Riverbank Laboratories v. Hardwood Products Corp.

PETITIONER: Riverbank Laboratories
RESPONDENT: Hardwood Products Corp.

DECIDED BY: Warren Court (1955-1956)

ARGUED: Jan 16, 1956
DECIDED: Apr 02, 1956

Facts of the case


Media for Riverbank Laboratories v. Hardwood Products Corp.

Audio Transcription for Oral Argument - January 16, 1956 (Part 2) in Riverbank Laboratories v. Hardwood Products Corp.

Audio Transcription for Oral Argument - January 16, 1956 (Part 1) in Riverbank Laboratories v. Hardwood Products Corp.

Maurice Rosenfield:

This case, which is here on certiorari to the Seventh Circuit, involves a Wisconsin corporation's defense to a diversity suit of Chicago on the ground that it was not doing business there.

The exact issue, which this creates on this Court, is whether this defense is to be tested on the merits by state law under the Erie rule or whether it is governed by the principles announced by this Court in the International Shoe case, or whether it's is governed by 1404 (a) of the Judicial Code enacted in 1948.

The action wanted to enjoin a common law tort.

The infringement of the name Riverbank is applied to acoustical doors.

The key facts bearing on the question of doing business are these.

The defendant is a Wisconsin corporation with its home office at Neenah, Wisconsin.

It has maintained a Chicago office for 30 years.

Its acoustical division, which is called as acoustical department, is headquartered at Chicago.

The acoustical -- the acoustical department of Chicago solicited business in Illinois and throughout the country, and supervised other agents located elsewhere.

Sales manuals and literature went from the department headquarters of Chicago all over the country.

The Chicago headquarters of the acoustical department was responsible for sales everywhere.

The agent in charge of the Chicago office knew more about acoustics than the chief executives of the company.

His compensation reflected his special contributions to the development of the company's product.

Shipments by the defendant into Illinois amounted to over $500,000 a year and into the Chicago area about $100,000, but it is true that the sales blanks here are used by the defendant, had a clause printed on the back requiring all orders to be accepted at the home office.

On consideration of these facts, the District Court overruled the motion to dismiss, proceeded to the merits and granted an injunction.

It was appealed to the Court of Appeals.

The case was brief and argued on the merits.

The defendant, however, preserved this jurisdictional point and persuaded the Court to that effect, holding the lower court lack jurisdiction it reversed for dismissal.

Its decision was based entirely on an Illinois rule that when orders are solicited subject to acceptance at a home office, the corporation is not doing business and is not suable.

A couple of preliminary points to put this issue in contest, first, this case, raises no question of venue under the federal venue statute.

Our opponents characterized the case as raising a question of venue under Section 1391 (c) of the Judicial Code.

If the Court accepts that characterization of the case, it must reverse it because venue may be satisfied in one of two ways, then you can be laid, either where all the plaintiffs reside or where the defendant resides.

There is one plaintiff here and that plaintiff resided in the district -- in the division where the case was brought.

Since, therefore, a venue was satisfied under 1391 (a).

There is no occasion at all to look to 1391 (c).

The second preliminary issue is this, the defendant pleads for trial at Neenah, Wisconsin under the laws of Wisconsin.

This is a misleading statement of the alternative.

The alternative was not and never was trialed in the state court of Wisconsin.

The alternative to trial in the District Court of Chicago was trialed in the federal court at Milwaukee.

Neenah happens to be in the Milwaukee federal district, the southern district of Wisconsin, 90 miles from Chicago, and it would have been one of these two federal courts.