UNITED STATES OF
AMERICA
v.
FAMOUS ARTISTS CORPORATION
FAMOUS
HOSPITALITY CORPORATION, INC.,
and COMMUNICORP, INC.
CIVIL ACTION NO.
95-5240
UNITED STATES
DISTRICT COURT
FOR THE EASTERN DISTRICT
OF PENNSYLVANIA
1996 U.S. Dist.
LEXIS 3043
March 14, 1996,
Decided
March 14, 1996, Filed
March 15, 1996, ENTERED
COUNSEL: [*1] For UNITED STATES
OF AMERICA, PLAINTIFF: JEANNINE R.
LESPERANCE, [COR LD NTC], U.S.
DEPT. OF JUSTICE, CIVIL DIVISION, WASHINGTON, DC.
For FAMOUS ARTISTS CORPORATION, FAMOUS
HOSPITALITY, INC., DEFENDANTS: JOHN E. MC
KEEVER, [COR LD NTC], SCHNADER,
HARRISON, SEGAL & LEWIS, PHILA, PA. KAREN L.
TOMLINSON, [COR LD NTC],
SCHNADER, HARRISON, SEGAL & LEWIS, PHILA, PA. For
COMMUNICORP, INC., DEFENDANT: JOHN E. MC
KEEVER, [COR LD NTC], SCHNADER,
HARRISON, SEGAL & LEWIS, PHILA,
PA.
JUDGES: JUDGE LOUIS C. BECHTLE
OPINIONBY: LOUIS C. BECHTLE
OPINION: MEMORANDUM AND
ORDER
BECHTLE, J.
MARCH 14, 1996
Presently before the court are Defendant
Communicorp, Inc.'s Motion to Dismiss for Lack of Personal
Jurisdiction or, in the Alternative, to Transfer Venue to
the Middle District of Georgia, and Defendants Famous
Artists Corporation's and Famous Hospitality Corporation,
Inc.'s separate Motions to Transfer Venue to the Middle
District of Georgia. Plaintiff United States of America has
responded to these motions. For the reasons set forth below,
the three motions will be denied.
I. BACKGROUND
This civil action centers around Plaintiff United States of
America's ("Plaintiff") [*2] allegations that
Defendants owe it $ 2,814,091.13 in damages for deficiencies
in postal rates used between 1987 and December 19, 1990.
Plaintiff alleges that Defendants Famous Artists Corp.
("Famous Artists") and Famous Hospitality Corp., Inc.
("Famous Hospitality") underpaid postage on its mailings by
unlawfully using the nonprofit postal rate. Further,
Plaintiff alleges that Communicorp, Inc. ("Communicorp")
also is liable for the debt either because its sale of
Famous Artists' assets was a fraudulent conveyance or
because it acquired the proceeds from the sale of Famous
Artists subject to its debt to Plaintiff.
Between December 9, 1986, and January 29,
1990, Famous Artists was a wholly owned subsidiary of
Communicorp. (Compl. P 28, FA Answer P 28 n1 ; Howard Aff. P
3 n2 .) On January 29, 1990, Communicorp sold the vast bulk
of Famous Artists' assets to Famous Hospitality through an
Asset Purchase Agreement. n3 (Compl. P 29; FA Answer P 29;
Howard Aff. P 10; see Communicorp's Mem. Supp. Dismissal or
Transfer Ex. 3.) Plaintiff alleges that after Famous
Hospitality purchased Famous Artists' assets, the business
of Famous Artists continued as a division of Famous
Hospitality. n4 [*3] (Compl. P 31.) On May 31, 1993,
Famous Hospitality sold some of its Famous Artists division
to Barton & Cotton, Inc., a Maryland corporation. (FH
Answer P 31.) On July 14, 1995, Famous Artists was
dissolved. (Compl. P 32; FA Answer P 32.) Plaintiff seeks
relief for postal rate deficiencies by Famous Artists
between 1987 and January 29, 1990, and by Famous Hospitality
between January 29, 1990, and December 17, 1990. n5 (Compl.
PP 76-77.)
Footnotes:
n1 Citations to "FA Answer" and
"FH Answer" refer to Answers filed by Famous Artists and
Famous Hospitality, respectively.
n2 Citations to "Howard Aff." refer to the Affidavit of Bev
H. Howard, Communicorp's President and Director, who also
served as President of Famous Artists and another
Communicorp subsidiary named A.S. Hospitality, Inc. ("A.S.
Hospitality"). (Howard Aff. P 4.) Howard's affidavit is
attached as Exhibit 8 to Communicorp's Motion to Dismiss for
Lack of Personal Jurisdiction or, in the Alternative, to
Transfer to the Middle District of Georgia. The court will
refer to this memorandum as "Communicorp's Mem. Supp.
Dismissal or Transfer."
n3 MWM Dexter, Inc., incorporated a subsidiary, Famous
Hospitality, to facilitate the asset transfer. (Howard Aff.
P 10.) Communicorp sold the vast bulk of the assets of
Famous Artists and A.S. Hospitality to Famous Hospitality in
exchange for $ 3.173 million in cash and two subordinated
notes payable in the amounts of $ 2 million and $ 880,000.
(Id.; FA Answer P 29; FH Answer P 29.) The Asset Purchase
Agreement was executed by representatives of Communicorp and
its parent, American Family Corporation (now known as AFLAC,
Inc.), A.S. Hospitality, Inc., Famous Artists, and Famous
Hospitality. (Howard Aff. P 10.) [*4]
n4 Famous Hospitality acknowledges that its Famous Artists
Studios Division conducted its business operations in Valley
Forge, Pennsylvania. (FH Answer P 31.)
n5 To keep matters simple, this Memorandum will refer to
Famous Artists and the Famous Artists division of Famous
Hospitality both as "Famous Artists."
From 1987 through 1990, Famous Artists
was in the business of helping nonprofit organizations
solicit charitable contributions by designing gifts such as
greeting cards and return-address labels and mailing them on
behalf of the nonprofit group to individuals on a mailing
list. (Compl. P 35; FA Answer 35.) The mailings by Famous
Artists included these gifts, a personalized appeal letter,
and an envelope for returning donations to the nonprofit
group. (FA Answer P 35(c), (d).) As part of its relationship
with the nonprofit clients, Famous Artists paid the initial
design, printing, and mailing costs. (Compl. P 35(e), (f);
FA Answer P 35(e), (f).) In exchange for assuming this
responsibility, Famous Artists had the right to take all
incoming contributions until its costs and profits relating
[*5] to the mailing program were paid in full.
(Compl. P 35(e), (f); FA Answer P 35(e), (f).) Famous
Artists also offered to its nonprofit clients, at a nominal
charge, a full processing service that included banking and
periodic reporting. (Compl. P 35(g); FA Answer P 35(g).) At
the client's option, Famous Artists would establish a bank
account in which all contributions would be deposited.
(Compl. P 35(g); FA Answer P 35(g).) No withdrawal from the
account could be made without the signature of both the
nonprofit client and a Famous Artists officer. (Compl. P
35(g); FA Answer P 35(g).) In the event that contributions
were insufficient to pay Famous Artists' costs and profits,
Famous Artists reserved the right to mail gifts to and
solicit donations from persons on the mailing list until
Famous Artists' loss was zero. n6 (Compl. P 35(i); FA Answer
P 35(i).) Famous Artists had the duty to track incoming
contributions and report the results of the mailing program
to the nonprofit client. (Compl. P 35(j); FA Answer P
35(j).) Famous Artists mailed its customized greeting cards
and return-address labels at the nonprofit postal rate.
(Compl. P 36; FA Answer P 36.)
Footnotes:
n6 Plaintiff alleges, and Famous Artists denies, that, as
part of Famous Artists' business practice, in the event that
contributions were insufficient to pay Famous Artists' costs
and profits, the nonprofit client received nothing, but was
not required to pay Famous Artists for any loss. (Compl. P
35(h); FA Answer P 35(h).)
[*6]
In a nutshell, Plaintiff alleges that
Famous Artists' mailings between 1987 and December 19, 1990,
did not qualify for the nonprofit rate because its mailings
for its nonprofit clients were " cooperative. " (See Compl.
PP 38-74.) Under federal regulations, only nonprofit
organizations authorized by the United States Postal Service
("USPS") may mail at the nonprofit rate ("Authorized
Organizations"). (Compl. P 20; FA Answer P 20; FH Answer P
20.) n7 An Authorized Organization may mail only its own
materials at the nonprofit rate and may not delegate or lend
the use of its authorization to any other person or
organization. (Compl. P 22; FA Answer P 22; FH Answer P 22.)
An Authorized Organization, however, may hire a for-profit
company to perform the ministerial task of mailing materials
belonging to the Authorized Organization, and the materials
may be mailed at the nonprofit rate only if the Authorized
Organization has a principal-agent relationship with the
for-profit mailer. (Compl. P 23; FA Answer P 23; FH Answer P
23.) If, however, an Authorized Organization contracts with
an outside service to mail materials, and the relationship
is not a principal-agent relationship, the USPS [*7]
deems the mailing to be " cooperative, " and the material
may not be mailed at the nonprofit rate unless all parties
to the arrangement are Authorized Organizations. (Compl. P
24; FA Answer P 24; FH Answer P 24.)
Footnotes:
n7 Famous Artists and Famous Hospitality respond to this
assertion as follows: "Paragraph 20 of the Complaint states
a legal conclusion to which no responsive pleading is
required." (FA Answer P 20; FH Answer P 20). This is not a
proper response. The assertion that, under federal
regulations, only nonprofit organizations authorized by the
USPS may mail at the nonprofit rate is an assertion of fact,
not a conclusion of law.
Famous Artists and Famous Hospitality could have responded
in three ways. They could have either admitted the fact,
denied the fact, or stated that they are without knowledge
or information sufficient to form a belief as to the truth
of the fact. Fed. R. Civ. P. 8(b). Therefore, Famous
Artists' and Famous Hospitality's responses, under the rule,
are treated as admissions. Fed. R. Civ. P. 8(d) ("Averments
in a pleading to which a responsive pleading is required,
other than those as to the amount of damage, are admitted
when not denied in a responsive pleading.").
Likewise, Famous Artists' and Famous Hospitality's responses
to other allegations are also improper under Rule 8. For
example, their response that "the contracts speak for
themselves" is inappropriate. (See FA Answer PP 56, 58, 59,
63-65; FH Answer PP 56, 58, 59, 63-65.)
The requirement that responding parties limit their
responses to one of the three listed above serves the
important function of narrowing the issues in dispute.
Because it would have been preferable for Famous Artists and
Famous Hospitality to follow these rules more strictly, the
court will direct both parties to file Amended Answers that
follow Rule 8's requirements.
[*8]
Plaintiff alleges that two clauses in
Famous Artists' contracts with its nonprofit clients created
a " cooperative" relationship between Famous Artists and its
nonprofit clients, which precluded Famous Artists from
mailing its fundraising material at nonprofit rates. First,
Famous Artists' agreements provide that the nonprofit client
would not be financially responsible except to the extent of
the money received as a result of the fundraising program
(the "no-risk clause"). (See Compl. P 45; FA Answer P 45; FH
Answer P 45.) Second, the same contracts provided that
donors would forward payments directly to the nonprofit
group, but the money was to be deposited daily in a bank
account held jointly by Famous Artists and the nonprofit
client (the "joint account clause"). n8 (See Compl. P 45; FA
Answer P 45; FH Answer P 45.)
Footnotes:
n8 In 1975, the USPS informed Famous Artists, then known as
Famous Artists Studios, that the presence of the "no-risk"
and "joint account" clauses in its contracts with nonprofit
groups made Famous Artists ineligible to use the nonprofit
postal rate for its mailings. (Compl. P 44; FA Answer P 44;
FH Answer P 44.) Plaintiff alleges that Famous Artists later
deleted the two clauses from its contracts, and that the
USPS approved mailings at the nonprofit rate under these
amended contracts. (Compl. PP 45, 48.) Plaintiff alleges
that, from 1987 to 1990, Famous Artists's contracts with
nonprofit groups revived the "no risk" and "joint account"
clauses. (Compl. PP 63, 65.)
[*9]
In 1988, the USPS audited Famous Artists'
relationship with a nonprofit entity called "The Tall Cedars
of North America" ("Tall Cedars") and determined that Famous
Artists was sending cooperative mailings on behalf of Tall
Cedars at a nonprofit rate. n9 (Compl. P 50; FA Answer P 50;
FH Answer P 50.) Plaintiff avers that the Tall Cedars audit
led to a more comprehensive USPS review of Famous Artists'
relationships with all of its nonprofit clients. (Compl. P
51.) After the broader USPS investigation, the agency
concluded that Famous Artists' contracts created "
cooperative" mailings for many nonprofit clients. (Compl. P
55; FA Answer P 55.) Plaintiff alleges that the USPS found
that nearly 31.3 million pieces of mail were improperly
mailed at the nonprofit rate, representing a $ 2,814,091.13
deficiency in postage, as compared with the regular bulk
third class rate. (Compl. P 66.)
Footnotes:
n9 Plaintiff alleges that such conduct violates provisions
of the Domestic Mail Manual, which is a USPS regulation, 39
C.F.R. @ 211.2(a)(2), incorporated by reference in 39 C.F.R.
@ 111.1.
[*10]
On May 15, 1991, the USPS sent a letter
to Famous Artists demanding payment of the deficiency.
(Compl. P 68; FA Answer P 68; FH Answer P 68.) On September
20, 1991, Famous Artists and Famous Hospitality filed an
appeal, which the USPS denied on August 16, 1994, stating
that its denial was the agency's final decision. (Compl. P
70; FA Answer P 70; FH Answer P 70.) On May 2, 1995, the
USPS sent to Famous Artists a second demand letter for
payment of the deficiency. (Compl. P 71; FA Answer P 71; FH
Answer P 71.) On June 30, 1995, Famous Artists and Famous
Hospitality asked the USPS to mitigate the revenue
deficiency. (Compl. P 72; FA Answer P 72; FH Answer P 72.)
The record does not disclose whether USPS responded to this
request.
On August 16, 1995, Plaintiffs filed this
civil action against Famous Artists, Famous Hospitality, and
Communicorp, alleging seven claims that generally fall into
three categories. Count One alleges a claim to enforce the
USPS assessment of the deficiencies in postage against
Famous Artists and Famous Hospitality in the amounts of $
2,314,000 and $ 500,091.13, respectively. Count Six is
Plaintiff's request, as a principal creditor of Famous
Artists, for an [*11] accounting of all assets as of
July 14, 1995, the date of Famous Artists' dissolution. In
Counts Two, Three, Four, Five and Seven, Plaintiff seeks to
recover the alleged deficiency against Communicorp under the
federal priority statute, 31 U.S.C. @ 3713, the Federal Debt
Collection Procedures Act, 28 U.S.C. @ 3001 et seq., and
various provisions of Pennsylvania common law.
On October 23, 1995, Communicorp filed a
Motion to Dismiss for Lack of Personal Jurisdiction or, in
the Alternative, to Transfer Venue to the Middle District of
Georgia. On the same day, Famous Artists and Famous
Hospitality filed separate Answers and motions to Transfer
Venue to the Middle District of Georgia. Plaintiffs filed
timely opposition papers. For the reasons set forth below,
the court will deny Defendants' motions.
II. COMMUNICORP'S MOTION TO DISMISS
FOR LACK OF PERSONAL JURISDICTION
Communicorp argues that it lacks sufficient contacts
with Pennsylvania to warrant the exercise of this court's
personal jurisdiction. Plaintiff responds that this court
has personal jurisdiction over Communicorp because it has
sued Communicorp under the Federal Debt Collection
Procedures Act, 28 U.S.C. [*12] @ 3001 et seq. (the
"FDCPA"), which authorizes nationwide service of process,
and that this court's jurisdiction is coextensive with the
boundaries of the United States.
A. The Applicable Standard
In response to a claim, a party may assert the defense
of lack of jurisdiction over the person. Fed. R. Civ. P.
12(b)(2). When the defendant raises such a defense, the
burden shifts to the plaintiff to prove, by a preponderance
of the evidence, facts sufficient to establish jurisdiction.
Carteret Sav. Bank, F.A. v. Shushan, 954 F.2d 141, 146 (3d
Cir.), cert. denied, 506 U.S. 817, 121 L. Ed. 2d 29, 113 S.
Ct. 61 (1992). To satisfy its burden, the plaintiff may not
rely on the bare pleadings, but must establish
jurisdictional facts through sworn affidavits or other
competent evidence. Time Share Vacation Club v. Atlantic
Resorts, Ltd., 735 F.2d 61, 66 n.7 (3d Cir. 1984).
Before a court can exercise personal
jurisdiction over a defendant, there must be a basis for the
defendant's amenability to service of summons. Omni Capital
Int'l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97,
104, 98 L. Ed. 2d 415, 108 S. Ct. 404 (1987). Unless
otherwise provided by federal law, federal courts must
follow the methods prescribed by the state [*13] in
which the court is located to determine whether a defendant
is amenable to service. Id. at 105; Fed. R. Civ. P. 4(e).
Thus, a federal district court must look either to a federal
statute or to the long-arm statute of the state in which it
sits. Omni Capital, 484 U.S. at 105. This rule also applies
to service upon corporations. See Fed. R. Civ. P.
4(h).
In this case, Plaintiff has alleged a
claim against Communicorp under the FDCPA, which provides
for nationwide service of process. This federal statute n10
triggers a special rule that is essential to the court's
determination of whether it can constitutionally exercise
personal jurisdiction over Communicorp: Where Congress
specifically authorizes nationwide service of process, a
federal district court's jurisdiction encompasses the
boundaries of the United States, and due process requires
that a defendant have minimum contacts only with the United
States. See Go-Video, Inc. v. Akai Elec. Co., Ltd., 885 F.2d
1406, 1414 (9th Cir. 1989) (stating that federal statutes
permitting service of process beyond the boundaries of the
forum state broaden the authorized scope of personal
jurisdiction and that the question becomes [*14]
whether the party has sufficient contacts with the United
States, not any particular state); Dent v. Cunningham, 786
F.2d 173, 175 (3d Cir. 1986); Max Daetwyler v. R. Meyer, 762
F.2d 290, 297 (3d Cir.), cert. denied, 474 U.S. 980, 88 L.
Ed. 2d 336, 106 S. Ct. 383 (1985) ("In the absence of some
provision
authorizing nationwide service of process,
the district court's power to exercise in personam
jurisdiction is limited by Fed. R. Civ. P. 4(e) and by the
Pennsylvania long-arm statute, whose incorporation by
reference, Rule 4(e) requires."); American Trade Partners,
L.P. v. A-1 Int'l Importing Enters., Ltd., 755 F. Supp.
1292, 1302 (E.D. Pa. 1990); Ethanol Partners Accredited v.
Wiener, Zuckerbrot, Weiss & Brecher, 617 F. Supp. 300,
307 (E.D. Pa. 1985) (holding that, even though defendants
had no significant contacts with the forum state, the court
had personal jurisdiction over the defendants "because the
action here is brought under a statute which provides for
nationwide service of process"); 4 Charles A. Wright &
Arthur L. Miller, Federal Practice & Procedure @ 1067.1,
at 83-84 (Supp. 1995) ("The Supreme Court never has ruled on
the issue of reconciling the minimum contacts doctrine
[*15] with nationwide service of process authorized
by federal statute, but all of the lower federal courts that
have addressed the issue have applied a national contacts
standard when process is served under an applicable federal
service provision.") (footnote omitted). In nondiversity
cases such as this one, n11 the Due Process Clause of the
Fifth Amendment governs a district court's exercise of
personal jurisdiction.
Footnotes:
n10 The relevant part of the statute reads as follows:
(b) Nationwide enforcement -- (1) Except as provided in
paragraph (2) -- (A) any writ, order, judgment, or other
process, including a summons and complaint, filed under this
chapter, may be served in any State; and (B) such writ,
order, or judgment may be enforced by the court issuing the
writ, order, or process, regardless of where the person is
served with the writ, order, or process.
(2) If the debtor so requests, within 20 days after
receiving the notice described in section 3101(d) or
3202(b), the action or proceeding in which the writ, order,
or judgment was issued shall be transferred to the district
court for the district in which the debtor resides. 28
U.S.C. @ 3004(b). The FDCPA was designed to "create a
Federal procedural system so that the Federal government can
better coordinate its debt management effort." Schueler v.
Rayjas Enters., Inc., 847 F. Supp. 1147, 1150 (S.D.N.Y.
1994) (reprinting the government's statement, which includes
a section-by-section analysis of the bill that was submitted
to the Senate Judiciary Committee and referred to at the
hearings on the FDCPA). The nationwide service provision was
enacted "in recognition of accelerating transportation and
communication." In re New York Trap Rock Corp., 158 Bankr.
574, 578 (S.D.N.Y. 1993). [*16]
n11 Plaintiff asserts subject-matter jurisdiction under 28
U.S.C. @@ 1331, 1339; 39 U.S.C. @ 401(1), 409(a), 2601,
2605. (Compl. P 2). Neither Famous Artists nor Famous
Hospitality properly denied this assertion under Rule 8, so
the assertion is deemed to be admitted. See supra note
7.
Having determined that the relevant forum
is the United States, and not the Commonwealth of
Pennsylvania, the court will proceed with its due process
analysis, which involves two steps. Vetrotex CertainTeed
Corp. v. Consolidated Fiber Glass Prods. Co., 75 F.3d 147,
150 (3d Cir. 1996); Grand Entertainment Group v. Star Media
Sales, 988 F.2d 476, 481 (3d Cir. 1993). First, the court
must determine whether the defendant has constitutionally
sufficient minimum contacts with the relevant jurisdiction,
in this case, the United States. See Vetrotex, 75 F.3d at
150; Grand Entertainment, 988 F.2d at 481. Minimum contacts
exist when the defendant has "purposefully directed" its
activities towards residents of the forum. Vetrotex, 75 F.3d
at 150 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462,
474, [*17] 85 L. Ed. 2d 528, 105 S. Ct. 2174
(1985)). Second, if the court finds sufficient minimum
contacts with the forum, "jurisdiction may be exercised
where the court determines, in its discretion, that to do so
would comport with 'traditional notions of fair play and
substantial justice.'" Id. at 150-51 (quoting International
Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66
S. Ct. 154 (1945)); Grand Entertainment, 988 F.2d at
481.
The United States Supreme Court and the
United States Court of Appeals for the Third Circuit have
discussed the two methods by which minimum contacts can
arise. "General jurisdiction" is invoked when the
"'plaintiff's cause of action arises from the defendant's
non-forum related activities.'" Vetrotex, 75 F.3d at 151 n.3
(quoting North Penn Gas Co. v. Corning Natural Gas Corp.,
897 F.2d 687, 690 n.2 (3d Cir.), cert. denied, 498 U.S. 847,
112 L. Ed. 2d 101, 111 S. Ct. 133 (1990)). A plaintiff
establishes general jurisdiction if he shows that the
defendant has "maintained 'continuous and systematic'
contacts with the forum." Id. (citing Burger King, 471 U.S.
at 473 n.15; Helicopteros Nacionales de Colom., S.A. v.
Hall, 466 U.S. 408, 414 n.8, 80 L. Ed. 2d 404, 104 S. Ct.
1868 (1984)). "'Specific jurisdiction is invoked when the
cause of [*18] action arises from the defendant's
forum related activities' such that the defendant should
reasonably anticipate being haled into court there." Id.
(internal quotations and citations omitted). Communicorp
alleges that this court lacks both general and specific
jurisdiction over it.
B. Minimum Contacts
Because this is a federal question case and Plaintiff
has alleged a claim under a federal statute that provides
for nationwide service of process, the first prong of the
personal jurisdiction analysis is satisfied if Communicorp
has minimum contacts with the United States as a whole.
Communicorp's President admits that Communicorp is a Georgia
corporation that is headquartered and doing business in
Columbus, Georgia. (Howard Aff. P 6.) These facts establish
that Communicorp is a United States citizen, that its
contacts with the United States are continuous and
substantial, and that Communicorp has purposely directed its
activities at residents of the United States. Because the
FDCPA claim arises out of Communicorp's contacts with the
United States, and Communicorp should reasonably expect to
be haled into a United States court, this court has specific
personal jurisdiction [*19] over Communicorp as to
the FDCPA claim.
C. Fair Play and Substantial
Justice
Now that Plaintiff has established that Communicorp has
sufficient minimum contacts with the United States to
justify this court's exercise of specific jurisdiction,
Communicorp "must present a compelling case that the
presence of some other considerations would render
jurisdiction unreasonable." Burger King, 471 U.S. at 477.
Courts, in determining whether subjecting a defendant to
jurisdiction is fair and reasonable, should consider the
following factors: the burden on the defendant, the
interests of the forum, the plaintiff's interest in
obtaining relief, the interstate judicial system's interest
in obtaining the most efficient resolution of controversies,
and the shared interest of the several states in furthering
fundamental substantive social policies. Grand
Entertainment, 988 F.2d at 483 (citing Asahi Metal Indus.
Co. v. Superior Court, 480 U.S. 102, 113, 94 L. Ed. 2d 92,
107 S. Ct. 1026 (1987)) (quotation omitted).
The court believes that the boundaries of
the United States, and not the boundaries of Pennsylvania,
is the relevant jurisdiction framework for this fairness
inquiry. It is beyond dispute that Communicorp [*20]
can reasonably be haled into a United States court because
Communicorp is incorporated in and transacts business in the
United States. Communicorp has not presented compelling
reasons for the court to find that defending this action in
the United States would be unreasonable. n12 Therefore, this
court's exercise of personal jurisdiction over Communicorp
as to the FDCPA claims does not offend the right to fair
play and substantial justice that is at the heart of the Due
Process Clause.
Footnotes:
n12 Communicorp alleges that litigating this case in
Pennsylvania will be burdensome and unduly expensive. Those
arguments, however, are more appropriately addressed as part
of Communicorp's argument supporting a 28 U.S.C. @ 1404(a)
transfer to the Middle District of Georgia.
D. Pendent Personal Jurisdiction
The court has subject-matter jurisdiction over
Plaintiff's federal statutory claims against Communicorp and
its attempts to enforce the administrative decision because
these claims arise under the laws of the United
[*21] States. 28 U.S.C. @ 1331. In addition, the
court has subject-matter jurisdiction over Plaintiff's state
law claims against Communicorp and Famous Artists because
"the district courts have original jurisdiction of all civil
actions, suits or proceedings commenced by the United
States
" 28 U.S.C. @ 1345. Therefore, the court has the
power to hear all claims alleged by Plaintiff against
Communicorp. So much for jurisdiction over the claims. We
must now turn to jurisdiction over the person.
Usually, a plaintiff raising separate
claims must have personal jurisdiction over the defendant
with respect to each claim. Anglo Am. Ins. Group, P.L.C. v.
CalFed, Inc., 1996 U.S. Dist. LEXIS 2112, No. 92 CIV.
9137(RLC), 1996 WL 79856 at * 13 n.17 (S.D.N.Y. Feb. 26,
1996). However, the Third Circuit has held that where the
defendant is properly before the court pursuant to the
extraterritorial service provision of a federal statute, the
court may, in its discretion, exercise personal jurisdiction
over him in connection with pendent state claims. Robinson
v. Penn Cent. Co., 484 F.2d 553 (3d Cir. 1973); Bowers v.
NETI Technologies, Inc., 690 F. Supp. 349, 357 (E.D. Pa.
1988); Ethanol Partners, 617 F. Supp. at 307; [*22]
see also IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049,
1056-57 (2d Cir. 1993), cert. denied, 130 L. Ed. 2d 38, 115
S. Ct. 86 (1994) (applying the same rule and citing cases).
Some courts have labeled this doctrine "pendent personal
jurisdiction." Herrmann, 9 F.3d at 1057; Bowers, 690 F.
Supp. at 357.
The court will exercise "pendent personal
jurisdiction" over Communicorp as to Plaintiff's remaining
federal and state claims because all claims arise from a
common nucleus of operative facts. See Herrmann, 9 F.3d at
1057. All of those claims allege that Communicorp stripped
Famous Artists of its assets and failed to make provisions
for Plaintiff as one of its creditors. As stated above, the
court will exercise its discretion and subject Communicorp
to personal jurisdiction in those other claims because doing
so will enable the court and the parties to more efficiently
resolve this dispute. Dismissing all but Plaintiff's FDCPA
claim against Communicorp would likely force two trials in
two courts and would result in two presentations of the same
witnesses and documents.
Thus, the court need not consider whether
personal jurisdiction as to the other federal and state
[*23] law claims is available because it has
personal jurisdiction over Communicorp under the FDCPA, and
the other four claims against Communicorp derive from a
common nucleus of operative facts. Accordingly, the court
has personal jurisdiction over Communicorp as to all claims
in the Complaint.
III. DEFENDANTS' MOTIONS TO
TRANSFER
A. Applicable Standard
A district court may transfer any civil action to
another district or division where it might have been
brought "for the convenience of parties and witnesses, in
the interest of justice." 28 U.S.C. @ 1404(a).
B. Propriety of Bringing this Action
in the Middle District of Georgia
The first issue is whether Plaintiff might have brought
this civil action in the United States District Court for
the Middle District of Georgia. Examination of this issue
requires an analysis of whether venue is proper in that
judicial district. In a civil action in which jurisdiction
is not founded solely on diversity of citizenship, venue is
proper in a judicial district in which a substantial part of
the events or omissions giving rise to the claim occurred,
or a substantial part of the property that is the subject of
the [*24] action is situated. 28 U.S.C. @
1391(b)(2). In addition, venue is proper in a district in
which any defendant resides, if all defendants reside in the
same state. 28 U.S.C. @ 1391(b)(1). A corporate defendant is
deemed to reside in any judicial district in which it is
subject to personal jurisdiction at the time the action is
commenced. 28 U.S.C. @ 1391(c).
1. Location of the Events Giving Rise
to the Claims
a. Claims vs. Communicorp
The court believes that, as to Plaintiff's claims against
Communicorp, a ubstantial part of the events giving rise to
the claims occurred in the Middle District of Georgia.
Plaintiff alleges that, on January 29, 1990, in Columbus,
Georgia, Communicorp, knowing of Famous Artists' debt to
Plaintiff, executed an Asset Purchase Agreement in which it
sold Famous Artists and another wholly owned subsidiary to
Famous Hospitality and kept the cash proceeds. Famous
Hospitality's consideration for the transfer of Famous
Artists' assets consisted solely of funds wired from Chicago
to Columbus, and two promissory notes executed in Georgia.
(FA Answer P 82; FH Answer P 82.) Because these events
occurred in Georgia and form a substantial part of
Plaintiff's [*25] claims against Communicorp, the
Middle District of Georgia would have been a proper venue to
bring those claims.
b. Claims vs. Famous Artists & Famous
Hospitality
Plaintiff's claims against Famous Artists and Famous
Hospitality also seek enforcement of the USPS administrative
decision, but the facts giving rise to these claims have
nothing to do with the Asset Purchase Agreement. Rather,
Plaintiff seeks simply to collect on an unpaid deficiency
judgment rendered by the USPS. The events that gave rise to
these allegations involve Famous Artists entering into
contracts with nonprofit clients, affixing nonprofit postage
to the mailings, and then posting the mailings at the
nonprofit rate. The three defendants admit that "the
mailings at issue took place in Pennsylvania,"
(Communicorp's Mem. Supp. Dismissal or Transfer at 21), and
that Famous Artists mailed materials on behalf of its
nonprofit clients from
Valley Forge, Hatfield and King
of Prussia, Pennsylvania," (FH Answer P 7). Based on the
pleadings, motions, exhibits and all other evidence
submitted by the parties, the court concludes that none of
the mailing or postage-affixing activities that gave rise to
Plaintiff's [*26] claims against Famous Artists and
Famous Hospitality occurred in the Middle District of
Georgia.
2. Residency of the Defendants
Therefore, if Plaintiff's suit against Famous Artists
and Famous Hospitality might have been brought in the Middle
District of Georgia, it can only be because all defendants
"reside" in Georgia, and one of the defendants resides in
the Middle District of Georgia. Because a corporate
defendant "resides" in all districts in which it is subject
to personal jurisdiction, the court must determine whether a
Georgia court could exercise personal jurisdiction over all
three defendants.
In federal question cases that arise
under a federal statute that is silent as to service of
process, Federal Rule of Civil Procedure 4(e) requires a
federal court to gauge its assertion of jurisdiction and the
service of process by state amenability standards, that is,
the state's long-arm statute. Max Daetwyler Corp. v. R.
Meyer, 762 F.2d 290, 295, 297 (3d Cir.), cert. denied, 474
U.S. 980, 88 L. Ed. 2d 336, 106 S. Ct. 383 (1985). The
Georgia long-arm statute provides, in relevant part:
A court of this state may exercise
personal jurisdiction over any non-resident
as to a
cause of action [*27] arising from any of the acts,
omissions, ownership, use or possession enumerated in this
Code section, in the same manner as if he were a resident of
the state, if in person or through an agent, he: (1)
Transacts any business within this state
Ga. Code Ann. @ 9-10-91. This statute
extends the state courts' jurisdiction over nonresident
defendants as far as permitted by the Due Process Clause of
the Fourteenth Amendment. Francosteel Corp. v. M/V Charm, 19
F.3d 624, 627 (11th Cir. 1994). Thus, this court need only
inquire as to whether Georgia's exercise of jurisdiction
over Famous Artists and Famous Hospitality satisfies the due
process requirements imposed by the Fourteenth Amendment.
The court will apply the same due process standard that it
set forth in the section of this memorandum discussing
Communicorp's motion to dismiss under Rule 12(b)(2).
Famous Artists and Famous Hospitality
allege that they are subject only to specific jurisdiction
in the Middle District of Georgia. (Communicorp's Mem. Supp.
Dismissal or Transfer at 15-16.) They argue that their
"participation" in the Asset Purchase Agreement is
tantamount to a purposeful availment "'of the privilege
[*28] of conducting activities within the forum
state, thus invoking the benefits and protections of its
law,'" and that such activities are sufficient to confer
specific jurisdiction when a claim arises out of the
defendant's forum-related contacts. Id. at 16 (quoting
Francosteel, 825 F. Supp. 1074, 1078 (S.D. Ga. 1993), aff'd,
19 F.3d 624 (11th Cir. 1994)).
Plaintiff's claims against Famous Artists
and Famous Hospitality, however, do not arise out of their
roles as parties to the Asset Purchase Agreement, which is
their only contact with Georgia. As stated supra,
Plaintiff's enforcement claims seek to enforce the USPS
administrative action imposing the postage deficiency
against Famous Artists and Famous Hospitality, and the
evidence submitted by the parties shows that the events
giving rise to those claims involved contacts only with
Pennsylvania. For this reason, Famous Artists and Famous
Hospitality cannot be subject to specific personal
jurisdiction in the Middle District of Georgia. n13 This
conclusion precludes them from being residents of Georgia,
which prevents venue from being laid there, which therefore
rules out the Middle District of Georgia as a place where
[*29] the action could have been brought under 28
U.S.C. @ 1404(a), which, finally, blocks transfer to that
forum.
Footnotes:
n13 The court also finds no evidence suggesting that Famous
Artists and Famous Hospitality's business in Georgia was so
continuous and substantial that the companies are subject to
a Georgia court's general jurisdiction. If, for example,
Famous Artists and Famous Hospitality had proven that they
regularly directed mailings at Georgia residents, a Georgia
court likely could constitutionally exercise personal
jurisdiction over both corporations. Grand Entertainment
Group v. Star Media Sales, 988 F.2d 476, 482 (3d Cir. 1993)
(" Mail and telephone communications sent by the defendant
into the forum may count toward the minimum contacts that
support jurisdiction."). However, the parties have provided
the court with no information as to whether or to what
extent the mailing companies routinely solicited Georgia
residents in their fundraising efforts on behalf of
nonprofit companies.
Famous Artists and Famous [*30]
Hospitality also emphasize that the Asset Purchase
Agreement, to which they are a party, is governed by Georgia
law. The choice of law in a contract, however, is
insufficient, without more, to vest jurisdiction. Time Share
Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 65 (3d
Cir. 1984) ("A choice of law provision, by itself, is merely
a shorthand incorporation into the contract of rules which,
for the most part, could have been explicitly written into
the agreement by the parties without reference to any
particular state or its law.").
Therefore, because all three defendants
do not reside in Georgia for purposes of the federal venue
statute, this court concludes that Plaintiff may not have
brought this civil action against Famous Artists and Famous
Hospitality in the Middle District of Georgia. Thus, and the
Eastern District of Pennsylvania is the appropriate venue
for this civil action.
IV. CONCLUSION
For the reasons set forth above, the court will (1) deny
Communicorp's Motion to Dismiss for Lack of Personal
Jurisdiction or, in the Alternative, to Transfer Venue to
the Middle District of Georgia, (2) deny Famous Artists'
Motion to Transfer Venue to the [*31] Middle
District of Georgia, and (3) deny Famous Hospitality's
Motion to Transfer Venue to the Middle District of
Georgia.
An appropriate Order follows.
ORDER
AND NOW, TO WIT, this 14th day of March, 1996, upon
consideration of Defendant Communicorp, Inc.'s Motion to
Dismiss for Lack of Personal Jurisdiction or, in the
Alternative, to Transfer Venue to the Middle District of
Georgia, and Plaintiff's response thereto, IT IS ORDERED
that said motion is DENIED.
Upon consideration of Defendant Famous
Artists Corporation's Motion to Transfer Venue to the Middle
District of Georgia, and Plaintiff's response thereto, IT IS
FURTHER ORDERED that said motion is DENIED.
Upon consideration of Defendant Famous
Hospitality Corporation, Inc.'s Motion to Transfer Venue to
the Middle District of Georgia, and Plaintiff's response
thereto, IT IS FURTHER ORDERED that said motion is
DENIED.
IT IS FURTHER ORDERED that Famous Artists
and Famous Hospitality shall file Amended Answers that
comply with the Federal Rules of Civil Procedure within
twenty (20) days of the date of this Order.
LOUIS C. BECHTLE, J.
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