Opinion
CIVIL ACTION NO. 03-3020
November 13, 2003
Memorandum and Order
Plaintiffs Corporate Aviation Concepts, Inc. ("CAC") and CFS Air, LLC ("CFS") bring this action against defendant MultiService Corporation ("MSC"), seeking a declaratory judgment that liens, placed by MSC upon three of plaintiffs' aircraft, are invalid under Pennsylvania law. Defendant now moves to dismiss this action for lack of personal jurisdiction, or, in the alternative, to transfer the case to the District of Kansas.
BACKGROUND
Procedural History
This dispute stems from defendant MSC's placement of liens upon three aircraft operated and maintained by plaintiff CAC at the Lehigh Valley International Airport ("LVI"). CAC is an aviation services corporation incorporated in Delaware, with its principal place of business in the state of Washington. Compl. ¶ 3. CFS is an aircraft leasing company also incorporated in Delaware, with its principal place of business in Connecticut, and owned the aircraft. Id. ¶ 4.
In April, 2003, CFS leased three airplanes to CAC pursuant to a lease agreement, the terms of which require CAC to keep the aircraft free from all liens. Id. ¶¶ 7-8. In late March or early April of 2003, however, defendant MSC caused liens to be placed on the three planes with the Federal Aviation Administration ("FAA"). Id. ¶ 9. These liens arise out of fuel, taxes, and catering services purchased by CAC using MSC credit cards. Id. MSC contends that the charges have not been paid. Id. ¶ 9. On May 8, 2003, CAC and CFS filed an action in this court, seeking a declaratory judgment that Pennsylvania law applies and that the liens are invalid under Pennsylvania law. See Compl. at 1-5. MSC now seeks dismissal of that declaratory judgment action on the ground that this court lacks personal jurisdiction over MSC, or, in the alternative, a transfer of this action to the District of Kansas.
Factual History
MSC is a credit card processing company which issues corporate aviation cards to qualified businesses in the aviation industry. See defendant's official website, at https://aviation.multiservice.com/mscavi_index.shtml. The Multi Service Card ("the card" or "the credit card") functions much like an average credit card, enabling its holder to purchase goods and services on credit. See Schongar Aff. ¶ 3 (attached to Br. in Support of Def.'s Mot. to Dismiss or Transfer). Each card is attached to a specific aircraft, and all three of the aircraft in this lawsuit possessed a card. See Coyle Aff. ¶¶ 2-3 (attached to Pls.' Br. in Opp'n to Def.'s Mot. to Dismiss or Transfer as Ex. B). With this credit card, the operator of an aircraft can purchase fuel from MSC's Fixed Base Operators ("FBO's"). See Schongar Aff. ¶ 3; Tobin Aff. ¶ 2 (attached to pls.' Br. in Opp'n to Def.'s Mot. to Dismiss or Transfer as Ex. A).
An FBO is an independently-owned business, generally located at an airport, that provides goods and services to aircraft and other users of the airport facilities. Tobin Aff. ¶ 2. Although not owned by or associated with MSC, an FBO has an agreement in place with MSC enabling it to accept the MSC card as payment. See id.; Schongar Aff. ¶¶ 3-4. On MSC's official website, it boasts over 5800 FBO locations worldwide, 76 of which are located in Pennsylvania. See https://aviation.multiservice.com/mscavi_index.shtml; see also Fullmer Aff. ¶ 9. Piedmont Hawthorne is one such FBO. Tobin Aff. ¶ 2.
Piedmont Hawthorne is located at LVI in Allentown, Pennsylvania, and provides fuel and other services to aviation customers. Id. ¶¶ 1-2. For many years, Piedmont Hawthorne and MSC have had a business agreement in place pursuant to which Piedmont accepts the MSC credit card from customers as payment. Id. ¶ 2. At the close of business each day, Piedmont Hawthorne transmits to MSC a list of all customer charges made to MSC credit cards that day. Id. ¶ 3. MSC then confirms the gross total charges made to their cards, subtracts its 2.5% fee, and electronically transfers funds equal to the net daily purchase amount into Piedmont Hawthorne's bank account in Allentown, Pennsylvania. Id. This process appears to be typical of the manner in which other FBO's conduct business with MSC as well.
In this case, the three aircraft leased to CAC by CFS used their MSC cards to charge fuel and other expenses in the winter and spring of 2003. Coyle Aff. ¶¶ 2-3. MSC claims that it was not paid for these charges, thus resulting in its decision to file a lien against these three planes. See Compl. ¶ 9. Of the transactions giving rise to MSC's decision to file these liens, 34% of the total number of transactions took place at FBO locations in Pennsylvania. See Coyle Aff. ¶ 4. Furthermore, 25% of the dollar value of these purchases occurred in Pennsylvania. Id. Because the remaining transactions took place in several different locations worldwide, the greatest plurality of transactions giving rise to the unpaid MSC invoices and resulting liens transpired in Pennsylvania. Id. Finally, each of the three aircraft underlying this lawsuit was based in Pennsylvania at all times relevant to this action. Id. ¶ 3.
STANDARD
Where a defendant raises a jurisdictional defense, the burden shifts to the plaintiff to establish sufficient facts to support the court's exercise of personal jurisdiction. Mellon Bank (E.) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). The plaintiff satisfies this burden by "establishing with reasonable particularity sufficient contacts between the defendant and the forum state." Provident Nat'l Bank v. Cal Fed. Sav. Loan Assoc., 819 F.2d 434, 437 (3d Cir. 1987). To prove such contacts, plaintiffs must introduce "sworn affidavits or other competent evidence." N. Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir. 1990). Any "factual discrepancies created by affidavits are generally resolved in favor of the non-moving party." Friedman v. Israel Labour Party, 957 F. Supp. 701, 706 (E.D. Pa. 1997).
DISCUSSION
Determining whether personal jurisdiction exists over a non-resident defendant requires a two-part inquiry. First, a district court must ascertain whether the Pennsylvania long-arm statute permits exercising jurisdiction over the defendant. Imo Indus, v. Kiekert AG, 155 F.3d 254, 258-59 (3d Cir. 1998). Second, this court must ensure that its assertion of personal jurisdiction over defendant will comport with constitutional due process requirements. Id. Because Pennsylvania's long-arm statute is coextensive with the limitations imposed by the Due Process Clause, this court's current inquiry is limited to the second prong of the analysis.
See 42 Pa. Cons. Stat. Ann. § 5322(b) (extending state court jurisdiction over nonresidents to "fullest extent allowed under the Constitution of the United States").
The Due Process Clause of the Fourteenth Amendment operates to limit a state's power to assert personal jurisdiction over non-residents. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984). The central focus of a court's due process inquiry, therefore, is the relationship among the defendant's conduct, the forum state, and the subject of the litigation. See Shaffer v. Heitner, 433 U.S. 186, 204 (1977). Whether due process is satisfied depends upon the "quality and nature of [defendant's] activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure." Int'l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945). In other words, defendant must have "purposefully directed its activities toward the residents" of Pennsylvania or otherwise "purposefully availed itself of the privilege of conducting activities within [Pennsylvania], thus invoking the benefits and protections of its laws." Imo Indus., 155 F.3d at 259 (citations omitted).
Courts may assert two types of personal jurisdiction: general and specific. Plaintiffs assert that MSC is subject to both the general and specific jurisdiction of this court.
Where a defendant's contacts with the forum state are continuous and systematic, it is subject to a court's general jurisdiction regardless of where the events occurred which gave rise to the action. In contrast, where the action arises out of the defendant's contacts with the forum state, defendant can be subject to the court's specific jurisdiction. See Helicopteros, 466 U.S. at 414-16.
General Jurisdiction
This court's general personal jurisdiction over a non-resident corporate defendant is founded upon that corporation's general activity within Pennsylvania. See Derman v. Wilair Servs., Inc., 590 A.2d 317, 323 (Pa.Super. 1991). Under Pennsylvania's long-arm statute, a district court has general jurisdiction over a non-resident corporation when it carries on "a continuous and systematic part of its general business" within Pennsylvania's borders. 42 Pa. Cons. Stat. Ann. § 5301(a)(2)(iii).
In assessing whether a defendant's business in Pennsylvania is "continuous and systematic," this court must examine the defendant's contacts "over a reasonable period of time," Modern Mailers, Inc. v. Johnson Quin, Inc., 844 F. Supp. 1048, 1052 (E.D. Pa. 1994), and may consider factors such as: whether the defendant conducts "daily business" with Pennsylvania companies, see Provident Nat'l Bank v. Cal. Fed. Sav. Loan Ass'n, 819 F.2d 434, 436-38 (3d Cir. 1987); what percentage of defendant's total business was generated in Pennsylvania, see Derman, 590 A.2d at 324; whether defendant maintained offices or paid taxes in Pennsylvania, see id.; whether defendant availed itself of Pennsylvania resources in an extensive manner as a way of furthering its business, see Gulentz v. Fosdick, 466 A.2d 1049, 1055 (Pa.Super. 1983); and whether defendant made significant direct sales in Pennsylvania, solicited business regularly in Pennsylvania, and advertised in a manner specifically targeted to reach the Pennsylvania market. See Strick, Corp. v. A.J.F. Warehouse Distribs., Inc., 532 F. Supp. 951, 956 (E.D. Pa. 1982).
In Provident National Bank, the Third Circuit held that Pennsylvania had general jurisdiction over defendant California Federal Savings Loan Association, a California bank that conducted daily business with a Pennsylvania corporation. Provident Nat'l, 819 F.2d at 438. Defendant California Federal, which is headquartered in California, maintained no Pennsylvania offices, employees, agents, mailing address, or telephone number, and it neither advertised nor paid taxes in Pennsylvania. Id. at 436. Only .066% of California Federal's depositors were located in Pennsylvania, it received $10 million of its $14 billion in deposits from Pennsylvania, comprising only .071% of all deposits, and only .083% of California Federal's outstanding loans were held by Pennsylvania residents. Id. California Federal also had a "zero balance account" arrangement in place with Mellon Bank ("Mellon"), a Pittsburgh, Pennsylvania bank, pursuant to which Mellon notified California Federal, every business day, of the total amount of the checks which had cleared though the account that day. Id. Following this notification, California Federal wired funds in that amount to Mellon Bank. Id.
Despite the relatively insignificant percentage of defendant's business which took place in Pennsylvania, the Third Circuit held that California Federal's daily business transactions with Mellon constituted a "substantial, ongoing, and systematic activity in Pennsylvania" sufficient to give rise to general personal jurisdiction. Id. at 438. In so holding, the Court highlighted that "California Federal conducted business regarding [the Pennsylvania account] every business day. This daily contact was a continuous and central part of California Federal's business." Id. Moreover, "California Federal's activities relating to Pennsylvania, the borrowing and lending of money, are the bread and butter of its daily business." Id. In light of California Federal's daily transfer of funds into a Pennsylvania account as part of its business, the Third Circuit found that California Federal could reasonably anticipate "being haled into court in Pennsylvania." Id.
Likewise, MSC conducts daily business with its 76 FBO locations in Pennsylvania. While the 76 FBO locations in Pennsylvania represent only 1.3% of MSC's 5800 FBO locations worldwide, the daily transactions which take place between MSC and each of these 76 FBO's is a "continuous and central part" of MSC's business. As a credit card processing company, MSC is in the business of issuing credit to aviation businesses, enabling its cardholders to use this credit at authorized FBO locations, reimbursing FBO's for these charges, then billing its cardholders. The daily process by which MSC reimburses an FBO is therefore central to MSC's business in the same way that the borrowing and lending of money was the "bread and butter" of defendant's business in Provident National. MSC has business agreements with its FBO's, and the transmission of account statements and reimbursements to and from these FBO's, every day, is crucial to MSC's business. The undisputed facts before this court thus reveal that MSC conducts multiple business transactions within the Commonwealth of Pennsylvania every business day, therefore constituting the type of "continuous and systematic contacts" which give rise to general personal jurisdiction. Having entered into credit agreements with 76 independent businesses in Pennsylvania, with the intention that these FBO's sell products to MSC cardholders in Pennsylvania, it can hardly offend "traditional notions of fair play and substantial justice" to require MSC to defend a lawsuit in Pennsylvania. Int'l Shoe, 326 U.S. at 316. Transfer
While "[c]ontracting with a resident of the forum state does not alone justify the exercise of personal jurisdiction over a non-resident defendant," Mellon Bank (E.) PSFS, N.A. v. DiVeronica Bros., Inc., 983 F.2d 551, 557 (3d Cir. 1993), where defendant has reached out of its home state to create a continuing business relationship with citizens of another state, it can be subject to personal jurisdiction. See Mellon Bank (E.) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). Although plaintiffs have failed to specify how MSC came to enter into business agreements with the independent FBO's in Pennsylvania, MSC's decision to enter into seventy six such contracts clearly evidences an intent to create continuing business relationships in Pennsylvania.
Because I find that this court has general jurisdiction, it is not necessary to consider the issue of specific jurisdiction. I note, however, that plaintiffs in this action seek to invalidate the liens placed upon their three aircraft by defendant. The events underlying this action, therefore, involve plaintiffs' use of the MSC card to purchase goods and services for the airplanes and their ensuing payment — or non-payment — on MSC invoices for these purchases. Each of the three aircraft upon which MSC has placed a lien — aircraft registration Nos. N29NW, N312NW, and N325NW — was based in Pennsylvania at all times throughout 2003. Coyle Aff. ¶ 3. Indeed, 34% of the transactions giving rise to the liens took place in Pennsylvania, while the remaining charges were evenly scattered across the United States. Similarly, 25% of the dollar value of the allegedly unpaid invoices derived from purchases made in Pennsylvania. The MSC credit cards were attached to airplanes which were based in Pennsylvania, which made the plurality of their fuel purchases in Pennsylvania, and which used their MSC credit cards at authorized FBO locations in Pennsylvania. MSC also entered into business agreements with the FBO locations in Pennsylvania which allowed the operators of the three aircraft to make purchases on credit in Pennsylvania.
In defendant's Reply, it argues that plaintiff CAC cannot be permitted to maintain this suit because it is not qualified to do business in Pennsylvania. It appears that CAC has filed an application for a Certificate of Authority, see Letter of Edward M. Dunham, Jr., 8/1/03, at 1-2, which may render defendant's argument moot. More importantly, however, defendant did not raise this argument in its initial motion. Accordingly, I will not consider it.
MSC moves in the alternative to transfer this action to the District of Kansas for the convenience of the parties pursuant to § 1404(a).
Section 1404(a) provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). The Supreme Court has recognized that § 1404(a) was intended to provide district courts with the discretion to evaluate motions for transfer according to an "individualized, case-by-case consideration of convenience and fairness." Stewart Org. Inc. v. Ricoh, Corp., 487 U.S. 22, 29 (1988). While there is no "definitive formula or list" of the factors relevant to this analysis, "courts have considered many variants of the private and public interests protected by the language of § 1404(a)." Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). These factors include private interests, such as the plaintiffs forum preference, as manifested in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their physical location and financial condition; the convenience of the witnesses (only to the extent that the witnesses may be unavailable at a trial held in one of the fora); and the location of the evidence. Id. In addition, courts have considered factors indicative of public interests, such as the relative enforceability of the judgment; practical considerations; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; and the familiarity of the trial judge with the applicable state law in diversity cases. Id. at 879-80.
The movant bears the burden of establishing the need for transfer, and plaintiffs choice of venue "should not be lightly disturbed." Id. at 879. In this case, MSC has not met its burden of demonstrating that the interests of justice mandate a transfer of this action to the District of Kansas. Despite the fact that plaintiffs' choice of venue is legally proper, defendant argues that Kansas provides a more convenient and less expensive location for the litigation of this action. Defendant, however, fails to acknowledge that the underlying action is a declaratory judgment, the resolution of which will not require access to thousands of documents or hundreds of witnesses. Plaintiffs simply asks this court to determine which state's law controls the liens placed by MSC upon plaintiffs' aircraft, and whether the liens are invalid under that state's law, inquiries which are neither intensely factual nor especially complicated. Other than a vague reference to "documentation" and "employees with knowledge of the facts," defendant points to nothing which convinces this court that the litigation of a declaratory judgment action would be overwhelmingly burdensome or inconvenient were it to take place in Pennsylvania. With regard to local interests, this case is of no special significance to either Pennsylvania or Kansas, and public interest factors in general do not favor one location over another. The aircraft central to this dispute are based in this district, many of the purchases giving rise to the liens occurred in this district, and defendant has shown no compelling reason why plaintiffs' original choice of forum should be disturbed. Consequently, defendant has not presented specific facts sufficient to meet its burden, and I thus find no reason to transfer this case.
CONCLUSION
For the foregoing reasons, this court has personal jurisdiction over the defendant. Furthermore, defendant has demonstrated no grounds for transferring this case to the District of Kansas. Accordingly, defendant's motion will be denied.
Memorandum and Order
And now, this ____ day of November, 2003, upon consideration of the motion of defendant Multi Service Aviation Corporation to dismiss plaintiffs complaint pursuant to Fed.R.Civ.P. 12(b)(2), or, in the alternative, to transfer this action to the District of Kansas (Doc. #4); the plaintiffs' response thereto (Doc. #7), and defendant's reply (Doc. #9), it is hereby ORDERED that defendant's motion is DENIED.