The opinion of the court was delivered by: LUONGO
Plaintiffs in this case are L. Richard Feld and Nancy S.M.A. Feld, officers of the third plaintiff, Tele-View of Delaware Valley, a Pennsylvania corporation (Tele-View Pa.). Defendants are Tele-View, Inc., a California corporation (Tele-View Cal.); Richard M. Silverstein, president of Tele-View Cal.; William J. Hoffman, treasurer and director of Tele-View Cal.; and Ben Adelman, secretary, director and legal counsel of Tele-View Cal. Presently before me is the motion of defendant Ben Adelman under Fed. R. Civ. P. 12(b)(2) to dismiss the suit as to him for lack of in personam jurisdiction.
This suit arises out of a written distributorship agreement between the two corporations. Tele-View Pa. was to distribute and service closed circuit movies supplied by Tele-View Cal. for apartment complexes in the Greater Delaware Valley. Tele-View Pa. paid Tele-View Cal. a certain amount for the distributorship rights and promised to provide a certain number of subscribers each year over a five year period. Tele-View Cal. was to supply an initial number of subscribers for Tele-View Pa., along with providing the movies and electronic equipment necessary to enable subscribers to see the movies on their home televisions. Tele-View Cal. was also obligated to provide training and promotional materials to Tele-View Pa.
Plaintiffs' complaint, filed May 25, 1976, alleges that defendant Richard M. Silverstein made numerous representations to plaintiffs which he knew or should have known were false. They included statements that the company was sufficiently capitalized, that Tele-View Cal. could and would provide the services promised in the contract, and that Tele-View Cal. possessed the requisite knowledge, training and ability to guide the then soon to be formed Tele-View Pa. distributorship. The complaint further alleges that the defendants breached the contract by failing to provide promotion materials, electronic equipment, training personnel, adequate quality films, moneys due plaintiffs from subscription fees, advice and guidance, and "best efforts." The third count of plaintiffs' complaint alleges that various acts by defendants were grossly negligent and caused substantial financial injury to plaintiffs. Plaintiffs also allege damage to their business reputation. They seek punitive damages as well as damages for financial losses and injury to their business reputation.
On June 28, 1976, defendant Ben Adelman filed a motion for change of venue under 28 U.S.C. § 1404, requesting that I dismiss the suit or alternatively transfer it to the United States District Court for the Central District of California. Defendant Richard M. Silverstein joined in the motion. Both defendants filed affidavits in support of the motion. The grounds for the motion were that most of the parties, witnesses and evidence were located in California and the parties had agreed that the contract should be governed by California law. Plaintiffs opposed the motion, arguing that "a far greater part of the subject matter involved in this litigation occurred within the Eastern District of Pennsylvania . . . ." Richard and Nancy Feld filed affidavits in opposition to the motion. Marcie P. Rosenblum, Sales Manager for Tele-View Pa., also filed an affidavit in opposition. The affidavits asserted that plaintiffs' witnesses were in Pennsylvania and that it would be a great hardship for the affiants to travel to California. On August 18, 1976 I denied defendants' motion for a change of venue, concluding that the "balance of convenience lies clearly with the plaintiffs' [choice of forum]." I relied heavily on the clause in the distributorship contract which provided:
"14.11 Although this agreement shall be interpreted by the laws of the State of California, Tele-View agrees that should court action or American Arbitration action become necessary, Tele-View will submit to the court or American Arbitration Association of Pennsylvania."
Although Adelman and Silverstein moved individually for a change of venue, their motion requested that the civil action be transferred. Adelman and Silverstein are not individually subject to the forum selection clause, but the transfer would, of course, include the corporate parties which are subject to the provision. Tele-View Cal. and Tele-View Pa. are the primary parties to this suit, and thus I found the above clause to be a significant factor. In concluding my Opinion, I stated:
"Since no attack has been made upon the service of process, I intimate no views as to the in personam jurisdiction over the individual defendants."
On September 3, 1976 defendant Ben Adelman filed the instant motion to dismiss for lack of in personam jurisdiction.
Rule 4(d)(7) of the Federal Rules of Civil Procedure provides that in the case of an individual defendant service of process may be
". . . in the manner prescribed by any statute of the United States or in the manner prescribed by the law of the state in which the district court is held for the service of summons or other like process upon any such defendant in an action brought in the courts of general jurisdiction of that state."
Thus whether service of process on defendant Adelman was effective so as to bring his person within the jurisdiction of the district court turns on whether service of process met Pennsylvania's statutory requirements. See Miller v. American Telephone & Telegraph Co., 394 F. Supp. 58 (E.D. Pa. 1975), aff'd, 530 F.2d 964 (3d Cir. 1976). Because Adelman is not a resident of Pennsylvania, service of process must be made under Pennsylvania's long-arm statute, 42 P.S. § 8301 et seq. Plaintiffs assert that the requirements of both § 8304
and § 8305
were met, either being sufficient to establish in personam jurisdiction over the defendant. Adelman does not argue that the requirement of the above sections were not met. Instead, he argues that he has not had even the "minimal contacts" with Pennsylvania which due process requires before the courts located in that state may exercise in personam jurisdiction over him. Hanson v. Denckla, 357 U.S. 235, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958); International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945). I conclude that the jurisdictional requirements of § 8304 and § 8305 have not been met, and, therefore, find it unnecessary to reach the constitutional issue.
Section 8304 provides for jurisdiction over persons who were doing business in Pennsylvania at the time the cause of action against them accrued or the harm or financial loss occurred. What activities amount to doing business is the subject of § 8309. Plaintiffs rely on subdivision (3) ...