R. LANIER ANDERSON, Circuit Judge:
The question before us in this diversity case is whether due process will permit the application of the Texas "Long-Arm" Statute to impose personal jurisdiction over Tokai-Seiki, a Japanese corporation. We find personal jurisdiction, and reverse. However, before addressing the merits, we must explain why this appeal is properly before us.
None of the parties to this appeal have raised the issue of appealability. Their failure to do so does not preclude this Court from addressing the question; it is well-established that a court may at any time, and sua sponte, determine whether it has jurisdiction. See Skidmore v. Syntex Laboratories, Inc., 529 F.2d 1244, 1248 n.3 (5th Cir. 1976); 5 Wright, Miller & Cooper, Federal Practice & Procedure, Civil, § 1350. Because the facts relevant to appealability in this case are somewhat convoluted, they require careful recounting.
On March 12, 1974, Mrs. Gene Oswalt was seriously burned when a "Catch 98" lighter, distributed by Scripto, allegedly malfunctioned, catching Mrs. Oswalt's pajamas on fire. Seeking to recover damages, Mrs. Oswalt and her husband sued Scripto and Tokai-Seiki, which the Oswalts alleged was the manufacturer of the lighter. Scripto subsequently filed a cross-claim against Tokai-Seiki,
On February 28, 1977, after a hearing on the issue of personal jurisdiction, the district court entered an order dismissing Tokai-Seiki. In response to this dismissal, the Oswalts and Scripto filed a Joint Motion for Permission to Appeal. One of the representations made to the district court in this Joint Motion was that the Oswalts had:
This Joint Motion was signed by both the Oswalts' and Scripto's attorneys. The district court granted the Oswalts' and Scripto's motion, and made the representations under 28 U.S.C.A. § 1292(b)
Undeterred by this court's refusal to hear their appeal, the Oswalts and Scripto then filed with the district court a Joint Motion to Sever the actions by Scripto against Holland-Hessol Company and the action by Holland-Hessol Company against Ameretex. In this Joint Motion, they repeated the representations concerning their settlement and the Oswalts' agreement not to prosecute their claim against Scripto. The district court granted this Joint Motion, and in addition entered a new Order, repeating in substance the order of February 25, 1977, as well as a Judgment, dismissing Tokai-Seiki for lack of personal jurisdiction. Because the Oswalts and Scripto this time did not request any 28 U.S.C.A. § 1292(b) representations, none were given. Nor did the district court give a Rule 54(b) certificate as is permitted by the Federal Rules of Civil Procedure.
After these procedural maneuvers by the Oswalts and Scripto, the current status of the case is as follows: (1) the Oswalts, Scripto and Tokai-Seiki are the only parties
It is the fact that there is no final order or judgment dismissing the claim by the Oswalts against Scripto which raises the question of whether the judgment below is final. See 28 U.S.C.A. § 1291.
We begin our analysis by noting that the representation to the district court of a settlement between the Oswalts and Scripto, and their agreement that the Oswalts would not further prosecute their claim against Scripto, is tantamount to a stipulation of dismissal under Fed.R.Civ.P. 41(a)(1)(ii).
We are not deterred in reaching this decision by the fact that Rule 41(a)(1) refers to dismissals of an "action" by notice or stipulation. While the Second Circuit in Harvey Aluminum, Inc. v. American Cyanamid Co., 203 F.2d 105 (2nd Cir. 1953), cert. denied 345 U.S. 964, 73 S.Ct. 949, 97 L.Ed. 1383 (1953), has held that "action" in Rule 41 means the entire controversy, that view was rejected by this Court in Plains Growers, Inc., Fl. M. I. Co. v. Ickes-Braun Glass,
Nor are we deterred from finding a stipulated dismissal by the fact that there is no formal stipulation of dismissal entered in the record by the Oswalts or Scripto. This court approved a district court's finding that an oral dismissal of claims against defendants in the course of a trial was sufficient to constitute a dismissal under Rule 41(a)(1) even though there was no formal dismissal or stipulation filed with the clerk. Harkless v. Sweeny Independent School District of Sweeny, Texas, 554 F.2d 1353, 1360 (5th Cir. 1977), aff'g. in part, 388 F.Supp. 738, 749 (S.D.Tex.1975). The Tenth Circuit in Pipeliners Local has found that a verbal stipulation of dismissal in open court sufficed for the purposes of Rule 41(a)(1)(ii). Compare, Municipal Housing Authority for the City of Yonkers, supra. To require the filing of a formal document would be to countenance a mechanistic view of the Federal Rules of Civil Procedure and exalt form over substance.
Having found that the Oswalts' claim against Scripto was dismissed by stipulation, we conclude the dismissal of Tokai-Seiki results in the termination of the litigation in the district court. Compare Jetco, supra. Accordingly, the order dismissing Tokai-Seiki is appealable. We now turn to the merits of this appeal.
II. Personal jurisdiction over Tokai-Seiki.
Personal jurisdiction over Tokai-Seiki is urged pursuant to Texas' "Long-Arm" Statute, Article 2031b, Vernon's Tex.Rev.Civ.Stat.Ann.
The facts contained in the record pertinent to this issue are few and can be quickly stated. Tokai-Seiki manufactured the "Catch 98" cigarette lighter which allegedly malfunctioned and injured Mrs. Oswalt. Tokai-Seiki is a foreign corporation, incorporated under the laws of the Country of Japan. It has its principal place of business in Yokahama, Japan. There is no evidence in the record that Tokai-Seiki has now, or ever has had, any office, place of business, servant, employee or director in either the United States or Texas. There is
Kevin MacCarthy, Vice-President, Marketing of Scripto, stated in an affidavit that Scripto's records reflected that Scripto had an agreement with Tokai-Seiki whereby Scripto was the exclusive distributor of the Catch 98 lighter in the United States of America. He further swore that prior to Mrs. Oswalt's injury, Scripto had purchased several million of the lighters and had placed them in commerce for sale to the public in the United States of America. He stated that these lighters were marketed in "many of the states of the United States."
MacCarthy's affidavit is supplemented in the record by an affidavit by H. W. Sams, who stated that while he was President and Chief Executive Officer of Scripto, Inc., in January, 1973, he conducted negotiations with Tokai-Seiki concerning Scripto's purchase of the Catch 98 lighter.
The record indicates that in 1973, Tokai-Seiki manufactured 3,165,000 Catch 98 lighters, and in 1974 manufactured 4,667,000,
The district court in its order found that Tokai-Seiki "should have known or could expect the product would reach the forum." The district court nevertheless held that due process precluded jurisdiction on two grounds: (1) that no showing had been made that Tokai-Seiki had actual knowledge the lighter would be marketed in Texas as had been done in Coulter v. Sears, Roebuck & Co., 426 F.2d 1315 (5th Cir. 1970); and (2) that no showing was made of other contacts by Tokai-Seiki with the forum as were present in Jetco, supra, and Eyerly Aircraft Co. v. Killian, 414 F.2d 591 (5th Cir. 1969).
We agree with the district court that Tokai-Seiki did have reason to know or expect that the cigarette lighter would reach Texas. Three to four million such lighters were sold each year by Tokai-Seiki to Scripto pursuant to a distribution system which made Scripto the exclusive distributor in the United States and which included a customer with "national retail outlets."
A. Supreme Court Guidelines
The guiding principle of due process in the exercise of personal jurisdiction was announced by the Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), which allows states to exercise jurisdiction over non-residents who have such "minimum contacts" with the state "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. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), amplified this standard. Hanson states that due process requires "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." 357 U.S. at 253, 78 S.Ct. at 1240.
The trend of recent years has unquestionably been to expand the powers of the states to impose jurisdiction over defendants. As noted by the Supreme Court:
McGee v. International Life Insurance Co., 355 U.S. 220, 222-223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957). Despite this trend,
The warning that a state's power to impose jurisdiction is not without limits was relied upon in World-Wide Volkswagen, supra, the most recent Supreme Court pronouncement on this issue. In World-Wide Volkswagen, New York residents who had a year earlier purchased an automobile from a Massena, New York, retailer were injured in Oklahoma while driving to a new home. The Court held that due process would not permit Oklahoma to impose jurisdiction over the local retailer of the automobile or the New York automobile wholesale distributor who sold to retailers in New York, Connecticut and New Jersey. The Court rejected the argument that jurisdiction was afforded because the mobility of automobiles made it "foreseeable" that a purchaser in Massena, New York, might drive the automobile through Oklahoma. In rejecting that notion of "forseeability," the Court pointed to the "forseeability that is critical to due process analysis":
___ U.S. at ___, 100 S.Ct. at 567. In World-Wide Volkswagen, the plaintiffs had also sued the German manufacturer, Audi, and the American importer, Volkswagen. Neither defendant contested jurisdiction and, accordingly, the portion of the above quotation imposing jurisdiction upon them is dictum.
We believe that the imposition of personal jurisdiction over Tokai-Seiki comports with both the holding and dictum in World-Wide Volkswagen. The Supreme Court there noted that the only contact demonstrated in the record between both the local retailer and the New York wholesaler and Oklahoma was the single automobile involved in the suit. There was nothing in the record indicating that these defendants had in any way attempted to do business in Oklahoma; rather the Massena, New York, retailer sold only in Massena, and the wholesaler's sales were limited to New York, New Jersey and Connecticut. The facts in this case speak more strongly for the reasonableness and fairness of imposing personal jurisdiction over Tokai-Seiki. Tokai-Seiki delivered millions of the lighters to Scripto with the understanding that Scripto would be the exclusive distributor for the United States and that Scripto would be selling the lighters to a customer with national retail outlets. There is nothing in this record to indicate that Tokai-Seiki attempted in any way to limit the
Also, these facts place this case squarely within the dictum of World-Wide Volkswagen implying that jurisdiction over a foreign manufacturer such as Audi is constitutional. By utilizing the distribution network in the United States established by Scripto, Tokai-Seiki has made efforts to serve indirectly the market for its product in Texas. Tokai-Seiki, precisely as the dictum describes, "delivered its product into the stream of commerce with the expectation that they will be purchased by consumers in the forum state". The instant case fits like a glove the commercial context and the manufacturer's distribution plan for the marketing of its product contemplated by the World-Wide Volkswagen dictum.
We conclude that the guiding principles provided by the Supreme Court support jurisdiction over Tokai-Seiki. We turn now to the Fifth Circuit cases.
B. Fifth Circuit Cases
Our analysis begins with Coulter v. Sears, Roebuck & Co., 426 F.2d 1315 (5th Cir. 1970). In Coulter, this Court was called upon to decide whether due process prevented Texas from exercising jurisdiction over Warwick, a non-resident manufacturer of an allegedly defective television set distributed by Sears. The only evidence of contacts by Warwick with Texas was an affidavit by an official of Sears. This affidavit stated that "a great many of the color and black and white television sets manufactured by Warwick are and have been sold and offered by Sears in Texas, all with Warwick's knowledge." 426 F.2d at 1316. While this Court in Coulter noted that Warwick unquestionably knew that its products were being regularly marketed in Texas, it did not establish such actual knowledge as the touchstone of jurisdiction. Instead, this Court stated that it is sufficient to impose jurisdiction over a foreign manufacturer if he introduces his product into the "stream of interstate commerce with reason to know or expect that his product would eventually be brought into Texas", the forum state, 426 F.2d at 1318. We note that this test is almost identical to that in the World-Wide Volkswagen dictum.
In this case, the court below saw a significant distinction between the jurisdictional showing here and that in Coulter; here it has been shown that Tokai-Seiki introduced its products into the stream of commerce and should have known they would be marketed ultimately in Texas; in Coulter, it was shown that the manufacturer actually knew its products were marketed in Texas. We cannot assign such significance to this distinction. The traditional equivalence between "know" and "should have known" in our jurisprudence suggests that, for purposes relevant to this case, it is a distinction that makes no difference.
Tokai-Seiki, citing Coulter, Eyerly and Jetco, supra, makes an additional argument that two conditions must be met before jurisdiction can be imposed when a manufacturer does not have actual knowledge his product is entering a particular forum state: (1) there must be a reasonable expectation that the product will enter the forum state, and (2) there must be sufficient other contacts by the manufacturer with the forum state. Tokai-Seiki argues that this two prong test is established in the following language of Jetco:
473 F.2d at 1234. The district court relied on the same reasoning in its decision.
We acknowledge that the quoted language suggests that both conditions are necessary, but we note that the language is dictum. In Jetco, the defendant did have other contacts with the forum state on which the court could, and did, rely. Therefore, the court was not required to hold that other contacts are necessary when there is only a reasonable expectation. The fact that the Jetco language quoted above cites Eyerly and Coulter for authority further undermines Tokai-Seiki's argument.
In Eyerly, an Oregon manufacturer of carnival equipment sold a ride to a Chicago, Illinois, operator some 20 years before the injury giving rise to the suit. The Illinois operator sold the ride to a North Dakota operator who toured various states. While on tour in Texas, the plaintiff was injured in a fall from the ride. The manufacturer had substantial other contacts with Texas, having sold and serviced equipment there. In finding jurisdiction, Judge Goldberg relied on the dual grounds of reasonable expectation and other contacts, because both were present, but he was careful to reserve the question of whether the commission of a single tort would be sufficient without other contacts. 414 F.2d at 597-8. Thus, Eyerly does not lend authority to Tokai-Seiki's literal interpretation of the Jetco language.
Nor does Coulter support the interpretation. Although there was actual knowledge that the product was entering the forum state in Coulter, the Court noted the same two prong test, i. e., reasonable expectation and other contacts, and clearly stated that the first prong alone is sufficient. 426 F.2d at 1318.
Our conclusion is reinforced by the holding in Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961).
176 N.E.2d at 766. Tokai-Seiki's contacts with Texas are more substantial and direct than those in Gray.
We hold that the facts established in this case are sufficient to impose in personam jurisdiction on Tokai-Seiki. Tokai-Seiki sold three to four million cigarette lighters per year to Scripto as part of a distribution system for its product which included Scripto as the exclusive distributor in the United States and a customer of Scripto with national retail outlets. Tokai-Seiki should have known that its products would reach Texas in the normal course of the distribution chain. The lighter was in fact acquired by Mrs. Oswalt from a Texas drug store which acquired it from a Texas wholesaler. This case involves the commercial context and the precise marketing distribution system contemplated by the dictum in World-Wide Volkswagen and the holding in Coulter.
REVERSED AND REMANDED.
My name is R. Kevin MacCarthy. My address is 760 Piedmont Way, N.E., Atlanta, Georgia. I am employed by Scripto, Inc., as Vice President, Marketing. In this capacity, I have access to records of Scripto, Inc., concerning the Catch 98 disposable butane lighter that they have marketed.
A review of our records reflects that all of the Catch 98 disposable butane lighters were marketed in the United States by Scripto, Inc., were purchased from Tokai-Seiki, KK. Our records further reflect that according to our agreement with Tokai-Seiki, KK, Scripto, Inc., prior to March 12, 1974, was the exclusive distributor of Catch 98 disposable butane lighters in the United States of America, and prior to that date, Scripto, Inc., purchased several million of such Catch 98 disposable butane lighters and placed them in commerce for sale to the public in the United States of America. These Catch 98 disposable butane lighters were marketed in many of the states of the United States.
FURTHER AFFIANT SAITH NOT.
Before me the undersigned a notary public in and for said county and state on this day personally appeared H. W. Sams to me well known and who after being before me duly sworn, deposes and says:
My name is H. W. Sams. I reside at 955 West Wesley Road, Atlanta, Georgia. I am presently Chairman of the Board of Scripto, Inc. I have been employed by Scripto, Inc. for approximately 34 years.
During the years 1973 and 1974 prior to March 12 of that year, I was employed by Scripto, Inc. in the capacity of President and Chief Executive Officer. In such capacity I represented Scripto, Inc. in January, 1973, in assessing the manufacturing capabilities of Tokai-Seiki KK to supply an adequate volume of Catch 98 disposable butane lighters to Scripto, Inc. to meet its distribution needs. Said lighters were manufactured by Tokai-Seiki KK. In such capacity, I met in January, 1973, with the representatives of Tokai-Seiki KK in the Tokai-Seiki KK office situated in Japan.
At such meeting the potential market in the United States for such lighters was discussed. In particular, we discussed the needs of one particular Scripto customer for such lighters and Tokai-Seiki KK was informed that said customer had national retail outlets.
Tokai-Seiki KK expressed an intent to manufacture the Catch 98 disposable butane lighters in sufficient quantity to satisfy the orders submitted by Scripto on schedule.
Scripto, Inc. did sell such Catch 98 disposable butane lighters to the particular customer referred to in my meeting with Tokai-Seiki KK representatives in Japan. Tokai-Seiki KK supplied said butane lighters in keeping with the discussions in sufficient quantities to supply Scripto, Inc.
FURTHER AFFIANT SAYETH NOT.
Comparison should also be made to Duple Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d 231 (9th Cir. 1969), Saccamain v. Robert Reiser & Company, Inc., 348 F.Supp. 514 (W.D.Pa.1974), and Thornton v. Toyota Motor Sales U. S. A., Inc., 397 F.Supp. 476 (N.D.Ga.1975).