OHIO BELL TELEPHONE CO., v. CORECOMM NEWCO, INC., (N.D.Ohio 2002)

DONALD C. NUGENT, United States District Judge

This matter is before the Court on SBC Communications Inc.'s ("SBC") Motion to Dismiss for Lack of Personal Jurisdiction. For the reasons set forth below, this motion is DENIED.

When personal jurisdiction is challenged, the plaintiff bears the burden of demonstrating that jurisdiction is proper. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir, 1991); McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135, 1141 (1936). In the face of a properly supported motion for dismissal, the plaintiff may not stand on his pleading but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction. Theunissen, supra, 935 F.2d at 1458 (6th Cir. 1991); Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974). When the district court decides the motion after the parties have entered into discovery, the plaintiff must demonstrate jurisdiction by a preponderance of the evidence. See, Conti v. Pneumatic Products Corp., 977 F.2d 978, 980 (6th Cir. 1992); Market/Media Research v. Union-Tribune Publishing Co., 951 F.2d 102, 104 (6th Cir. 1991), ced. denied, — U.S. — , 113 S.Ct. 79, 121 L.Ed.2d 43 (1992).

In this diversity case, Third-Party Plaintiff, CoreComm Newco, Inc. ("CoreComm") has set forth specific facts showing, by a preponderance of the evidence, that this Court has specific jurisdiction over SBC Communications in this matter. The parties conducted some discovery relevant to the issue of personal jurisdiction and CoreComm filed a Supplement to its Memorandum in Opposition to SBC's Motion to Dismiss incorporating information obtained through that discovery process. SBC has had full opportunity to challenge and respond to such information in its Reply.

To determine whether personal jurisdiction is proper in a diversity case, district courts must apply the law of the state in which they sit. Welsh v. Gibbs, 631 F.2d 436, 439 (6th Cir. 1980), cert. denied, 450 U.S. 981, 67 LEd.2d 816, 101 S.Ct. 1517 (1981). In Ohio, personal jurisdiction may be established by minimum contacts with the state as defined in Ohio Rev. Code § 2307.382, Ohio's long arm statute, which states, in pertinent part, as follows:

(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's;

(1) Transacting any business in this state;

(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state.

O.R.C. § 2307.382; see also, Pittock v. Otis Elevator Co., 8 F.3d 325 (6th Cir. 1994).

SBC's agents, acting on its behalf, have transacted business in Ohio. it is not necessary that a commercial defendant have a physical presence in Ohio to be subject to personal jurisdiction within the state, so long as the defendant has purposefully directed its actions toward the residents of Ohio. CompuServe Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996). SBC has agents who have appeared in Ohio on its behalf to negotiate with regulatory agencies (including the Ohio Public Utilities Commission) and with customers (including CoreComm, itself). SBC agents have signed contracts on its behalf in Ohio, made promises to Ohio residents and regulatory agencies, and apparently at least one of SBC's agents lists Ohio as his place of residence.

In additions, SBC, as a result of the intense governmental oversight in the telecommunications arena and of its own promises, which were rendered in order to be allowed to merge with Ameritech Ohio, is also responsible for ensuring that its Ohio affiliates operate according to the PUCO directives. Further, SBC derives substantial revenue from the services and goods rendered by its affiliates in Ohio. The commitments and responsibilities SBC entered into through these contacts are the subject of the claims set forth by CoreComm in its Third-Party Complaint. Thus, Ohio's long-arm statute is satisfied.

Having determined that SBC is generally subject to personal jurisdiction on this matter in Ohio, the Court must further determine whether jurisdiction would be properly exercised in this particular case. In Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, at 381 (6th Cir. 1968), the Sixth Circuit devised the following test to determine when a District Court may impose specific personal jurisdiction:

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from defendant's activities there. Third, the acts of a defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make a exercise of jurisdiction over the defendant reasonable.

SBC has purposefully availed itself of the privilege of acting in Ohio. SBC has spent tremendous time and effort in its attempts to convince the PUCO that it should be allowed to merge with an Ohio telecommunications company. SBC made promises to participate directly, when necessary, in the provision of services by its Ohio affiliates, CoreComm, who was a participant in the PUCO review of SBC's merger application allegedly relied on some of these promises relating to SBC's support of increasing competition in the telecommunications industry when it withdrew its objections to the SBC/Ameritech merger. Further, SBC derives substantial gains as a result of the PUCO's agreement to allow it to enter into a merger with the Ohio telecommunications provider.

The cause of action asserted by CoreComm is directly connected to the SBC/Ameritech merger and more specifically to the conditions SBC agreed to in order to facilitate that merger. Further any inconveniences that SBC may suffer as a result of being hailed into court in Ohio are easily outweighed by the factors set forth above. Consequently, this Court finds that the exercise of personal jurisdiction over SBC in this matter is fair and proper.

For the reasons set forth above, SBC's Motion to Dismiss for Lack of Personal Jurisdiction is hereby DENIED.

IT IS SO ORDERED.