The opinion of the court was delivered by: LUONGO
Plaintiff, CES Publishing Corp. (CES), which publishes the electronic trade magazine Consumer Electronics, brought this action against Dealerscope, Inc., the publisher of a competing trade journal, Dealerscope. CES alleges that Dealerscope, Inc. placed advertisements in its own and other journals which falsely claimed, inter alia, that Dealerscope, Inc. ran "more ad pages than any other magazine" in the industry including Consumer Electronics. CES contends that, by running this allegedly false advertisement, Dealerscope, Inc. violated section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count I) and committed the state law torts of trade disparagement, unfair competition, and false advertising (Counts II-III). CES asserts that subject matter jurisdiction over this action is pursuant to 28 U.S.C. §§ 1331 & 1338, and 15 U.S.C. § 1121. Dealerscope, Inc. now moves to dismiss the action for lack of in personam jurisdiction and improper venue. F.R.Civ.P. 12(b) (2)-(3). Alternatively, Dealerscope, Inc. moves, pursuant to 28 U.S.C. § 1404(a), to transfer this action to the District of Massachusetts. The record before me consists of the pleadings, answers to interrogatories, affidavits and exhibits to the motions. For the reasons stated hereafter this action will be transferred to the district of Massachusetts.
The facts relevant to these motions are as follows. CES is a Delaware corporation with its principal place of business in New York City. (Complaint para. 1). It is a wholly-owned subsidiary of International Thompson Business Press which is headquartered in Radnor, Pennsylvania. (Affidavit of Roland A. DeSilva, para. 3a, Exhibit 9 to CES' Answer to Motion to Dismiss, Document No. 16). CES publishes monthly the trade magazine Consumer Electronics which is "distributed to independent retailers, mass merchandisers, discount chains, hi-fi specialty shops, radio-TV appliance stores and department stores in the consumer-electronics industry." (Complaint para. 8). Eighty percent of the copies of Consumer Electronics are distributed to retail merchants. (Id.) CES distributes Consumer Electronics free of charge and relies solely on advertising to obtain revenues. (Id. P 11).
Defendant, Dealerscope, Inc., is a Delaware corporation with its principal place of business in Waltham, Massachusetts. (Id. P 12). Dealerscope, Inc. publishes Dealerscope, which like Consumer Electronics, is a trade journal which is distributed to persons and businesses in the appliance, television, high-fidelity and consumer electronics industry. (Id. P 9). Eighty percent of the copies of Dealerscope are supplied to retail merchants. Dealerscope is distributed free of charge and its corporate publisher relies solely on advertising to obtain revenues. (Id. P 2). Dealerscope primarily solicits its advertising through telephone sales from its Waltham, Massachusetts place of business. (Affidavit of David E. Genger in Support of Motion to Dismiss (attached to Document No. 8)). As should be evident by now, Dealerscope competes with Consumer Electronics for advertising.
Dealerscope, Inc.'s sole contacts with Pennsylvania consist of sending copies of Dealerscope to retailers in Pennsylvania, (Exhibit 7 to Answer to Motion to Dismiss), calling Pennsylvania manufacturers from Massachusetts to solicit advertising, (see, e.g., Genger Affidavit, Exhibit 4 to Answer to Motion to Dismiss), and occasionally sending salesmen into Pennsylvania to service accounts. (Exhibits 2-3 to Answer to Motion to Dismiss). In addition, Dealerscope runs ads for a number of Pennsylvania businesses. (Exhibit 5 to Answer to Motion to Dismiss). Dealerscope's available circulation totals reveal that Dealerscope, Inc. distributes between 2400 to 2600 copies of Dealerscope to Pennsylvania each month out of an approximate total circulation of between 30,000 and 34,000 copies per month.
(Exhibits 6-7 to Answer to Motion to Dismiss). Accordingly, Dealerscope, Inc. consistently distributes between 5-7% of its copies to Pennsylvania monthly. All of the administrative and mechanical work involved in publishing Dealerscope takes place in Waltham, Massachusetts. Dealerscope, Inc. maintains no place of business in Pennsylvania and has no dealers or jobbers in this Commonwealth. (Genger Affidavit).
The September 1981 issue of Dealerscope contained the advertisement which, along with an ad placed by Dealerscope, Inc. in another journal, is the subject matter of this action. This "house advertisement" entitled "'Target Advertising Dollars'" provided:
We [ Dealerscope ] run more ad pages than any other magazine in our industry . . . . More than Consumer Electronics, more than Mart, more than Merchandising.
Dealerscope, Inc. also ran a similar advertisement making the identical claim in the October 19, 1981 issue of Advertising Age. Advertising Age is published weekly and its circulation on a six-month average is 76,896 copies, 22,617 of which are distributed to the Middle Atlantic states. No Pennsylvania circulation figures are available for Advertising Age.
CES filed this action on June 6, 1982 contending that the advertisements in Dealerscope and Advertising Age were false and that Dealerscope had violated § 43 of the Lanham Act and committed various state law torts. CES seeks, inter alia, (1) a permanent injunction enjoining Dealerscope, Inc. from claiming that Dealerscope "has contained or presently contains more pages of advertising than Consumer Electronics ", (2) an order directing Dealerscope, Inc. to issue a retraction of the allegedly false claim made in the ads, (3) treble damages, and (4) an accounting from Dealerscope, Inc. of the profits it realized from its activities. (Complaint, Prayer for Relief).
Turning to the instant motions, I will not discuss the issues of jurisdiction and venue at length since my decision to transfer this action under § 1404(a) makes it unnecessary to engage in any extended analysis of these questions. However, I do hold that, although these issues are close, there is jurisdiction over Dealerscope, Inc. and that venue is properly laid in this district.
Insofar as jurisdiction is concerned, Dealerscope, Inc. ships directly a not insignificant number of copies of Dealerscope into Pennsylvania each month and it actively solicits Pennsylvania businesses to advertise in Dealerscope. Accordingly, it appears to be "conducting a continuous and systematic part of its general business within this Commonwealth." 42 Pa. Cons. Stat. Ann. § 5301(2) (iii). See Smith v. Avco-Lycoming, 497 F. Supp. 622, 623 (E.D. Pa. 1980). Further, CES which competes with Dealerscope, Inc. for advertising in this market, was possibly harmed by the false advertising in this Commonwealth. Pennsylvania arguably has an interest in providing a forum to non-resident businesses that are hindered in competing for Pennsylvania business because of false advertising by other non-residents. In addition, Pennsylvania has an interest in ensuring that resident businesses are not harmed by false advertising. On balance, these facts counsel strongly toward the exercise of jurisdiction. See, e.g., Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F. Supp. 886, 889 (S.D. N.Y. 1974); Scott Paper Company v. Scott's Liquid Gold, Inc., 374 F. Supp. 184, 186-188 (D. Del. 1974).
The venue issue is somewhat closer. As I have pointed out in the past, there is some question as to whether a finding that a company is doing business for the purposes of jurisdiction suffices to satisfy the requirement that the company be doing business in this district for the purposes of the venue statute, 28 U.S.C. § 1391(c).
See Smith v. Avco-Lycoming, supra, 497 F. Supp. at 624-625. Regardless whether the test for venue is more stringent than the test for jurisdiction, however, it appears that Dealerscope, Inc.'s activities in Pennsylvania are sufficient to support a finding that it is doing business here for purposes of venue. Again, Dealerscope, Inc. directly distributes its journal to Pennsylvania on a monthly basis and solicits Pennsylvania businesses to place advertising in Dealerscope. "Its contacts are not a result of happenstance," but rather reflect a conscious business decision by Dealerscope, Inc. to distribute its magazine in Pennsylvania and to solicit ...