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AGENCY RENT A CAR SYS. v. GRAND RENT A CAR CORP.

February 13, 1996

AGENCY RENT A CAR SYSTEM, INC., AVIS, INC., and AVIS RENT A CAR SYSTEM, INC., Plaintiffs, against GRAND RENT A CAR CORP., HAYES LEASING COMPANY, INC., SHORE RENTALS, INC., RENT-A-CAR CO., INC., CAR & TRUCK RENTALS, INC., MOTORENT, INC., GENERAL CAR AND TRUCK LEASING SYSTEM, INC., NESS RENT A CAR, INC., BAKER CAR AND TRUCK RENTAL, INC., AUTO RENT, INC., CHECKER LEASING, INC., and, COASTAL BEND RENT A CAR, INC., individually and on behalf of all others similarly situated, Defendants.


The opinion of the court was delivered by: HURLEY

 HURLEY, District Judge

 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. *fn1" 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.

 Background

 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)).

 A. The Parties

 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

 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 the Complaint, ARACS informed its licensees of its intention to acquire the "Agency Business," which involves "renting replacement cars to insurance companies, auto body repair shops, automobile dealers and individual customers when the customer's own car is stolen or damaged . . . ." (Compl. P 25.b.) The Complaint further alleges that the Agency Business is a separate "niche market" for "insurance replacement" rentals, (id. P 26), but that "defendants [have] asserted that the conduct of the Agency Business violates their License Agreements insofar as Agency Business locations situated in their territories are involved." (Id. P 30.) Further, "they have made several demands or threats including that Agency dispose of or close locations of the Agency Business in such licensees territories or turn over such locations to them and generally agree not to open or expand an Agency Business location in their territories in the future." (Id.)

 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 ...


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