The opinion of the court was delivered by: HURLEY
This declaratory judgment action arises from a dispute among the parties over whether the actions of Avis Rent A Car System, Inc. ("ARACS"), in acquiring the business conducted by Agency Rent A Car System, Inc. ("Agency"), violates licensing agreements between ARACS and its licensees. Currently before the Court are motions by Defendant Grand Rent A Car Corp. ("Grand"), and all other named Defendants to dismiss the action for lack of personal and subject matter jurisdiction.
Additionally, all Defendants other than Grand move to dismiss this action for insufficiency of service of process and for failure to state a claim upon which relief can be granted. For the reasons that follow, the motions to dismiss for lack of personal jurisdiction over each of the Defendants are granted, and the action is dismissed.
The pertinent facts, set forth below, are undisputed or appear from the complaint or plaintiffs' affidavits. For the purposes of the instant motions to dismiss on jurisdictional grounds, they are accepted as true. See Moyers v. Brown, 1990 U.S. Dist. LEXIS 224 (Jan. 8, 1990 S.D.N.Y.) (Haight, J.) (citing Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985)).
Plaintiffs Avis, ARACS and Agency (collectively, "Plaintiffs") are each Delaware corporations with their principal places of business in Garden City, New York. (Compl. PP 4 - 6.) ARACS is a wholly-owned subsidiary of Avis. (Id. P 6.)
Each Defendant is a foreign corporation, with its principal place of business as follows: Grand, El Segundo, California; Hayes Leasing Co. ("Hayes"), Dallas, Texas; Shore Rentals, Inc. ("Shore"), Matawan, New Jersey; Rent-A-Car Co., Inc. ("Rent-A-Car"), Richmond, Virginia; Car & Truck Rentals, Inc. ("Car & Truck Rentals"), Birmingham, Alabama; Motorent, Inc. ("Motorent"), Nashville, Tennessee; General Car and Truck Leasing System, Inc. ("General"), Davenport, Iowa; Kal-Co. Rental & Leasing, Inc. ("Kal-Co"), Kalamazoo, Michigan; Ness Rent A Car, Inc. ("Ness"), Fargo, North Dakota; Baker Car and Truck Rental, Inc. ("Baker"), Little Rock, Arkansas; Auto Rent, Inc. ("Auto Rent"), Amarillo, Texas; Checker Leasing ("Checker"), Roanoke, Virginia; Coastal Bend Rent A Car, Inc. ("Coastal Bend"), Corpus Christi, Texas.
B. Facts Underlying the Present Dispute
1. Defendants' Contacts with New York
ARACS has entered into exclusive licensing agreements with each of the respective Defendants that provide, inter alia, for covenants by the licensee concerning: i) the provision, by the licensee, of monthly reports regarding the total time and mileage charges assessed and the number of vehicles rented and available for rental by the licensee; ii) the uniform provision by the licensee of liability, fire, theft and collision insurance to renters; iii) use of an ARACS Standard Rental Agreement; iv) compliance with, inter alia, the Avis System Operator's Manual and other directives from ARACS; v) inspection of the licensee's premises and pertinent records by ARACS; vi) payment by the licensee of administrative and advertising fees; and vii) subscription to a national advertising campaign conducted by an Advertising and Policy Committee, composed of members elected by the licensees and appointed by ARACS. (See "Exclusive License Agreement" attached as Ex. 1 to Compl. §§ 3,4,5.)
The license agreements further provide covenants by ARACS to provide assistance in advertising and the procurement of large-scale accounts, to avail the licensee of optional participation in manufacturers' vehicle fleet programs, and to permit the licensee to use the Avis name. (See id. § 6.) Additionally, pursuant to a separate agreement, licensees utilize a computerized central reservation system known as the Wizard System. (See Compl. P 10.b.)
Finally, four business organizations that service the needs of ARACS and its licensees, including Defendants, have offices in New York: i) the Avis Licensee Association ("Licensee Association"); ii) the Advertising & Policy Committee (the "A & P Committee"); iii) the Avis System Advertising Trust (the "Trust"); and iv) Vehicle Services of America, Ltd. ("VSA"). (Pls.' Mem. Opp. P 6.)
The first organization, the Licensee Association, is a Texas corporation with its offices in Mineola, New York. (See Klyce Oct. 19, 1995 Aff. Supp. P 20.) Robert Klyce ("Klyce"), President of Car & Truck Rentals, is its president, and C. Kenneth Wright ("Wright"), Chairman of Rent-A-Car, is its Chairman. (Id.) In addition to other functions, the Licensee Association facilitates cooperative purchase programs on behalf of the licensees who are dues-paying members. (See id. P 21.)
Second, the Trust "was organized to be utilized by [ARACS] and its Licensees whereby certain costs common to both parties (such as advertising and reservation processing) would be charged to and paid by the Trust." (See Financial Statement, Avis System Advertising Trust, attached as Ex. 4 to Compl., at 3.) The Trust is a Massachusetts corporation with an office in Mineola, New York. According to Wright, Chairman of the Trust, the "day-to-day" executive needs of the Trust are conducted in Virginia, where Wright maintains his office. (Wright Nov. 17, 1995 Aff. Reply P 7.)
Through contributions directly from ARACS, and indirectly through ARACS from a percentage of fees paid to ARACS by licensees, the Trust funds the activities of the third organization, the A & P Committee. (See Wright Oct. 17, 1995 Aff. Supp. P 25.) The A & P Committee is an unincorporated association with its office in Mineola, New York; seven of its members are elected by licensees, and six are appointed by ARACS. (Id. P 21.)
The fourth entity, VSA, is a Delaware corporation with an office in Mineola, New York. (See Collins Nov. 10, 1995 Aff. Opp. P 9.) According to Wright, a Director of VSA, VSA negotiates purchasing programs, which are then made available to ARACS licensees. (See Wright Aff. Reply P 12.) Licensees, in turn, independently arrange their own purchasing. (Id.)
2. The instant controversy
According to Plaintiffs, on or about September 7, 1995, Avis Executive Vice Presidents Charles Bovino ("Bovino") and James Collins ("Collins") "had conversations with Wright, Klyce and an attorney representing Grand and Hayes regarding the Agency Business acquisition[.]" (Id. P 32.) During those conversations, Plaintiffs learned that the licensees' retained counsel believed that the conduct of Agency Business within any licensee's territory would constitute a breach by ARACS of its license agreement with that licensee. (Id. P 32.b-c.) Finally, according to Plaintiffs, the licensees' legal counsel "stated that if, on the basis of their demands, no solution were reached, litigation would be commenced to stop plaintiffs from operating the ...