Ball v. Metallurgie Hoboken-Overpelt, S.A.

Citation902 F.2d 194
Decision Date27 April 1990
Docket NumberNo. 624,HOBOKEN-OVERPEL,D,S,624
PartiesBruce BALL, et al., Plaintiffs-Appellants, v. METALLURGIEA., Defendant-Appellee. ocket 89-7826.
CourtU.S. Court of Appeals — Second Circuit

Susan Cummins Doan, Washington, D.C. (Ashcraft & Gerel, Washington, D.C., and Anthony Endieveri, Camillus, N.Y., on the brief), for plaintiffs-appellants.

James L. Chivers, Binghamton, N.Y. (James F. Lee and Paul T. Sheppard, Hinman, Howard & Kattell, Binghamton, N.Y., on the brief), for defendant-appellee.

Before KAUFMAN, MESKILL, and NEWMAN, Circuit Judges.

JON O. NEWMAN, Circuit Judge:

This appeal of a diversity case raises several issues concerning the assertion of personal jurisdiction over foreign corporations pursuant to N.Y.Civ.Prac.L. & R. Secs. 301 & 302 (McKinney 1972 & Supp.1990). The issues arise on plaintiffs' appeal from the August 3, 1989, judgment of the District Court for the Northern District of New York (Neal P. McCurn, Chief Judge) dismissing for lack of personal jurisdiction their complaint against defendant Metallurgie Hoboken-Overpelt, S.A. ("MHO"), a metals processing company incorporated in Belgium. The suit sought damages for employment-related injuries allegedly sustained by the plaintiffs as a result of inhaling dust and fumes from cobalt products defectively processed by MHO. After extensive discovery and the filing of cross-motions for summary judgment, the District Court found that plaintiffs had failed to make a prima facie showing that MHO does business in New York (section 301) or has acted so as to come within the reach of New York's long-arm statute (section 302). We affirm.

Background

The plaintiffs in this action include individuals who worked at a tungsten carbide plant operated by Valeron Corporation in DeWitt, New York, prior to the plant's closing in 1982. 1 In their complaint, filed in 1987, they alleged that they developed "cobalt-related Hard Metals Disease" through exposure to cobalt-containing products defectively processed by MHO and used at the plant. Defendant asserted lack of personal jurisdiction in its answer, and, shortly thereafter, moved pursuant to Rule 56(b) for summary judgment on this basis. The District Court held a conference on the motion and granted plaintiffs leave to conduct discovery on the jurisdictional question before filing opposing papers.

Plaintiffs conducted discovery for nearly a year. These efforts included document production, extensive interrogatories, requests for admission, and depositions of several officers of MHO and of Afrimet-Indussa, Inc. ("Afrimet"), a New York-based sales organization alleged by plaintiffs to be MHO's agent in New York. Viewing the facts in a light most favorable to the plaintiffs, Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir.1983), the District Court found that discovery revealed the following. Prior to 1982, plaintiffs' employer, Valeron, purchased cobalt products from Afrimet, which sells metal products to customers throughout the United States and Canada and transacts all its business from a New York City office. Afrimet, in turn, buys a variety of metal products processed by MHO and other processing companies. Although there was some dispute as to whether, prior to 1985, any of the metals purchased by Afrimet had been owned by MHO or had merely been processed by MHO, it was undisputed that after 1985 Afrimet purchased metals, including cobalt-containing products, that MHO owned.

As of the time of suit, there was no evidence of common ownership, direct or indirect, between MHO and Afrimet. There was evidence that Afrimet engaged in some solicitation in New York on behalf of MHO and consulted with the latter over efforts to promote and market MHO products in New York. Afrimet typically consulted MHO before contracting with third parties to sell MHO products on a long-term basis. Afrimet held an exclusive sales right for certain of MHO's "cobalt special products," including powder oxides and salts. There was, however, no formal agency agreement between Afrimet and MHO, and the former did not sign contracts on the latter's behalf or make reference to MHO in its own contracts with third parties.

As noted by the District Court, none of the facts summarized above was disputed by the parties. In November 1988, plaintiffs cross-moved for summary judgment on the jurisdictional issue. The District Court held that plaintiffs had failed to make a prima facie showing of jurisdiction over the defendant. The District Court ruled that plaintiffs had failed to present facts sufficient to support an inference that Afrimet acted as MHO's New York agent, and thus that MHO was doing business (for purposes of section 301) in New York through Afrimet. The Court also ruled that plaintiffs had failed to make a prima facie showing (for purposes of section 302(a)(3)(i)) that MHO "derives substantial revenue from goods used or consumed" in New York. Accordingly, the Court granted MHO's motion for summary judgment and denied plaintiffs' cross motion. This appeal followed.

Discussion
I. Procedure for Establishing Personal Jurisdiction

As a preliminary matter, the District Court considered the type of showing a plaintiff must meet to defeat a defendant's claim that a court lacks personal jurisdiction over it. In determining the nature of the plaintiff's obligation, Judge McCurn detected what he took to be conflicting signals from two recent decisions of this Court, Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55 (2d Cir.1985), and Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117 (2d Cir.1984). In Hoffritz, we said that though a plaintiff bears the burden of establishing jurisdiction over the defendant by a preponderance of the evidence, the plaintiff need make only a prima facie showing that jurisdiction exists prior to the holding of an evidentiary hearing. 763 F.2d at 57. In Beech Aircraft, we had previously rejected a plaintiff's contention that it need establish only a prima facie case of jurisdiction in order to defeat a Rule 12(b)(2) motion and had said that a plaintiff must establish personal jurisdiction by a preponderance of the evidence. 751 F.2d at 120. Judge McCurn extracted from these decisions two approaches: (1) only a prima facie showing is needed to defeat a jurisdiction testing motion before discovery; (2) jurisdiction must be established by a preponderance of the evidence at a hearing conducted after discovery. The District Judge felt it was unclear which approach applied where a jurisdiction testing motion (either under Rule 12(b)(2) or Rule 56) is presented after discovery but before an evidentiary hearing. He selected the "prima facie " approach because Hoffritz is the more recent decision and because other district courts in the Circuit appear to be requiring only a prima facie showing in these circumstances. See, e.g., Lana Mora, Inc. v. S.S. Woermann Ulanga, 672 F.Supp. 125, 126-27 (S.D.N.Y.1987); Forgash v. Paley, 659 F.Supp. 728, 729-30 (S.D.N.Y.1987). 2

We agree with Judge McCurn that the nature of the plaintiff's obligation varies depending on the procedural posture of the litigation. Prior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith, see Fed.R.Civ.P. 11, legally sufficient allegations of jurisdiction. At that preliminary stage, the plaintiff's prima facie showing may be established solely by allegations. After discovery, the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by the trier, would suffice to establish jurisdiction over the defendant. Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d at 57; Birmingham Fire Insurance Co. v. KOA Fire & Marine Insurance Co., 572 F.Supp. 962, 964 (S.D.N.Y.1983). At that point, the prima facie showing must be factually supported.

Where the jurisdictional issue is in dispute, the plaintiff's averment of jurisdictional facts will normally be met in one of three ways: (1) by a Rule 12(b)(2) motion, which assumes the truth of the plaintiff's factual allegations for purposes of the motion and challenges their sufficiency, (2) by a Rule 56 motion, which asserts that there are undisputed facts demonstrating the absence of jurisdiction, or (3) by a request for an adjudication of disputed jurisdictional facts, either at a hearing on the issue of jurisdiction or in the course of trial on the merits. If the defendant is content to challenge only the sufficiency of the plaintiff's factual allegation, in effect demurring by filing a Rule 12(b)(2) motion, the plaintiff need persuade the court only that its factual allegations constitute a prima facie showing of jurisdiction. If the defendant asserts in a Rule 56 motion that undisputed facts show the absence of jurisdiction, the court proceeds, as with any summary judgment motion, to determine if undisputed facts exist that warrant the relief sought. If the defendant contests the plaintiff's factual allegations, then a hearing is required, at which the plaintiff must prove the existence of jurisdiction by a preponderance of the evidence. See Cutco Industries Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986); Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d at 120; United States v. Montreal Trust Co., 358 F.2d 239, 242 n. 4 (2d Cir.), cert. denied, 384 U.S. 919, 86 S.Ct. 1366, 16 L.Ed.2d 440 (1966). 3

In the pending case, the issue of jurisdiction was submitted by both sides on cross-motions for summary judgment. Since discovery had occurred, Judge McCurn properly examined the record to determine if there were undisputed facts that could resolve the jurisdictional issue. He did not require the plaintiff to prove its facts by a preponderance of the evidence, since that is a standard of proof appropriate for resolving disputed issues of fact. J...

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