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September 30, 1994

Howard Reiss, Plaintiff,
Alan A. Steigrod, Defendant.


The opinion of the court was delivered by: SONIA SOTOMAYOR



 In this diversity action, defendant moves, pursuant to Rules 12(b)(2) and (6) of the Federal Rules of Civil Procedure, to dismiss the Complaint for lack of personal jurisdiction and for failure to state a claim upon which relief can be granted. Because I find that plaintiff has not met his burden of proffering sufficient facts to establish this court's personal jurisdiction over the defendant, I will not address the motion to dismiss for failure to state a claim.


 Plaintiff Howard Reiss, a New York resident, is a former employee of both Rolf W. Rosenthal, Inc. ("RWR") and World Health Communications, Inc. ("WHC"). RWR and WHC are organizations involved in the medical and pharmaceutical fields, and share a parent company, Nelson Communications, Inc.

 Defendant Alan A. Steigrod, a California resident who is sued in this action in his individual capacity, is President and Chief Executive Officer of Cortex Pharmaceuticals, Inc., located in Irvine, California.

 In May 1992, RWR and WHC commenced a lawsuit (the "RWR lawsuit") in the New York Supreme Court against plaintiff, alleging that he had unlawfully misappropriated revenues, confidential business information and goodwill associated with clients of RWR and WHC. Plaintiff claims that the RWR lawsuit against him resulted from false and misleading statements made by defendant in Pennsylvania and repeated in a deposition held in New York in the RWR lawsuit. Plaintiff further alleges that defendant's false statements have seriously impaired plaintiff's standing in his business community in New York. Plaintiff has instituted the present suit against defendant, alleging tortious interference with business relations.

 In the instant motion, defendant maintains that plaintiff's Complaint sets forth a defamation claim, and that such claim is time barred by New York's one-year statute of limitations. Defendant also argues that because he is a California resident who does no personal business in New York, and because the alleged tort in this action occurred in Pennsylvania, not New York, this court has no personal jurisdiction over him. I agree with defendant's personal jurisdiction challenge.


 In a diversity action, personal jurisdiction is determined according to the law of the forum. Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc). Under New York law, the plaintiff bears the burden of establishing jurisdiction over the defendant, which burden varies depending on the procedural posture of the litigation. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). In the preliminary stages of a litigation, the plaintiff must simply make a prima facie showing of personal jurisdiction. After discovery has been conducted, the issue of personal jurisdiction must be established by a preponderance of the evidence. Bare allegations of jurisdiction will not suffice after discovery. Ball, 902 F.2d at 197, United Bank of Kuwait, v. James M. Bridges, Ltd., 766 F. Supp. 113, 115 (S.D.N.Y. 1991).

 The Court permitted plaintiff discovery concerning the personal jurisdiction issues in this case. Having deposed defendant in the RWR lawsuit, plaintiff elected not to conduct any further discovery before filing his answer to defendant's motion to dismiss. The Court cautioned plaintiff that he would be bound to the higher standard of proof required of a plaintiff after discovery and recommended that he reconsider conducting further discovery before answering the motion to dismiss. Plaintiff refused the opportunity to do so, maintaining that he had all of the proof necessary to establish personal jurisdiction. Plaintiff, however, has failed to meet his burden of proof not only by a preponderance of evidence, he has also failed to make out even a prima facie case of personal jurisdiction.

 Plaintiff claims that defendant is subject to jurisdiction in New York pursuant to C.P.L.R. § 302(a)(1), (2) and (3). I will discuss each of these subsections in turn.

 Under § 302(a)(1), a nondomiciliary is subject to personal jurisdiction in New York if he or she "transacts any business within the state or contracts anywhere to supply goods or services in the state." The Court of Appeals of New York has interpreted § 302(a)(1) to require not only that the nondomiciliary transacts business in the state, but also that the cause of action arises from the business transactions. Cutco Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986) (citing McGowan v. Smith, 52 N.Y.2d 268, 272, 437 N.Y.S.2d 643, 645, 419 N.E.2d 321 (1981)). Plaintiff bases his contention that defendant transacts business in New York solely on two ambiguous statements defendant made when deposed in the RWR lawsuit. When describing meeting someone in New York for a drink, defendant stated, "I am in New York a lot." Nowhere in the deposition was defendant asked the purpose of his trips to New York. Later in the deposition, defendant mentioned that he had one telephone conversation with an employee of a New York business, in which he "asked him for some information on one of the companies he was working with for one of the companies I was working with." Based on these two remarks, plaintiff improbably concludes, "It is quite obvious that Mr. Steigrod's trips to New York were frequent for business purposes," and "It is quite obvious that Mr. Steigrod had this communication . . . for business purposes, thus reflecting again his regular transaction of business in New York . . . ." Plaintiff's conclusions are neither obvious nor reasonable inferences. Defendant could make trips to New York City for a multitude of ...

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