On Motions of Salt Service, Inc. and Pioneer Salt Co. to Dismiss No. 33781, November 10, 1965.
On Motions of International Salt Co. and Salt Service, Inc. to Dismiss No. 33781, November 10, 1965.
GRIM, District Judge.
On July 1, 1963, the City of Philadelphia "on behalf of itself and others similarly situated" filed its complaint against certain producers and distributors of rock salt, including Cayuga Rock Salt Company, averring that these producers and distributors, including Cayuga, had engaged in an unlawful combination and conspiracy to fix the prices of rock salt. For the purposes of this case, it will be assumed that venue in the original action (filed by Philadelphia on July 1, 1963) was proper because Cayuga filed a motion to dismiss the action on the ground of improper venue, but after some discovery stipulated that this motion to dismiss would be withdrawn by it thereby indicating to me that at that time Cayuga regarded venue to be proper as to it and thereby removing the question of the appropriateness of the venue of the original action from the case.
However, another question has arisen. Venue was proper in the original action by the City of Philadelphia only because at that time Cayuga had a sales representative and distributor, Salt Service, Incorporated, in the Eastern District of Pennsylvania. However, on July 1, 1964, Cayuga completely detached itself from Salt Service, Incorporated, and established no other agency connections in this district thereby, at that time, destroying the possibility of service upon a sales agent within the Eastern District of Pennsylvania and also thereby destroying the fitness for venue purposes of suits against Cayuga in the Eastern District of Pennsylvania. On December 11, 1964, after Cayuga had withdrawn its connection with the Eastern District of Pennsylvania, the first of many petitions to intervene (now seventy-one) were filed in the original City of Philadelphia class action and allowed by this court. On January 4 and 5, 1965, thirteen independent (independent from the class action and the intervening actions) antitrust suits against the same defendants as those in the class suit, including Cayuga, were filed. Subsequently Cayuga filed the motions now being considered by the court to dismiss the intervenor actions as to Cayuga as well as the independent suits against it contending that these actions are invalid for lack of proper venue since they were instituted after Cayuga had withdrawn its connection with the Eastern District of Pennsylvania and consequently was no longer "transacting business" nor "found" within the Eastern District of Pennsylvania.
The intervenors on the other hand contend that a class action by its nature theoretically includes all prospective plaintiffs similarly situated and that the decision to join in the original action later as intervenors or to bring an action of their own is a choice which prospective plaintiffs at their option can make. They contend further that in view of the nature of class actions, the advantages, such
There is much to be said for and against each of these contentions by Cayuga and plaintiff intervenors.
In view of my conclusion that there was proper venue for the intervenor actions and that the motions of Cayuga to dismiss them must be denied, it is unnecessary to discuss the intervenors' other contention that by withdrawing its motion to dismiss the orginal action and filing an answer to the original complaint on the merits, Cayuga waived its privilege (see Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167 (1939), to assert a lack of proper venue, except to say that there is good authority for this waiver contention. See Drabik v. Murphy, 246 F.2d 408 (2d Cir. 1957); U. S. for Use and Benefit of Bryant Electric Co. v. Aetna Cas. & Surety Co., 297 F.2d 665, 669 (2d Cir. 1962).
Service of the intervenor complaints was effected on Cayuga by delivering a copy of the complaint to Cayuga's attorney of record purportedly in accordance with Fed.R.Civ.P. 5(b). Such service is proper, Berman v. Herrick, 30 F.R.D. 9, 11 (E.D.Pa.1962, Luongo, J.), and, accordingly, Cayuga's motion to quash the service must be denied.
Cayuga also was named as one of the defendants in the thirteen independent suits which were filed on January 4 and 5, 1965. It has moved to dismiss these thirteen independent suits as to it on the contention that venue as to it in these suits is improper because at the time they were instituted it was not "found" nor "transacting business" in the Eastern District of Pennsylvania.
The plaintiffs contend that the special antitrust venue provision applicable here should be liberally construed so as to render amenable to suit in this District a corporation which up until the time of suit and presumably during the time that the alleged antitrust violations took place, transacted substantial business in this District, although it actually had left the jurisdiction before a suit was instituted. See Farmers Elevator Mut. Ins. Co. v. Carl J. Austad & Sons, Inc., 343 F.2d 7 (8th Cir. 1965); L'Heureaux v. Central American Airways Flying Service, Inc., 209 F.Supp. 713 (D.Md.1962).
The court cannot agree. The venue statutes are phrased in the present tense, clearly referring to the time that a complaint is filed with the court. Moreover, the Supreme Court of the United States has counseled us that "[t]he requirement of venue is specific and unambiguous; it is not one of those vague principles which, in the interest of some overriding policy, is to be given a `liberal' construction." Olberding v. Illinois Central Ry. Co., 346 U.S. 338, 340, 74 S.Ct. 83, 85, 98 L.Ed. 39 (1953). Finally, the
Plaintiffs assert that by the mere fact of doing business in this District prior to the institution of these suits, Cayuga has waived its objections to venue in this District. In Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167 (1939), the Supreme Court held that objections to venue in a federal district court could be waived when a corporation in compliance with a state statute regulating the conduct of affairs of foreign corporations within the state appointed a local agent for service of process upon it. The "actual" designation or appointment of such an agent creates a true contract of consent to be sued within the state. The consent extends to cases in federal courts, based upon federal causes of action as well as those in which diversity of citizenship is the basis of jurisdiction. Oklahoma Packing Co. v. Oklahoma Gas & Electric Co., 309 U.S. 4, 308 U.S. 530, 84 L.Ed. 447, 537 (1940).
In Sunbury Wire Rope Co. v. United States Steel Corp., 230 F.2d 511 (3d Cir. 1956), an antitrust suit was instituted in the federal district court for the Eastern District of Pennsylvania against a foreign corporation which had done business in Pennsylvania for several years but had removed itself from the state prior to the time that the antitrust suit was filed against it. The Court of Appeals for the Third Circuit held that the foreign corporation had waived its federal venue objections when, following Pennsylvania statutory law, in applying for leave to withdraw its Pennsylvania certificate of registration as a foreign corporation it had filed in the office of the Pennsylvania Secretary of the Commonwealth, a document which contained the following provision:
In construing this clause consenting to service along with Pennsylvania law in reference to the requirements applicable to foreign corporations doing business in Pennsylvania and later withdrawing therefrom, the Court of Appeals concluded that the corporation had not only consented to service upon it but had also consented to venue at the place where the suit was brought, that is, it had waived its venue privilege. Thus the venue section of the antitrust statute referred to above was satisfied.
In this connection, it must be pointed out that in the Neirbo case, the Supreme Court in upholding a finding of waiver of venue rights where a foreign corporation had in fact pursuant to a state statute appointed an agent for the service of process, distinguished the case In Re Keasbey & Mattison Co., 160 U.S. 221, 16 S.Ct. 273, 40 L.Ed. 402 (1895) where venue had been held not waived by the doing of business within the district of suit. The court in comparing the activities of the foreign corporation in both cases said that the "decisive difference * * * is that in the latter case [In Re Keasbey] the designation under state law which is the basis of consent had in fact not been made."
It is of course clear that there is a major difference between driving an automobile once within a state and transacting substantial business within the state, and that it is easier or more fair to imply consent to be sued in the latter situation.
Moreover, I recognize the unfairness that is created by a holding that a foreign corporation which complies with state law by appointing an agent for the service of process is subject to suit in a federal court in that state (as in Sunbury) but a foreign corporation which does business in a state without registering and appointing a process agent, in violation of state law, can by not following state registration law avoid liability in federal court for the consequences of its activities within that state. However, it must be remembered that the Supreme Court has specifically required "actual consent" to be sued as a basis for a finding that venue objections have been waived and has further counseled us that the requirements of venue are specific and unambiguous and are not to be given a liberal construction in the interest of some alleged overriding policy.
There are situations where non-residents of Pennsylvania are subject to service of process from Pennsylvania courts merely because they did something in that state, such as non-resident motorists (75 P.S. § 1201 et seq.), non-resident shipowners (12 P.S. § 336 Pocket Parts) and non-resident property owners (12 P.S. § 331 et seq.). However, there does not appear to be any Pennsylvania statute specifically permitting suit against an unregistered foreign corporation in a Pennsylvania federal court on an antitrust cause of action not necessarily arising within Pennsylvania, merely because that corporation at some time in the past did business within that state. Indeed, it is doubtful that if there were such a statute it could validly be applied in such a way as to interfere with a federal venue right. See McCoy v. Siler, 205 F.2d 498 (3d Cir. 1953); Olberding v. Illinois Central Ry. Co., 346 U.S. 338, 74 S.Ct. 83, 98 L.Ed. 39 (1953).
I conclude therefore that the mere doing of business in this District without the actual appointment of an agent for the service of process is insufficient
The venue requirements as to Cayuga were not met when the independent suits were started against it. Cayuga never consented to these suits. Consequently each of the thirteen independent suits filed January 4 and 5, 1965, which include Cayuga as a defendant, must be dismissed as to Cayuga Rock Salt Company.
And now, this 9th day of November, 1965, it is ordered and decreed (1) That the motion of Cayuga Rock Salt Company to dismiss for improper venue the complaints and amended complaints of the intervening plaintiffs in the class action instituted by the City of Philadelphia and docketed as Civil Action No. 33781, and the motion of Cayuga Rock Salt Company to quash the return of service of intervenor plaintiffs' complaints in this class action are denied.
(2) That the motions of Cayuga Rock Salt Company to dismiss for improper venue the complaints of Muskegon County Road Commission, Board of County Road Commissioners of the County of Wayne, Michigan, City of Grand Rapids, Michigan, City of Livonia, Michigan, City of Holland, Michigan, City of Detroit, Michigan, City of Pittsburgh, Pennsylvania, Washtenau County Road Commission, City of Dearborn, Michigan, Board of County Road Commissioners of the County of Oakland, Michigan, City of Lansing, Michigan, County of Allegheny, Pennsylvania, Board of County Road Commissioners of the County of Macomb, Michigan, docketed in this court as Civil Actions Nos. 37159, 37160, 37161, 37162, 37163, 37164, 37165, 37166, 37167, 37168, 37169, 37173 and 37174, are granted as to Cayuga Rock Salt Company and the said complaints against Cayuga Rock Salt Company are dismissed.
On Motions of Salt Service, Inc. and Pioneer Salt Co. to Dismiss No. 33781.
Defendants, Salt Service, Incorporated and Pioneer Salt Company, have filed motions to dismiss this class action on the grounds that unlike the other defendants which are major national producers of rock salt they are only local distributors whose sales have been substantially geographically limited to this area of the country and who have had little dealing with most of the party plaintiffs in this case. Salt Service and Pioneer consequently argue that it is manifestly unfair to subject them to the burdens of defending a class suit averring a national conspiracy.
On the other hand, it is apparent from the statements contained in plaintiffs' complaints that defendants Salt Service and Pioneer are alleged to have been co-conspirators with the national producers in a conspiracy to restrain competition and fix rock salt prices, a conspiracy which allegedly damaged each and every plaintiff in this action because of the resulting artificially high prices paid for rock salt by the plaintiffs. Moreover, it appears that Salt Service in fact dealt directly with the City of Philadelphia and the Pennsylvania Turnpike Commission selling them substantial amounts of rock salt during the period of the alleged conspiracy and that Pioneer likewise sold substantial amounts of rock salt to the City of Philadelphia during the period of the alleged conspiracy. Accordingly, it cannot be considered unfair or unreasonable to require Pioneer and Salt Service to defend this suit together with the large producer defendants. All are alleged to have engaged in the same national conspiracy; all are alleged to have participated in causing the damages suffered by plaintiffs. Consequently the motion to dismiss
On Motions of International Salt Co. and Salt Service Inc. to Dismiss No. 33781.
Two of the defendants in this antitrust case, International Salt Company and Salt Service Incorporated, have filed motions to dismiss this action asserting that it is an invalid class action.
Rule 23 of the Federal Rules of Civil Procedure provides:
The City of Philadelphia instituted this suit on July 1, 1963 and asserted in its complaint that it was representing a class "consisting of all state and municipal governments, governmental agencies and governmental subdivisions using rock salt for de-icing and water softening purposes and generally purchasing rock salt by sealed bids * * * which have been injured by the unlawful conspiracy hereinafter alleged." It was averred that the conspiracy referred to was a national conspiracy to fix prices joined in by all the defendants as a result of which the plaintiff and all the prospective intervening plaintiffs suffered damages.
Although there is nothing in the record of this case to indicate how many members there are in this class, the court can take judicial notice of the fact that there are thousands of governmental units in this country; it is obvious therefore that it would be impracticable from the standpoint of efficient judicial administration to require all the members of this class to come before the court. The City of Philadelphia has alleged in its complaint that it "will fairly insure the adequate representation of the entire class" and no allegation to the contrary appears in defendants' motions before the court at this time.
Finally, it is clear that the requirement of Rule 23(a) (3) that there be a common question of law or fact affecting the several rights of the members of the class against defendants and that a common relief be sought, is satisfied in the case. The existence or nonexistence of the alleged conspiracy to fix prices and the acts and conduct asserted as establishing this conspiracy, are the common questions of law and fact in this case; the common relief sought by the class here is money damages even though the amounts sought by each plaintiff may vary in amounts.
Hence it would appear that all the requirements for a valid class action have been satisfied in this case. Defendants argue, however, that "the uncommon issues of law and fact involved in the claims predominate over common issues * * * [and that the] members of the alleged class are so varied in size, type,
In Independence Shares Corporation v. Deckert, 108 F.2d 51 (3d Cir. 1939), reversed on other grounds 311 U.S. 282, 61 S.Ct. 229, 85 L.Ed. 189 (1940), a spurious class action was brought by a shareholder who averred that he and many other shareholders were defrauded when certain shares of the involved corporation were issued to them. The plaintiffs brought their suit as a spurious class action asserting a cause of action under the Securities Act of 1933. In its opinion deciding that the complaint stated a proper spurious class action, the Court of Appeals said, at 55:
I conclude that this is a proper class action under Fed.R.Civ.P. 23(a) (3) and accordingly the motion to dismiss will be denied.