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noting that "Section 301 does not lie where the total amount of sales in New York each year constitutes 4%, or $400,000, of total sales" and holding that where sales to New York customers accounted for less than 1% of sales, there was no general jurisdiction over the foreign defendant
Summary of this case from Schottenstein v. SchottensteinOpinion
00 CIV. 9186 (DLC)
May 8, 2001
Andrew N. Krinsky, Tarter Krinsky LLP, New York, N.Y. 10016, Attorney for plaintiff.
Steven R. Schindler, Schindler Cohen Hochman, New York, N.Y. 10006-1404, Attorney for defendant.
MEMORANDUM OPINION ORDER
At a pretrial conference on April 13, 2001, this Court issued a Bench Opinion holding that plaintiff Stemcor USA, Inc. ("Stemcor") had failed adequately to allege specific jurisdiction over defendant Sharon Tube Company ("Sharon Tube") under New York law but reserving on the issue of whether the plaintiffs had sufficiently pled general jurisdiction to warrant discovery. Based on the representations of defendant's counsel that Sharon Tube does not have regular or substantial business contacts with New York as a whole, this Court allowed defendant to submit an affidavit and plaintiff to reply.
By letter of April 27, 2001, defendant submitted the affidavit of the Manager of Raw Material Procurement for Sharon Tube, attesting to the fact that in 1999 and 2000, orders invoiced to and shipped to customers in New York represented under 1% of its total invoices. In 1999, these invoices to New York accounted for .58%, or $741,900.27, of total sales. In 2000, these invoices to New York accounted for .73%, or $926,011.43, of total sales. Further, Sharon Tube comports with the occasional requests of some of its non-New York customers to ship products into New York. The customers are invoiced outside of New York but the products are shipped into New York. These requests occurred with respect to .25% of its total sales, or $314,219.87, in 1999, and .21% of its total sales, or $261,143.32, in 2000. Sharon Tube further attests that it has no offices, warehouses, or storage locations in New York, and it argues that its amount of New York sales is too insubstantial to subject it to personal jurisdiction in New York.
Pursuant to CPLR § 301, a foreign corporation is subject to general personal jurisdiction under New York law if it is "doing business" in New York "`not occasionally or casually, but with a fair measure of permanence and continuity.'" Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000) (citation omitted). To meet this standard, the plaintiff must show that the defendant "engaged in `continuous, permanent, and substantial activity in New York,'" id., even where the defendant's activities are not related to the particular cause of action, Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998). In defining the contours of the test under Section 301, the Second Circuit has held,
The test is a "simple pragmatic one," which is necessarily fact sensitive because each case is dependent upon its own particular circumstances. The Court must therefore analyze a defendant's connections to the forum state "not for the sake of contact-counting, but rather for whether such contacts show a continuous, permanent and substantial activity in New York."
In assessing jurisdiction under this pragmatic standard, New York courts have generally focused on the following indicia of jurisdiction: the existence of an office in New York; the solicitation of business in New York; the presence of bank accounts or other property in New York; and the presence of employees or agents in New York. However, the "solicitation of business alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services." On the other hand, if the solicitation is substantial and continuous, and defendant engages in other activities of substance in the state, then personal jurisdiction may properly be found to exist. Under this "solicitation-plus" rule, "once solicitation is found in any substantial degree very little more is necessary to a conclusion of "doing business."Landoil Resources v. Alexander Alexander Serv., 918 F.2d 1039, 1043-44 (2d Cir. 1990) (citations omitted); see also Citigroup Inc. v. City Holding Co., 97 F. Supp.2d 549, 569-70 (S.D.N Y 2000). A New York court has held where a defendant has no office, telephone, bank account, or warehouse in New York nor owns any property there, that jurisdiction under Section 301 does not lie where the total amount of sales in New York each year constitutes 4%, or $400,000, of total sales. New England Laminates Co. v. Murphy, 362 N.Y.S.2d 730, 733, 735 (Sup.Ct. 1974); see also Hennigan v. Taser International, Inc., 00 Civ. 2981 (MBM), 2001 WL 185122, at *2 (S.D.N.Y. Feb. 26, 2001) (finding insufficient contacts under Section 301 where New York sales comprised 3%, or under $60,000, of total nationwide sales); Pieczenik v. Dyax Corp., 00 Civ. 243 (HB), 2000 WL 959753, at *3 (S.D.N.Y. July 11, 2000) (holding that personal jurisdiction under Section 301 does not exist where defendant maintained no offices, property or employees in New York, had no bank account nor was registered to do business in New York, and sales to New York accounted for 1.3% of defendant's world wide sales and 1.9% of its domestic sales); Pellegrino v. Stratton Corp., No. 87 Civ. 549, 1987 WL 10726, at *4 (N.D.N.Y. Feb. 9, 1989) (holding that no jurisdiction exists under Section 301 where defendant's sales in New York accounted for roughly 1%, or $1,300,000, of its total sales over a three year period);Bush v. Stern Brothers Co., 524 F. Supp. 12, 15 (S.D.N.Y. 1981) (dismissing for lack of personal jurisdiction under Section 301 where defendant's sale of securities to customers in New York consisted of less than 1% of its total business over five years).
While Stemcor argues that New York courts have held that revenue for purposes of long-arm jurisdiction may be calculated either as a percentage or as a numerical figure, it cites cases discussing "substantial revenue" in the context of jurisdiction under Section 302(a)(3), not Section 301. See Vecchio v. S T Manufacturing Co., 601 F. Supp. 55 (E.D.N.Y. 1984); Allen v. Canadian General Electric Co., 410 N.Y.S.2d 707 (App.Div. 1978).
The plaintiff has failed to allege sufficient facts to allege personal jurisdiction or even to warrant discovery. Sharon Tube's New York sales are too insubstantial to reflect the degree of permanent and substantial activity required for jurisdiction under Section 301. Sharon Tube's motion to dismiss for lack of personal jurisdiction is granted. The Clerk of Court shall close this case.
SO ORDERED: