The opinion of the court was delivered by: WARD
The complaint in this action states two claims, one for defendant's alleged breach of an employment contract with plaintiff and the other based on defendant's alleged fraudulent misrepresentations that induced plaintiff to enter into this employment contract.
The Court's jurisdiction is founded on diversity. Plaintiff, a citizen of New York, seeks an award of compensatory and punitive damages. Defendant, Racal-Milgo, Inc. ("Racal-Milgo"), is a corporation organized under the laws of Delaware. Racal-Milgo moves pursuant to Rule 12(b)(2), Fed. R. Civ. P., for an order dismissing the complaint for lack of personal jurisdiction.
For the reasons hereinafter stated, Racal-Milgo's motion is denied.
This litigation has had a peripatetic pre-trial history. It was commenced in the Supreme Court of the State of New York by service of a summons and a complaint on February 4, 1980. The action was removed, without opposition, to this Court by a petition for removal filed with the Clerk of this Court on February 25, 1980. By a notice of motion filed March 25, 1980, defendant moved to dismiss the complaint pursuant to Rule 12(b)(2), Fed. R. Civ. P., alleging lack of personal jurisdiction, and pursuant to Rule 12(b)(5), Fed. R. Civ. P., alleging insufficiency of service of process. Alternatively, defendant's motion sought an order, pursuant to 28 U.S.C. § 1404(a), transferring this action to the United States District Court for the Southern District of Florida.
Defendant's motion was originally returnable April 8, 1980. By an order dated June 6, 1980, the Court extended plaintiff's time to serve and file its opposition to defendant's motion until July 8, 1980. The Court also directed defendant to serve and file answers to those of plaintiff's interrogatories that related to the issues of service of process and personal jurisdiction by June 26, 1980. In a motion returnable September 9, 1980, plaintiff moved, pursuant to Rules 37(b)(2)(E) and 37(d), Fed. R. Civ. P., for a default judgment, on the ground that defendant had failed to comply with the Court's directive relating to plaintiff's interrogatories. At a pre-trial conference held September 26, 1980, defendant stated that it had failed to comply because of its uncertainty as to whether plaintiff's theory of jurisdiction was based on Racal-Milgo's own business activities within New York or rather on the activities of Racal-Milgo's subsidiary, Racal-Milgo Information Systems, Inc. Plaintiff explained that he was relying on the former theory. The Court then ordered defendant to answer plaintiff's interrogatories, insofar as they related to whether Racal-Milgo was doing business in New York, by October 20, 1980. This order rendered plaintiff's motion for a default judgment moot. Defendant's motion was adjourned until November 11, 1980.
Plaintiff filed no opposition to defendant's motion prior to the return date. Nor did he advise the Court that defendant had failed to comply with the Court's directive regarding plaintiff's interrogatories. Accordingly, on December 23, 1980, the Court granted, as unopposed, defendant's motion to dismiss pursuant to Rule 12(b)(2), Fed. R. Civ. P. Plaintiff thereupon moved, pursuant to Rule 59, Fed. R. Civ. P., for an order vacating the Court's order of dismissal on the ground that plaintiff's failure to file any opposition to defendant's motion was the result of excusable neglect. Oral argument on plaintiff's motion was held on January 30, 1981. At the conclusion of the argument, the Court determined to grant plaintiff's motion and endorsed the motion papers accordingly.
This decision had the effect, since the Court had never reached the merits of defendant's motion, of leaving defendant's motion pending and unopposed. At the oral argument, the parties agreed, in view of the fact that plaintiff had not yet opposed defendant's motion on the merits, that the progress of this litigation would likely be accelerated if the Court were to deal immediately with the question whether this action should be transferred pursuant to 28 U.S.C. § 1404(a), while reserving, if it deemed transfer to be inappropriate, the jurisdictional question for later consideration. (Defendant conceded that it had, by then, been properly served, and accordingly withdrew its motion insofar as it relied on Rule 12(b)(5), Fed. R. Civ. P.)
The Court accepted this suggestion and plaintiff thereupon filed his opposition to the transfer branch of defendant's motion. In a memorandum decision filed July 16, 1981, the Court denied defendant's motion insofar as Racal-Milgo sought a transfer of this action to the United States District Court for the Southern District of Florida. The Court's decision further contained a briefing schedule for the personal jurisdiction branch of defendant's motion. However, after some delay, both parties determined to rest on their previous submissions to the Court.
The facts relevant to whether this Court has personal jurisdiction over defendant in this action are set forth in plaintiff's affidavit filed March 9, 1981, in the affidavit of defendant's counsel filed March 25, 1980, and in Racal-Milgo's answers to interrogatories filed January 7, 1981. Racal-Milgo, which is, as noted, a corporation organized under the laws of Delaware, has few business contacts with New York. It neither maintains offices nor owns real property in New York; it has no employees, representatives, or agents whose residence or place of business is situated in New York; it does not market its products in New York; it does not solicit orders in New York; it does not ship its products into New York; it is not contractually obligated to install or to repair any equipment shipped to or situated in New York. Defendant's business contacts with New York appear to be limited to the following: (1) it once participated in a syndicated loan agreement that involved, among others, two New York banks and that required defendant to maintain "compensating bank accounts" in New York; (2) it occasionally leases automobiles and pager systems in New York; (3) its employees occasionally travel to New York on business, for such purposes as to attend trade shows and to interview prospective employees; (4) it regularly places advertisements in publications sold or circulated in New York, for such purposes as to promote products manufactured by defendant or to solicit inquiries pertaining to possible employment by defendant; and (5) it occasionally places job listings with employment agencies located in New York, which agencies are hired by defendant on a fee-for-services basis.
The products manufactured by Racal-Milgo are marketed, sold, delivered, installed, and serviced in New York by Racal-Milgo Information Systems, Inc. ("Systems"), a wholly-owned subsidiary of Racal-Milgo. Systems, a corporation organized under the laws of Florida, maintains an office in New York City, where a significant number of its employees work. This office serves as a base from which Systems conducts its business throughout New York. The "business" of Systems includes soliciting and taking orders for, negotiating contracts pertaining to, coordinating shipment, delivery, and installation of, and handling customer service problems involving Racal-Milgo's products.
In early 1976, plaintiff commenced discussions with Robert Half Personnel Agency, Inc. ("Robert Half"), regarding a position as corporate controller of Milgo Electronic Corporation ("Milgo"). Milgo, a corporation that was subsequently merged into Racal-Milgo, defendant herein, had hired Robert Half to secure candidates for this position. An employee of Robert Half referred the applications of ten candidates, including an application submitted by plaintiff, to Milgo. Milgo reviewed the qualifications of these candidates and scheduled interviews with them.
During May 1976, plaintiff was interviewed for the controller's position in New York City by Daniel Bronson, an officer of Milgo. Plaintiff was one of three applicants selected by Bronson for further interview. A few days later, plaintiff was interviewed for the position by Charles Weston, a Vice President of Milgo. The second interview also occurred in New York City. Subsequently, plaintiff traveled, at Milgo's request, to Milgo's offices in Miami, Florida, where he was interviewed by the two officers who saw him in New York City and by other officers of Milgo. At the conclusion of the Miami interviews, Weston offered the position to plaintiff. Milgo confirmed the offer in a letter dated June 4, 1976. Plaintiff accepted the offer shortly thereafter. After moving to Florida, plaintiff began work at Milgo's offices in Miami on June 21, 1976. His employment by Milgo ended when he was discharged on July 28, 1976.
With this background in mind, the Court turns to Racal-Milgo's contention that the Court lacks personal jurisdiction over it, requiring that plaintiff's complaint be dismissed pursuant to Rule 12(b)(2), Fed. R. Civ. P. Such a jurisdictional question is, of course, to be determined by reference to the law of the state where the district court sits. Rules 4(d)(7) & 4(e), Fed. R. Civ. P.; see Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 901 (2d Cir. 1981); Dogan v. Harbert Construction Corp., 507 F. Supp. 254, 257 (S.D.N.Y. 1980). Plaintiff's theory of personal jurisdiction is based alternatively on N.Y. Civ. Prac. ...