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STRICK CORP. v. CRAVENS HOMALLOY LTD.

December 29, 1972

STRICK CORPORATION
v.
CRAVENS HOMALLOY (SHEFFIELD) LTD. et al.


Bechtle, District Judge.


The opinion of the court was delivered by: BECHTLE

Defendant, Cravens, Homalloy (Sheffield) Ltd., (hereinafter Cravens) is a foreign corporation, with its principal place of business in Great Britain. Plaintiff, Strick Corporation (hereinafter Strick), is a Pennsylvania corporation with its principal place of business in Fairless Hills, Pennsylvania. On June 9, 1966, these two parties entered into a five-year licensing agreement which provided Cravens with a license to produce Strick trailers, containers, and related equipment in England. For this five-year period, Strick was also required to provide Cravens with the following data: copies of drawings and designs, sales literature, information regarding improvements, findings of market surveys, the right to use the trade name "Strick" and the right to visit Strick factories to learn production methods.

 At the termination of the five-year period covered by the agreement, Strick alleges that Cravens continued to manufacture and sell Strick trailers and equipment, notwithstanding the absence of a license to do so.

 On September 1, 1971, Strick instituted an action against Cravens by filing a two-count complaint. Count one of the complaint alleges misappropriation of business, trade secrets and good will, and asserts jurisdiction under 28 U.S.C. § 1332. Count two alleges a cause of action arising under Patent Law, 35 U.S.C. § 271 et seq., for patent infringement, with jurisdiction based on 35 U.S.C. §§ 281 and 283, and 28 U.S.C. § 1338.

 Strick attempted to serve the complaint upon Cravens by (1) service upon the Secretary of the Commonwealth pursuant to the Pennsylvania "long-arm" statute, 15 P.S. § 2011 and Fed.R.Civ.P. 4(d)(7); (2) issuing writs of foreign attachment purporting to seize debts owing to Cravens by persons within this district; *fn1" and, (3) personal service upon an officer of Cravens within this district. Presently before this Court is defendant Cravens' motion to dismiss and quash service of the complaint. Cravens claims that the attempted service upon it under each of the above-mentioned methods is invalid. In addition, it alleges that subject matter jurisdiction is lacking in this Court by reason of an arbitration clause in the June 9, 1966, leasing agreement; and, that venue does not lie in this district.

 For the reasons stated below, this Court finds the defendant's motion without sufficient merit to warrant the granting of the relief requested.

 I. SERVICE OF PROCESS

 Rule 4(d)(7) of the Fed.R.Civ.P. provides for the service of Federal process in conformity to the practice of the state in which the forum Federal Court sits. Accordingly, the validity of service in this instance is governed by § 1011 of the Pennsylvania Business Corporation Law, 15 P.S. § 2011 (more commonly known as the "long-arm" statute). That statute provides in part:

 
"B. Any foreign business corporation which shall have done any business in this Commonwealth, without procuring a certificate of authority to do so from the Department of State, shall be conclusively presumed to have designated the Secretary of the Commonwealth as true and lawful attorney authorized to accept, on its behalf, service of process in any action arising within this Commonwealth. . . ."

 The requirement of "doing business" is defined in the next section of the statute:

 
"C. For the purposes of determining jurisdiction of courts within this Commonwealth, the doing by any corporation in this Commonwealth 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' . . ."

 Whether defendant, Cravens, was "doing business" in Pennsylvania within the meaning of this statute is one of the decisive questions upon which disposition of its motion lies. After carefully considering all of the leading cases on point, which both sides ably briefed, we answer this question in favor of the plaintiff, Strick.

 Strick has the burden of proving that Cravens was "doing business" in Pennsylvania at the time of the purported service. Optico Corporation v. Standard Tool Company, 285 F. Supp. 46, 48 (E.D.Pa.1968). Whether or not a corporation is "doing business" in Pennsylvania is a matter of fact to be resolved in a case-by-case basis and not by the application of a mechanical rule. Campbell v. Triangle Corporation, 336 F. Supp. 1002 (E.D.Pa.1972). The relevant facts surrounding this issue which have been educed from the pleadings, briefs and oral argument on this motion are as follows:

 (1) Cravens has no offices in Pennsylvania; (2) Cravens owns or leases no real property in Pennsylvania; (3) Cravens is not registered or licensed to do business in Pennsylvania; (4) Cravens has never paid any taxes to any governmental body in Pennsylvania; (5) Cravens has never had a telephone listing in Pennsylvania; (6) Cravens has never advertised in any manner in Pennsylvania; (7) Cravens has no bank accounts in Pennsylvania; (8) Cravens has no employees whose place of business is in Pennsylvania; (9) Cravens has never invested any capital in Pennsylvania; (10) Cravens has never shipped any products directly or indirectly into Pennsylvania; (11) between June, 1966, and April, 1971, representatives of Cravens made thirty-eight (38) trips to Fairless Hills, Pennsylvania, in connection with the license ...


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