Opinions of the United
1998 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-9-1998

Pennzoil Prod v. Colelli & Assoc Inc.
Precedential or Non-Precedential:

Docket 97-3335




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Recommended Citation
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Filed July 9, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 97-3335 & 97-3344

PENNZOIL PRODUCTS COMPANY,

       Appellant,

v.

COLELLI & ASSOCIATES, INC.;
PYRAMID TREATING INC;
T.O.P. PRODUCTION & OILFIELD SERVICES INC.;
COLELLI OIL WELL SERVICES INC.;
CHEMICAL SOLVENTS, INC.

       PYRAMID TREATING INC.;
       T.O.P. PRODUCTION & OILFIELD
        SERVICES, INC.
       CHEMICAL SOLVENTS, INC.,

       Appellants in 97-3344

       PENNZOIL PRODUCTS COMPANY

       Appellant in 97-3335

On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil Action No. 95-cv-00229E)

Argued March 26, 1998

Before: MANSMANN, ROTH and MCKEE, Circuit Judges

(Opinion filed: July 9, 1998)
William M. Wycoff, Esquire
 (Argued)
Thorp, Reed & Armstrong
One Riverfront Center
Pittsburgh, PA 15222

 Attorney for Appellant

Timothy L. Kerwin, Esquire
 (Argued)
Davis & Young
101 Prospect Avenue, West
1700 Midland Building
Cleveland, OH 44115

 Attorney for Appellee
 Colelli & Associates, Inc.

Shawn P. Martin, Esquire
Colelli & Associates
1370 Ontario Avenue
2000 Standard Building
Cleveland, OH 44113

 Attorney for Appellee
 Colelli & Associates, Inc.

Theodore O. Struk, Esquire
Dickie, McCamey & Chilcote
Two PPG Place, Suite 400
Pittsburgh, PA 15222-5402

 Attorney for Pyramid Treating, Inc.

William W. Guthrie, Esquire
William W. Guthrie & Associates
416 Frick Building
Pittsburgh, PA 15219

 Attorney for T.O.P. Production &
 Oilfield Services, Inc.

                           2
       Edward J. Cass, Esquire
       Virginia L. Heidloff, Esquire
       Gary L. Nicholson, Esquire
       Gallagher, Sharp, Fulton & Norman
       1501 Euclid Avenue
       6th Floor Bulkley Building
       Cleveland, OH 44115

        Attorneys for Colelli Oil Well
        Services, Inc.

       Edwin Allen Young, Esquire
       1225 One Oxford Centre
       Pittsburgh, PA 15219

        Attorney for Chemical
        Solvents, Inc.

OPINION OF THE COURT

ROTH, Circuit Judge.

This appeal arises from a diversity action brought by
Pennzoil Products Company ("Pennzoil") against, among
others, Colelli & Associates, Inc. and Colelli Oil Well
Services, Inc. (collectively "Colelli"). Colelli sold to crude oil
producers in Ohio a solvent, which was designed to reduce
the accumulation of wax in the shafts of oil wells. The oil
producers sold the oil to refineries, one of which was
Pennzoil's refinery in Pennsylvania. Pennzoil alleges that
Colelli's solvent contained silicon and that the silicon-
tainted oil caused damage to its refinery. The district court
granted Colelli's motion to dismiss for lack of personal
jurisdiction and certified its order for interlocutory appeal.
Because we conclude that Pennsylvania's long-arm statute
extends personal jurisdiction to Colelli and that the exercise
of such jurisdiction complies with constitutional due
process requirements, we will reverse and remand to the
district court for further proceedings consistent with this
opinion.

I.

Pennzoil is a Nevada corporation with its principal place
of business in Texas. Pennzoil operates an oil refinery in

                                3
Rouseville, Pennsylvania, for which it purchases Penn grade
and Corning grade crude oil from producers in Ohio. The
two Colelli entities are Ohio corporations with principal
places of business in Ohio. Colelli is in the oil well
maintenance business. It sells chemicals to oil producers to
clean residue from their wells. Unlike most of the crude oil
produced in the United States, Penn grade and Corning
grade crude oil from the Ohio oil fields contain high levels
of paraffin (i.e., wax). The high wax content results in the
gradual accumulation of wax in the shafts of oil wells. Wax
build-up impedes oil flow and production. Colelli sold a
paraffin solvent to Ohio oil producers which they injected
into the oil wells to reduce the accumulation of wax. As a
result, however, the solvent also mixed with the oil
produced from those wells.

Approximately sixty percent of the Penn grade and
Corning grade crude oil produced by the Ohio producers
was sold and shipped to Pennsylvania refineries. One of
these was Pennzoil's Rouseville refinery. The other was a
refinery owned by Witco in Bradford, Pennsylvania. The
remaining oil was sold to a refinery in West Virginia. Cam
C. Colelli, who founded and runs Colelli, has stated in
deposition that he knew his customers (the producers)
would be shipping oil to Pennzoil's Rouseville refinery. In
fact, in 1994 (prior to the events that underlie the present
case), Pennzoil had complained of damage caused to its
refinery by chlorides in Colelli solvents. Once the issue was
brought to his attention, Cam Colelli worked with Pennzoil
to alleviate the chloride problem. He sent samples of
solvents to Pennzoil's laboratories for testing and attended
a trade association seminar on the dangers of chlorides in
crude oil solvents.

In September 1995, Pennzoil initiated a diversity action
in the Western District of Pennsylvania against Colelli &
Associates, alleging that the anti-paraffin solvent injected
into the Ohio oil wells contained silicon and that the silicon
damaged its Rouseville refinery. The complaint also named
Pyramid Treating, Inc. ("Pyramid") and T.O.P. Production
and Oilfield Services, Inc. ("T.O.P.") as defendants. In April
1996, Pennzoil amended its complaint to add Colelli Oil
Well Services and Chemical Solvents, Inc. ("Chemical") as

                               4
defendants. Like Colelli, the other defendants are Ohio
corporations with principal places of business in Ohio.

In August 1996, Colelli moved to dismiss for lack of
personal jurisdiction pursuant to Rule 12(b)(2) of the
Federal Rules of Civil Procedure. On February 7, 1997, the
district court granted Colelli's motion. Later that month,
Pennzoil moved for modification of the February 7 order to
permit an interlocutory appeal. Pyramid, T.O.P. and
Chemical joined Pennzoil's motion. In May 1997, the
district court granted Pennzoil's motion to permit the
appeal. Subsequently, Pennzoil filed a petition for
permission to appeal to this court, which was granted.
Pyramid, T.O.P. and Chemical also filed a notice of appeal.
The two appeals have been consolidated.

II.

Although the propriety of personal jurisdiction is in
dispute, the district court clearly had subject-matter
jurisdiction over this diversity action, pursuant to 28 U.S.C.
S 1332(a). Furthermore, since its order dismissed some, but
not all, of the defendants, the order was not final and
appealable under 28 U.S.C. S 1291. Nonetheless, the
district court did grant permission for an interlocutory
appeal. Therefore, we have jurisdiction to hear this appeal
pursuant to 28 U.S.C. S 1292(b).

To the extent that a district court makes factualfindings
in determining personal jurisdiction, we review for clear
error. Mellon Bank (East) PSFS, National Association v.
Farino, 

, 1220 (3d Cir. 1992). However, a
district court's decision that it possesses or lacks personal
jurisdiction over certain defendants is an issue of law of
which our review is plenary. 

III.

There are specific analytical steps we must take in
determining whether personal jurisdiction can be asserted
over a nonresident defendant. Rule 4(e) of the Federal Rules
of Civil Procedure is the starting point. This rule
"authorizes personal jurisdiction over non-resident

                               5
defendants to the extent permissible under the law of the
state where the district court sits." 

(citation omitted). The forum state in this case is
Pennsylvania. That state's long-arm statute is codified at 42
Pa. Cons. Stat. Ann. S 5322.1 We have acknowledged that
the statute permits Pennsylvania courts to exercise
personal jurisdiction over nonresident defendants"to the
constitutional limits of the [D]ue [P]rocess [C]lause of the
[F]ourteenth [A]mendment." 

(citations omitted); see also Renner v. Lanard Toys Limited,

, 279 (3d Cir. 1994) (noting that
"Pennsylvania's long-arm statute authorizes jurisdiction to
the fullest extent permissible under the Constitution"). A
district court's exercise of personal jurisdiction pursuant to
Pennsylvania's long-arm statute is therefore valid as long as
it is constitutional. 

; see also

("[T]his court's inquiry is solely
whether the exercise of personal jurisdiction over the
defendant would be constitutional.") (citation omitted).

Next, we must determine whether the defendant's
contacts with the forum state are sufficient to support
general personal jurisdiction. 

.
When a state has general jurisdiction over a party, that
party can be haled into court in that state "regardless of
whether the subject matter of the cause of action has any
connection to the forum." 

contacts with
the forum must be "continuous and substantial" to
establish general jurisdiction. Provident National Bank v.
California Federal Savings & Loan Association, 

, 437 (3d Cir. 1987) (citations omitted). However, no
party in this case contends that there is a basis for general
_________________________________________________________________

1. Two portions of Pennsylvania's long-arm statute are pertinent to this
case. First, the statute contains a "tort out/harm in" provision which
extends personal jurisdiction to anyone who "[c]aus[es] harm or tortious
injury in th[e] Commonwealth by an act or omission outside th[e]
Commonwealth." 42 Pa. Cons. Stat. Ann. 5322(a)(4). Second, section
5322(b) of the statute states that jurisdiction extends "to all persons
who
are not within the scope of section 5301 [relating to general
jurisdiction]
to the fullest extent allowed under the Constitution of the United States
and may be based on the most minimum contact with this
Commonwealth allowed under the Constitution of the United States."

                               6
jurisdiction in Pennsylvania -- so we are free to consider
solely whether the alternative form of personal jurisdiction
is present: specific personal jurisdiction. Specific
jurisdiction exists when the plaintiff's claim " `is related to
or arises out of the defendant's contacts with the forum.' "

(quoting Dollar Savings Bank v.
First Security Bank of Utah, N.A., 

, 211 (3d
Cir. 1984)).

To make a finding of specific jurisdiction, a court
generally applies two standards, the first mandatory and
the second discretionary. These standards serve to ensure
that defendants receive due process as required by the
Fourteenth Amendment. First, a court must determine
whether the defendant had the minimum contacts with the
forum necessary for the defendant to have "reasonably
anticipate[d] being haled into court there." World-Wide
Volkswagen Corporation v. Woodson, 

, 297
(1980) (citations omitted). Second, assuming minimum
contacts have been established, a court may inquire
whether "the assertion of personal jurisdiction would
comport with `fair play and substantial justice.' " Burger
King Corporation v. Rudzewicz, 

, 476 (1985)
(quoting International Shoe Company v. Washington, 

, 320 (1945)). Although the latter standard need
only be applied at a court's discretion, see 

(citing 

), we have
generally chosen to engage in this second tier of analysis in
determining questions of personal jurisdiction. See, e.g.,
Mesalic v. Fiberfloat Corporation, 

, 701-02 (3d
Cir. 1990) (considering notions of "fair play and substantial
justice" in deciding issue of personal jurisdiction).

A.

1.

We will first consider the application of Pennsylvania's
long-arm statute to Colelli. Pennzoil and its co-appellants
argue that the statute extends jurisdiction to Colelli under
its "tort out/harm in" provision. The statute provides that
personal jurisdiction extends to any person who "[c]aus[es]

                               7
harm or tortious injury in th[e] Commonwealth by an act or
omission outside th[e] Commonwealth." 42 Pa. Cons. Stat.
Ann. 5322(a)(4).2 Pennzoil contends that specific
jurisdiction arises from the alleged tortious injury it
suffered in Pennsylvania, which was caused by Colelli in
Ohio. (Again, no party maintains that there is any basis for
general jurisdiction.) The district court rejected this
contention, concluding that section 5322(a)(4) only applies
to intentional tortfeasors -- not reckless or negligent
tortfeasors as Pennzoil argued. Pennzoil Products Company
v. Colelli & Associates, Inc., 

, 675 (W.D.
Pa. 1997). There is no foundation for this conclusion. The
statute does not contain the modifier "intentional" in its
reference to out-of-state tortfeasors. The statute simply
extends jurisdiction to anyone who causes harm or tortious
injury, intentionally or not, in Pennsylvania through acts or
omissions outside Pennsylvania. We find guidance on this
point from the Supreme Court of Pennsylvania, which has
interpreted the closely related provision of section
5322(a)(3) (which addresses tortfeasors who cause injury in
the state by acts or omissions within the state) as extending
jurisdiction regardless of "what kind of tort is alleged."
Kubik v. Letteri, 

, 1113 n.4 (Pa. 1992)
(citation omitted). If the type of tort is irrelevant when
committed within the state, there could be little reason it
would matter when committed outside the state.

One court of appeals has confronted this exact issue and
reached the same conclusion. In Robinson v. Giarmarco &
Bill, P.C., 

(11th Cir. 1996), the court of appeals
for the Eleventh Circuit had to determine whether Florida's
long-arm statute extended jurisdiction to nonresident
defendants who were being sued for negligent conduct
outside of Florida which resulted in harm in Florida.
_________________________________________________________________

2. We should be cognizant that section 5322(a) only sets forth "examples
of sufficient contact" (e.g., transacting business within the state,
committing a tort within the state, etc.). Dayhoff Inc. v. H.J. Heinz
Company, 

, 1302 (3d Cir.), cert. denied, 

(1996). Since section 5322(b) "further expands the potential bases for
jurisdiction" to the limits of the U.S. Constitution, 

of
examples of sufficient contact in section 5322(a) cannot be considered
exhaustive.

                               8
Although the language of Florida's long-arm statute was not
identical to Pennsylvania's, the Robinson court interpreted
it to "reach[ ] the situation where a foreign tortious act
cause[s] injury in [the forum 

(internal quotation marks and citation omitted). The court
then concluded that the long-arm statute could be used to
assert jurisdiction against parties whose "negligence ha[d]
allegedly caused damage . . . in Florida." 

Robinson to be supportive of our conclusion that a "tort
out/harm in" provision of a long-arm statute cannot be
restricted to intentional tortfeasors if its plain language
gives no indication that it should be so restricted. Thus,
based on the plain language of section 5322(a)(4), as well as
the reasoning of Kubik and Robinson, we conclude that the
district court erred in ruling that Pennsylvania's "tort
out/harm in" statute only extends to intentional tortfeasors.3

The only way Colelli could argue that section 5322(a)(4)
does not apply is by arguing that Pennzoil did not suffer an
injury in Pennsylvania because it is not a Pennsylvania
corporation (i.e., the harm is only "felt" wherever the
corporation is headquartered). That argument, however,
would also be untenable because we already rejected it in
Carty v. Beech Aircraft Corporation, 

(3d Cir.
1982). In interpreting a long-arm statute very similar to
section 5322(a)(4),4 we held that"when a commercial entity
_________________________________________________________________

3. We acknowledge that, even if the "tort out/harm in" portion of
Pennsylvania's long-arm statute did not extend to nonintentional
tortfeasors, the statute could still potentially reach Colelli because it
extends to the due-process limits of the Constitution. See Mellon Bank
(East) PSFS, National Association v. Farino, 

, 1221 (3d Cir.
1992) (citations omitted); Renner v. Lanard Toys Limited, 

,
279 (3d Cir. 1994). However, since the "tort out/harm in" provision
describes the present situation so explicitly and since the district court
partially based its ruling on an application of the "tort out/harm in"
provision, we find it appropriate to consider the proper bounds of that
provision in hearing this appeal.

4. The long-arm statute (which was enacted in the U.S. Virgin Islands) in
Carty v. Beech Aircraft Corporation extended jurisdiction to anyone who
had "caus(ed) tortious injury in th[e] territory by an act or omission
outside th[e] territory and regularly . . . solicit[ed] business or
engage[d]
in any other persistent course of conduct, or derive[d] substantial

                               9
sues for tortious injury to its physical property, the `injury'
takes place for jurisdictional purposes where the property
has been damaged." 

Since Pennzoil claims to
have suffered damage to its refinery equipment in
Pennsylvania, that is where -- for jurisdictional purposes --
we must conclude the alleged injury occurred.

For the foregoing reasons, we conclude that
Pennsylvania's long-arm statute extends personal
jurisdiction to Colelli.

2.

Although we conclude that Pennsylvania's long-arm
statute extends jurisdiction to Colelli, we must still
determine whether the strictures of constitutional due
process (i.e., minimum contacts and notions of "fair play
and substantial justice") would be observed by asserting
jurisdiction.5 We cannot presume that jurisdiction is proper
simply because the requirements of a long-arm statute have
been met. Several courts of appeals have stressed this
point.

For example, in Sculptchair, Inc. v. Century Arts, Ltd., 

(11th Cir. 1996), the court of appeals for the
Eleventh Circuit had to determine whether Florida's long-
arm statute extended jurisdiction to several Canadian
_________________________________________________________________

revenue from goods used or consumed or services rendered in th[e]
territory." 

, 1062 (3d Cir. 1982) (internal quotation marks,
citation and emphasis omitted). Thus, the statute in Carty was not as
far-reaching as the Pennsylvania statute but it operated under the same
principle of extending jurisdiction to foreign tortfeasors.

5. Since the "majority of states (and Puerto Rico) has enacted
jurisdictional statutes that have been interpreted to extend to the limits
of due process, [jurisdictional] analysis frequently is collapsed into a
one-step inquiry: does jurisdiction satisfy due process?" 4 Charles A.
Wright & Arthur R. Miller, Federal Practice and Procedure S 1069 (2d ed.
Supp. 1998). However, as noted earlier, Pennzoil's "tort out/harm in"
argument and the district court's rejection of that argument indicate that
we must consider both the proper application of Pennsylvania's long-arm
statute and the satisfaction of due process requirements -- not just the
latter. See supra note 3.

                               10
defendants. In rendering its decision, the Sculptchair court
described this two-part analysis:

       First we must determine whether the Florida long-arm
       statute provides a basis for personal jurisdiction. If so,
       then we must determine whether sufficient minimum
       contacts exist between the defendants and the forum
       state so as to satisfy "traditional notions of fair play
       and substantial justice" under the Due Process Clause
       of the Fourteenth 

(quoting 

). Thus,
according to Sculptchair, a court must engage in due
process analysis after it concludes that a state's long-arm
statute extends jurisdiction to a defendant.

The court of appeals for the Sixth Circuit expressed the
same understanding of due process in Nationwide Mutual
Insurance Company v. Tryg International Insurance
Company, Ltd., 

(6th Cir. 1996). In a case
involving the application of Ohio's long-arm statute to a
Danish corporate defendant, the Nationwide Mutual court
concluded that "[a] valid assertion of personal jurisdiction
must satisfy both the state long-arm statute, and
constitutional due 

(quoting
Reynolds v. International Amateur Athletic Federation, 

, 1115 (6th Cir.), cert. denied, 

(1994)) (emphasis added). Similarly, the court of appeals for
the Eighth Circuit has stated, "The federal court in a
diversity case must determine whether [a] defendant is
subject to the court's jurisdiction under the state's long-
arm statute, and if so, whether exercise of that jurisdiction
comports with due process." Moog World Trade Corporation
v. Bancomer, S.A., 

, 1384 (8th Cir. 1996)
(applying Missouri's long-arm statute). See also Jobe v. ATR
Marketing, Inc., 

, 753 (5th Cir. 1996)
(considering both state's long-arm statute and
constitutional due process requirements); Metropolitan Life
Insurance Company v. Robertson-Ceco Corporation, 

, 567 (2d Cir.) (same), cert. denied, 

(1996); Viam Corporation v. Iowa Export-Import Trading
Company, 

, 427 (Fed. Cir. 1996) (same).

                               

.

The issue of minimum contacts is rather fact-sensitive in
that it turns on the "quality and nature of a defendant's
activity [in relation to the forum state]." Max Daetwyler
Corporation v. R. Meyer, 

, 298 (3d Cir. 1985)
(citation omitted); see also 

("[Q]uestions of personal jurisdiction do not lend themselves
to categorical determinations."). Nonetheless, despite the
difficulty in formulating bright-line rules in this area, some
basic precepts have evolved in the assessment of minimum
contacts. For example, if a nonresident defendant's contact
with the forum is simply "fortuitous" or "the result of a
single transaction," Max 

, the
minimum-contacts requirement has not been satisfied.
Furthermore, with regard to producers or sellers of goods,
"the mere foreseeability that a product one sells may end
up in the forum state" does not render the seller amenable
to suit in the forum state. 

(citing

, 295). A finding of minimum
contacts demands the demonstration of " `some act by
which the defendant purposely avail[ed] itself of the
privilege of conducting business within the forum State,
thus invoking the protection and benefits of its laws.' "

(quoting Hanson v. Denckla, 

, 253 (1958)).

In many products-liability cases (of which this case is a
sort), the seller does not come in direct contact with the
forum state but does so through intermediaries such as
retailers or distributors. In response to this phenomenon,
courts have developed the "stream of commerce" theory by
which specific jurisdiction is asserted over a nonresident
defendant which injected its goods, albeit indirectly, into
the forum state and either "derived [a] substantial benefit
from the forum state or had a reasonable expectation of
[deriving a substantial benefit from it]." Max 

. Clearly, the stream-of-commerce theory can
appear somewhat abstruse without some definition of its
key terms (e.g., When is a benefit "substantial"? When is an
expectation "reasonable"?).

                               12
In Asahi Metal Industry Company, Ltd. v. Superior Court
of California, Solano County, 

(1987), the
Supreme Court attempted to elucidate the elements of
jurisdiction based on the stream-of-commerce theory.
Unfortunately, the Asahi Metal Court presented three
different conceptions of purposeful availment through the
stream of commerce, none of which was endorsed by a
majority of the Court.6 In Asahi Metal, a California plaintiff
injured in a motorcycle accident in California filed a
products liability suit in California against Cheng Shin, the
Taiwan corporation that manufactured the motorcycle's tire
tube, contending the tube was defective. Cheng Shin
impleaded Asahi Metal Industry Company, Ltd., a Japanese
corporation, seeking indemnification because Asahi had
manufactured the valve assemblies for Cheng Shin's tire
tubes. The plaintiff and Cheng Shin settled, leaving only the
indemnity action between Cheng Shin and Asahi, which
contested jurisdiction.

Asahi had not solicited any business in California and
had no offices, agents or property there. It sold its tube
assemblies to Cheng Shin in Taiwan and had no control
over the distribution system that brought its components
into products eventually sold in California. The California
Supreme Court concluded that Asahi knew that some of the
valve assemblies would be incorporated into tire tubes sold
in California and benefited indirectly from the sale of
products incorporating the components in California. On
this basis, the California Supreme Court sustained
jurisdiction over Asahi.

The Supreme Court reversed that ruling, as all the
Justices agreed that the exercise of personal jurisdiction
over Asahi was disconsonant with notions of "fair play and
substantial justice." 

(discussing
Asahi Metal generally).7 However, the Justices were divided
on the level of minimum contacts necessary for afinding of
_________________________________________________________________

6. The voting breakdown among the Justices was 4-4-1. See generally
Asahi Metal Industry Company, Ltd. v. Superior Court of California,
Solano County, 

(1987).

7. We synopsized the facts, as well as the various analytical frameworks,
of Asahi Metal in 

-82.

                               13
jurisdiction under the stream-of-commerce theory. For this
reason, the Court issued three different methods of
analysis. Justice O'Connor, writing for a plurality of four,
concluded that placement of a product in the stream of
commerce must be accompanied by some "[a]dditional
conduct of the defendant [that] may indicate an intent or
purpose to serve the market in the forum State." Asahi

. Justice O'Connor provided the
following examples of such conduct: "designing the product
for the market in the forum State, advertising in the forum
State, establishing channels for providing regular advice to
customers in the forum State, or marketing the product
through a distributor who has agreed to serve as the sales
agent in the forum State." 

writing for another plurality of four,
disagreed that a finding of such "additional conduct" was
necessary. Noting that the stream of commerce does not
consist of "unpredictable currents or eddies," Justice
Brennan stated that "[a]s long as a participant in this
process is aware that the final product is being marketed in
the forum State, the possibility of a lawsuit there cannot
come as a surprise." 

(Brennan, J., concurring).
This premise led him to conclude:

       A defendant who has placed goods in the stream of
       commerce benefits economically from the retail sale of
       the final product in the forum State, and indirectly
       benefits from the State's laws that regulate and
       facilitate commercial activity. These benefits accrue
       regardless of whether that participant directly conducts
       business in the forum State, or engages in additional
       conduct directed toward the State.

, concurring) (emphasis added).

Justice Stevens, the ninth vote, presented a third
viewpoint in his concurring opinion (which was joined by
Justices White and Blackmun, who also joined Justice
Brennan's concurrence). First, Justice Stevens observed
that the Court's disquisition on minimum contacts was
superfluous since the reversal was based on concerns
about "fair play and substantial justice." 

(Stevens, J., concurring) (internal quotation marks and

                               14
citation omitted). Nonetheless, he felt compelled to voice his
distaste for the belief that "an unwavering line can be
drawn between `mere awareness' that a component will find
its way into the forum State and `purposeful availment' of
the forum's market." 

(Stevens, J., concurring)
(citation omitted). Justice Stevens posited, instead, that a
determination of purposeful availment must be made
considering the following factors: "the volume, the value,
and the hazardous character of the components [placed in
the stream of commerce]." 

, concurring). He
even went so far as to offer a rough estimate of the type of
volume that would suggest purposeful availment: "I would
be inclined to conclude that a regular course of dealing that
results in deliveries of over 100,000 units annually over a
period of several years would constitute `purposeful
availment' . . . ." 

, concurring). Justice
Stevens departed from the formulations of the two plurality
opinions because (1) he did not find Justice O'Connor's
factor of "additional conduct" to be dispositive or even
relevant and (2) he considered the extent of the benefit (e.g.,
in terms of value or volume) derived from the forum State,
a factor irrelevant to Justice Brennan's analysis, to be
highly dispositive.

Obviously, Asahi Metal does not erect any bright-line
guideposts -- and that point is evidenced in the federal
appellate court decisions that have come in its wake. Some
courts of appeals have boldly adopted one of the conflicting
conceptions of minimum contacts via the stream of
commerce. Compare, e.g., Barone v. Rich Brothers Interstate
Display Fireworks Company, 

, 613-15 (8th Cir.
1994) (adopting a position consistent with that of Justice
Brennan) and Ruston Gas Turbines, Inc. v. Donaldson
Company, 

, 420 (5th Cir. 1993) (same) with Boit
v. Gar-Tec Products, Inc., 

, 683 (1st Cir. 1992)
(adopting a position consistent with that of Justice
O'Connor) and Madara v. Hall, 

, 1519 (11th
Cir. 1990) (same). Most courts of appeals, however, have
avoided choosing one position over the other and have
instead decided cases based on facts in the record. See,
e.g., Beverly Hills Fan Company v. Royal Sovereign
Corporation, 

, 1566 (Fed. Cir. 1994); Tobin v.
Astra Pharmaceutical Products, Inc., 

, 543 (6th

                               15
Cir. 1993); Vermeulen v. Renault, U.S.A., Inc. , 

, 1548 (11th Cir. 1993);8Shute v. Carnival Cruise
Lines, 

, 382 n.3 (9th Cir. 1990), rev'd on other
grounds, 

(1991). In our most recent stream-
of-commerce case, Renner, we too did not have occasion to
choose between the O'Connor and Brennan positions
because we concluded that the factual record had to be
developed through further 

.
Consequently, we remanded the case to the district court
without adopting one position or the other on the issue of
minimum contacts based on the stream-of-commerce
theory.

2.

After making a determination with regard to minimum
contacts, a court has the option of evaluating whether
exercising jurisdiction comports with notions of "fair play
and substantial justice." That is, even if a defendant has
the requisite minimum contacts with the forum state, other
factors may militate against exercising jurisdiction. These
"fairness factors" include: "the burden on the defendant,
the forum State's interest in adjudicating the dispute, the
plaintiff's interest in obtaining convenient and effective
relief, the interstate judicial system's interest in obtaining
the most efficient resolution of controversies, and the
shared interest of the several States in furthering
fundamental substantive social policies." 

(quoting 

) (internal
quotation marks omitted).
_________________________________________________________________

8. The court of appeals for the Eleventh Circuit has manifested some
ambivalence in this regard in that it has issued opinions both embracing
Justice O'Connor's standard and declining to adopt either standard.
Compare Vermeulen v. Renault, U.S.A., Inc., 

, 1548 (11th
Cir. 1993) ("Because jurisdiction . . . over [the defendant] in this case
. . .
is consistent with due process under the more stringent `stream of
commerce plus' analysis adopted by the [O'Connor] plurality, we need
not determine which standard actually controls this case.") with Madara
v. Hall, 

, 1519 (11th Cir. 1990) (concluding that exercise
of jurisdiction must satisfy the stream-of-commerce test articulated by
the O'Connor plurality).

                               16
As mentioned earlier, application of the "fair play and
substantial justice" prong is left to a court's discretion. See

. Nonetheless, we typically apply
this second tier of the analysis in resolving issues of
personal jurisdiction. See, e.g., 

(concluding that assertion of personal jurisdiction
comported with notions of "fair play and substantial
justice"). Moreover, we have referred to its application as
mandatory, not discretionary. 

("Having
determined that there were sufficient minimum contacts,
we must determine whether the assertion of personal
jurisdiction accords with notions of `fair play and
substantial justice.' ") (citation omitted) (emphasis added).
The very fact that the Supreme Court precedent most
pertinent to this matter -- Asahi Metal-- was decided on
this basis counsels its application to the present case. This
final step (i.e., assessing the "fairness" of asserting
jurisdiction) concludes a court's jurisdictional analysis.

C.

1.

We now turn to the issue of whether exercising
jurisdiction over Colelli complies with the requirements of
due process under the Constitution. Initially, we must
determine whether Colelli had minimum contacts with
Pennsylvania by selling solvents to Ohio oil producers.
Three facts are pertinent to this determination: (1)
approximately sixty percent of the Penn grade and Corning
grade crude oil produced by the Ohio oil producers was
sold to Pennsylvania refineries; (2) Cam Colelli knew that oil
produced by Colelli's Ohio customers was going to
Pennzoil's refinery in Pennsylvania; and (3) in response to
the 1994 chloride problem, Cam Colelli sent samples of
Colelli solvents to laboratory personnel at Pennzoil's
refinery to preclude future contamination problems.9
_________________________________________________________________

9. Both Pennzoil and Colelli contend that a fourth fact is relevant: i.e.,
Cam Colelli admitted that he had some concerns that silicon in Colelli
solvents could cause problems for some refineries. Pennzoil argues that

                               17
Keeping these facts in mind, we will apply the stream-of-
commerce standards enunciated in Asahi Metal.

Looking first to Justice O'Connor's standard (which is
more stringent than Justice Brennan's), the placement of a
product in the stream of commerce must be accompanied
by some "[a]dditional conduct of the defendant [that] may
indicate an intent or purpose to serve the market in the
forum State." Asahi 

. Justice
O'Connor proffered the following as examples of such
additional conduct: "[1] designing the product for the
market in the forum State . . . [2] establishing channels for
providing regular advice to customers in the forum State."

clearly conformed to Justice O'Connor's
definition of "additional conduct." Sending solvent samples
to Pennzoil's laboratories demonstrated an intent to
"design" a product which could be used to serve the
Pennsylvania refinery market. Furthermore, the record
indicates that Cam Colelli had a number of telephone
conversations with lab personnel at Pennzoil's refinery to
discuss testing procedures and methodology. Thus, Cam
Colelli had established "channels for providing regular
advice to" Pennzoil's personnel in Pennsylvania. Although
Pennzoil was not technically a "customer" of Colelli's (since
Colelli did not sell solvents directly to Pennzoil), Colelli was
obviously motivated by the fact that Pennzoil operated one
of the two major refineries in the state to which the Ohio
producers sent sixty percent of their crude oil. Cam Colelli
admits that he knew Pennzoil held such a significant
portion of the Ohio producers' customer base;10 the
_________________________________________________________________

the admission demonstrates knowledge of the dangers of silicon-tainted
solvents. Colelli, on the other hand, argues that Cam Colelli only thought
that silicon could be problematic because it acts as an anti-foaming
agent, and not because he was aware of any potential for serious
damage. Both of these arguments are irrelevant to our analysis because
they address the merits of Pennzoil's claim, not the issue of
jurisdiction.
Cam Colelli's beliefs about the potential degree of harm do not shed any
light on where, no matter how slight or how severe, he thought that
harm would occur.

10. When asked how he knew that the Ohio producers would send oil to
Pennzoil's refinery, Cam Colelli responded, "The oil producers told me.
There weren't that many refineries. Being that Pennzoil was the biggest,
it was pretty obvious, in a sense." (Emphasis added.)

                               18
"additional conduct" of ensuring that the solvents met
Pennzoil's requirements evinces a desire to satisfy that
portion of the customer base. For these reasons, we
conclude that Justice O'Connor's touchstone of additional
conduct is present in this case. According to Justice
O'Connor's standard, Colelli had the minimum contacts
with Pennsylvania necessary for it to be haled into court in
that state.

Next, we apply the standard articulated by Justice
Brennan. This standard is even more clearly satisfied than
Justice O'Connor's.11 Colelli has "placed goods [i.e.,
solvents] in the stream of commerce [and] benefit[ed]
economically from the . . . sale of the final product[, i.e.,
crude oil, to refineries] in the forum State." 

(Brennan, J., concurring). As such, Colelli "benefit[ed] from
[Pennsylvania]'s laws that regulate and facilitate
commercial activity." 

, concurring).
According to Justice Brennan's standard, therefore, Colelli
had the minimum contacts necessary for Pennsylvania to
exercise jurisdiction.12

In summary, regardless of whether one applies the
O'Connor standard or the Brennan standard, Colelli
purposely availed itself of the laws of Pennsylvania by
deriving financial benefits from its customers' sale of crude
oil to Pennsylvania refineries. The Ohio producers sent
_________________________________________________________________

11. One may note that, since Justice O'Connor's standard is more
demanding than Justice Brennan's, any factual scenario that satisfies
the former will probably satisfy the latter as well. Still, since we have
not
manifested a preference for either of the two standards, the demands of
clarity counsel us to apply both standards explicitly. The clear
satisfaction of both the O'Connor and the Brennan standards obviates
any need to adopt one over the other.

12. Although it is not essential to our analysis, we note that Colelli
even
had minimum contacts under Justice Stevens' standard. The relative
volume and value (two of the three factors central to Justice Stevens'
position) of the silicon-laced oil forwarded to Pennsylvania is not in
dispute: sixty percent of the crude oil generated by the Ohio producers
found its way to Pennsylvania. Also, the "hazardous character" of the
silicon (to property interests if not personal safety) is apparent from
the
damage caused to Pennzoil's refinery. Asahi 

(Stevens, J., concurring).

                               19
most of their oil to Pennsylvania; Colelli indirectly benefited
from the sale to Pennsylvania refineries; Cam Colelli was
aware of that indirect benefit; and Colelli had expressed a
desire to preserve its relationship with at least one
Pennsylvania refinery (Pennzoil's) by conforming its solvents
to the refinery's specifications. For the reasons discussed
above, these facts satisfy the criteria of both Justice
O'Connor and Justice Brennan.13 We therefore conclude
that Colelli did have the minimum contacts needed to
support the exercise of personal jurisdiction in
Pennsylvania.

2.

Finally, having determined that Colelli can be haled into
court in Pennsylvania, we must determine whether such an
exercise of jurisdiction would respect notions of"fair play
and substantial justice." Justice Brennan noted that cases
are "rare . . . in which minimum requirements in the
concept of fair play and substantial justice . . . defeat the
reasonableness of jurisdiction even [though] the defendant
has purposefully engaged in forum activities." 

(Brennan, J., concurring) (quoting 

-78) (internal quotation marks omitted). The present
case is not one of those rare cases described by Justice
Brennan.

None of the "fairness factors" -- the burden on the
defendant, the forum state's interest in adjudicating the
dispute, the plaintiff's interest in obtaining convenient and
effective relief, the interstate judicial system's interest in
obtaining the most efficient resolution of controversies and
the shared interest of the several states in furthering
fundamental social policies -- suggest that exercising
jurisdiction would be unreasonable in this case."This is not
a case where a severe burden is placed on an alien
defendant as in Asahi[ Metal]. Nor does this case involve
one isolated occurrence where the defendant had no
connection with the forum state, as in [Woodson]." Mesalic,
_________________________________________________________________

13. Since the facts of this case satisfy the standards of both Asahi Metal
pluralities, we do not have occasion to select one standard or the other
as the law of this circuit.

                               

. Colelli, which comprises two Ohio
corporations, has been haled into district court in a state
with which Ohio shares a border. Far from being isolated,
Colelli's connection with the forum state has been bolstered
by steady shipments of crude oil across that border.
Furthermore, the suit was brought in the Western District
of Pennsylvania, the district closest to Ohio. If we were to
deem litigation in the Western District of Pennsylvania to be
unreasonably onerous for Ohio defendants, we would create
an unacceptable implication: i.e., that no foreign defendant
could be haled into court in Pennsylvania -- because any
burden borne by Ohio defendants would be the same for
foreign defendants from other neighboring states and even
greater for foreign defendants who are not domiciled in a
neighboring state. Thus, we conclude that Colelli would not
endure an unreasonable inconvenience by litigating this
matter in Pennsylvania. See Interfirst Bank Clifton v.
Fernandez, 

, 285 (5th Cir.) ("The situation is
unlike that in Asahi[ Metal], where the defendant, a
Japanese corporation, would have had to travel to
California and contend with a foreign legal system.[The
defendant in this case] was asked only to travel to a
neighboring state.") (citation omitted), amended on other
grounds, 

(5th Cir. 1988).

When the district court declined to exercise jurisdiction
over Colelli, Pennzoil refiled this action against Colelli in
district court in Ohio. Considering the fact that several
Ohio corporations are involved, one cannot deny Ohio's
interest in this matter. Yet, Pennsylvania also has an
interest in this dispute, since the only alleged harm
occurred in Pennsylvania and relates to the oil industry --
an industry which is important for any state economy.
Whatever the degree of Pennsylvania's interest in this
matter, it cannot be considered any less than Ohio's.
Finally, we cannot conceive of any judicial inefficiency or
impairment of a substantive social policy that would result
from exercising jurisdiction in Pennsylvania.

Indeed, Colelli itself does not even explain with any
specificity how exercising jurisdiction would offend notions
of "fair play and substantial justice." No claims of
exorbitant travel expenses, unavailability of evidence,

                               21
drains on judicial resources or countervailing state
interests have been made. Instead, Colelli merely argues
that any exercise of jurisdiction without minimum contacts
cannot comply with notions of "fair play and substantial
justice." However, since we conclude that minimum
contacts are present in this case, we reject this argument.
Concomitantly, we conclude that exercising jurisdiction
would be in accord with notions of "fair play and
substantial justice."

IV.

To recapitulate, we conclude that Pennsylvania's long-
arm statute properly extends personal jurisdiction to Colelli
and that the exercise of such jurisdiction satisfies the
requirements of constitutional due process. Accordingly, we
will reverse the judgment of the district court and remand
for further proceedings consistent with this opinion.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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