On Motion to Strike Filed March 2, 1981.
On July 9, 1980, appellants moved to strike portions of appellees' brief. A motions panel referred the matter to the panel assigned to hear and decide the appeal. On January 30, 1981, prior to oral argument, the court ordered:
Appellants' motion to strike appellees' discussion of D.C.Code § 13-423(b) is denied. The request is frivolous. Appellants seek jurisdiction over appellees under D.C.Code § 13-423, the District of Columbia's "long-arm" statute. Subsection (b) is an integral part of that statute, one that this court cannot ignore while considering appellants' arguments.
The requests to strike appellees' references to facts outside the record and to the Fed.R.Civ.P. 12(b)(6) motion, unresolved by the district court, are also denied. While appellants' motion is not frivolous in these respects, motions to strike, as a general rule, are disfavored
Opinion for the Court filed by Circuit Judge GINSBURG.
GINSBURG, Circuit Judge:
In this trademark infringement case, two German plaintiffs seek district court adjudication of their claims against an Australian wine producer, its Australian subsidiary, a New York importer, and a District of Columbia liquor store. The claims relate to sales of the Australian defendants' wine in the United States generally and in this District specifically. The district court held that it lacked personal jurisdiction over the Australian defendants. It then declared those defendants "indispensable parties." On that basis, it held that the action could not proceed solely against the New York and District of Columbia defendants. Accordingly, the district court dismissed the entire case. We reverse and direct reinstatement of the action as to all defendants. We hold that the District of Columbia long-arm statute authorizes adjudication of the claims against the Australian wine companies, and that the district court improperly dismissed the claims against the New York importer and District of Columbia retailer.
Zentralkellerei Badischer Winzergenossenschaften (ZBW) is a German cooperative association that produces and sells "Kaiserstuhl-Tuniberg" wines. Stabilisierungsfonds Fur Wein (SFW) is a German organization that maintains the quality and promotes the sale of German wines. ZBW and SFW assert that the names "Kaiserstuhl" and "Kaiserstuhl-Tuniberg" are common law certification marks
Barossa Co-operative Winery (Barossa) is an Australian corporation that produces wines labelled "Kaiser-Stuhl" and markets the wine in the United States. Barossa exports Kaiser-Stuhl wines to the United States through its wholly owned Australian subsidiary, Kaiser Stuhl Wine Distributors (Kaiser). Kaiser ships the wines to two exclusive United States importers, Victoire Imports Co. in San Francisco and Peartree Imports Co. in New York. Victoire distributes the wine in the western United States and Peartree, in the eastern part of the country. One of the east coast retailers that has purchased Australian Kaiser-Stuhl wine from Peartree is A & A Liquors, a District of Columbia liquor store that also sells German Kaiserstuhl-Tuniberg wine.
In October 1978, ZBW and SFW initiated this suit to halt the distribution of Australian wines bearing the Kaiser-Stuhl label. They sued Barossa, Kaiser, Peartree, and A & A Liquors in the United States District Court for the District of Columbia. Count I of the complaint alleged that defendants' distribution of Kaiser-Stuhl wine violated § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1976), infringed SFW's common law rights in the marks Kaiserstuhl and Kaiserstuhl-Tuniberg, and constituted unfair competition. Count II alleged that defendant Kaiser had wrongfully obtained registration of the Kaiser-Stuhl mark on the United States Supplemental Register, see 15 U.S.C. § 1091 (1976), by representing that the name Kaiser-Stuhl distinguished its wine from other wines. The plaintiff requested, inter alia, an injunction against further infringement and an order striking the name Kaiser-Stuhl from the Supplemental Register.
The Australian defendants, Barossa and Kaiser, moved to dismiss, pursuant to Fed.R.Civ.P. 12(b)(2), for lack of personal jurisdiction. The United States defendants, Peartree and A & A, moved to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted. The district court agreed that it lacked jurisdiction over the Australian defendants and granted their 12(b)(2) motion. The court did not reach the Peartree and A & A 12(b)(6) motion. Instead, it held sua sponte, without benefit of briefs or argument, that the Australians were indispensable parties. It therefore dismissed the entire suit under Fed.R.Civ.P. 19(b).
II. Adjudicatory Authority Over the Australian Defendants
A motion to dismiss for lack of jurisdiction over the person requires inquiry at two levels. In United States jurisprudence, the outer boundaries of a court's authority to proceed against a particular person or entity is set for federal tribunals by the due process clause of the Fifth Amendment and for the state courts by the due process clause of the Fourteenth Amendment.
In this case, judicial jurisdiction in the constitutional sense concededly exists with respect to all defendants and no question is raised concerning the court's competence with respect to defendants Peartree and A & A Liquors. Defendants Kaiser and Barossa claim in support of the Rule 12(b)(2) dismissal that no rule of competence authorizes the district court to exercise judicial jurisdiction over them. However, counsel for the Australian defendants acknowledged at oral argument that requiring those companies to defend this action in the District of Columbia does not offend due process. Kaiser ships Barossa's wine to Peartree, a New York importer with exclusive authority to distribute the wine throughout the eastern part of the United States. The Australian defendants thus have arranged for introduction of their wine into the United States stream of commerce with the expectation (or at least the intention and hope) that their products will be shelved and sold at numerous local outlets in diverse parts of the country. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S.Ct. 559, 567-568, 62 L.Ed.2d 490 (1980); Oswalt v. Scripto, Inc., 616 F.2d 191, 199-200 (5th Cir. 1980). As defendants recognize, therefore, the links between the claims in suit and the Australian defendants' arrangements to develop and serve a market in the United States make the district court here a fair and reasonable forum, within due process constraints, for the action plaintiffs have brought.
Turning to the contested issue, does an applicable rule of competence authorize
We explain first why federal courts, in cases such as this one, refer to local statutes or rules governing competence. In some areas, Congress has delineated the reach of the federal courts — the length of the court's arm — with respect to nonresident defendants by providing for nationwide service of process or service wherever defendant is "doing business" or "may be found."
We note that in this case involving alien defendants and some federal claims, application of the local long-arm statute "produce[s] perplexities" since the statute was drafted from the point of view of the District community, not from the perspective of the nation as a whole. von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L.Rev. 1121, 1124 n.6 (1966). Under these circumstances, it might be appropriate for the federal courts to disregard aspects of the state statute and state court interpretations of it that do not fit the federal frame of reference. See id. at 1125 n.6.
The District's long-arm statute authorizes the exercise of personal jurisdiction over nonresident defendants in six situations. The first subsection, as noted above, allows the court to proceed when the claim arises out of any business the nonresident transacts in the District. D.C.Code § 13-423(a)(1) (1973). The District of Columbia Court of Appeals has declared that this clause "permit[s] the exercise of personal jurisdiction over nonresident defendants to the extent permitted by the due process clause of the United States Constitution." Environmental Research International, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808, 810-11 (D.C.1976) (en banc).
While Kaiser and Barossa have not personally entered the District to conduct business,
As a consequence of their access to District consumers and the placement of their wine on a local retailer's shelf, Kaiser and Barossa may invoke "the benefits and protection[s]" of local law. See Environmental Research International, supra, 355 A.2d at 812 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958)). That law safeguards their Kaiser-Stuhl mark against infringement by producers with an inferior claim to the Kaiser-Stuhl name.
In sum, we conclude that the Australian defendants, as foreign producers who anticipate and seek sales of their goods in a market that includes the District of Columbia, transact business here within the meaning of D.C.Code § 13-423(a)(1) (1973),
Moreover, we believe that subsection (a)(4) of the District's long-arm statute provides an alternate basis for upholding the exercise of personal jurisdiction over Kaiser and Barossa. That subsection provides for suit against a nonresident "who caus[es] tortious injury in the District of Columbia by an act or omission outside the District" so long as the nonresident "regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia." D.C.Code § 13-423(a)(4) (1973). Kaiser and Barossa act in Australia, where they attach the disputed mark to their wine, and are alleged to cause an injury in the District, where the Australian and German wines are sold side-by-side. But subsection (a)(4) requires something more. Defendants must engage in a "persistent course of conduct" or derive "substantial revenue" from sales here.
Kaiser and Barossa do not deny that they derive "substantial revenue" from sales in the United States. They assert, however, that revenue from sales in the District is insubstantial. In absolute and percentage terms, their characterization may be accurate.
The District of Columbia Court of Appeals, however, has noted that "[t]he concept of cause of action or claim for relief [in subsection (b)] should be broadly construed to cover an entire transaction so that, when possible, the entire dispute may be settled in a single litigation." Cohane v. Arpeja-California, Inc., 385 A.2d 153, 159 (D.C.) (quoting Uniform Interstate & International Procedure Act (13 U.L.A.) § 1.03, Commissioners' Comment, at 288 (1975)), cert. denied, 439 U.S. 980, 99 S.Ct. 567, 58 L.Ed.2d 651 (1978). Plaintiffs ZBW and SFW allege one encompassing injury, the sale of wine with a label that infringes their common law certification mark. Cancellation of defendants' registration of the Kaiser-Stuhl mark is properly perceived as one of the remedies plaintiffs seek for that injury. We hold, therefore, that plaintiffs' cancellation demand "arises from" the activity that affiliates Kaiser and Barossa with the District under subsection (a) of the long-arm statute. Accordingly, the district court has adjudicatory authority to hear and decide the entire controversy.
III. Dismissal of Claims Against the United States Defendants
Since we hold that the district court has adjudicatory authority (both jurisdiction as determined by the Constitution, and competence pursuant to Rule 4(e)) over the Australian defendants with respect to the claims in suit, we must also reverse the district court's further determination dismissing the action in its entirety. Labelling the Australian defendants "indispensable parties," the district judge held that the claims against the United States defendants, distributor Peartree and retailer A & A Liquors, could not proceed.
The judgment of the district court is reversed and the case is remanded for proceedings consistent with this opinion.