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WILLIAM ROSENSTEIN & SONS CO. v. BBI PRODUCE

October 30, 2000

WILLIAM ROSENSTEIN & SONS CO., PLAINTIFF,
V.
BBI PRODUCE, INC., DEFENDANTS.



The opinion of the court was delivered by: Caputo, District Judge.

MEMORANDUM

Plaintiff William Rosenstein & Sons Co. (Rosenstein) brought this libel action against Defendant BBI Produce (BBI) on April 6, 2000, alleging that BBI injured its reputation in the business community by publishing defamatory statements to various members of the Florida strawberry industry. (Complaint, Doc. 1.) On June 14, 2000, BBI filed a motion to dismiss for lack of in-personam jurisdiction and failure to state a claim upon which relief can be granted, or alternatively for a transfer to the Middle District of Florida under 28 U.S.C. § 1404(a). (Doc. 4.) This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. However, because Rosenstein has failed to establish that this court has either specific or general jurisdiction over the person of BBI, the motion to dismiss for lack of personal jurisdiction will be granted.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of an action where the district court lacks personal jurisdiction over the defendant. Unlike subject matter jurisdiction, which may be challenged at any time, in-personam jurisdiction is an affirmative defense that is waived unless raised in a timely manner. See Fed. R. Civ. Pro. 12(g), 12(h)(1); EF Operating Corp. v. American Bldgs., 993 F.2d 1046, 1048 (3d Cir. 1993) (citations omitted). In deciding a motion to dismiss for lack of in-personam jurisdiction, the court generally must take as true the allegations contained in the complaint. See Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996) (citations omitted). However, it is the plaintiff that bears the burden of proving, by affidavits or other competent evidence, that the court may properly assert jurisdiction over the defendant. Id. See also North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d. Cir. 1990).

Unlike a Rule 12(b)(6) motion, a Rule 12(b)(2) motion "requires resolution of factual issues outside the pleadings." Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 66 (3d Cir. 1984). At least with respect to the facts on which jurisdiction depends, the allegations in the complaint cannot simply be assumed to be true, nor can the factual inquiry be deferred. The court must determine at the outset whether jurisdiction will lie, before jurisdiction is exercised. Consequently the plaintiff must respond to a personal jurisdiction defense with actual proofs, not simply with mere allegations, and may not rely on the pleadings alone to carry its burden of establishing the jurisdictional facts. Id. Accordingly, the plaintiff should generally be allowed limited discovery for the purpose of proving facts that would support the exercise of jurisdiction. See Renner v. Lanard Toys Ltd., 33 F.3d 277, 283 (3d Cir. 1994).

BACKGROUND

Plaintiff Rosenstein is a fruit and vegetable wholesaler and distributor based in Scranton, Pennsylvania. (Doc. 1 ¶¶ 1, 6.) Defendant BBI is a Florida corporation engaged in the business of selling produce, principally strawberries. (Affidavit in Support of Motion to Dismiss, Doc. 6 ¶ 2.) Rosenstein alleges that in March of 2000 BBI sent a defamatory writing via facsimile to sixteen other sellers of strawberries in the Tampa, Florida region. (Doc. 1 ¶¶ 8-14.)

According to Rosenstein, this facsimile falsely stated, expressly or by necessary implication, that Rosenstein had engaged in unsavory business practices in the course of its last transaction with BBI. (Doc. 1.) Specifically, Rosenstein alleges that the facsimile, sent to other strawberry vendors under the title "ALERT," asserted that Rosenstein had fraudulently refused to pay the agreed upon price for a shipment of strawberries it had received from BBI. (Doc. 1.) Rosenstein claims this facsimile has injured its good reputation and caused it significant business losses. (Doc. 1 ¶¶ 17-18.)

According to the affidavit of BBI Secretary Ronnie Young, BBI does not maintain any place of business, business operation or bank account in Pennsylvania, nor does it own land there. (Doc. 6 ¶ 4.) Further, "BBI does not have any employees, representatives, or agents in Pennsylvania, does not purposefully direct advertising to Pennsylvania, and has not applied for any qualification or license to do business in Pennsylvania." (Doc. 6 ¶ 4.) During the 1998-1999 sales season, BBI made only .0156% of its sales to purchasers in Pennsylvania, and only .0236% of its sales to Florida brokers buying for Pennsylvania clients. (Doc. 6 ¶ 10.) During the 1999-2000 sales season, BBI made only .0125% of its sales to purchasers within Pennsylvania, and only .0335% of its sales to Florida brokers buying for Pennsylvania clients. (Doc. 6 ¶ 11.) In 95% of BBI's transactions, BBI transfers the produce to the purchaser's carrier at BBI's place of business in Florida. (Doc. 6 ¶ 9.) According to Rosenstein, however, BBI is "a large shipper of strawberries" that sells strawberries throughout Pennsylvania. (Affidavit of Rosenstein, Doc. 8 ¶ 3.)

DISCUSSION

Rule 4(e) of the Federal Rules of Civil Procedure "authorizes personal jurisdiction over non-resident defendants to the extent permissible under the law of the state where the district court sits." Pennzoil Products Company v. Colelli & Associates, Inc., 149 F.3d 197, 200 (3d Cir. 1998) (quoting Mellon Bank v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992)). Pennsylvania's long-arm statute, set forth at 42 Pa. Cons. Stat. Ann. §§ 5301-22, authorizes Pennsylvania courts to assert personal jurisdiction over nonresident defendants to the extent allowed by the Due Process Clause of the Fourteenth Amendment. Id. Thus the personal jurisdiction of a federal district court sitting in the Commonwealth of Pennsylvania is limited only by the strictures of constitutional due process.

The Due Process Clause of the Fourteenth Amendment allows a court to exercise personal jurisdiction over a defendant only if the defendant has certain "minimum contacts" with the state in which the court sits "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quotation omitted).

The concept of minimum contacts, in turn, can be seen to perform two related, but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant and inconvenient forum. And it acts to ensure that the States through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). Predicating jurisdiction upon minimum contacts with the forum state enables a potential defendant to reasonably anticipate where he may be haled into court, and affords him the opportunity to adjust his conduct accordingly. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. For this reason, a plaintiff cannot act unilaterally to create the necessary contacts between the defendant and the forum; "minimum contacts" can be formed only by "some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." ...


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