Henkel Corp. v. Degremont

136 F.R.D. 88, 1991 U.S. Dist. LEXIS 5358, 1991 WL 62453
CourtDistrict Court, E.D. Pennsylvania
DecidedApril 19, 1991
DocketCiv. A. No. 90-6413
StatusPublished
Cited by8 cases

This text of 136 F.R.D. 88 (Henkel Corp. v. Degremont) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Henkel Corp. v. Degremont, 136 F.R.D. 88, 1991 U.S. Dist. LEXIS 5358, 1991 WL 62453 (E.D. Pa. 1991).

Opinion

MEMORANDUM

O’NEILL, District Judge.

I. Introduction.

Plaintiff Henkel Corporation (“Henkel”) brought this action alleging that defendants Degremont, S.A. (“Degremont”) and L’Air Liquide (“Air Liquide”) breached a joint venture agreement through which Henkel would acquire control over an ozone technology business in North America. Henkel’s Complaint alleges breach of contract in Count One, promissory estoppel in Count Two and breach of fiduciary duty in Count Three.

Degremont and Air Liquide have moved to dismiss Henkel’s Complaint1 on the grounds that: (i) Henkel’s service of process was insufficient; (ii) this Court lacks personal jurisdiction over Degremont and Air Liquide; (iii) Henkel has failed to join its parent company, Henkel KGaA (“Henk-el Germany”) as a plaintiff, and Henkel Germany is an indispensable party to this action whose joinder would divest the Court of subject matter jurisdiction; and (iv) venue is improper in this district under the doctrine of forum non conveniens. I heard oral argument on the motions.

I conclude that Henkel’s service of process was not effective. I will not reach the indispensable party issue and cannot decide on the record as currently developed whether the Court has personal jurisdiction over Degremont and Air Liquide. Because personal jurisdiction questions remain unresolved, I cannot determine whether the action should be dismissed on forum non conveniens grounds.

Therefore, I will quash Henkel’s service of process. I will permit Henkel to decide whether it wishes to attempt to serve De-gremont and Air Liquide by other means or whether the Complaint should be dismissed. Finally, I will deny Henkel’s motion for expedited discovery without prejudice to its renewal if hereafter defendants are served properly.

II. Facts.2

Henkel is a United States company incorporated in Delaware with its principal place of business in Gulph Mills, Pennsylvania. Henkel is a wholly owned subsidiary corporation of Henkel Germany, a German partnership. Degremont and Air Liquide are French corporations with their principal places of business in France.

In April of 1989, Henkel entered the ozone water treatment business by ac[90]*90quiring the Emery Group from Quantum Chemicals Corporation. Emery sells a so-called “low frequency” ozone technology for the treatment of waste water and purification of drinking water.

In March of 1990, Henkel decided to acquire a reliable “medium-frequency” ozone technology in order to remain competitive in the water treatment business. Accordingly, Henkel began negotiations in March of 1990 with non-party Asea Brown Boveri Ltd. (“ABB”), a Swiss corporation with its principal place of business in Switzerland, for the acquisition of ABB’s medium-frequency ozone technology. ABB’s medium-frequency ozone technology has been the most successful commercially in the United States ozone industry. Negotiations between Henkel and ABB progressed through March, April and May of 1990.

During late April or early May of 1990, Dr. Deiter Ambros, who is Chairman of the Board of Henkel and Executive Vice-President of Henkel Germany, received a telephone call from Michael Ulrich of Degre-mont to discuss a joint venture between Degremont and Henkel Germany for the acquisition and commercial development of the ABB ozone technology.

In discussions leading up to the parties’ meeting on May 4, 1990 in Paris, Ulrich told Ambros that if Henkel ceased its then on-going negotiations for the direct acquisition of ABB’s ozone technology business and permitted Degremont to acquire the business Degremont would agree to form a joint venture in which Henkel would acquire control over ABB’s ozone business in North America. Henkel agreed to meet with Degremont in Paris to discuss the formation of the joint venture.

On May 4, 1990, Olivier Kreiss and Ul-rich of Degremont met in Paris with Amb-ros and Dr. Harald Wulff, Henkel’s President and CEO. Also present at the meeting was a representative of Air Liquide, Dominique Belot. Belot and Kreiss advised Ambros and Wulff that Air Liquide was present because it would be a third member of the joint venture.

It is alleged that during the May 4, 1990 meeting, Henkel, Henkel Germany, Degre-mont and Air Liquide entered into an agreement (the “Joint Venture Agreement”) for the formation of the joint venture and the division of ABB’s ozone business once it was acquired by Degremont and Air Liquide. Having reached agreement on the essential terms of the joint venture at the meeting, Kreiss, Belot, Amb-ros and Wulff summarized the terms in a memorandum (the “May 4 memorandum”) which they all signed that day.

According to the Joint Venture Agreement, Henkel was to pay one-third of the acquisition price for ABB and Degremont- and Air Liquide were to pay jointly the remaining two-thirds of the acquisition price. In exchange for paying one-third of the acquisition price and contributing its ozone business to the joint venture, Henkel was to receive a 51% interest and management rights in a company (the “U.S. Corporation”) which would have the right to exploit ABB’s medium-frequency ozone technology in North America.

In exchange for paying their respective shares of the remaining two-thirds of the acquisition price, Degremont’s agreement to contribute its ozone business to the joint venture and Air Liquide’s agreement to buy equipment for the generation of ozone from the U.S. Corporation, Degremont and Air Liquide were to receive jointly a 90% interest in the Holding Company which would own a 49% interest in the U.S. Corporation. In addition, Air Liquide and its subsidiaries were to have the right to sell and install the plant and equipment which are necessary to generate ozone on-site for customers of the medium-frequency process. Henkel Germany was to receive the remaining 10% of the stock of the Holding Company.

On or about June 25, 1990, Degremont advised Henkel that Degremont and Air Liquide had acquired ABB’s worldwide ozone business for approximately 9.5 million Swiss francs. Degremont also informed Henkel that Degremont and Air Liquide were in the process of creating new joint venture companies in Switzerland and France to begin exploiting the medium frequency technology.

[91]*91The parties met again in Paris on August 28, 1990. Henkel contends that at that meeting, subsequent to the completion of their acquisition of ABB’s ozone business, Degremont and Air Liquide informed Henkel that they would exclude Henkel from the joint venture unless they received 60% of the stock of and management right in the U.S. Corporation.

At the close of the August 28,1990 meeting, Ambros arranged an additional meeting between the parties to take place at Henkel’s corporate headquarters in Gulph Mills, Pennsylvania. Henkel Canada, a Canadian subsidiary of Henkel Germany, confirmed the meeting in a letter dated September 24, 1990 to Ulrich of Degremont. The letter describes the purpose of the meeting as follows:

The meeting is to involve a mutual exchange of information such as order backlog, market shares, people and organization, technology, patents, etc. This mutual exchange should enable us to determine whether there is indeed some material change since the May 4 meeting.

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136 F.R.D. 88, 1991 U.S. Dist. LEXIS 5358, 1991 WL 62453, Counsel Stack Legal Research, https://law.counselstack.com/opinion/henkel-corp-v-degremont-paed-1991.