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American Cyanamid Co. v. Hammond Lead Products Inc.

decided: April 15, 1974.

AMERICAN CYANAMID COMPANY, A CORPORATION OF THE STATE OF MAINE,
v.
HAMMOND LEAD PRODUCTS, INC., A CORPORATION OF THE STATE OF INDIANA, AND GARY R. MITCHENER, APPELLANTS



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY D.C. Civil Action No. 1925-72

Kalodner, Adams and Rosenn, Circuit Judges.

Author: Kalodner

Opinion OF THE COURT

KALODNER, Circuit Judge.

Can a Maine corporation, with principal headquarters in New Jersey, bring a diversity action in New Jersey against an Indiana corporation and an Indiana resident?

The district court answered the question in the affirmative in its Order denying the defendants' motions to dismiss for lack of venue under 28 U.S.C.A. § 1391(a) and certifying the issue to this Court pursuant to 28 U.S.C.A. § 1292(b).

American Cyanamid Company (Cyanamid), a Maine corporation whose principal headquarters are located in New Jersey, a state in which it does business,*fn1 brought this diversity action in the District of New Jersey against Hammond Lead Products, Inc. (Hammond), an Indiana corporation, and Gary Mitchener, an Indiana resident, charging unfair competition and seeking injunctive and compensatory relief.

Cyanamid's complaint alleged, in relevant part, that Mitchener, a former employee of Cyanamid and the MacGregor Lead Company of Chicago, Illinois, a company acquired by Cyanamid, violated his "contractual and fiduciary duty" to Cyanamid when he left Cyanamid's employ in July of 1971 and became employed with defendant Hammond's Halstab Division in Indiana, and that Mitchener and Hammond engaged in acts of unfair competition, in that the defendants "lured away" certain of Cyanamid's employees and "conspired . . . to unlawfully compete with plaintiff and to unlawfully use plaintiff's secret, unique, confidential and valuable methods, techniques, products, customer specifications, data, processes and systems."

The defendants moved to dismiss Cyanamid's complaint, inter alia, for lack of proper venue under 28 U.S.C.A. § 1391(a). The district court denied the motions upon oral argument, and entered an Order on May 14, 1973, denying the "Defendants' motion to dismiss the within action for lack of venue under Section 1391(a) of Title 28 U.S.C." and certifying "pursuant to section 1292(b) . . . that this matter involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." Accordingly, the defendants filed a petition for leave to appeal, which petition was granted by this Court on June 5, 1973.

Concisely stated, the issue here is whether the plaintiff corporation Cyanamid is entitled to the privilege of laying venue in the District of New Jersey solely because it does business in that state. The relevant venue statutes in this diversity suit are 28 U.S.C.A. § 1391(a) and § 1391(c). Section 1391(a) provides:

"A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose."

Section 1391(c) provides:

"A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

It is readily apparent, and not disputed, that two of the three venue options available to a plaintiff under § 1391(a) are clearly inapposite under the facts as stated, for New Jersey is neither the judicial district in which "all defendants reside" nor is it the judicial district "in which the claim arose." And, but for the presence of § 1391(c), it could likewise not be argued that the third venue option of § 1391(a), plaintiff's residence, applies here, since Cyanamid is a Maine corporation and, it has long been settled that "the 'residence' of a corporation, within the meaning of the venue statutes, is only the 'State and district in which it has been incorporated. '" Suttle v. Reich Bros. Construction Co., 333 U.S. 163, 166, 92 L. Ed. 614, 68 S. Ct. 587 (1948), quoting from Shaw v. Quincy Mining Co., 145 U.S. 444, 449, 36 L. Ed. 768, 12 S. Ct. 935 (1892). Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 84 L. Ed. 167, 60 S. Ct. 153 (1939), represented the only judicial exception to this proposition, in that Neirbo held that a corporation had "waived" its right to be sued only in its state of incorporation when the corporation obtained a ...


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