ANDREW L. CARTER, Jr., District Judge.
Plaintiff The Foundry brings the present suit against Defendant Trade Secret Web Printing, Inc. and Bashir "Dave" Harb alleging breach of contract, tortious interference with existing business relationships, defamation, prima facie tort, and negligence. Plaintiff asserts that this Court has jurisdiction over Defendants pursuant to the federal courts' diversity jurisdiction, 28 U.S.C. § 1332. Defendants challenge the Court's personal jurisdiction and move for dismissal of the Complaint pursuant to Rules 12(b)(2) of the Federal Rules of Civil Procedure, or in the alternative, to dismiss the Complaint pursuant to the doctrine of forum non conveniens. Defendants also move to dismiss four of the five counts in the Complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). On June 7, 2012, Plaintiff moved for an order of pre-judgment attachment, for which a hearing was held on June 29, 2012.
For the reasons stated below, the Court denies Defendant Harb's motion to dismiss for lack of personal jurisdiction, but grants Defendants' motion to dismiss the Complaint pursuant to the doctrine of forum non conveniens. Accordingly, Plaintiffs motion for an order of-pre-judgment attachment is moot.
The following facts are taken from the Complaint unless otherwise indicated.
Plaintiff is a Virginia limited liability company named The Foundry, A Print Communications Company, LLC ("The Foundry" or "Plaintiff'). The Foundry is a global printing company that serves the printing needs of corporate, travel, hospitality, publishing, automotive, college, university, and other markets. The Foundry produces books, magazines, directories, packaging, security-printed items and other forms of media.
Defendant is a Canadian corporation located in Toronto named Trade Secret Web Printing, Inc. ("Trade Secret"). Defendant, Bashir "Dave" Harb ("Harb") is a principal of Trade Secret. Trade Secret handles printing for customers across the world, including those located in New York State.
On or about July 15, 2010, Michael Cialdella ("Cialdella"), a principal of The Foundry, emailed a request to Trade Secret in Toronto for a quote on a potential print order of 20,000 magazines to be shipped to locations in Virginia and New York. (Affidavit of Bashir Harb at ¶ 9-10, ECF #14 ("Harb's Aff.")). Pre-order discussions took place via email and telephone over the course of the next two to three months between Cialdella in Virginia and Trade Secret in Canada. (Harb's Aff at ¶ 9.) This agreement was memorialized on September 9, 2010, when The Foundry issued a print order to Trade Secret outlining the terms between the parties and all of the pertinent details of the project (the "Print Order"). Pursuant to the terms of the Print Order, The Foundry agreed to pay $43,000 to Trade Secret.
The Foundry hired Trade Secret for the sole purpose of printing an order for a new client of The Foundry's, The American Academy of Hospitality Services ("AAHS"). AAHS hired The Foundry on August 1, 2010 to print a total of 20,000 magazines of the Star Diamond World publication Issue No.6. (the "Project").
The Print Order between The Foundry and Trade Secret contained a clause prohibiting Trade Secret from soliciting The Foundry's customers (the "non-solicitation clause"). This clause provided:
Although the Print Order (attached to the Complaint as Exhibit 2, ECF # 1-1) does not expressly mention AAHS (other than noting "Project #AH-01," which presumably refers to AAHS), The Foundry conveyed to Trade Secret the importance of the Project, and there is no indication that Trade Secret was unaware that the Project was for AAHS since Trade Secret shipped the magazines to AAHS.
Between September 9, 2010, and September 22, 2010, The Foundry attempted to communicate with Trade Secret concerning the latter's progress on the Project. Trade Secret also ignored The Foundry's requests for certain information important to successfully printing the magazines. Trade Secret failed to deliver the Project by the September 22, 2010 deadline. Between September 22, 2010 and September 27, 2010, Trade Secret ignored The Foundry's repeated requests for updates on the Project's status. On September 28, 2010, Trade Secret admitted to outsourcing a portion of the Project and that Trade Secret's outside vendor had yet to begin work because that vendor's outside supplier had not been paid.
On October 1, 2010, Trade Secret shipped some, but not all, of the magazines directly to AAHS in New York. AAHS immediately contacted The Foundry to complain of numerous problems with the printing. In order to try and salvage The Foundry's business relationship with AAHS, Cialdella traveled to New York City on October 5, 2010, in order to meet with AAHS representatives and to ensure them that the problems with the magazines would be rectified. Cialdella also traveled to Trade Secret's facilities in Toronto for an explanation on the status of the Project, because Trade Secret was failing to communicate with The Foundry. The Foundry determined that the additional shipments had not shipped because Trade Secret failed to fully pay its vendor for a portion of the Project. Cialdella also paid Trade Secret's vendor for its work so that the Project could be completed. Nevertheless, Trade Secret did not deliver the full balance of the magazines until October 20, 2010, and even then, many of the publications allegedly were of poor quality or contained errors and inaccuracies. AAHS and The Foundry incurred additional costs to accommodate the new delivery deadlines, all of which Trade Secret failed to meet. Ultimately, as a result of the many errors associated with the Project, AAHS failed to pay The Foundry for its work on the Project and for subsequent work.
The Complaint also alleges that Trade Secret and Harb (collectively, "Defendants"), who had access to the names of The Foundry's various existing customers and prospects, proceeded, almost immediately and without authorization, to directly solicit these customers and prospects in New York City and elsewhere. The Foundry specifically advised Defendants that they could not even contact AAHS unless Cialdella was out of the country and if The Foundry was not immediately available to communicate with AAHS. And even then, Trade Secret could only update AAHS as to the status of the Project. At some point "not long after" the failure of the Project, Trade Secret and Harb contacted AAHS, claiming that The Foundry was to blame for the problems with the Project and referred to The Foundry as "crooks," a "bad" printing company, and "other words to this effect."
The Complaint also alleges that Defendants contacted an existing customer of The Foundry, Sunny Day Guides ("Sunny Day"), and made similar statements as those made to AAHS. The Foundry enjoyed annual net revenues of $75,000 due to its relationship with Sunny Day, which consisted of printing the travel guides for various destinations, including Branson, the Smoky Mountains, Myrtle Beach, Ocean City, the Outer Banks and Colonial Williamsburg. However, as a result of the Defendants' comments, Sunny Day has refused to provide printing jobs to The Foundry.
On December 23, 2011, The Foundry sued Trade Secret and Harb in the Southern District of New York. Although Trade Secret concedes that New York has personal jurisdiction over it, Harb argues that he is not individually subject to personal jurisdiction in New York. Both defendants additionally move to dismiss all the causes of action except for breach of contract pursuant to Fed. R. Civ. P 12(b)(6). Finally, in the alternative, defendants move to dismiss this case under the doctrine of forum non conveniens. For its part, The Foundry opposes these motions, and petitions the Court to attach defendants' assets pursuant to Fed. R. Civ. P. 64 and C.P.L.R. § 6201.
"When responding to a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant."
This case is before this Court pursuant to diversity jurisdiction; therefore, the Court will look to New York law to determine whether defendant Harb is subject to personal jurisdiction here.
Under New York law, there are two bases for personal jurisdiction over out-of-state defendants: (1) general jurisdiction pursuant to C.P.L.R. § 301 and (2) long-arm jurisdiction pursuant to C.P.L.R. § 302.
Under C.P.L.R. § 301, a New York court may exercise jurisdiction over a non-domiciliary defendant "on causes of action wholly unrelated to acts done in New York," when the defendant is "engaged in such a continuous and systematic course of `doing business' [in New York] as to warrant a finding of its `presence' in the jurisdiction.'"
Here, none of the indicia of"doing business" is present to confer general personal jurisdiction for the individual defendant Harb. As Harb's affidavit sets forth, he does not reside in New York; maintain offices, addresses, phone numbers, or bank accounts in New York; does not own property in New York; and does not conduct any business personally in New York. Plaintiff offers no facts to support a finding that Harb is "doing business" in New York, and therefore has not made out a prima facie showing of general personal jurisdiction over Harb. Accordingly, the Court finds that New York does not have general personal jurisdiction over him pursuant to C.P.L.R. § 301.
C.P.L.R. § 302(a)(1) provides, in relevant part: "[A] court may exercise personal jurisdiction over any non-domiciliary . . . who in person or though an agent . . . transacts any business within the state or contracts anywhere to supply goods or services in the state." C.P.L.R. § 302(a)(1) (McKinney's 2012). In addition to finding that the defendant has transacted business within the state or contracted anywhere to supply goods or services within the state, "the claim asserted must arise from that business activity."
C.P.L.R. § 302(a)(1) is a "single act statute and proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted."
Here, the Complaint alleges that at some time after the magazines were shipped to AAHS, Harb made a telephone call to AAHS to blame The Foundry for the poor quality of the magazines. Also during this call, Harb allegedly successfully solicited AAHS as a client for future business. This telephone call was "related to" The Foundry's prior business transaction with AAHS-which "had its center of gravity inside New York"-and the call "projected" Harb and Trade Secret into future transactions with AAHS having their "center of gravity inside New York."
To satisfy the minimum contacts required by the Due Process Clause of the Fourteenth Amendment, the defendant's "conduct and connection with the forum State [must be] such that he should reasonably anticipate being haled into court there."
"Ordinarily . . . if jurisdiction is proper under the C.P.L.R., due process will be satisfied because C.P.L.R. § 302 does not reach as far as the constitution permits."
Under the common law doctrine of forum non conveniens, a district court has broad discretion to "dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim."
"[A] court reviewing a motion to dismiss for forum non conveniens should begin with the assumption that the plaintiffs choice for forum will stand."
With regard to step two, "[t]he defendant bears the burden of establishing that a presently available and adequate alternative forum exists."
At step three, the "burden is on the defendant to show `the balance of private and public interest factors tilts heavily in favor of the alternative forum.'"
The public interest factors include: "(1) settling local disputes in a local forum; (2) avoiding the difficulties of applying foreign law; (3) avoiding the burden on jurors by having them decide cases that no impact on their community." Id. No single factor is dispositive, and "each case turns on its facts."
Plaintiff's choice of forum here is accorded a moderate level of deference. First, the "convenience of the plaintiff's residence in relation to the chosen forum" weighs against according deference to The Foundry's choice of forum. The Foundry is a company headquartered in Virginia, and it admits that New York is not a convenient forum for either party. (Memorandum of Law in Opposition to Defendants' Motion to Dismiss ("Opp.") at 20 n. 7).
Second, "the availability of witnesses or evidence to the forum district" does not strongly weigh in favor of deferring to Plaintiff's choice of forum. Plaintiff claims that it "filed its lawsuit in New York City because it is the location of the majority of activities and witnesses associated with all aspects of this dispute." (Opp. at 20 n.7.) Plaintiff points to the facts that: (1) AAHS is a New York City publisher; (2) the proofs and publications related to the Project were shipped to New York City, "where some of those publications remain"; (3) Plaintiff attended meetings with AAHS in New York City that were "relevant to the Project"; and (4) Defendants solicited many of the Plaintiff's customers and prospects located in New York City and throughout the United States. (Opp. at 19.) In arguing that "the majority of activities and witnesses associated with all aspects of this dispute," Plaintiff emphasizes the tort allegations against Trade Secret involving AAHS but ignores its breach of contract claim against Trade Secret, whose witnesses are all located in Canada. Plaintiff also downplays the tort allegations against Defendants involving Sunny Day, a vendor presumably located in Virginia with whom Plaintiff had an existing relationship worth $75,000 in annual net revenues, and who, allegedly as a result of Defendants' comments, has now refused to work with Plaintiff.
The third factor, "the defendant's amenability to the suit in the forum district," weighs in favor of according deference to Plaintiff's choice of forum, but not by much. Trade Secret concedes that it is subject to personal jurisdiction in New York, although the basis for this is not made clear by the parties. And, as discussed above in Part. A,
Fourth, courts must ask whether the plaintiffs choice of forum was motivated by tactical reasons. In light of the other deference factors above, and given that Virginia public policy generally disfavors non-solicitation clauses
In sum, Plaintiff is afforded a moderate level of deference because the lawsuit does have a bona fide connection to New York, but New York is not particularly convenient for Plaintiff, Defendants, or the majority of available witnesses.
Canada and Virginia are adequate fora. Plaintiff spends much of its opposition to Defendants' forum non conveniens motion arguing that Defendants failed to demonstrate that a Canadian court would be an adequate alternative forum. (Opp. at 17-18.) The Court disagrees. "An alternative forum is adequate if the defendants are amenable to service of process there, and if it permits litigation of the subject matter of the dispute."
First, the "relative ease of access to evidence" does not weigh significantly in either direction. To the extent there is evidence regarding the negotiation and execution of the Print Order, this evidence will likely be in Canada or Virginia. Assuming that the samples of the allegedly defective magazines are currently in New York, these can easily be shipped to Canada or Virginia.
Second, the "cost to transport witnesses to trial" weighs slightly in Defendants' favor. Trade Secret will have to fly its witnesses from Canada to New York, but given that Trade Secret conducts other business in New York and has conceded to personal jurisdiction here, "any inconvenience caused by travel to New York for this litigation will not be oppressive."
Third, the "availability of compulsory process for unwilling witnesses" also does not weigh significantly in either direction. Aside from broadly stating that "requiring the various willing (and unwilling) U.S. witnesses involved to travel to Canada would be unnecessarily expensive, procedurally difficult and time-consuming," (Opp. at 20), Plaintiff does not specify which witnesses are unwilling and why travel would be procedurally difficult.
In sum, the private interest factors do not weigh heavily in either direction.
First, the fora's relative interests weigh in favor of dismissal. Despite Plaintiffs contentions to the contrary, New York does not have a strong interest in this particular lawsuit. Plaintiff argues that "the large majority of the material activities or a substantial portion therefore occurred in New York and/or the causes of action accrued in New York." (Opp. at 18.) However, as noted above, Plaintiff emphasizes only the allegations involving AAHS and downplays everything else, including the events surrounding the Print Order and the communications to Sunny Day. New York does not have a strong interest in settling contract disputes between a company in Virginia and one in Canada. Nor does New York have a strong interest in holding a Canadian company liable for allegedly harming a Virginia company. New York does, however, have an interest in "avoiding the burden on [its] jurors by having them decide cases that have no impact on their community."
Considering the moderate level of deference afforded Plaintiff's choice of forum, that Canada and Virginia are both adequate alternative fora, and that New York has no real interest in this litigation, Defendants have sufficiently shown that a balance of the hardships in this case favors dismissal. Accordingly, this action is dismissed for forum non conveniens. The Court need not address Defendants' motion to dismiss for failure to state a claim or Plaintiff's petition for pre-judgment attachment.
Based on the above, the Defendants' motion to dismiss the Complaint for forum non conveniens is GRANTED.
SO ORDERED.