JEFFREY L. SCHMEHL, District Judge.
Before the Court is the Second Motion of Defendant, Galleon Beach Resort, Ltd., to Dismiss Plaintiffs' Amended Complaint (Docket No. 41). Plaintiffs, Yousifeh Bassil and Antoine Bassil ("Plaintiffs") have opposed the motion, Defendant has filed a reply, and Plaintiffs have filed a sur-reply letter. Having read the parties' briefing, I will deny Defendants' Motion to Dismiss and order this matter to proceed to arbitration.
This matter arises from an incident which occurred on July 25, 2010 when Plaintiffs were vacationing in the Cayman Islands. (Amended Complaint, ¶ 11.) On this date, Plaintiff-wife allegedly was injured when she tripped and fell while staying at the Westin Casuarina Resort and Spa ("Resort"), located in Grand Cayman, Cayman Islands. (
Plaintiffs originally sued Columbia Sussex Corporation, Starwood Hotels and Resorts Worldwide, Inc. and Westin Hotel Management, L.P. in this court. Upon learning that none of these defendants owned or operated the hotel where Plaintiff-wife fell, Plaintiffs were permitted to amend their complaint to name Galleon Beach Resort, Ltd. ("Galleon"), the owner of the hotel, as a defendant.
Galleon filed a Motion to Dismiss, alleging that this Court cannot exercise personal jurisdiction over it, as it has no contacts with Pennsylvania. The Honorable Cynthia M. Rufe denied Defendants' Motion to Dismiss without prejudice, and permitted the parties to engage in jurisdictional discovery in order to determine if jurisdiction over Galleon can be imputed to it based upon the theory of alter ego jurisdiction. After this matter was transferred to the undersigned and jurisdictional discovery was completed, Defendants filed their second Motion to Dismiss. Defendants again argue that this Court has no personal jurisdiction over Galleon as Galleon is not owned, operated or controlled by any of the other defendants and therefore, there is no alter ego jurisdiction over Galleon.
Defendants move to dismiss Plaintiffs' claims on the basis of lack of personal jurisdiction. In response, Plaintiffs argue that this Court has general jurisdiction over Defendant Galleon Beach Resort Ltd. through an alter ego theory of personal jurisdiction. Specifically, Plaintiffs argue that Galleon is the alter ego of Columbia Sussex Corporation ("CSC"), a company over which this Court does have jurisdiction.
A motion to dismiss for lack of jurisdiction is brought under Federal Rule of Civil Procedure 12(b)(2). The standard for deciding a motion under Rule 12(b)(2) is different from that governing a Rule 12(b)(6) motion. While a 12(b)(6) motion requires a court to accept the allegations of the non-moving party as true, a 12(b)(2) motion "requires resolution of factual issues outside the pleadings, i.e., whether in personam jurisdiction actually lies."
The alter ego theory of jurisdiction can be used to impute a corporation's contacts with a forum to a related corporation for purposes of establishing personal jurisdiction.
Courts examine ten factors when analyzing the relationship between related corporations under the alter ego theory, including 1) ownership of all or most of the stock of the related corporation; 2) common officers and directors; 3) common marketing image; 4) common use of a trademark or logo; 5) common use of employees; 6) integrated sales system; 7) interchange of managerial and supervisory personnel; 8) performance by the related corporation of business functions which the principal corporation would normally conduct through its own agent or departments; 9) acting of the related corporation as marketing arm of the principal corporation, or as an exclusive distributor; and 10) receipt by the officers of the related corporation of instruction from the principal corporation.
After careful examination of the relevant factors and the facts presented by Plaintiffs, I find that Plaintiffs have properly established that CSC and Galleon are sufficiently inter-related so as to permit the exercise of alter ego jurisdiction. I will analyze the factors identified in
CSC does not own any stock in Galleon. William J. Yung, President and Director of both CSC and Galleon, testified that CSC never owned Galleon. (Docket no. 41, Ex. I, p. 57.) Further, Theodore R. Mitchel, an officer in both CSC and Galleon, testified that all shares in Galleon are owned by Casuarinas Cayman Holdings. Further, Mr. Mitchel testified that Galleon Development Corporation is the sole shareholder in Casuarinas Cayman Holdings. (Docket No. 41, Ex. J., pp. 9-13.) In turn, the William J. Yung Family Trust is the sole owner of all non-common shares of Galleon Development Corporation, while William J. Yung personally owns all common shares in Galleon Development Corporation. (
Plaintiffs argue that William J. Yung controls both CSC and Galleon, and therefore the corporations should be considered to have common ownership, but Plaintiff has presented no evidence that Yung or CSC own any stock in Galleon. Plaintiffs' allegations that Yung controls both corporations are insufficient to prove common ownership. Therefore, I find this factor weighs against the finding of an alter ego relationship between the two corporations.
It is undisputed that CSC and Galleon had (and continue to have) significant overlap in their officers and directors. At the time of the incident in question, the two corporations had five common officers and directors, and at the present time, they have two common officers and directors. (Docket No. 42, Ex. G, pp. 2-3.) I find that this factor weighs in favor of the existence of an alter ego relationship between CSC and Galleon.
Plaintiffs argue that CSC and Galleon share a common marketing image and that, "in the public sphere, Galleon has been subsumed by [CSC]." (
Defendants fail to address the articles and websites discussed above, aside from alleging that they are not "competent evidence" that this Court can consider in ruling on Defendants' Motion to Dismiss. I find that information such as that produced by Plaintiffs is indeed competent evidence that can be used at this stage of proceedings to defeat Defendants' motion to dismiss. At a bare minimum, these sources show that on occasion, CSC held itself out to the public and marketed itself as the owner and/or operator of the Resort. I find that this factor weighs in favor of finding an alter ego relationship between CSC and Galleon.
Plaintiffs argue that CSC and Galleon both take advantage of the trademark "Westin." Plaintiffs have provided evidence that the Westin logo is displayed throughout the Resort and that the Resort uses the Westin corporate logo. Further, Plaintiffs argue that Resort's promotional materials show only the Westin name and do not reference Galleon at all.
In response, Defendants argue that Galleon contracted with Westin License Company for use of Westin logos and trademarks and therefore had every right to use Westin logos and trademarks in its business. (Def's Reply Brief, p. 6). I agree with Defendants and find that the mere use of the Westin logo does not weigh in favor of an alter ego relationship existing between CSC and Galleon. It cannot be disputed that multiple hotels have contracted with Westin License to use the Westin logo; obviously, the mere creation of such a contract does not result in any sort of relationship with Galleon.
Plaintiffs claim that CSC and Galleon are "so enmeshed with one another that the Defendants are confused about exactly who works for each company." (Pl's Brief in Opposition, unnumbered p. 9.) In support of this contention, Plaintiffs point to employees Roberta Bush, Daniel Szydlowski, Sharon Raehring, Poppy Guloien and Daniel Beddor. As to Ms. Bush, Defendants state that she is an employee of Galleon but Plaintiffs claim that she is held out to the public as an "agent of the Westin Casuarina Resort & Spa" in promotional materials which show the Westin Grand Cayman Sales Team and list Ms. Bush as the Sales Coordinator. (Docket No. 42, Ex. T.) Plaintiffs also argue that Ms. Bush accepted service of the amended complaint and signed for it on behalf of "Galleon Beach Resort Ltd. The Westin." (Docket No. 42, Ex. W.) As to Mr. Szydlowski, Defendants represent that he was employed as general manager of
In response, Defendants argue that Szydlowski and Fulioen are both employees of Galleon, not CSC, and that Raehring, although not employed by Galleon, is also
Plaintiffs argue that CSC and Galleon employ an integrated sales system based on the fact that Sharon Raehring, Director of Group Sales, works from the sales office at CSC's corporate address, while her business card shows that her territory includes the Resort. (Docket No. 42, Ex. I.) Plaintiffs also rely on the fact that Sales Coordinator Roberta Bush was employed by Galleon but listed on the Westin website as Sales Coordinator for the Westin Grand Cayman Sales Team and reported to Szydlowski, who Plaintiffs claim is the general manager of CSC.
I find that Plaintiffs have failed to present sufficient competent evidence of an integrated sales system. The mere fact that Director of Group Sales Sharon Raehring, an employee of Columbia Sussex Management, LLC, worked at CSC's offices and also handled sales for the Resort is not, without more, sufficient evidence to prove an integrated sales system. Therefore, this factor weighs against the finding of an alter ego relationship.
As to this factor, Plaintiffs point to a 1996 "Service Agreement" that Galleon and CSC entered into, whereby Galleon contracted with CSC for CSC to provide "accounting and business management services on its behalf." (Docket No. 42, Ex. J.) These services would also include administrative tasks, filing forms with governmental agencies, insurance matters, processing invoices and payments and obtaining and renewing licenses. (
I find that the Services Agreement, the $140 million loan to Galleon guaranteed by CSC and the $400,000 loan by CSC to Galleon for its operating expenses all clearly weigh in favor of an alter ego relationship between these two corporations. I am also persuaded by the fact that Galleon has received mail at CSC's mailing address in Kentucky, in care of CSC (Docket No. 42, Ex. C, pp. 42-43), had letterhead which displayed Galleon's address as being CSC's address in Kentucky (
Plaintiffs set forth no argument on this factor.
In regards to this factor, Plaintiffs state that CSC "manager's manual was provided to Galleon as a reference for management" of the Resort. (Docket No. 42, Ex. G, No. 24.) Further, when the Resort developed financial troubles, CSC led a "Transition Planning Meeting" to discuss the issues and all of the individuals present at that meeting were CSC officers; no Galleon officers were present. (Docket No. 42, Ex. M.) Defendants do not refute these contentions. I find that this is again a significant factor that weighs in favor of an alter ego relationship between the two corporations.
The weighing of the above factors by mere numbers seems to present a very close call as to whether CSC and Galleon are sufficiently interconnected as to give this court jurisdiction over Galleon, a corporation that admittedly has no contacts with this forum. However, Plaintiffs point to a number of significant business factors which suggest a high degree of intimacy and communality between the two entities. I find that the more important factors clearly weigh in favor of finding an alter ego relationship in this case. Plaintiffs have presented sufficient evidence from which an inference can be drawn that the two corporations do not deal with each other as separate legal entities.
For the foregoing reasons, Defendants' Motion to Dismiss is denied.