Visual Sciences, Inc. v. Integrated Communications Inc.

• Decision Date: 21 September 1981
• Docket Number: No. 1793,D,1793
• Citation: 660 F.2d 56
• Parties: VISUAL SCIENCES, INC., individually and on behalf of itself and all other stockholders of Integrated Communications Incorporated, Plaintiff-Appellee, v. INTEGRATED COMMUNICATIONS INCORPORATED, Duane C. Harden, Richard Haden, Allen B. Neuendorf, Alan W. Robinson, Allan W. Peddle, and Betacom Corporation, Defendants, Duane C. Harden, Richard Haden, Allen B. Neuendorf and Betacom Corporation, Defendants-Appellants. ocket 81-7456.
• Court: U.S. Court of Appeals — Second Circuit

Page 56

660 F.2d 56

VISUAL SCIENCES, INC., individually and on behalf of itself and all other stockholders of Integrated Communications Incorporated, Plaintiff-Appellee, v. INTEGRATED COMMUNICATIONS INCORPORATED, Duane C. Harden Richard Haden, Allen B. Neuendorf, Alan W Robinson, Allan W. Peddle, and Betacom Corporation, Defendants Duane C. Harden, Richard Haden, Allen B. Neuendorf and Betacom Corporation, Defendants-Appellants.

No. 1793, Docket 81-7456.

United States Court of Appeals Second Circuit.

Argued Aug. 11, 1981.

Decided Sept. 21, 1981.

Daniel J. Sullivan, New York City (Murray, Hollander, Sullivan & Bass, New York City), for defendants-appellants.

Henry J. Forman, Jr., New York City (Satterlee & Stephens, New York City), for plaintiff-appellee.

Before VAN GRAAFEILAND and KEARSE, Circuit Judges, and MARKEY,C.C.P.A. ^*

VAN GRAAFEILAND, Circuit Judge:

This is an appeal from an order of the United States District Court for the Eastern District of New York (Costantino, J.) entered July 13, 1981, granting plaintiff-appellee's motion for a preliminary injunction and denying the motions of defendants-appellants, Duane C. Harden and Betacom Corporation to dismiss the second amended complaint for lack of personal jurisdiction. Because the matter is properly before us on appellants' appeal from the temporary injunction order, we may consider appellants' attack on the district court's order denying their motion to dismiss for lack of jurisdiction. United States v. First National City Bank, 321 F.2d 14, 17 n.3 (2d Cir. 1963), rev'd on other grounds, 379 U.S. 378, 85 S.Ct. 528, 13 L.Ed.2d 365 (1965).

In the affidavits submitted in support of the parties' several motions, many essential facts were sharply disputed. The parties disagreed as to the existence and nature of an alleged contract between Visual Sciences and defendant Harden. They disagreed as to the purpose of trips by Harden, a citizen of Minnesota, to New York. They also disagreed as to the facts necessary to confer standing on plaintiff to pursue its derivative stockholder's action on behalf of Integrated Communications, Inc. The district court ordered a combined hearing on the motions but terminated it abruptly before defendants had cross-examined plaintiff's witnesses or presented evidence of their own.

On a motion for a preliminary injunction an adequate presentation of the facts is necessary. Where, as here, essential facts are in dispute, there must be a hearing, Forts v. Ward, 566 F.2d 849 (2d Cir. 1977), and appropriate findings of fact must be made. Fed.R.Civ.P. 52(a). These findings are not conclusive, and may be altered after a trial on the merits. Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 1953). However, tentative or not, findings must be made.

Moreover, if the hearing is to serve its intended purpose of illuminating and resolving factual issues, it must be conducted fairly. The opposing party must be afforded the opportunity to cross-examine the moving party's witnesses and to present evidence. Because appellants were not given an opportunity to fully cross-examine appellee's witnesses and present evidence and because the district court made no adequate findings of fact, the order granting the preliminary injunction must be vacated.

Ordinarily, in passing upon a defendant's Rule 12(b) motion to dismiss for lack of jurisdiction, a district court may exercise more procedural leeway. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). The court may determine the motion on the basis of affidavits alone; it may grant discovery; it may conduct a preliminary hearing on the merits. Id. In the absence of a full-blown hearing on the merits, plaintiff need make only a prima facie showing that the court has jurisdiction under a long-arm statute. United States v. Montreal Trust Co., 358 F.2d 239, 242 (2d Cir.), cert. denied, 384 U.S. 919, 86 S.Ct. 1366, 16 L.Ed.2d 440 (1966). Such a showing will not prevent the defendant from challenging the jurisdictional facts on the trial, and the plaintiff must then prove the facts supporting jurisdiction by a preponderance of the evidence. United States v. Montreal Trust Co., supra, 358...