S & H Contractors, Inc., a Corporation v. A.J. Taft Coal Company, Inc., a Corporation, A.J. Taft Coal Company, Inc. v. S & H Contractors, Inc.

CONTRACTORS, INC., &S

corporation, Plaintiff-Appellant,

v. INC., COMPANY,

A.J. TAFT COAL Defendant-Appellee.

corporation, COMPANY, INC., TAFT

A.J. COAL

Plaintiff-Appellee, CONTRACTORS, INC.,

HS &

Defendant-Appellant. 87-7028,

Nos. 88-8829. Appeals,

United States Court of

Eleventh Circuit.

July appealed. H again & and S

рroceedings, consolidated. appeals separate judgments. affirm both We I. cor- Taft, an Alabama May On Bucy- with a contract into

poration, entered Delaware Company, a rus-Erie Wis- place of business principal its with disassembled of a consin, purchase for excavating large dragline” “walking —a industry. mining coal used machine drag- transport the agreed to Bucyrus-Erie send several Alabama parts line assembly site engineers its Taft assembly, but machine’s supervise Corry, Thornton, & Dennis T. Michael for assem- responsible primarily remained III, Clay Stiff, M. Atlanta, Ga., L. Graves dragline. bling the III, Davis, A. IV, William Ragsdale, Bu- Ala., the contract entering for into Atchison, Birmingham, After & Starnes drag- purchase for cyrus-Erie appellant. contractor hire a line, Taft decided Jr., Stone, Ray Buster, Freddie Kevin J. ne- into dragline and entered assemble R. Ga., Atlanta, Edward Spalding, &King Kentucky corpora- H, a S & gotiations Beech, Jasper, Jаckson, Tweedy, Jackson place of primary with its Ala., appellee. for culminated negotiations Kentucky. 1984,1 December signed on a contract agreed assemble H S & under Bucy- supervision dragline under time of At engineers. rus-Erie not been formation, H had S & contract’s secretary of state Alabama’s qualified by TJOFLAT, Judge, Chief Before fact, & HS in Alabama. to do business *, and SMITH CLARK, Judge, Circuit in Alabama to do business qualify did Judge. Circuit Senior February until TJOFLAT, Judge: Chief filed a & HS March On District Court States in the United plaint H) judg- appeals (S & H Contractors S & Alabama, District Northern cases, by for entered, separate in two ments substantially that it had alia alleging inter District for the Northern the District Court under responsibilities its performed for by the District Court of Alabama had breached Taft The dis- Georgia. District the Northern due amounts failing pay by sum- court, granted first trict for extra performance substantial Taft Coal A.J. mary judgment favor 31, 1986, March by & H. On done work against H (Taft) in a suit S & Company on the complaint moved to dismiss Taft par- those two between on a contract that, quali- S & failed because ground but judgment, appealed that & H ties. S before enter- Alabama fy to do business stayed pending arbitration appeal Taft, the contract court, its contract with into dispute. The district parties' forum- under Alabama’s unenforceable case, enjoined the arbitration second * the con- dispute over whether Smith, There is some U.S. Circuit S. Senior Edward Honorable Kentucky, or in Alabama tract was entered into Circuit, designa- sitting by Judge the Federal disposition our dispute is irrelevant tion. appeals. these Const, XII, argued Ala. art. bringing laws. See suit on the 232; (1975). 10-2A-247 Ala.Code contract in federal district court § before de- § action on district court took no the motion arbitration, manding right H waived months, and, during to dismiss for several to demand arbitration. Taft then moved in period, engaged fairly H exten- S & summary judgment. for The district court Then, discovery. pretrial sive on Novem- granted enjoinеd the motion and the arbi- 14, 1986, H demanded that ber S & Taft proceedings. tration The court held that dispute auspices under arbitrate the contract was both unenforceable and the American Arbitration Association as parties agreed void and thus the never required by arbitration clause in submit to arbitration. The court declined 12, 1986, contract. December the dis- On again to address the waiver H issue. S & Taft’s motion trict court converted to dis- (No. 88-8829) appealed, appeal and that summary judgment a motion for miss to ap- was consolidated with S & H’s earlier motion, holding granted that & peal from the district court’s dismissal of do qualify failure to business made H’s ap- the contract action. We address each its contract with Taft unenforceable under peal in order. forum-closing laws. The Alabama’s complaint H’s therefore dismissed S & II. S & H’s Suit on the Contract appealed, appeal H but the prejudice. S & (No. 87-7028) stayed pending the out- that, provides Alabama’s constitution come of arbitration. foreign corporation any do shall busi- “[n]o filing ness in this state without ... 3, 1987, Taft filed suit in February On secretary copy of state a certified of its enjoin the Northern ‍‌‌​‌​‌‌​‌‌​‌‌‌‌‌​‌​​‌‌‌‌‌‌​​​​​​​‌​​​​​‌‌‌‌‌‌‌​​‍District of Alabama incorporation articles of or association.” arguing that proceedings, arbitration Const, XII, provision Ala. art. 232. This § declared the entire contract void court had through operation is enforced of Ala- dismissing H’s suit on the in its order S & statute, 17, 1987, bama’s which states April the court contract. On granted prayer for relief and en- Taft’s

joined proceedings arbitration Alabama. agreements contracts or made or [a]ll The court reasoned if the arbitration by foreign entered into this state cor- Alabama, proceedings were conducted porations which have not obtained a cer- might federal district cоurt Alabama be authority transact tificate of required to enforce the arbitrator’s award shall held at the this state void and, effect, underlying to enforce the any foreign action of such or view, contract.2 In the court’s such a re- claiming person through or under such public pol- undermine Alabama’s sult would corporation by foreign virtue of said void expressed in its laws. icy as agreement; nothing in contract or petitioned H then the American Arbi- abrogate equitable this section shall to transfer the tration Association arbitra- equity rule that he who seeks must do Atlanta, proceedings to and the Associ- equity.... petition. On March granted ation 10-2A-247(a) (1975). Ala.Code § complaint filed a United cases, diversity apply we a two- Northern District Court for the Dis- States step analysis to determine whether Ala requesting that court Georgia, trict forum-closing statute bars a for bama’s procеedings. Taft enjoin the arbitration First, claim. eign corporation’s contract should en- proceedings argued that courts, ap whether Alabama we determine first, according to joined for two reasons: statute, would refuse the for plying the Taft, H void with S & was its contract corporation’s request to enforce the eign H could not demand purposes, and S & all Second, Leasing Corp. Aim v. Heli contract. See a void contract. under arbitration to be unenforceable in had held the rejected of its Taft’s characterization 2. The court declaring foreign corporation, prior ruling the contract void Alabama courts Rather, explained that it purposes. the court all 151 0 Inc., See, Evacuation, Milling Loudonville Co.

copter e.g., action. Medical Davis, (Ala. 1948). Cir.1982). So.2d If we conclude would close their courts that Alabama however, The contract in this is not corporation, then we doors goods; for the sale it is the burden such must examine solely machinery for the interstate commerce: we place provides expressly Alabama. forum-closing statute will not enforce “completely erect and that S & must particular case would in a enforcement dragline] deliver ... at [the ” in vio- unduly interstate commerce place ‘erection site’ hereinafter called the commerce clause. of the federal lation Alabama. We conclude that con- law federal law state and We address the provides clearly tract for a transaction of hold the district questions in turn and an intrastate nature. H’s properly refused enforce that, merely S H would have us believe & Taft. contract with delivery because the sale and disas dragline a involv sembled A. commerce, ing the erection of a еnforce a must also be transaction involv Alabama courts will not (1) ing H argues at the interstate commerce. & corporation’s contract foreign into, were “inciden entered that its construction services the contract was time qualified primary tal” corporation had interstate transaction. foreign not been Court, however, Supreme in The has secretary of state do business Alabama corporation argument. Alabama, (2) foreign rejected and such an considered “ repeatedly held ‘a doing of an intrastate nature court has business foreign corporation doing construction pursuant to the contract. Alabama See doing a Corp. v. work within state is held to be Credit G.B. Sanwa Business exempted not Corp., 548 1337 business that state is “Boots"Smith So.2d (Ala.1989). regulation the fact that dispute S H does that it from local not into the qualify brings do in Ala materials or laborеrs had failed to business ” Sanwa, (quot 548 So.2d at 1339 the time it entered into the con state.’ bama at however, N.L. argue, Computaflor It Co. v. Blaum tract with Taft. does Co., (Ala.1972)). holding 265 So.2d 852 district court erred in that Constr. that the Works, example, For Inc. doing Calvert Iron S & H was intrastate business Blair, Inc., (Ala. Algernon court’s v. So.2d We consider the district Alabama. 1969), foreign corporation a contracted to holding on this issue be sound. “furnish erect certain Alabama] [in Supreme has held The Alabama specified price.” at Id. steel for foreign corporation business that a does Thus, provided the contract sale Alabama, meaning within the of the forum- goods of out-of-state but also closing provisions, when the contract required corporation to foreign assem foreign performed by issue must be goods in ble those Alabama. Alabama the contract Alabama and Court held transaction to be does not involve interstate commerce. See intrastate in nature and refused enforce Co., 445 Sanjay, Inc. v. Duncan Constr. at 425-26. contract. words, (Ala.1983). So.2d In other ease, present because S & H did In the corporation’s must be activities “ ” Sanwa, supply out-of-state ma- contract ‘intrastate nature.’ assembled, the transaction at (quoting terials to be So.2d at v. MPL Johnson (Ala. even removed from inter- Corp., issue is further Leasing So.2d Thus, than the transactions at 1983)). state commerce generally Alabama courts Sanwa, Computaflor, issue in Cal- foreign corporation’s hold that sale and hold & H goods We therefore that S delivery of out-of-state vert. transac having doing in Alabama without involving enforce commerce and qualified to do so and that Alabama been underlying su ch trans

15H Although question would refuse to enforce S & H’s courts of localiza with Taft. inquiry tion calls for an ad hoc into the facts of each we have cаnvassed the B. Supreme Court’s and this court’s relevant cases and have distilled two factors that placed We now must examine the consistently guide the courts’ decisions. by enforcing on interstate commerce Ala- First, the courts often perma focus on the in this bama’s statute scope nence relationships between guided, analysis solely of this issue Our foreign corporation and the forum law; therefore, by federal constitutional See, e.g., state. Lilly Eli & v.Co. Sav-on- law, holding under previous our Inc., 276, 280-82, Drugs, nature, is intrastate this transaction does 1316, 1319-20, (1961); 6 L.Ed.2d 288 Union analysis affect our of the constitution- 972; Brokerage, 322 U.S. at 64 S.Ct. at enforcing ality Mfg. Co., SAR Co. Dumas Bros. in this case. district court failed to (5th Cir.1976).3 1284-86 question, federal address this constitutional Second, the frequently courts ask whether operating misconcep- under the apparently the intrastate transaction is an essential that the federal commеrce clause issue See, element of an interstate transaction. “doing the state law business” issue Pittman, e.g., Allenberg Cotton v. 419 Co. inquiries are identical. The two are dis- 20, 30, 260, 266, U.S. 95 S.Ct. 42 L.Ed.2d nevertheless, tinct, think, but we that the (1974); Colley, 195 York v. 247 Co. court would have reached the same district 21, 24-26, 430, 431-32, U.S. 38 S.Ct. 62 had it considered the federal com- result (1918); Indus., L.Ed. 963 Diversacon Inc. question separately. merce clause Commerce, v. National Bank 629 F.2d of at issue has both inter The transaction ‍‌‌​‌​‌‌​‌‌​‌‌‌‌‌​‌​​‌‌‌‌‌‌​​​​​​​‌​​​​​‌‌‌‌‌‌‌​​‍1030, (5th Cir.1980). view, 1033 In our Indeed, aspects. state and intrastate we weigh holding both factors favor of the inquiring constitutionality of were into sufficiently transaction at issue here to be transaction, regulation of this we federal permit localized to enforcement of Ala in likely hold that the transaction would forum-closing bama’s statute without vio concerns more volves “commerce which lating the federal commerce clause. one,” 22 Ogdеn, states than see Gibbons v. (9 Wheat.) 1, 194, (1824), analysis permanence 6 L.Ed. of the U.S. 23 Our properly subject congres scope of & H’s relations with Alabama and would be begins Supreme regulation. sional When we are faced with with the Court’s decision transaction, 276, regulation how 366 at 81 S.Ct. at Lilly, state of such Eli U.S. ever, question: Lilly sought Does the 1316. Eli to enforce a con we ask a different Jersey against Jersey a New regulation, applied as to the transaction at tract New court, issue, relying unduly corporation, interstate commerce? but a state on statute, dismissed Supreme The has held that a state’s the state’s Court unduly complaint. Lilly, corpo Eli not bur an Indiana statute does ration, foreign actively engaged in the sale and interstate commerce when the was den ” “ goods in commerce corporation has ‘localized its business’ of interstate permanent entering it is not but had estаblished a branch in the state when “ Jersey. Lilly to or a office in New Eli leased of state ‘to contribute to conclude ” space fice in the state and maintained a unitary interstate transaction.’ Allen Pittman, 20, approximately eighteen employees v. 419 U.S. staff of berg Cotton Co. 267, 32-33, 260, frequent the com 42 L.Ed.2d 195 who were contact with S.Ct. (1974) Jersey at 279- (quoting Brokerage pany's New customers. Id. Union Co. 967, 972, 81, Jensen, 202, 210, 64 S.Ct. at 1319. The Court S.Ct. (1944)). degree given held of contact with 88 L.Ed. 1227 Prichard, prior City the former Fifth Circuit handed down In Bonner v. 3. of (11th Cir.1981) (en banc), court October 1981. binding precedent adopted all as decisions an necessary element of to be found was federal Jersey, the New the State transaction, we those think interstate by en- violated be clause merce from distinguishable easily are cases forum-closing stat- state’s forcement Manu in York example, For present 280-82, 81 at Lilly. Id. Eli against ute at S.Ct. at U.S. faсturing, at 1319-20. sale involved same conclusion reached This ice machine a disassembled delivery of F.2d at Manufacturing, in SAR under state in the forum to be assembled prior to corporation, case, a Texas the manufacturer/sell supervision issue, a ware- leased at the transaction machine Apparently, engineer. er’s of tem- purpose in Alabama house services engineer’s complex sowas Texas shipped goods storing porarily machine to assemble required customers. Alabama corporation's at 38 S.Ct. at Id. properly. several employed forum-closing that the held Court the Ala- at employees part-time full- because case enforced could of the All at 1284. Id. warehouse. bama forum] done [the service to “the Alabama corporation’s commerce of an the result warehouse, Alabama out transacted essentially connected sale manufac- actual exception sale, is, might be subject-matter This court Texas. goods in turing of duty of inhere appropriately made substan- case facts found at 431. Id. performance.” Lilly and Eli to the facts tially similar distinguish those went fo- Alabama enforcement held “inherently cases constitutional. rum-closing statute na its essential lose did not [transaction] 1285-86. at interstate of an part it formed because ture hand are at the case of no nec it had facts the to While contract commerce Lilly Eli of either at the facts to S.Ct. Id. at identical not relation.” essary in are similar facts SAR, added). the we think or (emphasis H&S Although respects. many important sub- returned Supreme Court The permanent not maintain did apparently 20, 95 at Cotton, 419 U.S. Allenberg ject indicates Alabama, record the presence underlying transaction The at S.Ct. no de- drаgline, with the of sale the for a contract Allenberg involved Fur- year. one almost require lays, would for- buyer, a cotton. The delivery of and engaged had been thermore, H&S a warehouse maintained corporation, eign least four at Alabama on projects similar into con- and entered forum in the dragline the complete To occasions. other Under farmers. cotton local with tracts or five four here, H sent &S at issue “for- typical contract, which was the em- full-time one and employees part-time to promised contract, the farmer ward” apart- site, leased the erection ployee to cotton, grown amount a certain deliver employees, those for the area ments foreign cor- season, the during the next equip- amount a substantial transported state. forum warehouse poration’s telephone site, maintained the ment the sorted then The site, hired the a trailer system in the cotton sold warehouse at the cotton for the employees union other numerous state. the forum buyers outside no facts, have we these light In job. of this importance considered the Court with relations & H’s finding S difficulty in middlemen, as such contract type of relatively substantial forward Alabama needed who foreign corporation, id. permanent. See expenses. their cover contracts held Court at 264. at S.Ct. at transaction think that alsoWe warehouse, ato the cotton “[d]elivery of neces- or essential an here issue transac- isolation, an intrastate is taken transaction. an interstate sary element also essential delivery is But that tion. other case compared have We transac- interstate completion transaction the intrastate in which cases tion_” “essential,” sary,” “integral” part or at 266. at Therefore, Indeed, refused to enforce dragline.4 Court sale of the interstate Id. at statute. state’s entering might into the erection contract Diversacon, see also 267; at afterthought— characterized better an enforced (forum-closing statute something precondition that was not a integral “an when interstate sale that Taft did not pattern or of an overall part do in order to the machine. have to utilize transaction”). & H’s relations Alabama were S this case from key distinguish Two facts furthermore, lengthy; significant York, and Diversacon. First, Allenberg, erection contract was not an essential ele- seeking company begin Taft did not even transaction. We ment it had dragline until to assemble after operations hold that S H’s therefore purchase entered into contract sufficiently localized Alabama Second, oth- dragline Bucyrus-Erie. сourts to the forum- allow Alabama enforce corpo- including an Alabama companies, er against statute S & without of- itself, have assembled ration and could commerce clause. fending federal ignoring reality dragline. We would Thus, affirm the court’s order we district facts on these if we concluded dismissing & H’s suit on the contract.5 a “neces- constituted erection Alabama, whether ser- es in we must ask those concluding case is controlled that this York, "essentially fundamentally so connected” to the sale misreads vices were the dissent York, they parts could be con- determined whether (i.e. Bucyrus-Erie’s) operate part could of the seller’s sidered the state’s clearly super- performance." “duty the contract to facts show preclude enforcement of The sell- the ice machine. were not so connected to vise construction of that S & H’s sеrvices much like the seller’s in York er’s contract the sale. provid- Finally, imply The York contract in this case. seems to that if the dissent ship parts (which ed that the seller would in interstate com- machine merce) has been sold assembly, assembled, supervise engineer would send then is useless unless it responsible buyer essentially would be assembling but that connected the machine is the machine. providing to assemble argument mechanics has some to the sale. While Court, S.Ct. at 431. The rejects teaching 247 U.S. at appeal, completely See logical however, enforceability 16, of did not address City Waycross, Browning 34 of v. of contract; rather, it considered 578, (1914). Waycross, the mechanics' L.Ed. 58 828 provide super- seller’s contract to whether the extensively and Court cited which eventually distinguished, York 22-23, at at 38 S.Ct. be enforced. Id. visor could Court held that shipped assembly light poles, had been оf commerce, activity. Id. was a local in interstate case, not asked to enforce we are 22-23, Obviously, light poles S.Ct. at 580. at 34 Bucy- against statute Alabama’s Thus, while unless assembled. are useless payment in a suit to recover rus-Erie appealing because of its test is "uselessness” engineer. Bucyrus-Erie’s That case services has indi- easy application, the York, by and we would would be controlled something than uselessness is more cated undoubtedly forum-clos- enforce Alabama’s to an connection needed to show essential to do is enforce ing What we asked statute. are interstate sale. against party provid- statute Thus, ques- ing local construction services. sought complaint, S & H also amended In its maintains, not, whether the dissent tion is as theory quantum meruit relief based on complex and re- of the machine a lien on the requested the court establish at suрervision, whether the service quired We note that S & of S & in favor H. essentially the sub- "was connected issue quantum meruit request based on H’s for relief sale, is, might be made to ject-matter question of might have raised difficult duty perform- in the appropriately inhere a suit on the a suit whether such constitutes 24, (emphasis at 431 38 S.Ct. ance." added). meaning of the forum-clos within the promise Certainly, Bucyrus-Erie’s Wells, So.2d v. 358 statute. See First Bank supervise assembly engineer was so send 435, (Ala. 1978) (forum-closing bars 437 be considered the sale that it could essential contract, “eq only suits based on suit on "duty performance.” Bucyrus-Erie’s part of recognized by jurispru rights long our essence, arguing— uitable dissent is that is what the In unfortunately, however, dence"). question, been has not arguing This about the dissent presented appeal, therefore have no only about we are concerned wrong Since we to address it. provide servic- оccasion construction H’s contract S &

1514 Co., 494, (5th Enjoin 781 F.2d

III. Taft’s Suit Arbitration Distrib. 497 Cir. 1986). determining When whether the oth above, the As we note District Court party prejudiced, may er has been we con Georgia granted the Northern District length delay demanding sider the summary judgment Taft’s motion for expense by and the incurred arbitration enjoined ground arbitration on the that the litiga party participating from contract between S & H and Taft was void Paine, Webber, process. Frye See v. purposes. for all The court refrained Curtis, Inc., 399 Jackson & H, argument addressing Taft’s that S & — (5th Cir.1989), denied, U.S. -, cert. contract, bringing waived its suit on (1990). 108 L.Ed.2d 110 S.Ct. ‍‌‌​‌​‌‌​‌‌​‌‌‌‌‌​‌​​‌‌‌‌‌‌​​​​​​​‌​​​​​‌‌‌‌‌‌‌​​‍right under the contract. We to arbitrate enjoining affirm the district court’s order case, eight In this S & H waited arbitration, it for a different but we do time complaint months from the it filed its that the issue whether reason. We think to the time it demanded arbitration. See contract, and hence the arbitration Brewing, (plaintiff 781 F.2d at 497 Miller clause, purposes presеnts is void for all eight filing waited months after suit in extremely questions difficult of state law state court to announce intention to arbi Indeed, possible. if that we should avoid trate). time, During that Taft filed two there is no need to resolve these oppo motions—a motion to dismiss and an since, even questions difficult of state law discovery. sition to S & H’s motion for enforceable, the arbitration clause is Additionally, H depositions S & took the right H waived its to arbitrate. Our deter employees (totalling approximate five Taft right of whether & H waived its mination S ly pages) prior demanding arbitra arbitration, opposed to whether the tion. We conclude from these facts law, con contract is void under Alabama law, prejudiced by as a matter of Taft was Huber, solely by federal law. trolled See delay demanding 5 & H’s arbitration and Nichols, Hunt Inc. v. Architectural litigation process. its invocation of the (5th Co., F.2d 25 & n. 8 Stone Furthermore, we find that S & acted Cir.1980); Ernst, E.C. Inc. Manhattan inconsistently right. with its arbitration Cir.1977), Co., F.2d Constr. H, therefore, right has waived its rt. denied sub nom. Providence ce arbitrate, affirm, ground, and we on that Co., Hosp. v. Manhattan Constr. U.S. enjoining the district court’s order the arbi- (1978). 55 L.Ed.2d 769 proceedings. tration that, despite We have held arbitration,

strong policy favor of see IV. Hosp. Moses H. Cone Memorial v. Mercu reasons, foregoing For we affirm 1, 22-23, ry Corp., 103 Constr. judgment both the of the District Court for 927, 940-41, (1983), 74 a L.Ed.2d 765 the Northern District of Alabama dismiss- conduct, party may, by right its waive its ing & H’s suit on the contract and the Ernst, to arbitration. See E.C. Inc. v. judgment of the District Court for the Co., 268, F.2d Manhattan Constr. Georgia enjoining Northern District of (5th Cir.1977). Thus, party that “[s]ub proceedings. arbitration stantially litigation machin invok[es] AFFIRMED. ery” prior demanding may to arbitration right party waive its to arbitrate. AId. CLARK, Judge, dissenting: Circuit right if, has waived its to arbitrate “under totality circumstances, Respectfully, of the I majority the ... dissent. The opinion incorrectly analyzes acted party inconsistently has with the ar the facts when (1) right,” it finds that bitration National Found. S & H’s work Alabama Can for Sons, unitary v. A. 821 was not an essential element of an cer Research G. Edwards & (D.C.Cir.1987),and, (2) F.2d in so act interstate transaction and it finds that S way ing, prejudiced has in some & H localized its in Alabama not- the other Brewing withstanding clearly showing party, Miller Co. v. Fort evidence Worth appropriate to its sale. The conse- purpose for the sole there & was that S ruling in this quence of such a if made question. the contract emphasized by particularly ease would be unsuccessfully attempts of the functions of a consideration very facts are a case whose distinguish plant machinery composing the which those this case. York similar sold, complexity, neces- of its Colley, 247 U.S. 38 S.Ct. v.Co. sity aggregation and unison with of its pur- (1918), York sued Texas L.Ed. 963 precision skill and order mechanical bill, pay York’s chaser who refused sale— that the result contract following: recited the the Court into plant purchased might come the ice — dispute it was shown without At the trial existence. plant an ice covered the contract at 431-32. 247 U.S. at three tons of ice a produce guaranteed referring legal standard gas compression day, consisting predecessor Div- type of our ammonia condens- compressor, pumps, a (discussed legal cans, infra) stated evaporating ersacon ers, freezing tank and “Essentially, machin- test follows: coils, [Su and other agitator brine included in a defini accessories, preme] federal including apparatus ery and any activity of interstate commerce making tion of for utilizing steam exhaust integral an intrastate nature which was ice cans. an filling the distilled water pattern or part of overall interstate provid- an machinery, it was parts of These F.2d Cir. Pennsylva- transaction.” ed, shipped from 1980) (citations omitted). delivery in point Texas nia and connected. to be erected were there work, stipulated, was to FACTS

This neer ing Company for per purchasers, assistance done operation before receive it would purchasers diem only the ^[*] under the machinery to a charge of was to be of mechanics sent ¥ n erection and who should have by the York supervision of arise. supervision to include ^[*] whose services $6 obligation to but the practical ^[*] furnished Manufactur- submitting ^[*] paid by a fixed test finally engi- ^[*] rus), which because the business shipped assembled. bly process. items. ed that neer to oversee Coal In the provide Company to sell foreign corporation, contracted Bucyrus would present follow-up service of sales it an unassembled Additionally, of its (Taft) the entire ease, Bucyrus-Erie (Bucy- assembling such huge Bucyrus was not furnish A.J. size, ‍‌‌​‌​‌‌​‌‌​‌‌‌‌‌​‌​​‌‌‌‌‌‌​​​​​​​‌​​​​​‌‌‌‌‌‌‌​​‍could not be expressly provid- Bucyrus agreed a resident 275-day assem- six visits at dragline, large engi- completion of after intervals three-month con- particular provision of the theWas was func- the machine assure engineer to for the tract service Finally, the contract be- tioning properly. machinery in erect assemble (S H) and Taft H Contractors & tween S & point of destination question at in the Bu- provisions incorporates expressly efficiency before practically test to as- pertain cyrus/Taft appropri- relevant and complete surrounding sembly. circumstances The interstate sale of the machin- the ate to subsequent the sales and thus the formation controversy is the ery? When that Taft demonstrate assembly contracts analysis issue to this brought in last selecting a Bucyrus in heavily on any relied to be no room for would seem there re- Taft assembly contractor. Generically suitable answer. an affirmative its list Bucyrus from received quested and be said it can that must be unless capable who were assembly contractors assembling the to direct agreement equipment. S type of assembling this machinery whose intrinsic supervision of the list on the contractors being H was one upon its largely depends value recom- specifically Bucyrus and one which as a whole is operative made united majority’s strategy H had The is to show that Bucyrus and S & mended to Taft. assembly projects assembly part unitary on of a together worked Bucyrus employ- past. by contending Several former interstate transaction that which, H accord- employed by S & assembly ees were was not essential to the sale of a testimony, satisfied deposition dragline. support argument, of its necessary exper- Taft that S & H had the majority argu- relies on two irrelevant dragline. tise assemble this model First, to. ments. relies on the begin fact that did not its search for a assembly record shows dragline contractor to assemble the until extremely complex op- machine involved an signed it had the sales contract with after provision provide eration. The contract However, majority’s reliance Bucyrus. supervising engineer indicates that timing of the two contracts as dem- on sufficiently it Bucyrus considered assembly part onstrating is not of a expertise. plex require Bucyrus’ unitary fundamentally Bucy- deposition testimony reveals that the any negotiations with S & H actively participated in the flawed as engineer rus fact, process. naught if & H did day-to-day assembly would have been for appears Bucyrus retained some con- expertise have the to assemble the Elmore, process. David ultimately trol over selected. dragline which Taft Taft and general supеrintendent with Second, assembly majority argues assembly supervisor, testified that Taft’s contract be- was not essential to the sales assembly process near end when drag- could have assembled the cause Taft dragline to walk the S & wished contrary This conclusion is line itself. assembly pad mining pit, deposition testimony. A.J. the available engineer sign off the Bucyrus “wouldn’t Taft, testified that Taft did not have Jr. BE was still liable for the machine because manpower sufficient available to assemble until the electrical work was com- machine dragline. He also stated that certain pleted.” dragline component delivery aspects assembly work on the assembly schedule also indicates that far than that 1300-W were more involved dragline contemplated by dragline on the much smaller which Taft Bucyrus did keyed to the sales contract. previously Additionally assembled. he had parts all the of the machine at not deliver any noted that Taft had not assembled time. When S & H started work same dragline since 15, 1985,- January many parts had not parts continued to ar- been delivered DISCUSSION Bucyrus through rive December 1985. de- necessary in parts they livered became Application of Alabama’s forum assembly process. impermissible in this case creates an law The shear size of the is also The ma- on interstate commerce. complexity indicative of the of the assem- of decisions in jority discusses number bly procedure. immense; The 1300-W is and concludes that two factors this area long feet the boom is 285 and the bucket “consistently guide the decisions.” courts’ forty-five yard capacity. has The com- interrelationship between the isOne dragline weighs pleted over 650 tons. Fi- portions and interstate nally, procedure— the 1300-W erection permanence Another is transactions. partially incorporated into the relationship between the cor- assembly assembly contract —shows that and the forum state. poration required significant special- of the 1300-W expertise. Bucyrus 62,000 proximately complete man-hours to Supreme in three cases has variety The Court requires and of skilled laborers electricians, complexi- importance of including pipefitters and considered weld- assembly determining whether the ty of ers. cross, In part Browning City Way v. integral indispensable an assembly is of 579-80, U.S. 58 L.Ed. 828 Mfg. The York Co. v. of the sales contract. (1914),the concluded that Court installation already been discussed case has Colley lightning rods, of sold interstate com part.1 locally by employees merce and installed of York, Colley argued that defendant seller, was not in interstate commerce. assembly portion of supervision of the wholly The installation awas intrastate separate and distinct from contract was and appropriate affair “bore no relevant or concluded, portion, there- York, relation to interstate commerce.” wholly fore, supervision was a York, that since at 431. S.Ct. Court distin transaction, plaintiffs concluding guished Waycross, suit that it “was controlling as to a case where the ser plaintiff fail- to dismissed for was due done in a state as the result vice to be in the state. qualify to do business ure to essentially interstate commerce sale was agreed, Texas court The subject-matter with the of the connected concluded that reversed. The Court Court is, sale, might appropriate be made to testing be “relevant assembly and would duty performance.” inhere in the ly interstate sale of appropriate” to the added). (emphasis machinery, “unless it can be complex such Finally, Railway Signal Co. General direct the assem- agreement that an said Virginia, machinery whose bling supervision (1918), Virginia L.Ed. 854 the State of con- being unit- depends upon value its intrinsic Railway purchase tracted with General whole is not operative made as a ed and railway crossing sig- install automatic 38 S.Ct. at appropriate to its sale.” Id. at various locations in the state. Gen- nals Throughout opinion, the Court Railway many manufactures eral complexity of the endeavor emphasized the installation; how- components required for bought an purchaser that the and the fact ever, signals “to these as re- construct machine, an ice ma- parts not the ice necessary by the it was quired engi- supervising The terms of the chine.2 labor, skilled and un- employ this state provision Bucyrus/Taft in the neer skilled, dig ditches in which conduits for relationship as- a closer between evidences placed, construct concrete the wires are arrangement than did the sembly and sale foundations, completed paint struc- engineer from York in York.3 that “the The Court concluded tures.” Id. paid per diem basis which worked on clearly show local business recited facts here, Bucy- whereas by purchaser, from interstate separate and distinct provided commented engineer’s services merce.” Id. rus lightning very similar this case part the sales contract. Bucyrus as "Apparently, ma- majority the [ice] notes: 3.The case is also cited and discussed 1. This engineer’s pp. complex servic- majority's opinion supra 1511-12. that the chine was so prop- required the machine to assemble es were dragline. purchased an unassembled 2. Taft previously, erly.” p. I noted Supra 1512. As However, it, machine, use ice was of no like the dragline assembly was also extraordinari- suрply was assembled. Taft had until it supported by ly complex, a which is conclusion supervised, but and mechanics location engineer's were re- services the fact that clearly contemplated Bucyrus the contract machine and it took 275 quired to assemble the obligation Bucyrus' not be dis- part working complete. days In another dragline operational. charged until after the days opinion, on the 275 relies "entering majority's into observation presence permanent evidence of S & H's something] [was erection contract ... an did not have chine,” together, Supra p. 1512. Taken the state. to do in order to utilize the ma- compel incompre- majority’s simply supportable the record observations may only year required It over conclusion that or common sense. hensible get operational so only complexity the machine to be in intеrstate work medium closely essential, might resem- “utilize” it. The easy too it is not Too commerce. machine, intrinsic value "whose the ice bles depends presence. permanent indicates hard and it operative being made united and York, S.Ct. at 432. as a whole." process. The focused on York, assembly Court In the Court distin- rods subject “the work the matter of the contract stating, re- whether this case guished sufficiently complex over to render its as- by the contract done was quired to be the intrinsic relation to to its sale. It was sembly inherent and essential above its interstate assembly required supervising the the subject-matter of fact that the performance the the engineer’s expertise involved influenced merce contract case, right state had a the instant duties over which decision. In court’s of their general inherent control because S & as a purchaser exercise instead hired 38 S.Ct. at 432. intrastate charaсter.” hired other work- contractor who turn analy- not alter the This nuance men. does cases indicate These York, expertise engineer’s sis. As in construction question fundamental complete assembly. There required was whether it is type cases is or installation that indicates nothing the record the sell- and essential appropriate replace- & H a Bucyrus considered S continue its involve- er/manufacturer fact, supervising engineer. ment for the It satisfies stan- delivery. ment after contrary conclusion supports the the record matter of the sale subject if the dard parties to these contracts which is that all sufficiently complex, or the seller’s ex- dragline essen- assembly of the considered pur- necessary bring the item pertise is tial to its sale. following de- existence chased into useful mind, synthesis in assem- livery. With this Establishing A Presence. B. Permanent clearly essentiаl bly of the Mfg., 526 part Mfg. v. Dumas Bros. unitary of a SAR its sale therefore Cir.1976), the court conclud- complexi- F.2d 1283 Given the interstate transaction. case, closing forum assembly process in this ed that state’s ty impermissible work an burden on assembly did not majority illogically concludes applied to the interstate when afterthought. commerce was an conducted activities transactions unsuccessfully majority attempts engaged in the in Alabama. Sar Sar from the instant case. distinguish York it manu- polyurethane foam which sale of that “the machine which all of diversa- transaction to by the drawn The distinction at 1285. F.2d construction in- activities related —the between con’s the connection turns on court This highway.” Id. at 1034. portions the Louisiana interstate trastate present the in- in- highly whether The issue is relevant transaction. is case H, indepen- entity, on an portion has taken the out-of-state where quiry, trastatе separates it of its own to work on a character with local dent contracted workers differ- Stated portion. interstate commerce. The that is in project interstate per- entity has out-of-state ently, that S & H has in this case shows record to render in-state acts state, sufficient any formed presence in the established a dis- transaction of the overall aspects two than was Diversacon’s. permanent more fo- subject to the tinct, entity then present S & H and Diversacon Both which factor laws. One rum complet- purpose the sole in the state for indepen- probative of court found com- interstate project the out-of-state is whether dent character court acknowl- The Diversacon merce. pres- in-state permanent entity up has set value of Diversacon’s edged probative court’s However, the focus enсe. state, focused remained presence remained whether analysis it was performed and whether the work on of a element an essential transaction. unitary part of a interstate interstate transaction. unitary Because I believe Industries next case is Diversacon of an element was an essential 1300-W Commerce, F.2d Bank ‍‌‌​‌​‌‌​‌‌​‌‌‌‌‌​‌​​‌‌‌‌‌‌​​​​​​​‌​​​​​‌‌‌‌‌‌‌​​‍v. Nat’l nothing under interstate transaction Cir.1980), where 1030, 1034-35 removes the transac- facts of this case contrac- highway construction plaintiff, character, I hold interstate tion’s inter- portion of tor, to build a contracted clos- forum application of Alabama’s Diversacon, a highway in Louisiana. impermissible ing law effects administra- up its corporation, set Florida commerce. Since interstate compa- parent personnel in its support tive however, otherwise, re- I concluded has Jackson, Mississippi officе. One ny’s spectfully DISSENT. defaulted subcontractors Diversacon’s to honor its Bank refused the defendant because surety agreement

construction to do busi- qualify failed to had

Diversacon appeals The court of in the state.

ness of Diversacon’s scope “the

concluded Mississippi beyond the extended

activities definite of a consummation

border be an LIMITED, “it would project,” thus interstate BRINK’S MAT interstate impermissible burden on Plaintiff-Appellant, access give effect to denial merce statute.” through qualification Fleming, DIAMOND, Mar John Patrick Diversa- The subcontract between Limited, Comprehensive blemay Com not lose did and the subcontractor con Limited, Bolero Management pany simply because character interstate Limited, Defendants-Appellees. presence contractor established general state. home subcontractor’s No. 89-3578. in- “Court noted Appeals, United States Court federal definition of in a cluded Circuit. Eleventh na- activity an intrastate any commerce part of integral was an ture which July or transaction.” pattern overall observed court further 1033. The Id. at Diversa- upon which agreement “the single clearly Bank is suing the

con is ized notes the as- The Reach of Interstate Commerce A. procedure sembly ap- takes Assembly Contracts.

Notes

notes [ice] Texas, Georgia plants factured in located complex that was so [manufactur- Mississippi. Sar leased warehouse engineer’s services were re- er/seller’s] and store the foam for Alabama to receive properly.” the machine quired to assemble in-state processing subsequent sale to majority notes that “other Elsewhere employed part- full or concerns. Sar seven corpora- including an Alabama companies, and main- employees at warehouse time itself, have could assembled tion and at the warehouse on a tained two vehicles dragline.” Supra pp. appeal, the court con- full-time basis. On evidence). (Without support from the any the state’s subjecting Sar to cluded majority’s evidence the These comments impermissibly forum laws did misunderstanding York. In that commerce. supplied purchaser is clear that Supreme Court The court relied two the ice machine. 34 mechanics to assemble intrastate that Sar’s purchaser simply cases4 and concluded 431. The acted S.Ct. at Lily’s Eli very much like foam sales were general contractor and labor as both distin- drug The court However, engineer from sales. York pool. Cotton, on the notion guished Allenberg process. supervised the entire That SAR, no nationwide that under the facts la- purchaser performed impeded. 526 marketing system complexity of did not diminish bor Pittman, Sav-On-Drugs, S.Ct. U.S. Allenberg Cotton Co. (1974) (intrastate (1961) (independent efforts at in- 42 L.Ed.2d L.Ed.2d 288 accomplished farmer and out-of-state marketing between cotton contract cotton merchant’s and distribution essential office, in-state broker enough Lily's to break in-state Eli marketing and interstate mechanism connection). interstate commerce Lily & Co. v. aspect predominated); and Eli

Case Details

Case Name: S & H Contractors, Inc., a Corporation v. A.J. Taft Coal Company, Inc., a Corporation, A.J. Taft Coal Company, Inc. v. S & H Contractors, Inc.

Court Name: Court of Appeals for the Eleventh Circuit

Date Published: Jul 30, 1990

Citation: 906 F.2d 1507

Docket Number: 87-7028, 88-8829

Court Abbreviation: 11th Cir.