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GIULIANO v. ALITALIA AIRLINES

June 10, 1963

William GIULIANO
v.
ALITALIA AIRLINES, INC.



The opinion of the court was delivered by: CLARY

Defendant, a nonregistered foreign corporation, has moved to dismiss this action for lack of jurisdiction and to quash service of the summons and complaint on the grounds that defendant is neither present nor doing business within the jurisdiction of the Court.

 The jurisdiction of the Court is invoked upon the basis of diversity only, the plaintiff being a citizen of the Commonwealth of Pennsylvania, and the defendant an Italian corporation not registered in Pennsylvania. The District Court, in diversity suits of this nature, must rely upon State standards of service of process. Florio v. Powder Power Tool Corp., 248 F.2d 367 (3 Cir. 1957); Partin v. Michaels Art Bronze Co., Inc., 202 F.2d 541 (3 Cir. 1953); Allentown Record Co., Inc. v. Agrashell, Inc., 101 F.Supp. 790 (E.D.Pa.1951); Strauss v. Delta Air Lines, Inc., 207 F.Supp. 120 (1962).

 Traditionally, the Pennsylvania Supreme Court has subjected to impersonam jurisdiction only those nonregistered foreign corporations which are found to be doing business within the Commonwealth. In Shambe v. Delaware & Hudson R.R. Co., 288 Pa. 240, 135 A. 755 (1927), it was held that the mere solicitation of business did not constitute the doing of business in Pennsylvania. This rule was affirmed in Lutz v. Foster & Kester Co., Inc., 367 Pa. 125, 79 A.2d 222 (1951) and Law v. Atlantic Coast Line R.R. Co., 367 Pa. 170, 79 A.2d 252 (1951). The Lutz case held that a foreign corporation is not doing business within Pennsylvania unless its local solicitors have authority to bind the corporation. Subsequently, the Pennsylvania Business Corporation Law, 2852-1011 was amended by the addition of subsection C, a much expanded definition of doing business. This amendment is limited in application to causes of action arising out of acts or omissions of the corporation within the Commonwealth, and to that extent overrules the Shambe, Lutz and Law cases. Rufo v. The Bastian-Blessing Co., 405 Pa. 12, 173 A.2d 123 (1961), Florio v. Powder Power Tool Corp., supra. However, the 'solicitation plus' rule of these cases still retains vitality in those areas not precluded by Section 2852-1011.

 The original subsection C was enacted in 1951 (1951-52 Laws of Pa., p. 1489) and was repealed in 1957 (1957 Laws of Pa., p. 766). It was re-enacted in 1959 (1959 Laws of Pa., p. 1436) and stands today with only slight alteration from the original form:

 'C. For the purposes of this section, the entry of any corporation into this Commonwealth for the doing of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object, or doing a single act in this Commonwealth for such purpose, with the intention of thereby initiating a series of such acts, shall constitute 'doing business'.' 15 P.S. ┬ž 2852-1011, sub. C (sup. 1962).

 Were this definition applicable to the instant case, there would be no question that defendant Alitalia is doing business in Pennsylvania. However, the definition of subsection C is limited by its terms ('For the purposes of this section * * *') to Section 2852-1011 of the Business Corporation Law. Subsection A concerns only registered foreign corporations; subsection B, only nonregistered foreign corporations, where the cause of action arises out of acts or omissions of the corporation within the Commonwealth. Thus, it is only in these limited circumstances that the new statutory definition applies.

 But the 'solicitation plus' standard of the Pennsylvania cases was applicable to all foreign corporations against which service of process was attempted. Thus, my colleague Judge Luongo recently found that 'except to the limited extent that it has been modified by the amendment to the Business Corporation Law, the 'solicitation-plus' standard of doing business is still followed in Pennsylvania * * *', Strauss v. Delta Air Lines, Inc., supra, 207 F.Supp. at 123. There were no State Supreme Court or higher Federal decisions on this precise issue to guide Judge Luongo, and there have been none since, but I agree that the Pennsylvania Supreme Court would reach this same result. If subsection C were read as completely overruling the 'solicitation plus' doctrine of Shambe, Lutz and Law, then no action arising out of acts or omissions outside Pennsylvania could be maintained in Pennsylvania against a foreign, nonregistered corporation, even if it was in fact doing an extensive amount of business. While Pennsylvania does not have to permit such actions and could refuse to exercise jurisdiction over them, they were allowed prior to subsection C. As there is nothing in the language of that amendment indicating any change of the law in this regard, the Court cannot be so bold as to guess that there has been a change. Subsection C only expands 'doing business' in certain cases; it certainly does not curtail jurisdiction in the other cases to which the rule of 'solicitation plus' must still be applied.

 Neither can the Court accept the theory that although subsection C directly applies only to cases under Section 2852-1011, the broad statement of the definition therein is indicative of a legislative policy that the 'solicitation plus' rule should also be applied more broadly. The 'solicitation plus' rule is not a mere 'policy'; rather it is an unusually definite rule of law set out quite clearly by the Pennsylvania Supreme Court in Shambe. Had the Legislature intended such a sweeping revision, it could quite easily have done so.

 Alitalia is a commercial airline organized under the laws of the Republic of Italy. It has no aircraft located in Pennsylvania and operates no regularly scheduled flights into or out of the State, but has flown five charter flights out of Philadelphia in the last three years and will fly more if business demands. On at least one occasion, an Alitalia jet has landed at Philadelphia's International Airport when the weather in New York was inclement. The closest regular terminus of defendant is New York International Airport where an average of three flights arrive and leave each day.

 Two offices, employing eleven persons, are operated in Philadelphia at 1704 and 1801 Pennsylvania Boulevard. Both offices and the employees are supervised by the District Sales Manager whose jurisdiction extends over defendant's operations in central and southern New Jersey, Delaware and Pennsylvania, east of and including Altoona. No property is owned in Pennsylvania other than office furniture and supplies. Defendant describes its Pennsylvania operations as the solicitation of passengers and cargo traffic and the dissemination of information to prospective passengers and shippers.

 A passenger desiring to travel on an Alitalia flight can purchase a ticket and secure a reservation at one of defendant's Philadelphia offices. However, defendant's employee in Philadelphia must first obtain a confirmation of the reservation from the New York reservation department. There are also roughly 120 travel agents in Pennsylvania who are authorized to sell defendant's tickets. These agents also contact New York to secure confirmation of space. Once confirmation is received, the travel agent issues the ticket, collects the money, deducts his commission, and remits the balance to the Philadelphia office. The Philadelphia office deposits all money received for tickets and freight in a depository account with a Philadelphia bank from which only the New York office can make withdrawals. In 1962 the Philadelphia office handled roughly one million dollars in collected fares and charges.

 Defendant's freight operation in Philadelphia is not fully explained in the present state of the record. Alitalia has no provisions for carrying freight from any place in Pennsylvania to the New York terminal. However, the Philadelphia office is able to issue waybills and also makes arrangements with other carriers ...


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