Opinion
Civil Action No. 3:02-CV-1879-G
October 29, 2002
MEMORANDUM ORDER
Before the court are the following motions: (1) the motions of the defendants Inco Limited ("Inco") and N M Rothschild Sons Canada Limited ("Rothschild") to dismiss the claims against them for lack of personal, jurisdiction; (2) the motion of Rothschild to dismiss the claims against it on the basis of forum non conveniens; (3) the motions of Rothschild and the defendant PricewaterhouseCoopers, LLP. ("PWC-US") to dismiss the claims against them for failure to state a claim on which relief can be granted; and (4) the motion of PWC-US to dismiss the claim against it for improper joinder. For the reasons discussed below, the motions of Inco and Rothschild to dismiss for lack of personal jurisdiction and the motion of PWC-US to dismiss for improper joinder are granted. The remaining motions are denied as moot.
I. BACKGROUND
In 1955, Inco acquired 25% of the stock of Diamond Fields Resources, Inc. ("Diamond"). Plaintiffs' Original Petition and Jury Demand ("Petition") ¶ 10, attached to Notice of Removal. In August of 1996, Inco acquired the 75% of Diamond shares it did not own by issuing shares ("VBN shares") to Diamond's shareholders. Id. The plaintiff MIL (Investments) SARL ("MIL"), a Luxembourg corporation with its principal place of business in Luxembourg, and the plaintiff Jean-Raymond Boulle ("Boulle"), a citizen of the Principality of Monaco, (collectively, "the plaintiffs"), owned between them 807,873 VBN shares. Inco Limited's Motion to Dismiss for Lack of Personal Jurisdiction and Brief in Support ("Inco Motion") at 1. In the fall of 2000, Inco announced plans to redeem the VBN shares. Id. at 2. According to the plaintiffs, Rothschild valued the VBN shares and PWC-US audited that valuation. Petition ¶ 14, 17.
The plaintiffs objected to the redemption. Appendix of Evidence in Support of Inco Limited's Motion to Dismiss for Lack of Personal Jurisdiction and Brief in Support ("Inco Appendix") at 18-19. Despite the plaintiffs' opposition, Inco's shareholders approved the redemption plan and all VBN shares, including those shares held by the plaintiffs, were redeemed. Petition ¶ 15-17. Dissatisfied with the redemption value, the plaintiffs exercised their right under Canadian law to challenge the valuation and commenced an action in a Canadian court. Inco Motion at 2-3. The plaintiffs also filed this suit in a Texas state court. Id. at 3. On September 3, 2002, the defendant International Nickel, Inc. ("Nickel") removed the case to this court on the basis of diversity of citizenship. Notice of Removal ¶ 9. The plaintiffs have not filed any response to the motions.
II. ANALYSIS A. Inco and Rothschild's Motions to Dismiss for Lack of Personal Jurisdiction
When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert. denied, 513 U.S. 930 (1994); Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). If the district court chooses to decide the matter without an evidentiary hearing, the plaintiff may meet its burden by presenting a prima facie case for personal jurisdiction. Wilson, 20 F.3d at 648; Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985). The court will take the allegations of the complaint as true, except where they are controverted by opposing affidavits, and all conflicts in the facts are resolved in favor of the plaintiff. Wilson, 20 F.3d at 648. In making its determination, the court may consider affidavits, interrogatories, depositions, oral testimony, or any combination of recognized discovery methods. Thompson, 755 F.2d at 1165; Stuart, 772 F.2d at 1192.
The plaintiffs failed to respond to either Inco's or Rothschild's motion to dismiss for lack of personal jurisdiction. Although the court may not grant the motions solely as a result of this failure, establishing a prima facie case for personal jurisdiction over Inco or Rothschild requires the plaintiffs to provide some factual basis. See Bullion v. Gillespie, 895 F.2d 213, 216-17 (5th Cir. 1990); Thomas v. Kadish, 748 F.2d 276, 282 (5th Cir. 1984) (affirming dismissal of claims against California defendants for lack of personal jurisdiction where the plaintiff stated only conclusory allegations of conspiracy based upon their acts in California and the alleged effects of the conspiracy in Texas). Here, the court has only the benefit of the plaintiffs' original petition filed in state court to determine whether the plaintiffs have established this court's jurisdiction over Inco or Rothschild. In that petition, the plaintiffs acknowledge that Inco and Rothschild are Canadian corporations, yet assert both Inco and Rothschild were "doing business in the State of Texas." Petition ¶ 5, 7. Beyond this assertion, however, the plaintiffs offer no further information even remotely connecting Inco or Rothschild with Texas. See Petition ¶ 10-31. And, when weighed against the affidavits submitted by Inco and Rothschild that attest to the complete lack of any past or present contact with Texas, see Inco Appendix at 14-17, 39-41; Affidavit of Edmondo R. Giacomelli, attached to Appendix in Support of N M Rothschild Sons Canada Limited's Motion to Dismiss Plaintiffs' Original Petition ("Rothschild Appendix"), this court is convinced that the plaintiffs have failed to meet their burden of presenting a prima facie case for personal jurisdiction. See Jefferson v. Lead Industries Association, Inc., 106 F.3d 1245, 1250 (5th Cir. 1997) ("conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss"). Accordingly, the motions of Inco and Rothschild to dismiss for lack of personal jurisdiction are granted.
B. PWC-US's Motion to Dismiss for Improper binder Pursuant to Federal Rule Civil Procedure 21
Federal Rule of Civil Procedure 21 provides that "[p]arties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just." FED. R. CIV. P. 21. While Rule 21 on its face vests district courts with the authority to dismiss improperly joined parties, the rule provides no guidance for defining misjoinder. Instead, courts have applied the standards for permissive joinder set forth in Rule 20 to determine whether a party was improperly joined. See, e.g., Olan Mills, Inc., of Tennessee v. Enterprise Pub. Company, 210 F.2d 895, 896 (5th Cir. 1954) (noting that Rule 20 assists districts courts in determining misjoinder of parties); Battison v. City of Electra, 2001 WL 497769, at *1-*2 (N.D. Tex. May 8, 2001) (Buchmeyer, C.J.) (denying severance under a Rule 20 and Rule 21 analysis); Lott v. Eastman Kodak Company, 1999 WL 242688, at *2-*4 (N.D. Tex. Apr. 16, 1999) (Solis, J.) (analyzing requirements of Rule 20 to deny severance under Rule 21); Brodrick v. The City of New York, 1996 WL 586360, at *1 (S.D.N.Y. Oct. 11, 1996) (Baer, J.) (applying Rule 20 analysis to Rule 21 motion); see also 7 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, AND MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1683 (3d. edition 2001) at 479-80 (noting that Rule 17 and Rule 19 provide reference points to define nonjoinder in Rule 21). According to Rule 20(a), joinder is permissible if the claims arise from the same transaction or occurrence and share a common question of law or fact. FED. R. CIV. P. 20(a); Applewhite v. Reichhold Chemicals, Inc., 67 F.3d 571, 574 n. 11 (5th Cir. 1995). Therefore, a party has been improperly joined if the claims asserted against them do not arise from the same transaction or occurrence or lack a common question of law or fact.
In this case, PWC-US denies any connection with the underlying transaction and the legal or factual questions presented in this case. Defendant PricewaterhouseCoopers LLP's Brief in Support of its Motion to Dismiss ("PWC-US Motion") at 3-4. PWC-US asserts that the plaintiffs have confused PWC-US with PricewaterhouseCoopers Canada ("PWC-Canada") and due to that confusion have improperly joined PWC-US. PWC-US Motion at 3. According to PWC-US's uncontradicted affidavits, PWC-Canada performed the accounting services associated with this case and PWC-Canada is a wholly separate and distinct legal entity from PWC-US. Defendant PricewaterhouseCoopers LLP's Appendix of Evidence in Support of its Motion to Dismiss ("PWC-US Appendix") at 139, 141; see also Inco Appendix at 20-22. Furthermore, the plaintiffs tacitly acknowledged PWC-Canada's role by filing a petition in Texas court that stated service upon PricewaterhouseCoopers was proper in Ontario, Canada. PWC-US Appendix at 145-146. Without the benefit of a response by the plaintiffs to PWC-US's motion, the court can only conclude that PWC-US has no involvement in the subject matter of this case. Accordingly, the motion of PWC-US to be dismissed for improper joinder, pursuant to Rule 21, F.R. CIV. P., is granted.
III. CONCLUSION
For the reasons discussed above, the motions of Inco and Rothschild to dismiss the claims against them for lack of personal jurisdiction are GRANTED. The motion of PCW-US to dismiss the claim against it for improper joinder is also GRANTED. The remaining motions are DENIED as moot.