ABKCO Industries, Inc. v. Lennon

• Decision Date: 17 October 1975
• Citation: 85 Misc.2d 465,377 N.Y.S.2d 362
• Parties: ABKCO INDUSTRIES, INC., Plaintiff, v. John LENNON et al., Defendants. ABKCO INDUSTRIES, INC., Plaintiff, v. APPLE CORPS LTD. et al., Defendants.
• Court: New York Supreme Court

Page 362

377 N.Y.S.2d 362

85 Misc.2d 465

ABKCO INDUSTRIES, INC., Plaintiff, v. John LENNON et al., Defendants.

ABKCO INDUSTRIES, INC., Plaintiff, v. APPLE CORPS LTD. et al., Defendants.

Supreme Court, Special Term, New York County, Part I.

Oct. 17, 1975.

Supplemental Decision Nov. 25, 1975.

Rosenman, Colin, Kaye, Petschek, Freund & Emil, New York City, for plaintiff; Max Freund, Robert W. Gottlieb, Douglas Gordon, New York City, of counsel.

Cleary, Gottlieb, Steen & Hamilton, by Richard W. Hulbert, New York City, for defendants.

JACOB MARKOWITZ, Justice:

Motions under calendar numbers 143 and 145 (Index Number 456/74) and 146 and 147 (Index Number 19258/73), all of July 25, 1975, are consolidated for joint disposition.

In ABKCO Inc. (ABKCO) v. John Lennon, et al. (the 1973 Beatles action) and ABKCO Inc. v. Apple Corps, et al. (the 1974 Beatles action), the plaintiff generally seeks to recover against the various defendants, monies due and owing for services rendered, commissio earned and expenses advanced. Certain additional causes of action are also alleged in the 1973 Beatles action. In total, plaintiff's various claims total more than $24,000,000. As a consequence of the institution of these law suits in New York, defendants, other than Paul McCartney and the John Does, moved to dismiss the complaints on various grounds, to wit: lack of in personam jurisdiction over their corporate or individual person; for forum non conveniens; legal insufficiency of the respective pleadings; non-joinder of necessary parties; and in addition seek to stay the proceedings because of a prior action pending between the parties in England and to generally stay certain pretrial proceedings. Lastly, movants seek an order disqualifying ABKCO's counsel from appearing or representing its client in either lawsuit.

By order of this Court dated July 1, 1974, and upon consent of the parties the jurisdictional issues being of prime consideration were referred to a special referee to hear and report, together with recommendations. Dean Joseph M. McLaughlin accepted appointment by this Court. In the interval, ultimate disposition of the various related applications for stay or dismissal was held in abeyance. Dean McLaughlin has concluded his hearings and made his reports. The respective parties' motions for either confirmation or rejection of his various findings and recommendations and for resolution of those matters held in abeyance are now before this Court.

JURISDICTIONAL QUESTIONS

Python Music Publishing Co. Inc. and Apple Music Publishing Co. Inc., defendants in the 1973 Beatles action, and Apple Corps Ltd., Subafilms Ltd.; Apple Publishing Ltd., Harrisongs Ltd.; Startling Music Ltd., defendants in the 1974 Beatles action, were all served pursuant to CPLR 301, as was Richard Starkey (Starkey), a defendant in both actions. George Harrison was later personally served in New York and consequently the motion as to him was withdrawn. Simply the issue is whether any or all of these defendants 'do business' in New York to an extent that justifies this Court to exert its jurisdiction over them. Resolution of a simple issue unfortunately in this situation involves some rather complex factual considerations.

Logically, examination of these problems required an in depth analysis of the nature and extent of defendants' contacts with New York. (1) Did these defendants transact busine in New York with a fair measure of permanence and continuity either personally, through an agent or representative, or in the form of some alter ego? (2) Would retention of jurisdiction be repugnant to accepted notions of fair play and due process? (See, generally: Frummer v. Hilton Hotels, Int. Inc., 19 N.Y.2d 533, 536--537, 281 N.Y.S.2d 41, 43--44, 227 N.E.2d 851, 852--853, cert. den. 389 U.S. 923, 88 S.Ct. 241, 19 L.Ed.2d 266; Mtr. of La Belle Creole Int., S.A. v. Attorney-General, 10 N.Y.2d 192, 197, 219 N.Y.S.2d 1, 5--6, 176 N.E.2d 705, 707--708; Tauza v. Susquehanna Coal Co., 220 N.Y. 259 at p. 267, 115 N.E. 915 at p. 917; Simonson v. International Bank, 14 N.Y.2d 281, at pp. 285--288, 251 N.Y.S.2d 433, at pp. 435--439, 200 N.E.2d 427, at pp. 428--432; Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283; Busch v. Drexel Firestone, Inc., CCA 2d, April 6, 1975, and Restatement 2d Conflict of Laws § 35). (3) Could jurisdiction be retained under circumstances where the cause of action arose outside of New York and is unrelated to the business transacted here? (See: Bryant v. Finnish National, 15 N.Y.2d 426, 260 N.Y.S.2d 625, 208 N.E.2d 439; Berner v. United Airlines, 3 N.Y.2d 1003, 170 N.Y.S.2d 340, 147 N.E.2d 732, and compare those with Flexner v. Farson, 248 U.S. 289, 39 S.Ct. 97, 63 L.Ed. 250; Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091; Doherty & Co. v. Goodman, 294 U.S. 623, 55 S.Ct. 553, 79 L.Ed. 1097; International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95; The Restatement (2d) Conflict of Laws, supra; Foster, Long-Arm Jurisdiction, 47 F.R.D. 73 and note CPA Section 229--b with Wis.Stat.Annot. § 262.05(1)(d).)

The Referee's accurate evaluation of existing New York law required him to draw the over-all legal conclusion that the courts of this State have not imposed its jurisdiction upon a non-resident individual where, on similar facts, it would unquestionably do so if it were dealing with a foreign corporation or recognized commercial entity. Thus, this Court is faced not only with the problem of evaluating Dean McLaughlin's findings and recommendations in the light of established jurisdictional concepts, but also must consider whether certain concepts, as applied to non-resident individuals, should under all circumstances remain inviolable.

THE CORPORATE DEFENDANTS

An amazing corporate web was woven to exploit the endeavors of the Beatles and others. The entire corporate system is a complex interwoven structure of which the named corporate defendants form only part. Separating and unravelling the various jurisdictional threads which would connect or tend to connect these entities to New York was no mean task. The report and its evaluations were extremely The motion to dismiss by Apple Corps Ltd. and Harrisongs Ltd. is denied. The facts sustain the conclusion that Apple-NY and Apple-Cal, corporations both doing business in New York are merely alter egos to Apple Corps Ltd., an English entity. Harrisongs Ltd., also an English entity, on the other hand, is shown to have engaged in activities in its own behalf and through agents and representatives sufficient to support a finding that it also is doing business here. Plaintiff has conceded that there is no jurisdiction over Python Music Publishing Co. Inc. and this Court is convinced as to the remaining corporate defendants that their contacts with New York are either remote or legally insufficient to consider for jurisdictional purposes. The motion to dismiss as to all other moving corporations is consequently granted.

thorough. Upon review, I do not hesitate to confirm the findings of the Referee as to the corporate defendants in all respects.

THE INDIVIDUAL DEFENDANT-STARKEY

The statements in the Referee's report in the 1973 action that 'CPLR 301 adds nothing to CPLR 302(a) as far as the individual defendant is concerned' (p. 9) and that 'jurisdiction over an individual cannot rest on a finding that he is doing business in this State unless the cause of action arises out of that business' (ibid.) may well represent an accurate exposition of case law to date. But Starkey does do business here. In all but the physical, defendant Starkey is here, pervasively, unmistakably, undeniably, continuously, and substantially. Consequently, plaintiff asserts that such facts support the legal conclusion that he may be sued upon any cause of action whatsoever whether arising here or without the State.

New York heretofore faced with this problem held that jurisdiction could only be established over a non-resident individual where he is doing business here And the action arises out of that business (CPA Section 229--b; Tomaselli v. Martens, 283 App.Div. 742, 127 N.Y.S.2d 529). The CPLR made no explicit extension of jurisdiction, but its legislative drafters allowed the courts latitude to develop prior concepts (Weinstein, Korn & Miller, N.Y. Civil Practice § 301.11, pp. 3--19). Certainly, as our attitude toward the corporate defendants indicates, a corporation or partnership could be sued here even though the action arose outside the State and is unrelated to the business transacted here (see also Pine & Co. v. McConnell, 298 N.Y. 27, 30, 80 N.E.2d 137, aff'g 273 App.Div. 218, 223, 76 N.Y.S.2d 279, 283--284). The problem is whether we are ready, or, considering accepted notions of fair play, if there is reason, to subject a non-resident to jurisdiction under like circumstances. It is unquestionable as emphasized by the Referee in his report tht such action would be constitutional and not offend existing notions of due process (Flexner v. Farson, 248 U.S. 289, 39 S.Ct. 97, 63 L.Ed. 250; Doherty & Co. v. Goodman, 294 U.S. Dean McLaughlin was reluctant to advise a departure from established principle. I do not find myself unwilling to do so. An individual's constitutional rights are not invaded if maintenance of the suit does not offend traditional notions of fair play and substantial justice (International Shoe Co. v. Washington, supra, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95; Hanson v. Denckla, supra). From a practical viewpoint, imposition of jurisdiction upon Starkey, albeit constitutional, is not additionally onerous since he admittedly does do business here and draws substantial revenues from the State. He is 'here' to suit his various commercial activities and interests. In fact his professional mobility is such that he makes appearances and does business in other parts of the United States, as well as Europe. It would not be an unwarranted...