd. has included Inc. in advertisements published in

American aviation journals. One full-page advertisement

contained the following claims:

App. 4

‘“‘How to carry 3 million passengers an

average of 42 miles each.

And make it pay.

* * *

In the last 10 years, Golden West has flown over

168,400,000 passenger miles, making it the largest

commuter airline in the U.S.A. Their 12 Twin Otters

have made an astonishing 1,387,000 landings. * * *

* * * (Dje Havilland Twin Otter proves 99.9% reli-

able. Rugged airframe and simple systems keep main-

tenance to a minimum. Quiet turboprops with TBOs

of over 8,000 hours conserve fuel, and reverse to

shorten landings and extend brake life.

Golden West President James M. Harmon sums up

his passengers’ satisfaction with Twin Otter: “They

know they can depend on its comfort, convenience

and on-time reliability.’ And to short haul operators,

that’s pure gold.

The de Havilland Aircraft of Canada, Limited

Downsview, Ontario M38K 1Y5

Telephone: (416) 633-7310

Telex: 0622128. Cable: MOTHTOR, Toronto.

DE HAVILAND Twin Otter

The standard of dependability and versatility

around the world.

Twin Otter service and spares support also avail-

able through de Havilland Canada Inc., 5321

North Pearl Street, Rosemont, Illinois 60018.

Telephone (312) 678-8380. Telex 00726409.”

In this appeal, we are only concerned with the issue

of jurisdiction. The merits of this case have never been

addressed in more than seven years of litigation. We begin

our discussion of the jurisdictional arguments by noting

that the plaintiffs do not contend that Illinois courts have

jurisdiction based on the long-arm statute (Ill. Rev. Stat.

1981, ch. 110, par. 2-209). Rather, the plaintiffs contend

App. 5

that Ltd.’s contacts with Illinois constituted “doing busi-

ness” in Illinois, thus subjecting Ltd. to the personal juris-

diction of Illinois courts.

The United States Supreme Court has determined that

a State’s power to enter in personam judgments bind-

ing on nonresident defendants is limited by the due

process clause of the fourteenth amendment (U.S. Const.,

amend. XIV) (due process guarantees made applicable to

the States by the fourteenth amendment). Criteria for

such determinations were delineated in International Shoe

Co. v. Washington (1945), 326 U.S. 310, 90 L. Ed. 95, 66

S. Ct. 154. State courts may invoke personal jurisdiction

over a nonresident defendant that has minimum contacts

with the forum, so long as the suit does not offend

“ ‘traditional notions of fair play and substantial justice.’ ”

(326 U.S. 310, 316, 90 L. Ed. 95, 102, 66 S. Ct. 154, 158.)

The court noted:

“Whether due process is satisfied must depend rather

upon the quality and nature of the activity in rela-

tion to the fair and orderly administration of the laws

which it was the purpose of the due process clause

to insure. * * * [T]Jo the extent that a corporation ex-

ercises the privilege of conducting activities within

a state, it enjoys the benefits and protection of the

laws of that state. The exercise of that privilege may

give rise to obligations, and, so far as those obliga-

tions arise out of or are connected with the activities

within the state, a procedure which requires the cor-

poration to respond to a suit brought to enforce them

can, in most instances, hardly be said to be undue.”

326 U.S. 310, 319, 90 L. Ed. 95, 104, 66 S. Ct. 154,

160.

Our review of subsequent United States Supreme Court

cases supports our determination that Ltd. is subject to

the jurisdiction of Illinois courts. In Keeton v. Hustler

App. 6

Magazine (1984), _._. U.S. ___, 79 L. Ed. 2d 790, 104

S. Ct. 1473, a unanimous court ruled that New Hamp-

shire could exercise in personam jurisdiction over a

nonresident magazine publisher that had circulated his

publication in New Hampshire. The court noted that New

Hampshire was chosen as the forum State because New

Hampshire’s statute of limitations for libel provided a

longer period of time than the statute of limitations of

other States. Similarly, the court found no due process

violation in Calder v. Jones (1384), ___. U.S. ___, 79 L.

Ed. 2d 804, 104 S. Ct. 1482. In Calder, another unanimous

court determined that a California court could exercise

in personam jurisdiction over Florida journalists, even

though the allegedly libelous article was written and

published in Florida and the only contact with the forum

State was the circulation of the article. Although these

two cases deal with libel and not airplane crashes, we

believe that the due process considerations in Keeton and

Calder support our determination in the case at bar.

Business contacts must be of a continuous and system-

atic nature to invoke the jurisdiction of State courts. In

Helicopteros Nacionales de Columbia v. Hall (1984), ___

U.S. ___, 80 L. Ed. 2d 404, 104 S. Ct. 1868, the United

States Supreme Court held that a nonresident Columbian

corporation was not subject to in personam jurisdiction

of the State courts of Texas. Helicopteros (Helicol) had

entered into a contract to provide helicopter transporta-

tion in Peru for the Peruvian State oil company. Four

American citizens were killed in a helicopter crash in

Peru, and suit was brought in a Texas court. The court

held that Helicol’s contacts with Texas were insufficient

to satisfy the requirements of the due process clause of

the fourteenth amendment. The court noted:

App. 7

“Helicol never has been authorized to do business in

Texas and never has had an agent for the service

of process within the State. It never has performed

helicopter operations in Texas or sold any product

that reached Texas, never solicited business in Texas,

never signed any contract in Texas, never had any

employee based there, and never recruited an em-

ployee in Texas. In addition, Helicol never has owned

real or personal property in Texas and never has

maintained an office or establishment there.” _ _

US. , , 80 L. Ed. 2d 404, 409, 104 S. Ct.

1868, 1871.

We contrast this with the business contacts between

Ltd. and the State of Illinois. Ltd. established a wholly

owned subsidiary in Illinois to provide product support

for the users of Ltd.’s products. Inc. has been operating

in Illinois for 13 years, and these operations have been

continuous and systematic. Inc. has been included in Ltd.’s

American advertising, and has been an essential compo-

nent of Ltd.’s business activities in Illinois. We believe

that the case at bar, unlike Helicopteros, presents a pat-

tern of continuous and systematic business activities, and

these contacts are sufficient to invoke the jurisdiction of

Illinois courts.

In Illinois, jurisdiction over nonresident corporations

doing business in the State is based on the following

statutory provision:

“A private corporation may be served (1) by leav-

ing a copy of the process with its registered agent

or any officer or agent of said corporation found any-

where in the State; or (2) in any other manner now

or hereafter permitted by law. A private corporation

may also be notified by publication and mail in like

manner and with like effect as individuals.” Ill. Rev.

Stat. 1981, ch. 110, par. 2-204.

App. 8

A determination of whether a foreign corporation is

doing business in the State of Illinois turns on the facts

unique to each case. (Cf. Cook Associates, Inc. v. Lexing-

ton United Corp. (1981), 87 Ili. 2d 190; Connelly v. Uni-

royal, Inc. (1979), 75 Ill. 2d 393.) We have been unable

to fashion a precise test or talismanic phrase to guide us

in this task. (See Waits, Values, Intuiiions and Opinion

Writing: The Judicial Process and State Court Jurisdic-

tion, 1983 U. Ill. L. Rev. 917.) Justice Cardozo defined

the term “doing business” for jurisdictional purposes as

the corporation operating within the State “not occasional-

ly or casually, but with a fair measure of permanence and

continuity.” Tauza v. Susquehanna Coal Co. (1917), 220

N.Y. 259, 267, 115 N.E. 915, 917.

Early decisions of this court required that a corpora-

tion have agents or physical offices in this State, and that

these agents do more than mere solicitation of business.

(Booz v. Texas & Pacific R.R. Co. (1911), 250 Ill. 376; see

also Eaton, Illinois Replaces “Profit” for “Presence” in

Determining Long-Arm Jurisdiction Over Foreign Cor-

porations, 69 Ill B.J. 676, 678 (1981).) Technological change

and a more sophisticated national economy mandated a

departure from the restrictive rule in Booz, and this step

was taken in Braband v. Beech Aircraft Corp. (1978), 72

Ill. 2d 548. In Braband, plaintiffs’ decedents were killed

while aboard an aircraft that crashed in Frobisher Bay,

Northwest Territories, Canada. Beech Aircraft Corpora-

tion was a Delaware corporation with its principal place

of business in Kansas. The defective airplane had been

manufactured in Kansas, but Beech had an agreement

with Hartzog Aviation, Inc., an Illinois corporation, to

market Beech’s products within Illinois. This court held

that Beech was “doing business”’ in Illinois even though

the activities of Hartzog Aviation were not related to the

App. 9

subject matter of the litigation. The Braband court de-

clined to decide the question of whether Hartzog’s ac-

tivities alone would subject Beech to the jurisdiction of

Illinois courts but based the decision on the business ac-

tivities of Beech. The court noted:

“In view of defendant’s activities within Illinois de-

signed to effect sales to residents of Illinois, defen-

dant could reasonably assume that airplanes which

it manufactured would be owned by residents of IIli-

nois and in view of the high de of mobility

peculiar to its products could er assume that

they would be flown both within Illinois and into

other States, or as in this instance, to other coun-

tries. We hold, therefore, that * * * defendant’s ac-

tivities showed sufficient contacts with this State so

that requiring it to defend this action does not of-

fend ‘traditional notions of fair play and substantial

justice.’ ””’ 72 Ill. 2d 548, 559.

In the case at bar, we believe that Ltd. had sufficient

contacts with Illinois to invoke the jurisdiction of Illinois

courts. The record demonstrates that Inc. was a wholly

owned subsidiary of Ltd., and that Inc. operated in Rose-

mont, Illinois, as a supply depot for Ltd. products for the

entire United States. Clearly Ltd., through Inc., was

doing business in Illinois.

Defendant urges us to follow the decision in People ex

rel. Compagnie Nationale Air France v. Giliberto (1978),

74 Ill. 2d 90, where this court held that the circuit court

of Cook County could not entertain an action arising out

of the events surrounding the Israeli rescue of a terrorist-

held plane at Entebbe Airport in Uganda. We find Air

France distinguishable because it involved a determina-

tion of lack of jurisdiction over Air France because of the

Warsaw Convention governing international air transpor-

tation (74 Ill. 2d 90, 108) and a related determination that

App. 10

forum non conveniens principles precluded the exercise

of jurisdiction over Singapore Airlines (74 Ill. 2d 99,

108-16). Air France did not squarely involve the “doing

business” test for jurisdiction over a nonresident corpora-

tion. The case at bar is not comparable.

Defendant argues that Cannon Manufacturing Co. v.

Cudahy Packing Co. (1925), 267 U.S. 333, 69 L. Ed. 634,

45 S. Ct. 250, warrants a reversal of the appellate court’s

holding. In Cannon, the United States Supreme Court

held that the activities of a subsidiary corporation did not

automatically subject the parent corporation to the juris-

diction of the State court where the subsidiary was

domiciled. Although Cannon has not been expressly over-

ruled, its vitality has been limited by the subsequent deci-

sions in International Shoe and its progeny. (See Com-

ment, A New Footnote in Erie v. Tompkins: “Cannon

is Overruled,” 36 N.C. L. Rev. 181 (1958); see generally

Wellborn, Subsidiary Corporations in New York: When

Mere Ownership is Enough to Establish Jurisdiction Over

the Parent, 22 Buffalo L. Rev. 681 (1973).) Many commen-

tators have noted that the Cannon opinion is no longer

followed in an era when the United States Supreme Court

focuses on “contacts” rather than “physical presence”’ in

determining the scope of State court jurisdiction over non-

resident defendants. (See Kurland, The Supreme Court,

the Due Process Clause, and the In Personam Jurisdic-

tion of State Courts From Pennoyer to Denckla: A Re-

view, 25 U. Chi. L. Rev. 569 (1958); see generally Bril-

mayer, How Contacts Count: Due Process Limitations on

State Court Jurisdiction, 1980 S. Ct. Rev. 77.) Even an

expansive reading of Cannon does not justify the conclu-

sion that a parent corporation can never be subject to

the jurisdiction of a State where a subsidiary is located.

We conclude that Cannon does not prevent the State of

Illinois from exercising jurisdiction over Ltd.

App. 11

Ltd.’s contention that service of process on Inc. was not

effective is without merit. We believe that Inc. was an

agent of Ltd. for service of process, and that Ltd. was

fully apprised of the pendency of the suit by the delivery

of a copy of the complaints and summons at Inc.’s office

in Rosemont. Davis v. Dresback (1876), 81 Ill. 393.

We next consider Ltd.’s argument that Illinois cannot

exercise jurisdiction over Ltd. because none of the plain-

tiffs had any contact with Illinois. We believe the crucial

question is whether due process prevents the plaintiffs

from suing Ltd. in Illinois, not whether any of the plain-

tiffs are domiciled here. The nature of air-crash litigation

frequently produces an exotic cast of characters, and there

is often no ideal place to try the case. (See Simpson, Re-

cent Trends in International Aviation Accident Litigation—

A Practical View. 5 Annals Air & Space Law 189 (1980);

2 J. Kennelly, Litigation and Trial of Air Crash Cases

ch. 4.) Ltd.’s argument that the case should be tried in

Zambia or Canada is misdirected. This appeal is based

on the question of jurisdiction, nor forum non conveniens.

Although many of the occurrence witnesses reside in

Africa, and although it may be more convenient for Ltd.

to defend this lawsuit in Canada because its main offices

are located there, that cannot affect our determination of

the extent of jurisdiction of Illinois courts. If Ltd. can-

not be sued in Illinois, it follows that Ltd. cannot be sued

anywhere in the United States under the theory of “doing

business,” since Inc. is the only subsidiary of Ltd. in the

United States. We believe that a corporation that has

established a supply depot in Illinois to support an enter-

prise that has sold 885 airplanes in the United States and

logged millions of passenger miles should be subject to

the jurisdiction of Illinois courts.

App. 12

Since we have determined that Inc. was doing business

in Illinois, we need not address the alternative theory of

whether Inc. was the alter ego of Ltd. We therefore con-

clude that Ltd. was doing businez* in Illinois and that

Illinois courts have jurisdiction over this cause of action.

The judgment of the appellate court is affirmed, and the

cause is remanded to the circuit court for proceedings con-

sistent with the views expressed in this opinion.

Affirmed and remanded.

JUSTICE SIMON, specially concurring:

I concur in the court’s conclusion that Illinois has juris-

diction over this case, but not for the reason given, name-

ly that the Canadian corporation is doing business in IIli-

nois merely because it has a subsidiary corporation here.

Rather, I would hold that Inc. is an alter ege of Ltd.

The record shows that Inc. exists for the sole purpose

of selling Ltd.’s products within the United States, that

Ltd. provides Inc. with inventory for which Inc. is per-

mitted to pay out of receipts on the sales of that inven-

tory, and that Ltd. owns all of Inc.’s stock. Inc. is over-

seen, not by a board of directors of its own, but by Ltd.’s

board of directors, all Canadians, and two of whose mem-

bers also serve as president and vice-president of both

Ltd. and Inc. In addition, the position of “resident direc-

tor and manager” of Inc. ranks on Inc.’s official organ-

izational chart with its “service manager” and “spare

parts manager” and two levels below its executive of-

ficers, both of whom are directors and officers of Ltd. The

officers of Inc. are paid by Ltd., as are expenses for busi-

ness trips on behalf of Inc. Finally, in addition to the sub-

stantial name identity between “De Havilland Aircraft of

App. 13

Canada, Ltd.” and “De Havilland Canada, Inc.,” Inc. is

described in Ltd’s Illustrated Parts Catalogue as one of

three “De Havilland Canada Products Support Depot{s].”

In short, Inc. exhibits few of the independent character-

istics of a subsidiary company but behaves functionally

as a branch of Ltd. and holds itself out to the public to

be so. Under these circumstances Inc. is properly viewed

as an instrumentality or alter ego of Ltd., and Illinois has

general jurisdiction over Ltd. based on Inc.’s activities

here. See Leach Co. v. General Sani-Can Manufacturing

Corp. (7th Cir. 1968), 393 F.2d 183; Boryk v. deHavilland

Aircraft Co. (2d Cir. 1965), 341 F.2d 666; Top Form Mills,

Inc. v. Sociedad Nationale Industria Applicazioni Viscosa

(S.D.N.Y. 1977), 428 F. Supp. 1237; Captain International

Industries, Inc. v. The Westbury, Chicago, Inc. (N.D. Ill.

1975), 416 F. Supp. 721; Tokyo Boeki (U.S.A.), Inc. v. SS

Navarino (S.D.N.Y. 1971), 324 F. Supp. 361.

App. 14

Decision of Illinois Appellate Court,

Rendered on February 16, 1983

CRISPIN MAUNDER, Plaintiff-Appellant, v. DEHAVILLAND

AIRCRAFT OF CANADA, LTD., Defendant-Appellee.—(Samuel

J. Betar, Public Adm’r of Cook County, Adm’r of the Es-

tate of Raghubir Dutt Law, Deceased, Plaintiff-Appellant,

v. DeHavilland Aircraft of Canada, Ltd., Defendant-

Appellee.)

First District (8d Division) Nos. 81-1527, 81-1528 cons.

Reversed and remanded.

PRESIDING JUSTICE MCNAMARA delivered the opinion of

the court:

These consolidated actions for persona] injury and

wrongful death arose from the crash of an airplane

manufactured by defendant DeHavilland Aircraft of

Canada, Ltd., a Canadian corporation. The trial court

granted defendant’s motion to quash service of summons

and dismissed both causes for lack of jurisdiction. Plain-

tiffs appeal.

An airplane manufactured by defendant crashed on May

3. 1976, in Zambia, Central Africa. As a result of the

crash, plaintiff Crispin Maunder, a passenger and English

subject, was injured. Another passenger, Raghubir Dutt

Law, a citizen of India, was killed. Maunder and Samuel

J. Betar, an Illinois citizen and administrator of Law’s

estate, filed separate suits in the circuit court of Cook

County against defendant for personal injuries and

wrongful death. Plaintiffs also named as a defendant

DeHavilland Canada, Inc. (DeHavilland, Inc.), a Delaware

App. 15

corporation with its principal place of business in Rose-

mont, Illinois. DeHavilland, Inc., is a wholly owned sub-

sidiary of defendant and sells and distributes parts for

airplanes manufactured by defendant. Service of the com-

plaint and summons for both actions was affected upon

defendant and DeHavilland, Inc., by leaving service on

an employee of DeHavilland, Inc.. at its Illinois office.

Pursuant to petitions filed by defendant, the cases were

removed to the United States District Court for the

Northern District of Illinois. While the matters were

pending in that court, DeHavilland, Inc., was dismissed

as a party defendant. The district court granted Maunder’s

motion to remand his action to the circuit court of Cook

County on the ground that the Federal Court was without

jurisdiction, the suit being between aliens. A similar mo-

tion filed by Betar was denied on the ground that diver-

sity did exist between Betar, as administrator, and de-

fendant. The court subsequently found that defendant was

not doing business in Illinois and granted defendant’s mo-

tion to dismiss.

On appeal, the Seventh Circuit Court of Appeals re-

versed the district court’s denial of Betar’s motion to re-

mand, holding that Betar was merely a nominal plaintiff

and that therefore, like Maunder, the suit was between

aliens. (Betar v DeHavilland Aircraft of Canada, Ltd. (7th

Cir. 1979), 603 F.2d 30, cert. denied (1980), 444 U.S. 1098,

62 L. Ed. 2d 785, 100 S. Ct. 1064.) The district court was

instructed to remand the case to the circuit court of Cook

County. The issue of personal jurisdiction was not ad-

dressed.

Upon remand to the circuit court, defendant renewed

its motions to quash service of summons and to dismiss

both actions for lack of personal jurisdiction. Specifically,

App. 16

defendant alleged that it was not subject to service of

process under the long-arm statute (Ill. Rev. Stat. 1979,

ch. 110, par. 17), and that DeHavilland, Inc., was not its

agent for service of process in Illinois. After the cases

were consolidated and discovery was pursued with respect

to the jurisdictional issue, the trial court granted defen-

dant’s motion to dismiss.

On appeal, plaintiffs do not base their jurisdictional argu-

ment on the long-arm statute. They do not maintain that

the airplane involved in the crash was ever in Illinois or

that any of its parts had been handled, sold or otherwise

connected with defendant’s Illinois subsidiary. Rather,

plaintiffs urge that defendant’s activities within Illinois are

sufficient to constitute “doing business” here thus sub-

jecting it to the personal jurisdiction of the Illinois courts.

Alternatively, plaintiffs argue that DeHavilland, Inc., is

merely an alter ego of defendant and that defendant has

therefore submitted to personal jurisdiction in [Illinois

through DeHavilland, Inc.’s, systematic and continuous ac-

tivities within this State. We initially address the claim

that defendant’s activities in Illinois are sufficient to con-

stitute “doing business.”

In Illinois, jurisdiction may be acquired over a nonresi-

dent for a cause of action unrelated to the corporation’s

activities in this State so long as the corporation is do-

ing business in Illinois. (Braband v. Beech Aircraft Corp.,

(1978), 72 Ill. 2d 548, 382 N.E.2d 252, cert. denied (1979),

442 U.S. 928, 61 L. Ed. 2d 296, 99 S. Ct. 2857.) There

is no all-inclusive test for determining whether a foreign

corporation is doing business in this State. (Cook

Associates, Inc. v. Lexington United Corp. (1981), 87 IIl.

2d 190, 429 N.E.2d 847.) Such finding, however, general-

ly requires that the corporation conducts business in IIli-

nois of such a character and extent as to warrant the in-

App. 17

ference that it has subjected itself to the jurisdiction and

laws of Illinois. (Cook Associates, Inc. v. Lexington United

Corp.) More than mere solicitation generally is required.

(St. Louis-San Francisco Ry. Co. v. Gitchoff (1977), 68

Ill. 2d 38, 369 N.E.2d 52.) Nevertheless, jurisdiction has

been found based on a variety of other activities. In Git-

choff a foreign railroad with no Illinois tracking was held

to be amenable to Illinois jurisdiction because it main-

tained an office in Illinois staffed with employees who

solicited business and one employee who spent 60% to

80% of his working time in Illinois coordinating the

movements of defendant’s railcars. In Connelly v.

Uniroyal, Inc. (1979), 75 Ill. 2d 393, 389 N.E.2d 155, ap-

peal dismissed (1980), 444 U.S. 1060, 62 L. Ed. 2d 738,

100 S. Ct. 992, a product liability action, a foreign cor-

poration was found to be doing business in Illinois because

its products regularly entered Illinois in substantial

amounts. In Braband v. Beech Aircraft Corp., which is

factually similar to the present case, defendant manufac-

turer was held to be present and doing business in IIli-

nois because it maintained a contractual relationship with

an Illinois distributor who, subject to defendant’s inspec-

tion, was authorized to sell and required to service de-

fendant’s products. Defendant also cosponsored an Illinois

sales program and advertised its products in Illinois.

Unlike Beech Aircraft, there is no contractual relation-

ship between defendant here and DeHavilland, Inc., nor

is DeHavilland, Inc., required to service defendant’s prod-

ucts. In other respects, however, the justification for juris-

diction in the present case appears to be as strong or even

stronger than that in Beech Aircraft.

Similar to the distributor in Beech Aircraft, DeHavil-

land, Inc.’s, sole business is to sell and distribute

parts for defendant’s airplanes. DeHavilland, Inc., is in

App. 18

fact defendant’s only distributor in the United States.

Defendant prints and distributes an “Illustrated Parts

Catalog”’ which provides that all orders for parts in the

United States should be directed to DeHavilland, Inc. All

orders for parts received by defendant from its customers

in the United States are likewise referred to DeHavilland,

Inc. For the first six years of its existence DeHavilland,

Inc., merely ordered parts from defendant as it re-

ceived orders from defendant’s customers. It then paid

defendant from proceeds of the sale. In 1974 DeHavilland,

Inc., expanded its inventory and began to pay defendant

within 30 days of shipment. Some standard parts are pur-

chased by DeHavilland, Inc., directly from suppliers in

the United States. DeHavilland, Inc., also has some discre-

tion as to pricing.

The control exercised by defendant over DeHavilland,

Inc., appears to be greater than that exercised by the

defendant in Beech Aircraft over its Illinois distributor.

Defendant owns 100% of DeHavilland, Inc.’s, stock. James

B. Cox, manager and sole director of DeHavilland, Inc.,

was previously a service representative for defendant. He

is directly responsible to Russell Bannock, president of

DeHavilland, Inc., and of defendant. All the officers, with

one exception, serve both corporations. They are likewise

responsible to Bannock, not Cox. Stanley Kerr, DeHavil-

land’s secretary-treasurer, made occasional trips to Chi-

cago to discuss financing for potential customers with local

banks. Expenses for these trips were paid by defendant.

Defendant and DeHavilland, Inc., used a combined finan-

cial statement.

Defendant in the present case, as in Beech Aircraft,

entered the Illinois market by way of its distributor,

which was also its wholly owned subsidiary. Defendant

regularly and systematically reaped substantial profits

App. 19

through the sale of its parts by its Illinois subsidiary. The

fact that these sales were conducted indirectly through

a third party does not excuse defendant from the juris-

diction of Illinois courts. (Connelly v. Uniroyal, Inc.) In

light of the control exercised by defendant over DeHavil-

land, Inc., coupled with its own activities directed at pro-

moting the sale of its product in Illinois, we hold that de-

fendant is actively and systematically doing business in

Illinois and is therefore subject to the jurisdiction of Illi-

nois cou~ts.

Defendant relies on Cannon Manufacturing Co. v.

Cudahy Packing Co. (1925), 267 U.S. 333, 68 L. Ed. 634,

45 S. Ct. 250, primarily to dispute plaintiffs alter ego

theory. Nevertheless, to the extent that defendant relies

on Cannon for its argument that defendant is not doing

business in Illinois we believe that such reliance is

misplaced. As noted in Beech Aircraft, Cannon was decided

more than 20 years prior to International Shoe Co.

v. Washington (1945), 326 U.S. 310, 90 L. Ed. 95, 66 S.

Ct. 154, the decision in which the focus of the court on

jurisdictional questions shifted from a defendant’s

“presence” in the forum State to his “minimum contacts”

therewith. Consequently, Cannon merely purports to hold

that conducting business through a wholly owned sub-

sidiary does not necessarily render the parent corpora-

tion amenable to process in the State where the sub-

sidiary does business. Braband v. Beech Aircraft Corp.

Having determined that defendant is doing business in

Illinois, we next turn to the question of whether subject-

ing it to Illinois jurisdiction violated due process. Under

the due process clause of the fourteenth amendment there

are limits to which a State is confined in asserting in per-

sonam jurisdiction over a nonresident corporate defen-

dant. First, it must appear that defendant had such

App. 20

“minimum contacts” with the State as to render it con-

sistent with “traditional notions of fair play and substan-

tial jus. ve” that it be compelled to defend itself there.

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

310, 90 L. Ed. 95, 66 S. Ct. 154.) Second, assuming the

requisite minimum contacts, a method of service must be

employed which is reasonably designed to give defendant

actual notice of the action pending against it. Milliken

v. Meyer (1940), 311 U.S. 457, 85 L. Ed. 278, 61 S. Ct.

339.

In determining whether it is reasonable to require de-

fendant to defend this suit in Illinois, we must focus on

the quality and nature of defendant’s activities here. (In-

ternational Shoe Co. v. Washington.) In view of defen-

dant’s activities directed at promoting the sale of its prod-

ucts in Illinois and the profits which defendant regularly

reaped as a result of such activities, we find that it does

not offend traditional notions of fair play and substantial

justice to require defendant to defend this action in Illinois.

Having found that jurisdiction over defendant in Illinois

is both in accord with Illinois law and within the confines

of due process, we next address the question of whether

defendant was properly served. Since defendant was not

personally served in Canada and since the cause of ac-

tion is unrelated to defendant’s activities in Illinois, proper

service could have been effected by serving an officer or

agent of defendant found within the State. Ill. Rev. Stat.

1977, ch. 110, par. 13.3.

Plaintiffs attempted to serve defendant by leaving copies

of the complaints and summons with an employee of De-

Havilland, Inc., at its Illinois office. In its motion to

dismiss, defendant contended that this method of service

was improper because DeHavilland, Inc., was not an agent

of defendant for purposes of service of process pursuant

App. 21

to section 13.3. We do not agree. In Beech Aircraft, as

in the present case, service on the foreign defendant was

accomplished through service on its Illinois distributor.

Having found that Beech was doing business in Illinois

through its Illinois distributor, the court also found the

distributor to be the agent of Beech and thus a proper

recipient of service of process upon Beech. (Braband v.

Beech Aircraft Corp. (1977), 51 Ill. App. 3d 296, 367

N.E.2d 118.) Likewise in the present case we find that

DeHavilland, Inc., was an agent of defendant for purposes

of service of process.

Defendants also argue, relying on Mason v. Freeman

National Printing Equipment Co. (1977), 51 Ill. App. 3d

581, 366 N.E.2d 1015, that even if DeHavilland, Inc., was

an agent of defendant, the requirements of section 13.3

were not satisfied because a mere employee of the agent

was served. We note that this issue was not raised by

defendant in its motions to dismiss. We also find that

Mason is distinguishable. In that case neither defendant

nor his agent were actually given notice of the complaint

prior to the ex parte judgment that was entered. In the

present case there is no question that defendant received

actual notice. It is obvious, therefore, that plaintiffs’ method

of service at least met the requirements of due process.

In view of our holding, we need not address plaintiffs’

contention that DeHavilland, Inc., is merely an alter ego

of defendant and that defendant has therefore submitted

to jurisdiction in Illinois.

For the foregoing reasons, the judgment of the circuit

court of Cook County dismissing plaintiffs’ causes of ac-

tion are reversed and the causes are remanded for fur-

ther proceedings.

Reversed and remanded.

MCGILLICUDDY and WHITE, JJ., concur.

App. 22

Decision of Illinois Circuit Court,

Rendered on May 20, 1981

IN THE

CIRCUIT COURT OF COOK COUNTY, ILLINOIS

COUNTY DEPARTMENT—LAW DIVISION

BETAR

-VS.-

DEHAVILLAND

and

MAUNDER

-VS.-

No. 77 L 8087

No. 77 L 5215

ee ee ee ee

DEHAVILLAND

ORDER

This cause coming on to be heard upon the special and

limited appearance and motion to quash and dismiss

presented by DeHavilland Aircraft of Canada, Ltd., the

court being fully advised in the premises;

This court finds that the case of Cannon v. Cudahy,

267 U.S. 333 did not involve a constitutional question and

is not solely dispositive of the issues in this case. Can-

non does, however, reflect traditional notions of fair play

and substantial justice.

The court further finds that the standards applicable

to this case are contained in Worldwide Volkswagen v.

Woodson, 444 U.S. 286, Braband v. Beech Aircraft, 72

App. 23

Ill.2d 548, U.A.L. Conductron, 69 Ill.App.3d 847 at page

852, and in addition Cook Associated v. Lexington United,

86 Ill.App.3d 909.

Worldwide reiterates the Constitutional standards in

terms of “minimum contacts.” The concept, according to

the Supreme Court, performs two related functions: 1)

protection of the defendants against the burdens of litigating

on a distant or inconvenient forum, and 2) ensurers against

individual states over-reaching under the federal system.

With respect to 1) above, the court stated: “The pro-

tection against inconvenient litigation is typically described

in terms of ‘reasonableness’ or ‘fairness’. We have said

that the defendant’s contacts with the forum state must

be such that maintenance of the suit ‘does not offend

traditional notions of fair play and substantial justice’. (Cita-

tions omitted.) The relationship between the defendant and

the forum must be such that it is reasonable to require

the corporation to defend the particular suit which is

brought there” (emphasis supplied). Among other factors to

be considered is the forum state’s interest in adjudicating

the dispute.

In Braband the Illinois Supreme Court specifically did

not decide that the activities of the distributor-agent were

sufficient minimum contacts to establish jurisdiction in Illi-

nois. Rather the court found that Beech itself, conducted

sufficient activities in Illinois to meet the minimum con-

tacts test. It is important to note that the court in Bra-

band did not merely find minimum contacts, but went

further, as required by International Shoe and Shafer and

analyzed “the quality and nature of the activities in which

the defendant was engaged and whether it is reasonable

to require defendant to defend the particular suit which

is brought here.” In this analysis the court first noted

App. 24

that the suit was brought on behalf of Illinois residents

for death occurring on a flight originating in Illinois—

“clearly within the ambit of the states [sic.] legitimate pro-

tective policy.” Secondly, the court analyzed the contacts

in light of the nature of the litigation, concluding its

analysis as follows:

“In review of defendant’s activities within Illinois designed

to effect sales to residents of Illinois, defendant could

reasonably assume that airplanes which it manufactured

would be owned by residents of Illinois and in view of

the high degree of mobility peculiar to its products could

further assume that they would be flown both within IIli-

nois and into other states, or as in this instance, to other

countries. Conductron at page 852 further reiterates this

analysis and notes that it is not merely the contracts [sic.]

but the nature of the contacts which must be analyzed

to determine whether it is fair to require a defendant to

defend in Illinois.

The instant litigation involves the crash in Africa of a

plane manufactured in Canada causing the death of two

residents of India. It cannot be said that these facts are

clearly “within the ambit of the states [sic.] legitimate pro-

tective policy”. The contacts with this state involve a

separate subsidiary corporation which supplies parts for

DeHavilland aircrafts, however, no activities of this sub-

sidiary are in any way involved in the basic litigation.

There is no contention that the subsidiary supplied parts

for the plane involved in the crash. There is some evi-

dence that the parent exercised some control of the sub-

sidiary both in starting up the business and with respect

to the line of authority, however, the evidence does not

show that the subsidiary was a mere sham or alter ego.

Further, the subsidiary did not manufacture or sell

aircraft.

App. 25

Analyzing the nature and quality of the contacts with

the State of Illinois, this court cannot say that it would

be fair and reasonable to require DeHavilland Aircraft,

Ltd., a Canadian Corp., to defend this action in Illinois.

Additionaliy, reference is made to Cook Associates v.

Lexington, supra, wherein the Illinois Appellate Court

adopts a broader method of analysis requiring a deter-

mination of the relationship among the forum, the defen-

dant and the litigation. Under this analysis, there is an

insufficient relationship among the defendant, the forum

and the litigation to show that DeHavilland, Ltd. could

have reasonably anticipated being haled [sic.] into court

in Illinois to defend this action.

For the reasons stated, the defendant’s motiun to quash

service and dismiss the action is granted.

JUDGE ARTHUR A. SULLIVAN, JR.

ENTER: May 20, 1981

CiRCUIT COURT