(2) transfer for forum non conveniens to the District of New Jersey; or (3) dismiss the action, or stay it pending disposition of the District of New Jersey proceeding.
For the reasons below, P.S.C.'s motions are granted in part and denied in part. I conclude that the dispute should be resolved here. The parties are therefore enjoined from pursuing the District of New Jersey action, which action has been held in abeyance by the District of New Jersey pending resolution of the instant motions.
A. Personal Jurisdiction
The extent to which P.S.C. "does business" in New York State subjects it to personal jurisdiction here pursuant to N.Y. Civ. Prac. L. & R. ("CPLR") 301.
P.S.C.'s transaction of business here includes, among other activities:
(i) an ongoing relationship with Just Packaging, Inc. (which is located in the Eastern District of New York), an independent New York packaging and distribution center that receives the pet grooming mitts from abroad, repackages them, and ships them out to fulfill 80% of P.S.C.'s orders from within and without New York State, Pl.'s Mem. L. Opp'n at 5-6 (citing Decl. of Def. Ziskind);
(ii) a contract with a Manhattan based company, Media Syndication Group (MSG) (which is located in the Southern District of New York), giving it exclusive print media advertising and corresponding distribution rights. MSG purchases pet mitts from the Hong Kong manufacturer and P.S.C. receives commissions on MSG's purchases; and
(iii) a relationship with Emson, a Manhattan based distributor (which is located in the Southern District of New York), whereby P.S.C. has granted Emson the right to sell to retail markets that P.S.C. has chosen not to service directly.
Although Just Packaging, Inc. is an independent contractor, personal jurisdiction over P.S.C. can nonetheless result from this relationship alone. Where New York contacts are such that local representatives--even non-agents--do all that a foreign defendant would do by its own officials if it were in New York, personal jurisdiction can be invoked. See, e.g., Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116 (2d Cir. 1967), cert. denied, 390 U.S. 996, 20 L. Ed. 2d 95, 88 S. Ct. 1198 (1968); Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 281 N.Y.S.2d 41, 227 N.E.2d 851 (N.Y.), cert. denied, 389 U.S. 923, 19 L. Ed. 2d 266, 88 S. Ct. 241 (1967). In practice, this means that the local entity must represent "so significant a portion of [the] business that the non-resident would have to dispatch its own employees to [the] State were its affairs not conducted on its behalf." Pneuma-Flo Sys., Inc. v. Universal Mach. Corp., 454 F. Supp. 858, 865 (S.D.N.Y. 1978) (citations omitted). As indicated above, by their own estimate, defendants acknowledge that fully eighty percent of all nationwide orders are fulfilled by Just Packaging, Inc. If P.S.C. did not retain Just Packaging, Inc. to do so, P.S.C. would no doubt have to dispatch its own employees to perform these packaging and distribution activities.
2. Stephen Ziskind
Ontel states that Stephen Ziskind is the "founder, CEO, President and owner of 100% of the capital stock" of P.S.C., Pl.'s Letter Br. at 2, and characterizes Ziskind's deposition testimony as relating that he "was and continues to be the sole driving force behind the activities that stand as the basis for this" lawsuit, id. Ontel concludes that Ziskind's activities in connection with New York give this Court jurisdiction over him pursuant to New York's long-arm statute, CPLR 302(a). Defendants, meanwhile, argue that Ziskind "should . . . be dismissed from this action since his actions relating to Ontel's claims were conducted on behalf of [P.S.C.] solely in his corporate capacity." Defs.' Letter Br. at 3.
In New York, the individual who owns a corporation is generally not subject to personal jurisdiction as a result of the corporation's activities unless (1) the corporate veil can be "pierced" or (2) the corporation acted as an agent for the owner. Lamar v. American Basketball Ass'n, 468 F. Supp. 1198, 1203 (S.D.N.Y. 1979). An individual, such as a corporate officer or employee, however, cannot avoid jurisdiction on the basis that he or she engaged in the offending activity solely in the context of his or her corporate capacity. Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 202, 522 N.E.2d 40 (N.Y. 1988).
Ontel proclaims that it "believes . . . Mr. Ziskind has clearly formed the corporation for his own wrongful gain," Pl.'s Letter Br. at 5, while defendants note that "the mere fact that a corporation consists of a 'one person' corporation [sic] does not alone justify piercing the corporate veil," Defs.' Letter Br. at 3 (citation omitted). Under Florida law, which controls this question,
piercing the veil requires more than mere conjecture on the plaintiff's part; before a corporation's owners can be required to demonstrate proper maintenance of the corporate form, the plaintiff must make:
a preliminary showing "that the corporation is in actuality the alter ego of the stockholders and that it was organized or after organization was employed by the stockholders for fraudulent or misleading purposes, or in some fashion that the corporate property was converted or the corporate assets depleted for the personal benefit of the individual stockholders, or that the corporate structure was not bona fidely established or, in general, that property belonging to the corporation can be traced into the hands of the stockholders."
Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114, 1120 (Fla. 1984) (quoting Advertects, Inc. v. Sawyer Indus., Inc., 84 So. 2d 21, 24 (Fla. 1955)). Accord Lamar, 468 F. Supp. at 1204 n.9 (rejecting an effort to pierce a corporate veil where the only evidence plaintiff presented consisted of requests to the court to take "notice of the generally accepted intelligence that the various entities which have been created to enclose [the owner's] activities . . . are no more than [the owner's] alter egos and have no independent existence for contractual purposes separate and apart from [the owner]" (quoting plaintiff's att'y's aff.)). Ontel fails to provide any support for its naked statement that Ziskind "clearly formed the corporation for his own wrongful gain," and I will therefore not find that Ziskind is subject to this Court's jurisdiction by virtue of his supposed abuse of the corporate form.
Ontel fails as well in establishing that P.S.C. does business in New York as Ziskind's agent. Ontel has not shown that P.S.C. acted in pursuit of Ziskind's business; rather, there is every indication that whatever activities Ziskind may have personally taken were to further P.S.C.'s business.
See Lamar, 468 F. Supp. at 1204 ("It is not Buffalo Braves, Inc. which is in New York to do [the owner's] business, but rather [the owner] who has . . . entered New York to do the corporation's business.").
Ontel cannot obtain personal jurisdiction over Ziskind based solely on his position as President of P.S.C.; Instead, Ontel must show that Ziskind personally took part in the activities giving rise to the action at issue. See Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976, 984 (S.D.N.Y. 1992) ("The transaction at issue performed by the corporation . . . must be with the knowledge and consent of the officer and the officer must have exercised control over the corporation in the transaction." (citations omitted)); see also Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 201, 522 N.E.2d 40 (N.Y. 1988) (distinguishing between exercising jurisdiction over an individual who was a "primary actor in the [corporate] transaction . . . in New York . . . [and an] employee in Texas who played no part in it"). The many contacts Ontel describes that Ziskind himself personally had, and may continue to have, with New York are irrelevant as to whether New York can exercise long-arm jurisdiction over him in connection with the dispute at issue.
Ontel has presented no evidence, nor even made any allegations, concerning Ziskind's personal involvement with the activities giving rise to this suit; Ontel has not asserted that Ziskind himself engaged in the following activities or directed that they be undertaken: communicating information about Ontel's alleged infringement to third parties, negotiating with Ontel regarding Ontel's alleged infringement, and creating the patent warning on P.S.C.'s packages. It is not enough that Ziskind, as President of P.S.C., likely possessed authority to direct all the activities that gave rise to this suit. If that were the case, the President of every company would be subject to jurisdiction in New York based on activities with which he or she had no personal involvement and over which he or she exercised no decisionmaking authority.
Accordingly, the action against Ziskind is dismissed for lack of personal jurisdiction.
Because P.S.C. is a corporation, venue is proper in the Southern District of New York pursuant to the federal venue statute, 28 U.S.C. § 1391. P.S.C.'s activities in the Southern District are such that, if the Southern District were a distinct state, P.S.C. would be subject to personal jurisdiction there in accordance with the New York State law of personal jurisdiction detailed in the previous section of this Opinion.
28 U.S.C. § 1391(c).
C. Transfer or Dismiss
Defendants further argue that even if I were to find as to one or both of the defendants that this Court has personal jurisdiction and venue were proper here, this case should be transferred to the District of New Jersey pursuant to 28 U.S.C. § 1404(a), where defendants filed their own action against plaintiff only hours after the instant action had been filed. Alternatively, defendants request that I dismiss or stay this action pending the outcome of the District of New Jersey suit. Defendants exhort,
Ontel's obvious race to the courthouse door by filing suit during ongoing settlement negotiations should not be rewarded by this Court, since any potential plaintiff, as PSC, should be encouraged to enter into settlement discussions without fear that the defendant will use the opportunity to file a preemptive suit in a district of its own choosing.