filed: April 19, 1985.
REV. CLAYTON HEWITT, GRACE HEWITT, DARRYL MARTIN AND MICHAEL MARTIN, CO-GUARDIANS OF THE ESTATE OF JOAN H. FORCEY, INCOMPETENT, APPELLANTS,
EICHELMAN'S SUBARU, INC., KRIS J. HOOT, HILLTOWN TOWNSHIP, BUCKS COUNTY, PENNSYLVANIA DEPARTMENT OF TRANSPORTATION, FUJI HEAVY INDUSTRIES, SUBARU OF AMERICA AND PENN JERSEY SUBARU
No. 01816 PHL 83, Appeal from the Order entered June 15, 1983 in the Court of Common Pleas of Philadelphia County, Civil Division, at No. 5395 Nov. Term, 1981.
Mark C. Schultz, Norristown, for appellants.
William J. Ricci, Philadelphia, for appellees.
Del Sole, Popovich and Hoffman, JJ.
[ 341 Pa. Super. Page 591]
Appellants contend that the lower court erred in declining to exercise jurisdiction over appellee, Fuji Heavy Industries (Fuji). We agree and, accordingly, reverse.
On December 19, 1979, Joan Forcey was severely injured in an automobile accident involving her 1977 Subaru and
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another vehicle. Her guardian*fn1 subsequently instituted this action against appellee, the manufacturer of the car, and others,*fn2 alleging negligence, strict liability in tort, and breach of warranties. Appellee filed a preliminary objection claiming that Pennsylvania courts could not exercise in personam jurisdiction over it. On June 15, 1983, the lower court sustained the preliminary objection and dismissed the complaint against appellee. This appeal by Ms. Forcey's present guardians followed.
The power of a court to exercise in personam jurisdiction over a non-resident defendant turns upon two considerations: (1) jurisdiction must be conferred by the state long-arm statute, and, (2) the exercise of jurisdiction under the statute must meet constitutional standards of due process. Nissley v. JLG Industries, Inc., 306 Pa. Superior Ct. 557, 560-61, 452 A.2d 865, 866-67 (1982). Because the reach of the Pennsylvania long-arm statute extends "to the fullest extent allowed under the Constitution of the United States,"*fn3 the controlling consideration is whether the nonresident defendant had sufficient minimum contacts with this forum to permit the exercise of jurisdiction. See Nissley v. JLG Industries, Inc., supra; Koenig v. International Brotherhood of Boilermakers, 284 Pa. Superior Ct. 558, 426 A.2d 635 (1980). Due process requires that a defendant have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Moreover, "the relationship between the defendant and the forum must be such that it is 'reasonable . . . to require [a foreign] corporation to defend
[ 341 Pa. Super. Page 593]
the particular suit which is brought there.'" World-Wide Volkswagen Corp. v. Woodsun, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), quoting International Shoe Co. v. Washington, supra 326 U.S. at 317, 66 S.Ct. at 158. Further, although forseeability alone is not a sufficient basis for exercising jurisdiction under the due process clause, the Supreme Court has stated that
the forseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather it is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.
Id. 444 U.S. at 297, 100 S.Ct. at 567.
Our court has developed a two-part test for implementing these due process concerns and determining whether the exercise of jurisdiction by our courts over a particular non-resident is constitutional. See, e.g., Union National Bank of Pittsburgh v. L.D. Pankey Institute, 284 Pa. Superior Ct. 537, 426 A.2d 624 (1980); Goff v. Armbrecht Motor Truck Sales, Inc., 284 Pa. Superior Ct. 544, 426 A.2d 628 (1980); Koenig v. International Brotherhood of Boilermakers, supra. First, we apply the test formulated in Proctor & Schwartz, Inc. v. Cleveland Lumber Co., 228 Pa. Superior Ct. 12, 323 A.2d 11 (1974). This Proctor test has three prongs, as follows:
First, the defendant must have purposefully availed itself of the privilege of acting within the forum state thus invoking the benefits and protections of its laws . . . . Secondly, the cause of action must arise from defendant's activities within the forum state . . . . Lastly, the acts of the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over it reasonable.
Id., 228 Pa. Superior Ct. at 19, 323 A.2d at 15 (citations omitted). Next, if this test is not satisfied, we must determine whether the non-resident defendant's activities in Pennsylvania unrelated to the cause of action were "continuous
[ 341 Pa. Super. Page 594]
and substantial." Bork v. Mills, 458 Pa. 228, 231-32, 329 A.2d 247, 250 (1974).
With these principles in mind, we turn to the facts of the instant case: Fuji, a Japanese corporation, is the sole manufacturer of Subaru automobiles. Subaru of America (SOA), a New Jersey corporation licensed to do business in Pennsylvania, is the exclusive importer of Subaru automobiles in the United States. Fuji sells the completed automobiles to SOA in Japan on a "FOB Japan" basis. SOA then sells the automobiles to franchised American distributors who, in turn, distribute them to franchised dealers for sale to the general public. The Subaru car which Ms. Forcey was driving at the time of the accident was manufactured by Fuji and sold to SOA. SOA then sold the car to Penn Jersey Subaru, the franchised regional distributor, which sold it to Eichelman's Subaru, Inc., a franchised dealership. Ms. Forcey bought the car from Eichelman's Subaru, Inc.
Although SOA is a publicly-owned corporation, Fuji owns over forty-nine percent of its stock, and two of Fuji's directors are on the board of directors of SOA. Fuji also maintains a liason office at SOA's New Jersey headquarters, consisting of five employees. Fifty-three Subaru dealerships operate in Pennsylvania, and the number of Subaru automobiles sold in the Commonwealth annually is as follows:
1975 -- 3,113
1976 -- 3,548
1977 -- 7,352
1978 -- 9,595
1979 -- 11,255
1980 -- 13,29 1
The first requirement of the Proctor test is that the non-resident defendant must have purposefully availed itself of the privilege of acting within Pennsylvania. In World-Wide, supra, the United States Supreme Court noted that when a corporation purposefully avails itself of the privilege of conducting activities in the forum state, "it has
[ 341 Pa. Super. Page 595]
clear notice that it is subject to suit there . . . ." 444 U.S. at 297, 100 S.Ct. at 567. The Court also stated:
Hence, if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.
Id. at 297-98, 100 S.Ct. at 567. The distinction drawn in World-Wide between a dealer or regional distributor seeking to serve a limited market and a manufacturer or national distributor seeking to serve a larger market is critical to the instant case.*fn4 Here, the presence of Ms. Forcey's Subaru automobile in Pennsylvania was not an isolated occurrence but part of Fuji's effort to serve the United States market for its products. Although Fuji itself does no business in Pennsylvania, it places its automobiles in the stream of commerce in such a manner that it can expect that they will be purchased throughout the United States. Fuji's use of an American distributor, rather than marketing the automobiles itself, represents only a change in the method of distributing the cars, not a lack of participation in the chain of distribution itself. Furthermore, the close relationship between Fuji and SOA makes it unlikely that Fuji is unaware of the extent of SOA's distribution network. We therefore find that Fuji has purposefully availed itself of the privilege of conducting activity in Pennsylvania.
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Reversed and remanded for further proceedings. Jurisdiction is not retained.