author: YOUNG, District Judge.

text:
    BUCKEYE ASSOCIATES, LTD. v. FILA SPORTS, INC., et al.
    Civ. A. No. 85-1031-Y.
    United States District Court, D. Massachusetts.
    Sept. 4, 1985.

      Evan T. Lawson, Lawson & Wayne, Boston, Mass., for plaintiff.
    Lawrence J. Crowley, Jr., Julius Thannhauser, Riemer & Braunstein, Boston, Mass., for defendants.
   MEMORANDUM AND ORDER

YOUNG, District Judge.

The plaintiff Buckeye Associates (“Buckeye”) brought this action against defendants Fila Sports, Inc. (“Fila USA”) and Fila Sports, S.P.A. (“Fila Italy”), seeking damages for alleged violations of the federal antitrust laws, breach of contract, misrepresentation, interference with advantageous relations, unfair and deceptive trade practices in violation of the Massachusetts Consumer Protection Act, violation of the Massachusetts Antitrust Act, and violation of the California Unfair Trade Law. Buckeye asserts subject matter jurisdiction pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1332, and general principles of pendent jurisdiction. The defendants have moved to dismiss the complaint for lack of personal jurisdiction or, in the alternative, to dismiss on the ground of forum non conveniens. For the reasons that follow, the motion is granted on the ground that Buckeye has failed to establish personal jurisdiction over the defendants.

The defendants’ motion is accompanied by a lengthy brief and affidavits executed by the president of Fila USA, the chief executive officer of Fila Italy, and the legal counsel of Fila Italy. Buckeye’s counsel appeared at an oral hearing on the motion but filed nothing in response to the defendants’ papers.

When jurisdiction is properly challenged, the plaintiff has the burden of establishing sufficient facts upon which the court can exercise personal jurisdiction over the defendant. American Freedom Train Foundation v. Spurney, 747 F.2d 1069, 1075 (1st Cir.1984). To establish personal jurisdiction, the plaintiff “must go beyond the pleadings and make affirmative proof.” Chlebda v. H.E. Fortna & Bro., Inc., 609 F.2d 1022, 1024 (1st Cir.1979). Although the Court has considered the allegations in the complaint, the resolution of this motion essentially turns on whether the facts set forth in the defendant’s own affidavits establish personal jurisdiction.

In analyzing whether it has personal jurisdiction over a defendant, a court must engage in a two-step inquiry: (1) Is the court authorized by either a federal or state statute to exercise jurisdiction? (2) Even if there is statutory authorization, does the defendant have the requisite minimum contacts with the jurisdiction so that the exercise of personal jurisdiction will comport with due process? International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

Because Buckeye chose not to file any papers in opposition to the motion to dismiss, it is unclear what statute Buckeye is relying on to assert personal jurisdiction. However, at the oral hearing, the parties focused on two statutory sources of jurisdiction: (1) Section 12 of the Clayton Act, 15 U.S.C. § 22, and (2) the Massachusetts long arm statute, Mass.Gen.Laws c. 233A, § 3. Those statutes do indeed provide the appropriate starting point in analyzing jurisdiction in this case.

I. Section 12 of the Clayton Act

Buckeye has asserted three claims under the federal antitrust laws. Thus, it is entitled to look to a relevant federal statute for serving process on the defendants. Fed.R. Civ.P. 4(e). Section 12 of the Clayton Act provides:

Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.

15 U.S.C. § 22 (1982).

Section 12 is a venue statute which also provides worldwide service of process if the specified venue requirements are satisfied. Because venue is “primarily a matter of convenience of litigants and witnesses,” Denver & Rio Grande Western R.R. Co. v. Brotherhood of R.R. Trainmen, 387 U.S. 556, 560, 87 S.Ct. 1746, 1748, 18 L.Ed.2d 954 (1967), it should be distinguished from personal jurisdiction. Likewise, service of process should be distinguished from personal jurisdiction—service of process is the mechanism by which the commencement of an action is brought to the notice of a defendant. Wright & Miller, Federal Practice and Procedure: Civil § 1063 (1969). Consequently, compliance with Section 12 does not by itself confer personal jurisdiction over a defendant. This Court can properly exercise jurisdiction over the defendants only if the due process requirements of International Shoe and its progeny are satisfied. Sportmart, Inc. v. Frisch, 537 F.Supp. 1254, 1257 (N.D.Ill. 1982).

Although Section 12 is primarily a venue statute, some federal courts have suggested that the analyses of venue and personal jurisdiction are “virtually congruent, since both are controlled by general due process principles.” Id.; see Smokey’s of Tulsa v. American Honda Motor Co., 453 F.Supp. 1265, 1267 (E.D.Okla.1978) (“[T]he jurisdictional issue hinges upon the determination regarding venue, to wit: if venue is proper [under Section 12] so is. in personam jurisdiction; if venue is improper and the action is dismissed as to this defendant on account thereof, the jurisdiction question becomes moot and need not be resolved.”) Because the Court rules that the venue requirements of Section 12 are not satisfied in this case, it is unnecessary to decide whether those requirements are congruent with the due process requirements of the United States Constitution.

Under Section 12, venue is appropriate in any district where the defendant is an inhabitant, where it may be found, or where it transacts business. A corporation is an “inhabitant” of the state of its incorporation. Aro Mfg. Co. v. Automobile Body Research Corp., 352 F.2d 400 (1st Cir.1965), cert. denied, 383 U.S. 947, 86 S.Ct. 1199, 16 L.Ed.2d 210 (1966). Neither of the defendants in this case is incorporated in Massachusetts and thus neither is an “inhabitant” of this district. Therefore, the defendants must either be “found” or “transacting business” in Massachusetts for venue to be proper in this district. A corporation must engage in more extensive activities to be “found” within a district than it must to be “transacting business” there. Chrysler Corp. v. General Motors Corp., 589 F.Supp. 1182 (D.D.C.1984); Haskell v. Aluminum Co. of America, 14 F.2d 864 (D.Mass.1926). Consequently, the Court need only determine whether either or both of the defendants transacts business in Massachusetts.

Whether a defendant has “transacted business” within a particular district sufficient to create venue under Section 12 is a factual question to be determined in each individual case. Sportmart, Inc. v. Frisch, 537 F.Supp. 1254, 1257 (N.D.Ill. 1982). This test of venue has been described as “the practical, everyday business or commercial concept of doing business or carrying on business of any substantial character.” United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948). The general standard is that “isolated and sporadic contacts with the forum state are not sufficient to constitute transacting business; the business transacted must be of a substantial character, and it must have some degree of continuity.” Grappone, Inc. v. Subaru of America, Inc., 403 F.Supp. 123, 130 (D.N.H. 1975). Among factors to be considered in applying this standard are: (1) place to do business; (2) people to carry on business; (3) tangible property; (4) subjection to state regulation; (5) business operations; (6) manifestations of doing business; and (7) goodwill activities. Agra Chem. Distrib. Co. v. Marion Laboratories, Inc., 523 F.Supp. 699, 702 (W.D.N.Y.1981).

Applying these standards to the case at bar, the Court rules that neither of the defendants transacts business in this district for purposes of Section 12. First, with respect to Fila Italy, the affidavit executed by Angiolo Tacci (the CEO of Fila Italy) states that Fila Italy is organized under the laws of Italy, its corporate offices are located in Italy, all of its corporate officers and employees are in Italy, it manufactures all of its merchandise in Italy, it owns no real property outside Italy, and its only bank accounts are located in Italy, Switzerland, and Austria. Fila Italy has no assets in the United States except that it is the sole shareholder of Fila USA. Fila USA is a wholly owned subsidiary of Fila Italy and acts as Fila Italy’s exclusive U.S. distributor of merchandise manufactured in Italy by Fila Italy.

Pursuant to their exclusive distribution agreement, Fila USA purchases merchandise from Fila Italy’s factory in Biella, Italy. Title is taken by Fila USA in Italy and all risk of loss shifts to Fila USA at the time of transfer. The only business conducted in the United States by Fila Italy involves several advertising and sponsorship agreements with certain American athletes; none of those agreements were made in Massachusetts. Officers or employees of Fila Italy occasionally travel to the United States to meet with Fila USA representatives or customers or to visit trade shows, but none of these activities is regularly conducted in Massachusetts.

On the basis of these uncontroverted facts, Fila Italy does not transact business in Massachusetts within the meaning of Section 12. In fact, Buckeye has not shown that Fila Italy has any contacts whatsoever with Massachusetts. At the oral hearing on the motion to dismiss, there was a suggestion that Buckeye may be attempting to reach Fila Italy through the business activities of its subsidiary, Fila USA, on an “alter ego” theory. However, even if Fila USA was found to be subject to personal jurisdiction and venue in this district, its activities cannot be attributed to Fila Italy. The affidavit of Franco Maula (legal counsel for Fila Italy) indicates that Fila Italy and Fila USA do not share any officers, board members, or employees. Buckeye has offered no evidence to suggest that Fila Italy controls or directs the activities of its subsidiary. Because the two companies are separate and distinct corporate entities, Fila Italy cannot be reached on an “alter ego” theory. See Global Publishing Corp. v. Grolier, Inc., 273 F.Supp. 637 (D.Mass.1967).

Turning to Fila USA, the affidavit executed by Pietro Fenu (the president of Fila USA) states that Fila USA is organized under the laws of California, all of its corporate officers and employees are located in California, all of its merchandise is manufactured in Italy and warehoused in California, its only bank accounts are located in California and New York, and its only interests in real property are leasehold agreements in California and New York. Fila USA contracts with independent sales representatives throughout the United States to obtain acceptable purchase orders for the sale of Fila merchandise, but none of those independent sales representatives reside in Massachusetts.

According to Mr. Fenu’s affidavit, the only contact by Fila USA with Massachusetts is the following: one of Fila’s independent sales representatives obtains orders from, and Fila USA ships merchandise to, several national department store chains which have outlets in Massachusetts. The merchandise is sold F.O.B. in California, title is taken in California, and risk of loss passes to the purchaser at the time of shipment in California. Fila USA’s total sales in Massachusetts amounted to less than two percent of its total gross sales nationwide in 1984.

The fact that Fila USA’s sales in Massachusetts constituted only a small percentage of the company’s total business is not dispositive. The determination of whether a defendant corporation’s activities are of a “substantial character” within the meaning of Section 12 is generally based on the point of view of the “average businessman,” and several courts have properly rejected the view that “substantiality” should be tested by looking to the percentage of the defendant’s business conducted within the forum district. E.g., Green v. United, States Chewing Gum Mfg. Co., 224 F.2d 369 (5th Cir.1955). On the other hand, there must be evidence of a “systematic, continuous carrying on of business” to satisfy the requirements of Section 12. Brandt v. Renfield Importers, Inc., 278 F.2d 904 (8th Cir.) cert. denied, 364 U.S. 911, 81 S.Ct. 274, 5 L.Ed.2d 226 (1960). While it seems clear that some Fila products make their way into Massachusetts, there is insufficient evidence to conclude that Fila USA’s contacts with this district are systematic, continuous, or substantial. Therefore, the Court rules that Fila USA does not transact business in Massachusetts within the meaning of Section 12.

II. The Massachusetts Long Arm Statute

Because several of Buckeye’s claims are brought on the basis of diversity of citizenship or the principles of pendent subject matter jurisdiction, it is necessary to discuss the personal jurisdiction question in the context of the Massachusetts long arm statute. State law controls the determination of personal jurisdiction over a foreign corporation with regard to claims brought under diversity of citizenship, Boston Super Tools, Inc. v. RW Technologies, 467 F.Supp. 558, 560 (D.Mass.1979), as well as any state law counts appended to a federal antitrust claim. Sportmart, Inc. v. Frisch, 537 F.Supp. 1254, 1256 n. 5 (N.D.Ill. 1982).

Two questions must be answered affirmatively in order for this Court to properly exercise personal jurisdiction over nonresident defendants under the Massachusetts long arm statute: (1) Is the assertion of jurisdiction authorized by the statute? (2) If so authorized, is the exercise of jurisdiction under state law consistent with basic due process requirements mandated by the United States Constitution? Hahn v. Vermont Law School, 698 F.2d 48, 50 (1st Cir.1983); Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 5-6, 389 N.E.2d 76 (1979).

Section 3 of the Massachusetts long arm statute provides in relevant part:

A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to any cause of action in law or equity arising from the person’s
(a) transacting any business in this commonwealth;
(b) contracting to supply services or things in this commonwealth;
(c) causing tortious injury by an act or omission in this commonwealth;
(d) causing tortious injury in this commonwealth by an act or omission outside this commonwealth if he regularly does or solicits business, or engages in any other persistant course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this commonwealth.

Mass.Gen.Laws ch. 223A, § 3.

The “transacting any business” provision of the long arm statute has been construed broadly, Hahn v. Vermont Law School, 698 F.2d 48, 50 (1st Cir.1983), and reaches any “purposeful acts by an individual, whether personal, private or commercial.” Ross v. Ross, 371 Mass. 439, 441, 358 N.E.2d 437 (1976). The purely statutory requirement for jurisdiction under § 3(a) may be met where the only contact involved is an isolated transaction or one with little impact on the commerce of the commonwealth. Bond Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d 928, 933 (1st Cir. 1985). That is, a defendant with very slight contact with Massachusetts may be viewed literally as having “transacted business” in Massachusetts even though such contact may be constitutionally insufficient to support jurisdiction. Id.; Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 8 n. 13, 389 N.E.2d 76 (1979).

Despite the broad construction of § 3(a), Buckeye has offered no evidence to support a finding that Fila Italy or Fila USA falls within that statutory provision. Although some Fila products are sold by department stores doing business in Massachusetts, there has not been a sufficient showing that either defendant has taken “purposeful” steps to transact business in the commonwealth.

Even if the defendants’ contacts with Massachusetts amounted to transaction of business within the meaning of § 3(a), Buckeye’s causes of action did not “arise from” such transaction of business. Buckeye’s causes of action arise from (1) an alleged breach of contract which has no direct connection with Massachusetts, and (2) alleged acts by the defendants of inducing prospective buyers of goods from Buckeye to refrain from purchasing such goods. Since none of those causes of action arise from any business transacted in Massachusetts by either Fila Italy or Fila USA, the Court cannot acquire jurisdiction under § 3(a). Subsection 3(b) is inapplicable for the same reason—even if the Court found that either defendant had “contracted to supply services or things in this commonwealth,” there is no connection between any such contractual relations and Buckeye’s claims.

A closer question is presented by subsections 3(c) and 3(d). Several of Buckeye’s claims relate to tortious conduct, including the alleged antitrust violations, which generally are considered to be grounded in tort for purposes of applying state long arm statutes. Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1236 (6th Cir.), cert. denied, 454 U.S. 893, 102 S.Ct. 388, 70 L.Ed.2d 207 (1981); see Engine Specialties, Inc. v. Bombardier Limited, 454 F.2d 527 (1st Cir.1972). In its complaint, Buckeye makes certain conclusory allegations to support its claim that “the defendant committed tortious acts in this district.” Buckeye essentially alleges that Fila USA conspired with prospective buyers of Fila merchandise (some of whom were located in Massachusetts) to refuse to deal with Buckeye. Buckeye also alleges that both Fila USA and Fila Italy contacted these prospective buyers with the intent of interfering with Buckeye’s ability to sell Fila products. Fila USA has responded with an affidavit from its president, Pietro Fenu, stating that Mr. Fenu has had “no contact or communication with anyone in the State of Massachusetts relating to the plaintiff in this action.” Although the affidavits from Fila Italy officials contain no similar statement, the thrust of those affidavits clearly is that Fila Italy has had no significant contacts with anyone in Massachusetts.

Despite the requirement that it must go “beyond the pleadings” to establish jurisdiction in the face of opposing affidavits, Chlebda v. H.E. Fortna & Bro., Inc., 609 F.2d 1022, 1024 (1st Cir.1979), Buckeye has filed no counter affidavits. However, even Buckeye’s unsupported allegations fall short of demonstrating jurisdiction under either subsection 3(c) or 3(d) of the Massachusetts long arm statute. Subsection 3(c) is intended to apply only when the act causing the injury occurs within Massachusetts. There is no allegation that representatives of either Fila USA or Fila Italy have ever set foot in Massachusetts. Although it is not necessary to show physical presence of the defendant in the commonwealth, id. at 1024, Buckeye has simply alleged that the defendants contacted several non-parties, some of whom were located in Massachusetts, with the purpose of injuring Buckeye, an Ohio corporation. The Court rules that such an allegation is insufficient to show that the alleged tortious acts occurred in Massachusetts within the meaning of subsection 3(c). See Kolikof v. Samuelson, 488 F.Supp. 881, 883 (D.Mass.1980) (allegations that the defendant unlawfully tape recorded two telephone conversations while defendant was in Pennsylvania and plaintiff was in Massachusetts were insufficient to confer jurisdiction under 3(c)); Chromium Indus. v. Mirror Polishing & Plating Co., 448 F.Supp. 544, 552 (N.D.Ill.1978) (rejecting theory that long arm jurisdiction exists over an absent corporate defendant merely because defendant is alleged to be part of a conspiracy having tortious consequences in the district).

The exercise of personal jurisdiction under subsection 3(d) does not depend upon the location of the allegedly tortious conduct. Instead, the plaintiff must show that there was tortious injury in Massachusetts. Buckeye claims that the defendants interfered with its business relations with “prospective buyers” in Massachusetts and that such interference caused Buckeye to lose sales. Economic injury in the form of lost sales in the forum state may be sufficient to satisfy the requirement of “tortious injury in this commonwealth,” even if the plaintiff’s principal place of business is outside the forum. See Engine Specialties, Inc. v. Bombardier Limited, 454 F.2d 527, 529 (1st Cir.1972).

However, even if Buckeye can satisfy this threshold requirement of subsection 3(d), it must also demonstrate that each of the defendants “regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this commonwealth.” There is nothing is the record to indicate that either Fila Italy or Fila USA “regularly does or solicits business” in Massachusetts or otherwise engages in any “persistent course of conduct” here. The key question, then, is whether either defendant “derives substantial revenue from goods used or consumed” in Massachusetts.

The affidavit by Fila USA President Pietro Fenu indicates that Fila USA “ships merchandise to several department store chains located in the State of Massachusetts” and that “Fila USA’s total sales in the State of Massachusetts amounted to less than two percent (2%) of its total gross sales nationwide in the United States in 1984.” These statements suggest that Fila USA does derive some revenue from goods used or consumed in Massachusetts; however, they are insufficient standing alone for this Court to conclude that such revenue is “substantial” for purposes of subsection 3(d). Although the “substantial revenue” requirement is construed liberally, Mark v. Obear & Sons, Inc., 313 F.Supp. 373, 375-76 (D.Mass.1970) ($5,000 constituted “substantial revenue”), there is no evidence whatsoever indicating the volume of sales in Massachusetts of Fila merchandise. On this record, it would be pure speculation to conclude that either defendant derived “substantial revenue” from sales in Massachusetts.

The plaintiff has thus failed to establish that this Court can properly exercise personal jurisdiction over either defendant under the Massachusetts long arm statute. Having reached this conclusion, ordinarily the Court would have no reason to determine whether the exercise of jurisdiction over the defendants would be consistent with the due process requirements mandated by the United States Constitution. However, because the facts relating to the sale of Fila products in Massachusetts present a close question under the long arm statute, a brief review of the constitutional due process requirements is in order.

III. Due Process Requirements

Even if the exercise of personal jurisdiction over a nonresident defendant is authorized by statute, the assertion of jurisdiction must also satisfy the requirements of due process. Under the principles of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), this Court must determine whether each defendant has purposely established “minimum contacts” in the forum state such that the exercise of personal jurisdiction would comport with “fair play and substantial justice.” Id. at 319-20, 66 S.Ct. at 159-60. A defendant’s conduct and connection with the forum must be such that he should “reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). In each case, there must be 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.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958).

Applying these principles to the facts of this case, the Court rules that there has been an inadequate showing of “minimum contacts” in Massachusetts on the part of either defendant. With respect to Fila Italy, there is no evidence of any contact with Massachusetts other than Buckeye’s unsupported “belief” that representatives of Fila Italy contacted certain prospective buyers of Fila products in Massachusetts with the purpose of interfering with Buckeye’s business relations. A similar allegation lodged against Fila USA has been directly refuted by affidavit. As for Fila USA’s shipments of merchandise to some department store chains who conduct business in Massachusetts, such shipments ordinarily would suggest that Fila USA “purposely directed” certain business activities toward Massachusetts residents. However, the Court does not have sufficient record evidence to adequately assess the nature or scope of such activities.

At the oral hearing, Buckeye’s counsel relied heavily on the Supreme Court’s recent decision in Burger King Corp. v. Rudzewicz, — U.S. —, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). In Burger King, the Court held that a federal court in Florida could constitutionally exercise personal jurisdiction over a Michigan restaurant franchisee who, despite having no physical ties to Florida, established a “substantial and continuing relationship” with the franchisor’s Florida headquarters and “received fair notice from the contract documents and the course of dealing that he might be subject to suit in Florida.” Id. at —, 105 S.Ct. at 2190. Although Buckeye’s counsel suggested that Burger King extended traditional due process analysis into a new frontier, the Court is not persuaded that the Supreme Court’s pronouncement significantly affects the jurisdictional inquiry in this case.

The Burger King decision reaffirms the principles, discussed above, that have been laid down by International Shoe and its progeny. Although Burger King does emphasize that jurisdiction “may not be avoided merely because the defendant did not physically enter the forum State,” — U.S. at —, 105 S.Ct. at 2184 (emphasis in original), as appears to be the situation in the case at bar, the Supreme Court also made clear that a defendant’s purposeful actions must create a “substantial connection” with the forum. Id.; see McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957). On the existing record, the Court is unable to conclude that either Fila Italy or Fila USA has a substantial connection with Massachusetts.

For the reasons set forth above, the defendants’ motion to dismiss for lack of personal jurisdiction is ALLOWED.

      . It is therefore unnecessary to reach the issue of forum non conveniens.

      . Buckeye not only failed to respond to the defendants’ memorandum and affidavits, it resisted the defendants’ discovery efforts relating to this jurisdictional issue. On April 13, 1985, the defendants served notices for taking the depositions of Buckeye’s president and a designated officer of Buckeye pursuant to Fed.R. Civ.P. 30(b)(6). The depositions were scheduled for April 24, 1985 and were limited solely to the issue of personal jurisdiction. In response to these deposition notices, Buckeye moved for a protective order vacating the notices on the grounds that “justice requires protection of its officers from oppression and undue burden and expense" and that "the plaintiff is located out of state and its officers have busy schedules."

      . In Chlebda, the defendant moved to dismiss for lack of personal jurisdiction and supported its motion with an affidavit indicating a lack of contacts with the forum. The plaintiff filed a memorandum in opposition to the motion but filed no counter-affidavits. After the motion to dismiss was granted, the plaintiff argued on appeal that the allegations in her complaint must be accepted as proven for purposes of resolving the issue of personal jurisdiction. The Court of Appeals characterized this argument as an "elementary mistake.” In affirming the district court’s dismissal of the complaint, the Court held that the plaintiff must go beyond to pleadings to establish personal jurisdiction. 609 F.2d at 1024; see Geist v. Martin, 675 F.2d 859, 862 (7th Cir.1982); Weller v. Cromwell Oil Co., 504 F.2d 927, 929-30 (6th Cir.1974) ("Where a motion [to dismiss for lack of personal jurisdiction] is filed, supported by affidavits, the non-moving party may not rest upon allegations or denials in his pleadings but his response by affidavit or otherwise must set forth specific facts showing that the court has jurisdiction.’’)

      . This focus is consistent with the complaint, which asserts that "[v]enue is proper in this district pursuant to both s. 12 of the Clayton Act, 15 U.S.C., s. 22, and 28 U.S.C., s. 1391 since the claim asserted herein arose in this district because the defendant committed tortious acts in this district, and because the defendants transact and do business within the district.” Complaint ¶ 3.

      . Personal jurisdiction in federal question cases is a matter of federal law, to be governed by the due process standards of the Fifth Amendment rather than the Fourteenth Amendment. Stanley Works v. Globemaster, Inc., 400 F.Supp. 1325, 1334 n. 13 (D.Mass.1975). As a general proposition, the Fifth Amendment would permit a federal court to exercise personal jurisdiction over a defendant in a federal question case by looking to the defendant’s aggregate contacts with the United States as a whole, without regard to the defendant’s contacts with the forum state. See, e.g., Holt v. Klosters Rederi A/S, 355 .F.Supp. 354, 356-57 (W.D.Mich.1973).
      Courts have differed as to whether there must be a clear manifestation of Congressional intent before a district court can use such an “aggregate contacts” test in all federal antitrust cases. Compare Superior Coal Co. v. Ruhrkohle, A.G., 83 F.R.D. 414 (E.D.Pa.1979) with Centronics Data Computer Corp. v. Mannesmann, A.G., 432 F.Supp. 659 (D.N.H.1977). The better rule is there must be specific statutory authority. That is, to obtain service and personal jurisdiction on the basis of the defendant’s aggregate contacts with the nation as a whole, there must be a federal statute authorizing such action. Superior Coal Co., supra at 418; see generally Hovenkamp, Personal Jurisdiction and Venue in Private Antitrust Actions in the Federal Courts: A Policy Analysis, 67 Iowa L.Rev. 485, 498-502 (1982). If there is no such federal statute, the federal court must then look to the long arm provisions of the forum state to obtain personal jurisdiction, even in federal question cases.

      . There is a split of authority as to whether the appropriate time for analyzing facts relating to venue under the "transacting business” clause is the time the suit was commenced or the time the cause of action accrued. Compare Agra Chem. Distrib. Co. v. Marion Laboratories, Inc., 523 F.Supp. 699 (W.D.N.Y.1981) with Board of County Commissioners v. Wilshire Oil Co., 523 F.2d 125 (10th Cir.1975). Because there is nothing in this record to suggest that there was any change in either of the defendants’ contacts with Massachusetts between the time the cause of action accrued in 1984 and the time suit was commenced in 1985, the analysis focuses on the events of 1984.

      . This fact, by itself, is not compelling. If a defendant makes substantial sales on a continuous basis within a forum district, he cannot escape jurisdiction and venue in that district simply by requiring shipments to be made F.O.B. outside the forum. See State of Illinois v. Harper & Row Publishers, Inc., 308 F.Supp. 1207, 1209 n. 7 (N.D.Ill.1969). However, it is one factor to be considered in analyzing a defendant's manner of doing business.

      . Even where there is a federal statute, such as Section 12, providing for worldwide service of process in a federal question case, the plaintiff has the option of relying on the forum state’s long arm statute for asserting personal jurisdiction over the defendant. Although some courts have indicated that "the requirements of state long arm statutes are simply irrelevant to the in personam jurisdiction of a federal court,” Sportmart, Inc. v. Frisch, 537 F.Supp. 1254, 1257 (N.D.Ill.1982), the Federal Rules of Civil Procedure clearly permit the plaintiff to look to the applicable state long arm statute. Fed.R.Civ.P. 4(c)(2)(C)(i); Advisory Committee Notes to the 1963 Amendments to Rule 4. Thus, Buckeye could rely on the Massachusetts long arm statute for asserting personal jurisdiction even on its federal antitrust claims. See Black v. Acme Markets, Inc., 564 F.2d 681, 684 (5th Cir.1977).

      . The defendants note in their brief that Buckeye might also seek to invoke Mass.Gen.Laws ch. 223, § 38 in an attempt to establish personal jurisdiction over the defendants. The plaintiff has failed to mention this or any other statute as the basis for personal jurisdiction. Section 38 of Mass.Gen.Laws ch. 223 has not been supplanted by the long arm statute and therefore remains an independently viable basis for asserting jurisdiction over a foreign corporation. Campbell v. Frontier Fishing & Hunting, Ltd., 10 Mass.App. 53, 405 N.E.2d 989 (1980). Section 38 permits service of process on a foreign corporation which “is engaged in or soliciting business in the commonwealth, permanently or temporarily.” This statute may be invoked "only if a foreign Corporation's activities affected Massachusetts commerce substantially or so affected the transaction at issue as to make Massachusetts an appropriate forum.” Mas Marques v. Digital Equipment Corp., 637 F.2d 24, 28 (1st Cir.1980). For the reasons set forth elsewhere in this opinion, the Court rules that Section 38 does not support the exercise of jurisdiction over the defendants.

      . Shipments F.O.B. do not, standing alone, give rise to jurisdiction under Mass.Gen.Laws ch. 223A, § 3(b) as they do not constitute contracts "to supply services or things in this commonwealth." Droukas v. Divers Training Academy, Inc., 375 Mass. 149, 157-60, 376 N.E.2d 548 (1978). Here, there is no evidence that Buckeye ever contracted with Fila USA for the delivery of goods or services whatsoever. As for Fila Italy, the contract appended to the complaint makes no reference to Massachusetts, and Buckeye has provided no factual support for its contention that certain of the Fila merchandise mentioned in the contract was slated for sale in Massachusetts.


source: Caselaw Access Project

license: Public Domain

text:
    Albert R. PITTS, individually and as father and next friend of Michael Pitts, a minor, Dorothy Pitts, Plaintiffs, v. CIBA-GEIGY CORPORATION, Ciba-Geigy Ltd., Ciba-Geigy (U.K.) Ltd. Aerolite SPE Corporation, Defendants.
    Civ. A. No. 83-2890-Y.
    United States District Court, D. Massachusetts.
    Sept. 5, 1985.

      Edmund M. Pitts, Pitts & Pitts, Boston, Mass., for plaintiffs.
    Marjorie D. Robertson, Paul B. Galvani, Ropes & Gray, Boston, Mass., for CIBA-GEIGY Corp.
    Norman A. Hubley, William A. Scofield, Jr., Boston, Mass., for CIBA-GEIGY Ltd.
   MEMORANDUM AND ORDER

YOUNG, District Judge.

As originally framed when filed on September 4, 1983, the plaintiffs’ action claimed negligence and breach of warranty on the part of CIBA-GEIGY Corporation, a New York corporation, arising out of the manufacture and distribution of urea-formaldehyde foam insulation in the plaintiffs’ home. A local installer and the individual who installed the insulation were also named as defendants. Upon receipt of the complaint, counsel for CIBA-GEIGY Corporation discussed the ease with plaintiffs’ counsel, maintaining that CIBA-GEIGY Corporation was not in the business of manufacturing or distributing urea-formaldehyde foam insulation and that counsel might wish to explore whether his clients’ cause of action ought rather be maintained against a related corporation, CIBA-GEIGY Ltd. (U.K.), (“Limited-U.K.”), which apparently does manufacture such insulation. Counsel for CIBA-GEIGY Corporation also explained that both it and Limited-U.K. were wholly-owned corporate subsidiaries of CIBA-GEIGY Ltd. of Basel, Switzerland (“Limited-Switzerland”). Counsel for CIBA-GEIGY Corporation evidently hoped that, by voluntarily providing this information, the plaintiffs would drop their suit against his client. This was not to be.

Instead, the plaintiffs amended their complaint, dropping the individual defendant and the local installer but adding as defendants Limited-U.K. and Limited-Switzerland. In addition to claims for negligence and breach of warranty, the amended complaint sought damages for conspiracy, fraud, and loss of consortium as well. A further amendment added as a defendant Aerolite Spe Corporation of Kentucky (“Aerolite”), which, it is alleged, was at all material times the exclusive United States distributor of the offending insulation.

While the plaintiffs’ claims against Limited-U.K. and Aerolite appear to be viable, at least as a matter of pleading, these two defendants appear not so viable. Limited-U.K. has defaulted and Aerolite has sought the protection of the bankruptcy laws.

The plaintiffs have thus mounted their major effort towards maintaining this action against Limited-Switzerland and CIBA-GEIGY Corporation. This effort has foundered due to the plaintiffs’ unwillingness to provide meaningful discovery. Due to the obvious inadequacy of plaintiffs’ response to the defendants’ discovery requests, another judge of this Court ordered supplementary responses and, as a sanction, stayed the plaintiffs’ discovery until adequate responses were made. The supplementary responses likewise fall far short of any adequate explanation of the basis of the plaintiffs’ allegations against Limited-Switzerland and CIBA-GEIGY Corporation. Upon receipt of the inadequate supplemental responses to discovery, Limited-Switzerland and CIBA-GEIGY Corporation each moved that the action against it be dismissed as a sanction for failure to comply with the earlier order that discovery must be furnished. In the alternative, each moves for summary judgment and supports its motion with detailed and comprehensive affidavits. Against this avalanche of paper, the plaintiffs can say only that certain unauthenticated documents which the plaintiffs admit are not in proper form to oppose a motion for summary judgment suggest that a genuine issue of material fact may exist concerning the relationship of the two defendant corporations and their activities. Beyond this, the plaintiffs ask for further discovery, claiming that opposing affidavits are unavailable in view of the earlier stay of discovery. See Fed.R.Civ.P. 56(f). While dismissal seems an overly harsh remedy for plaintiffs’ shortcomings in furnishing discovery as to the details of their allegations, a review of the materials supporting these two defendants’ motions for summary judgment leaves no doubt that, at least upon this record, summary judgment for Limited-Switzerland and CIBA-GEIGY Corporation is fully, warranted.

The issue is thus starkly presented: are the allegations of the complaints plus an unauthenticated document together sufficient to withstand a well pleaded and supported motion for summary judgment where the plaintiffs offer utterly no support for their claim that the materials necessary to demonstrate the existence of a genuine issue of material fact lie within the exclusive control of the defendants and can be obtained only through discovery? In this case, upon this record, they are not.

1. Limited-Switzerland

Upon this record, there is neither constitutional nor statutory authority to exercise personal jurisdiction over Limited-Switzerland. This court has recently had occasion to analyze the contacts necessary for the exercise of personal jurisdiction over a non-resident defendant under the United States Constitution and the Massachusetts Long Arm Statute, Mass.Gen. Laws ch. 223A. See Buckeye Associates, Ltd. v. Fila Sports, Inc., 616 F.Supp. 1484 (D.Mass.1985). It would add nothing to recite the absence of any such contacts as are relevant here. It suffices to conclude that Limited-Switzerland has no minimum contacts with this forum and has not conducted itself in such a way that it might reasonably be expected to respond to a law suit here. Although the plaintiffs claim that the individual corporate identities of Limited-Switzerland, Limited-U.K., and CIBA-GEIGY Corporation are a sham to frustrate the imposition of just liability, this court is presently faced with an uncontroverted affidavit which indicates (1) that the three corporations operate as separate and independent entities, (2) that the businesses of Limited-U.K. and CIBA-GEIGY Corporation are controlled and directed by their respective boards of directors and senior management, (3) that neither the president and chairman nor any member of the corporate management committee of CIBA-GEIGY Corporation is an employee of Limited-Switzerland, (4) that a majority of CIBA-GEIGY Corporation’s board of directors is not employed by or otherwise affiliated with Limited-Switzerland, (5) that none of CIBA-GEIGY Corporation’s officers is an employee of Limited-Switzerland, (6) that Limited-U.K. and CIBA-GEIGY Corporation maintain their own separate books and accounts, and, (7) that neither Limited-U.K. nor CIBA-GEIGY Corporation act as sales agent for Limited-Switzerland.

Would further discovery suggest that Limited-Switzerland might be subjected to the jurisdiction of this court through the intimacy of its relationship to CIBA-GEIGY Corporation? This seems highly unlikely in view of the fact that at least five courts have held that the relationship between Limited-Switzerland and CIBA-GEIGY Corporation was not such as would permit the assertion of jurisdiction over Limited-Switzerland due to the activities of CIBA-GEIGY Corporation in the United States. Degginger v. CIBA-GEIGY, Ltd., No. 79-3116 (D.N.J. Jan. 29, 1980), aff’d, 639 F.2d 772 (3rd Cir.1980) (dismissing complaint for lack of personal jurisdiction over Limited-Switzerland and rejecting claim that Limited-Switzerland was acting in New Jersey through CIBA-GEIGY Corporation). Guthrie v. CIBA-GEIGY, Ltd., 620 F.Supp. 91 (D.Conn.1984) (dismissing employment discrimination suit against Limited-Switzerland and rejecting the plaintiffs claim that Limited-Switzerland was acting in Connecticut through CIBA-GEIGY Corporation). Klein v. CIBA-GEIGY Mexicana, No. 83-1017 GT, F.Supp. (S.D.Cal. June 11, 1984) (dismissing complaint against Limited-Switzerland and CIBA-GEIGY Mexicana for lack of personal jurisdiction and rejecting the plaintiffs claim that Limited-Switzerland was acting in California through CIBA-GEIGY Corporation). Morgan v. Aerolite Foam Division of CIBA-GEIGY Corp., No. 83-0988 (Ohio Ct. of Common Pleas, May 16, 1984) (dismissing suit against Limited-Switzerland for lack of personal jurisdiction and rejecting the claim that Limited-Switzerland was acting in Ohio through CIBA-GEIGY Corporation, Limited-U.K., and Aerolite Spe Corporation). New York Anhydrous Ammonia Development Corp. v. CIBA-GEIGY Corp., No. 2917-1977 (N.Y.Super.Ct. April 7, 1978) (dismissing complaint for lack of personal jurisdiction over Limited-Switzerland and rejecting the claim that Limited-Switzerland was acting in New York through CIBA-GEIGY Corporation). While this court has no way of determining precisely what evidence was before the courts rendering the decisions above, their uniformity is suggestive of the conclusion that, on this record, further discovery will avail nothing which will impugn the affidavit before this court. True, the plaintiffs contend that, even if the corporations are separate entities, they each conspired with the others to cause tortious injury in the Commonwealth of Massachusetts and are thus subject to the jurisdiction of this court. There is, however, no evidence of conspiracy here and “[w]here a plaintiff fails to produce any specific facts whatsoever to support a conspiracy allegation, a district court may, in its discretion, refuse to permit discovery and grant summary judgment.” Contemporary Mission, Inc. v. United States Postal Service, 648 F.2d 97, 107 (2d Cir.1981). Eastway Construction Corp. v. City of New York, 762 F.2d 243, 254 (2nd Cir.1985). Such a course is proper here. Summary judgment will enter for the defendant, Limited-Switzerland.

2. CIBA-GEIGY Corporation

While CIBA-GEIGY Corporation is assuredly subject to the personal jurisdiction of this court, it appears, upon this record, that it has done nothing wrong. That is, it appears on this record that CIBA-GEIGY Corporation has never manufactured, sold, distributed, or installed any form of urea-formaldehyde foam insulation. Nor has it ever manufactured or sold any of the ingredients required in the manufacture of such insulation.

Again, the plaintiffs assert that if only they were afforded discovery, they could uncover facts which would demonstrate that there is a genuine issue of material fact concerning these conclusions. Again, this is doubtful. In at least seven other products liability actions involving urea-formeldehyde foam insulation, CIBA-GEIGY has been granted summary judgment. Gray v. CIBA-GEIGY, 554 F.Supp. 1223 (S.D.Ind.1983). Smith v. CIBA-GEIGY Corp., Middlesex Civil Action No. 81-6208 (Mass.Super.Ct.). Brewster v. CIBA-GEIGY Corp., Middlesex Civil Action No. 81-6002 (Mass.Super.Ct.). Masciarelli v. CIBA-GEIGY Corp., Middlesex Civil Action No. 81-5743 (Mass.Super.Ct.). James v. Spear & Associates, Inc., No. 84-27364-NZ (Mich.Cir.Ct. for the County of Washtenaw July 23, 1985). Thom v. Inman, Hancock County No. 44-389 (Ohio Ct. of Common Pleas March 13, 1985). Connors v. Miller, 7th Judicial District No. 29246 (D.C. Idaho August 4, 1983). Review of these decisions makes clear that all the arguments advanced by the plaintiffs here have been raised by litigants in one or more of the cases just cited and resolved in favor of CIBA-GEIGY Corporation on generally accepted principles of tort law. It is necessary only to point out that, while it appears undisputed that CIBA-GEIGY Corporation purchased the stock of Aerolite Spe Corporation after the allegedly offending uieaformaldehyde foam insulation was installed in the plaintiff’s home, it does not thereby become liable for the conduct of Aerolite. Absent fraud or abuse of the privilege of acting in a corporate form, the courts of Kentucky have refused to pierce the corporate veil in cases involving the purchase of the stock of a going concern. White v. Winchester Land Development Corp., 584 S.W.2d 56, 62 (Ky.Ct.App.1979). See Poyner v. Lear Siegler, Inc., 542 F.2d 955, 958 (6th Cir.1976) cert. denied, 430 U.S. 969, 97 S.Ct. 1653, 52 L.Ed.2d 361 (1977) (applying Kentucky law); Louisville Gas Co. v. Kaufman, Straus & Co., 105 Ky. 131, 48 S.W. 434, 449 (1898). Indeed, even if the corporate form were to be disregarded, CIBA-GEIGY Corporation would not be liable for the conduct of Aerolite during the period prior to its purchase of Aerolite’s stock. See W. Fletcher, Cyclopedia of the Law of Private Corporations § 43 at 209 (rev. perm. ed. 1974). For these reasons, CIBA-GEIGY Corporation is entitled to have summary judgment enter in its favor.

3. Aerolite Spe Corporation

The automatic bankruptcy stay as to Aerolite having been lifted in order to enable it to defend this action to the extent of its available insurance, Aerolite moves to dismiss the claim against it upon the grounds of certain irregularities in the service of process and upon the ground that the “plaintiffs have not alleged facts showing personal jurisdiction over Aerolite.” The motion to dismiss is denied, the irregularities in the service of process being minor in nature and having been subsequently corrected. The plaintiffs are under no obligation to allege facts demonstrating that this court has personal jurisdiction over Aerolite. Rather, it is up to Aerolite to raise the jurisdictional question through a motion to dismiss or in its answer. Since Aerolite’s motion to dismiss suggests the absence of personal jurisdiction yet only attacks—erroneously—the form of the plaintiffs’ pleading, the interests of justice will here best be served if the denial of the motion to dismiss is expressly stated to be without prejudice to Aerolite’s right to raise the matter of an alleged lack of personal jurisdiction as a defense in its answer. See Fed.R.Civ.P. 12(g) and (h)(1).

4. Conclusion

For the reasons stated above, the motions of Limited-Switzerland and CIBA-GEIGY Corporation for summary judgment are allowed and the motion of Aerolite to dismiss is denied. These actions are taken notwithstanding the plaintiffs’ strenuous claim that the failure to continue the hearing on the motions for summary judgment while they pursue extensive discovery of defendants’ intracorporate machinations would result in a miscarriage of justice since they cannot presently stand against the defendants’ summary judgment motion. No miscarriage of justice has—or will—occur. Granting these motions quite properly brings the period of active defense by Limited-Switzerland and CIBA-GEIGY Corporation to an end, thus sparing them the expense and business disruption that all litigation entails. The litigation itself, however, will not come to an end. Fed.R. Civ.P. 54(b). Limited-U.K. is in default and Aerolite must now answer the plaintiffs’ complaint. Thus the plaintiffs can maintain their action against Aerolite and can theoretically obtain full and complete relief for any injuries they may have sustained from the defaulting defendant, Limited-U.K. Once judgment against Limited-U.K. has entered pursuant to Fed.R.Civ.P. 55(b)(2) supplementary proceedings in aid of such a judgment may be had pursuant to Fed.R.Civ.P. 69(a) should it not be satisfied. Proper discovery to determine promptly, efficiently, and justly all these subsequent proceedings will no doubt be a necessity. Should that discovery as to the conduct of those entities who are properly parties before this court reveal that this court has clearly erred in entering summary judgment at this juncture, the orders might, after proper notice and further hearing, be reversed and the actions against defendants prevailing today might be resuscitated. These comments are not intended as an invitation to the plaintiffs to seek reconsideration. Rather, they point out that the grant of summary judgment at this juncture appears most faithfully to accommodate the requirement of Fed.R.Civ.P. 1 that the Rules of Procedure “be construed to secure the just, speedy, and inexpensive determination of every action.” To read Fed.R.Civ.P. 56(f) so broadly as to permit these plaintiffs, upon the unsubstantiated and insufficient showing thus far made, to engage in extensive discovery of defendants who are, at the very best, apparently so peripheral as to make any possible theory of successful liability extremely remote, seems wholly unwarranted. Accordingly, the motions of the defendants Limited-Switzerland and CIBA-GEIGY Corporation for summary judgment have been allowed on the present record without permitting the plaintiffs to embark upon further discovery.

      . The law of Kentucky applies because Aerolite is incorporated in Kentucky. Realeo Service, Inc. v. Holt, 513 F.Supp. 435, 442 n. 8 (D.Pa. 1980), aff’d 671 F.2d 495 (3d Cir.1981).


author: SIMMONS, District Judge.

text:
    Ernest J. CARNEVALI, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 84-2259.
    United States District Court, W.D. Pennsylvania, Civil Division.
    Sept. 6, 1985.
    Thomas P. Geer, Pittsburgh, Pa., for plaintiff.
    Amy Reynolds Hay, Asst. U.S. Atty., Pittsburgh, Pa., for defendant.
   OPINION

SIMMONS, District Judge.

I.

The Plaintiff, Ernest J. Carnevali, filed an application for disability insurance benefits under Title II of the Social Security Act on August 3, 1982, alleging that he had been disabled since August 18, 1981, as the result of the amputation of his right forearm and other impairments. Carnevali indicated on his application that in October, 1981, he received a workmen’s compensation award, payable in bi-weekly amounts of $524.00, beginning in September, 1981. Title II disability benefits were awarded, but Plaintiff was notified that his benefits would be reduced because of the receipt of the workmen’s compensation. Plaintiff requested reconsideration of that decision, on the grounds that the workmen’s compensation award was not based on disability but on loss of the forearm, and that the workmen’s compensation had been commuted to a lump sum on March 30, 1983. Upon reconsideration it was found that the reduction in the Title II benefits was required. An Administrative Law Judge [ALJ] found in a de novo decision dated March 26, 1984 that the monthly disability insurance benefits were properly reduced due to Carnevali’s entitlement to workmen’s compensation benefits. The Appeals Council denied the request for review, and the decision of the Secretary thus became final on July 23, 1984. This district court action was filed on September 20, 1984.

The administrative record and the answer have been filed, the Defendant Secretary has filed a motion for summary judgment, the parties have submitted briefs in support of their respective positions, and the matter is now ready for decision by this Court. The issue is whether the Secretary’s decision that the Plaintiff Ernest Carnevali received workmen’s compensation within the meaning of 42 U.S.C. § 424a is supported by substantial evidence, and whether that decision is in accordance with the applicable laws and regulations.

II.

Section 224(a) of the Social Security Act, 42 U.S.C. § 424a(a), as amended, August 13, 1981, and applicable to the instant case, provides that benefits are to be reduced on account of receipt of workmen’s compensation:

(а) If for any month prior to the month in which an individual attains the age of 65—
(1) such individual is entitled to benefits under section 223, and
(2) such individual is entitled for such month to periodic benefits on account of such individual’s total or partial disability (whether or not permanent) under—
(A) a workmen’s compensation law or plan of the United States or a State,
The total of his benefit under section 223 for such month and of any benefits under section 202 for such month based on his wages and self-employment income shall be reduced (but not below zero) by the amount by which the sum of—
(3) such total of benefits under sections 223 and 202 for such month, and
(4) such periodic benefits payable (and actually paid) for such month to such individual under such laws or plans, exceeds the higher of—
(5) 80 percent of his ‘average current earnings’, or
(б) The total of such individual’s disability insurance benefits under section 223 for such month and of any monthly insurance benefits under section 202 for such month based on his wages and self-employment income, prior to reduction under this section.

42 U.S.C. § 424a(a).

Section 224(d), 42 U.S.C. § 424a(d), provides that the above reduction will not be made if the applicable workmen’s compensation law requires that benefits be reduced because of entitlement to Social Security disability benefits. The Pennsylvania Workmen’s Compensation Act, 77 P.S. § 1 et seq., does not so provide.

Section 224(b), 42 U.S.C. § 424a(b), also provides that if a periodic benefit “is payable on other than a monthly basis (excluding benefits payable as a lump sum except to the extent that it is a commutation of, or a substitute for, periodic payments), the reduction under this section shall be made at such time or times and in such amounts as the Secretary finds will approximate as nearly as practicable the reductions prescribed by subsection (a).” There is no provision in the Social Security Act imposing the obligation upon a beneficiary to apply for workmen’s compensation as a condition for receiving Social Security benefits.

The Pennsylvania Workmen’s Compensation Act is the exclusive remedy for employees in actions against the employer for injury or death arising in the course of employment. (77 P.S. § 481). Under the Act, compensation is given for total disability, 77 P.S. § 511; partial disability, 77 P.S. § 512; and disability from permanent injuries, 77 P.S. § 513. The amount of payment for each category is based on a percentage of the wages for a specified time period. The compensation is payable in periodic installments, 77 P.S. § 601, but it may be commuted to a lump sum payment, provided that certain conditions set forth in 77 P.S. § 604 are met.

III.

The Plaintiff contended before the AU that his Social Security disability insurance benefits should not be reduced because the Workmen’s Compensation benefit was not a payment for disability, but rather was payment for the loss of the forearm; and because the periodic Workmen’s Compensation benefit was commuted to a lump sum payment made on April 13, 1983. The AU rejected the contention that the payment was for the loss of the forearm rather than a disability payment, finding that the particular definitions contained in the Pennsylvania Workmen’s Compensation Act were not incorporated into the Social Security Act, which provides, instead, that any periodic benefit based on a workers total or partial disability, temporary or permanent, paid under a workmen’s compensation law, will cause Social Security disability benefits to be offset. The AU found that section 306(c) of the Pennsylvania Workmen’s Compensation Act, 77 P.S. § 513, used the term “disabled”, and payments made under that section of the Pennsylvania act have all the characteristics enumerated in section 224(a), 42 U.S.C. § 424a, of the Social Security Act.

Additionally, the AU concluded that the fact that Carnevali’s periodic payment was commuted to a lump sum award did not exempt the disability insurance benefits from the offset provision contained in section 224(a) of the Social Security Act, 42 U.S.C. § 424a(a). The AU read section 224(b) of the Social Security Act, and the applicable Social Security Regulations, as requiring the lump sum award to be pro rated on a monthly basis to calculate the offset to be applied to the disability benefits from the date of the lump sum award in April, 1983. The mere fact that a lump sum award was given did not exempt the Plaintiff’s benefits from the offset provision of the Social Security Act.

The Plaintiff argues on this appeal that the Pennsylvania Workmen’s Compensation Act deals differently with specific loss benefits from permanent injuries under section 306(c), 77 P.S. § 513, than it does for disability benefits under section 306(a), 77 P.S. § 511, and for partial disability under section 306(b), 77 P.S. § 512. This difference is significant, according to the Plaintiff, because the benefits under section 306(c), 77 P.S. § 513, vest as the property of the claimant from the time of the award, are payable whether or not the claimant is working, and remain payable even when the claimant dies from other causes. Plaintiff argues that an award such as the one made here for the loss of a forearm, is therefore not a “disability” award which is subject to the offset provisions of the Social Security Act.

With respect to the lump sum payment, Plaintiff argues that the commutation of benefits under section 306(c), 77 P.S. § 513, has a different character than commuted partial disability benefits under section 306(b), 77 P.S. § 512. The commutation of section 306(c) benefits, says Plaintiff, is actually a lump sum payment of the claimant’s own money, dating back to the time of the award. In contrast, commuted benefits for partial disability do not accrue in advance, because partial disability is a temporary situation, depending upon the availability of light work and its changing pay scale, and the changing physical condition of the claimant.

The constitutionality of section 224, the offset provision of the Social Security Act, has been upheld by the Supreme Court of the United States in Richardson v. Belch-er, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971). The Supreme Court noted that Congress examined the problem of duplication of disability benefits in 1965, and passed section 224 in response to that concern:

[I]n 35 of the 50 States, a typical worker injured in the course of his employment and eligible for both state and federal benefits received compensation for his disability in excess of his take-home pay prior to the disability____It was strongly urged that this situation reduced the incentive of the worker to return to the job, and impeded the rehabilitative efforts of the state programs. Furthermore, it was anticipated that a perpetuation of the duplication in benefits might lead to the erosion of the workmen’s compensation programs. The legislative response was § 224, which, by limiting total state and federal benefits to 80% of the employee’s average earnings prior to the disability, reduced the duplication inherent in the programs and at the same time allowed a supplement to workmen’s compensation where the state payments were inadequate.
The original purpose of state workmen’s compensation laws was to satisfy a need inadequately met by private insurance or tort claim awards. Congress could rationally conclude that this need should continue to be met primarily by the States and that a federal program that began to duplicate the efforts of the States might lead to the gradual weakening or atrophy of the state programs.

404 U.S. at 82-84, 92 S.Ct. at 258, 30 L.Ed.2d at 235-36.

In Killian v. Heintz Div. Kelsey Hayes, 468 Pa. 200, 205, 360 A.2d 620, 623 (1976), the Pennsylvania Supreme Court discussed the three classifications for compensation under the Pennsylvania Workmen’s Compensation Act. Disability payments under sections 306(a) and (b), 77 P.S. §§ 511, 512, are designed to provide for compensation during the period of disability following an injury, and payment is dependent on whether the disability is total or partial, and reflects an incapacity to perform duties and the loss of earning power resulting from the injury. With respect to section 306(c), 77 P.S. § 513, the Court stated as follows:

Under Section 306(c), the legislature has set forth a schedule of payment of compensation for a permanent injury or a loss of a member of the body. This sum is a statutorily prescribed amount and is intended to include all disability emanating from or connected with the loss of a member or a permanent injury to that member. Lente v. Luci, 275 Pa. 217, 220, 119 A. 132 (1932); Yaklich v. Union Collieries Co., 158 Pa.Super. 55, 58, 43 A.2d 591, 593 (1945); Vanaskie v. Stevens Coal Co., 133 Pa.Super. 457, 460, 2 A.2d 531, 532 (1938). Thus, even though a claimant was employed at the same work and at the same wages as before the accident he would not be barred from compensation under Section 306(c). Morrow v. J.S. Murray & Sons, et al., 136 Pa.Super. 277, 7 A.2d 109 (1939).

468 Pa. at 205, 360 A.2d 620.

It is clear that the fact that the Plaintiff received compensation for a specific permanent loss under section 306(c), 77 P.S. § 513, does not mean that the compensation was not for disability. “[W]hen a claimant suffers a permanent loss and receives benefits under Section 306(c) that award compensates him not only for that loss but for all disability resulting from that loss.” Campbell v. Workmen’s Compensation Appeal Board (M. Glosser & Sons), 80 Pa.Cmwlth. 148, 472 A.2d 272, 275 (1984). Compensation received under 77 P.S. § 513 makes an individual ineligible for partial or total disability compensation under 77 P.S. §§ 511 and 512. Moreover, an individual who has lost the use of both legs and is totally disabled pursuant to section 306(c)(23), 77 P.S. § 513(23), may elect between receiving loss benefits under section 306(c), 77 P.S. § 513, or total disability benefits under section 306(a), 77 P.S. § 511. Turner v. Jones & Laughlin Steel Corporation, 479 Pa. 618, 389 A.2d 42 (1978). This Court also notes that in Grant v. Weinberger, 482 F.2d 1290 (8th Cir. 1973), it was concluded that specific loss benefits for the loss of an arm were subject to offset against Title II disability benefits, even though state law did not require proof of incapacity for work as the basis for the receipt of the compensation.

This Court therefore concludes that a payment made under section 306(c), 77 P.S. § 513, is a payment made for disability and is subject to the offset provisions contained in section 224(a), 42 U.S.C. § 424a, of the Social Security Act.

The Pennsylvania Workmen’s Compensation Act provides that all compensation shall be payable in periodic installments, as the wages of the employee were payable before the injury. 77 P.S. § 601. However, the award may be commuted if it is in the best interest of the employee and it will avoid undue expense and hardship to either party. 77 P.S. § 604. Here, the referee on March 25, 1983, clearly stated that the weekly workmen’s compensation award was commuted. {See Tr. 100-102). Therefore, 42 U.S.C. § 424a(b) requires the offset of workmen’s compensation received as a commutation of, or a substitute for, periodic payments.

After thoroughly reviewing the record and the applicable law, this Court is convinced that the decision of the Secretary is supported by substantial evidence and is in accordance with the law. The Defendant’s Motion for Summary Judgment will be granted, and an appropriate Order will be entered.


author: WARREN, District Judge.

text:
    GENSPLIT FINANCE CORPORATION, Plaintiff, v. FOREIGN CREDIT INSURANCE ASSOCIATION, Defendant.
    No. 85-C-886.
    United States District Court, E.D. Wisconsin.
    Sept. 6, 1985.

      Dean P. Laing, Smith & O’Neil, S.C., Milwaukee, Wis., for plaintiff.
    Carol S. Josten, Godfrey & Kahn, S.C., Milwaukee, Wis., for defendant.
   DECISION AND ORDER

WARREN, District Judge.

The plaintiff, Gensplit Finance Corporation (“Gensplit”), has filed a motion to remand this action to the Circuit Court of Milwaukee County, State of Wisconsin, from which it was removed on June 11, 1985, by the defendant, Foreign Credit Insurance Association (“FCIA”). FCIA not only opposes Gensplit’s motion to remand but has filed its own motion to transfer this case to the United States District Court for the Southern District of New York. The Court has held FCIA’s motion in abeyance pending resolution of the motion to remand. For the reasons set forth below, the Court will now grant Gensplit’s motion to remand this case to the Circuit Court of Milwaukee County.

BACKGROUND

Gensplit is a Wisconsin corporation engaged in the business of providing financing for the export of goods from the United States. FCIA is an unincorporated association of insurance companies, its principal place of business being New York, New York. Since its inception in 1961, FCIA has acted under a series of agreements as the agent of Eximbank, an agency of the United States Government, for the purpose of representing Eximbank’s interests in connection with the issuance, administration, and servicing of export credit insurance policies.

Eximbank was created by Congress in the Export-Import Bank Act of 1945, as amended, 12 U.S.C. § 635 et seq. In that Act, Congress authorized Eximbank to issue federal export credit insurance and to employ insurance companies or associations thereof to act as its agent in connection with the export insurance program.

On or about June 13, 1979, FCIA issued an export insurance contract to Gensplit for the purpose of insuring Gensplit’s financing of certain machinery and equipment to be exported by Link Power & Machinery Corporation of White Plains, New York, to John G. Salonikis, “VEKO S.A.,” located in Athens, Greece. The value of the machinery and equipment was approximately $812,352.00. Under the contract, FCIA agreed to indemnify Gensplit for eighty percent (80%) of any and all losses incurred by it due to VEKO’s failure to pay Gensplit the financed portion of the transaction, which amounted to $690,-864.00.

VEKO subsequently failed to pay a substantial portion of the purchase price financed by Gensplit, whereupon Gensplit submitted a notice of claim and proof of loss to FCIA. FCIA refused payment of Gensplit’s claim. On May 14, 1985, Gen-split filed this action in state court alleging that FCIA breached the export insurance contract by refusing to indemnify Gensplit for the loss caused by VEKO.

FICA removed the case to this court on the grounds that Gensplit’s claim arises under federal law, thereby according this Court original jurisdiction over the case pursuant to 28 U.S.C. §§ 1331 and 1337. As an additional basis for removal, FCIA asserts that it is a person acting under an officer of the United States or agency thereof and that, therefore, jurisdiction lies in this Court by virtue of 28 U.S.C. § 1442(a)(1).

Gensplit contends that this Court lacks jurisdiction over this matter because the complaint states a claim for breach of contract, which does not arise under nor is it governed by federal law. Gensplit further contends that jurisdiction does not lie in this Court pursuant to 28 U.S.C. § 1442(a)(1) because FCIA is not a “person” within the meaning of that statute. Therefore, Gensplit requests that this action be remanded back to state court and that the Court award Gensplit its costs incurred in relation to the present motion.

II. JURISDICTION PURSUANT TO 28 U.S.C. § 1331

Section 1331 of 28 U.S.C. provides that

The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.

With respect to this section, the question is whether the plaintiff’s claim “arises under” the Constitution or laws of the United States. FCIA argues that Gensplit's claim arises under federal law because FCIA issued the insurance policy as the agent of Eximbank as authorized by Congress under 12 U.S.C. § 635(a)(1) et seq. Gensplit states that its claim is a garden-variety contract action which arises under and is governed by state law.

In determining whether a particular claim arises under federal law within the meaning of § 1331, a court must look solely to the plaintiff’s complaint. K.T. Hunter v. United Van Lines, 746 F.2d 635, 639 (9th Cir.1984); North American Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229, 233 (2nd Cir.1978); Local Division 519, Amalgamated Transit Union, AFL-CIO v. LaCrosse Municipal Transit Utility, 445 F.Supp. 798, 801 (W.D.Wis.), aff’d, 585 F.2d 1340 (7th Cir.1978). Although the defendant went to great lengths in its brief to demonstrate that the Court should look beyond the complaint in this situation, it would be inappropriate to do so unless the plaintiff has “artfully manipulated” the wording of the complaint in order to defeat removal. Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir.1976).

In this case, the complaint clearly sets forth a breach of contract claim based on state law. Although the complaint does not mention the statutory authority by which Eximbank and its agents operate, that statute bears little if any relation to the plaintiffs cause of action. Thus, the complaint may be considered well-pled even though there is no reference to 12 U.S.C. § 635(a)(1) et seq.

FCIA’s argument that Gensplit’s claim arises under federal law simply because Congress created Eximbank and authorized the export insurance program constitutes a strained interpretation of § 1331. In order for a claim to “arise under” federal law, it is necessary that the complaint “establish either that federal law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Board v. Laborers Vacation Trust, 463 U.S. 1, 27, 103 S.Ct. 2841, 2856, 77 L.Ed.2d 420, 442 (1983); see also, County Department of Public Welfare of Lake County v. Stanton, 545 F.Supp. 239, 242 (N.D.Ind.1982); Molton, Allen & Williams, Inc. v. Harris, 436 F.Supp. 853, 857 (D.D.C.1977). In other words, a claim arises under federal law “when the action may be defeated by one construction of the law and sustained by the opposite construction.” Local Division 519, 445 F.Supp. at 804.

Since the Court must look solely to the complaint in deciding whether the plaintiff’s claim arises under federal law, any defenses raised by FCIA concerning waiver or immunity are irrelevant for the purpose of resolving this issue. Therefore, the only consideration is whether the success of Gensplit’s breach of contract claim, standing alone, depends in some way upon the resolution of a substantial question of federal law. Clearly it does not. Although federal law may be invoked by way of FCIA’s defense, the complaint itself, which the Court considers to be a well-pled document, sets forth a breach of contract claim based on state law. As such, the success of that claim depends upon the wording and validity of the contract in light of applicable state law. Accordingly, Gen-split’s claim does not arise under federal law, and jurisdiction does not lie in this Court by reason of 28 U.S.C. § 1331.

III. JURISDICTION PURSUANT TO 28 U.S.C. § 1337

The defendant’s second basis for asserting that this Court has original jurisdiction over this case, and that removal is therefore proper under 28 U.S.C. § 1441, is that the plaintiff’s claim arises under an act of Congress as stated in 28 U.S.C. § 1337(a). Section 1337(a) provides, in relevant part, that

(a) The district courts shall have original jurisdiction of any civil action or proceeding arising under any act of Congress regulating commerce ...

The issue with respect to § 1337(a) is very similar to the one discussed with reference to § 1331, as the “arising under” language in § 1337(a) is to be interpreted according to the same standards as the “arising under” language in § 1331. K.T. Hunter, 746 F.2d at 639; First National Bank of Aberdeen v. Aberdeen National Bank, 471 F.Supp. 460, 466 (D.S.D.1979). The Court’s determination as to whether it has jurisdiction by virtue of § 1337(a) is also to be made solely on the basis of the allegations in the complaint, as that document in no way obscures the nature of the plaintiff’s claim. Long Island Railroad Company v. United Transportation Union, 484 F.Supp. 1290, 1291 (S.D.N.Y.1980).

In view of the allegations in the complaint, the Court is convinced that the plaintiff’s claim does not arise under an Act of Congress regulating commerce. Although FCIA may operate pursuant to statutory authorization, that legislation does not serve as the foundation for the plaintiffs claim. As the court stated in First National Bank of Aberdeen v. Aberdeen National Bank, 471 F.Supp. at 466:

“Merely because an Act of Congress regulating commerce may be involved in the case is not enough to raise federal court jurisdiction. Eickhof Construction Co. v. Great Northern Railway Co., 291 F.Supp. 44 (D.Minn.1968). The plaintiffs claim must arise under that Act in the sense that the Act supplies not only the source of the authority to establish that right, but also that it establishes the federal nature of the right.”

The source of the plaintiffs claim in this instance is the insurance contract between it and FCIA; no Act of Congress has supplied the plaintiff its authority to establish its rights under the contract. Therefore, the Court finds that 28 U.S.C. § 1337 does not confer original jurisdiction over this matter to this Court, and the defendant’s contentions to the contrary are rejected.

IV. JURISDICTION PURSUANT TO 28 U.S.C. § 1442(a)(1)

The third and final basis upon which the defendant contends that this Court has jurisdiction over this action is that FCIA is a “person” acting under an agency of the United States within the meaning of 28 U.S.C. § 1442(a)(1). That section provides, in relevant part, that

(a) A civil action or criminal prosecution commenced in a State court against any of the following persons may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending:
(1) Any officer of the United States or any agency thereof, or person acting under him, for any act under color of such office ...

Gensplit disputes that FCIA is a “person” as that term is used in § 1441(a)(1). Instead, Gensplit asserts that the term applies only to natural persons. In support of its position, Gensplit has cited a number of cases, including two involving Eximbank, where courts did not permit removal pursuant to § 1442(a)(1) by entities which were not natural persons. These cases will be addressed below.

Unlike the determinations made above with respect to § 1331 and § 1337, the Court must consider all relevant facts in the removal petition and supporting affidavits, in addition to those alleged in the complaint, when applying § 1442(a)(1) to the present situation. O’Bryan v. Chandler, 496 F.2d 403 (10th Cir.1974); State of New Jersey v. Moriarity, 268 F.Supp. 546, 557 (D.N.J.1967). However, the facts asserted in support of removal must clearly demonstrate that jurisdiction rests in federal court, as any doubts about the propriety of removal will result in the case being remanded to state court. Jones, 541 F.2d at 664; Tasner v. U.S. Industries, Inc., 379 F.Supp. 803, 809 (N.D.Ill.1974). The corollary to that rule is that the party who removed the action bears the burden of establishing its right to remove. Jones, 541 F.2d at 664.

The cases in which § 1442(a)(1) was interpreted provide no clear-cut answer as to whether the term “person” as used in that section applies to non-individuals. In Willingham v. Morgan, 395 U.S. 402, 406-407, 89 S.Ct. 1813, 1815-1816, 23 L.Ed.2d 396 (1969), the Supreme Court stated that § 1442(a)(1) was not to be narrowly construed, but that the statute was “broad enough to cover all cases where federal officers can raise a colorable defense arising out of their duty to enforce federal law.” The issue in Willingham, however, was not whether the parties seeking removal were “persons”, but rather whether they had acted in the course of their official duties. In fact, the parties seeking removal were the warden and chief medical officer at the United States Penitentiary at Leavenworth, Kansas, who were obviously natural individuals and therefore “persons” under § 1442(a)(1). 395 U.S. at 403, 89 S.Ct. at 1814.

The language in Willingham was cited by the court in Peterson v. Blue Cross/Blue Shield of Texas, 508 F.2d 55 (5th Cir.1975), where the primary issue also was whether the defendants had acted beyond the scope of their statutory authority. 508 F.2d at 57. After citing Willingham and a number of other cases where removal by natural persons was allowed, however, the court concluded without discussion that the corporate defendants were “persons acting within the purview of § 1442(a)(1).” 508 F.2d at 58.

The defendant relies heavily on the Peterson decision to support its argument that this Court has jurisdiction over this case pursuant to § 1442(a)(1). In view of the conflicting cases cited by the plaintiff, however, the Court is not convinced that it should base its decision upon the outcome in Peterson, especially when the crux of that case was centered upon a different issue.

Likewise, the Court does not feel compelled to follow the holdings in the other cases cited by FCIA. In Group Health Inc. v. Blue Cross Assn., 587 F.Supp. 887, 890 (S.D.N.Y.1984), the court cited Peterson for the proposition that corporate agents of the Department of Health and Human Services administering Medicare programs may remove an action under § 1442(a)(1). After referring to other cases which held that § 1442(a)(1) did not grant a right of removal to federal agencies, the court nonetheless concluded that “(t)he section is not by its terms limited to natural persons.” Id.

The defendant also cited Allen v. Allen, 291 F.Supp. 312 (S.D.Iowa 1968), and Kuenstler v. Occidental Life Ins. Co., 292 F.Supp. 532 (C.D.Cal.1968). In both of those cases, it was held that the defendants, although not natural persons, were “persons” acting under the Secretary of the Department of Health, Education, and Welfare. In State of Texas v. National Bank of Commerce of San Antonio, 290 F.2d 229, 231 (5th Cir.1961), also cited by the defendant, the court found that the defendant banks were acting in their official capacity as agents of the United States Government. However, the court did not specifically address the issue of whether the banks were “persons.”

Balanced against the cases cited by FCIA are a number of decisions which support Gensplit’s contention that the term “persons” in § 1442(a)(1) pertains only to individuals. In Lance International, Inc. v. Aetna Casualty and Surety Co., 264 F.Supp. 349 (S.D.N.Y.1967), the court decided that Eximbank was not entitled to remove an action to federal court on the basis of § 1442(a)(1). “The plain language of (§ 1442(a)(1)) limits the right to remove to an ‘officer’ or ‘person acting under him’. Nothing in the legislative history reveals that the term ‘officer’ was intended to include corporations or agencies as distinguished from individuals.” 264 F.Supp. at 355.

Eximbank also failed in its removal attempt in Harlem River Produce Co. v. Aetna Casualty and Surety Co., 257 F.Supp. 160 (S.D.N.Y.1965). In reaching its decision, the Court in Harlem River reviewed the congressional purpose behind § 1442(a)(1), which was “that all suits against officers of the United States Government for acts done within the ambit of their authority be tried only in courts of the United States.” 257 F.Supp. at 163. In other words, Congress intended by means of § 1442(a)(1) to protect individuals employed by the government against suits brought against them in state courts for actions done in the course of their official duties; there was no evident intention to protect government agencies or other corporate entities from such suits.

The most well-reasoned discussion of the issue presently before the Court is contained in Lowe v. Norfolk & Western Railway Co., 529 F.Supp. 491 (S.D.Ill.1982). The question in Lowe was whether the Environmental Protection Agency (“EPA”) was an “officer” or “person” within the meaning of § 1442(a)(1). In holding that the EPA was neither, the court reasoned as follows:

“The plain wording of subsection one makes it clear that removal is available to any officer of the United States or any officer of any agency of the United States. Although Monsanto and WES would not agree to this construction and would instead allow removal to any agency of the United States, the very next phrase dispels this alternative construction. The next phrase reads “or person acting under him.” (Emphasis supplied) “Him” obviously refers directly to the officer of the United States or of the United States agency. It is highly unlikely that Congress would refer to a federal agency, in this case the EPA, as “him.” Moreover, subsection (a) provides that any civil action or criminal prosecution commenced against certain following persons, enumerated in sub-subsections (1) through (4) may be removed by them. Thus, the words of the statute demonstrate that it provides protection for persons, not agencies. This makes sense, since Congress has already provided ample protection against tort suits for its agencies and the entire government in the Federal Tort Claims Act, and any other claims which could be brought in state court are barred by sovereign immunity.”

529 F.Supp. at 493-494. Additional cases exist which support the plaintiffs proposition that the right to remove actions by means of § 1442(a)(1) extends only to natural persons. See, e.g., Brewer v. Department of Housing And Urban Development, 508 F.Supp. 72 (S.D.Ohio 1980); KCPO Employees Credit Union v. Mitchell, 421 F.Supp. 1327 (W.D.Mo.1976).

The defendant points out, as did the court in Peterson, that the cases cited by the plaintiff merely hold that federal agencies have no right to remove under § 1442(a)(1). The Court fails to discern what succor the defendant obtains from that fact. Certainly, if Congress did not intend to provide a right to remove under § 1442(a)(1) to federal agencies, it would have no cause to do so for private, non-individual agents of federal agencies. What logic lies in the defendant’s argument?

The Court believes that the better reasoned approach was taken by those courts which denied the right to remove under § 1442(a)(1) to any but individual defendants. Statutes ordinarily are to be construed according to the normal meanings of the words contained therein. Andrus v. Allard, 444 U.S. 51, 100 S.Ct. 318, 62 L.Ed.2d 210 (1979). If Congress had intended to extend coverage under § 1442(a)(1) to other than natural persons, it could easily have done so by stating as much in the language of the statute. Moreover, unlike certain situations where courts employed strained interpretations of § 1442(a)(1) to maintain their jurisdiction, this Court sees no overriding federal interest in this action such that an overly broad interpretation of § 1442(a)(1) might be justified. This case involves a simple claim for breach of contract, and it belongs in state court where it was originally brought. The defendant has not sustained its burden of establishing its right to remove under § 1442(a)(1), and the Court hereby finds that it lacks jurisdiction over this action under that section.

V. COSTS

The plaintiff has asked that the Court award it the costs incurred by it in relation to this motion should the matter be remanded to state court. The defendant contends that it removed the action in good faith and that, in the event the case is remanded, costs should not be awarded.

The Court believes there was little doubt that § 1331 and § 1337 offered no reasonable basis for removal of this action. On the other hand, the conflicting case law concerning the propriety of removal under § 1442(a)(1) presented a far more valid issue, albeit one that was not resolved in the defendant’s favor.

Accordingly, since the defendant removed this action based in part on ill-founded contentions which the plaintiff was forced to refute, the Court will and hereby does order that the $250.00 bond posted by the defendant with the Clerk of Court be forfeited to the plaintiff. Further costs will not be awarded in this instance. However, the defendant is now on notice of this Court’s decision with respect to § 1442(a)(1), and any future attempts to remove similar cases under that section, in the absence of subsequent controlling decisions to the contrary, will result in the award of full costs to the party contesting removal.

CONCLUSION

In summary, the Court hereby GRANTS the plaintiff’s motion to remand this action to the Circuit Court for Milwaukee County, State of Wisconsin. Defendant’s motion to transfer this case to the United States District Court for the Southern District of New York is moot and therefore DENIED. The Court also orders that the removal bond posted by the defendant in the amount of $250.00 be forfeited to the plaintiff.