Opinion
MDL No. 1428 (SAS), No. 04 Civ. 1402.
November 19, 2004
Robert A. Swift, Esq., Kohn, Swift Graf, P.C., Philadelphia, Pennsylvania, Jay J. Rice, Esq., Nagel, Rice Mazie, LLP, Livingston, New Jersey, Kenneth P. Nolan, Esq., Speiser, Krause, Nolan Granito, New York, New York, Edward D. Fagan, Esq., Fagan and Associates, Short Hills, NJ, Attorney for Plaintiffs.
Sabine Beck, Esq., Herzfeld Rubin, P.C., New York, New York, Attorney for Defendant.
OPINION AND ORDER
I. INTRODUCTION
Plaintiffs, the relatives of Americans who died in a ski train fire on November 11, 2000, in Kaprun, Austria, brought this action against numerous defendants. The Judicial Panel on Multidistrict Litigation ("MDL Panel") consolidated all suits related to the Kaprun ski train fire for pretrial purposes before this Court. Defendant Beton-und Monierbau, G.m.b.H. ("Beton") now moves to dismiss for lack of personal jurisdiction, insufficiency of process and/or insufficiency of service of process, and forum non conveniens. For the reasons set forth below, Beton's motion to dismiss for lack of personal jurisdiction is granted.
See In re Ski Train Fire in Kaprun, Austria on November 11, 2000, 175 F. Supp. 2d 1379 (S.D.N.Y. 2001). This action, which was filed after the original civil actions were consolidated, was transferred to this Court as a "tag-along action" in February of 2004. See Conditional Transfer Order Regarding Habblett v. Beton-und Monierbau, No. 03 Civ. 12171 (D. Mass.) ("Transfer Order").
See 5/11/04 Beton's Notice of Motion to Dismiss ("MTD Notice").
Because the motion to dismiss based on lack of personal jurisdiction is granted, I do not address the other two claims.
II. BACKGROUND
A. Moving Defendant
Beton is an Austrian corporation specializing in underground construction and the New Austrian Tunnelling Method ("NATM"), with its principal place of business in Innsbruck, Austria. Plaintiffs allege that Beton "designed, engineered and manufactured, constructed and/or maintained" the tunnel in which the Kaprun ski train fire took place.
See 11/4/03 Complaint in the District of Massachusetts ("MA Complaint"), ¶ 11.
Id.
B. Procedural History
Plaintiffs had previously filed suit against Beton in the District of Connecticut, and the MDL Panel transferred the Connecticut action to this Court. On March 19, 2003 this Court dismissed the Connecticut action for lack of personal jurisdiction, and granted leave for the plaintiffs to refile in an appropriate jurisdiction. On November 4, 2003, plaintiffs refiled their complaint against Beton in the District of Massachusetts. The MDL panel subsequently transferred the case to this Court on February 6, 2004.
See In re Ski Train Fire in Kaprun, Austria on November 11, 2000, 257 F. Supp. 2d 648 (S.D.N.Y. 2003).
See id. at 651.
See MA Complaint.
See Transfer Order.
C. Jurisdictional Allegations
Plaintiffs allege that this Court has personal jurisdiction over Beton because Beton "is engaged in continuous and systematic business activities within the State of Massachusetts and [the District of Massachusetts]." Specifically, plaintiffs argue that Beton "took significant steps to secure its role in a least two public contracts in Massachusetts since 1998," namely, the Central Artery Tunnel Project ("Big Dig") and the South Boston Piers Transitway Project ("Piers Project").
MA Complaint ¶ 3.
8/27/04 Plaintiffs' Brief in Opposition to Beton's Motion to Dismiss ("Pl. Opp.") at 6. See also MA Complaint ¶¶ 14-15.
1. Big Dig
Plaintiffs claim that Beton applied to be prequalified by Massachusetts as a contractor for the Big Dig project. Plaintiffs argue that Beton's prequalification was "a necessary and substantial step in the bidding process" for the Big Dig, and required Beton to provide detailed information to Massachusetts about the company's finances, experience, and prior projects. The Massachusetts Bay Transportation Authority subsequently prequalified Beton for the I-93 Leverett Circle/Storrow Drive Connectors, contract number C19E1, which was one aspect of the larger Big Dig project.
See Pl. Opp. at 7.
Id.
See id.; 6/5/98 Letter from Beton to Massachusetts Bay Transportation Authority, Ex. 4(a) to Pl. Opp., at 1.
Plaintiffs provided information alleging that after a contractor is prequalified, the subsequent Big Dig bidding process is "time-consuming and expensive." Specifically, plaintiffs contend that the bidding process for contract C19E1 required attending a pre-bid conference and a site tour on March 16, 1998, a pre-bid meeting on May 13, 1998, and spending over six million dollars. However, in the end, Beton was not awarded a contract to work on any aspect of the Big Dig project. Additionally, the only evidence of Beton's participation in the bidding process beyond prequalification is the fact that Beton is included in a Purchase Distribution Bidders List for contract C12E1 of the Big Dig.
Pl. Opp. at 9.
See id.
See id. at 7 n. 2.
See id. at 8-9; 12/7/99 Central Artery Tunnel Project Purchase Distribution System Bidders List for Contract C19E1 ("Bidders List"), Ex. 5 to Pl. Opp., at 1.
2. Piers Project
Plaintiffs contend that Beton participated in the Piers Project administered by the Massachusetts Bay Transportation Authority. According to plaintiffs, Beton's initial involvement included prequalification as a subcontractor specializing in NATM and engaging in the bidding process with Modern Continental, the primary contractor. Modern Continental was ultimately selected as the primary contractor, with Beton as the NATM subcontractor.
See Pl. Opp. at 10.
See id. at 10-11.
See id. at 11. See also Printout from Beton's Website, http://www.bemo.net, Ex. 7 to Pl. Opp., at 1 (describing Beton's role as a partner to Modern Continental in the Piers Project).
As the NATM subcontractor, Beton was responsible for providing a Senior Tunnel Engineer and at least five Tunnel Superintendents. Plaintiffs claim the project was valued at over twelve million Euro, of which Beton was to receive fifty percent. Plaintiffs also note that while working on the Piers Project, Beton founded a wholly-owned subsidiary, Beton-und Monierbau USA Inc. ("Beton USA"), in Evansville, Illinois. Although plaintiffs assert that Beton USA is the "agent" of Beton, plaintiffs consistently state that jurisdiction should be premised on Beton's contacts in Massachusetts, not Beton USA's contacts in Massachusetts.
See Pl. Opp. at 11; 6/6/98 Beton's Contractor Prequalification Statement, Ex. 4(a) to Pl. Opp., at 6-7.
See Pl. Opp. at 13.
See id. at 18.
See id. at 19.
See, e.g., id. at 15 (stating that "[r]egardless of defendant's characterization of its 'agreement' with [Beton USA], the facts of Beton's engagement plainly support this Court's conclusion that Beton is conducting sufficient business in Massachusetts to support general jurisdiction").
III. APPLICABLE LAW
A. Legal Standard
"Personal jurisdiction . . . 'represents a restriction on judicial power . . . as a matter of individual liberty.'" A court is obligated to dismiss an action against a defendant over which it has no personal jurisdiction. Plaintiffs bear the ultimate burden of establishing, by a preponderance of the evidence, that the court has jurisdiction over the defendant. However, "prior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith . . . legally sufficient allegations of jurisdiction, i.e., by making a prima facie showing of jurisdiction." Plaintiff "can make this showing through his own affidavits and supporting materials, containing an averment of facts that, if credited . . . would suffice to establish jurisdiction over the defendant." Thus, a court may consider materials outside the pleadings, but must credit the plaintiff's averments of jurisdictional facts as true.
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) (quoting Insurance Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982)).
See Fed.R.Civ.P. 12(b)(2). See also In re Ski Train Fire in Kaprun, Austria on November 11, 2000 (Siemens Austria), 230 F. Supp. 2d 403, 406 (S.D.N.Y. 2002).
See Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999).
Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998) (quotations and citation omitted); see also Koehler v. Bank of Berm., Ltd., 101 F.3d 863, 865 (2d Cir. 1996).
Whitaker v. American Telecasting Inc., 261 F.3d 196, 208 (2d Cir. 2001) (quotations and citations omitted).
See Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996); Hsin Ten Enter. USA, Inc. v. Clark Enter., 138 F. Supp. 2d 449, 452 (S.D.N.Y. 2000).
In the determination of whether a federal court has personal jurisdiction over a defendant, plaintiffs must show both that jurisdiction is proper under the long-arm statute of the forum state and that the exercise of personal jurisdiction over the defendant is consistent with federal due process requirements. In an MDL proceeding, the forum state is the district court where the action was originally filed. Because this complaint was originally filed in the District of Massachusetts, Massachusetts law governs whether a Massachusetts court would have personal jurisdiction over Beton.
See Metropolitan Life, 84 F.3d at 567.
See In re Ski Train Fire in Kaprun, Austria on November 11, 2000, 230 F. Supp. 2d 392, 399 (S.D.N.Y. 2002).
See In re Ski Train Fire, No. MDL No. 1428, 2004 WL 515534, at *3 (S.D.N.Y. Mar. 15, 2004) (noting that "[a] transferee court can exercise personal jurisdiction only to the same extent as the transferor court could") (citing In re Sterling Foster Co. Sec. Litig., 222 F. Supp. 2d 289, 300 (E.D.N.Y. 2002)).
B. Personal Jurisdiction in Massachusetts
Chapter 223, section 38 of the Massachusetts General Laws provides for service on a foreign corporation that "has a usual place of business in the commonwealth, or with or without such usual place of business, is engaged in or soliciting business in the commonwealth, permanently or temporarily." Although this statute ostensibly addresses service of process, courts have construed it more broadly to confer jurisdiction over foreign corporations operating within the state. Jurisdiction under this provision is extended when (1) "the corporation's activities affect the commerce of Massachusetts substantially so that the state has an interest in regulating the general conduct of those activities ('doing business')", or (2) "the corporation's activities in Massachusetts have so affected the particular transaction at issue that it is appropriate to hear the claim in a Massachusetts court." The First Circuit has further defined "doing business" as activities that "closely approximat[e] the regular conduct of a domestic corporation."
Mass. Gen. Laws Ann. ch. 223, § 38 (West 2004). Where foreign corporations fall under section 38, the rules for service upon domestic corporations, as found in chapter 223, section 37, govern.
See, e.g., Howse v. Zimmer Manufacturing Co., 757 F.2d 448 (1st Cir. 1985) (finding jurisdiction over a foreign corporation under chapter 223, section 38, because the corporation was "doing business" within Massachusetts); Pharmachemie B.V. v. Pharmacia S.p.A., 934 F. Supp. 484, 490 (D. Mass. 1996) (noting that chapter 223, section 38 "provides that jurisdiction may be exercised over a foreign corporation as long as . . . the foreign corporation is engaged in or soliciting business in the commonwealth") (quotations and citations omitted); Campbell v. Frontier Fishing Hunting, Ltd., 10 Mass. App. Ct. 53, 55 (1980) (holding that chapter 223, section 38 is "independently viable and has not been supplanted by" the Massachusetts long-arm statute found in chapter 223A, section 3).
Caso v. Lafayette Radio Elecs. Corp., 370 F.2d 707, 712 (1st Cir. 1966).
Howse, 757 F.2d at 451.
Although plaintiffs did not rely on chapter 223A, section 3, which commonly functions as the Massachusetts long-arm statute, I briefly note that the statute is inapplicable because plaintiffs' claim does not "aris[e] from" Beton's business or contracts in Massachusetts, nor did Beton "caus[e] tortious injury" in Massachusetts.
Mass. Gen. Laws Ann. ch. 223A, § 3 (West 2000). Specifically, plaintiffs have made no claim that the Kaprun ski train fire was in any way connected to Beton's activities in Massachusetts. Additionally, none of the named plaintiffs or their decedents are from Massachusetts. See MA Complaint ¶¶ 5-10 (identifying the plaintiffs and their decedents as residents of Florida, Alabama, and New York).
C. Personal Jurisdiction and Due Process Requirements
The Due Process Clause of the Fourteenth Amendment specifies that in order for a court to exercise personal jurisdiction over a nonresident corporate defendant, the defendant must have "certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." A court may exercise "specific jurisdiction" over a defendant who has "purposefully directed his activities" at the forum state, and the alleged injuries "arise out of or relate to those activities." Alternately, when the defendant's activities within the forum state are "continuous and systematic," a court may exercise "general jurisdiction" even if the defendant's activities are unrelated to the litigation. Although "minimum contacts" may suffice to establish specific jurisdiction over a defendant, where jurisdiction over a defendant is premised on general jurisdiction, courts will be "considerably more stringent" in evaluating the defendant's contacts within the forum state. Factors that are considered when assessing a defendant's contacts within the forum state include, but are not limited to, the revenues the defendant obtained from the forum state, if the defendant deploys employees in the forum and for how long, and whether the defendant has an office, bank account, phone number, or any property within the forum state.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quotations and citations omitted).
Helicopteros Nacionales de Columbia, 466 U.S. at 415-16. See also Massachusetts Sch. of Law v. ABA, 142 F.3d 26, 34 (1st Cir. 1998) ("General jurisdiction exists when the litigation is not directly founded on the defendant's forum-based contacts, but the defendant has nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state.") (quotations and citations omitted).
Glater v. Eli Lilly Co., 744 F.2d 213, 216 (1st Cir. 1984).
See Noonan v. Winston Co., 135 F.3d 85, 93 (1st Cir. 1998).
See Helicopteros, 466 U.S. at 416.
See Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 98 (2d Cir. 2000).
IV. DISCUSSION
A. Jurisdiction Under Massachusetts Law
In Caso v. Lafayette Radio, the court held that jurisdiction can be obtained under chapter 223, section 38 of the Massachusetts General Laws when the defendant is either "doing business" within the forum state, or when the cause of action is related to the defendant corporation's activities within the forum state. Because plaintiffs have made no allegations that the Kaprun ski train fire is related to Beton's activities within Massachusetts, the question is narrowed to whether Beton is "doing business" within Massachusetts so as to give Massachusetts an interest in regulating the corporation's activities.
See Howse, 757 F.2d at 451.
Courts have traditionally defined "doing business" as systematic, regular contacts by a corporation in the forum state. For example, in Walsh v. National Seating Co., the defendant corporation was "doing business" in Massachusetts for the purpose of sustaining general jurisdiction, because the corporation maintained a local telephone listing, permanently based a sales representative in Massachusetts, made sales to eleven Massachusetts companies, performed over three million dollars worth of business in the forum state during a three-year period, and the defendant's service personnel visited the state on a "regular, predetermined schedule." Similarly, in Pharmachemie B.V. v. Pharmacia S.p.A, the court found the defendant to be "doing business" within Massachusetts, and hence that the exercise of general jurisdiction was proper, because the defendant corporation had generated sales of over thirty million dollars in Massachusetts during a five year period, stationed five permanent sales representatives in the state, and made "substantial annual payments" to Massachusetts hospitals that performed clinical studies using the defendant's products. In contrast, the court in Guay v. Ozark Airlines found that the defendant corporation was not "doing business" within Massachusetts, despite the fact that the defendant flew thirty-seven charter flights out of a Massachusetts airport, and maintained a bank account in the state for over three years. The Guay court based its decision on the fact that the charter flights "were isolated events and had minimal effect on Massachusetts commerce."
411 F. Supp. 564, 572-73 (D. Mass. 1976).
450 F. Supp. 1106, 1108-09 (D. Mass. 1978).
Id. at 1112.
As in Guay, Beton's contacts with Massachusetts are neither extensive nor regular enough to subject the corporation to general jurisdiction within the state. Beton is based in Innsbruck, Austria, and does not have an office, mailing address, telephone number, or bank account in Massachusetts. In response to plaintiffs' allegations regarding Beton's work on the Big Dig, Beton contends that the extent of its involvement in the Big Dig was to prequalify as a bidder on contract number C19E1 of the project. Beton did not ultimately bid on the contract C19E1, and attests that it took no further action on any aspect of the Big Dig project. Plaintiffs have failed to provide any evidence to the contrary. Although plaintiffs note that Beton appeared on a bidders list for contract C19E1, Beton clarifies that this document "is not a list of entities actually bidding on the [C19E1] project, but a listing of firms which, like [Beton], obtained a set of project documents." Beton notes that the actual bidders list for contract C19E1 of the Big Dig project can be found online, and that Beton's name is not among the bidders.
See 5/11/04 Declaration of Manfred Krapf, General Counsel to Beton ("Krapf Dec."), Attachment to MTD Notice, ¶¶ 3, 11, 13-15.
See 8/15/04 Beton's Reply Memorandum of Points and Authorities ("Reply Mem."), at 3.
See id. at 4-6.
See Pl. Opp. at 8-9; Bidders List at 1.
Reply Mem. at 4; Krapf Dec. ¶ 6.
See Reply Mem. at 3;
http://www.bigdig.com/thtml/contract/c19e1.htm. Plaintiffs should be aware of the correct bidders list, as their counsel referenced it as an exhibit when motions were first submitted in this case. See 7/24/04 Declaration of Hilary Cohen, Counsel for Plaintiffs, Attachment to Reply Mem., ¶ 11.
Beton did perform work on the Piers Project, but this involvement fails to rise to the level of "doing business" within Massachusetts so as to subject Beton to general jurisdiction within the state. Beton worked on the Piers Project as a joint contractor with another company, Modern Continental. No more than five Beton employees were in Massachusetts at any one time, and all of these employees obtained only temporary United States work visas. Although neither party identified Beton's precise start date, Beton appears to have started work on the Piers Project sometime in 2001, and the last Beton employee departed Massachusetts in June 2004. The total value of the project was over twelve million Euro, of which Beton received fifty percent, coming to approximately seven and a half million dollars. Although this is a substantial sum of money, it is clearly less than the thirty million dollars worth of business used to support general jurisdiction in Pharmachemie B.V., it represents a small portion of Beton's overall revenue, and is not a large sum for a public construction project. In sum, Beton's activities in Massachusetts do not comprise a "systematic pattern of in-state activity . . . closely approximating the regular conduct of a domestic corporation." Rather, Beton made an isolated and discrete foray into Massachusetts commerce, which is not enough to sustain general jurisdiction over the corporation for an incident entirely unrelated to its Massachusetts activities.
See Reply Mem. at 6.
See Pl. Opp. at 11; Reply Mem. at 6; 9/15/04 Declaration of Norbert Fügenschuh, Senior Engineer for Beton, Attachment to Reply Mem., ¶ 3.
See Krapf Dec. ¶¶ 29, 31.
See Beton's List of References for Underground Constructions/Tunnelling, Ex. 7 to Pl. Opp., at 5.
See Reply Mem. at 6.
See Pl. Opp. at 13; Reply Mem. at 14; 9/13/04 Declaration of Christian Neumann, Project Manager for Beton, Attachment to Reply Mem., ¶ 2.
See Beton's 2003 Annual Report, Ex. 9B to Pl. Opp., at 1 (stating that Beton's total revenue between fiscal year 2002 and 2003 was over 93,000 Euro).
See News Article on the Big Dig, Ex. 3 to MA Complaint (noting that the Big Dig project cost Massachusetts over $14.6 billion).
Howse, 757 F.2d at 453 (quotations and citations omitted).
B. Federal Due Process Requirements
Because Beton is not "doing business" within Massachusetts for the purpose of sustaining general jurisdiction under chapter 223, section 38, plaintiffs have not met the first prong of the Metropolitan Life test, and an analysis of federal due process requirements is not necessary. However, for the same reasons that Beton's contacts within Massachusetts are not sufficient to sustain general jurisdiction under state law, Beton's contacts are not "continuous and systematic" enough to ensure that subjecting Beton to general jurisdiction in Massachusetts would comport with federal due process requirements. The constitutional standard for the exercise of general jurisdiction is quite high, and Beton's prequalification as a bidder on contract C19E1 of the Big Dig, plus its involvement in the now-completed Piers Project, does not meet this standard.
See Metropolitan Life, 84 F.3d at 567.
See Helicopteros, 466 U.S. at 416.
See, e.g., id. (determining that the Due Process Clause prevented the defendant corporation, which sent its chief executive officer to negotiate contracts in Texas, sent additional personnel to Texas for training, and bought equipment and services from Texas, from being subjected to general jurisdiction within the state); Donatelli v. National Hockey League, 893 F.2d 459 (1st Cir. 1990) (holding that general jurisdiction did not meet federal due process requirements, despite the fact that defendant sports league provided league officials to hockey games in the forum state for over ten years, regularly broadcast games into the forum state, and continuously sold products within the forum state).
V. CONCLUSION
For the foregoing reasons, Beton's motion to dismiss for lack of personal jurisdiction is granted. The Clerk of the Court is directed to close this motion [docket #6] and dismiss plaintiffs' suit against Beton.
SO ORDERED.