Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

SPORTMART, INC. v. FRISCH

United States District Court, Northern District of Illinois, E.D


May 7, 1982

SPORTMART, INC. AND OLYMPIC DISTRIBUTORS, INC., PLAINTIFFS,
v.
WALTER FRISCH, GARY PETRICH, RNC, INC., NORDICA USA, ROSSIGNOL SKI COMPANY, INC., NORDICA DI FRANCO E GIOVANNI VACCARI & C.S.A.S. AND SKIS ROSSIGNOL, S.A., DEFENDANTS.

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

MEMORANDUM OPINION AND ORDER

Plaintiffs, Sportmart, Inc. and Olympic Distributors, Inc., (hereinafter referred to as "Sportmart"), brought this private antitrust action against defendants, Rossignol Ski Company, Inc. and Skis Rossignol, S.A. ("Rossignol defendants"), Nordica USA, Inc. ("Nordica-US") and Nordica di Franco e Giovanni Vaccari & C.S.A.S. ("Nordica-Italy"), RNC, Inc. ("RNC"), a domestic distributor of Nordica and Rossignol ski products, and two employees of RNC, seeking declaratory, injunctive and monetary relief on the ground that defendants allegedly conspired together in a concerted refusal to supply Sportmart with certain Alpine skis and boots in violation of sections 1 and 2 of the Sherman Act.*fn1 This matter is presently before the Court on the Nordica defendants' motion to dismiss the complaint for lack of personal jurisdiction, improper venue and insufficient service of process*fn2 pursuant to Rule 12(b)(2), (3), (4) and (5) of the Federal Rules of Civil Procedure. For the reasons set forth below, that motion will be granted.

Although the parties submit that the in personam jurisdiction of this Court is governed by the law of Illinois, citing Ohio-Sealy Mattress Manufacturing Co. v. Kaplan, 429 F. Supp. 139, 140 (N.D.Ill. 1977), it is clear that federal due process principles govern the jurisdiction and venue questions in this antitrust action.*fn3 Rule 4(e) of the Federal Rules of Civil Procedure provides that:

  Whenever a statute of the United States or an
  order of court thereunder provides for service of
  a summons . . . upon a party not an inhabitant of
  or found within the state in which the district
  court is held, service may be made under the
  circumstances and in the manner prescribed by the
  statute or order, or, if there is no provision
  therein prescribing the manner of service, in a
  manner stated in this rule.

Thus, if a federal statute or rule provides for service of process, service may be made in the manner prescribed by the statute or rule. Only if there is no applicable federal statute or rule, as in a case brought pursuant to federal diversity jurisdiction, does Rule 4(e) refer to alternative methods of service. In such circumstances, Rule 4(d)(7) immediately preceding Rule 4(e) refers a federal court to the applicable state long-arm statute.*fn4

The second clause of section 12 of the Clayton Act, 15 U.S.C. § 22, provides for service of process upon a corporate defendant in an antitrust case "in the district of which it is an inhabitant, or wherever it may be found." This worldwide service of process provision prescribes the manner of service in antitrust cases so that, pursuant to Rule 4(e), there is no need to refer to the long-arm statute of the state in which the federal district court sits.*fn5 The only limitations on service of process under section 12 of the Clayton Act are those general due process principles articulated in International Shoe and subsequent cases dealing with the constitutional limits on extra-territorial service of process. As the court said in Black v. Acme Markets, Inc., 564 F.2d 681, 684 (5th Cir. 1977), "[i]n such cases, the requirements of state long-arm statutes are simply irrelevant to the in personam jurisdiction of a federal court."*fn6 See also 14 Von Kalinowski, Antitrust Laws and Trade Regulation § 104.02[6] at 104-27.13. — 104-27.15 (1981).

Venue, the other threshold inquiry with which we are concerned at this early stage in these proceedings, may be established under the special venue provisions of the Clayton Act, 15 U.S.C. § 15, 22, or under the general federal venue provisions applicable to non-diversity cases, 28 U.S.C. § 1391(b), (c). It is clear that the venue provisions of the Clayton Act are not to be applied exclusively in antitrust cases; they merely supplement the general rule. Ohio-Sealy Mattress Manufacturing Co. v. Kaplan, 429 F. Supp. 139, 140 (N.D.Ill. 1977); C.C.P. Corporation v. Wynn Oil Company, 354 F. Supp. 1275, 1279 (N.D.Ill. 1973); A.B.C. Great States, Inc. v. Globe Ticket, 310 F. Supp. 739 (N.D.Ill. 1970). In the instant case, Sportmart contends that venue is properly laid in this district because the Nordica defendants transact business here within the meaning of 15 U.S.C. § 22 and because the claim arose here within the meaning of 28 U.S.C. § 1391(b).

It is established that, as far as the Court's power over a non-resident corporate defendant in an antitrust action is concerned, the jurisdiction and venue analyses are virtually congruent, since both are controlled by general due process principles. United States v. Scophony Corporation, 333 U.S. 795, 68 S.Ct. 855, 866, 92 L.Ed. 1091 (1948); Eastman Kodak Company v. Southern Photo Materials Co., 273 U.S. 359, 370, 47 S.Ct. 400, 402, 71 L.Ed. 684 (1927); Smokey's of Tulsa, Inc. v. American Honda Motor Co., 453 F. Supp. 1265, 1267 (E.D.Okla. 1978); Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd., 402 F. Supp. 262, 317 (E.D.Pa. 1975); C.C.P. Corporation v. Wynn Oil Company, 354 F. Supp. 1275, 1278 (N.D.Ill. 1973); Pacific Tobacco Corporation v. American Tobacco Co., 338 F. Supp. 842, 844 (D.Or. 1972). If venue is proper, then personal jurisdiction may be obtained over the defendants by extra-territorial service of process. If venue is improper, then the personal jurisdiction issue is moot since the court would not entertain the action in any event. With these principles in mind, we proceed to a discussion of the merits of the motion to dismiss in the case at bar.

In United States v. Scophony Corporation, 333 U.S. 795, 807-08, 68 S.Ct. 855, 961-62, 92 L.Ed. 1091 (1948), the Supreme Court stated that "[t]he practical, everyday business or commercial concept of doing business or carrying on business `of any substantial character' [is] the test of venue" under the "transacts business" language in section 12 of the Clayton Act. Since Scophony, the lower federal courts have consistently applied that practical test in determining whether venue is proper over a nonresident corporate defendant, domestic or foreign. See Caribe Trailer Systems, Inc. v. Puerto Rico Maritime, 475 F. Supp. 711, 716 (D.D.C. 1979); Smokey's of Tulsa, Inc. v. American Honda Motor Co., 453 F. Supp. 1265, 1268 (E.D.Okla. 1978); Chromium Industries, Inc. v. Mirror Polishing & Plating Co., Inc., 448 F. Supp. 544, 550 (N.D.Ill. 1978); Zenith Radio Corporation v. Matsushita Electric Industrial Co., Ltd., 402 F. Supp. 262, 318-19 (E.D.Pa. 1975). Whether a defendant has transacted business within a particular district sufficient to create venue is a factual question to be determined in each individual case. Id. Temporally, a corporation must have transacted business in the district at least at the time the cause of action accrued, if not when the complaint was filed. Lee v. Ply*Gem Industries, Inc., 593 F.2d 1266, 1271-72 (D.C. Cir. 1979); Board of County Commissioners v. Wilshire Oil Company of Texas, 523 F.2d 125, 131-32 (10th Cir. 1975); Eastland Construction Company v. Keasbey & Mattison Co., 358 F.2d 777, 780 (9th Cir. 1966); Sunbury Wire Rope Manufacturing Co. v. United States Steel Corp., 230 F.2d 511, 512 (3d Cir. 1956); Redmond v. Atlantic Coast Football League, 359 F. Supp. 666 (N.D.Ill.), affirmed, 478 F.2d 1405 (7th Cir. 1973).

In the case at bar, Sportmart contends that the Nordica defendants transact business in this district because: (1) Nordica products are sold and advertised in Illinois; (2) Nordica-Italy purportedly controlled defendant RNC, a domestic distributor of Nordica products which concededly transacted business in this district, during the time period covered by the complaint; (3) Nordica-US, a wholly-owned subsidiary of Nordica-Italy, has been the exclusive domestic distributor of Nordica products since early January, 1982, with substantial sales in this district; and (4) Nordica-US is merely a continuation of the ongoing business of RNC with respect to the distribution of Nordica products. Taken singly or together, however, these factors do not compel the conclusion that either Nordica defendant is subject to personal jurisdiction in this district or that venue is properly laid here.

Those courts that have considered the question in an antitrust context have tended to reject the notion that a foreign corporation transacts business in a district simply because its products are sold in the district in the absence of other evidence that the sales are made by a company controlled by the foreign manufacturer. See, e.g., O.S.C. Corporation v. Toshiba America, Inc., 491 F.2d 1064, 1066 (9th Cir. 1974); Smokey's of Tulsa, Inc. v. American Honda Motor Co., Inc., 453 F. Supp. 1265 (E.D.Okla. 1978). In order to support the exercise of jurisdiction and venue over the foreign corporation, the relationship between the foreign and local corporations must be such that one is merely the alter ego of the other. Wells Fargo & Company v. Wells Fargo Express Company, 556 F.2d 406, 425 (9th Cir. 1977). That clearly was not the case as between RNC and Nordica-Italy at the time of the wrongs alleged in the complaint.

RNC is a Delaware corporation with headquarters in Williston, Vermont. Nordica-Italy has a 34 percent minority interest in the company. Rossignol owns the remaining 66 percent of RNC. Of the five members of the board of directors of RNC, only two are also on the five member Nordica-Italy board. Between 1976 and the time period covered in Sportmart's complaint filed in September, 1981, RNC was the exclusive United States distributor for Nordica products. During that time, sales between Nordica-Italy and RNC were negotiated on an arm's length basis. Title to the goods sold passed in Italy, and RNC bore responsibility for shipping the goods to this country as well as the risk of loss. RNC was responsible for its own advertising, accounting, legal work, bookkeeping services, and pension management.*fn7 The books and records of the two companies were always separately maintained. No RNC employees left that company to work for Nordica-Italy or vice-versa during the time preceding the filing of Sportmart's complaint. Under these facts,*fn8 it cannot be said that RNC was the alter ego of Nordica-Italy so that Nordica-Italy would be subject to the jurisdiction of a court wherever RNC did business or that venue as to the Italian company would be proper in those jurisdictions. Indeed, one of the reasons that Nordica-Italy established Nordica-US was apparently so that it could exert more control over the marketing and distribution of its products in the United States, than it was able to exert over RNC during the previous five years. See Vaccari Second Affidavit at ¶ 3.

The Court has searched in vain, however, for the legal significance in the argument that after the cause of action alleged in Sportmart's complaint accrued and after that complaint was filed, Nordica-US commenced operations and proceeded to transact business in this district, replacing RNC as the exclusive distributor of Nordica products. Whatever the relationship may be between Nordica-Italy and Nordica-US at this juncture, a question we need not now decide, it is clear that the relevant time period for jurisdiction and venue purposes is the time that the cause of action accrued. See Lee v. Ply*Gem Industries, Inc., supra; Board of County Commissioners v. Wilshire Oil Company of Texas, supra; Eastland Construction Co. v. Keasbey & Mattison Co., supra; Sunbury Wire Rope Manufacturing Co. v. United States Steel Corp., supra; Redmond v. Atlantic Coast Football League, supra. The cause of action alleged in Sportmart's complaint arose in August, 1981, when the defendants allegedly conspired together and refused to accept orders for Rossignol skis and Nordica boots for delivery to Sportmart's Clark Street location. See Complaint at ¶ 17. Nordica-US did not commence operations until January 1, 1982, approximately five months later. The complaint thus fails to allege a sufficient jurisdictional nexus between the cause of action alleged and the transaction of business by Nordica-US at the time the cause of action accrued. Although there are allegations in the papers filed in connection with the pending motion to the effect that, since the complaint was filed, Nordica-US has begun distributing Nordica products in this district and has refused to accept Sportmart's orders for Nordica boots, those allegations go beyond the period involved in the complaint presently on file and are thus jurisdictionally irrelevant.*fn9

Sportmart's other arguments in support of personal jurisdiction and venue are also unavailing. The fact that Sportmart may have suffered injury here, without more, will not support the exercise of personal jurisdiction or create venue in an antitrust case such as the one at bar. As the court stated in Redmond v. Atlantic Coast Football League, 359 F. Supp. 666, 669 (S.D.Ind.), affirmed, 478 F.2d 1405 (7th Cir. 1973), "[w]hile it may be appropriate in tort cases to find that the plaintiff's cause of action arose in the jurisdiction where the injury occurred, the current trend is to view this as a simplistic rationale to which antitrust actions are not susceptible." The court went on to apply a `weight of the contacts' approach to venue. Accord: Caribe Trailer Systems, Inc. v. Puerto Rico Maritime, 475 F. Supp. 711, 719 (D.D.C. 1979); Philadelphia Housing Authority v. American Radiator & Standard Sanitary Corp., 291 F. Supp. 252, 260 (E.D.Pa. 1968).

Similarly, Sportmart's attempt to create jurisdiction or venue over both Nordica defendants in this district on the basis of the contacts of their alleged co-conspirators is unpersuasive. Most courts that have considered the so-called co-conspirator theory of venue after the Supreme Court's rejection of it in dictum in Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106 (1953), have also declined to find venue appropriate over a non-resident corporate defendant solely on the basis of the alleged conduct of its co-conspirators in the forum state. See Piedmont Label Company v. Sun Garden Packing Company, 598 F.2d 491 (9th Cir. 1979); San Antonio Telephone Co. v. American Telephone & Telegraph Co., 499 F.2d 349, 351 n. 3 (5th Cir. 1974); H.L. Moore Drug Exchange, Inc. v. Smith, Kline & French Laboratories, 384 F.2d 97, 98 (2d Cir. 1967); Cascade Steel Rolling Mills, Inc. v. C. Itoh and Company, 499 F. Supp. 829 (D.Or. 1980); Chromium Industries, Inc. v. Mirror Polishing & Plating Co., Inc., 448 F. Supp. 544 (N.D.Ill. 1978). This Court also declines to follow the co-conspirator theory of venue which, according to the court in Piedmont Label Co., supra, "was given what has been called its `illegitimate birth' by a decision of [the Ninth Circuit] more than thirty years ago in Giusti v. Pyrotechnic Industries, [156 F.2d 351 (9th Cir. 1946)]." Piedmont Label Co., supra, 598 F.2d at 493.*fn10

Finally, this Court rejected the national contacts approach to personal jurisdiction, advanced herein by Sportmart with regard to Nordica-Italy, in Ingersoll Milling Machine Co. v. J. E. Bernard & Co., 508 F. Supp. 907, 910 n. 4 (N.D.Ill. 1981). In that opinion we noted that both the courts of appeals that have considered the national contacts approach have rejected it as well. See Wells Fargo & Company v. Wells Fargo Express Company, 556 F.2d 406 (9th Cir. 1977); Honeywell, Inc. v. Meltz Apparatewerke, 509 F.2d 1137 (7th Cir. 1975).

Accordingly, the Nordica defendants' motion to dismiss for lack of personal jurisdiction and improper venue is granted. It is so ordered.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.