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TRINITY METALS v. ANDY INTL.

January 11, 1977

TRINITY METALS
v.
ANDY INTERNATIONAL, INC.



The opinion of the court was delivered by: BRODERICK

 BRODERICK, J.

 Plaintiff Trinity Metals, Inc., a New Jersey corporation with offices in New Jersey, and plaintiff Trinity Caribbean, Inc., a Puerto Rican corporation with offices in New Jersey, are in some manner affiliated. These two corporations brought this action for misrepresentation and breach of contract against defendant Andy International, Inc., a Texas corporation with offices in Texas. Jurisdiction is predicated upon diversity of citizenship. The defendant, Andy International, Inc., has filed a motion to transfer this action to the United States District Court for the District of Puerto Rico. In support of its motion, the defendant contends that venue does not lie in the Eastern District of Pennsylvania and that, even if venue does lie in this District, the District Court in Puerto Rico is a more convenient forum.

 This suit arose out of Trinity Caribbean's purchase from defendant of a former United States Navy destroyer which was sold to the defendant by the government. The contract between Trinity and Andy International for the purchase and sale of the destroyer was executed and signed in San Juan, Puerto Rico, where the vessel was then located and where it is still located. Trinity Caribbean began scrapping the destroyer in Puerto Rico. None of the negotiations or communications preceding or following the sale of the destroyer occurred in Pennsylvania. It is undisputed that plaintiff corporations do not now conduct business, nor have they ever conducted business, in Pennsylvania. It is also undisputed that defendant Andy International does not have an office nor an agent in Pennsylvania. The only connection that this suit appears to have with this District is the fact that plaintiffs' attorney is a member of the bar of this Court.

 Venue in a diversity case is determined by 28 U.S.C. § 1391. § 1391(a) provides:

 
(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose.

 § 1391(c) provides:

 
(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

 Neither of the plaintiff corporations nor the defendant corporation is incorporated or licensed to do business in this District. It is admitted that the plaintiff corporations are not "doing business" in this District. We must therefore determine whether the defendant is "doing business" in this District within the meaning of those words as used in § 1391(c).

 
[The] prevailing view in this Eastern District is that "[in] determining how much activity within a district a foreign corporation must engage before such activity will constitute 'doing business' for purposes of federal venue, the basic consideration is whether a license would be required of the foreign corporation as a condition precedent to carrying on that activity." Remington Rand, Inc. v. Knapp-Monarch Co., 139 F. Supp. 613, 617 (E.D. Pa. 1956). There Judge Wright rejected the International Shoe "minimum contacts" interpretation of doing business as applied in "service of process" questions. See International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). Thus more activity is needed to subject a defendant corporation to venue in a jurisdiction than would be needed to subject it to service of process there.

 Both Remington and American Radiator make it clear, however, that the determination of whether a license would be required of the foreign corporation should not be dependent upon the licensing requirements of the state in question, but requires the application of a uniform federal standard. In Remington, the Court said, 139 F. Supp. at 620-621:

 
In view of the principle enunciated earlier, namely, a corporation will be held to be "doing business" for purposes of § 1391(c) if its activities within the district are such that its business has become localized and is an operation within the district so that some state would probably require the foreign corporation to be ...

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