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MODERN MAILERS, INC. v. JOHNSON & QUIN

February 10, 1994

MODERN MAILERS, INC. d/b/a ACXIOM MAILING SERVICES, INC., Plaintiff
v.
JOHNSON & QUIN, INC., Defendant



The opinion of the court was delivered by: WILLIAM H. YOHN, JR.

 Yohn, J.

 Defendant, Johnson & Quin, Inc. ("Johnson & Quin"), an Illinois corporation, has moved to dismiss the declaratory judgment action filed by the plaintiff, Modern Mailers, Inc. ("Modern Mailers"), pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3). Johnson & Quin bases its motion to dismiss on lack of personal jurisdiction over the defendant and improper venue. Alternatively, Johnson & Quin has moved for a transfer of the action to Northern District of Illinois. For the reasons set forth below, the court will grant defendant's motion to dismiss and deny its motion to transfer venue.

 I. Background

 Plaintiff is seeking a declaratory judgment that it has not infringed on a patent owned by the defendant. The patent at issue relates to an apparatus and method for assembling mass mail items. In December, defendant sent a letter to Acxiom Corporation, the plaintiff's parent corporation located in Arkansas, warning of the plaintiff's possible infringement on Johnson & Quin's "'088" patent. Defendant's Memorandum, Exhibit C. The plaintiff's ultimate response was to file this action seeking declaratory judgment that it is not infringing upon the '088 patent.

 Johnson & Quin is an Illinois corporation that conducts most of its business in Illinois. It is in the business of selling business forms, direct marketing, print and data services, and laser printing technology. See Defendant's Memorandum, Exhibit B, Declaration of David Henkel at P 3; Plaintiff's Memorandum, Exhibit A, Henkel Deposition at 34, 46, 51, 157-58. The defendant has no office or facility in Pennsylvania, does not own or maintain personal or real property in Pennsylvania, and has no license to do business within Pennsylvania. Declaration of David Henkel at 2. The defendant has, however, sold over $ 231,000 worth of its goods and services in Pennsylvania from 1990 to 1993. See Plaintiff's Memorandum, Exhibit A, Deposition of David Henkel at 31-32, 54, 63-64, 72; Declaration of David Henkel at P 8. In his deposition, David Henkel, the president of Johnson & Quin, stated that the following were the sales in Pennsylvania and their approximate percentage of the company's total sales for the respective years: 1990 - $ 106,922 (less than .50% of total sales); 1991 - $ 57,056 (.25%); 1992 - $ 51,999 (.20%); and 1993 - $ 15,895 (.10%). See Id. These goods and services were sold to approximately 29 different customers in Pennsylvania, many of whom were repeat customers. *fn1" Plaintiff's Memorandum, Exhibit A, Deposition of David Henkel at 34-64, 145-52, 197-98, 212-19. Although Johnson & Quin has no sales force assigned exclusively to Pennsylvania, seven salespersons employed by the defendant between 1990 and 1993 had Pennsylvania included among the states of their assigned sales territory. See Henkel Deposition at 94-110, 121-56, 195-207, 210-27. Most of these salespersons were employed for only a portion of 1990-93 and their sales territories were quite large, often encompassing the entire United States. Id.

 II. LEGAL STANDARDS

 Once a defendant has raised a jurisdictional defense, the burden shifts to the plaintiff to prove that the relevant jurisdictional requirements are met. Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 63 (3d Cir. 1984). The plaintiff must support this burden through "sworn affidavits or other competent evidence." North Penn Gas, Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir.) (quoting Time Share, 735 F.2d at 67 n.9), cert. denied, 498 U.S. 847, 111 S. Ct. 133, 112 L. Ed. 2d 101 (1990).

 Personal jurisdiction may be either specific or general. Specific jurisdiction applies to claims which arise out of the defendant's forum related activities. General jurisdiction applies to claims which need not arise out of the defendant's forum related activities, but the defendant has such extensive contacts with the forum state that the defendant is continually subject to the state's personal jurisdiction. Bane v. Netlink, Inc., 925 F.2d 637, 639 (3d Cir. 1991); Reliance Steel Prods. Co. v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 588 (3d Cir. 1982). In its brief opposing the motion to dismiss, the plaintiff argues that the court has general jurisdiction over the defendant. Plaintiff's Memorandum at 7. Plaintiff does not assert that the cause of action arose out of the defendant's Pennsylvania related activities. The court, therefore, will only consider whether it has general personal jurisdiction over the defendant.

 A federal district court's personal jurisdiction over a nonresident of the state in which the court sits is controlled by the laws of that state. Fed. R. Civ. P. 4(e). Under Pennsylvania's long-arm statute, a court has general jurisdiction over a foreign corporation if the corporation carries on "a continuous and systematic part of its general business within" Pennsylvania. 42 Pa. Cons. Stat. Ann. § 5301(a)(2)(iii).

 Because this a patent law action, the due process clause of the fifth amendment, instead of the fourteenth amendment's due process clause which would apply to diversity actions, limits the reach of Pennsylvania's long-arm statute. Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293 (3d Cir.), cert. denied, 474 U.S. 980, 106 S. Ct. 383, 88 L. Ed. 2d 336 (1985). However, due process under either amendment limits the long-arm statutes in the same manner. Id. The due process clause prevents a court from exercising personal jurisdiction over a defendant unless the defendant has "certain minimum contacts with [the forum state] 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) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 342, 85 L. Ed. 278 (1940)). The defendant's contacts with the forum state must rise to a level such that the defendant would be able to reasonably anticipate being haled into court in the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490 (1980).

 The minimum contacts standard, however, is only the first step in evaluating general jurisdiction. In order to establish general jurisdiction, the plaintiff must show significantly more contacts with the forum state than the mere minimum contacts required for specific jurisdiction. Dollar Sav. Bank v. First Sec. Bank of Utah, 746 F.2d 208, 212 (3d Cir. 1984); Reliance Steel, 675 F.2d at 589. Due process requires that a court can exercise general jurisdiction only over a defendant who has maintained "continuous and substantial" contacts with the forum state. *fn2" Reliance Steel, 675 F.2d at 588 (citing International Shoe v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945); Compagnie des Bauxites de Guinea v. Insurance Co. of North America, 651 F.2d 877 (3d Cir. 1981)). The issue, then, is whether Johnson & Quin conducted continuous, substantial and systematic business within Pennsylvania such that it may be subject to personal jurisdiction in Pennsylvania for any cause of action.

 III. ...


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