Summary
denying Talisman's second motion to dismiss
Summary of this case from Presbyterian Church of Sudan v. Talisman Energy, Inc.Opinion
01 CIV. 9882 (DLC).
August 27, 2004
Carey R. D'Avino, Stephen A. Whinston, Berger Montague, P.C., Philadelphia, Pennsylvania, Lawrence Kill, Linda Gerstel, Stacey L. Tishler Anderson Kill Olick, P.C., New York, New York, for Plaintiffs.
Joseph P. Cyr, Marc J. Gottridge, Scott Reynolds, Kathy L. McFarland, Lovells, New York, New York, for Talisman Energy, Inc.
MEMORANDUM OPINION and ORDER
This class action lawsuit alleges that Talisman Energy, Inc. ("Talisman") and the Republic of Sudan ("Sudan") (together, "Defendants") committed gross violations of human rights and international law in connection with the exploration and extraction of Sudanese oil. Plaintiffs, current and former residents of Sudan, argue that in order to secure its oil operations, Talisman directly and indirectly provided support for the Sudanese government's brutal ethnic cleansing campaign against the non-Muslim, African population of Sudan. This Memorandum Opinion addresses Talisman's February 15, 2004 motion to dismiss for lack of personal jurisdiction.
The complaint in this action was filed on November 8, 2001. On March 19, 2003, the Honorable Alan G. Schwartz issued an Opinion ("2003 Opinion") denying Talisman's motion to dismiss on the basis of lack of subject matter jurisdiction, lack of personal jurisdiction, lack of plaintiffs' standing, forum non conveniens, international comity, act of state doctrine, political question doctrine, failure to join necessary and indispensable parties, and equity considerations. Presbyterian Church of Sudan v. Talisman Energy, Inc., 244 F. Supp. 2d 289 (S.D.N.Y. 2003). Familiarity with the detailed procedural and factual background set forth in the 2003 Opinion is presumed. The 2003 Opinion found that Plaintiffs had pled facts sufficient to meet their prima facie burden of establishing personal jurisdiction and to demonstrate a need for discovery on this issue. Presbyterian Church, 244 F. Supp.2d at 329-31.
The complaint was amended on February 25, 2002 and August 18, 2003.
This action was assigned to this Court on April 16, 2003, and Talisman's motion for reconsideration of the 2003 Opinion was denied on June 13. A schedule for Talisman's renewed motion to dismiss for lack of personal jurisdiction was set forth in a June 18 Order. Talisman's motion to dismiss, first filed on July 11, 2003, was deemed withdrawn on January 12, 2004. It was re-filed on February 15, and following the conclusion of relevant discovery, fully submitted on August 12. For the reasons set forth below, Talisman's motion to dismiss is denied.
Discussion
Following discovery, a plaintiff must prove by a preponderance of the evidence that personal jurisdiction over the defendant exists. Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996); Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). If material facts are in dispute, a hearing must be held to determine whether the plaintiff has satisfied his burden. Ball, 902 F.2d at 197.
A district court may exercise jurisdiction over any defendant who would be subject to the jurisdiction of a court of general jurisdiction in the state in which the district court is located.Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 94 (2d Cir. 2000). Under New York law, general personal jurisdiction exists over a foreign corporation that is doing business in the state "not occasionally or casually, but with a fair measure of permanence and continuity." Id. at 95 (citation omitted); N.Y.C.P.L.R. § 301. A fact-specific inquiry is necessary to determine whether a corporation's contacts with New York demonstrate "continuous, permanent and substantial activity."Wiwa, 226 F.3d at 95 (citing Landoil Resources Corp. v. Alexander Alexander Services, 918 F.2d 1039, 1043 (2d Cir. 1990)). The contacts to be considered include the existence of an office in New York, the solicitation of business in New York, the presence of property in New York, and the presence of employees or agents in New York. Landoil, 918 F.2d at 1043.
A plaintiff may establish personal jurisdiction over a foreign corporation based on its subsidiary's presence in New York by demonstrating that the subsidiary is a "mere department" of the parent corporation. Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998). To determine whether a subsidiary is a mere department, a court must evaluate four factors: (1) common ownership of the parent and subsidiary, (2) the financial dependency of the subsidiary on the parent, (3) "the degree to which the parent corporation interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities," and (4) "the degree of control over the marketing and operational policies of the subsidiary exercised by the parent." Id. at 185 (citing Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120, 121, 122 (2d Cir. 1984)).
If personal jurisdiction exists under New York law, a court must ensure its exercise is permissible under the Due Process Clause of the Fourteenth Amendment. Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002). Jurisdiction may be maintained if "the defendant has certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Id. at 127 (citation omitted). In order for a state to assert general jurisdiction, the defendant's contacts must be "continuous and systematic." Id. (citation omitted).
In assessing whether the exercise of jurisdiction comports with notions of fair play and substantial justice, courts examine five factors:
(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies.Kernan v. Kurz-Hastings, 175 F.3d 236, 244 (2d Cir. 1999) (citation omitted); see also Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 113 (1987). The 2003 Opinion analyzed these factors in the context of Talisman's motion to dismiss on forum non conveniens grounds. Presbyterian Church, 244 F. Supp. 2d at 338-341. The Supreme Court's recent decision in Sosa v. Alvarez-Machain, 124 S.Ct. 2739 (2004), does not undermine the 2003 Opinion's determination that the burden on the defendant is substantially outweighed by the plaintiff's interest in obtaining relief, and that the United States has a strong interest in vindicating violations of established human rights.Presbyterian Church, 244 F. Supp. 2d at 338-41. New York also has an interest in ensuring that companies doing business in the state adhere to recognized norms of international law.
Plaintiffs' opposition papers provide overwhelming evidence of the permanent, continuous and substantial activity conducted by Talisman's subsidiary, Fortuna U.S. Inc. ("Fortuna"), in the state of New York. In its reply, Talisman abandons the argument that Fortuna's contacts with New York are insufficient to establish Fortuna's presence in New York for jurisdictional purposes.
Plaintiffs have also offered undisputed evidence establishing by a preponderance of the evidence that Fortuna operates as a mere department of Talisman under the applicable standard. For example, Plaintiffs have demonstrated that Fortuna is wholly-owned by Talisman, that Fortuna is financed entirely by intercompany loans from Talisman without which it would be unable to remain in business, that Fortuna's Board of Directors is composed of Talisman officers who hold identical positions in both companies and are paid only by Talisman, that Fortuna has no employees of its own, and that Talisman exercises extensive control over the operational and marketing policies of Fortuna. Plaintiffs have shown that all four of the relevant factors support the conclusion that Fortuna operates as a mere department of its parent, permitting the exercise of personal jurisdiction over Talisman.
The extensive contacts between New York and Fortuna, acting as a mere department for Talisman, exceed the minimum contacts required by the Due Process Clause. For these reasons and the reasons described in the 2003 Opinion, the maintenance of this lawsuit is consistent with traditional notions of fair play and substantial justice. Talisman's motion to dismiss for lack of personal jurisdiction is denied.
SO ORDERED.