The opinion of the court was delivered by: BECHTLE
Plaintiffs, Russell P. Miller and Margaret Jane Miller, filed this action against American Telephone & Telegraph Company ("AT&T") and the named members of the Board of Directors of AT&T ("the individual defendants") involving a $1,500,000 debt alleged by plaintiffs to be due AT&T from the Democratic National Committee, principally for telephone and other communication services rendered at the 1968 Democratic National Convention in Chicago, Illinois, and during the 1968 Presidential campaign. Federal diversity jurisdiction was invoked under 28 U.S.C. § 1332 (1966).
This Court previously dismissed plaintiffs' first amended complaint for failure to state a claim upon which relief could be granted. 364 F. Supp. 648 (E.D. Pa. 1973). The Court of Appeals reversed that decision and remanded the case here, 507 F.2d 759 (3rd Cir. 1974), on the ground that the failure of AT&T to collect the debt conceivably constituted an illegal corporate campaign contribution in violation of 18 U.S.C. § 610 (1970) and, thus, a claim of breach of the individual defendants' fiduciary duty to the corporation was sufficiently stated by the complaint to withstand a motion to dismiss.
Subsequent to the decision of the Court of Appeals, plaintiffs filed a second amended complaint consisting of two counts. The first count sets forth a stockholders' derivative action against the defendants seeking monetary and injunctive relief. The second count, asserting private rights of action under the Federal Corrupt Practices Act, 18 U.S.C. § 610 (1970), and the Communications Act of 1934, 47 U.S.C. § 202 (1970), again seeks monetary and injunctive relief.
Before the Court are defendants' motions to dismiss the second amended complaint. The individual defendants move for dismissal of the complaint as to them for insufficiency of process and for lack of jurisdiction over the person of each of them. Alternatively, they move to dismiss Count II of the complaint as to them for lack of jurisdiction over the subject matter and for failure to state a claim against them upon which relief can be granted. Defendant AT&T moves to dismiss Count I of the complaint as to it for failure to state a claim upon which relief can be granted. AT&T moves to dismiss Count II as to it for lack of jurisdiction over the subject matter and for failure to state a claim upon which relief can be granted. For the reasons stated below, this Court agrees that plaintiffs' second amended complaint must be dismissed as to all of the defendants.
The facts relevant to a determination of these motions are not in dispute. Plaintiffs, citizens and residents of Pennsylvania, are the owners of 200 shares of AT&T common stock. At the end of June, 1974, there were outstanding approximately 557 million common shares and 48 million preferred shares of AT&T stock.
Defendant AT&T is a corporation organized and existing under the laws of the State of New York. It does business in Pennsylvania, but has its principal place of business and executive offices in New York City. The individual defendants were members of the Board of Directors of AT&T when this action began in 1972. None of them are citizens or residents of Pennsylvania,
and they reside in states scattered across the country: California, Georgia, Illinois, Massachusetts, New Jersey, Indiana, New York, North Carolina, Ohio, and Texas. Meetings of the Board of Directors of AT&T are normally held at the corporate headquarters in New York City, and at no time since September 1, 1968, the approximate date the debt arose, has the Board of Directors ever met in the Commonwealth of Pennsylvania. In fact, of the approximately 300 times the Board has met since 1952, only three of those meetings have been in Pennsylvania.
While they are related in substance, this Opinion will discuss separately the individual and corporate defendants' motions.
The Individual Defendants
The individual defendants' motion to dismiss the second amended complaint, pursuant to Fed. R. Civ. P. 12(b)(2) and (4), for insufficiency of process and for lack of jurisdiction over the person of each of them must be granted. Rule 4(d)(7) of the Federal Rules of Civil Procedure permits service of process upon an individual to be made in the manner prescribed by a statute of the state in which the District Court is located. Plaintiffs contend that proper service of process upon the individual defendants was made in compliance with the Pennsylvania "long-arm" statute, 42 Pa.S. § 8301 et seq. (Supp. 1974).
In particular, they rely on §§ 8304 and 8305 of that statute.
In determining this type of jurisdictional question, two issues are presented: First, whether the conduct of the defendants is within the relevant provisions of the statute; second, assuming the statutory requirements are satisfied, whether the application of those provisions to the particular circumstances of this case complies with the constitutional standard of due process of law. Each of the sections of the Pennsylvania statute alleged by plaintiffs to support the service of process here will be considered separately.
42 Pa.S. § 8304 provides, in pertinent part:
"§ 8304. Doing business by ...