Environmental Research International, Inc. v. Lockwood Greene Engineers, Inc.

355 A.2d 808, 1976 D.C. App. LEXIS 505

• Court: District of Columbia Court of Appeals
• Decided: March 26, 1976
• Docket: 7860
• Status: Published

Opinions

HARRIS, Associate Judge:

On May 23, 1975, by a vote of 2-1, a division of the court released an opinion in this case reversing the trial court’s order which had granted appellees’ motion to quash service of process and dismiss appellant’s complaint on the ground that the court lacked in personam jurisdiction over the appellees. 339 A.2d 390, D.C.App. On July 10, 1975, we granted appellees’ petition for a rehearing en banc and vacated the May 23 decision. The case since having been reargued and reconsidered en banc, we now hold that the judgment of the trial court was correct and affirm.

This case presents another question as to the permissible reach of the District of Columbia’s “long-arm statute”. D.C.Code 1973, § 13-423(a) (1). It arose in the following factual context. In the spring of 1971, appellee Lockwood Greene Engineers, Inc. (Lockwood Greene), a Massachusetts corporation with its principal place of business in South Carolina, was engaged in negotiations with appellee Penn Dye and Finishing Co., Inc. (Penn Dye), a Pennsylvania corporation, to provide engineering services concerning the treatment of industrial waste created at Penn Dye’s textile processing plant in Pine Grove, Pennsylvania. Appellant Environmental Research International, Inc. (Environmental Research), a professional consulting firm incorporated in the District of Columbia, contacted Lockwood Greene in South Carolina and offered to assist it in its Penn Dye project by collecting data from which to prepare a construction grant application to be submitted to the Environmental Protection Agency (EPA) and by assisting in processing the grant through the EPA. An agreement was made, and appellant apparently performed various services for appellees, including the analysis of data and the preparation of memoranda and an application for funding from the EPA.

In July of 1973, appellant brought an action against appellees in the Superior Court of the District of Columbia, claiming a breach of contract and seeking the value of the services performed. Appellant asserted that D.C.Code 1973, § 13-423 (a)(1) gives the courts of the District of Columbia personal jurisdiction over the nonresident defendants because they were “transacting business” in the District within the meaning of the statute.¹ Appellees moved to quash service of process and dismiss the complaint for lack of personal jurisdiction; that motion was granted.

The full reach of the District of Columbia’s relatively new long-arm statute has not been defined.² However, the legislative history of the act makes it clear that it was Congress’ intent to provide the District with a long-arm statute equivalent in scope to those already in effect in Maryland and Virginia.³ Therefore, to the extent that the courts of our neighboring jurisdictions have spoken on the reach of their long-arm statutes, we welcome their guidance. In interpreting their statutes, the courts of both Maryland and Virginia have concluded that they permit the exercise of personal jurisdiction over nonresident defendants to the extent permitted by the due process clause of the United States Constitution.⁴ We reach a similar conclusion as to our statute.

The outer limits of jurisdiction consistent with the due process clause have been demarcated by the Supreme Court principally in three cases: International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); and Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). To satisfy the requirements of due process, the nonresident defendant must have had sufficient “minimum contacts” with the forum state to justify subjecting him to the exercise of personal jurisdiction by its courts. No easily-administered formula exists by which to measure whether the defendant’s contacts are sufficient to sustain jurisdiction. Rather, the jurisdictional issue must be resolved on a case-by-case basis, noting in each the particular activities relied upon by the resident plaintiff as providing the supposed basis for jurisdiction.⁵

Before discussing whether the activities of appellees within the District of Columbia constituted the minimum contacts necessary to subject them to the jurisdiction of our courts, we note the trend toward liberalization of jurisdictional limitations. Even a small amount of in-jurisdiction business activity is generally enough to permit the conclusion that a nonresident defendant has transacted business here. However, to recognize that trend is not to suggest that restraints upon jurisdictional authority now are nonexistent, or that the inquiry into the extent of a defendant’s contacts with the forum state is an empty process. A meaningful assessment of the defendant’s activities is constitutionally mandated. As the Supreme Court stated in Hanson v. Denckla, supra, 357 U.S., at 251, 78 S.Ct., at 1238, 2 L.Ed.2d, at 1296:

[T]he requirements for personal jurisdiction over nonresidents have evolved from the rigid rule of Pennoyer v. Neff, [95 U.S. 714, 24 L.Ed. 565] to the flexible standard of International Shoe Co. v. Washington . . . . But it is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States. However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the “minimal contacts” with that State that are a prerequisite to its exercise of power over him. [Citations omitted.]

Our examination of the facts in this case convinces us that the totality of appellees’ contacts within the District of Columbia falls short of satisfying due process requirements, and that the action against them may not be maintained here. The affidavits submitted by the parties indicated that: (1) both appellees are incorporated under the laws of other states; (2) neither appellee is authorized to do business in the District; (3) neither appellee maintains an office, an agent, or any employees in the District; and (4) appellees perform no aspect of their work, nor do they solicit any work, in the District of Columbia. The only contacts appellees reasonably could be said to have had within the District of Columbia were those which they had with appellant and with the EPA. The jurisdictional significance of those respective contacts will be examined in turn.

It is undisputed that appellant initiated the relationship between it and appellees. It did so by visiting Lockwood Greene in South Carolina. No negotiations were conducted in the District of Columbia. Penn Dye’s contacts with appellant were limited to a few letters and telephone calls, as well as some discussions with appellant concerning the progress of the waste treatment project. Except for two visits to the District of Columbia to meet with EPA officials, no personnel of the appellees were physically present within the jurisdiction.

Appellant does not assert that the limited correspondence or telephone communications engaged in between it and the appellees satisfy the constitutional requirement for in personam jurisdiction. Rather, the thrust of appellant’s argument is that since it was performing services in the District of Columbia for the benefit of ap-pellees, its own activities here constituted a proper basis for the exercise of personal jurisdiction over appellees. To accept such a position would be effectively to remove any protection which the due process clause affords a nonresident defendant. The position for which appellant argues has been rejected by the Supreme Court:

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant’s activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities with the forum State, thus invoking the benefits and protection of its laws.⁶ [Citations omitted.]

Thus, a plaintiff cannot rely on its own activities, rather than those of a defendant, to establish the requisite minimal contacts for personal jurisdiction.⁷ The mere fact that a nonresident has retained the professional services of a District of Columbia firm, thereby setting into motion the resident party’s own activities within this jurisdiction, does not constitute an invocation by the nonresident of the benefits and protections of the District’s laws.⁸

Nor can the visits by certain of appellees’ personnel to the District of Columbia to consult with officials of the EPA concerning the possibility of a grant constitute the transaction of business here. This is so because of the long-standing and still vital doctrine that entry into the District of Columbia by nonresidents for the purpose of contacting federal governmental agencies is not a basis for the assertion of in personam jurisdiction.⁹ This so-called “government contacts” principle first was articulated in Mueller Brass Co. v. Alexander Milburn Co., 80 U.S.App.D.C. 274, 152 F.2d 142 (1945), when the predecessor of our present long-term statute was in effect.¹⁰ In our view, however, Congress did not intend to set aside that principle when it enacted the present long-arm statute. Accord, Siam Kraft Paper Co. Ltd. v. Parsons & Whittemore, Inc., 400 F.Supp. 810 (D.D.C.1975); cf. Margoles v. Johns, 157 U.S.App.D.C. 209, 219, 483 F.2d 1212, 1222 (1973). The rationale for the “government contacts” exception to the District of Columbia’s long-arm statute does not hinge upon the wording of the statute. Rather, it finds its source in the unique character of the District as the seat of national government and in the correlative need for unfettered access to federal departments and agencies for the entire national citizenry.¹¹ To permit our local courts to assert personal jurisdiction over nonresidents whose sole contact with the District consists of dealing with a federal instrumentality not only would pose a threat to free public participation in government, but also would threaten to convert the District of Columbia into a national judicial forum.¹²

Our dissenting colleagues take the position that Mueller Brass and its progeny are inapposite to the instant case, since in them the claims for relief which were asserted against the nonresident defendants did not arise from the nonresidents’ activities in the District, whereas in this case the claim does arise from activities conducted here on behalf of appellees. See D.C.Code 1973, § 13^-23 (b). However, neither Mueller Brass nor any other case recognizing the “government contacts” principle based its denial of jurisdiction upon the fact that the claim arose apart from the activities upon which jurisdiction was premised. Rather, those cases held that the activities themselves, when they consisted solely of contacts with the federal government, did not constitute the transaction of business within the meaning of the statute. Absent activities which can place a nonresident within the scope of the long-arm statute, no personal jurisdiction may be asserted over him.¹³

The dissent acknowledges—as indeed it must—that appellees merely “caused appellant to carry on business activities in the District on their behalf.” (Infra at 20.) However, for the foregoing reasons, we conclude both that appellant’s own activities there cannot constitute a proper basis for asserting jurisdiction over the nonresident appellees, and that appellees’ limited presence in the District of Columbia to confer with the EPA fell beyond the permissible reach of the long-arm statute. The trial court properly refused to sustain the exercise of in personam jurisdiction over appellees.

Affirmed.

1 . D.C.Code 1973, § 13-423(a) (1) provides in pertinent part:

(a) A District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person’s—

(1) transacting any business in the District of Columbia.

H: Hs sis * *

2 . The statute was part of the District of Columbia Court Reform and Criminal Procedure Act of 1970, Act of July 29, 1970, Pub.D.No.91-358, 84 Stat. 473, which became effective on February 1, 1971.

3 . See S.Rep.No.405, 91st Cong., 1st Sess. 35 (1969); H.R.Rep.No.907, 91st Cong., 2d Sess. 61 (1970). See also Margoles v. Johns, 157 U.S.App.D.C. 209, 483 F.2d 1212 (1973).

4 . See Kolbe, Inc. v. Chromodern Chair Co., 211 Va. 736, 180 S.E.2d 664 (1971); Groom v. Margulies, 257 Md. 691, 265 A.2d 249.

5 . The dissent places considerable reliance upon McGee v. International Life Ins. Co., supra. However, the facts of that case limit its relevance to the general principles enunciated therein by the Supreme Court. The California long-arm statute involved in McGee was specific in providing for jurisdiction over out-of-state insurance companies having policy holders in California.

6 . Hanson v. Denckla, supra, at 253, 78 S.Ct. at 1239, 2 L.Ed.2d at 1298. See also Anderson v. Shiflett, 435 F.2d 1036, 1038 (10th Cir. 1971); Piracci v. New York City Employees’ Retirement System, 321 F.Supp. 1067, 1073 (D.Md.1971).

7 . Section 13—423(a)(1) contemplates the exercise of personal jurisdiction over defendants who transact business here “by an agent.” as well as directly. At the hearing before the trial court on the jurisdictional motion, the parties presented conflicting positions on whether appellant was an agent or an independent contractor with respect to appellees. Appellees argued that appellant was an independent contractor whose acts did not constitute those of the appellees for jurisdictional purposes. See Read v. LaSalle Extension University, 81 U.S.App.D.C. 177, 156 F.2d 575 (1946). Appellant claimed it was appellees’ agent for purposes of obtaining an EPA grant. The trial court found that Environmental Research was an independent contractor and not an agent. The record supports the trial court’s conclusion by failing to reveal that degree of control by appellees over appellant’s actual performance of its functions which would be necessary for an agency relationship. Since the trial court’s judgment on that issue is supported by the evidence, it is binding upon us. D.C. Code 1973, § 17-305(a).

8 .Our conclusion on this point is buttressed by Geldermann & Co., Inc. v. Dussault, 384 F.Supp. 566 (N.D.Ill.1974), in which an Illinois broker in commodities futures sought to bring suit against a Wyoming client in Illinois. Despite plaintiff’s argument to the contrary, the court found the fact that the feeder cattle futures which plaintiff had purchased for defendant were purchased at the Chicago Mercantile Exchange to be without jurisdictional significance. Noting that the Chicago exchange was the only commodities exchange on which such futures were available, the court concluded:

[T]he fact that defendant’s requests with respect to feeder cattle contracts could only be met by executing transactions on the Chicago Mercantile Exchange cannot be viewed as an act by defendant by which he purposely availed himself of the benefits of the law of Illinois. [384 F.Supp. at 572 (citations omitted).]

So, too, in the instant case were a number of appellant’s contractual duties necessarily performed here, for this is where the EPA is located.

9 . See Weisblatt v. United Aircraft Corp., D.C.Mun.App., 134 A.2d 713 (1957); Fandel v. Arabian American Oil Company, 120 U.S.App.D.C. 193, 345 F.2d 87 (1965); Traher v. De Havilland Aircraft of Canada, Ltd., 111 U.S.App.D.C. 33, 294 F.2d 229 (1961), cert. denied, 368 U.S. 954, 82 S.Ct. 397, 7 L.Ed.2d 387 (1962); Mueller Brass Co. v. Alexander Milburn Co., 80 U.S.App.D.C. 274, 152 F.2d 142 (1945); Siam Kraft Paper Co. Ltd. v. Parsons & Whittemore, Inc., 400 F.Supp. 810 (D.D.C.1975). See also Margoles v. Johns, supra note 3; Layne v. Tribune Co., 63 App.D.C. 213, 71 F.2d 223, cert. denied, 293 U.S. 572, 55 S.Ct. 83, 79 L.Ed. 670 (1934); Neely v. Philadelphia Inquirer Co., 61 App.D.C. 334, 62 F.2d 873 (1932).

10 . Under the prior long-arm statute, in per-sonam jurisdiction could be exercised over a nonresident if he was “doing business” here. The “doing business” criterion of the earlier statute was amended to “transacting any business,” thereby demanding a less systematic and continuous course of conduct by a defendant.

11 . We believe, although we need not so hold, that had Congress intended to abrogate the Mueller Brass principle in enacting the present long-arm statute, it thereby would have been placing an impermissible burden on the First Amendment “right of the people . . . to petition the Government for a redress of grievances.”

The Fifth Circuit has recognized that the ordinarily liberally-construed minimum contacts requirement of state jurisdictional statutes must yield when the assertion of jurisdiction based upon such minimum contacts threatens the free exercise of First Amendment rights. New York Times Co. v. Connor, 365 F.2d 567 (5th Cir. 1966). See also Margoles v. Johns, 333 F.Supp. 942, 946 (D.D.C.1971), aff’d, 157 U.S.App.D.C. 209, 483 F.2d 1212 (1973).

12 . See Siam Kraft Paper Co. Ltd. v. Parsons & Whittemore, Inc., supra, at 812.

13 . We are dealing here only with the exercise of personal jurisdiction based upon “transacting business” in the District of Columbia. The long-arm statute provides five other bases for jurisdiction over nonresidents, none of which is relevant to this case. D.C.Code 1973, § 13-423(a).