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ALLEGHENY LUDLUM STEEL CORP. v. PACIFIC GAS & ELEC

December 27, 1984

ALLEGHENY LUDLUM STEEL CORPORATION, Plaintiff
v.
PACIFIC GAS And ELECTRIC COMPANY, Defendant



The opinion of the court was delivered by: TEITELBAUM

 In this diversity action for breach of contract, defendant moves to dismiss for lack of personal jurisdiction or, in the alternative, to transfer to a more convenient forum. For the reasons set forth below, the action will be transferred.

 Allegheny Ludlum Steel Corporation is a Pennsylvania corporation with its principal place of business in Pennsylvania. It manufactures stainless and specialty steel. Pacific Gas and Electric Company (PG & E) is a California corporation with its principal place of business in California. It provides electricity and gas to customers in northern and central California.

 Allegheny Ludlum alleges the parties entered into a contract under which Allegheny Ludlum was to manufacture and sell and PG & E to buy stainless steel condenser tubing for use in the construction of units 16 and 20 of a power plant in California. Allegheny Ludlum alleges the contract called for delivery of the tubing for unit 20 to a company in Pennsylvania and for delivery of the tubing for unit 16 to the jobsite in California. Allegheny Ludlum further alleges the tubing for unit 20 was delivered but that PG & E wrongfully cancelled the contract for tubing for unit 16.

 Subject matter jurisdiction is alleged on the basis of diversity of citizenship and amount in controversy. Personal jurisdiction over PG & E is asserted under Pennsylvania's long-arm statute. PG & E moves to dismiss for lack of personal jurisdiction, to dismiss under the doctrine of forum non conveniens, or to transfer to a more convenient forum.

 Fed.R.Civ.P. 4(e) provides for service of process upon a party not an inhabitant of or found within the state, under the circumstances and in the manner prescribed in the statutes of the state in which the district court is held. Pennsylvania's long-arm statute, 42 Pa.C.S.A. § 5301 et seq., provides for exercise of personal jurisdiction "to the fullest extent allowed under the Constitution of the United States."

 Federal courts sitting in diversity are bound by the highest state court's interpretations of its own statutes, but are not bound by state judicial interpretations of the due process clause of the United States Constitution. Empire Abrasive Equipment Corp. v. H.H. Watson, Inc., 567 F.2d 554, 556 n.1 (3d Cir. 1977). Thus, the Court of Appeals for the Third Circuit has undertaken an independent assessment of the phrase "to the fullest extent allowed under the Constitution of the United States." Id.

 In determining whether an assertion of personal jurisdiction comports with due process, initially it must be determined whether the cause of action arises from defendant's forum-related activities or whether the cause of action arises from defendant's non-forum-related activities. See Reliance Steel Products Co. v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 588 (3d Cir. 1982). If the cause of action arises from defendant's forum-related activities, the defendant is subject to the so-called "special" or "transactional" jurisdiction if the defendant had sufficient contacts with the forum arising out of that transaction. Id. If the cause of action arises from defendant's non-forum-related activities, the defendant is subject to the so-called "general" jurisdiction, if, in other respects, the defendant had continuous and substantial forum affiliations. Id.

 The due process clause imposes two limitations on the exercise of specific jurisdiction. Empire Abrasive Equipment, 567 F.2d at 557. First, out of respect for values of federalism, the due process clause forbids a state from exercising its adjudicatory authority in a manner that encroaches upon the sovereignity of a sister state. Id. "A state must have some palpable interest - rationally connected with public policy - in adjudicating a dispute within its borders for jurisdiction to be lawfully acquired." Id. Second, the due process clause "prevents a state of plaintiff's choosing from coercing defense of a suit in a forum which, because of its remoteness from defendant's residence and from witnesses and proof, would be fundamentally unfair." Id.

 Pennsylvania's long-arm statute reflects this dichotomy between specific and general jurisdiction. Compagnie des Bauxites de Guinee v. L'Union, 723 F.2d 357, 362 (3d Cir. 1983). A single forum-related contact is sufficient to give jurisdiction under 42 Pa.C.S.A. § 5322, but the cause of action must arise out of that contact. Id. 42 Pa.C.S.A. § 5301 provides for general jurisdiction over a corporation which does continuous and systematic business in the state, regardless of whether the event or transaction sued on took place in Pennsylvania. Id.

 Defendant's challenge to the court's exercise of personal jurisdiction imposes on the plaintiff the burden of coming forward with facts, by affidavit or otherwise, in support of personal jurisdiction. Compagnie des Bauxites de Guinea v. Insurance Company of North America, 651 F.2d 877, 880 (3d Cir. 1981), aff'd, 456 U.S. 694, 72 L. Ed. 2d 492, 102 S. Ct. 2099 (1982).

 Allegheny Ludlum contends PG&E is subject to both general and specific jurisdiction. Allegheny Ludlum first contends PG&E maintains continuous and substantial business activities in Pennsylvania so that it is generally amenable to process in a lawsuit unrelated to these Pennsylvania activities. To support its assertion that PG&E maintains continuous and substantial business activities in Pennsylvania, Allegheny Ludlum relies on a list of more than 200 businesses with which PG&E has transacted business over the years and to which PG&E has directed payment in Pennsylvania.

 In Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 80 L. Ed. 2d 404, 104 S. Ct. 1868 (1984) the Supreme Court held that a non-resident defendant's substantial purchases of goods and services in the forum did not establish continuous and systematic business activity for the exercise of general jurisdiction. In Helicopteros a wrongful death action had been brought against a Colombian defendant in Texas; the cause of action arose from the crash of defendant's helicopter in Peru, but it was ...


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