The opinion of the court was delivered by: BRYAN
Plaintiff Hoffman Motors Corporation (Hoffman Corp.) is a Delaware corporation authorized to do business in New York, with its principal offices in Manhattan. Defendant Alfa Romeo S.p.A. (S.p.A.) is an Italian corporation manufacturing motor cars in Italy. Its subsidiary, defendant Alfa Romeo Inc. (Alfa Inc.) is a New York corporation. Defendant Reitz is an Italian citizen, resident in New Jersey, who is an employee of S.p.A. and an officer of Alfa Inc.
The complaint alleges seven separate claims for relief. Five are based on federal statutes, one (I) on the Automobile Dealers Act, 15 U.S.C. § 1221 et seq., and four (III, IV, V and VI) on the Robinson-Patman Price Discrimination Act, 15 U.S.C. § 13. Two claims for breach of fiduciary relationship and prima facie tort are based on state law and are alleged to be pendent to the claim under the Automobile Dealers Act (II, VII).
Defendants move pursuant to Rule 12, F.R.C.P., for the following relief.
(1) S.p.A. moves for dismissal of the complaint for improper venue and want of personal jurisdiction (Rule 12(b)(2) and (3)).
(2) S.p.A. and Alfa Inc. move for dismissal of the Automobile Dealers Act claim, and with it the two pendent claims, for failure to state a claim upon which relief can be granted (Rule 12(b)(6)).
(3) Both also move to strike parts of the complaint as impertinent, immaterial and scandalous and for a more definite statement of the claims for relief (Rule 12(e) and (f)).
(4) Reitz moves to dismiss the complaint as to him for failure to state a claim on which relief can be granted, for want of personal jurisdiction and for improper venue. (Rule 12(b)(2)(3) and (6)).
The following facts emerge from the affidavits and depositions submitted on the motions:
In 1955 one M. E. Hoffman entered into a franchise agreement with S.p.A. granting him the sole and exclusive right to purchase Alfa Romeo cars which S.p.A. manufactured in Italy for distribution and resale in all of the United States. The agreement provided that it could be assigned by Hoffman to a corporation organized by him and was so assigned.
Plaintiff Hoffman Corp. was organized by Hoffman in 1959.
In 1961 Hoffman, allegedly on behalf of Hoffman Corp., entered into a new franchise agreement with S.p.A. granting exclusive distribution and resale rights on Alfa Romeos for only fourteen states, including New York. The rights formerly held by Hoffman in the other 36 states were granted by S.p.A. to defendant Alfa Inc., 95% of whose stock is owned by S.p.A. The chief executive officer of Alfa Inc. in this country is Reitz, who is also an employee of S.p.A.
The 1961 franchise agreement between Hoffman Corp. and S.p.A. expired in 1963 and was not renewed.
The complaint alleges that the reduction of plaintiff's franchise territory and eventual termination of its franchise resulted from a conspiracy between S.p.A., Alfa Inc. and Reitz to destroy plaintiff's business and appropriate its benefits to themselves. A number of acts by the defendants claimed to be tortious in furtherance of the conspiracy are alleged. It is further alleged that defendants caused S.p.A. to fail to act in good faith in carrying out the provisions of the franchise agreement based on allegations of various acts of bad faith.
All this is alleged to have been in violation of the Automobile Dealers Act, 15 U.S.C. § 1222.
It is further alleged that, during the operation of the franchise agreement, S.p.A. discriminated against plaintiff in favor of Alfa Inc. so as to substantially lessen competition. Such discriminations are alleged to have consisted in lower prices to Alfa Inc., compensation for reasons other than services rendered, compensation not available on a proportionately equal basis to plaintiff for services rendered, and facilities and services furnished which were not accorded to plaintiff on proportionately equal terms, all in violation of the Robinson-Patman Act and pursuant to the conspiracy.
Thus the controversy plainly arises out of the operation and termination of plaintiff's franchise agreement.
Alfa Inc. was served in New York.
S.p.A. was served by registered mail in Italy. In addition, the general manager of S.p.A. was personally served in Italy by an Italian attorney designated by the Clerk of this Court to serve process and S.p.A.'s New York attorneys, who were also attorneys for Alfa Inc., were personally served here - over their protest.
Reitz was personally served at his office in New Jersey.
(a) Robinson-Patman claims.
15 U.S.C. § 22 provides that a suit against a corporation under the anti-trust laws may be brought "in any district wherein it * * * transacts business." S.p.A. denies that it "transacts business" in this district and seeks dismissal for improper venue.
The transacting business test of venue under § 22 is " The practical, everyday business or commercial concept of doing or carrying on business 'of any substantial character.'" United States v. Scophony Corp., 333 U.S. 795, 807, 92 L. Ed. 1091, 68 S. Ct. 855 (1948). Each case is governed by its own facts. Abrams v. Bendix Home Appliances, Inc., 96 F. Supp. 3, 5 (S.D.N.Y. 1951).
The undisputed facts here show numerous business activities of S.p.A. within this district.
S.p.A. negotiated and signed the 1955 franchise agreement with Hoffman in Manhattan. The 1961 franchise agreement was negotiated and signed by S.p.A., through its president and general manager, in Manhattan. The exclusive sales and distribution rights granted included this district. The franchise required the holder to promote the sale of Alfa Romeo cars. Thus Hoffman Corp. was obligated to display the Alfa Romeo in a "prominent and distinctive manner" in a Park Avenue showroom. Moreover, adequate service facilities for the servicing and maintenance of Alfa Romeos had to be maintained at another Manhattan location, and qualified dealers in important cities had to be appointed.
Under the franchise S.p.A. retained close supervision and control over the franchised operations. It had the right to cancel the franchise of any dealer plaintiff appointed, as well as to approve the terms of the contract. The amount of spare parts kept on hand at the Manhattan repair facility was subject to specification by S.p.A. Even suggested selling prices were subject to its approval. It reserved the right to inspect all the Hoffman Corp. facilities. Disputes arising under the contract were to be resolved by arbitration in New York, under New York law, with service to be made upon attorneys for S.p.A. in Manhattan.
The franchise recites that S.p.A. proposed to organize a subsidiary corporation through which it would assist plaintiff. Alfa Inc. was organized by S.p.A. under New York law, with 95% stock ownership in the parent. Policies for Alfa Inc. were set by S.p.A. in Italy.
Of the five directors of Alfa Inc. in 1961, three were officers or employees of S.p.A., one its president, another its general manager, and the third, Reitz, an employee of some importance. Reitz was the vice-president and treasurer of Alfa Inc. and the chief executive officer of Alfa Inc. in this country. His salary, however, was paid entirely by S.p.A. and his expenses were shared on a 50/50 basis by the two corporations. Reitz regularly transacts business in New York on behalf of both S.p.A. and Alfa Inc.
One of the functions of Alfa Inc. was to approve or disapprove on behalf of S.p.A. warranty claims made on Alfa Romeo cars, including claims of New York purchasers. Warranty claims had previously been handled by direct communication between S.p.A. and Hoffman Corp.
In addition to matters handled through Alfa Inc., S.p.A. directly carried on numerous activities within this district. Reitz, in his capacity as an S.p.A. employee, acted as liaison between S.p.A. in Italy and Hoffman Corp. In this capacity he discussed such matters as the number and model of cars Hoffman Corp. required and warranty procedures on cars purchased from Hoffman Corp. and its dealers.
From 1961 to 1963 at least one other employee of S.p.A. was assigned to visit the Hoffman Corp. offices to examine complaints and claims received from its customers and dealers. Other full time employees of S.p.A. carrying on activities within this district included several mechanics. One such mechanic, a specialist in Alfa Romeo cars, has worked at plaintiff's New York City facilities since 1958.
Five other mechanics were employed by S.p.A. for promotional and educational work in the United States from 1960-1963 and thereafter. These mechanics travelled in three or four trucks supplied by S.p.A. and owned by Alfa Inc., to various Alfa Romeo dealers in and around New York City, including Rockland and Westchester counties. They demonstrated Alfa Romeo cars and gave instructions to dealers and mechanics in repair and maintenance.
From these undisputed facts it is obvious that S.p.A. has been consistently carrying on business in this district of a substantial nature and thus "transacts business" so as to meet venue requirements.
The activities of S.p.A. employees with regard to sales, promotion and warranties alone seem sufficient to meet the relatively minimal contacts necessary to constitute transacting of business under the liberally construed requirements of 15 U.S.C. § 22. Compare Green v. U.S. Chewing Gum Mfg. Co., 224 F.2d 369 (5 Cir. 1955); ...