Troma Entm't, Inc. v. Centennial Pictures Inc.

• Decision Date: 06 September 2013
• Docket Number: Docket No. 12–1883–cv.
• Citation: 729 F.3d 215
• Parties: TROMA ENTERTAINMENT, INC., Plaintiff–Appellant, v. CENTENNIAL PICTURES INC., Pan Global Entertainment, LLC, Defendants, Lance H. Robbins, King Brett Lauter, Defendants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

729 F.3d 215

TROMA ENTERTAINMENT, INC., Plaintiff–Appellant,

v. CENTENNIAL PICTURES INC., Pan Global Entertainment, LLC, Defendants,Lance H. Robbins, King Brett Lauter, Defendants–Appellees.

Docket No. 12–1883–cv.

United States Court of Appeals, Second Circuit.

Argued: April 29, 2013.

Final Submission: July 25, 2013.

Decided: Sept. 6, 2013.

Stuart Reiser (Manuel A. Arroyo, Rachel Schulman, Esq., on the brief), Shapiro, Croland, Reiser, Apfel & Di Iorio, LLP, Hackensack, NJ, for Plaintiff–Appellant.

Lance H. Robbins, pro se, North Hollywood, CA.

King Brett Lauter, pro se, Marina Del Rey, CA.

Brian Marc Feldman, John P. Bringewatt, Harter Secrest & Emery LLP, Rochester, NY, pro bono amicus curiae at the request of the Court in support of the Defendants–Appellees.^*

Before: JACOBS and SACK, Circuit Judges, and RAKOFF, District Judge. ^**

SACK, Circuit Judge:

The subject of this appeal is the reach of New York State's long-arm statute in the context of alleged infringement of intellectual property. At issue is section 302(a)(3)(ii) of the New York Civil Practice Law and Rules, and in particular its requirement that the allegedly tortious conduct of the individual over whom personal jurisdiction is asserted under that section “caus [ed] injury to person or property within the state.” N.Y. C.P.L.R. § 302(a)(3). The district court concluded that plaintiff-appellant Troma Entertainment, Inc., (“Troma”) had failed to allege such an in-state injury, and therefore dismissed its lawsuit against defendants-appellees Lance H. Robbins and King Brett Lauter for want of personal jurisdiction. We agree with the district court and therefore affirm.

BACKGROUND

The following facts are drawn from the allegations in Troma's complaint, which are taken as true for purposes of resolving this appeal. See Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 56 (2d Cir.2012).

Troma is a New York-based corporation in the business of producing and distributing “controlled budget motion pictures.” Compl. ¶ 5. Two such motion pictures are spoof films titled “Citizen Toxie, Toxic Avenger Part IV,” created by Troma, and “Poultrygeist: Night of the Chicken Dead,” to which Troma owns distribution rights. Id.

In October 2009, Troma authorized one Lance Robbins to represent it in negotiations concerning the licensing of distribution rights to Citizen Toxie and Poultrygeist to a German distributor. Such authorization was supposed to lapse after thirty days if no agreement was reached. Thirty days passed with Robbins apparently unable to negotiate a deal with a German distributor. At least that was what Troma's officers thought.

As it turned out, Robbins, in cahoots with codefendant King Brett Lauter, had, a week prior to receiving authorization, entered into a distribution license in Germany with an outfit called Intravest Beteiligungs GMBH (“Intravest”). Troma alleges that Robbins and Lauter falsely assured Intravest that they owned the rights to the films; purchased, as any retail customer might, German-language DVD copies of the films from Amazon.com's German website; delivered those DVDs to Intravest; and pocketed the proceeds of the agreement, without ever notifying Troma that the agreement even existed. None of these actions is alleged to have taken place in New York.

Troma learned in August 2010 that Intravest, “via pay-per-channel distribution on Silverline AG's Movie Channels,” id. ¶ 18, had been broadcasting Citizen Toxie and Poultrygeist in Germany. Troma filed suit on March 7, 2011, against Robbins, Lauter, and two entities that are no longer parties to this litigation, in the United States District Court for the Eastern District of New York. Its complaint alleges copyright infringement under federal law, and state law claims of common law fraud and tortious interference with prospective economic advantage.

In March 2012, Robbins and Lauter, both proceeding pro se, filed motions to dismiss for want of personal jurisdiction. In a memorandum decision and order filed April 10, 2012, the district court (Brian M. Cogan, Judge ) concluded that New York State's long-arm statute did not permit it to exercise personal jurisdiction over Robbins and Lauter in the Eastern District of New York. Troma Entertainment, Inc. v. Centennial Pictures Inc., 853 F.Supp.2d 326, 327–30 (E.D.N.Y.2012). It concluded that the allegations in Troma's complaint, taken as true, did not make out a prima facie showing that Robbins's and Lauter's conduct “caus[ed] injury within [New York],” N.Y. C.P.L.R. § 302(a)(3)(ii), as required by the provision of New York State's long-arm statute pursuant to which Troma asserted personal jurisdiction. Troma, 853 F.Supp.2d at 329–30.

On April 18, 2012, after Troma advised the district court that it did not wish to pursue a transfer of the action to the Central District of California—where personal jurisdiction over the defendants could be exercised—the court entered judgment dismissing Troma's lawsuit for lack of jurisdiction and improper venue.

Troma appeals.

DISCUSSION

The only issue before us is whether the district court erred in determining that it lacked personal jurisdiction over Robbins and Lauter under New York State's long-arm statute. “A plaintiff bears the burden of demonstrating personal jurisdiction over a person or entity against whom it seeks to bring suit.” Penguin Group (USA) Inc. v. American Buddha (“ Penguin I ”), 609 F.3d 30, 34 (2d Cir.2010). At this stage of the proceedings, a plaintiff need only make a “prima facie showing that jurisdiction exists.” Id. at 34–35. In other words, a complaint will survive a motion to dismiss for want of personal jurisdiction so long as its allegations, taken as true, are “legally sufficient allegations of jurisdiction.” Id. at 35 (internal quotation marks omitted). “We review a district court's legal conclusions concerning its exercise of jurisdiction de novo, and its underlying factual findings for clear error.” Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 128 (2d Cir.2013).

In order to exercise personal jurisdiction over a defendant, a district court must possess a statutory basis for doing so. Id. at 128. With few exceptions not applicable to the case at bar, the existence of such a statutory basis “is determined by the law of the state in which the court is located,” Spiegel v. Schulmann, 604 F.3d 72, 76 (2d Cir.2010)—here, New York.

Troma asserts that personal jurisdiction may be exercised in the Eastern District over Robbins and Lauter through section 302(a)(3)(ii) of New York's long-arm statute. SeeN.Y. C.P.L.R. § 302(a)(3)(ii). That provision confers personal jurisdiction over an individual who “commits a tortious act without the state causing injury to person or property within the state ... if he ... expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” Id.; see Penguin I, 609 F.3d at 35 (discussing the requirements for establishing jurisdiction under section 302(a)(3)(ii)). At issue here is the requirement that the alleged tortious conduct “caus[ed] injury within [New York].” Id. Troma argues that Robbins and Lauter's alleged infringement caused such injury in the state because it resulted in “a loss of sale and a generalized harm ... to [Troma's] exclusive distribution right” over Citizen Toxie and Poultrygeist. Appellant's Br. at 9.

It is well-settled that “residence or domicile of the injured party within [New York] is not a sufficient predicate for jurisdiction” under section 302(a)(3). Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 326, 402 N.E.2d 122, 126, 425 N.Y.S.2d 783, 787 (1980). Honoring this principle, we have rejected as insufficient to support the exercise of jurisdiction over a defendant allegations of “remote or consequential injuries such as lost commercial profits which occur in New York only because the plaintiff is domiciled or doing business here.” Lehigh Valley Indus. v. Birenbaum, 527 F.2d 87, 94 (2d Cir.1975); see also American Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428, 433 (2d Cir.1971) (rejecting as insufficient “harm in New York in the sense that any sale lost anywhere in the United States affects [the plaintiff's] profits”). In sum, “[t]he suffering of economic damages in New York is insufficient, alone, to establish a direct injury in New York for N.Y. C.P.L.R. § 302(a)(3) purposes.” Penguin I, 609 F.3d at 38 (internal quotation marks omitted).

Troma maintains that its allegations amount to more than the assertion of mere economic injury within the state. It relies principally on the New York Court of Appeals' decision in Penguin Group (USA), Inc. v. American Buddha (“ Penguin II ”), 16 N.Y.3d 295, 946 N.E.2d 159, 921 N.Y.S.2d 171 (2011), in which the Court answered a question we had certified to it. The plaintiff in that case, Penguin Group, alleged that defendant American Buddha had infringed its copyrights over four books by uploading copies of the books to its Internet website and “making them available free of charge to its 50,000 members and anyone with an Internet connection.” Id. at 300, 946 N.E.2d at 160, 921 N.Y.S.2d at 172. Penguin Group brought suit in the United States District Court for the Southern District of New York, asserting personal jurisdiction within the state pursuant to section 302(a)(3)(ii). Penguin I, 609 F.3d at 31.

When the issue reached us on appeal, we noted that “[n]either the New York Court of Appeals nor this Court has decided what the situs of injury is in an intellectual property case.” Id. at 36. We recognized also that “the fact that the alleged infringement ... was conducted by means of the Internet and online libraries ... may affect the [jurisdictional] analysis.” Id. at 34. Finding ourselves unable to predict how the New York Court of Appeals would resolve the jurisdiction issue in that case, we certified to it the question: ...