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INPACO, INC. v. MCDONALD'S CORP.

January 9, 1976

INPACO, INC., Plaintiff
v.
McDONALD'S CORPORATION, Defendant



The opinion of the court was delivered by: DITTER

 Rather than "doing it all for you," McDonald's Corporation claims in a motion now before the court that it does nothing for anybody in Pennsylvania. Believing its ad men have assessed the situation more accurately than its lawyers, I deny McDonald's motion to dismiss this diversity action for lack of jurisdiction.

 The plaintiff, Inpaco, Inc., instituted suit against McDonald's Corporation for breach of an alleged contract under the terms of which the defendant agreed to purchase a food sauce dispensing system to be designed by plaintiff for use in McDonald's popular fast-food restaurants. When defendant sought dismissal of the complaint pursuant to Fed. R. Civ. Proc. 12(b)(2), its motion was denied. In response to defendant's request to reconsider, I vacated the original order of dismissal and the parties proceeded with discovery aimed at the jurisdictional issue. Discovery having been completed, the motion to dismiss is before me once again.

 McDonald's Corporation is incorporated under the laws of Delaware and has its executive offices and principal place of business in Oak Brook, Illinois. Inasmuch as McDonald's Corporation is not licensed or qualified to do business in Pennsylvania, service of process in this action was carried out pursuant to the Commonwealth's "long-arm" statute, 42 P.S. § 8302 and Fed. R. Civ. Proc. 4(e). Section 8302 provides that a non-qualifying foreign corporation which does any business in Pennsylvania is conclusively presumed to have designated the Department of State as its agent for accepting service of process in any action arising in this Commonwealth. For a definition of the conduct which constitutes doing business under § 8302 reference must be made to § 8309. The latter section, in pertinent part, provides:

 
§ 8309. Acts affecting jurisdiction
 
(a) General rule. -- Any of the following shall constitute "doing business" for the purposes of this chapter:
 
(1) The doing by any person in this Commonwealth of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object.
 
(2) The doing of a single act in this Commonwealth for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object with the intention of initiating a series of such acts.
 
(4) The engaging in any business or profession within this Commonwealth, whether or not such business requires license or approval by the Commonwealth or any of its agencies.
 
(5) The ownership, use or possession of any real property situate within this Commonwealth.
 
(b) Exercise of full constitutional power over foreign corporations. -- In addition to the provisions of subsection (a) of this section the jurisdiction and venue of courts of the Commonwealth shall extend to all foreign corporations and the powers exercised by them to the fullest extent allowed under the Constitution of the United States.

 The plaintiff advances three arguments in support of its contention that this court has jurisdiction over the defendant. First, it is argued that the defendant itself has had sufficient contacts with Pennsylvania to come within the definition of "doing business" in § 8309(a). Second, the plaintiff contends that the defendant was doing business in Pennsylvania through subsidiary corporations which acted as its "alter-ego" and that the defendant thereby became subject to in personam jurisdiction under § 8309(a). Lastly, the plaintiff claims that the defendant is subject to the jurisdiction of this court under § 8309(b). Because I find the defendant's own contacts with Pennsylvania to be sufficient to confer jurisdiction in this court under either § 8309(a) or § 8309(b), it is unnecessary to consider plaintiff's alter ego theory.

 Although the record *fn1" before me contains a wealth of information concerning the manner in which the defendant conducts most of its extensive business in Pennsylvania through its two wholly owned subsidiaries, McDonald's Systems, Inc. and Franchise Realty Interstate Corp., in view of the basis of my decision, the only relevant facts are these. The alleged contract which is the subject of this litigation was entered into by the parties on March 27, 1972. The record contains no indication of where the contract was made, but it called for the plaintiff, whose principal place of business is Allentown, Pennsylvania, to develop and produce a system of dispensing food sauces which would be suitable for use by a fast food restaurant chain. Thus, the parties must have envisioned that at least a substantial portion of the contract would be performed in Pennsylvania. In fact, the affidavit of William C. Christine, president of plaintiff, states that the agreement provided that all the work other than on-site testing was to be accomplished at plaintiff's plant in Allentown. The Christine affidavit also states that there was considerable correspondence between the representatives of the defendant in Oak Brook, Illinois, and Christine in Allentown concerning the agreement and its performance in Allentown. The defendants have not controverted any of these allegations. In addition, it is undisputed that after the formation of the contract on at least two occasions, January 11, 1973, and February 1, 1973, a representative of the defendant met with ...


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