Opinion
CIVIL ACTION No. 03-904 (PBT)
November 26, 2003
MEMORANDUM ORDER
Presently before the Court is a motion to remand filed by Plaintiffs Scott Yohn and Christina Yohn (Doc. 2), to which Third-party Defendant Pilosio, S.p.A. ("Pilosio") has filed a response in opposition (Doc. 4). Also before the Court is Pilosio's motion to dismiss the joinder complaint filed by Defendant/Third-party Plaintiff Waco Equipment Company ("Waco") for lack of personal jurisdiction and insufficient service of process (Doc. 3). Waco has opposed the motion (Doc. 6). Upon consideration of the parties respective filings, to include Pilosio's supplemental submissions on each motion, Plaintiffs' motion to remand is denied in part and Pilosio's motion to dismiss the joinder complaint for lack of personal jurisdiction is granted.
Pilosio submitted a filing clarifying a position taken in its brief opposing the motion to remand (Doc. 5), and a reply brief in support of its motion to dismiss (Doc. 7).
I. PROCEDURAL HISTORY
This case arises out of a product liability lawsuit brought by Plaintiffs against Waco, an Ohio-based company, originally filed in the Philadelphia Court of Common Pleas on June 11, 2002, stemming from an incident on a construction site involving allegedly defective scaffolding supplied by Waco. In September 2002, Waco filed a joinder complaint in state court naming Pilosio as an additional defendant on the theory of independent contribution or indemnification. Pilosio, an Italian company, manufactured the scaffolding at issue. Plaintiff Scott Yohn's employer, McCrossin, G.M., Inc. ("McCrossin"), a Pennsylvania corporation, was also joined to the action by Waco as an additional defendant. Upon learning McCrossin may have been improperly joined, Pilosio filed a timely notice of removal in this Court on February 14, 2003.II. REMOVAL
Plaintiffs have moved to remand contending only that "[the] law does not authorize a third party defendant to remove a case to federal court." Pls. Mot. ¶ 2 (citations omitted). Plaintiffs' brief is devoid of any analysis and appears merely to rely on the literal language of the applicable federal removal statute, which permits the removal of "any civil action brought in a State court of which the district courts of the United States have original jurisdiction,. . . by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a) (emphasis added). This Court is not of the view that third-party defendants are per se precluded from availing themselves of the removal statute. As the Third Circuit has observed:
To adopt an inflexible rule barring removal by third party defendants . . . would have the curious effect of making a litigant's right to have a claim heard in a federal forum turn on the fortuity of being sued in a third-party complaint rather than in a separate action.Thompson v. Wheeler, 898 F.2d 406, 409 (3d Cir. 1990) (quoting Mignogna v. Sair Aviation. Inc., 679 F. Supp. 184, 188 (N.D.N.Y. 1988)). Waco's joinder of Pilosio was not compulsory; Waco could have filed suit separately to enforce its contractual rights against Pilosio. Nor does Plaintiff suggest that Waco's joinder of Pilosio was undertaken with fraudulent intent. Cf. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 110 (3d Cir. 1990). Thus the fortuity of Pilosio being named a third-party defendant in this case rather than in a separate action should not bar its access to our federal courts, particularly given that Plaintiffs cite no basis for their motion other than Pilosio's status as a third-party defendant. Thompson, 898 F.2d at 409. See also Chicago. R. I. P. R. Co. v. Stude, 346 U.S. 574, 580 (1954) (noting "[f]or purposes of removal, federal law determines who is plaintiff and who is defendant.").
The Court is aware that courts have split on this question. Compare Ford Motor Credit. Inc. v. Aaron-Lincoln Mercury. Inc., 563 F. Supp. 1108 (N.D. I11. 1983) (allowing third-party removal), with Share v. Sears. Roebuck Co., 550 F. Supp. 1107 (E.D. Pa. 1982) (not permitting third-party removal). See also Mignogna v. Sair Aviation, supra (discussing cases). As a district court's decision to remand an action to state court is generally not reviewable,see 28 U.S.C. § 1447(d), there is little appellate guidance on this question.
III. PERSONAL JURISDICTION
As noted, Pilosio is an Italian company with its sole place of business located in Feletto Umberto (UD), Italy. Pilosio maintains no offices in the United States, nor does it have any officers, directors, employees or sales representatives located in this country. Waco and Pilosio are parties to an exclusive distribution agreement, executed in June 1999, wherein Waco is the "SOLE DISTRIBUTOR for all FORMWORK SYSTEM [sic] produced by Pilosio . . . in all the territory of U.S.A." Waco Resp., Ex. A ¶ 1 (distribution agreement styled "Letter of Intent"). The distribution agreement required that Waco make an initial purchase commitment of $100,000 in the first year of the agreement, increasing to $200,000 each year thereafter, and that Pilosio replenish Waco's inventory of Pilosio products at "the port of Baltimore" for sale in the United States.Id. ¶¶ 2, 5. Consistent with the terms of the agreement, Waco maintains an inventory of Pilosio products which it either leases out or uses itself on construction job sites throughout the country. Pilosio for its part, in addition to replenishing Waco's inventory, is required to maintain $5 million dollars in liability insurance to cover "Civil Responsibility on their products." Id. ¶ 3. Pilosio does not advertise or otherwise market its goods in the United States.
Based on these facts, Pilosio has moved to dismiss Waco's joinder complaint against it for lack of personal jurisdiction contending that it has not had sufficient minimum contacts with this District, or Pennsylvania more broadly, to satisfy the requirements for either specific or general jurisdiction. Pilosio asserts that exercise of personal jurisdiction over it would be unconstitutional, violative of the Due Process Clause of the Fourteenth Amendment, and would offend traditional notions of fair play and substantial justice. Conversely, Waco contends that by entering into an exclusive distribution agreement with Waco and placing its products in the stream of interstate commerce, and by reason of its contractual obligation to maintain liability insurance to cover any civil liability arising from the use of its products, Pilosio has availed itself to American courts and, presumably, a court sitting in Pennsylvania.
"A federal court may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of the [forum] state." Provident Nat'l Bank v. Calif. Fed. Sav. Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987). Pennsylvania's long-arm statute allows for in personam jurisdiction "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." 42 Pa.C.S.A. § 5322(b). Thus, Pennsylvania's long-arm statute "is coextensive with the due process clause of the United States Constitution," Time Share Vacation Club v. Atlantic Resorts Ltd., 735 F.2d 61, 63 (3d Cir. 1984), and ultimately permits jurisdiction so long as the nonresident has sufficient minimum contacts with the Commonwealth and the court's exercise of personal jurisdiction over the nonresident comports with "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations omitted); Dollar Savings Bank v. First Sec.Bank of Utah, 746 F.2d 208, 213 (3d Cir. 1984).
Once a defendant has raised the question of personal jurisdiction, the plaintiff (here, the third-party plaintiff) bears the burden of making out a prima facie case showing sufficient minimum contacts by the defendant with the forum state. Time Share, 735 F.2d at 65. To meet this burden, the plaintiff must demonstrate that either (1) the particular cause of action sued upon arose from the defendant's activities in the forum state ("specific jurisdiction"), or (2) that the defendant has "continuous and systematic" contacts with the forum state ("general jurisdiction"). Helicopteros Nacionales de Colombia. S.A. v. Hall, 466 U.S. 408, 414 (1984); Gehling v. St. George's Sch. of Med., 773 F.2d 539, 541 (3d Cir. 1985). Waco has failed to meet its prima facie burden.
Waco urges that the distribution agreement, in particular the agreement's requirement that Pilosio maintain liability insurance, is proof that Pilosio both purposefully acted to make its products available to the entire United States, and expected to be haled into American courts, to include those in Pennsylvania, allowing for general jurisdiction. The law does not support this conclusion. General jurisdiction exists where the defendant "has maintained `continuous and substantial' forum affiliations.'" Grand Entm't Group. Ltd, v. Star Media Sales. Inc., 988 F.2d 476, 481 n. 3 (3d Cir. 1993) (quoting Reliance Steel Prods. Co. v. Watson. Ess. Marshall Enggas, 675 F.2d 587, 588 (3d Cir. 1982)). The distribution agreement in no way mentions the Commonwealth and, as a general matter, reliance on such a contract is insufficient, without more, to evidence minimum contacts for purposes of establishing general jurisdiction. Moreover, though Pilosio was aware that its products would be introduced into the interstate stream of commerce in this country, it was Waco, not Pilosio, which determined where the products would be sold. In this respect, this case is not unlike Stranahan Gear Co. Inc. v. NL Indus. Inc., 800 F.2d 53 (3d Cir. 1986), where the Third Circuit rejected a distributor's argument that a nonresident purchaser could be haled into a Pennsylvania court merely because it was on notice that the distributor obtained the goods sold to the nonresident from a Pennsylvania manufacturer. Quoting the district court approvingly, the circuit court held:
The mere fact that Blue Streak [the nonresident defendant] was on notice that N.L. [the distributor] intended to obtain the goods necessary to perform its end of the contract from a Pennsylvania manufacturer will not support the conclusion that Blue Streak purposely availed itself of the privilege of acting within Pennsylvania. The unilateral activity of N.L. in contracting with a Pennsylvania supplier will not satisfy the requirement of contact between the defendant (here the third party defendant) and Pennsylvania.800 F.2d at 59. Similar rationale applies in this case. Waco's unilateral decision to sell Pilosio products to Scott Yohn's employer in Pennsylvania does not satisfy due process requirements for establishing minimum contacts to permit general jurisdiction over Pilosio. While Pilosio was aware that its products would be sold in the United States, "placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State." Asahi Metal Indus. Co., Ltd, v. Superior Ct. of California. Solano County, 480 U.S. 102, 112 (1987). Thus, Pilosio's assent to the distribution agreement with Waco no more evidences Pilosio's intent to avail itself to Pennsylvania courts than the nonresident's conduct in Stranahan. See also Lehigh Coal and Navigation Co. v. Geko-Mayo. GmbH, 56 F. Supp.2d 559 (E.D. Pa. 1999).
Likewise, the fact that Pilosio maintains a website and identifies Waco as its North American distributor does not allow for general jurisdiction over Pilosio in Pennsylvania. Waco has not identified any statements in the website directed at Pennsylvania residents. See Asahi, 480 U.S. at 112 (citing examples whereby a "defendant may indicate an intent or purpose to serve the market in the forum State.").
This conclusion is particularly compelled in light of the fact that the nonresident defendant in Stranahan, Blue Streak, twice visited the manufacturer in Pennsylvania in an attempt to resolve the underlying dispute prior to the lawsuit being initiated. Waco has proffered no evidence of a Pilosio agent or employee visiting the United States in connection with the distribution agreement. Thus, Pilosio's contacts with the Commonwealth are fewer than the Stranahan nonresident. This Court expresses no opinion on the question of whether Pilosio may be properly sued in another forum state.
Specific jurisdiction over Pilosio in a Pennsylvania court is also precluded. Waco has offered little evidence of Pilosio's contacts with the State. The only alleged direct contact identified by Waco is a single transaction, unrelated to this litigation, valued at $3.70 and delivered to Altoona, Pennsylvania, located in the Western District of Pennsylvania. While a single contact with the forum state may in some cases be sufficient to assert specific jurisdiction, this isolated andde minimus transaction in Altoona is insufficient to show that Pilosio "purposefully direct[ed]. . .[its] activities toward [Pennsylvania]" to avail itself to the benefits and protections of this State's laws. Nor can it be concluded on the basis of this sale that Pilosio "reasonably anticipate [d] being haled into court" here in Pennsylvania. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Accordingly, Pilosio's motion to dismiss for lack of personaljurisdiction is granted.
As the joinder complaint asserted against Pilosio is dismissed for lack of personal jurisdiction, the Court does not reach the issue of whether service of process was insufficient.
IV. CONCLUSION
The Court finds that Pilosio's removal was proper and grants its motion to dismiss for lack of personal jurisdiction. As all remaining claims in this action concern matters purely of state law, the Court remands these claims to the Philadelphia County Court of Common Pleas. An appropriate order follows.