Peanut Corporation of America, International Marketing Associates, Inc. v. Hollywood Brands, Inc., Consolidated Foods Corporation, 696 F.2d 311, 4th Cir. (1982)

696 F.
2d 311
PEANUT CORPORATION OF AMERICA, International

Marketing
Associates, Inc., Respondents,
v.
HOLLYWOOD BRANDS, INC., Consolidated Foods
Corporation, Petitioners.
No. 82-1574.
United States Court of Appeals,

Fourth Circuit.
Argued Oct. 7, 1982.
Decided Dec. 15, 1982.
Robert C. Wood, III, Lynchburg, Va. (Bernard C. Baldwin, Jr., Edmunds,

Williams, Robertson, Sackett, Baldwin & Graves, Lynchburg, Va., on
brief), for petitioners.
S.J. Thompson, Jr., Lynchburg, Va. (Gregory P. Cochran, Caskie, Frost,
Hobbs, Thompson, Knakal & Alford, Lynchburg, Va., on brief), for
respondents.
Before WIDENER, HALL and MURNAGHAN, Circuit Judges.
MURNAGHAN, Circuit Judge:
I.
The appeal raises questions concerning the scope and constitutionality of

Virginia's long-arm statute. Va.Code Sec. 8.01-328.1 et seq. The district court,
in a diversity case, had denied the motion of Hollywood Brands, Inc.
("Hollywood") to dismiss for lack of in personam jurisdiction. The district court
found, however, that there was substantial ground for difference of opinion
upon the issue and that an immediate appeal from its order might materially
advance the ultimate termination of the litigation. Thereupon, pursuant to
FRAP 5, we granted Hollywood's petition for an interlocutory appeal.
RELEVANT FACTS
2
Hollywood is an Illinois corporation that manufactures and distributes peanutfilled candy bars. Hollywood solicits business throughout Virginia through the
use of manufacturers' representatives. Although Hollywood uses brokers in
Virginia to sell its product, customers are invoiced directly by Hollywood. In
marketing its product in Virginia, Hollywood uses numerous advertising
methods. Substantial revenues are derived from sales in Virginia. Hollywood
purchases a significant portion of its peanuts, one of its essential ingredients,
from Virginia corporations.
In January, 1980, Hollywood experienced a fire in which its peanut processing

operation was destroyed. Hollywood then set up an interim operation for peanut
processing, contracting with outside concerns for its peanut supply. Hugh
Parnell, owner of Peanut Corporation of America ("PCA") and International
Marketing Associates, Inc. ("IMA") conducted a peanut processing business
from his residence in Lynchburg, Virginia; PCA and IMA maintained
warehouses in Texas. In late 1980, Parnell contacted Hollywood to inquire
whether it would be interested in purchasing some peanuts. Subsequently,
Hollywood sent two purchase orders to IMA at an address in Virginia. The
second purchase order, a modification letter, served as the basis for the
contract. The actual contract was finally made between the parties by a third
purchase order which varied slightly the terms of the second purchase order.
The third purchase order was sent from Illinois to Texas. By an addendum to
the third purchase order, PCA assigned all its rights under the contract to North
Carolina National Bank.
Differences of opinion arose as to Hollywood's expected performance under the

contract. Hollywood and IMA sent correspondence between Illinois and
Virginia attempting to rectify the situation.
After accepting a large quantity of peanuts, Hollywood considered its

obligation to the North Carolina National Bank satisfied. Hollywood thereafter
sent a letter to IMA in Virginia advising IMA that it had fulfilled its
commitment under the contract. The balance of the order was cancelled by
means of a change order which was sent to PCA in Texas. The North Carolina
National Bank reassigned all its rights to IMA.
IMA and PCA then sued Hollywood for breach of the contract.
II.
THE TWO STEP INQUIRY

7
When jurisdiction is sought pursuant to a long-arm statute, a dual analysis is

normally required: first, it must be determined whether the statutory language,
as a matter of construction, purports to assert personal jurisdiction over a
defendant; and second, assuming that the answer to the first question is
affirmative, it must be determined whether the statutory assertion of personal
jurisdiction is consonant with the Due Process Clause of the United States
Constitution. Haynes v. James H. Carr, Inc., 427 F.2d 700, 703 (4th Cir.1970).
The two inquiries may be interrelated, however. The Virginia long-arm statute,
as in the case of other state statutes as well,1 has been construed to extend in
personam jurisdiction to the outmost perimeters of due process. See Kolbe, Inc.
v. Chromodern Chair Co., Inc., 211 Va. 736, 740, 180 S.E.2d 664, 667 (1971)
("It is manifest that the purpose of Virginia's long arm statute is to assert
jurisdiction over nonresidents who engage in some purposeful activity in this
State to the extent permissible under the due process clause."); Carmichael v.
Snyder, 209 Va. 451, 456, 164 S.E.2d 703, 707 (1968) ("Admittedly, Chapter
4.1, Title 8 of the Code is a deliberate and conscious effort on the part of the
General Assembly of Virginia to assert jurisdiction over nonresident defendants
to the extent permissible by the Due Process Clause.").
Counsel for Hollywood conceded at oral argument that the statute could be
applied constitutionally to confer jurisdiction and restricted argument to the
proposition that, while Virginia could have written the statute in such a way as
constitutionally to subject Hollywood to the jurisdiction of its courts, the
Commonwealth has, nevertheless, not, in point of fact, done so. While that
position is difficult to reconcile with the announced rule of Virginia
jurisprudence that the words "transacting any business in this Commonwealth"
reach "to the extent permissible under the due process clause," that legal
proposition has not been tested in a context quite like the one presented here.
We, therefore, from an abundance of caution, proceed to the customary two
step analysis.
A. The Statutory Scheme

9
The Virginia long-arm statute, Va.Code Sec. 8.01-328.1, provides in pertinent

part:
10 A court may exercise personal jurisdiction over a person, who acts directly or by
A.
an agent, as to a cause of action arising from the person's:
1. Transacting any business in this Commonwealth;
11
***
12
***
13
14
Paragraph (1) of the statute extends the court's personal jurisdiction to

encompass all nonresidents who transact any business within Virginia so long
as the cause of action asserted arises from the nonresident's transaction of
business. One act of transacting business will suffice. Kolbe, Inc. v.
Chromodern Chair Co., supra.
15
Although Hollywood argues that it had no contacts with Virginia concerning

the disputed contract, the modification letter, which became a part of the basic
contract was addressed to and received by IMA in Virginia, telephonic
negotiations occurred with one of the participants located in Virginia, and
numerous written communiques between the parties were sent to and received
in Virginia. There was sufficient "contracting" in Virginia to amount to the
transaction of business from which the cause of action arose. See I.T. Sales Inc.
v. Dry, 222 Va. 6, 278 S.E.2d 789 (1981) (long-arm jurisdiction obtained
where contract had been executed in Virginia but substantially all the
performance of the contract's terms took place out-of-state); Kolbe, Inc. v.
Chromodern Chair Co., supra (long-arm jurisdiction upheld where a foreign
corporation secured a written purchase order from the plaintiff in Virginia). See
also General Electric Co. v. Rose Int'l, Inc., 475 F.Supp. 602 (W.D.Va.1979).
Plaintiffs' cause of action was a direct result of Hollywood's transaction of
business within Virginia, and so the requirement that the cause of action arose
from the transacting of the business was clearly satisfied.2
B. Due Process Considerations

16
The Due Process Clause serves as a limitation on state assertions of jurisdiction

and its scope should normally be investigated if a state's statute is construed to
confer long-arm jurisdiction.3 The parameters of the due process inquiry are
well-settled. Where the person over whom jurisdiction is asserted has
established "certain minimum contacts" with the forum such that requiring him
to defend his interests in the forum would not "offend 'traditional notions of fair
play and substantial justice,' " International Shoe Co. v. Washington, 326 U.S.
310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), and where he has "purposely
avail[ed] [himself] of the privilege of conducting activities within the forum
state, thus invoking the benefits and protections of its laws," Hanson v.
Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958),
jurisdiction will be upheld. Each assertion of jurisdiction is to be tested on a
case by case basis. Kulko v. Superior Court of California, 436 U.S. 84, 92, 98
S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978).

17
Hollywood solicits business throughout the state of Virginia using

manufacturers' representatives as well as numerous forms of advertising.
Virginia customers are billed directly by Hollywood. Products are distributed to
two "break-down" points in Virginia. Hollywood contacts Virginia peanut
concerns with regularity. Such solicitation of business within a forum state is
sufficient to subject a foreign corporation to suit within that State. Travelers
Health Assn. v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1960);
Westcott-Alexander, Inc. v. Dailey, 264 F.2d 853 (4th Cir.1959).
18
Hollywood contends that, because it was not "doing business" in Virginia in

such a manner as to necessitate procurement of a certificate of authority from
the State Corporation Commission under Va.Code Sec. 13.1-102, it has
insufficient "minimum contact" with Virginia to permit in personam
jurisdiction. Fourth Circuit precedent requires that we reject as inapposite such
a contention. See Westcott-Alexander, Inc. v. Dailey, supra, 264 F.2d at 857,
860.
19
Hollywood admittedly has sufficient contact with Virginia to satisfy due

process and thus to permit the extension of jurisdiction under the Virginia longarm statute.
20
AFFIRMED.
E.g., Geelhoed v. Jensen, 277 Md. 220, 352 A.2d 818 (1976)
Accordingly, we have no occasion to inquire as to whether, and, if so, to what

extent the requirement may have been relaxed by the decision in Kolbe, Inc. v.
Chromodern Chair Co., supra
For the purposes of argument, we proceed on the assumption that counsel's

apparent concession at oral argument that due process requirements were
sufficiently met derived from a misunderstanding

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696 F.

PEANUT CORPORATION OF AMERICA, International

United States Court of Appeals,

Robert C. Wood, III, Lynchburg, Va. (Bernard C. Baldwin, Jr., Edmunds,

The appeal raises questions concerning the scope and constitutionality of

In January, 1980, Hollywood experienced a fire in which its peanut processing

Differences of opinion arose as to Hollywood's expected performance under the

After accepting a large quantity of peanuts, Hollywood considered its

THE TWO STEP INQUIRY

When jurisdiction is sought pursuant to a long-arm statute, a dual analysis is

A. The Statutory Scheme

The Virginia long-arm statute, Va.Code Sec. 8.01-328.1, provides in pertinent

Paragraph (1) of the statute extends the court's personal jurisdiction to

Although Hollywood argues that it had no contacts with Virginia concerning

B. Due Process Considerations

The Due Process Clause serves as a limitation on state assertions of jurisdiction

S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978).

Hollywood solicits business throughout the state of Virginia using

Hollywood contends that, because it was not "doing business" in Virginia in

Hollywood admittedly has sufficient contact with Virginia to satisfy due

Accordingly, we have no occasion to inquire as to whether, and, if so, to what

For the purposes of argument, we proceed on the assumption that counsel's

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