The opinion of the court was delivered by: SOFAER
This action for libel was filed on January 11, 1983, in the Eastern District of Virginia. Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332, and venue on 28 U.S.C. § 1391(a). The plaintiffs are two State Department officials and a naval officer who were stationed in Santiago, Chile, in September 1973, at the time a military coup deposed the government of Salvador Allende Gossens. Plaintiff Nathaniel Davis served as United States Ambassador, Frederick D. Purdy as Consul to the Santiago Consulate, and Captain Ray E. Davis (U.S. Navy Ret.) as Commander of the United States Military Group and Chief of the United States Navy Mission in Santiago.
The coup in September 1973 was violent, and resulted in the death or disappearance of many people, including President Allende, whose bullet-riddled body was found the day after the military takeover. Among the other victims was a United States citizen named Charles Horman, who disappeared from his Santiago home a few days after the coup. A body with fingerprints that matched Horman's was discovered in Chile following Allende's overthrow. Horman's survivors sued several United States officials, including plaintiffs in this case, charging them with complicity in Horman's death. The suit was voluntarily dismissed. See Horman v. Kissinger, 77 Civ. 1748 (D.D.C. filed October 3, 1977). Horman's disappearance also attracted the attention of author Thomas Hauser, who researched and wrote what purports to be a nonfiction account entitled The Execution of Charles Horman: An American Sacrifice (hereinafter "Execution "). Execution was published in hardcover in 1978 by Harcourt Brace Jovanovich, Inc. ("HBJ"). In 1979 Hauser signed an option agreement to sell all movie rights in the book to Warner Brothers, which later assigned the option to Universal City Studios, Inc., ("Universal"), a subsidiary of MCA, Inc. Universal exercised the option in 1981.Director Constantin Costa-Gavras drew upon portions of the book for the screenplay of his film "Missing", starring Sissy Spacek and Jack Lemon, released by Universal in 1982. The film, set in Santiago, dramatizes the search carried on by Horman's wife and father, a New York businessman, in the weeks following his arrest and execution. The Hearst Corporation ("Hearst"), which had purchased the paperback rights from HBJ in 1979, issued two softcover editions, one in 1980 under the original title and a second in 1982 retitled Missing and adopting the distinctive red-lettered logo of the film. The plaintiffs have named author Hauser, publishers HBJ and Hearst, and filmmakers Costa-Gavras, Universal, and MCA as defendants. They seek damages of $150 million, charging that through the publication of books Execution and Missing, and the film "Missing," defendants have "falsely accused the plaintiffs of ordering or approving the order for the murder of Charles Horman."
Shortly after the suit was filed in the Eastern District of Virginia, defendants moved to dismiss for lack of personal jurisdiction and for improper venue, or in the alternative for a transfer of venue to this district under 28 U.S.C. § 1404(a). On March 25, 1983, Judge James Cacheris granted the defendants' motion to transfer in a ruling from the bench, denying without prejudice defendants' motion to dismiss. Davis v. Costa-Gavras, No. 83-019-A (E.D. Va. March 25, 1983).
After extensive discovery, defendants Hauser and HBJ now move for summary judgment, contending that the one-year statute of limitations has run on the original publication of the hardcover and paperback editions of Execution, and that they are not liable for Hearst's republication of the paperback Missing or for any alleged libels contained in the film. These motions require the resolution of several preliminary conflict-of-laws issues which bear upon the statute of limitations and the imposition of vicarious liability for a republication.
Both Virginia and New York impose a one year statute of limitations in libel actions. N.Y.C.P.L.R. § 215(3); Va. Code § 8.01-248 (1977). Defendants Hauser and HBJ, relying upon New York law, argue that the action against them is time-barred because the hardcover edition of Execution -- the only publication for which Hauser and HBJ admit responsibility -- was published in 1978. Plaintiffs contend, however, that Virginia law governs the statute of limitations issue and that Virginia recognizes the common law rule that each sale of a book gives rise to a separate cause of action. Plaintiffs allege that discovery has shown that at least two books were shipped to Virginia between January 1982 and January 1982, when the suit was filed. Plaintiffs also contend that Virginia substantive law applies to the republication issue, since under Virginia conflict-of-laws rules substantive rights of the parties in a multistate tort action are governed by the law of the place of the wrong. Plaintiffs interpret Virginia law as imposing liability for any republication authorized by the original publisher or issued as a natural and probable consequence of the original publication. Defendants argue that New York conflict-of-laws rules dictate application of New York law to the republication issue, since New York is the state having the most significant relationship to the tort. They interpret New York law as imposing liability only if the original publisher exercised authority or control over the republication.
A. Effect of Transfer of Venue on Choice of Law.
Ordinarily a federal court sitting in diversity applies the law of the state in which it sits to any issues of procedure not covered by federal law. Hanna v. Plumer, 380 U.S. 460, 470, 14 L. Ed. 2d 8, 85 S. Ct. 1136 (1965). It also looks to the forum state's conflict-of-laws rules in determining what substantive law to apply to the various issues in a diversity case. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). When a case has been transferred for the convenience of the parties, however, the transferee court must apply the same law as the transferor court would have applied. Van Dusen v. Barrack, 376 U.S. 612, 639, 11 L. Ed. 2d 945, 84 S. Ct. 805 (1964). Otherwise, defendants might convert 28 U.S.C. § 1404(a) into a forum-shopping device, obtaining a "change of law as a bonus for a change of venue." Id. at 635 (quoting Wells v. Simonds Abrasive Co., 345 U.S. 514, 522, 97 L. Ed. 1211, 73 S. Ct. 856 (1953) (Jackson, J., dissenting)). But the exception in Van Dusen applies only if the action could have been maintained in the original forum. Martin v. Stokes, 623 F.2d 469, 474 (6th Cir. 1980); Ellis v. Great Southwestern Corp., 646 F.2d 1099, 1110 (5th Cir. 1981); Roofing Sheet Metal Services, Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 991-93 (11th Cir. 1982); see Van Dusen, 376 U.S. at 638; 1 Moore's Federal Practice, P0.145[4.-5], at 1613 (2d ed. 1983). This qualification prevents plaintiffs from filing wherever the law is most favorable in order to capture that forum's law and carry it with them on transfer to a proper venue. See id. at 1608-09.
When Judge Cacheris granted defendants' motion to transfer to the Southern District of New York, he explicitly declined to decide whether venue or jurisdiction was proper in the Eastern District of Virginia. A court "has power to transfer [a] case even if there is no personal jurisdiction over the defendants, and whether or not venue is proper in [the] district, if a transfer would be in the interest of justice." Volk Corp. v. Art-Pak Clip Art Service, 432 F. Supp. 1179, 1181 (S.D.N.Y. 1977); accord Corke v. Sameiet M.S. Song of Norway, 572 F.2d 77 (2d Cir. 1978); See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 8 L. Ed. 2d 39, 82 S. Ct. 913 (1962). The transferor court may act under either section 1404(a) or 1406(a) to transfer an improperly venued action. Corke, 572 F.2d at 80. But when a transferor court has not ruled on the property of venue or jurisdiction, the transferee court must determine whether venue and jurisdiction would have been proper in the transferor court in order to decide which forum state's law will apply under Erie. See Martin, 623 F.2d at 474; Ellis, 646 F.2d at 1107; Roofing Sheet Metal, 689 F.2d at 992-93. Examination of the facts and the law indicates that federal venue would not have been proper in the Eastern District of Virginia, and that Virginia's long-arm statute would not authorize personal jurisdiction over these defendants. Therefore, the conflict-of-laws and procedural rules of New York apply.
B. Personal Jurisdiction Under Virginia's Long Arm-Statute.
Plaintiffs do not allege that either the individual or the corporate defendants are subject to jurisdiction in Virginia as Virginia domiciliaries or as corporations "present" in Virginia by virtue of "doing business" there. See International Shoe Co. v. Washington, 326 U.S. 310, 316-18, 90 L. Ed. 95, 66 S. Ct. 154 (1945); Va. Code § 8.01-330 (preserving traditional bases of jurisdiction). HBJ is a New York corporation with main offices in New York; Hearst is a Delaware corporation with its principal place of business in New York; Hauser is a New York citizen; Costa-Gavras is a citizen of Greece domiciled in France; Universal and MCA are Delaware corporations with principal places of business in California and offices in New York. None of the defendants appears to have offices, representatives, bank accounts, or real property in Virginia. Their contacts with Virginia are minimal. Hauser made a number of phone calls to the D.C. area in the course of his research, at least two of which were to Virginia. Hauser Deposition at 17-18. HBJ maintains an area representative in Washington, D.C., and Universal's films are shown in Virginia movie theaters. Aside from the de minimus distribution of books and cassettes noted below, no further connections or activities by the defendants in Virginia have been alleged.
As authority for the exercise of jurisdiction, plaintiffs rely on paragraph three of Virginia's long arm statute, which provides that
[a] court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's . . . [c]ausing tortious injury by an act or omission in this Commonwealth.
Va. Code § 8.01-328.1 (Supp. 1983). Plaintiffs argue that Virginia courts have held that commission of a single tortious act within the forum is sufficient to confer jurisdiction under this paragraph. They apparently rely on the shipping of two books and several video cassettes into the district within the profferred limitations period as the "act or ommission in [the] Commonwealth" causing tortious injury. Virginia's long-arm statute, however, does not contemplate jurisdiction based on the act of sending libelous written matter into Virginia. St. Clair v. Righter, 250 F. Supp. 148 (W.D. Va. 1966). Unlike many other states' long-arm provisions, Virginia's statute distinguishes between the act and the injury it causes. Compare id. at 151 with, e.g., Process Church of Final Judgment v. Sanders, 338 F. Supp. 1396 (N.D. Ill. 1972). Jurisdiction under paragraph three of Virginia's long-arm statute cannot be predicated solely on an extraterritorial act causing an effect in the state, but must be tied to some act by the defendant within the Commonwealth. Darden v. Heck's, Inc., 459 F. Supp. 727, 731 (W.D. Va. 1978); cf. Margoles v. Johns, 157 U.S. App. D.C. 209, 483 F.2d 1212, 1217-18 (D.C. Cir. 1973) (construing identical D.C. statute); id. at 1220-21 (discussing relevant portion of St. Clair with approval); Beaty v. M.S. Steel Co., 401 F.2d 157, 159 (4th Cir. 1968), cert. denied, 393 U.S. 1049, 21 L. Ed. 2d 691, 89 S. Ct. 686 (1969); (construing similar Maryland statute); Timberlake v. Summers, 413 F. Supp. 708, 709-10 (W.D. Okla. 1976) (construing identical Oklahoma statute). Moreover, an act does not confer jurisdiction if it can only technically be said to have transpired in Virginia. Danville Plywood Corp. v. Plain & Fancy Kitchens Inc., 218 Va. 533, 238 S.E.2d 800 (1977). Plaintiffs do not argue for application of paragraph four of the Virginia long-arm statute, which authorizes jurisdiction based on an act outside the forum causing injuries within the forum state, presumably because that paragraph also requires a showing of "persistent activity" or "substantial revenues" derived by the defendants in the state.
Defendants contend that the limitations imposed by the due process clause of the Constitution would bar the exercise of adjudicatory power in Virginia. See World-Wide Volkswagen v. Woodson, 444 U.S. 286, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980); Keeton v. Hustler Magazine, Inc., 682 F.2d 33 (1st Cir. 1982), cert. granted, 51 U.S.L.W. 3545 (U.S. Jan. 24, 1983)(No. 82-485).Here the state provision on which plaintiffs rely intentionally stops short of the outer limits of due process. See Margoles, 483 F.2d at 1216. The overwhelming weight of authority holds that a federal court sitting in diversity may not exceed the jurisdiction authorized by the forum state's long arm statute. See, e.g., Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 711-12, 72 L. Ed. 2d 492, 102 S. Ct. 2099 & n.3 (1982) (Powell, J., concurring); Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir. 1963); 2 Moore's Federal Practice P4.25 & cases cited at n.18. But see St. Clair, 250 F. Supp. at 152. Since paragraph (a)(3) of the Virginia statute does not authorize jurisdiction over these defendants, no need exists to decide the "hypothetical question of whether if it did such an assertion of jurisdiction would be unconstitutional." Margoles, 483 F.2d at 1220; see Beatty, 401 F.2d at 161.
C. Venue Under 28 U.S.C. § 1391.
Section 1391(a) authorizes venue in diversity cases in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose. 28 U.S.C. § 1391(a). Virginia is not now the domicile or residence of the plaintiffs in this case nor was it at the time of publication. Nathaniel Davis is currently a New Jersey citizen stationed in Rhode Island, Purdy is a Pennsylvania citizen residing in Brazil, and Ray E. Davis is a citizen of New Hampshire living in Chile. Even if the corporate defendants could be deemed Virginia residents under 28 U.S.C. § 1391(c) by virtue of "doing business" there, the presence in the litigation of defendants Hauser and Costa-Gavras precludes venue based on residence of all defendants.
Plaintiffs contend, however, that the claim arose in Virginia because plaintiffs' reputations were injured there when Virginia residents read the book or viewed the movie. Under plaintiffs' definition, a claim may arise wherever some part of the injury is sustained. But a "claim" under federal law is generally defined as "the aggregate of operative facts which give rise to a right enforceable in the courts." Original Ballet Russe, Ltd. v. Ballet Theatre, Inc., 133 F.2d 187, 189 (2d Cir. 1943) (emphasis added); see Gurrola v. Griffin Brand Sales Agency, Inc., 524 F. Supp. 115, 116 (S.D.Tex. 1980); Maney v. Ratcliff, 399 F. Supp. 760, 766 (E.D. Wis. 1975); Smith, Kline & French Laboratories v. A.H. Robins Co., 61 F.R.D. 24, 28-29 (E.D. Pa. 1973). The Supreme Court, construing identical language in section 1391(b), has made clear that Congress did not intend the 1966 language in section 1391, adding venue where a "claim arose," to provide plaintiffs with an "unfettered choice among a host of different districts." Leroy v. Great Western United Corp., 443 U.S. 173, 185, 61 L. Ed. 2d 464, 99 S. Ct. 2710 (1979). The Court observed that:
the broadest interpretation of the language of § 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose in only one specific district, a plaintiff may choose between those two (or conceivably even more) districts that with approximately equal plausibility - in terms of the availability of witnesses, the accessibility of other relevant evidence, and the convenience of the defendant (but not of the plaintiff) - may be assigned as the locus of the claim.
Id. (footnote omitted); see Hodson v. A.H. Robins, Co., 528 F. Supp. 809, 815 (E.D.Va.1981).
In construing section 1391(a), which unlike 1391(b) permits venue in the district where all plaintiffs reside, convenience of the plaintiffs arguably becomes a relevant factor. Although plaintiffs are not currently residents of Virginia, they point out that they have many connections with the District of Columbia and its surrounding area and allege that their reputations suffered the greatest injury there. Their residence abroad has been in the service of the United States and has required the advice and consent of the Senate. At various times in the past twenty-five years Nathaniel Davis has lived in the District of Columbia or worked in Arlington, Virginia; Purdy has lived in the District of Columbia, Maryland, and Virginia; Captain Davis has lived intermittently in Virginia and has family members and former classmates from the Naval Academy currently residing in that area. Plaintiffs also point out that the Central Intelligence Agency and the Defense Department, which they contend the defendants have depicted as guiding their conduct in Chile, have headquarters in Virginia.
These factors might carry substantial weight in assessing whether the exercise of jurisdiction in Virginia was compatible with due process standards of fair play, substantial justice, and the orderly administration of the federal system. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980). Conceivably, Virginia might have sufficient interest in adjudicating the claim to balance the paucity of defendants' contacts with the state. See, e.g., Anselmi v. Denver Post, Inc., 552 F.2d 316, 325 (10th Cir.), cert. denied, 432 U.S. 911, 97 S. Ct. 2960, 53 L. Ed. 2d 1084 (1977) (California newspaper publishing story datelined in Wyoming and reporting organized crime flourishing there subject to Wyoming jurisdiction); Buckley v. New York Post Corp., 373 F.2d 175 (2d Cir. 1967) (New York newspaper subject to suit in Connecticut state court for libel against Connecticut resident); Akbar v. New York Magazine Co., 490 F. Supp. 60 (D.D.C. 1980) (foreign nationals serving in D.C. embassy may sue New York publisher under D.C. long-arm statute). But, as Leroy demonstrated, the choice of forums afforded by the federal venue provisions is far narrower than the range permissible under the due process clause. See, e.g., Robbins v. First American Bank of Virginia, 514 F. Supp. 1183, 1192 (N.D.Ill. 1981) (venue not coextensive with due process); Cheeseman v. Carey, 485 F. Supp. 203, 212 & n.13 (S.D.N.Y. 1980) (questioning the validity of a minimum contacts approach to venue after Leroy); Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F. Supp. 886, 891 (S.D.N.Y. 1974) (venue does not automatically follow from personal jurisdiction). The "claim arose" language of section 1391(a) was not intended radically to expand the notion of venue but only to ensure that there be at least one district where federal venue would lie in a multiparty action. Leroy, 443 U.S. at 184 & n.17.
The local contacts cited by plaintiffs arguably support venue in the District of Columbia, the geographic focus of their professional reputations as federal officials and public servants, as the place where the claim arose. See Akbar, 490 F. Supp. at 64. But the limitations inherent in Section 1391 would be severely undercut if such a federal connection could be parlayed, as plaintiffs urge, into a "geographical nexus [with] the surrounding residential communities" of Virginia and Maryland, Plaintiffs' Memorandum of March 14, 1983 at 4; see also Davis and Kasanof Affidavits of March 8 and 11, 1983, in effect permitting plaintiffs to choose at will among these districts. See Mundy v. Weinberger, 554 F. Supp. 811, 818 (D.D.C. 1982) (refusing to attach signficance for venue purposes to location of Pentagon in Eastern District of Virginia and remarking that "it is located where it is because of its proximity to the nation's capital"). Compare Buckley, 373 F.2d at 184 (addressing jurisdiction, not venue, and reasoning that Connecticut state court may subject New York newspaper to process, given economic and intellectual interdependence of southwestern Connecticut and New York City).
Venue is not one of those "vague principles" susceptible to "liberal" construction," but a "specific and unambiguous" requirement. Leroy, 443 U.S. at 184 n.18 (quoting Olberding v. Illinois Central R.R. Co., 346 U.S. 338, 340, 98 L. Ed. 39, 74 S. Ct. 83 (1953)). Multiple venue under the "claim arose" provision is proper at most in districts that with "approximately equal plausibility . . . may be assigned as the locus of the claim." Id. at 185. This rule precludes venue in Virginia since, even under a plaintiff-centered, place-of-injury analysis, the District of Columbia would provide a more plausible forum. See Akbar, 490 F. Supp. at 66-67. Moreover, a plaintiffs' resort to a "nexus" theory illustrates the difficulty of fixing on a single district as the place of injury when the injury is as geographically diffuse as this multistate libel. See Reese, Choice of Law in Torts and Contracts, 16 Colum. J. Transnat'l L. 1, 3 (1977). In reality, plaintiffs seek recovery for damage to their national and indeed international reputations, and their "claim" of $150 million is hardly limited to that part of the injury to their reputations occurring in the Eastern District of Virginia.
Judge Mehrige of the Eastern District of Virginia wisely observes that "in cases involving activity by diverse defendants which may have caused injury in a multitude of districts, the place of injury is not the sole test of where the claim arises," and suggests that courts look also to the district where significant acts and omissions by the defendants gave rise to liability. Hodson, 528 F. Supp. at 16; accord Pfeiffer v. International Academy of Biomagnetic Medicine, 521 F. Supp. 1331 (W.D. Mo. 1981); cf. Patch v. Playboy Enterprises, Inc., 652 F.2d 754, 756-57 (8th Cir. 1981) (rejecting place of injury to determine where claim "accrued" for purposes of applying borrowing statute). Courts in this district have employed a similar approach: "[T]he weight of defendant's contacts in the various districts concerned must be compared, and the claim must be deemed to have arisen in the district where the contacts [were] most significant." Ghazoul v. International Management Services, Inc., 398 F. Supp. 307, 315 (S.D.N.Y. 1975) (quoting Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F. Supp. 886, 891 (S.D.N.Y. 1974)). This common sense approach is fully compatible with Leroy, as it typically results in a finding that the claim arose in the district with the bulk of relevant evidence and witnesses, often also a district conversant with the governing substantive law. See, e.g., Leroy, 443 U.S. at 185-86; Lamont v. Haig, 192 U.S. App. D.C. 8, 590 F.2d 1124 (D.C. Cir. 1978); German Educational Television Network, Ltd. v. Oregon Public Broadcasting Co., 569 F. Supp. 1529 (S.D.N.Y. 1983); Johnson Creative Arts, Inc. v. Wool Masters, Inc., 573 F. Supp. 1106 (D.Mass. 1983).
The Southern District of New York is the district where the vast majority of the acts giving rise to liability took place. Defendant Hauser researched and wrote his book in New York, HBJ negotiated its contracts with Hauser and Hearst here, and all editing and promotional planning were done in New York. Although the firm "Missing" was shot primarily in Mexico, Costa-Gavras' discussions with Hauser occurred in New York City and the film premiered here. While both the hardcover and the softcover were distributed nationwide, sales in the New York area were substantial; for example, New York accounted for almost 25 percent of HBJ's national sales during the limitations period. During the same period, hardcover sales in Virginia constituted only eighteen-hundredths of one percent of the national figure. All the meetings and contractual negotiations between Hauser, Warner Brothers, or Universal occurred in New York, save one meeting in California. Finally, although witnesses to the events depicted in the book and movie are scattered around the world, several crucial witnesses, including Charles Horman's widow and father, live in New York City.Thus the bulk of witnesses and evidence relevant to ...