Bicicletas Windsor v. Bicycle Corp. of America

• Decision Date: 27 January 1992
• Docket Number: No. 90 Civ. 7793 (CSH).,90 Civ. 7793 (CSH).
• Citation: 783 F. Supp. 781
• Parties: BICICLETAS WINDSOR, S.A., Plaintiff, v. BICYCLE CORPORATION OF AMERICA, Defendant.
• Court: U.S. District Court — Southern District of New York

783 F. Supp. 781

BICICLETAS WINDSOR, S.A., Plaintiff, v. BICYCLE CORPORATION OF AMERICA, Defendant.

No. 90 Civ. 7793 (CSH).

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

January 27, 1992.

COPYRIGHT MATERIAL OMITTED

Berger Steingut Tarnoff & Stern (Peter R. Stern, Jonathan A. Olsoff, of counsel), New York City, for plaintiff.

Conway & Ceriello (Darrell J. Conway, of counsel), Melville, N.Y., for defendant.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

This diversity case is before the Court on defendant's motion to dismiss for lack of personal jurisdiction and improper venue under N.Y.C.P.L.R. § 301 and 28 U.S.C. § 1391. Alternatively, the defendant moves to transfer the action to the Eastern District of Pennsylvania pursuant to 28 § U.S.C. 1404.

Plaintiff cross-moves to vacate the Court's prior vacatur of default judgment because of defendant's failure to answer the original complaint. In the alternative, plaintiff moves for attorney's fees and costs incurred in filing for the default judgment.

BACKGROUND

Plaintiff Bicicletas Windsor, S.A. ("BWS") is a manufacturer of bicycle frames with its principal place of business and sole plant in Naucalpan, Mexico. Defendant Bicycle Corporation of America ("BCA") is a manufacturer of bicycles with its principal place of business in Bethlehem, Pennsylvania.

The action arises out of a contract for the sale and delivery of bicycle frames. The plaintiff claims that the defendant breached by failing to pay for the frames. While BCA does not deny its failure to pay, it argues that BWS failed to deliver the frames by the date specified in the contract and that, even when BWS finally did make delivery, the frames were defective.

BWS filed and served its original complaint on the defendant on December 10, 1990. When BCA failed to reply, BWS moved for default. The Court granted the motion on January 9, 1991 and the Clerk entered the judgment the next day in the amount of $106,782.44.

BCA then moved by Order to Show Cause on February 20, 1991 to vacate the default judgment and dismiss the complaint for lack of jurisdiction. When BWS failed to appear by the return date of February 22, 1991, the Court entered an Order vacating the default judgment under Rule 60(b)(1), Fed.R.Civ.P., but withheld judgment on the jurisdiction issue.

BWS now moves to reinstate the default judgment and, alternatively, for attorney's fees and costs. It also opposes defendant's motion to dismiss. For the reasons stated below, I deny defendant's motion to dismiss for lack of personal jurisdiction and improper venue. I deny plaintiff's motion to reinstate the default but grant its motion for attorney's fees. I also grant defendant's motion to transfer the case to the Eastern District of Pennsylvania.

DISCUSSION

Jurisdiction

In order to defeat a motion to dismiss for lack of personal jurisdiction brought after discovery, plaintiff must make a prima facie showing of facts that, if credited by the trier of fact, would suffice to establish jurisdiction over the defendant. United Bank of Kuwait v. James M. Bridges, Ltd., 766 F.Supp. 113, 115 (S.D.N.Y.1991) (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 150, 112 L.Ed.2d 116 (1990)). Bare allegations of jurisdiction will not suffice where, as in this case, discovery has taken place. Id.

In the case at bar, the defendant argues that its headquarters and plant are in Pennsylvania, that it does not reside in New York, and that the transaction at issue did not occur in New York. BCA asserts further that "plaintiff has failed to offer a scintilla of proof that BCA is conducting business within the Southern District." Defendant's Memorandum in Support of Motion to Dismiss ("Def. Reply Brief") at 5.

BWS contends that BCA was "doing business" under CPLR § 301 and was therefore subject to jurisdiction in New York, even if the cause of this action did not arise in New York.¹ While the statute itself provides only that "a court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore," courts have construed it to include foreign corporations who are doing business in the "traditional sense." See Ball, supra, 902 F.2d at 198 (citing Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533, 281 N.Y.S.2d 41, 43, 227 N.E.2d 851, cert. denied, 389 U.S. 923, 88 S.Ct. 241, 19 L.Ed.2d 266 (1967)) (emphasis in original).

In the case at bar, plaintiff claims several factors demonstrate that BCA is "doing business" in New York. First, BCA solicits business in the state on a regular basis. In discovery the defendant produced a list of 270 New York companies that it uses to target promotional mailings, catalogs and telephone marketing. Plaintiff's Memorandum in Support of Vacatur ("Plaintiff's Brief") at 9; Affidavit of Jonathan A. Olsoff ("Olsoff Aff."), Exhibit B; Deposition of Robert Andrew Ehrlich ("Ehrlich Dep.") at 14-16. BCA has hired a "territorial manager" to represent the company in the New York City metropolitan area,² and the BCA sales manager occasionally accompanies her on sales calls. Ehrlich Dep. at 35. BCA also solicits business in New York by purchasing advertisements in journals distributed in New York. Id. at 25. These advertisements appear four to six times a year in at least three nationally distributed magazines, including American Bicyclist and Motorcyclist, Bicycle Business Journal and Bicycle Dealer Showcase. Id. One of these magazines, American Bicyclist and Motorcyclist, is itself located in New York. Olsoff Aff., Exhibit D.

In addition to soliciting business in New York, the defendant also has commercial and financial dealings of its own here. BCA has purchased 8,000 to 10,000 kickstands from a New York company in each of the last two years, and has purchased bicycle parts from two other New York companies during the same period.³ Olsoff Aff., Exhibit E; Ehrlich Dep. at 29-32.

These facts are enough to satisfy the "doing business" standard of § 301. As now Circuit Judge McLaughlin wrote in the Commentary to the CPLR:

It is clear ... that the doing business test does not require the primary activities of the defendant to be carried on in this state. It is sufficient that the foreign corporation has an agent or employee who solicits business in New York systematically, and who devotes a major portion of his time to promoting the business interests of the defendant. Solicitation of business alone may not be sufficient to constitute doing business; but solicitation plus additional business activities related to the defendant's operative or financial structure usually satisfies the test. See Elish v. St. Louis Southwestern Ry. Co., 1953, 305 N.Y. 267, 112 N.E.2d 842; Scanapico v. Richmond, Fredericksburg & Potomac R. Co., C.A.N.Y.1970, 439 F.2d 17, affirmed en banc 439 F.2d 25.

While it is settled that "mere solicitation" of business in this state is not sufficient to constitute "doing business," and that something more is required, it is clear from the cases in recent years that the something "more" has become very little else. The rule has been further diluted by a major decision of the Court of Appeals Laufer v. Ostrow, 55 N.Y.2d 305, 449 N.Y.S.2d 456, 434 N.E.2d 692 (1982) that if the corporation doing the solicitation in New York is different from the corporation on whose behalf the solicitation is done, them sic mere solicitation may be sufficient to find that the soliciting company is doing business.

CPLR § 301, at 9-10 (McKinney 1990) (emphasis added).

The defendant's activities fit neatly into this "solicitation-plus" scheme. BCA's business plan includes an active campaign to sell bicycles to New York retailers, and it also purchases parts from New York suppliers. It therefore must be considered to be doing business here even if the subject of this action did not involve New York. Accordingly, defendant's motion to dismiss for lack of personal jurisdiction is denied.

Venue

The defendant also moves to dismiss on the grounds of improper venue. BCA asserts that 28 U.S.C. § 1391(a) requires that the defendant be resident within the Southern District of New York in order for this Court to serve as venue. Because BCA is not a resident of this district, the defendant asserts that venue is improper.

Defendant gives no indication, however, that it recognizes the significance of subsection (c) of 28 U.S.C. § 1391. Both (a) and (c) are implicated in the case at bar.

Section 1391(a) provides:

A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which the defendants are subject to personal jurisdiction at the time the action is commenced.

Section 1391(c) provides:

For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.

(emphasis added).

As § 1391(c) demonstrates, defendant is a resident of a judicial district if it is subject to personal...