Stutts v. De Dietrich Group

• Decision Date: 21 November 2006
• Docket Number: No. 03-CV-4058 (ILG).,03-CV-4058 (ILG).
• Parties: James STUTTS, et al., Plaintiffs, v. The DE DIETRICH GROUP, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

465 F.Supp.2d 156

James STUTTS, et al., Plaintiffs, v. The DE DIETRICH GROUP, et al., Defendants.

No. 03-CV-4058 (ILG).

United States District Court, E.D. New York.

November 21, 2006.

COPYRIGHT MATERIAL OMITTED

Gary B. Pitts, Pitts & Associates, Houston, TX, Kenneth F. McCallion, McCallion & Associates LLP, New York, NY, for Plaintiffs.

Jamison A. Diehl, Akin, Gump, Strauss, Hauer & Feld, LLP, Brian Andrew Bender, Judi Abbott Curry, Harris Beach PLLC, Joshua Ethan Kurland, Genevieve Ann Pope, Frederick T. Davis, Debevoise & Plimpton LLP, Kenneth M. Kramer, Shearman & Sterling, Leslie F. Ruff, Biedermann, Hoenig, Massamillo & Ruff P.C., Michael Orth Ware, Mayer, Brown, Rowe, & Maw, LLP, New York, NY, Lance T. Lackey, Akin, Gump, Strauss, Hauer & Feld, LLP, Austin, TX, Steven M. Zager, Akin, Gump, Strauss, Hauer & Feld, LLP, Houston, TX, Charles F. Rysavy, McCarter & English, Newark, NJ, William J. Cremer, Cremer, Kopon, Shaugnessy & Spina, LLC, Chicago, IL, for Defendants.

Robert A. Schultz, Law Office of John P. Humphreys, Melville, NY, for Intervenor.

MEMORANDUM AND ORDER

GLASSER, District Judge.

This case involves the supply of chemical weapons and manufacturing equipment to Iraq during the Gulf War in 1991. Plaintiffs, Gulf War Veterans and others similarly situated, allege that they were injured by exposure to chemical weapons that defendants manufactured or assisted in providing to Iraq. Pending before the Court are the motions of defendants Buchi Labortechnik AG ("Buchi AG") and De Dietrich Process Systems, S.A. ("DDPSA") to dismiss the complaint based on lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Additionally, plaintiffs have moved for an order granting them jurisdictional discovery and leave to amend the complaint pursuant to Fed. R.Civ.P. 15(a). The Court will consider each motion in turn.

FACTS

Because a motion to dismiss for lack of personal jurisdiction is "inherently a matter requiring the resolution of factual issues outside of the pleadings," material submitted by the parties can be considered and the Court draws the following facts from those documents. See Pilates, Inc. v. Pilates Inst, Inc., 891 F.Supp. 175, 178 n. 2 (S.D.N.Y.1995). In the complaint,¹ plaintiffs allege that they were injured when Iraqi ammunition dumps were blown up by United States military forces, releasing toxic chemical agents into areas where the plaintiffs were stationed. Compl. ¶5. Plaintiffs assert claims against two classes of defendants. The "Supplier Defendants" allegedly sold chemical weapons and manufacturing equipment to Saddam Hussein's regime in Iraq with the knowledge that Hussein was using the chemical weapons "against his own people and citizens of neighboring states." Compl. ¶3. The "Bank Defendants" allegedly aided and abetted Saddam Hussein and the Supplier Defendants by providing letters of credit to the Hussein regime in favor of the Supplier Defendants with knowledge of the parties and goods involved in the sales transactions for which they issued the letters of credit. Compl. ¶4. Both Buchi AG and DDPS-SA are classified in the complaint as "Supplier Defendants."

DISCUSSION

I. Personal Jurisdiction Standard

A plaintiff bears the burden of establishing jurisdiction over a defendant on a motion to dismiss a complaint under Rule 12(b)(2) of the Federal Rules of Civil Procedure. See Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996). Although the plaintiff must ultimately establish jurisdiction over the defendant by a preponderance of the evidence, until an evidentiary hearing is held the plaintiff need only make a prima facie showing of jurisdiction. See Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990); Eoffritzfor Cutlery v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). A plaintiff may rely on the pleadings and affidavits to meet its burden. See In re Tamoxifen Citrate Antitrust Litig., 262 F.Supp.2d 17, 21 (E.D.N.Y.2003) (Glasser, J.) (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). As in this case, where an evidentiary hearing has not been held, a district court must view the pleadings in the light most favorable to the plaintiff. See id.

II. Buchi AG's Motion to Dismiss

Defendant Buchi AG is engaged in "the business of manufacturing laboratory tools for the pharmaceutical and food industries " Buchi AG Mem. at 1. It is incorporated under the laws of Switzerland and maintains its principal place of business in Flawil, Switzerland. See Declaration of Christian Radloff ("Radloff Decl.") ¶12. In moving to dismiss the complaint, Buchi AG contends that plaintiffs fail to allege sufficient facts to support this Court's jurisdiction over it. In particular, defendant avers that the complaint's lone allegation regarding Buchi AG's contacts with New York—that Buchi AG "is a Swiss company that does business in New York State"—is erroneous and insufficient to confer jurisdiction over it under New York law. Compl. ¶39; Buchi AG Mem. at 1. Defendant also opposes plaintiffs' request for leave to amend the complaint to include jurisdictional allegations about the New York contacts of Buchi AG's Delawarebased subsidiary, Buchi Analytical Inc. ("Buchi Analytical"). Defendant contends that Buchi Analytical is wholly independent from it and does not do business in New York. Buchi AG Mem. at 2. Buchi AG argues, therefore, that plaintiffs' proposed amended allegations are insufficient to confer jurisdiction over it. Buchi AG Mem. at 2. Finally, defendant argues that this Court should deny plaintiffs' request for jurisdictional discovery because plaintiffs have failed to make out a prima facie case of jurisdiction over defendant.

A. Buchi AG's "Presence" in New York

Plaintiffs assert that defendant is subject to jurisdiction under New York law. On a pending motion to dismiss for lack of personal jurisdiction, the district court must first determine whether it has jurisdiction under the laws of New York² and then whether the exercise of that jurisdiction would comport with constitutional due process. Plaintiffs contend that Buchi AG is subject to the general jurisdiction of this Court pursuant to N.Y. C.P.L.R. 301³ because it was "doing business" in New York.⁴ A foreign corporation—ie., one that is neither incorporated in New York nor licensed to do business in New York—is "doing business" in New York within the meaning of the statute "if it is engaged in such a continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction." Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 536, 281 N.Y.S.2d 41, 227 N.E.2d 851 (1967) (internal quotations omitted). See also Hoffritz, 763 F.2d at 58 (a foreign corporation is "doing business" under N.Y. C.P.L.R. 301 "if it does business in New York not occasionally or casually, but with a fair measure of permanence and continuity"). Courts considering this issue analyze the following factors: whether the corporation has an office in New York; has employees in New York; maintains a bank account or other property in the state; engages in public relations in New York; and solicits business in the state. See Frummer, 19 N.Y.2d at 537, 281 N.Y.S.2d 41, 227 N.E.2d 851 (internal quotations omitted).

Plaintiffs fail to allege sufficient facts suggesting that Buchi AG has any direct contacts with New York. Indeed, in the complaint, plaintiffs merely allege that it is a "Swiss company doing business in New York." Compl. ¶93. These allegations fall far short of establishing that Buchi AG is engaged in "a continuous and systematic course of business" in New York. See Frummer, 19 N.Y.2d at 537, 281 N.Y.S.2d 41, 227 N.E.2d 851. To the contrary, a sworn affidavit from Christian Radloff, CEO of Buchi AG, makes clear that Buchi AG has no direct contacts with New York. Radloff declares that Buchi AG is organized under the laws of Switzerland and maintains its principal place of business in Switzerland. Radloff Decl. ¶1. Buchi AG does not conduct business in New York. Id. ¶2. Moreover, it does not have: an office, a plant or other center of business; a registered agent for service of process; a bank account; a post office box; or a phone listing in New York. Id. ¶3. Nor does Buchi AG maintain property in New York. It has never paid New York state taxes or franchise fees; has never commenced a law suit in New York; and does not have persons or entities in New York that control its activities. Id. ¶¶4-7. Given that plaintiffs allege no facts justifying even an inference that defendant is "present" in New York under C.P.L.R. 301 and Frummer, they fail to present a prima facie case of jurisdiction over Buchi AG in this Court.

B. The "Presence" of Defendant's Subsidiary

Plaintiffs further contend that the New York contacts of defendant's subsidiary, Buchi Analytical, are attributable to Buchi AG because the subsidiary is either an "agent" or a "mere department" of defendant. PI. Opp. at 7. Thus, plaintiffs argue, Buchi AG can be deemed to be "doing business" in New York because of its subsidiary's presence in this state.⁵

In the complaint, plaintiffs make no factual allegations about Buchi Analytical. Indeed, they do not even mention Buchi Analytical. Instead, plaintiffs seek leave to amend the complaint to add allegations regarding personal jurisdiction over Buchi Analytical. Pursuant to Fed.R.Civ.P. 15(a), "A party may amend the party's pleading once as a matter of course at anytime before a responsive pleading is served.... Otherwise a party may amend the party's pleading only by leave of court...." Plaintiffs must obtain leave of the court because they have already twice amended the complaint. In the declaration of Kenneth F. McCallion, Esq., which accompanies plaintiffs' opposition to defendant's motion, plaintiffs set forth additional allegations they seek to include in a proposed amended complaint. As discussed in greater...