Opposition Brief — Miles, Inc. v. Sondergard

No. 92-1817

In The

Supreme Court of the United States

October Term, 1992

MILES INC.,

Petitioner,

DONALD BRUCE SONDERGARD,

Respondent.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

BRIEF IN OPPOSITION

Paut D. RHEINGOLD

RHEINGOLD & McGowan

113 East 37th Street

New York, NY 10016

(212) 684-1880

GLEN H. JOHNSON

(Counsel of Record)

JOHNSON HUFFMAN

3202 West Main Street

Rapid City, SD 57702

(605) 348-7300

Wayne F. GILBERT

Jay A. ALDERMAN

JOHNSON HUFFMAN

Rapid City, SD 57702

(605) 348-7300

Counsel for Respondent

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

OR CALL COLLECT (402) 342-2831

I.

II.

QUESTIONS PRESENTED

IS THE REGISTRATION TO DO BUSINESS AND

APPOINTMENT OF A REGISTERED AGENT FOR

SERVICE OF PROCESS SUFFICIENT “CONSENT”

TO IN PERSONAM JURISDICTION BY A FOREIGN

CORPORATION WHERE THE CAUSE OF ACTION

AROSE OUTSIDE THE FORUM STATE?

IF A FOREIGN CORPORATION REGISTERS TO DO

BUSINESS, APPOINTS AN AGENT FOR SERVICE

OF PROCESS, AND OFFERS ITS PRODUCT FOR

SALE THROUGHOUT THE FORUM STATE, HAS

THAT CORPORATION ESTABLISHED SUFFICIENT

CONTACTS WITH THE FORUM STATE TO

UPHOLD THE EXERCISE OF GENERAL JURISDIC-

TION?

ii

TABLE OF CONTENTS

Page

CURSE TIPO C NUEEE OOD 6b evn cewnde das eaeenanens i

peo ey reer ne iii

PEE MONEOEE GOP TOU GADD ais sisnccneevaceeereees 1

REASONS FOR DENYING THE PETITION......... 3

I. The Eighth Circuit’s Ruling that Personal Juris-

diction May Constitutionally be Based Solely

on the Appointment of a Registered Agent is

Not in Conflict with the Decisions of Other

DOCU i vito heres Seda s tncedwee eee es Vaaneeys 5

II. The Eighth Circuit’s Alternative Ruling that

Miles’ Business Activities in South Dakota were

Sufficient to Support in Personam Jurisdiction is

Consistent with the Decisions of Other Circuits

eae Ee te on PRET EET PEPE 12

SE 346 civ news cess ebeeeses eRe 17

TABLE OF AUTHORITIES

Page

Cases

Anderson v. U.S., 220 FSupp. 769 (E.D.Penn. 1963) ..... 8

Arney v. Central Electric & Gas Co., 66 F.Supp. 401

ee ahh gps na.0 so S00 e¥ Awad ceeee es 8

Bane v. Netlink, Inc., 925 F.2d 637 (3rd Cir. 1991) ..... 5

Bearry v. Beech Aircraft Corp., 818 F.2d 370 (Sth Cir.

ee eng beak dso) vs 6 04 ON kes va saens 14, 15

Bendix Autolite Corp. v. Midwesco Enterprises, 486

Oe eee 8, 11, 12

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)

ICC ECE he beae essere hase veeawevevseesees 8, 11

Burnham v. Superior Court, 495 U.S. 604 (1990)....... 10

Deines v. Vermeer Mfg. Co., 752 F.Supp. 989 (D.Kan.

Er ee ee 8

In Re Des Cases, 789 F.Supp. 552 (E.D.N.Y. 1992)..... 10

General Contracting and Trading v. Interpole, Inc.,

940 F.2d 20 (ist Cir. 1991) .............- ee eee eee 8

Glater v. Eli Lilly & Co., 744 F.2d 213 (1st Cir. 1984)....14

Hanson v. Denckla, 355 U.S. 220 (1957)..........----. 16

Hoffman v. Blaski, 363 U.S. 335 (1960).........-..-.--: 8

Holloway v. Wright & Morrissey, Inc., 739 F.2d 695

cd ea ea uc abs ness ans sna snsys- 7, 8

Insurance Corp. of Ireland v. Compagnie des Bauxites

de Guinee, 456 U.S. 694 (1982)............--.----5-- 8

iv

TABLE OF AUTHORITIES - Continued

Page

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

Be SEE ORE eee ree eee ree TTT Tee ee passim

Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196

Gee Ss SEES ba ve Conecuseteeanclesvishs ia es 3, 5, 8

Marshall v. Mole Constructors, 193 F.Supp. 617

ke | Pree rrr et Tre eer Tere er er 8

Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S.

Ree Tre re Ce hee ree ry hae 7%

Pennsylvania Fire Ins. Co. v. Gold Issue Mining &

Milling Co., 243 U.S. 93 (1917) ............. ee

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

FOU ca Vi weniiae cUhekeanna cee rake esas 8, 10, 11

Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745 (4th

Cir.), cert. denied, 404 U.S. 948 (1971) .......... 6, 13

Sandstrom v. Chemlawn Corp., 904 F.2d 83 (1st Cir.

io OE ee LE RE RD oe SE et Ln ae ea 6

Seymour v. Parke, Davis & Co., 423 F.2d 584 (1st Cir.

SES ese KeGa we ie iwh ceed elet aches’ cis 8 C408 14

Shaffer v. Heitmer, 433 US. 106 (1977).............5..- 9

Siemer v. Learjet Acquisition Corp., 966 F.2d 179 (5th

RM WEEE cab Gu Sd dace dud deere cre teuE irks A ee

Sondergard v. Miles, Inc., 985 F.2d 1389 (8th Cir.

ae AE Pee ery er heap gr a om TF

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

EET ee OTE EP ey Tene eee 16

Ytuarte v. Gruner, 935 F.2d 971 (8th Cir. 1991)........ 8

MIscELLANEOUS

Restatement (Second) of Conflicts of Laws § 44

EME PULA Rech eed LES iene cea bee hews era hardens kek os 7

No. 92-1817

¢

In The

Supreme Court of the United States

October Term, 1992

a

MILES INC.,

Petitioner,

DONALD BRUCE SONDERGARD,

Respondent.

¢

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

+

BRIEF IN OPPOSITION

*

STATEMENT OF THE CASE

Petitioner Miles Inc. (“Miles”) manufactures Aika-

Seltzer Plus Cold Medicine, which it distributes through-

out the United States including South Dakota. Miles had

applied to the South Dakota Secretary of State for a

Certificate of Authority to transact business in South

Dakota and was granted such authority in August 1991.

At the same time, Miles appointed CT Corporation Sys-

tem as its registered agent in the State of South Dakota.

In October 1989 while residing in Utah, Respondent

Donald Sondergard suffered a stroke after consuming

Alka-Seltzer Plus Cold Medicine. The stroke was caused

by a chemical interaction of Alka-Seltzer Plus with a

prescription anti-depressant he was taking. Sondergard

thereafter moved to South Dakota where this lawsuit was

commenced in October 1991, two months after Miles had

registered to do business and appointed CT Corporation

as its agent for process in South Dakota.

Upon Miles removal of the case to the United States

District Court for the District of South Dakota, Western

Division, the district court immediately granted Miles’

Motion to Stay Discovery’, and thereafter, Miles’ Motion

to Dismiss on personal jurisdiction grounds. The District

Court reasoned that, while the concept of general juris-

diction would be adopted by the South Dakota Supreme

Court, and further that by registering to do business and

appointing a resident agent for service of process, Miles

had consented to the jurisdiction of South Dakota Courts,

nonetheless, the exercise of personal jurisdiction over

Miles could only take place for torts committed by Miles

within the state of South Dakota after it had registered to

do business. See District Court Oral Decision (Petition

Appendix A35, 36).

1 The District Court granted Miles’ Motion to Stay Discov-

ery by Order of December 12, 1991. Contrary to Miles’ assertion,

Mr. Sondergard’s counsel did not waive an evidentiary hearing

on the nature and extent of Miles’ contacts with South Dakota.

is. fact, on January 15, 1992, Mr. Sondergard filed a Motion to

reconsider or Alternatively Stay the Court’s Decision on Miles’

Motion to Dismiss Pending Limited Discovery. The Court

denied this Motion and entered a Judgment dismissing the case

without prejudice.

The Court of Appeals for the Eighth Circuit reversed,

holding that when a foreign corporation expressly con-

sents to jurisdiction in the forum state by registering to

do business and appointing an agent for process, the

minimum contacts/due process analysis of International

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

unnecessary. Sondergard v. Miles, Inc., 985 F.2d 1389, 1396

(8th Cir. 1993). See also, Knowlton v. Allied Van Lines, Inc.,

900 F.2d 1196 (8th Cir. 1990).

Moreover, the Eighth Circuit found that Miles’ con-

tacts with the State of South Dakota were, nonetheless,

sufficient to satisfy the requirements of International Shoe

and its progeny. Miles had admitted that it distributed

Alka-Seltzer Plus for sale throughout South Dakota at the

time Mr. Sondergard ingested it. The Eighth Circuit rea-

soned that Miles had purposely availed itself of the bene-

fits and privileges of South Dakota’s laws from its efforts

to market its product in South Dakota, and that South

Dakota’s exercise of personal jurisdiction over Miles

would not violate traditional notions of fair play and

substantiz! justice.

REASONS FOR DENYING THE PETITION

Petitioner Miles claims that International Shoe Co. v.

Washington, 326 U.S. 310 (1945) makes a foreign corpora-

tion’s express consent to personal jurisdiction dependent

nevertheless upon a minimum contacts analysis to satisfy

due process and that Miles’ contacts with the State of

South Dakota are insufficient to support the exercise of

personal “long-arm” jurisdiction. Miles therefore asserts

ences

that the Eighth Circuit’s opinion in this case is wholly

inconsistent with other federal precedent, and that appar-

ent conflict and confusion necessitates review by the

Supreme Court.

The genesis of any confusion is Miles’ interpretation

of the authority it cites, and not any fundamental conflict

or disagreement among the various decisions of other

circuits or this Court. While addressing the issue of gen-

eral jurisdiction, Miles artfully mixes the significantly

different factual and legal concepts of implied and

express consent to jurisdiction and in so doing creates a

conflict that otherwise does not exist.

In consequence, and contrary to the manner in which

Miles incorrectly characterizes the status of the law, the

Supreme Court recognizes that by appointing an agent

for service of process, a foreign corporation expressly

consents to the jurisdiction of the forum state. And in any

event, given Miles’ substantial business contacts with the

State of South Dakota, the due process analysis of Interna-

tional Shoe is undoubtedly satisfied. Because of these

facts, the instant case is nothing more than a typical

general jurisdiction case in which a foreign corporation

has registered to do business, appointed an agent for

service of process, and purposefully directed its activities

toward the forum state. Because it is fact specific and the

Eighth Circuit’s decision is based on long standing

authority, this case does not present the novel oppor-

tunity to clear up the perceived conflict that Miles claims

exists.

I. THE EIGHTH CIRCUIT’S RULING THAT PER-

SONAL JURISDICTION MAY CONSTITU-

TIONALLY BE BASED SOLELY ON THE

APPOINTMENT OF A REGISTERED AGENT IS

NOT IN CONFLICT WITH THE DECISIONS OF

OTHER CIRCUITS.

In considering the issue of express consent to per-

sonal jurisdiction, the Eighth Circuit observed:

“that appointment of an agent for service of

process .. . gives consent to the jurisdiction of

Minnesota courts for any cause of action,

whether or not arising out of activities within

the state. Such consent is a valid basis of per-

sonal jurisdiction, and resort to minimum-con-

tacts or due-process analysis to justify the

jurisdiction is unnecessary.”

Sondergard v. Miles, Inc., 985 F.2d at 1396 (quoting Knowl-

ton v. Allied Van Lines, Inc., 900 F.2d at 1200).2 After

addressing the differences between specific and general

jurisdiction, the Eighth Circuit did not find that a conflict

existed over the recognition of implied and express con-

sent, nor that it was necessary to choose one rule over the

other. Rather, the Eighth Circuit recognized the existence

of express consent to jurisdiction, and cited both circuit

court and Supreme Court authority as support. Son-

dergard, 985 F.2d at 1392, 1395-97. See also, Knowlton, 900

F.2d at 1199-1200.

Miles principally relies on three circuit court cases

for the proposition that the appointment of an agent for

2 See also, Bane v. Netlink, Inc., 925 F.2d 637, 640 (3rd Cir.

1991).

service of process, without more, is not sufficient to con-

fer personal jurisdiction. Siemer v. Learjet Acquisition

Corp., 966 F.2d 179 (Sth Cir. 1992); Sandstrom v. Chemlawn

Corp., 904 F.2d 83 (1st Cir. 1990); Ratliff v. Cooper Laborato-

ries, Inc., 444 F.2d 745 (4th Cir.), cert. denied, 404 U.S. 948

(1971). On close examination, however, it is clear that the

cases above were decided in the context of the forum

state’s long-arm statute - applying the principles of

implied consent. Moreover, the same cases contain signif-

icantly different factual circumstances than are present

here.

In this case, the Eighth Circuit was specifically asked

to decide whether the act of appointing an agent for

service of process automatically confers jurisdiction over

a corporation on any cause of action (i.e., jurisdiction

based on express consent). In contrast, the cases cited by

Miles do not specifically address the issue of express

consent, but rather, proceed directly to the issue of

whether personal jurisdiction exists, if at all, under the

“minimum contacts” analysis (i.e., implied consent) of

International Shoe and its progeny. In other words, the

cases cited by Miles essentially treat the act of appointing

an agent for service of process as only one more “contact”

with the forum state, and not as an independent source of

jurisdiction.

Only one of the above cases cited by Miles appears to

address the question of express consent. See, Siemer v.

Learjet, 966 F.2d at 183. However, the court in Siemer

pointed out that “[n]o Texas state court decision has held

that [the Texas Business Corporation Act] acts as a con-

sent to jurisdiction over a corporation in a case such as

ours — that is where plaintiffs are non-residents and the

defendant is not conducting substantial activity within

the state.” Id. Unlike the Eighth Circuit’s analysis of

South Dakota law, the Siemer court was unable to locate

Texas authority recognizing express consent to general

jurisdiction. The Siemer court simply proceeded to decide

the case on the implied consent (minimum contact) prin-

ciples of International Shoe. Moreover, in this case, Donald

Sondergard was and is a resident of the state of South

Dakota, and Miles did and continues to do substantial

business in the state.

Contrary to Miles’ claims, the First Circuit does rec-

ognize express consent as a valid basis for obtaining

personal jurisdiction over a foreign corporation. In Hollo-

way v. Wright & Morrissey, Inc., 739 F.2d 695 (1st Cir.

1984), the plaintiff asserted jurisdiction based upon per-

sonal service of the defendant’s registered agent. The

defendant claimed that service of process would be

“required or permitted by law” only if the corporation

could be served pursuant to New Hampshire’s long-arm

statute. The Court rejected defendant’s view. Id. at 697.

The First Circuit in Holloway observed that, “[i]t is

well-settled that a corporation that authorizes an agent to

receive service of process in compliance with the require-

ments of a state statute, consents to the exercise of per-

sonal jurisdiction in any action that is within the scope of

the agent’s authority.” Id. (citing Neirbo Co. v. Bethlehem

Shipbuilding Corp., 308 U.S. 165, 170-71 (1939); Pennsylva-

nia Fire Insurance Co., 243 U.S. 93, 95 (1917); Restatement

(Second) of Conflicts of Laws § 44 (1971)). Though the

Holloway Court found some causal connection between

the defendant's activities in the forum state and plain-

tiff’s injury, the clear import of the case is that by

appointing an agent for service of process, a foreign

corporation voluntarily consents to the jurisdiction of

that state’s courts.?

The Eighth Circuit’s decision is likewise consistent

with the rule in Neirbo, and Pennsylvania Fire, and with

other Supreme Court precedent decided after Interna-

tional Shoe. See e.g., Bendix Autolite Corp. v. Midwesco

Enterprises, 486 U.S. 888 (1988); Burger King Corp. v.

Rudzewicz, 471 U.S. 462 (1985); Perkins v. Benguet Mining

Co., 342 U.S. 437 (1952).4

Although parties may not waive subject matter juris-

diction, they may waive personal jurisdiction. Insurance

Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456

U.S. 694 (1982).5 Therefore, consent has been recognized

as a basis for the exercise of general personal jurisdiction.

Express consent has been found to be a basis for

jurisdiction when a foreign corporation appoints an agent

for service of process. See, Neirbo, 308 U.S. at 170-71 and

3 See also, General Contracting and Trading v. Interpole, Inc.,

940 F.2d 20, 22 (ist Cir. 1991) (citing Holloway, Knowlton and

Pennsylvania Fire); Ytuarte v. Gruner, 935 F.2d 971 (8th Cir. 1991);

Deines v. Vermeer Mfg. Co., 752 F.Supp. 989 (D.Kan. 1990); Ander-

son v. U.S., 220 F.Supp. 769 (E.D.Penn. 1963); Marshall v. Mole

Constructors, 193 F.Supp. 617 (W.D. Penn. 1961); Arney v. Central

Electric & Gas Co., 66 F.Supp. 401 (D.Minn. 1946).

4 See, Sternberg v. O'Neil, 550 A.2d 1105 (Del.Supr. 1988) for

a comprehensive examination of express statutory consent to

jurisdiction by means of appointing a registered agent for ser-

vice of process.

5 See also, Hoffman v. Blaski, 363 U.S. 335 (1960).

Pennsylvania Fire, 243 U.S. at 95. Justice Holmes in Penn-

sylvania Fire, concisely summarized the applicable princi-

ple as follows:

The Defendant had executed the power of attor-

ney that made service upon the superintendent

the equivalent of personal service. If by a corpo-

rate vote it had accepted service in this specific

case, there would be no doubt of the jurisdiction

of the state court over a transitory action of

contract. If it had appointed an agent authorized

in terms to receive service in such cases there

would be equally little doubt. It did appoint an

agent in language that rationally might be held

to go to that length. The language has been held

to go to that length, and the construction could

not deprive the defendant of due process of law

even if it took the defendant by surprise, which

we have no warrant to assert.

243 U.S. at 95. The unanimous opinion, written by Justice

Holmes, held that Missouri could constitutionally exer-

cise general jurisdiction over the defendant foreign cor-

poration, and “not deprive the defendant of due

process,” even though its only apparent contact with

Missouri was its designation of the Missouri Superinten-

dent of Insurance as its registered agent. Id.

Petitioner Miles claims that the Supreme Court’s rec-

ognition of express consent to jurisdiction came to an end

with the decision in International Shoe. Arguing that due

process depends upon the quality and nature of the activ-

ity of the defendant in the forum state, Miles maintains

that “all assertions of state court jurisdiction must be

evaluated according to the standards set forth in /nterna-

tional Shoe.” See, Shaffer v. Heitner, 433 U.S. 186, 212 (1977).

10

When read in their proper context, however, the holdings

in International Shoe, and other Supreme Court cases

decided thereafter, are entirely consistent with the contin-

ued viability of the earlier holding in Pennsylvania Fire.®

Perkins v. Benguet Mining Co., 342 U.S. 437 (1952),

upheld the constitutional validity of an exercise of in

personam general jurisdiction with respect to a claim unre-

iated to the foreign corporation defendant’s forum activ-

ity. The context of the case involved the application of the

forum state’s long-arm statute, and a search for minimum

contacts. It was necessary for the Perkins Court to conduct

a minimum contact analysis because the foreign corpora-

tion was not registered to do business in the forum state,

and had not appointed an agent for service of process.

Nevertheless, Perkins reaffirmed the principle that there

would have been no need to search for minimum contacts

if express consent had been given:

Today if an authorized representative of a for-

eign corporation be physically present in the

state of the forum and be there engaged in activ-

ities appropriate to accepting service and receiv-

ing notice on its behalf, we recognize that there

is no unfairness in subjecting that corporation to

the jurisdiction of the courts of that state

6 See In Re Des Cases, 789 F.Supp. 552, 591 (E.D.N.Y. 1992)

(“Although the Supreme Court has not directly pronounced on

the subject since 1945, the constitutionality of the traditional

practice of asserting general jurisdiction solely on the basis of a

corporation’s being licensed to do business in the forum seems

to have survived International Shoe. See Burnham v. Superior

Court, 495 U.S. 604 (1990) (plurality opinion) (International Shoe

did not supplant long - and widely - accepted methods of

asserting jurisdiction” )).

11

through such service of process upon that repre-

sentative. 342 U.S. at 444.

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985),

continued the rationale that due process considerations

are different when jurisdiction is based on implied con-

sent rather than on express consent. When jurisdiction is

based on implied consent, “[t]he Due Process Clause

protects an individual's liberty interest in not being sub-

ject to the binding judgments of a forum with which he

has established no meaningful ‘contacts, ties, or rela-

tions.’ ” Id. at 471-72 (citing International Shoe, 326 U.S. at

319). However, immediately after stating this general

proposition, the Burger King Court reiterated the position

that personal jurisdiction is waivable:

[w]here a forum seeks to assert specific jurisdic-

tion over an out-of-state defendant who has not

consented to suit there, due process is satisfied if

the defendant has minimum contacts with the

forum.

Burger King, 471 U.S. at 472. (emphasis added). Burger

King and Perkins thus reaffirm that due process is satis-

fied by express consent, since express consent constitutes

a waiver of all other personal jurisdiction requirements.

Bendix Autolite Corp. v. Midwesco Enterprises, 486 U.S.

888 (1988) also appears to accept the express consent

rationale. The issue in Bendix, as in Perkins, involved a

forum state attempting to assert jurisdiction over an

unregistered foreign corporation. The Court stated:

[D]esignation of an agent subjects the foreign

corporation to the general jurisdiction of the

Ohio courts in matters to which Ohio’s tenuous

relation would not otherwise extend. Cf. World-

12

Wide Volkswagen Corp. v. Woodson, 444 U.S. 286

(1980). The Ohio statutory scheme thus forces a

corporation to choose between exposure to the

general jurisdiction of Ohio courts or forfeiture

of the limitations defense, remaining subject to

suit in Ohio and perpetuity. Requiring a foreign

corporation to appoint an agent for service in all

cases and to defend itself with reference to all

transactions, including those in which it did not

have the minimum contacts necessary for sup-

porting personal jurisdiction, is a significant

burden.

486 U.S. at 891. Based on the above decisions, and the

Eighth Circuit’s analysis of both federal and South

Dakota state law, it is clear that express consent remains a

valid means of obtaining personal jurisdiction over a

foreign corporation. The Eighth Circuit’s decision hardly

presents a pathbreaking approach to the exercise of gen-

eral jurisdiction. It is consistent with the holdings of the

Supreme Court and should not be reversed.

II. THE EIGHTH CIRCUIT’S ALTERNATIVE RULING

THAT MILES’ BUSINESS ACTIVITIES IN SOUTH

DAKOTA WERE SUFFICIENT TO SUPPORT IN

PERSONAM JURISDICTION IS CONSISTENT

WITH THE DECISIONS OF OTHER CIRCUITS

AND THE SUPREME COURT.

Notwithstanding the Eighth Circuit’s holding that

Miles had expressly consented to the jurisdiction of South

Dakota courts by appointing an agent for service of pro-

cess, the Court alternatively proceeded to assess the qual-

ity and quantity of Miles’ contacts with South Dakota and

hiccemeaeereneeneneetiasiettaeaataiaimaiamiiiaiieaiiiaaiuaiiiaes

13

found that Miles’ forum contacts were sufficient to sup-

port the exercise of general jurisdiction. However, Miles

contends that even under the application of general juris-

diction, Miles is not amenable to suit in South Dakota.

Miles cites Siemer and Ratliff for the proposition that

the mere sale of a defendant’s products in the forum state

is not sufficient to obtain jurisdiction consistent with the

Due Process Clause. That is an over generalization, how-

ever. A close examination of the facts in both cases

reveals that the quality and quantity of defendant’s con-

tact with the forum state were minimal compared to

Miles’ presence and sales in South Dakota.

Ratliff involved a consolidated appeal by two drug

companies who were sued for injuries caused by the use

of their products. The forum activity of one company was

limited to “solicitation by mail to dealers and whole-

salers, and the mailing of promotional literature to

approximately 650 doctors on its mailing lists.” 444 F.2d

at 746. The other company had actually registered to do

business in the state, and had appointed an agent for

service of process. Id. That same company also main-

tained five detail men in the state who promoted the

companies’ products through personal contacts with doc-

tors and drugstores throughout the state. Id. However,

“their primary responsibility is the promotion of drugs,

not the actual sale of them.” Id.

As the Court in Ratliff aptly pointed out, “[a]pplying

for the privilege of doing business is one thing, but the

actual exercise of that privilege is quite another.” Id. at

748. Neither drug company did substantial business in

the forum state. In contrast, Miles admits that Alka-

14

Seltzer Plus probably does appear on the shelves of groc-

ery and drug stores in every state.

Likewise, in Siemer, defendant Learjet had registered

to do business and appointed an agent for service of

process in the forum state of Texas. However, only

slightly over one percent of Learjet’s sales occurred in

Texas — not amounting to substantial activity according to

the Court. 966 F.2d at 183.

Miles also cites other circuit court opinions for the

same proposition. See e.g., Glater v. Eli Lilly & Co., 744 F2d

213 (1st Cir. 1984) and Bearry v. Beech Aircraft Corp., 818

F.2d 370 (5th Cir. 1987). In Glater, defendant Eli Lilly

employed sales representatives in the forum state, mar-

keted its products nationwide, and advertised its prod-

ucts in journals circulated in the forum state. However,

neither the sales representatives nor Eli Lilly directly sold

products in the forum state, nor had Eli Lilly appointed

an agent to receive service of process.

The First Circuit in Glater found that Eli Lilly’s con-

tacts with the forum state were “indistinguishable” from

a similarly situated defendant drug company in Seymour

v. Parke, Davis & Co., 423 F.2d 584 (1st Cir. 1970). Glater,

744 F.2d at 217. In Seymour, the First Circuit held that

where “defendant’s only activities consist of advertising

and employing salesmen to solicit orders, we think that

fairness will not permit a state to assume jurisdiction.”

Seymour, 423 F.2d at 586-87. Once again, Miles’ contacts

with the State of South Dakota are more continuous,

systematic and pervasive then defendant’s contacts in

Glater or Seymour.

15

In Bearry, defendant Beech Aircraft sold $250,000,000

worth of products in the forum state of Texas. However,

the Fifth Circuit found that these individual sales did not

amount to the type of continuous and systematic contacts

sufficient to support general jurisdiction. Beech Aircraft

made an effort to limit its exposure to general jurisdic-

tion. The Fifth Circuit held:

Beech exercised its right to structure its affairs

in a manner calculated to shield it from the

general jurisdiction of the courts of other states

such as Texas, carefully requiring the negotia-

tion, completion, and performance of all con-

tracts in Kansas. Beech has not afforded itself

the benefits and protection of the laws of Texas,

but instead has calculatedly avoided them.

818 F.2d at 375-76. Significantly, Beech Aircraft had never

qualified to do business nor maintained an agent for

service of process in Texas. Id. at 372.

By comparison Miles, unlike the defendant’s men-

tioned above, purposefully sought out the South Dakota

market for the sale of its product, registered to do busi-

ness and appointed an agent for service of process. The

totality of Miles’ contacts warrant the exercise of general

personal jurisdiction, and in so holding, the Eighth Cir-

cuit was not inconsistent with the authority referenced

above.

Nor is the Eighth Circuit’s decision inconsistent with

the precedent of this Court. Little improvement could be

made on how the Eighth Circuit succinctly characterized

the facts and law in this case:

In any case, we could not conclude that Miles is

unconstitutionally burdened by having to

16

defend this suit in South Dakota. Even without

the appointment of the process agent, Miles

should have foreseen similar suits in South

Dakota at the time Sondergard consumed Alka-

Seltzer Plus. Miles admits that it distributed

Alka-Seltzer Plus for sale throughout South

Dakota at the time Sondergard took it. Its sales

in South Dakota are “not simply an isolated

occurrence, but arise [] from the efforts . . . to

serve, directly or indirectly, the market for its

product in (South Dakota].” World-Wide Volks-

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

Thus, Miles had purposely availed itself of the

benefits and privileges of South Dakota’s laws

and economy. See, e.g., Hanson v. Denckla, 355

U.S. 220, 253-54 (1957). Its own activities created

a connection with South Dakota through which

it could reasonably foresee being haled into

court in South Dakota. See, e.g., World-Wide

Volkswagen, 444 U.S. at 296. Had Sondergard

consumed the Alka-Seltzer Plus in South

Dakota, there would be no question about the

constitutionality of South Dakota’s personal

jurisdiction.

Thus, Miles is left to argue that they could not

foresee being sued in South Dakota on this par-

ticular cause of action. This argument rings hol-

low, however, when one realizes that Miles does

not engage in face-to-face transactions with the

buyers of its products, and does not attempt to

structure its sales of Alka-Seltzer Plus with

regard to whether or not it might be sued in

South Dakota. Instead, it sells Alka-Seltzer in

every state. Because Miles does not limit who

may buy its product or where they may buy it,

we cannot conclude that Miles is unconstitu-

tionally burdened by having to defend this suit

17

in South Dakota simply because the plaintiff did

not consume its product there. We believe that

South Dakota’s exercise of personal jurisdiction

over Miles would not violate “traditional

notions of fair play and substantial justice.” See,

e.g., International Shoe v. Washington, 326 U.S.

310, 318 (1945).

Sondergard v. Miles, Inc., 985 F.2d at 1397.

¢

CONCLUSION

In summary, the questions presented by Miles in the

instant case do not warrant review by this Court. Con-

trary to Miles’ claim, the Eighth Circuit Court of Appeal’s

decision is analytically consistent with other relevant fed-

eral authority addressing the issue of express and implied

consent to jurisdiction. Notwithstanding the existence of

express consent, Miles’ contacts with the State of South

Dakota warrant the exercise of general in personam juris-

diction.

In any event, the facts in this case do not present the

kind of pure “express consent” issue Miles claims it does.

It is submitted that if this court wishes to review the

exercise of express consent to jurisdiction, the instant

case, given Miles’ obvious and substantial direct contacts

with the forum, does not provide the appropriate vehicle

for such consideration.

Pau. D. RHEINGOLD

RHEINGOLD & McGowan

113 East 37th Street

New York, NY 10016

(212) 684-1880

Respectfully submitted,

GLEN H. JOHNSON

(Counsel of Record)

JOHNSON HUFFMAN

3202 West Main Street

Rapid City, SD 57702

(605) 348-7300

Wayne F. GI_Bert

Jay A. ALDERMAN

JOHNSON HUFFMAN

Rapid City, SD 57702

(605) 348-7300