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QUAKER OATS CO. v. CHELSEA INDUSTRIES

July 23, 1980

THE QUAKER OATS COMPANY, A NEW JERSEY CORPORATION, PLAINTIFF,
v.
CHELSEA INDUSTRIES, INC., A DELAWARE CORPORATION, IRISH DAIRY BOARD (AN BORD BAINNE CO-OPERATIVE, LIMITED), A CORPORATION OF IRELAND, AND NORTH KERRY MILK PRODUCTS, LTD., A CORPORATION OF IRELAND, DEFENDANTS.



The opinion of the court was delivered by: Flaum, District Judge:

MEMORANDUM OPINION

This matter comes before the court on the motions of defendants North Kerry Milk Products, Ltd. ("North Kerry") and Irish Dairy Board (the "Board") to dismiss the amended complaint. For the reasons set forth below, the motions to dismiss are denied.

On July 12, 1977 plaintiff brought this action against Chelsea Industries, Inc. ("Chelsea"). On April 25, 1978 Chelsea filed a third party complaint against the Board. Thereafter, on July 10, 1978 plaintiff amended its complaint and added as defendants the Board and North Kerry.

The amended complaint alleges, inter alia, that plaintiff bought a quantity of sodium caseinate, which it used in the manufacture of LIFE cereal, from Chelsea; that Chelsea bought casein, an ingredient used in the manufacture of sodium caseinate, from the Board; that the Board obtained the casein from North Kerry; and that plaintiff was forced to destroy a large portion of LIFE cereal when plaintiff discovered a defect in the sodium caseinate which was caused by the casein from which it was manufactured. The Board and North Kerry moved to dismiss on the ground that the court lacks jurisdiction over the person, pursuant to rule 12(b)(2), Fed.R. Civ.P.

The limit to which jurisdiction over foreign corporations may be asserted is set out in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In International Shoe the Supreme Court stated:

  due process requires only that in order to
  subject a defendant to a judgment in personam, if
  he be not present within the territory of the
  forum, he have certain minimum contacts with it
  such that the maintenance of the suit does not
  offend "traditional notions of fair play and
  substantial justice." 326 U.S. at 316, 66 S.Ct. at
  158.*fn1

The Supreme Court then went on to note:

  the criteria by which we mark the boundary line
  between those activities which justify the
  subjection of a corporation to suit, and those
  which do not, cannot be simply mechanical or
  quantitative. . . Whether due process is
  satisfied must depend rather upon the quality and
  nature of the activity in relation to the fair
  and orderly administration of the laws which it
  was the purpose of the due process clause to
  insure. 326 U.S. at 319, 66 S.Ct. at 160.

Since the cause of action in International Shoe arose out of activities conducted in the forum state out of which obligations arose, the Supreme Court held that

  a procedure which requires the corporation to
  respond to a suit brought to enforce them [the
  obligations] can, in most instances, hardly be
  said to be undue. 316 U.S. at 319, 66 S.Ct. at
  160.

The Supreme Court has addressed when a state may entertain a cause of action against a foreign corporation where the cause of action does not arise out of the corporation's activities in the state of the forum. In Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 445-46, 72 S.Ct. 413, 418, 96 L.Ed. 485 (1951), the Supreme Court concluded that if a corporation carries on in a state continuous and systematic corporate activities,

  those activities are enough to make it fair and
  reasonable to subject that corporation to
  proceedings in personam in that state, at least
  insofar as the proceedings in personam seek to
  enforce causes of action relating to those very
  activities or to other activities of the
  corporation within the state.
  In Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958), where the cause of action did not arise out of an act done or a transaction consummated in the forum state, the Supreme Court reiterated:
  it is essential in each case that there be some
  act by which the defendant purposefully avails
  itself of the privilege of conducting activities
  within the forum State, thus ...

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