Smit v. Isiklar Holding A.S.

Decision Date07 January 2004
Docket NumberNo. 04 CIV. 733(CM).,04 CIV. 733(CM).
Citation354 F.Supp.2d 260
PartiesFred SMIT, as Chairman of the Board of Trustees of Teamsters Local 445 Freight Division Pension Fund, Plaintiff, v. ISIKLAR HOLDING A.S. a/k/a Isiklar Group a/k/a Powell & Minnock Brick Works, Inc., Isiklar Yapi Holding (World Construction Holding), Isiklar Ambalaj, Isiklar Insaat Malzemeleri a/k/a Isiklar Building Materials, Inc. a/k/a Isiklar Tugla, Isiklar Cemas a/k/a Isiklar Cimtek a/k/a Cimtek Cimento Teknolojisi Muhendislik A.S., Isiklar Nigbas, Isiklar Ozisik, Isiklar Bartin Tugla Fabrikisi Sanayi Ve Ticaret A.S., Isiklar Denizcilik a/k/a Isiklar Denizcilik Ve Ticaret a/k/a Denizcilik Sanayi Ve Ticaret, A.S., Isiklar Pazarlama, A.S., Isiklar Yapi Dekorasyon Sanayi Ve Ticaret A.S., Defendants.
CourtU.S. District Court — Southern District of New York

Kellie Terese Walker, Sapir & Frumkin LLP, White Plains, NY, for Plaintiff.

David A. Strassburger, Strassburger McKenna Gutnick & Potter, Pittsburgh, PA, Paul Hugo Galligan, Gary Herbert Glaser, Seyfarth Shaw LLP, New York City, Timothy A. Fedele, Strassburger McKenna Gutnick & Potter, Greenburg, PA, for Defendants.

DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

MCMAHON, District Judge.

This is an action to recover withdrawal liability payments allegedly owed to a pension fund.

Plaintiff, Fred Smit, is Chairman of the Board of Teamsters Local 445 Freight Division Pension Fund,1 which is a multi-employer pension benefit plan under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. (First Amended Complaint, dated October 15, 2004 ("Complaint") ¶ 2.) Plaintiff alleges that defendants owe the Fund $804,267.46, interest and liquidated damages, plus attorney's fees and costs, as a result of their failure to make payment of an assessed withdrawal liability owed to the Fund in accordance with ERISA, as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381, et seq. (Cmpl.¶ 2.)

All defendants are Turkish corporations with their principal places of business in Turkey. (Cmpl.¶¶ 27-37.) Plaintiff claims that personal jurisdiction over the defendants is properly exercised under Federal Rule of Civil Procedure 4(k)(2) ("Rule 4(k)(2)") and § 4301(d) of the MPPAA, 29 U.S.C. § 1451(d), "in that Defendant Isiklar [Holding A.S.] is subject to jurisdiction based on [its] contacts with the United States of America, as a whole, and New York State with respect to its failure to pay withdrawal liability in violation of §§ 4219(c)(2) and 4221(b)(1) of the MPPAA, 29 U.S.C. §§ 1399(c)(2) and 1401(b)(1)."2 (Cmpl.¶ 4.) As discussed more fully below, plaintiff also appears to argue, in the alternative, that personal jurisdiction is proper under Fed.R.Civ.P. 4(k)(1) ("Rule 4(k)(1)"), by virtue of New York's long-arm statute, C.P.L.R. § 302 (" § 302").

All defendants dispute plaintiff's characterization of their presence and activities in the United States and New York and move to dismiss the action for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). There has been no jurisdictional discovery to date.

As discussed more fully below, all of defendant Isiklar Holding A.S.'s ("Isiklar Holding") alleged pension obligations to plaintiff appear to have originated with the 1994 stock purchase of a New York corporation not separately named in this suit, Powell and Minnock Brick Works, Inc ("Powell and Minnock").3 (See, e.g., Cmpl. ¶¶ 5, 6.) Jurisdictional allegations regarding Isiklar Holding include the 1994 stock purchase (and subsequent breach of the stock purchase agreement), as well as various activities in New York and elsewhere in the United States. The other defendants' (the "non-Isiklar Holding defendants")4 putative pension obligations — as well as this court's exercise of personal jurisdiction over them — are alleged to arise solely from their relationship with Isiklar Holding. Because I find no independent allegations in the Complaint that would support the court's exercise of personal jurisdiction over these entities, I dismiss the case with respect to the 10 non-Isiklar Holding defendants. I do find, however, that Plaintiff has pleaded a prima facie showing of personal jurisdiction over Isiklar Holding, which shall remain a party to this suit, subject to further discovery on the issue.

I. Standard and Applicable Law
A. Motion to Dismiss

It is a plaintiff's burden to establish the propriety of a court's exercise of personal jurisdiction over parties to the suit. See In re Commodore Int'l, Ltd., 242 B.R. 243, 250 (Bkrtcy.S.D.N.Y.1999) (citing Falik v. Smith, 884 F.Supp. 862, 864 (S.D.N.Y.1995)). When a motion challenging personal jurisdiction is presented before discovery has been conducted on that issue, the plaintiff may defeat the motion by pleading a prima facie showing of personal jurisdiction over defendants. Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir.1998); Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990). All pleadings and affidavits "are construed in the light most favorable to plaintiff, and where doubt exists, they are resolved in plaintiff's favor." Gmurzynska, 257 F.Supp.2d at 625; see also Mutualidad Seguros Del Instituto Nacional De Industria v. M.V. Luber, No. 95-Civ. 10988KMWLB, 1998 WL 1108936 *1 (S.D.N.Y. Sept. 25, 1998); Turbana Corp. v. M/V "SUMMER MEADOWS", No. 03-Civ. 2099(HB), 2003 WL 22852742 * 1 (S.D.N.Y. Dec. 2, 2003) (not reported).

In its discretion, a district court may determine the issue of personal jurisdiction on the basis of affidavits alone, or it may order discovery on the issue. See, e.g., Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981); see also Mutualidad, 1998 WL 1108936 at *2. Specifically, if plaintiff has not pleaded a prima facie showing of personal jurisdiction, a court may order limited discovery "targeted at the missing jurisdictional elements," if plaintiff has shown that such an exercise "would serve to fill any holes in its showing." Turbana, 2003 WL 22852742 at * 2 (emphasis added). The pleadings must indicate, however, that limited discovery is likely to uncover additional facts supporting jurisdiction; a court will not draw "argumentative inferences" in favor of a plaintiff who has failed to allege even bare facts to support a finding of personal jurisdiction over defendants. See Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994) (citing Atlantic Mutual Ins. Co. v. Balfour Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir.1992)).

Once the plaintiff has made a threshold showing of minimum contacts and satisfaction of due process requirements to support the exercise of personal jurisdiction, the burden shifts to defendant to present compelling facts showing that personal jurisdiction is otherwise unreasonable. Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir.1996).

B. Applicable Statutes

In the Complaint, plaintiff asserts that personal jurisdiction is proper under Rule 4(k)(2), but does not expressly assert any other basis for personal jurisdiction. (Cmpl.¶ 4.)

Rule 4(k)(2) provides:

If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.

Thus, Rule 4(k)(2) requires proof that (1) plaintiff's claim arises under federal law; (2) the defendant is beyond the jurisdictional reach of any state court of general jurisdiction; and (3) the federal court's exercise of personal jurisdiction over the defendant does not offend the Constitution or other federal law. See United States v. Swiss American Bank, Ltd., 191 F.3d 30, 38 (1st Cir.1999). At this stage, plaintiff need only make a prima facie showing of the elements listed above.

Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss, dated November 23, 2004 ("plaintiff's brief") also argues that this Court has jurisdiction over defendants pursuant to New York's long-arm statute, C.P.L.R. § 302, presumably by way of Fed.R.Civ.P. 4(k)(1) ("Rule 4(k)(1)"). Rule 4(k)(1) provides, in pertinent part, that, "Service of a summons ... is effective to establish jurisdiction over the person of a defendant ... who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located."

Since plaintiff's brief argues that the defendants may not be subject to jurisdiction in any state, and his arguments rely on allegations pleaded in the Complaint, I construe the Complaint as trying to make out a claim of personal jurisdiction under Rule 4(k)(2) or, in the alternative, Rule 4(k)(1) by way of § 302. See Dale v. Banque SCS Alliance, No. 02 Civ. 3592, 2004 WL 2389894 at *3 (S.D.N.Y. Oct. 22, 2004) (noting that jurisdictional allegations are to be construed liberally in plaintiff's favor).

New York C.P.L.R. § 302(a)(1) provides that a party is subject to personal jurisdiction in New York if it transacts business within the state. A single transaction will support the exercise of jurisdiction, but the cause of action must arise out of the defendant's contact with New York. Id.; see also Dale at 2004 WL 2389894 *4-5.

"An entity is deemed to be transacting business in New York [under § 302(a)(1)] when he purposefully avails himself of the privilege of conducting activities within New York." Turbana, 2003 WL 22852742 at *4 (citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986) (internal quotations omitted)). Factors to be considered are: whether the defendant has an ongoing contractual relationship with a New York corporation, whether the contract was negotiated or executed in...

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