the damage to NEPCO's air preheater is allegedly the result of
Brasseur's and Pfeiffer's fraudulent and/or negligent
representations to NEPCO. Because the air preheater is located at
NEPCO's McAdoo, Pennsylvania facility, that is where — for
jurisdictional purposes — we must conclude the injury occurred.
See Pennzoil, 149 F.3d at 202. Therefore, the Court initially
concludes that Pennsylvania's long-arm statute extends personal
jurisdiction to BDAG.
B. "Minimum Contacts"
Despite the above finding, "we must still determine whether the
strictures of constitutional due process (i.e., minimum contacts
and notions of `fair play and substantial justice') would be
observed by asserting jurisdiction." Id. The issue of minimum
contacts is fact-sensitive and its analysis focuses on the
"quality and nature of a defendant's activity [in relation to the
forum state]." Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290,
298 (3d Cir. 1985) (citation omitted); see also Farino, 960
F.2d at 1224-25 ("[Q]uestions of personal jurisdiction do not
lend themselves to categorical determinations"). Although there
exist no bright-line rules to assist courts in making this
determination, prior cases have produced some basic precepts. For
example, the court in Max Daetwyler held that the minimum
contacts requirement is not satisfied where a nonresident
defendant's contact with the forum is simply "fortuitous" or "the
result of a single transaction." 762 F.2d at 295. Moreover, with
regard to producers or sellers of goods, "the mere foreseeability
that a product one sells may end up in the forum state" does not
subject the seller to the forum state's jurisdiction. Renner v.
Lanard Toys Ltd., 33 F.3d 277, 279 (3d Cir. 1994). In essence, a
finding of minimum contacts demands the demonstration of "`some
act by which the defendant purposely avail[ed] itself of the
privilege of conducting business within the forum State, thus
invoking the protection and benefits of its laws.'" Farino, 960
F.2d at 1221 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78
S.Ct. 1228, 2 L.Ed.2d 1283 (1958)).
In reviewing both the quality and nature of BDAG's acts as they
are spelled out in the record, the Court is simply unable to find
that BDAG "purposely availed itself of the privilege of
conducting business" within this State. It is true that BDAG and
BD GmbH shared such things as office space, telephone and
facsimile lines, and even Directors. The Court is also cognizant
of the fact that Brasseur and Pfeiffer sometimes exchanged
correspondence with BDI and NEPCO via forms containing BDAG
letterhead. However, the fact remains that BDAG and BD GmbH have
been separate business entities since October 1994. Moreover,
BDAG is a German holding company with its only business location
in Germany. Aside from this litigation, BDAG has no contacts with
the State of Pennsylvania. Finally, Brasseur and Pfeiffer were at
all times relevant to this litigation employees of BD GmbH.
Therefore, we conclude that BDAG's "contacts" with Pennsylvania
are far too slight to justify this Court's exercise of personal
jurisdiction over it. NEPCO's cause of action is more properly
directed at BD GmbH.
C. "Fair Play and Substantial Justice"
Even if the Court were to hold that BDAG met the "minimum
contacts" test, we would nonetheless conclude that exercising
jurisdiction would fail to comport with notions of "fair play and
substantial justice." "[E]ven if a defendant has the requisite
minimum contacts with the forum state, other factors may militate
against exercising jurisdiction." Pennzoil,
149 F.3d at 205. These factors, often called "fairness factors,"
(1) the burden on the defendant;
(2) the forum State's interest in adjudicating the
(3) the plaintiff's interest in obtaining convenient
and effective relief;
(4) the interstate judicial system's interest in
obtaining the most effective resolution of
(5) the shared interest of the several States in
furthering fundamental substantive social policies.
Rudzewicz, 471 U.S. at 477, 105 S.Ct. 2174.
An analysis of the above factors supports the determination
that notions of "fair play and substantial justice" would be
violated by having BDAG defend itself in a Pennsylvania forum.
The first factor, whether BDAG would be burdened by being forced
to litigate this dispute in Pennsylvania, weighs heavily in favor
of BDAG. It is clear that forcing BDAG, a German holding company
with its only business location in Germany, to defend itself in
this suit in the Eastern District of Pennsylvania would be a
substantial burden to the company. In fact, the Supreme Court has
stated that "[t]he unique burdens placed upon one who must defend
oneself in a foreign legal system should have significant weight
in assessing the reasonableness of stretching the long arm of
personal jurisdiction over national borders." Asahi Metal Indus.
Co., Ltd. v. Superior Court of Cal., Solano County,
480 U.S. 102, 114, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). The second factor
weighs in favor of NEPCO because Pennsylvania has a strong
interest in adjudicating disputes where the injury occurs within
its borders. The Court believes that the third factor favors BDAG
because, although NEPCO desires convenient and effective relief,
the facts show that this relief should come at the expense of, if
anyone, BD GmbH. Next, the Court finds that the fourth factor
weighs in BDAG's favor because, given the particular facts of
this case, we believe that the most effective resolution of this
case will occur without the participation of BDAG as a defendant.
Finally, the fifth factor also favors BDAG. According to Asahi,
this factor requires the "court to consider the procedural and
substantive policies of other nations whose interests are
affected by the assertion of jurisdiction by the [forum] court."
480 U.S. at 115, 107 S.Ct. 1026. Notably, the Court stated:
"Great care and reserve should be exercised when extending our
notions of personal jurisdiction into the international field."
Id. at 115, 107 S.Ct. 1026 (quoting United States v. First
Nat'l City Bank, 379 U.S. 378, 404, 85 S.Ct. 528, 13 L.Ed.2d 365
(1965)). Therefore, the Court finds that four of the five factors
in Rudzewicz weigh in favor of dismissing BDAG from this suit.
1. NEPCO's Apparent Agency Argument
NEPCO argues that the "fair play and substantial justice" test
weighs in its favor because BD GmbH acted as the apparent agent
of BDAG. This argument, however, is unpersuasive. In Johnson v.
Summa Corp., 632 F. Supp. 122, 125-26 (E.D.Pa. 1985), the court
discussed how Pennsylvania looks at the apparent agency issue and
The test for determining whether "an agent possesses
apparent authority is whether `a man of ordinary
prudence, diligence and discretion would have a right
to believe that the agent possessed the authority he
purported to exercise.'" Universal Computer Sys.,
Inc. v. Medical Servs. Ass'n, 628 F.2d 820, 823 (3d
Cir. 1980) (quoting Apex Fin. Corp. v. Decker,
245 Pa. Super. 439, 369 A.2d 483, 485-86 (1976)).
In determining whether the reasonable man would have
the right to believe in the existence of an agency
relationship, the proper focus is on the conduct of
the alleged principal and not the agent. William B.
Tanner Co. v. WIOO, Inc., 528 F.2d 262, 266 (3d Cir.
1975); Revere Press, Inc. v. Blumberg, 431 Pa. 370,
246 A.2d 407, 410 (1968).
In the case at bar, there has been no evidence presented by NEPCO
which would lead the court to conclude that BDAG acted in such a
way as to lead NEPCO to believe that it was engaged in a
principal-agent relationship with BD GmbH. Hence, this argument
in support of the Court exercising personal jurisdiction over
BDAG must fail.
Even if we were to find the existence of an apparent agency
relationship, NEPCO has failed to produce evidence showing that
it relied upon such a relationship. Hence, because reliance is
one of the three elements necessary to sustain a claim under this
theory, see, e.g., Drexel v. Union Prescription Centers, Inc.,
582 F.2d 781, 797 (3d Cir. 1978), the Court would nonetheless
find that the claim could not stand.
2. NEPCO's Alter Ego/Lack of Corporate Separateness Argument
Finally, NEPCO argues that the "fair play and substantial
justice" prong of personal jurisdiction weighs in its favor
because there was a lack of corporate separateness between BDAG
and BD GmbH. NEPCO argues that where there is no corporate
separateness, "[t]he contacts of a subsidiary/agent can be
imputed to its parent/principal for the purpose of establishing
personal jurisdiction over the parent/principal." Pl.'s Br. at 12
(citing Arch v. American Tobacco Co., Inc., 984 F. Supp. 830
(E.D.Pa. 1997)). In further support of its argument, NEPCO points
to the fact that BDAG wholly owns BD GmbH, BDAG and BD GmbH share
three common directors, and the two companies share office space,
telephone and facsimile lines, e-mail addresses and office
equipment. See id. at 14.
The court in Arch listed several factors which courts may
consider in determining whether an alter-ego relationship exists.
Specifically, the court stated:
Instead of applying one rigid test in lieu of all
other tests, this Court believes that it should
examine all relevant factors that relate to the
intimacy of the relationship to the parent and
subsidiary to assess whether the contacts of the
subsidiary with a particular state should be imputed
to the parent. Under this test the court is free to
examine all relevant facts such as whether the
subsidiary corporation played any part in the
transactions at issue, whether the subsidiary was
merely the alter ego or agent of the parent (this
factor perforce incorporates all the factors that
have been historically used in determining whether a
subsidiary is an alter ego or agent of the parent),
whether the independence of the separate corporate
entities was disregarded, and whether the subsidiary
is necessarily performing activities that the parent
would otherwise have to perform in the absence of the
984 F. Supp. at 837. Moreover, the Arch court stated that "to
establish an alter-ego relationship, plaintiffs must prove that
[the parent] controls the day-to-day operations of [the
subsidiary] such that [the subsidiary] can be said to be a mere
department of [the parent]." Id.