distribution of the Pictures is null and void.
These motions followed and were heard and considered
submitted on June 27, 1991.
There is No Jurisdiction Over Koala
Personal jurisdiction over Koala in this case is asserted
under New York's long-arm statute, CPLR § 302(a). Viacom's
First Amended Complaint has not alleged that Koala performed
any act in New York but that it is the assignee of rights
acquired under a New York contract, entered into initially by
Viacom and MSP, relating to the ownership of "Tilt."
The "jurisdictional net cast by" CPLR § 302(a) subsection (1)
[transacting business] "reaches only a defendant that
`"purposefully avails itself of the privilege of conducting
activities within [New York], thus invoking the benefits and
protections of its law."'" Mayes v. Leipziger, 674 F.2d 178,
183 (2d Cir. 1982), quoting McKee Electric Co. v. Rauland-Borg
Corp., 20 N.Y.2d 377, 382, 283 N.Y.S.2d 34, 38, 229 N.E.2d 604,
607 (1967), quoting Hanson v. Denckla, 357 U.S. 235, 253, 78
S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958); Galgay v. Bulletin
Co., 504 F.2d 1062 (2d Cir. 1974); Don King Prod., Inc. v.
Douglas, 735 F. Supp. 522, 527 (S.D.N.Y. 1990) (central question
for § 302(a)(1) is whether defendant performed purposeful acts
in New York in relation to the contract which is the basis upon
which jurisdiction is asserted) (citations omitted).
Acquiring all rights to a twelve year old motion picture in
California from a California entity does not constitute an
activity equivalent to transacting business in New York.
The remaining provisions of § 302(a) are equally inapposite.
Viacom does not allege that Koala committed a "tortious act
within the state" [subsection 2]. Indeed, Viacom does not
allege that Koala committed "a tortious act" at all, or that
Koala has caused Viacom any injury, making subsection 3
inapplicable on those grounds alone. And the case does not
concern real property [subsection 4].
Thus, New York does not even purport to exercise jurisdiction
over a non-domiciliary on facts such as these. Beyond that, due
process would be violated if Koala were required to litigate
Viacom's claims in New York.
Koala engaged in no activity in New York. Koala settled a
California litigation with a California entity and obtained all
of MSP's right, title and interest in "Tilt." While some of the
rights in the Picture were subject to an already extent
long-term license to Viacom, and thereby entitled Koala to
receive monies from Viacom, the right to receive money from an
entity in New York does not constitute "transact[ing] business"
within New York.
The question on the issue of whether a non-resident can be
sued in a given locale in a given case is what the nonresident
has done and whether the defendant has purposefully injected
itself into the state, so that it "should reasonably anticipate
being haled into court there." World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490
(1980). Accord, Glass v. Harris, 687 F. Supp. 906, 909 (S.D.N Y
Viacom has also referred to principles of in rem jurisdiction
alleging that "rights to `Tilt' proceeds and any other rights
now claimed by Koala represent intangible property having a
situs in New York, as to which the courts of New York have
jurisdiction to adjudicate and declare rights and duties."
Viacom thus characterizes a claim that one party owes another
as an in rem dispute, requiring the claimant to litigate on
that ground alone in the state of the obligor.
However, under Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct.
2569, 53 L.Ed.2d 683 (1977), all assertions of state court
jurisdiction — in personam, in rem and quasi in rem — must be
evaluated by the minimum contacts standard of International
Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95
(1945) and its progeny. Moreover, quasi-in-rem jurisdiction
as indicated by Viacom's authorities
concerns situations where a plaintiff, seeking money from a
non-resident, attaches property of the non-resident in the
state, thereby obtaining jurisdiction over the nonresident to
the extent that the plaintiff may satisfy its judgment out of
the attached property. See also, e.g., D. Siegel, New York
Practice (2d ed. 1991) ("Siegel"), pp. 154, 158, 162-63;
quasi-in-rem jurisdiction requires that the property be seized,
attached. See e.g., CPLR § 314(3); Siegel, pp. 162-63.
In addition, CPLR § 302(a) requires not only that the
defendant have transacted business within New York or done
other specified acts, but also that the cause of action sued on
"arises from" that activity. See, e.g., McGowan v. Smith, 52
N Y2d 268, 437 N.Y.S.2d 643, 419 N.E.2d 321 (1981). In this
case, Viacom seeks not damages for any injuries but rather
declarations that Viacom does not owe Koala any money or other
specified obligations. Under the principles of Columbia
Pictures Industries, Inc. v. Schneider, 435 F. Supp. 742
(S.D.N.Y. 1977), aff'd, 573 F.2d 1288 (2d Cir. 1978), the
transaction of business by a defendant in New York does not
give rise to a declaratory judgment cause of action.
There, Columbia Picture Industries ("Columbia"),
headquartered in New York, brought an action in New York
against California residents for a declaration that Columbia
had not violated the antitrust laws, breached its contract with
defendants, or otherwise violated their rights in connection
with a motion picture and moved to enjoin the defendants'
later-brought action in California. The Honorable Morris E.
Lasker denied the relief, stayed the New York declaratory
action, and stated:
Not surprisingly, long arm jurisdiction under
§ 302(a)(1) has typically been exercised when
plaintiff has claimed an injury arising out of the
defendant's transaction of business within the
state . . . Here, by contrast, Columbia merely
seeks a declaratory judgment that it did not injure
the nondomiciliary defendants. It is difficult to
understand in what way a cause of action for a
declaration that plaintiff did not injure
defendants "may fairly be said to have arisen" out
of the defendant's transaction of business in the
state . . . a . . . restrictive view should prevail
where the plaintiff claims no injury at all from
the defendants within the state business
transactions. The remedial purposes of the long arm
statute would not be promoted by a finding that
personal jurisdiction exists here; indeed, where no
injury to the plaintiff is claimed, it seems more
likely that the state courts would adhere to the
advice given in McKee Electric Co. . . .
435 F. Supp. at 749-50 (citations and footnote omitted).
This analysis was specifically cited with approval by the
Second Circuit in Beacon Enters., Inc. v. Menzies, 715 F.2d 757
(2d Cir. 1983), also a declaratory judgment action. "The New
York Court of Appeals' recent emphasis on the importance of the
nexus requirement in applying section 301(a)(1) . . .
reinforces our belief that Columbia Pictures Industries
correctly interprets New York law." 715 F.2d at 765.
Viacom's causes of action for declaratory judgments do not
"arise out of" Koala's activities.
Viacom has noted that in the 1970's Durand made trips to New
York to seek financing for "Tilt," to make a casting call, and
to screen the completed film. Viacom does not contend that its
claims arise out of these acts, but that these acts support its
claim that Koala is subject to jurisdiction derivatively.
However, Viacom's claims arise not from the making of "Tilt"
(in which Viacom was not involved), but rather from the
relationship between the television licensee and an entity that
later obtained ownership of the film by assignment. There is,
at best, a "remote causal connection between defendant's forum
activity and plaintiff's claim." Martin E. Segal Co. v. Barton,
612 F. Supp. 935, 937 (S.D.N.Y. 1985).
Further, MSP assigned the ownership of "Tilt" but not the
Agreement, which covers sixteen films and sets forth
obligations and rights of MSP beyond the right to receive
distribution fees, warranties of MSP, and the like.
The prior acts of the third party, MSP, cannot be attributed
to the defendant Koala even under Viacom's cited authorities.
In Schenin v. Micro Copper Corp., 272 F. Supp. 523 (S.D.N Y
1967), Micro had purchased all the assets of Vanura Uranium
Inc., which then dissolved. Plaintiff argued that jurisdiction
existed because Micro was Vanura's "successor-in-interest." Id.
at 526. The court rejected this claim:
Plaintiff's novel approach to the jurisdictional
issue rests, in effect, on an untenable theory of
involuntary, retroactive attribution. There exists
no basis in law or reason to impute to Micro, for
jurisdictional purposes, activities of Vanura in
New York, such as they may have been.
Similarly, in Colson Services Corp. v. Bank of Baltimore,
712 F. Supp. 28 (S.D.N.Y. 1989), the court stated:
The general rule in such cases is that the
successor-in-interest may be subject to
jurisdiction based on the activities of its
predecessor, but only under certain conditions not
at issue in the instant case.
712 F. Supp. at 30, (citing Schenin and Fehl v. S.W.C. Corp.,
433 F. Supp. 939, 947 (D.Del. 1977)).