175 F.3d 236 (2nd Cir. 1999), 98-7827, Kernan v. Kurz-Hastings, Inc.

Docket Nº:Docket No. 98-7827.
Citation:175 F.3d 236
Party Name:Lillian KERNAN and Harold Kernan, Plaintiffs-Appellees, v. KURZ-HASTINGS, INC., Defendant-Third-Party Plaintiff-Appellee, v. Forbes Products Corporation, Third-Party Defendant-Appellee, and Navitas Company, Ltd., Third-Party Defendant-Appellant.
Case Date:April 15, 1999
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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175 F.3d 236 (2nd Cir. 1999)

Lillian KERNAN and Harold Kernan, Plaintiffs-Appellees,


KURZ-HASTINGS, INC., Defendant-Third-Party Plaintiff-Appellee,


Forbes Products Corporation, Third-Party Defendant-Appellee,


Navitas Company, Ltd., Third-Party Defendant-Appellant.

Docket No. 98-7827.

United States Court of Appeals, Second Circuit

April 15, 1999

        Argued Feb. 26, 1999.

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        Robert W. Littleton, Wilson, Elser, Moskowitz, Edelman & Dicker, New York, N.Y. (Bruce Ainbinder and Michael Bai, on the brief), for third-party defendant-appellant.

        Gordon D. Tresch, Feldman, Kieffer & Herman, LLP, Buffalo, N.Y. (Ann W. Herman, on the brief), for defendant-third-party plaintiff-appellee.

        Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria, Buffalo, NY, for plaintiffs-appellees.

        Kevin M. O'Neill, Kamysz, Cotter, O'Neill & Hamberger, Buffalo, NY, for third-party-defendant-appellee.

        Before: WALKER, POOLER, and HEANEY, [*] Circuit Judges.

        JOHN M. WALKER, Jr., Circuit Judge.

        This case presents the question of whether a New York court has personal jurisdiction over a Japanese manufacturer of a machine said to have caused plaintiff's injuries in circumstances where the manufacturer's distributor in Pennsylvania sold the machine to plaintiff's employer in New York. Third-party defendant Navitas Company, Ltd. appeals from an order of the United States District Court for the Western District of New York (Carol E. Heckman, Magistrate Judge ) denying its motion pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss the third-party indemnity action against it for lack of personal jurisdiction. In accordance with 28 U.S.C. § 636(c), all parties to this action consented to having Magistrate

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Judge Heckman conduct all proceedings in the case. For the reasons that follow, we affirm.


        This case began as a product liability action arising out of personal injuries allegedly sustained by plaintiff Lillian Kernan on October 15, 1992, while she was operating a hot stamping press at Forbes Products Corporation in Dansville, New York. Plaintiff and her husband Harold Kernan filed the action on September 20, 1995 in New York State Supreme Court against defendant-third-party plaintiff, Kurz-Hastings, Inc. On October 20, 1995, Kurz-Hastings, a Pennsylvania corporation that sold the hot stamping press in question to Forbes, removed the action to the United States District Court for the Western District of New York on the basis of that court's diversity jurisdiction. See 28 U.S.C. § 1332.

        On November 27, 1996, Kurz-Hastings filed a third-party complaint for contribution and indemnification against Forbes as Ms. Kernan's employer, and against Navitas Co., Ltd., the Japanese manufacturer of the press in question that sold and shipped the press to Kurz-Hastings. Navitas filed an answer to the third-party complaint on March 11, 1997, in which it asserted several affirmative defenses, including lack of personal jurisdiction. Navitas admitted that it manufactured, partially designed, and assembled the hot stamping press.

        On October 31, 1997, Navitas moved to dismiss the third-party complaint against it for lack of personal jurisdiction. The district court denied the motion and certified the question to this court pursuant to 28 U.S.C. § 1292(b). We accepted the certification and this appeal followed.


       I. The Motion to Dismiss in the District Court

        The motion to dismiss by Navitas in the district court was accompanied by an affidavit from the company's President, Nubuo Arita, stating that Navitas is a corporation existing under the laws of Japan with its principal place of business in Japan; that Navitas is not licensed or registered to do business in New York, nor has it ever directly transacted or solicited business in New York; and that Navitas has never provided any services nor entered into any contract in New York.

        Arita's affidavit states that, with respect to the printing press at issue, Navitas had an oral agreement with Kurz-Hastings to manufacture the model of printing press at issue but had no specific "knowledge of what would become of the subject press machine after it was sold to Kurz-Hastings in Pennsylvania, beyond the general knowledge that Kurz Hastings would resell it somewhere in Pennsylvania or one of the other 49 states in the United States."

        In opposition to the motion to dismiss, Kurz-Hastings submitted the affidavit of its Vice President of Sales, Joseph D. McNamara. The McNamara affidavit states that on April 22, 1976, Kurz-Hastings entered into a contract with Navitas's corporate predecessor, Tahei Industries Co., Ltd., under which Tahei granted Kurz-Hastings the exclusive right to sell and promote Tahei's products in North America; and that in January 1979, Kurz-Hastings sold the machine in question to Forbes. Attached to the McNamara affidavit was a copy of the exclusive sales agreement. In addition to specifying that Kurz-Hastings would have the exclusive right to sell Tahei's products in any country other than 17 specified Asian countries, the agreement provided for the exchange of information for the purposes of developing or producing new machines and for either party to notify the other three months in advance of revising prices.

        Pursuant to the agreement, between 1976 and 1981, Kurz-Hastings sold 168 hot stamping presses manufactured by Tahei;

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however, the record does not specify where these machines (other than the machine at issue) were sold. Additional machines were sold after 1981, but the record contains no further information as to those sales.

        In a thorough opinion, Magistrate Judge Heckman denied Navitas's motion to dismiss, holding that Navitas was subject to personal jurisdiction in New York pursuant to the state's long-arm statute, N.Y.C.P.L.R. § 302(a)(3)(ii), and that this exercise of jurisdiction was consistent with the requirements of due process. See Kernan v. Kurz-Hastings, Inc., 997 F.Supp. 367, 374, 379 (W.D.N.Y.1998). This interlocutory appeal followed.

       II. The Appeal

        Some basic principles govern an appeal from a district court's grant or denial of personal jurisdiction. "On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996) (citing Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994)). Where, as here, no evidentiary hearing has been held but the parties have conducted extensive discovery into the third-party defendant's contacts with the forum state, " 'the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by [the ultimate trier of fact], would suffice to establish jurisdiction over the defendant.' " Id. at 567 (alteration in original) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990)). Thus, in reviewing de novo the magistrate's denial of Navitas's motion to dismiss for lack of personal jurisdiction, we accept as true all of Kurz-Hastings's averments of jurisdictional facts. See id.; see also CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364-65 (2d Cir.1986).

        It is by now well-established that

the amenability of a foreign corporation to suit in a federal court in a diversity action is determined in accordance with the law of the state where the court sits, with "federal law" entering the picture only for the purpose of deciding whether a state's assertion of jurisdiction contravenes a constitutional guarantee.

        Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir.1963). Accordingly, a district court must conduct a two-part inquiry when considering a motion to dismiss for lack of personal jurisdiction. "First, it must determine whether the plaintiff has shown that the defendant is amenable to service of process under the forum state's laws; and second, it must assess whether the court's assertion of jurisdiction under these laws comports with the requirements of due process." Metropolitan Life, 84 F.3d at 567 (citing Savin v. Ranier, 898 F.2d 304, 306 (2d Cir.1990)).

        A. New York's Long-Arm Statute

        The parties agree that the only possible basis for jurisdiction over Navitas under New York's long-arm statute is § 302(a)(3)(ii). It states in pertinent part:

As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent:


  1. commits a tortious act without the state causing injury to person or property within the state, ... if he


    (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.

            § 302(a)(3)(ii). The parties agree further that the analysis of whether jurisdiction is proper under § 302(a)(3)(ii) reduces to the question of whether Navitas "expect[ed] or should reasonably [have] expect[ed]" that

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    its actions would have consequences in New York.

            "The test of whether a defendant expects or should reasonably expect his act to have consequences within the State is an objective rather than subjective one." Allen v. Auto Specialties Mfg. Co., 45 A.D.2d 331, 357 N.Y.S.2d 547, 550 (3d Dep't 1974). New York courts...

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