Opposition Brief — Max Daetwyler Corp. v. Meyer

Supreme Court, U.S,

riLe@

No. 85-447 OCT 15 1088

JOSEPH F. SPANIOL, JR

CLERK

IN THE

Supreme Court of the United States

October Term, 1985

MAX DAETWYLER CORP.,

Petitioner,

v.

R. MEYER,

Respondent.

On Petition for a Writ of Certiorari to the —

United States Court of Appeals for the Third Circuit >

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a.)

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BRIEF OF RESPONDENT IN OPPOSITION Lad

co

Peter T. Coprin =<

Counsel of Record some

Srempuer, Coprin & Gopsserc, P.C. <r

Aitorneys for Respondent —_

501 Fifth Avenue [ —«

Suite 1900 _—

New York, New York 10017 CD

(212) 687-6090 r J

Ewen Rotustein a

Of Counsel ™

October 9, 1985

Counterstatement of Question Presented

Whether ™m personam jurisdiction may be exercised over

an alien defendant upon his aggregated contacts in the

United States, on a theory of ‘‘national contacts,’’ even if

he does not have sufficient minimum contacts with the

state in which the case is to be heard, when the claim against

the defendant is based upon a specified federal statute

which does not specifically authorize nationwide or world-

wide service of process?

TABLE OF CONTENTS

PAGE

Counterstatement of Question Presented .. | I

Table of Authorities .. RIS: ae . IV

Opinions Below ......... r semi aceaceeb ee okees eatin 1

Ne iciicasthsincscacencey Parad cuentas 2

Constitutional and Statutory Provisions ........ 2

Statement of Facts ..._...... Sane | 3

on

Reasons for Denying the Writ

I There is no Justification to Warrant Review by

This Court as to Whether Jn Personam Juris-

diction May Be Exercised Over an Alien De-

fendant Based Upon His Aggregated Contacts

in the United States, Taken as a Whole, for

Alleged Violations of a Federal Statute, when

Said Statute Does Not Specifically Authorize

Nationwide or Worldwide Service of Process 6

II This is Not a Case Presenting a Question of

Federal Law Which Should be, or Even May be,

Determined by This Court, Nor is There a Split

Among the Circuits in This Matter 000.00... 7

Ill The Opinion of the Court of Appeals for the

Third Cireuit Does Not Conflict with —_

Decisions of This Court ............... ‘ | 11

Conclusion e ae c a 15

Iv

TABLE OF AUTHORITIES

PAGE

Cases:

Centronics Data Computer Corporation v. Mannes-

mann, A.G., 432 F.Supp. 659 (D.N.H. 1977) ......... , 9

Cryomediecs, Tae. v. Spembly, Ltd., 397 xine 287

Pes I MIE 520 precanccecex ss dasl <edvateae rt agseunen aianes 10

Daetwyler Corp. v. R. Meyer, 762 F.2d 290 (3d Cir.

SANS nal I carer owes LES tees Meena tes BSI 2, 8, 10, 12, 14

Daetwyler Corp. v. R. Meyer, 560 F.Supp. 869 (E.D.

Pa. 1983) . SAI Teena to ARs nents CN tu ONION he 1,11

DeJames v. Magnificence Carriers, Inc., 654 F.2d 280

PMN TI i svavsascassarcanevecanss CY) 5 oh ele 8, 13

Edward J. Moriarty & Co. v. The General Tire and

Rubber Co., 289 F.Supp. 381 (S.D. Ohio 1967)........ 7; 10

Engineered Sports Products v. Brunswick Corp., 362

tome. Tae CD. tals BBTS) 2... soscc.-eccseseccsccccancens 10

Holt v. Klosters Rederi A/S, 355 F.Supp. 354 (W.D.

BN I ie icaad xccdscaceoastoaretckaios hcecammteuak 10

Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137

I Mo cctha saan seebiaecestack eed arial aE 9

Superior Coal Co. v. Ruhrkohie, A.G., 83 F.R.D. 414

a oan alaska dhs tae 9

Wells Fargo & Company v. Wells Fargo Express

Company, 556 F.2d 406 (9th Cir. 1977) .................. 8,9

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

PM ks foils Ccteansaionbainucereses tskaaipaemietees 6, 12, 13

Other Authorities:

15 U.S.C. Section 77 .....

28 U.S.C. Section 1254 ....... .

28 U.S.C. Sections 1331, 1332, 1338 -

28 U.S.C. Section 1655 .. ....

35 U.S.C. Section 271 . NEE:

Supreme Court Rule 17. “? trance

Federal Rule of Civil Procedure 4(e) ARES

Federal Rule of Civil Procedure 4(f)

aN

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_

PAGE

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No. 85-447

IN THE

Supreme Court of the United States

October Term, 1985

Max Dartwy Ler Corp.,

Petitioner,

v.

R. Meyer,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Third Circuit

BRIEF OF RESPONDENT IN OPPOSITION

Respondent, R. Meyer (‘‘Meyer’’), respectfully re-

quests that the Court deny the Petition for a Writ of

Certiorari of petitioner, Max Daetwyler Corp. (‘‘Daetwy-

ler’’). None of the reasons given by petitioner in support

of granting the Writ are appropriate bases for this Court

to exercise its discretionary jurisdiction.

Opinions Below

In a Memorandum Decision and Order entered April 13,

1983, which decision is reported at 560 F.Supp. 869 (E.D.

Pa. 1983), the District Court for the Eastern District of

2

Pennsylvania denied alien respondent’s motion to dismiss

for lack of in personam jurisdiction, basing its decision on a

theory of ‘‘national contacts’? (A31-35).’ Thereafter, the

same court, in a Memorandum Opinion and Order dated

December 8, 1983, which Opinion is reported at 575 F.Supp.

285 (E.D. Pa. 1983), certified for interlocutory appeal the

Order of April 13, 1983 pursuant to 28 U.S.C. Section

1292(b) (A36-41). The Opinion of the Court, of Appeals

for the Third Circuit, reversing that porti~ of the Opinion

of the District Court which sustained tie petitioner’s

‘‘national contacts’’ theory, is reported at 762 F.2d 290

(3d Cir. 1985) (A1-29).

Jurisdiction

The Opinion of the Court of Appeals for the Third Cir-

cuit which is the subject of review was entered May 22, 1985

(Al). A Petition for Rehearing and Suggestion for Re-

hearing En Banc was filed on June 4, 1985. By Order dated

June 18, 1985, the petition was denied (A58). Petitioner

now seeks a Writ of Certiorari pursuant to 28 U.S.C.

Section 1254(1).

Constitutional and Statutory Provisions

This action involves the Patent Act, Titie 35 U.S.C.

Section 271.

1. All page references are to the Appendix annexed to petitioner’s

Petition and Brief.

Statement of Facts

This is a patent infringement suit which was commenced

pursuant to Title 35, United States Code. Jurisdiction of

the District Court is based on 35 U.S.C. Section 271 as well

as 28 U.S.C. Sections 1331, 1332 and 1338.

The petitioner, Daetwyler, commenced this lawsuit in

the District Court for the Eastern District of Pennsylvania

for alien respondent’s (Meyer’s) alleged violation of

United States Letters Patent No. 4,184,429 which relates

to doctor blades.

Meyer responded to the Complaint by filing a motion

to dismiss for lack of in personam jurisdiction. The

District Court for the Eastern District of Pennsylvania,

Judge Pollak presiding, denied respondent’s motion, rely-

ing on respondent’s aggregate amount of contacts with the

United States (the ‘‘national contacts’’ theory) (A34-35).

At the same time, Judge Pollak found that he would be

‘‘hard pressed’’ to find respondent had sufficient minimum

contacts with the Commonwealth of Pennsylvania to

satisfy due process under Pennsylvania’s state law per-

taining to long-arm jurisdiction (A33).

Thereafter, respondent sought certification pursuant to

28 U.S.C. Section 1292(b), which was granted by Judge

Pollak in a Memorandum Opinion and Order which was

entered on December 12, 1983 (A36-41).

The sole issue certified for review was whether the

respondent could be sued in the Eastern District Court of

Pennsylvania on a claim arising under federal statute,

4

based upon his aggregate contacts in the entire United

States, taken as a whole (A41).

The issue of whether respondent was subject to juris-

diction based upon Pennsylvania’s long-arm statute was

never presented for review (see A41).

The Court of Appeals for the Third Cireuit appropri-

ately and correctly reversed the District Court’s findings

pertaining to im personam jurisdiction over an alien defend-

ant (respondent Meyer in this case) based upon the agere-

gate of Meyer’s contacts in the United States (A22-23). A

majority of the Court also found that respondent did not

have sufficient minimum contacts with the Commonwealth

of Pennsylvania to justify exercising long-arm jurisdiction

over Meyer (A22).

Respondent Meyer, an individual, is a citizen of West

Germany and does business as a sole proprietor in West

Germany. His sole place of business is West Germany. He

manufactures doctor blades in West Germany which are

sold in the United States by an independent contractor,

Henry P. Korn of New York (A3, 31).

Respondent has never set foot in Pennsylvania, has

never had a place of business or residence in Pennsylvania,

has never had a bank account or telephone listing in Penn-

sylvania, and has never leased or owned any real or per-

sonal property in Pennsylvania (A3, 31).

Sales of the Meyer blades in the United States are also

made by Uddeholm Corporation, a Delaware Corporation,

which takes title to the blades in West Germany, ware-

5

houses them in Cleveland and then ships them to United

States customers. On occasion, respondent Meyer also

ships blades directly to the United States at Uddeholm’s

request, but never into Pennsylvania (A3, 32).

Moreover, neither the advertising of Korn nor Udde-

holm specifically identifies Meyer blades. Nor do customers

specifically request Meyer blades. Further, Meyer does

not control the advertising of the blades or their destina-

tion (A17, 32).

Reasons for Denying the Writ

This case does not meet the accepted standards for dis-

cretionary review. This does not involve a case where one

federal court of appeals has rendered a decision in conflict

with the decision of another federal court of appeals. This

does not involve a case which has been decided in conflict

with a decision of th> highest court of any state or in con-

flict with any decisious of this Court. This does not involve

a case which advocates so far a departure from the accepted

and usual course of judicial proceedings so as to call for

this Court’s exercise of jurisdiction. Finally, this does

not involve an important question of federal law which has

not been, but should be, or even may be, decided by this

Court.

There is no Justification to Warrant Review by

This Court as to Whether In Personam Jurisdiction

May Be Exercised Over an Alien Defendant Based

Upon His Aggregated Contacts in the United States,

Taken as a Whole, for Alleged Violations of a Federal

Statute, when Said Statute Does Not Specifically Au-

thorize Nationwide or Worldwide Service of Process.

The Supreme Court Rules, and specifically, Rule 17.1

is quite explicit as to when this Court is authorized to exer-

cise its discretionary jurisdiction.

In bringing this Petition for a Writ of Certiorari, peti-

tioner apparently relies on three grounds:

(1) that this case presents a question of federal law

which this Court should decide;

(2) that the opinion of the Court of Appeals for the

Third Cireuit is in conflict with other circuit

opmions; and

(3) that the opinion of the Court of Appeals for the

Third Circuit is in conflict with an opinion of this

Court, specifically, World-Wide Volkswagen Corp.

v. Woodson, 444 U.S. 286 (1980).

However, a review of the applicable law and cases will re-

veal that none of these criteria exists.

“I

This is Not a Case Presenting a Question of Fed-

eral Law Which Should be, or Even May be, Deter-

mined by This Court, Nor is There a Split Among the

Circuits in This Matter.

The Federal Rules of Civil Procedure are quite explicit

as to how a federal court may obtain im personam juris-

diction over a defendant.

Specifically, Fed. R. Civ. Procedure 4(e) provides for

the application of state long-arm statutes, in this case, that

of Pennsylvania, only ‘‘under the circumstances and in the

manner prescribed in the statute or rule.’ This has been

interpreted to require that the entity served meet the ‘‘qual-

ifications for service set out in that statute.’’ Edward J.

Moriarty & Co. v. General Tire and Rubber Co., 289 F.Supp.

381, 390 (S.D. Ohio, 1967).

Also relevant here is Fed. R. Civ. Procedure 4(f) which

provides that the territorial limits established to effectuate

federal service of process are those ‘‘of the state in which

the district court is held.’’ Federal service of process be-

yond those limits can only be effectuated outside of those

limits ‘‘when authorized by a statute of the United States

or by these rules.’’ (Emphasis added).

Combining these two rules, it is readily apparent that

unless the federal statute specifically authorizes worldwide

service of process, or unless an alien defendant has suffi-

cient contacts with the state in which the district court is

situated, in personam jurisdiction cannot be obtained. See

8

DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 286

(3d Cir. 1981) (“‘[W]hen Congress has not authorized

nationwide service of process, a federal district court’s

power to require a defendant to submit to its jurisdiction

is limited by the Federal Rules of Civil Procedure, and

through them by the long-arm rule of the state in which it

sits.’’) (Emphasis added). Whether or not a defendant

has sufficient contacts with a state, in this case, Pennsyl-

vania, is a matter of state law, and not a question of federal

law.

Applying these principles, the Court of Appeals for the

Third Cireuit appropriately held that since 35 U.S.C. Sec-

tion 271 did not specifically provide for worldwide service

of process and since no method for worldwide service was

established by the Federal Rules of Civil Procedure, it

would be inappropriate, and in fact improper, to exercise

jurisdiction based upon a ‘‘national contacts’’ theory.

Daetwyler Corp. v. R. Meyer, 762 F.2d 290, supra, at 300

(A22-23).

The only other circuit court to specifically rule on the

‘‘national conitacts’’ theory was the Court of Appeals for

the Ninth Circuit in Wells Fargo & Co. v. Wells Fargo Ex-

press Co., 556 F.2d 406 (9th Cir. 1977).

In that case, the plaintiffs attempted to secure jurisdic-

tion over alien defendants based upon alleged violations of

the Lanham Act. In refusing to apply ~ ‘‘national contacts’’

theory, the court, while recognizing that such a theory may

not be unfair or unreasonable, nonetheless found that be-

fore such a theory is applied in a case when a plaintiff is

suing on a federal cause of action, “‘the Federal Rules

9

should be amended to authorize such a practice. Such a

step, however, is not ours to take.’’ Wells Fargo & Co. v.

Wells Fargo Express Company, supra, at 418. (Emphasis

added).

The Seventh Circuit, in Honeywell, Inc. v. Metz Ap-

paratewerke, 509 F.2d 1137, 1143 (7th Cir. 1975), specifi-

cally declined to rule on this issue. Instead, jurisdiction

over a German defendant was based upon the [Illinois

long-arm statute.

In Superior Coal Co. v. Ruhrkohle, A.G., 83 F.R.D.

414, 419-420 (E.D. Pa. 1979), the court rejected the ‘‘na-

tional contacts’’ theory in an action based upon violations

of the antitrust and antidumping laws in the absence of

any statutory authority.

Even the district court cases upon which petitioner

relies to give the appearance of a split among the circuit

courts recognize that in the absence of a federal statute

or rule, it is not within their power to give credence to a

‘‘national contacts’’ theory. Moreover, these cases ulti-

mately relied on the applicable state long-arm statute to

secure jurisdiction.

In Centronics Data Computer Corporation v. Mannes-

man, A.G., 482 F.Supp. 659, 664 (D.N.H. 1977), while the

court ultimately applied a ‘‘national contacts”’’ theory, juris-

diction over the alien defendant for alleged antitrust

violations was founded upon New Hampshire’s long-arm

statute. Indeed, the court recognized that the ‘‘national

contacts’’ theory ‘‘has not yet been generally accepted and

there is no specific statutory authority for it. Congress

10

could well have passed a statute stating that jurisdiction

over aliens will be based on their contacts with a nation as

a whole. .. .’’ (Emphasis added).

In Edward J. Moriarty & Co. v. General Tire and Rubber

Co., 289 F.Supp. 381, 390 (S.D. Ohio 1967), the court held

that for cases involving the Sherman Act, jurisdiction over

an alien defendant was premised on QOhio’s long-arm

statute, the court recognizing that neither the federal

statutes nor rules permits them to apply a ‘‘national con-

tacts’’ theory.

Engineered Sports Products v. Brunswick Corp., 362

F.Supp. 722, 728 (D. Utah 1973) involved an alleged patent

infringement. The court, while acknowledging the ‘‘na-

tional contacts’’ theory, nonetheless based jurisdiction upon

Utah’s long-arm statute.

The remaining two cases upon which petitioner relies,

Cryomedics, Inc. v. Spembly, Ltd. 397 F.Supp. 287 (D.

Conn. 1975) and Holt v. Klosters Rederi A/S, 355 F.Supp.

354 (W.D. Mich. 1973), both relied upon a ‘‘national con-

tacts’’ theory even though there was no statutory authority

for same, obviously violating the mandate of Fed. R. Civ.

Procedure 4(f). It is also interesting to note that, in the

former case, the ‘‘national contacts’’ theory was ultimately

premised on a broad reading of Connecticut’s long-arm

statute, and, in the latter, the action was ultimately trans-

ferred to Florida, a state in which the foreign defendant

did have multiple contacts. See Daetwyler Corp. v. R.

Meyer, 762 F.2d 290, supra, at 294.

Had Congress intended nationwide or worldwide service

of process over defendants in alleged patent infringement

11

cases, they would have permitted same specifically by stat-

ute. Such provisions have been included in other federal

statutes. See, e.g.,15 U.S.C. Section 77 (permitting service

of process over defendant, wherever found, for actions

arising under fhe Securities and Exchange Act of 1933) and

28 U.S.C. Section 1655 (permitting service of process over

absent defendants ‘‘wherever found’’ in lien enforcement

actions). Without such statutory authority, it is clear, and

the courts agree, that a federal court may not exercise

jurisdiction over an alien defendant.

Since the law is quite clear in this matter and there is

no split among the circuit courts as is required by the

Supreme Court Rules, there is no basis upon which this

Court may exercise its discretionary jurisdiction.

The Opinion of the Court of Appeals for the Third

Circuit Does Not Conflict with Applicable Decisions of

This Court.

If an alien defendant is subject to process under a

state’s long-arm statute, then the federal court sitting in

the applicable state may exercise jurisdiction over said

defendant. Fed. R. Civ. Procedure 4(e). Thus, in the

case at bar, if respondent Meyer were amenable to process

under Pennsylvania’s long-arm statute, the federal court

would be able to exercise jurisdiction.

At the outset, it should be noted that the federal dis-

trict court, in Daetwyler Corp. v. R. Meyer, 560 F.Supp.

869, 870 (E.D. Pa. 1983) (A833) held that the respondent

a eT

12

here, Meyer, did not have sufficient contacts to warrant the

court’s exercising its long-arm jurisdiction. This issue

was never certified for appeal (A41). Therefore, this issue

is not properly before this Court. Nonetheless, since peti-

tioner raises the issue and it was addressed by the circuit

court, it will be addressed here.

The Court of Appeals for the Third Circuit, upon an

examination of all of the facts, also held that respondent

did not have sufficient contacts with the forum state, to

wit, Pennsylvania, to warrant the exercise of jurisdiction

pursuant to Pennsylvania’s long-arm statute. Daetwyler

Corp. v. R. Meyer, 762 F.2d 290, supra, at 300 (A22-23).

There being no question in the lower courts that respon-

dent did not have sufficient ‘‘minimum contacts’’ with

Pennsylvania to warrant that court’s exercise of jurisdic-

tion over Meyer, and said question involving an application

of state law, this matter is not subject to this Court’s re-

view, especially since it is not in conflict with any opinion

of this Court.

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

286 (1980), this Court was faced with the question of

whether, in a product liabili:y action, a state court could

exercise personal jurisdiction over a nonresident auto re-

tailer and wholesaler. The court held that such jurisdiction

could not be exercised where the retailer and wholesaler

did not have the requisite minimum contacts with the forum

state such that ‘‘he should reasonably anticipate being

haled into court there.’’ Jd. at 297.

This Court did, however, recognize that the forum state

could assert jurisdiction over a corporation ‘‘that delivers

13

its products into the stream of commerce with the expecta-

tion that they wil be purchased by consumers in the forum

state.’’ Id. at 298. (Emphasis added).

In the case at bar, however, respondent’s products en-

tered the ‘‘stream of commerce’’ via his distributor in

New York (A3, 17, 31). Once his distributor had the

products, respondent could foresee their being sold in the

United States, but not necessarily in Pennsyivania (A10).

And, while this Court held that foreseeability may not be

irrelevant, a is limited to one’s ability to foresee being

brought ito a specific state, not foreseeability that the

product will find its way into the forum state. World-

Wide Volkswagen Corp. v. Woodson, supra, at 297.

As to the claim that the blades sold by Uddeholm were

put into Pennsylvania’s ‘‘stream of commerce’’ and that

this constitutes sufficient minimum contacts to warrant

exercise of jurisdiction over Meyer, the record clearly es-

tablishes that Uddeholm took title of the goods in West

Germany and that Meyer had no control over the products

after such time (A3, 32).

While respondent Meyer may have expected to derive

some indirect benefit from the United States market (A10),

this is not sufficient to warrant exercise of jurisdiction by

the Pennsylvania courts.

As noted in DeJames v. Magnificence Carriers, Inc., 654

F.2d 280, 285 (8rd Cir. 1981), this theory ‘‘developed in

products liability cases in which the product had traveled

through an extensive chain of distribution before reaching

the ultimate consumer’’ because ‘‘the manufacturer bene-

14

fits legally from the protection provided by the laws of the

forum state for i¢s products, as well as economically from

indirect sales to forum residents.’’

The case at bar does not involve a products liability

case where an individual sustained physical injury in the

forum state and thus, the need for such broad jurisdiction

may be less. Daetwyler Corp. v. R. Meyer, 762 F.2d, 290,

supra, at 299 (A18-19).

Nor does respondent receive economic benefit from the

residents of Pennsylvania. The record amply demonstrates

that respondent’s American distributor, Korn, did not sell

blades in Pennsylvania (A17, 32-33). As to Uddeholm’s

‘sporadic sales’’ in Pennsylvania, these were insufficient to

give Meyer ample opportunity to foresee being brought

into a Pennsylvania court since title passed to Uddeholm

in West Germany and thereafter Meyer had no control over

where the products went (A3, 9).

Moreover, the ‘‘stream of commerce’’ cases, as was

pointed out by the Third Circuit in Daetwyler Corp. v.

R. Meyer, 762 F.2d 290, supra, at 299 (A20), indicate ‘‘the

manufacturers involved had made deliberate decisions to

market their products in the forum state.’’

The respondent Meyer made no such decisions since he

lost control over the products once they were sold to

Uddeholm and Korn (A8, 17, 31-32).

Conclusion

For all of the foregoing reasons, the Petition for Writ

of Certiorari should be denied.

Respectfully submitted,

Peter T. Cosrin

Counsel of Record

Srempter, Coprin & Gopssere, P.C.

Attorneys for Respondent

501 Fifth Avenue

Suite 1900

New York, New York 10017

(212) 687-6090

ELuen Rotustein

Cf Counsel