Reply Brief — North Texas Steel Co. v. R. R. Donnelley & Sons Co.

Supreme Court, U.S,

FILED

oe | APR 29 1998

No. 97-1411 GFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1997

+

NORTH TEXAS STEEL COMPANY, INC.,

Petitioner,

VS.

R.R. DONNELLEY & SONS COMPANY,

Respondent.

«

On Petition For Writ Of Certiorari

To The Court Of Appeals

Of Indiana

¢

REPLY BRIEF IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI

¢

Epwarp L. Murpny, Jr. (9390-02)

Larry L. BARNARD (11904-49)

Counsel of Record

Miter CARSON BOxBERGER &

Murpuoy LLP

1400 One Summit Square

Fort Wayne, Indiana 46802

Telephone: (219) 423-9411

Attorneys for Petitioner

North Texas Steel Company, Inc.

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

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TABLE OF CONTENTS

I. THIS COURT HAS JURISDICTION TO REVIEW

pe eg 8 Serr Ee py er rer errr ree eee 1

Il. THERE WERE NO INDEPENDENT AND ADE-

QUATE STATE GROUNDS TO SUPPORT THE

DETERMINATION OF THE INDIANA COURT

Gor FRG A as bx eh a a hae ek chews’ 4

II. THE INDIANA SUPREME COURT’S DENIAL

OF TRANSFER IS NOT CAUSE FOR THIS

COURT TO REFUSE TO GRANT THE PETI-

TION FOR WRIT OF CERTIORARI............ 5

IV. THIS CASE IS AN APPROPRIATE VEHICLE TO

DETERMINE THE OUTER LIMITS OF DUE

PROCESS FOR THE PURPOSE OF PERSONAL

EP EEE fees ev ih ee Nae obese nee ee eke 6

pA ek Erne ry PIN omer 9

il

TABLE OF AUTHORITIES

Page

CASES

Asahi Metal Industry Company, Ltd. v. Superior

Court of California, Solano County, 480 U.S. 102,

107 S.Ct. 1026, 94 L.Ed.2d 92 (1987)......... i; #7, 8, 9

Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79

Ee eee OOS PIII x 5 os ees oi pandas ee

CMMC uv. Salinas, 929 S.W.2d 435 (Tex. 1996) ..6, 7, 8, 9

Coleman v. Thompson, 501 U.S. 729, 111 S.Ct. 2546,

425 Te ee OA CO. okie 4

Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 43

Ll. 2a SER, 9S SAR. SS Chain ee nencne eas 1, 2

Kulko v. Superior Court of California, 436 U.S. 84, 98

S.C. 1690, 5G. CBB SAE CNR ees knee vnws ti vivns 1, 2

a

Michigan v. Long, 463 U.S. 1032, 103 S.Ct. 3469, 77

Be” By Bes |) eng rr ee sre 4,5 |

Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62

Ce Oe BiG Fie os io ok ve a ie eee 1

Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53

Po ay. 2 1 Speremparaare serene Foire a hie . 2

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

286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)...... i

STATUTES AND RULES

USE. BOO 2,3

WS WSC. 0 VS ea 1

21S See, See Pe oe ba aS raed ee ae ca 6

I. THIS COURT HAS JURISDICTION TO REVIEW

THIS ACTION

In Respondent’s Brief in Opposition, respondent,

R.R. Donnelley & Sons Company (hereinafter “Don-

nelley”) contends that this Court lacks jurisdiction to

review this appeal under 28 U.S.C. §1257(a) for the reason

that it is not an appeal from a final judgment on the

merits. Donnelley argues that none of the exceptions

found in Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 43

L.Ed.2d 328, 95 S.Ct. 1029 (1975), apply to this appeal

from the Indiana Court’s denial of a Motion to Dismiss

for lack of personal jurisdiction. In doing so, Donnelley

either ignores or makes a quixotical attempt to distin-

guish a long line of cases wherein this Court has exer-

cised jurisdiction over cases prior to a final resolution on

the merits involving the issue of whether the exercise of

personal jurisdiction over a non-resident defendant com-

plied with the requirements of due process. Asahi Metal

Industry Company, Ltd. v. Superior Court of California,

Solano County, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92

(1987); Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79

L.Ed.2d 804 (1984); World-Wide Volkswagon Corp. v. Wood-

son, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980);

Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516

(1980); Kulko v. Superior Court of California, 436 U.S. 84, 98

S.Ct. 1690, 56 L.Ed.2d 132 (1978); Shaffer v. Heitner, 433

U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977).

Indeed, in Calder, this Court specifically considered

and rejected the argument asserted by Donnelley.

“Although there has not yet been a trial on the

merits in this case, the judgment of the Califor-

nia appellate court ‘is plainly final on the fed-

eral issue and is not subject to further review in

the state courts.’ Cox Broadcasting Corp. v. Cohn,

420 U.S. 469, 485, 43 L.Ed.2d 328, 95 S.Ct. 1029

(1975). Accordingly, as in several past cases pre-

senting jurisdictional issues in this posture, we

conclude that the judgment below is final within

the meaning of [28 U.S.C. §1257]’.” Id., 465 U.S.

at 789, n. 8.

Donnelley attempts to distinguish Calder and Shaffer

on the grounds that in those cases the Court’s decision

was final and not subject to further review in the state

court. However, Donnelley has wholly failed to state how

the decision of the Indiana Court of Appeals, with the

denial of transfer by the Indiana Supreme Court, is sub-

ject to further review in the Indiana courts.

Donnelley attempts to distinguish Kulko in World-

Wide Volkswagon on the grounds that the jurisdictional

issue in those cases were raised by the request for a writ

of prohibition or writ of mandamus. That is clearly a

distinction without a difference. No matter how the issue

of personal jurisdiction was raised in the appellate courts

of the jurisdiction at issue, the judgment is no more or

less final. In those cases, as in this case, there had been no

trial on the merits and the issue of personal jurisdiction

would not be determinative of the merits of the action.

Nevertheless, in each of those cases, this Court exercised

its jurisdiction to review the state court’s determination

that it had personal jurisdiction over a nonresident defen-

dant.

nee

In short, it is well established by the precedent of this

Court that this Court has jurisdiction under 28 U.S.C.

§1257 to review final state court determinations of

whether the court has personal jurisdiction over a non-

resident defendant. Accordingly, this Court should not

deny the Petition for Writ of Certiorari on that basis.

Donnelley next argues that jurisdiction in this case is

not appropriate because the decision of the Indiana Court

of Appeals was not a decision rendered by the highest

court in Indiana in which a decision could be had. Don-

nelley argues, as it did in the Indiana courts, that North

Texas Steel should have raised the issue of personal juris-

diction by the means of an original action for writ of

mandamus, and not by way of a permissive interlocutory

appeal. However, this argument was considerea and

rejected by the Indiana Court of Appeals, which held that

this action was properly one to be considered by means

of appeal, and not an original action. (Petition for Writ of

Certiorari, Appendix, pp. A5-A7). Apparently, Donnelley

would have this Court review the Indiana Court of

Appeals’ determination of an issue of Indiana appellate

procedure. Clearly, such a review would not be appropri-

ate under the guise that this Court lacks jurisdiction

under 28 U.S.C. §1257.

For all of the foregoing reasons, jurisdiction over this

appeal by this Court is appropriate.

Il. THERE WERE NO INDEPENDENT AND ADE-

QUATE STATE GROUNDS TO SUPPORT THE

DETERMINATION OF THE INDIANA COURT OF

APPEALS

Donnelley contends that the Petition for Writ of Cer-

tiorari should be denied because “the possibility exists”

that the reason for the denial of discretionary review by

the Indiana Supreme Court is that petitioner, North Texas

Steel Company, Inc., (hereinafter “North Texas Steel”),

mistakenly pursued its appeal via means of interlocutory

appeal rather than by an original action. In support of

this proposition, Donnelley cites Coleman v. Thompson, 501

U.S. 729, 111 S.Ct. 2546, 115 L.Ed.2d 640 (1991). However,

the Opinion of this Court in Coleman in no way supports

Donnelley’s argument. Indeed, a cursory review of Cole-

man makes clear that the “possibility” that the Indiana

Supreme Court denied transfer on the basis of a pro-

cedural irregularity is not a sufficient reason for this

Court to reject a petition for writ of certiorari.

In Coleman, this Court discussed the opinion in Michi-

gan v. Long, 463 U.S. 1032, 103 S.Ct. 3469, 77 L.Ed.2d 1201

(1983), wherein this Court considered the issue of

whether an ambiguous state court decision set forth an

independent and adequate state law ground for the out-

come. In Michigan v. Long, this Court established a con-

clusive presumption of jurisdiction in cases involving

such ambiguous state court decisions.

“When, as in this case, a state court decision

fairly appears to rest primarily on federal law,

or to be interwoven with the federal law, and

when the adequacy and independence of any

possible state law ground is not clear from the

face of the opinion, we will accept as the most

reasonable explanation that the state court

decided the case the way it did because it

believed that federal law required it to do so.”

Id., at 1040-1041, 103 S.Ct. at 3476.

Certainly, in this case, there is nothing in the Order

denying the Petition for Transfer by the Indiana Supreme

Court which would in any way indicate that transfer was

denied on the basis that North Texas Steel should have

filed an original action, rather than pursuing an inter-

locutory appeal. Accordingly, under Michigan v. Long, it

must be conclusively presumed that the decision was

based on federal grounds and that there is no indepen-

dent and adequate state ground to support the decision.

Ill. THE INDIANA SUPREME COURT’S DENIAL ON

TRANSFER IS NOT CAUSE FOR THIS COURT

TO REFUSE TO GRANT THE PETITION FOR

WRIT OF CERTIORARI

Donnelley argues that if the Indiana Supreme Court

did not decline review on the procedural ground that

North Texas Steel should have filed an original action,

then the Indiana Supreme Court must have concluded

that the jurisdictional issue was not important enough to

warrant transfer and, therefore, that this case lacks

importance sufficient to warrant this Court’s granting the

Petition for Writ of Certiorari. However, the fact that the

Indiana Supreme Court denied transfer in this case

should have absolutely no bearing on whether the Peti-

tion for Writ of Certiorari is granted. Indeed, the rules of

this Court clearly contemplate the filing and acceptance

of a petition for writ of certiorari seeking review of a

judgment of a lower state court that is subject to discre-

tionary review by the state court of last resort, where

such discretionary review is denied. See, Rule 13.1 of the

Rules of the Supreme Court of the United States. Accord-

ingly, the fact that the Indiana Supreme Court refused its

opportunity to exercise discretionary review over the

judgment of the Indiana Court of Appeals, does not mean

that this Court should deny the Petition for Writ of Cer-

tiorari in order to resolve the continuing conflict which

has arisen in both the federal courts and the state courts

concerning the stream of commerce theory of personal

jurisdiction.

os

IV. THIS CASE IS AN APPROPRIATE VEHICLE TO

DETERMINE THE OUTER LIMITS OF DUE PRO-

CESS FOR THE PURPOSE OF PERSONAL JURIS-

DICTION

Donnelley contends that there are no cases in other

jurisdictions reaching a contrary result and that this case

is consistent with existing precedent. However, that is

clearly not the case. For example, the opinion of the

Indiana Court of Appeals in this case is in conflict with

an opinion of the Texas Supreme Court in CMMC v.

Salinas, 929 S.W.2d 435 (Tex. 1996). In CMMC, a small

winery located in Texas ordered a wine press from an

independent distributor of equipment used in the wine

and juice industries. That distributor, in turn, ordered the

wine press for the winery from a French manufacturer,

instructing that manufacturer to wire the press for electri-

cal use in the United States. The distributor instructed the

French manufacturer to arrange for transport of that wine

press to Texas. The manufacturer complied and thus

knew the destination of the press was Texas.

The French manufacturer sold wine production

equipment primarily in Europe. It did not directly market

or advertise its equipment in the United States, other

than providing promotional material to its distributors.

The distributors advertised the manufacturer’s products,

but the manufacturer did not specifically authorize or

approve the ads. It manufactured and sold equipment in

the United States, including a direct sale to another

winery in Texas. However, the manufacturer had never

had a place of business, distributor or representative in

Texas or any other contact with Texas. The purchaser of

the wine press did not have any direct contact with the

manufacturer.

An employee of the Texas winery who injured his

arm while cleaning the press filed a products liability

action against the French manufacturer asserting strict

liability and negligence claims. After the trial court dis-

missed the action for lack of personal jurisdiction, the

Texas Court of Appeals reversed, holding that personal

jurisdiction could be asserted against the French manu-

facturer solely on the basis of its knowledge that the wine

press which it manufactured would be shipped to Texas.

The Texas Supreme Court reversed, holding that asserting

jurisdiction over the French manufacturer wouicd be a

violation of the due process clause.

In CMMC, the Texas Supreme Court considered the

opinions of this Court in Asahi and World-Wide Volks-

wagon in reaching the conclusion that the exercise of

jurisdiction over the nonresident corporate defendant in

that case would violate due process.

“For now, we need not take sides in the Asahi

debate over the stream of commerce doctrine

because of the difference in the factual circum-

stances of that case and the one now before us.

Asahi’s products were regularly sold in Califor-

nia, only not by Asahi. CMMC’s wine producing

equipment did not regularly find its way to

Texas. Neither CMMC nor KLR made any effort

to market CMMC’s equipment in Texas, other

than by advertisements in magazines with

national circulation. Hill Country Cellar’s pur-

chase was an isolated event. KLR did not con-

tact Hill Country Cellars; Hill Country Cellars

contacted KLR. Hill Country Cellars never had

any contacts at all with CMMC. CMMC’s mere

knowledge that its winepress would be sold and

used in Texas and its wiring the machine for use

in the United States were not sufficient to sub-

ject CMMC to the jurisdiction of Texas courts.

This evidence simply does not show that CMMC

designed products for use in Texas, or that it

made any effort to market them here, or that it

took any other action to purposely avail itself of

this market. Even Justice Brennati’s view of the

stream of commerce doctrine will not allow

jurisdiction absent a ‘regular and anticipated

flow of products from the manufacturer to dis-

tribution to retail sale.’ . . . There is no flow of

products from CMMC to Texas; there is scarcely |

a dribble.” Id., at 439.

The Opinion of the Supreme Court of Texas in CMMC

cannot be reconciled with the Opinion of the Indiana

Court of Appeals in this action. As Donnelley notes in

Respondent's Brief in Opposition, “the primary basis for

eG en rn eee Nee

the decision is that North Texas Steel ‘knew that the racks

which it was fabricating were ultimately going to a distri-

bution center for Donnelley, located in the State of Indi-

ana.’” (Respondent’s Brief in Opposition, p. 14). The

issue in this case, as in CMMC, is whether knowledge

that one’s product is ultimately going to be utilized in the

forum state, standing alone, is sufficient for the exercise

of personal jurisdiction over a non-resident defendant

consistent with the Due Process Clause. That was pre-

cisely the question left unanswered in Asahi and the

question on which the courts of Indiana and Texas, as

well as numerous other state and federal courts have

differed.

V. CONCLUSION

For all of the foregoing reasons, and for those reasons

set forth in the Petition for Writ of Certiorari, North Texas

Steel’s Petition for Writ of Certiorari should be granted.

Respectfully submitted,

MILLER CARSON BOXBERGER

& Murrpuy LLP

Epwarp L. Murpny, Jr. (9390-02)

Larry L. BARNARD, Jr. (11904-49)

Attorneys for Petitioner,

North Texas Steel Company, Inc.

1400 One Summit Square

Fort Wayne, Indiana 46802

Telephone: (219) 423-9411