Opinions of the United 1996 Decisions States Court of Appeals for the Third Circuit

1-26-1996

Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Prod. Co. Precedential or Non-Precedential:

Docket 94-2058

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Recommended Citation "Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Prod. Co." (1996). 1996 Decisions. Paper 252. http://digitalcommons.law.villanova.edu/thirdcircuit_1996/252

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No. 94-2058

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VETROTEX CERTAINTEED CORPORATION,

Appellant

v.

CONSOLIDATED FIBER GLASS PRODUCTS COMPANY

----------

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 94-2947)

----------

Argued Monday, December 11, 19950

BEFORE: ROTH, LEWIS and GARTH, Circuit Judges

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(Opinion filed January 26, 1996)

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Jon A. Baughman, Esq. (Argued) Pepper, Hamilton & Scheetz 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103-2799

Attorney for Appellant

0 This matter was originally heard on June 27, 1995 before Judges Hutchinson, Roth, and Garth. Because Judge Hutchinson died prior to an opinion being rendered, the Panel was reconstituted to include Judge Lewis, and the appeal was reargued.

1 2 Virginia H. McMichael, Esq. (Argued) Dilworth, Paxson, Kalish & Kauffman 3200 Mellon Bank Center 1735 Market Street Philadelphia, PA 19103

Wesley G. Beverlin, Esq. Knapp, March, Jones & Duran 515 South Figueroa Street Suite 1400, Manulife Plaza Los Angeles, CA 90071

Attorneys for Appellee

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OPINION OF THE COURT

----------

GARTH, Circuit Judge:

Plaintiff-appellant Vetrotex CertainTeed Corporation

("Vetrotex"), a Pennsylvania corporation, brought suit in the

federal district court for the Eastern District of Pennsylvania

against defendant-appellee Consolidated Fiber Glass Products

Company ("Conglas"), a California corporation. The issue presented in this appeal is whether the district court properly

dismissed the complaint of Vetrotex for lack of personal

jurisdiction. Because it is not contested that general

jurisdiction does not lie, and because we find that Conglas has

not purposefully directed its activities toward Pennsylvania for

purposes of specific jurisdiction, we will affirm.

I.

2 Vetrotex is a Pennsylvania corporation engaged in the

manufacture and sale of various fiber glass reinforcement

products. Vetrotex, which was incorporated in March of 1991, is

a wholly-owned subsidiary of CertainTeed Corporation

("CertainTeed"), another Pennsylvania corporation. Vetrotex is a

national corporation with facilities and offices in several

states, including California. Conglas is a California

corporation engaged in the manufacture of fiber glass roofing

products, including fiber glass mats. Conglas has no offices,

employees or representatives in Pennsylvania, nor has it ever

sold any of its products in Pennsylvania, or engaged in sales to

distributors or other third parties who sell Conglas products in

Pennsylvania.

Between 1980 and 1989, Conglas and CertainTeed engaged

in sporadic contracts for fiber glass products, which culminated

in a letter dated May 19, 1989 from CertainTeed to Conglas,

stating that CertainTeed would not be able to supply all of

Conglas's needs for glass and urging Conglas to go to another

vendor for glass. The CertainTeed letter concluded by stating:

"Finally, Jack, I want to thank you for our business relationship

over the past years. I plan on continuing this contact for none

of us can foretell the future and its opportunities." After this

arrangement was terminated, Conglas had no further business

relationship with CertainTeed.0

0 Between May of 1989 and February of 1991, the record reveals no relationship between Conglas and CertainTeed/Vetrotex. Indeed, the prior relationship between the parties had ended by 1989 and a new relationship began in 1991 when CertainTeed/Vetrotex

3 In February of 1991, CertainTeed again found itself

with a supply of chopped strands to sell, and it communicated

with Conglas to ascertain if Conglas would be interested in

purchasing "44E" chopped strand. During the week of February 11,

1991, CertainTeed met with representatives of Conglas in

California to solicit Conglas's purchase of CertainTeed's fiber

glass materials. On February 25, 1991, CertainTeed wrote and

forwarded an agreement to Conglas in California. Upon receiving

the letter, Conglas executed the agreement and returned it to

CertainTeed's headquarters in Valley Forge, Pennsylvania (the

"1991 Supply Agreement").

In March of 1991, Vetrotex was incorporated as

CertainTeed's wholly-owned subsidiary in charge of fiber glass

reinforcement products operations.

In January of 1992, representatives of

CertainTeed/Vetrotex flew to California and met with Conglas to

discuss a continuation of CertainTeed's agreement to sell chopped

strands to Conglas. At that meeting, the essential terms of a

solicited business from Conglas and entered into the 1991 and 1992 Supply Agreements. Those agreements, as discussed in text, were initiated by CertainTeed/Vetrotex and all the contacts with respect to those agreements were California contacts. It was obviously for this reason that the parties joined issue only with respect to specific jurisdiction rather than general jurisdiction, the latter of which would have involved the various pre-1989 matters with which Judge Roth is concerned and which we read as the premise for the dissent. In light of the new relationship initiated by Vetrotex in 1991 and the parties' acknowledgement that Burger King's specific jurisdiction teachings control our disposition, we attach little relevance to the general jurisdictional elements emphasized by the dissent. General jurisdiction was not a theory urged by Vetrotex.

4 new agreement were negotiated between Conglas and

CertainTeed/Vetrotex. Conglas did not send representatives to

Pennsylvania to meet with Vetrotex. Conglas did, however, place

some telephone calls to CertainTeed/Vetrotex's offices in Valley

Forge, Pennsylvania in the course of negotiating the renewal of

the 1991 Supply Agreement

On March 13, 1992, CertainTeed/Vetrotex and Conglas

renewed the 1991 Supply Agreement (now the "1992 Supply

Agreement"). The 1992 Supply Agreement was prepared by

CertainTeed/Vetrotex and sent to Conglas in California, where it

was executed. The 1992 Supply Agreement provided for a two-year

contract period that would automatically be renewed for an

additional one-year period commencing April 1, 1994, unless

canceled upon sixty-days notice.

Under the 1992 Supply Agreement, Vetrotex agreed to

ship fiber glass material directly from its plant in Wichita

Falls, Texas, to Conglas's manufacturing facility in Bakersfield,

California. Vetrotex's invoicing for the product sold under the

1992 Supply Agreement was handled by Vetrotex's Southern

California office, and all payments for the fiber glass material

were sent to Vetrotex's office in Los Angeles, California.

Conglas's primary contact at Vetrotex was Jerry Leland, a sales

representative working out of Vetrotex's Santa Ana, California

office.

In 1993, Vetrotex decided to withdraw from the fiber

glass chopped strand business and sought to terminate its

contract with Conglas. Vetrotex claims that it canceled the 1992

5 agreement by telephone on December 2, 1993, more than sixty days

prior to the April 1, 1994 deadline. According to Conglas, it

was only on March 23, 1994 that Vetrotex telephoned Conglas in

California with the information that Vetrotex would not sell any

more fiber glass chopped strand product to Conglas after March

31, 1994. Vetrotex ceased delivery of 44E strand, and Conglas

withheld payment on outstanding invoices.

On May 12, 1994, Vetrotex brought the present diversity

action against Conglas in the Eastern District of Pennsylvania,

seeking to recover $303,595.35 in withheld payments from Conglas.

Shortly thereafter, Conglas sued Vetrotex in California state

court, seeking damages for breach of the 1992 Supply Agreement.

Vetrotex then removed the California action to the Central

District of California, where it is currently stayed pending the

resolution of this appeal. Vetrotex has not yet counterclaimed

in the California action, but admitted at oral argument before us

that there is no impediment to its filing a counterclaim in that

action.

On July 5, 1994, Conglas moved to dismiss Vetrotex's

Pennsylvania action for lack of personal jurisdiction or,

alternatively, for improper venue. On October 18, 1994, the

district court for the Eastern District of Pennsylvania issued a

memorandum and order entered on October 20, 1994, dismissing

Vetrotex's complaint without prejudice for lack of personal

jurisdiction.

The district court found the relevant and dispositive

facts, which we recite in text, infra, to be undisputed.

6 Accordingly, the district court concluded that Conglas's contacts

with Pennsylvania were "marginal and were not directed at

Pennsylvania to benefit from its laws" and held that to exercise

jurisdiction over Conglas "would offend traditional notions of

fair play and substantial justice." Id. Vetrotex appealed.

II.

A.

"Whether personal jurisdiction may be exercised over an

out-of-state defendant is a question of law, and this court's

review is therefore plenary." Mellon Bank (East) PSFS, N.A. v.

DiVeronica Bros., Inc.,

(3d Cir. 1993) (citing

Mesalic v. Fiberfloat Corp.,

(3d Cir. 1990)).

We review any factual findings made by the district court for

clear error. Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino,

(3d Cir. 1992).

A district court sitting in diversity applies the law

of the forum state in determining whether personal jurisdiction

is proper. Fed. R. Civ. P. 4(e). Pennsylvania's long-arm

statute provides that its reach is coextensive with the limits

placed on the states by the federal Constitution. 42 Pa. Cons.

Stat. Ann. § 5322(b) (1981). We therefore look to federal

constitutional doctrine to determine Conglas's susceptibility to

personal jurisdiction in Pennsylvania. The due process clause of

the Fourteenth Amendment places limits on the power of a state to

assert personal jurisdiction over a nonresident defendant.

Pennoyer v. Neff,

(1877).

7 The due process limit to the exercise of personal

jurisdiction is defined by a two-prong test. First, the

defendant must have made constitutionally sufficient "minimum

contacts" with the forum. Burger King Corp. v. Rudzewicz,

(1985) (the "constitutional touchstone" of personal

jurisdiction is "whether the defendant purposefully established

'minimum contacts' in the forum State"). The determination of

whether minimum contacts exist requires an examination of "the

relationship among the forum, the defendant and the litigation,"

Shaffer v. Heitner,

(1977), in order to

determine whether the defendant has "'purposefully directed'" its

activities toward residents of the forum. Burger King,

(quoting Keeton v. Hustler Magazine, Inc.,

(1984)). There must be "some act by which the defendant

purposefully avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits and

protections of its laws." Hanson v. Denckla,

(1958). Second, if "minimum contacts" are shown, jurisdiction

may be exercised where the court determines, in its discretion,

that to do so would comport with "traditional notions of fair

play and substantial justice." International Shoe Co. v.

Washington,

(1945); Farino,

.

8 B.

Vetrotex alleged that the district court had specific

jurisdiction over Conglas. "Specific jurisdiction is invoked

when the cause of action arises from the defendant's forum

related activities," North Penn Gas Co. v. Corning Natural Gas

Corp.,

(3d Cir. 1990), cert. denied,

(1990); see Helicopteros Nacionales de Colombia v. Hall,

, 414 n.8 (1984); Dollar Sav. Bank v. First Sec. Bank of

Utah, N.A.,

, 211 (3d Cir. 1984), such that the

defendant "should reasonably anticipate being haled into court

there." World-Wide Volkswagen Corp. v. Woodson,

(1980). Vetrotex does not allege general jurisdiction.0

As is evident from the complaint, this action concerns

only Conglas's alleged breach of the 1992 Supply Agreement. The

1992 Supply Agreement, standing alone, is an insufficient ground

upon which to exercise specific personal jurisdiction over

Conglas. See Grand Entertainment Group, Ltd. v. Star Media

Sales, Inc.,

(3d Cir. 1993) ("[A] contract

alone does not 'automatically establish sufficient minimum

contacts in the other party's home forum.'") (quoting Burger

King,

); Mellon Bank (East) v. DiVeronica Bros.,

0 "General jurisdiction is invoked when the plaintiff's cause of action arises from the defendant's non-forum related activities." North Penn Gas Co. v. Corning Natural Gas Corp.,

, 690 n.2 (3d Cir. 1990). To establish general jurisdiction, the plaintiff must show that the defendant has maintained "continuous and systematic" contacts with the forum. See Helicopteros Nacionales de Colombia v. Hall,

, 414 n.9 & 416 (1984); Burger King Corp. v. Rudzewicz,

, 473 n.15 (1985).

9 Inc.,

(3d Cir. 1993) ("Contracting with a

resident of the forum state does not alone justify the exercise

of personal jurisdiction over a non-resident defendant.") (citing

Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino,

(3d Cir. 1992)).

In determining whether specific jurisdiction exists,

however, we consider not only the contract but also "prior

negotiations and contemplated future consequences, along with the

terms of the contract and the parties' actual course of dealing."

Burger King,

.

III.

A.

The facts underlying the present case are not in

dispute. Vetrotex solicited Conglas to obtain the 1991 Supply

Agreement by telephone and by personal visits to Conglas

headquarters in California.0 Conglas did not solicit the 1991

Supply Agreement, and no Conglas personnel ever visited

Pennsylvania. Conglas signed the 1991 Supply Agreement in

California and sent it to CertainTeed in Pennsylvania. Similarly,

with respect to the 1992 Supply Agreement, officers of

CertainTeed flew to California to negotiate that contract. The

1992 Supply Agreement was prepared by CertainTeed and sent to

Conglas in California, where it was executed. No product was

0 Even though the complaint does not mention the 1991 Supply Agreement, we find it to be relevant as a "prior negotiation" to the 1992 Supply Agreement, which had renewed the 1991 Supply Agreement.

10 shipped from, through, or to Pennsylvania. Instead, the chopped

strand was manufactured in Texas and shipped directly from

Vetrotex's plant in Texas to Conglas's facility in California.

Vetrotex handled all of the transportation arrangements and paid

the transportation costs. Vetrotex's invoicing for product sold

under the 1992 Supply Agreement was handled by Vetrotex's

California office. Conglas made all payments for goods to

Vetrotex's California office.

The district court found, among other things that the

following facts were not in dispute: Vetrotex solicited Conglas to obtain the 1991-92 contract by telephone and by personal visits to Conglas headquarters in California. The parties engaged in telephone communication prior to entering into the 1991-92 contract. Conglas signed the disputed contract in California and sent it to Vetrotex in Pennsylvania. Conglas made all payments for goods to Vetrotex CertainTeed's California office. Under the disputed contract, Vetrotex did not deliver any goods to Conglas in Pennsylvania.

(Memorandum and Order entered October 20, 1994 at 4).

Understandably, Vetrotex agreed at oral argument that none of

these findings of fact are clearly erroneous. See North Penn Gas v. Corning Natural Gas,

(3d Cir. 1990) ("A

determination of minimum contacts is based upon findings of fact.

As such, the district court's factual findings will not be

disturbed unless clearly erroneous."). The district court also

found that Vetrotex "has not shown solicitation, advertisement,

or delivery by Conglas in Pennsylvania since 1989." Id. at 3.

11 The only contacts that Conglas had with Pennsylvania

consisted of some telephone calls and letters written to Vetrotex

in Pennsylvania. However, this Court has recognized that

"informational communications in furtherance of [a contract

between a resident and a nonresident] does not establish the

purposeful activity necessary for a valid assertion of personal

jurisdiction over [the nonresident defendant]." Sunbelt Corp. v.

Noble, Denton & Assoc., Inc.,

, 32 (3d Cir. 1993)

(citing Stuart v. Spademann,

(5th Cir. 1985)

(stating that "an exchange of communications between a resident

and a nonresident in developing a contract is insufficient of

itself to be characterized as purposeful activity invoking the

benefits and protection of the forum state's laws")).

Thus, in the present case, Conglas was merely a

"passive buyer" of Vetrotex's product.0 We hold that the

undisputed circumstances attending Conglas's 1991 and 1992 Supply

Agreements with Vetrotex do not support the conclusion that

Conglas "purposefully availed" itself of the privilege of doing

business in Pennsylvania for purposes of the district court's

0 The Eighth Circuit has recognized that "reaching out" is particularly difficult to find where the nonresident defendant is a buyer, rather than a seller, of the resident plaintiff's products. See Bell Paper Box, Inc. v. Trans Western Polymers, Inc.,

(8th Cir. 1995). This distinction is even more telling when the defendant is a "passive" buyer, i.e. one which has been solicited as a customer of the plaintiff. See Stewart, A New Litany of Personal Jurisdiction,

, 45-46 (1989). The First Circuit, for instance, requires a showing that the defendant's forum-related activities in contract cases were "instrumental in the formation of the contract." United Elec. Workers v. 163 Pleasant St. Corp.,

, 1089 (1st Cir. 1992).

12 exercise of personal jurisdiction over Conglas. See Sunbelt

Corp., 5 F.3d at 32 (holding that a Pennsylvania corporation's

contract with a Texas corporation and post-contract telephone and

facsimile communications with the same were insufficient to show

"purposeful availment" of the privilege of doing business in

Texas, for purposes of the Texas long-arm statute, the latter of

which is co-extensive with the reach of the federal

constitution).0

The instant case is distinguishable from other cases

where jurisdiction over a nonresident defendant has been premised

largely on the defendant's contract with a resident of the forum

state. For instance, this is not a case where the defendant

solicited the contract or initiated the business relationship

leading up to the contract. Compare Mellon Bank (East) PSFS,

Nat'l Ass'n v. Farino,

(3d Cir. 1992). Nor is this

a case where the defendant sent any payments to the plaintiff in

the forum state, compare North Penn Gas v. Corning Natural Gas,

(3d Cir. 1990), or where the defendant

engaged in extensive post-sale contacts with the plaintiff in the

forum state. Compare Mesalic v. Fiberfloat Corp.,

(3d Cir. 1990) (after selling a boat to New Jersey buyer,

0 Vetrotex also argues that the fact that the invoices as distinct from the general Supply Agreements, provided as a term and condition, that they (the invoices) were to be governed by and should be construed in accordance with Pennsylvania law, is relevant to personal jurisdiction over this case. We disagree. The choice of law provisions pertain only to the individual sales contracts for each shipment of fiber glass chopped strand, and we do not find them relevant to our jurisdictional analysis of the underlying Supply Agreements.

13 defendant sent written correspondence to the buyer's New Jersey

residence, delivered the boat to New Jersey, and attempted to

repair the boat in New Jersey).

B.

Vetrotex argues that the relationship that existed

between Conglas and CertainTeed in the 1980s are also relevant as

"prior negotiations" or "course of dealing" with respect to the

1992 Supply Contract under Burger King. Burger King's reference

to "prior negotiations," "future consequences," "terms of the

contract," and "course of dealing," however, clearly contemplates

dealings between the parties in regard to the disputed contract,

not dealings unrelated to the cause of action. In Burger King,

the Court found specific jurisdiction over a Michigan franchisee,

Rudzewicz, in the franchisor Burger King's home state, Florida,

where "Rudzewicz deliberately reached out beyond Michigan and

negotiated with a Florida corporation," id. at 479-80, to enter

into a "carefully structured 20-year relationship that envisioned

continuing and wide-reaching contacts." Id. at 480.

In the present case, the negotiations that occurred

between Vetrotex and CertainTeed in the 1980s are unrelated to

the 1992 Supply Contract and are not relevant to specific

jurisdiction.0 See International Shoe,

(the

cause of action must "arise[] out of" or "relate[] to" the

defendant's contacts with the forum); Helicopteros,

n.8; Burger King Corp. v. Rudzewicz,

, 472

0 As earlier noted in text, Vetrotex has argued this appeal only on the issue of specific, and not general, jurisdiction.

14 (1985); C.L. Grimes v. Vitalink Communications Corp.,

, 1559 (3d Cir.), cert. denied,

(1994); Dollar

Sav. Bank v. First Sec. Bank of Utah, N.A.,

, 211 (3d

Cir. 1984).

Vetrotex would characterize the "thirteen-month hiatus"

in the parties' dealings from 1989 to 1991 as a mere interruption

in an ongoing course of dealing. The district court did not

agree, nor do we. The relationship between the parties in which

CertainTeed supplied Conglas with fiber glass chopped strands was

terminated by CertainTeed's letter of May 19, 1989, which urged

Conglas to look elsewhere for suppliers. The 1991 Supply

Agreement (renewed by the 1992 Supply Agreement at issue here)

began a new relationship between the parties, separate and apart

from the prior relationship. There is no evidence in the record

that the parties understood the 1991 and 1992 Supply Contracts to

be merely a continuation of the relationship that the parties had

in the 1980s.0

Conglas has not "purposefully availed itself" of the

privilege of doing business in Pennsylvania for purposes of

establishing the "minimum contacts" required for specific

jurisdiction. Nor has Vetrotex established "minimum contacts" on

any other grounds between Conglas and Pennsylvania for purposes

0 Thus, we find Associated Business Telephone Systems Corp. v. Greater Capital Corp.,

(3d Cir. 1988), to be distinguishable. In that case, we held that a district court in New Jersey had specific jurisdiction over a California corporation that had entered into a contract with a New Jersey corporation. However, the contract there provided for a ten-year life and created continuing obligations between the two companies.

15 of specific jurisdiction.0 Accordingly, we hold that the

assertion of jurisdiction over Conglas would violate the

fundamental dictates of due process.

IV.

We will affirm the district court's dismissal of

Vetrotex's complaint for lack of personal jurisdiction.

0 Because we have concluded that Vetrotex has not made the threshold showing of sufficient minimum contacts with Pennsylvania to warrant the exercise of personal jurisdiction over Conglas, we need not address the secondary issue of whether exercising jurisdiction would comport with fair play and substantial justice. See Bell Paper Box, Inc. v. Trans Western Polymers, Inc.,

(8th Cir. 1995) ("Due process requires both minimum contacts with the forum state and accord with the notions of 'fair play and substantial justice.'") (emphasis added) (quoting Burger King Corp. v. Rudzewicz,

(1985)).

16 Vetrotex CertainTeed Corporation v. Consolidated

Fiber Glass Products Company

No. 94-2058

_________________________________________________

ROTH, Circuit Judge, Dissenting:

As I read the Supreme Court's decision in Burger King

Corp. v. Rudzewicz,

(1985), a court determining

whether specific personal jurisdiction lies must consider prior

business dealings between the parties. The majority opinion in

this case, however, plays down the importance of a long business

relationship established between Conglas and CertainTeed/Vetrotex

during the 1980s. The majority focuses only on the final 1992

Supply Contract, see Majority Op. at ___ (slip op. at 14),

despite the fact that the 1992 contract grew out of and was

founded upon a thirteen-year-old working relationship.

I believe that the majority's narrow focus on the 1992

contract misinterprets the Supreme Court's rule in Burger King by

refusing to consider the entire "course of dealings" between the

relevant parties. The negotiations and dealings during the 1980s

are, in my opinion, both relevant and related to the present

cause of action. Because I would find that Conglas purposefully

availed itself of the privilege of conducting business within

Pennsylvania by virtue of its longstanding business relationship

with Vetrotex, I write in dissent.

I.

17 In its discussion of the facts, the majority opinion

emphasizes the 1991 and 1992 Supply Contracts and minimizes a

significant course of dealings that occurred between the parties

during the 1980s. These dealings affected the negotiation of the

1992 Supply Agreement and should not have been dismissed by the

court as irrelevant. The omitted facts demonstrate that Conglas

initiated and pursued a contractual relationship with CertainTeed

at its Pennsylvania office and made sufficient voluntary contacts

with Pennsylvania such that it should have "reasonably

anticipate[d] being haled into court there." World-Wide

Volkswagen Corp. v. Woodson,

(1980).

On April 30, 1980, Conglas sent CertainTeed a new

product announcement for Conmat-90, a fiber glass roofing mat,

expressly soliciting orders for the new product. In July 1981,

Conglas representative Tom Pessel followed up on Conglas's April

1980 solicitation letter by visiting CertainTeed's Blue Bell,

Pennsylvania office to discuss CertainTeed's requirements for

fiber glass mat and Conglas's ability to satisfy those

requirements. Following additional correspondence between

Conglas and CertainTeed's Pennsylvania offices, CertainTeed

placed an order for Conglas mats in November 1981.

In early 1982, Conglas and CertainTeed negotiated a

formal agreement pursuant to which Conglas agreed to sell fiber

glass mat to CertainTeed for the twelve-month period from

February 1, 1982 through January 31, 1983. After the execution

of the 1982 agreement, Conglas and CertainTeed began a

collaborative effort to resolve quality control issues raised by

18 CertainTeed's testing of Conglas's fiber glass mats. This

process resulted in regular communication between Conglas and

CertainTeed personnel located in Pennsylvania, as well as a

number of visits by Conglas representatives to the CertainTeed

facility located in Blue Bell, Pennsylvania.

Conglas and CertainTeed entered into sales agreements

similar to the 1982 agreement in February 1983 and May 1984.

Despite these successive agreements, the Conglas mats failed to

qualify for use in CertainTeed's roofing shingles. For this

reason, CertainTeed terminated the 1984 agreement. Conglas later

contacted CertainTeed in 1986 and 1989 regarding the sale to

CertainTeed of fiber glass mats, but no further agreements were

reached.

In addition to this business relationship involving the

sale of Conglas fiber glass mats to CertainTeed, the parties also

entered into a business relationship in which CertainTeed sold

chopped fiber glass strands to Conglas. Although the record is

devoid of any written agreements documenting sales of chopped

strands to Conglas during the 1980s, CertainTeed did produce

correspondence between the parties pertaining to such activities.

Correspondence in the record indicates that in 1987 and 1988

CertainTeed provided Conglas with a certain volume of chopped

strands each month. On December 8, 1987, representatives of

Conglas visited CertainTeed in Valley Forge, Pennsylvania. Among

the topics discussed was CertainTeed's supply to Conglas of

chopped strands.

19 CertainTeed's sale of chopped strands to Conglas was

interrupted, apparently at the end of 1989, when CertainTeed was

unable to meet Conglas's needs due to supply shortages. In

February 1991, however, CertainTeed again found itself with

chopped strands to sell. CertainTeed and Conglas entered into

negotiations regarding the terms of a sales agreement. David

Sharpe, a Vice President at CertainTeed, participated in these

negotiations from his office in Valley Forge, Pennsylvania, and

he forwarded a letter agreement (the "1991 Supply Contract") to

Conglas in California from Pennsylvania. The 1991 Supply

Contract is on CertainTeed letterhead with its Pennsylvania

headquarters address prominently displayed. Upon receiving the

1991 Supply Contract, a Conglas representative executed the

agreement and returned it to CertainTeed's Pennsylvania

headquarters.

On March 13, 1992, in anticipation of the expiration of

the 1991 Supply Contract, the parties entered into another

agreement (the "1992 Supply Contract"). By this time

CertainTeed's subsidiary, Vetrotex, had been incorporated.

Pursuant to the 1992 Supply Contract, Vetrotex agreed to continue

selling chopped fiber glass strands to Conglas. As noted in the

majority opinion, Dick Sharpe received several telephone calls

from Conglas at his Valley Forge, Pennsylvania, office in

negotiating the terms of the 1992 Supply Contract. Like the 1991

Supply Contract, the 1992 Supply Contract is printed on

Vetrotex/CertainTeed letterhead, displaying the company's

Pennsylvania address.

20 II.

A.

Because this case involves a contract between

interstate parties, the Supreme Court's opinion in Burger King is

the analytical keystone. See Mellon Bank (East) PSFS, N.A. v.

Farino,

(3d Cir. 1992). In upholding the

district court's exercise of specific personal jurisdiction in

Burger King, the Supreme Court noted that the minimum contacts

inquiry is a "fair warning" requirement of due process, which is

satisfied "if the defendant has 'purposefully directed' his

activities at residents of the forum, and litigation results from

alleged injuries that 'arise out of or relate to' those

activities." Burger King,

(citations omitted).

The Court explained:

[W]ith respect to interstate contractual obligations, we have emphasized that parties who "reach out beyond one state and create continuing obligations with citizens of another state" are subject to regulation and sanctions in the other State for the consequences of their activities. . .. [W]here individuals "purposely derive benefit" from their interstate activities, it may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities . . ..

(citations omitted). Thus, under Burger King,

parties taking the affirmative step of negotiating and entering

into interstate contractual obligations will likely subject

themselves to specific personal jurisdiction in the other state.

The Court warned, however, that "an individual's contract with an

out-of-state party alone [cannot] automatically establish

21 sufficient minimum contacts in the other party's home forum."

(emphasis in original). Such a mechanical test has been

explicitly rejected.

Instead, when deciding the question of specific

personal jurisdiction, the Supreme Court favors a "highly

realistic" approach that takes into account factors such as

"prior negotiations and contemplated future consequences," and

"the terms of the contract and the parties' actual course of

dealing."

. The reality of the situation in this case

is that CertainTeed/Vetrotex and Conglas were involved in a

business relationship spanning more than ten years. Over those

years, Conglas affirmatively solicited business with CertainTeed,

repeatedly made phone calls to Pennsylvania, sent employees to

visit CertainTeed's facilities in Pennsylvania, and mailed

contracts to Pennsylvania to be signed. Additionally, Conglas

deliberately involved itself in several contractual obligations

with CertainTeed/Vetrotex, fully aware that these corporations

were headquartered in Pennsylvania. Thus, the facts in the

instant case reveal that Conglas is not being brought into

Pennsylvania solely as a result of "random," "fortuitous," or

"attenuated" contacts, nor as a result of the "unilateral

activity of another party or third person."

(citations omitted). Rather, Conglas has knowingly and

deliberately engaged in a pattern of contacts with Pennsylvania

such that Conglas should have expected that it could be subject

to litigation there.

III.

22 Until now, the question whether two parties' prior

business relationships should be taken into account in

determining the existence of specific personal jurisdiction has

not been addressed by this court. As in all issues of personal

jurisdiction, however, this question cannot be answered

mechanically. Instead, each case must be individually evaluated

in full to determine whether the parties' "actual course of

dealing" is such that the nonresident party was effectively on

notice that it might be haled into court in the other party's

home forum. In the instant case, it is clear that Conglas,

through its long history of dealing with CertainTeed and its

subsidiary Vetrotex, engaged in repeated contacts with

representatives and facilities located in Pennsylvania. By

virtue of these extensive contacts, Conglas was on notice that it

could be subject to litigation in Pennsylvania. Thus, the

longstanding relationship between these parties is relevant and

should have been taken into account in determining whether

Conglas established sufficient minimum contacts in Pennsylvania.

See, e.g., Reynolds Metals Co. v. FMALI, Inc.,

(E.D. Va. 1994) (taking parties' continuing relationship

into consideration in finding that specific personal jurisdiction

was proper).

Accordingly, I dissent. I believe that, based on the

entire course of dealings between the parties, Conglas had

minimum contacts in Pennsylvania sufficient to allow the district

court to exercise personal jurisdiction over Conglas. I would

therefore reverse the district court's order dismissing

23 Vetrotex's complaint and remand this case to the district court

for further proceedings.

24