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PERFUMER'S WORKSHOP v. ROURE BERTRAND DU PONT

March 19, 1990

THE PERFUMER'S WORKSHOP, LTD., PLAINTIFF,
v.
ROURE BERTRAND DU PONT, INC., ROURE BERTRAND DU PONT, S.A. AND F. HOFFMAN-LA ROCHE & CO. LIMITED COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Kevin Thomas Duffy, District Judge:

MEMORANDUM & ORDER

Plaintiff Perfumer's Workshop, Ltd. ("Perfumer's"), seeks compensatory and punitive damages for alleged violations of various federal and state antitrust laws, and for state breach of contract, common law fraud, and negligence claims. Defendants Roure Bertrand du Pont, Inc. ("Roure"), Roure Bertrand du Pont, S.A. ("Roure-France"),*fn1 and F. Hoffman-La Roche & Co. Limited Company ("Hoffman-La Roche") move pursuant to Fed.R.Civ.P. 12(b)(2-5)*fn2 to dismiss for lack of personal jurisdiction, improper service of process, and improper venue. Alternatively, defendants move, under Fed.R.Civ.P. 12(b)(6), to dismiss the federal and state antitrust and fraud causes of action. Roure is the only defendant that concedes jurisdiction. Subject matter jurisdiction rests on federal antitrust claims, pendent and diversity jurisdiction.

FACTS

Perfumer's, a New York corporation, sells and produces perfume fragrances and related products. Amended Complaint ¶ 4. Roure, a New Jersey corporation, is a perfume house, supplying and manufacturing concentrates, essential oils, and other chemicals for perfumes and cosmetics. Amended Complaint ¶ 5. Roure-France is a French corporation that, together with Roure, participates in developing and producing prestige perfume products marketed world-wide. Amended Complaint ¶ 5. Hoffman-La Roche, the Swiss parent corporation of Roure and Roure-France, is engaged in the manufacture and sale of, among other things, pharmaceuticals, vitamins, fragrance products, and chemicals used in perfume production. Amended Complaint ¶¶ 6-7.

It is uncontested that a perfume house that creates or develops a perfume fragrance formula owns it as a trade secret according to industry custom. Amended Complaint ¶ 14. In April 1985, Roure developed a perfume fragrance for Perfumer's under the code name and number "Neroli Nights R6068," which Roure protected as a trade secret. Amended Complaint ¶¶ 38-40. Pursuant to agreement Perfumer's purchased and distributed 1,200 one-ounce samples of the secret formula for test marketing in December 1985. By late winter 1986, Perfumer's purchased the fragrance in varying concentrations to create cologne, eau de toilette, and eau de parfum. Touted as a "major new prestige fine fragrance," the fragrance was to be sold under Perfumer's trademark SAMBA. Amended Complaint ¶¶ 39-40. By spring 1987, Perfumer's undertook a major marketing and advertising campaign for the SAMBA fragrance both domestically and abroad. Amended Complaint ¶¶ 46-48.

Perfumer's allegedly detected an "off odor" in the SAMBA fragrance in post-promotional shipments of the product. In addition, Perfumer's determined that the scent's endurance on the skin of the 18% solution eau de toilette pre-production samples was inadequate. Roure proposed increasing the eau de toilette solution from 18% to 22% and Perfumer's agreed; Roure supposedly made no offer to remedy the "off odor." Amended Complaint ¶ 59.

Perfumer's claims, inter alia, that Roure breached its obligations under the supply agreement because all post-promotional shipments of the SAMBA fragrance failed to contain the preservative, BHT, at the agreed upon level of 0.05% of the essential oil. Perfumer's objected to the use of the preservative DL-alpha tocopherol in lieu of BHT, which it claimed to be the cause of the fragrance's premature destabilization, resulting in the drastic and unpleasant change in the scent. In addition, Perfumer's claims that the raw materials utilized were not of like grade and quality as the raw materials used in the "Neroli Nights" formula, test marketed in 1985. After refusing to pay Roure under the supply agreement, Perfumer's rejected all post-promotional SAMBA shipments. Perfumer's then engaged Roure-France's expertise to try and remedy SAMBA's "off odor." Nonetheless, as a result of Perfumer's failure to tender payment to Roure, Roure filed an action in New Jersey state court. That action has since been removed to New Jersey's Federal District Court and this court has not been advised as to the status of that action. Roure's Memorandum of Law in Support of Motion To Dismiss, at 3.

DISCUSSION

I. In Personam Jurisdiction

Both Hoffman-La Roche and Roure-France contest the assertion of jurisdiction over them in this forum. Personal jurisdiction "is a composite notion of two separate ideas: amenability to jurisdiction, or predicate, and notice to the defendant through valid service of process." Soltex Polymer Corp. v. Fortex Industries, Inc., 590 F. Supp. 1453, 1456 (E.D.N.Y. 1984), aff'd, 832 F.2d 1325 (2d Cir. 1987).

A. Hoffman-La Roche

The applicable law of jurisdiction in a diversity action is the law of the state in which the district court sits. CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). Whether this court may assert jurisdiction over Hoffman-La Roche as Roure's foreign parent turns on whether a prima facie showing is made that Hoffman-La Roche had sufficient contacts with New York such that traditional notions of fair play are not offended. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Marine Midland, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). Pursuant to New York law, a court is permitted to exercise jurisdiction over a corporate entity on the basis of a single purposeful transaction of business conducted by it in New York. N.Y. Civ. Prac.L. & R. § 302(a)(1) (McKinney 1983 & Supp. 1990). Thus, if jurisdiction is predicated upon a New York-based business transaction, an articulable nexus must exist between business transacted by Hoffman-La Roche in-state and the cause of action sued upon here. Alexander & Alexander v. Donald F. Muldoon & Co., 685 F. Supp. 346 (S.D.N Y 1986).

As a threshold matter, nothing in the record before me indicates that Hoffman-La Roche has either conducted business in New York or facilitated any transaction between Perfumer's and Roure in-state. Moreover, the nexus that Perfumer's draws upon in their pleadings and supportive documentation is a tenuous one, reliant on magazine articles and broadly ambiguous statements which suggest only that Hoffman-La Roche conducts business worldwide. The Supreme Court has held that merely entering products into the stream of commerce is an insufficient jurisdictional predicate. Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 110, 107 S.Ct. 1026, 1032, 94 L.Ed.2d 92 (1987) (citing World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). Although Hoffman-La Roche has many subsidiaries and its name is world renowned for such items as cosmetics and perfumes, business activity of this sort is nonetheless insufficient evidence of purposeful contacts with New York for the purposes of this action.

Nor can this court assert jurisdiction over Hoffman-La Roche simply because it is the parent of a United States subsidiary. Only where a parent corporation asserts such extensive control over its subsidiary as to be deemed the subsidiary's alter-ego, can the parent-subsidiary relationship be a sufficient jurisdictional predicate. See Volkswagenwerk Atkengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984) ("identical ownership interests must exist before one corporation can be considered a department of another corporation for jurisdictional purposes"). Parent corporations that observe "a strict formal separation" from their subsidiaries and that derive no direct benefit therefrom are not subject to in personam jurisdiction. Bulova Watch Co., Inc. v. K. Hattori & Co., Ltd., 508 F. Supp. 1322, 1342 (E.D.N.Y. 1981) (Weinstein, J.). Because Hoffman-La Roche ...


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