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.
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)).
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
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 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 Agency Business locations within the ARACS licensees territories." (Id. P 32.d.) It is undisputed that this meeting took place in Dallas, Texas. (See Collins Nov. 10, 1995 Decl. P 25.)
On September 22, 1995, Plaintiffs commenced the instant action, seeking declaratory and injunctive relief, to wit, a declaration that the acquisition of the Agency Business does not violate ARACS' Exclusive License Agreements with its licensees, and an injunction enjoining Defendants and all those similarly situated, from commencing litigation in other courts concerning Avis's acquisition of the Agency Business. In response, Defendants have moved to dismiss this action for lack of personal and subject matter jurisdiction.
A. Jurisdiction Under 28 U.S.C. § 2201
28 U.S.C. § 2201(a) provides, in pertinent part:
(a) In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration whether or not further relief could be sought.
28 U.S.C. § 2201(a).
Based on a review of the facts before the Court, the Court concludes that there exists an actual controversy in those instances where an Agency location is within a defendant licensee's geographical area of operation. See 800- Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 132 ("A party has a right to seek declaratory judgment where a reasonable apprehension exists that if it continues an activity it will be sued by another party.") (citations omitted); (see Grand Mem. Reply at 9 ("Grand is considering claims against Avis for breach of the Exclusive License Agreement.").) Accordingly, the Court finds that it has subject matter jurisdiction over the present dispute, and turns its attention to Defendants' motions to dismiss for lack of personal jurisdiction.
B. Personal Jurisdiction Over Defendants
Personal jurisdiction in a diversity case is determined by the law of state in which the court sits. Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963). A plaintiff has the ultimate burden of proving personal jurisdiction over a defendant by a preponderance of the evidence; however, "until an evidentiary hearing is held, plaintiff need only make a prima facie showing by its pleadings and affidavits that jurisdiction exists . . . and this remains true notwithstanding a controverting presentation by the moving party." Hoffritz, 763 F.2d at 57 (citations omitted). In the absence of an evidentiary hearing, all pleadings and affidavits are construed in a light most favorable to the plaintiff, and doubts are resolved in favor of the plaintiff. Id. (citations omitted). Bearing these standards in mind, the Court turns to the pending motions to dismiss for lack of personal jurisdiction.
1. CPLR § 301: "Doing Business "
New York Civil Practice Law and Rules section 301 ("Section 301") provides for the exercise of "jurisdiction over persons, property, or status as might have been exercised heretofore." N.Y. Civ. Prac. L. & R. § 301 (McKinney 1990). Section 301 provides for, inter alia, personal jurisdiction over foreign defendants that are "doing business," and that are, therefore, "present" in New York. Simonson v. International Bank, 14 N.Y.2d 281, 251 N.Y.S.2d 433, 200 N.E.2d 427 (1964). Stated simply, a foreign defendant is doing business in New York if it operates "not occasionally or casually, but with a fair measure of permanence and continuity." Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915, 917 (1917).
"Whether a corporation may be deemed to be present by virtue of its doing business in the jurisdiction depends upon the application of a 'simple and pragmatic' test." Hoffritz, 763 F.2d at 58 (citations omitted). In applying this pragmatic test, New York courts have focused on several factors, including: the maintenance of bank accounts and other property in New York by the foreign defendant; the presence of employees of the foreign defendant in New York; the existence of an office in New York; and, the solicitation of business in New York. See id. (citations omitted).
Viewing the pleadings and affidavits in a light most favorable to Plaintiffs, and resolving all doubts in their favor, the Court concludes that Plaintiffs have not made a prima facie showing that the named Defendants are "doing business" in New York. Initially, the undisputed facts convey none of the traditional indicia of "doing business," stated above, on which courts have relied in determining whether a foreign defendant does business in New York. No Defendant is licensed to do business in New York. None maintains an office in New York. No Defendant maintains a bank account in this state, has any employees in this state, or has an authorized agent to accept service in this state. None owns real or personal property in this state. Plaintiffs do not allege that any Defendant "solicits business" in New York.
Further, the allegations regarding activity conducted in New York -- viz., by the A & P Committee, the ALA and VSA -- do not amount to a prima facie showing that the thirteen individual named Defendants, who are entities separate from the A & P Committee, the ALA and VSA, and from one another, do business in New York. On a close reading, Plaintiffs' allegations fail to state business activities by the named Defendants in this jurisdiction vis-a-vis the activities of the A & P Committee, the ALA and VSA. The issue is well-framed by Defendants:
Plaintiffs have seized on the fact that the A & P Committee and the ALA have an office in Garden City, from which a staff of 4 employees administers certain matters. Certainly, the presence of an office and employees would be relevant factors in assessing whether the A & P Committee and/or the ALA are "doing business" in New York but, neither is a defendant herein. Thus, the issue is whether the office and employees of these distinct nondefendant entities can be used to show that any or all of Defendants are doing business in New York.
(Defs.' Mem. Supp. at 32-33) (further emphasis added).
The Court agrees with Defendants' statement of the issue and, for the reasons stated below, finds that Plaintiffs' allegations as to the New York activities of the A & P Committee, the ALA, and additionally, VSA, do not show that the named Defendants do business in New York, notwithstanding that certain executives of some Defendants hold positions in these entities.
For example, as to the activities of VSA, although Plaintiffs place great emphasis on the activities of VSA as a financial enterprise utilized by ARACS licensees, (see Collins Nov. 10, 1995 Aff. PP 8-11), Plaintiffs' allegations amount to little more than a showing of VSA's aggregate business in New York -- not business activities conducted in New York by the named Defendants. As with the facts regarding the A & P Committee and the ALA, cf. Armco Steel Co., L.P. v. CSX Corp., 790 F. Supp. 311, 320 (D.D.C. 1991) (defendant not transacting business through trade association where no specific evidence that association was acting as defendant's agent) Plaintiffs have not made a showing that the Defendants in this action are "present" in New York because of the activities of VSA.
See e.g., Delagi v. Volkswagenwerk, AG, 29 N.Y.2d 426, 328 N.Y.S.2d 653, 656, 278 N.E.2d 895 (1972) (no inference of agency between two separate corporations).
Further, Plaintiffs allege that the ALA and VSA arrange and facilitate substantial purchasing programs for ARACS licensees. Absent from Plaintiffs' proffer, however, is an indication of the extent to which the individual Defendants participate in the ALA and VSA buying programs. That pivotal information may not be gleaned from the record. The Court notes that Defendant Grand, for example, indicates that
VSA has not processed even one of Grand's dollars within this decade. Grand is not a shareholder in VSA; it is not an officer or director of VSA; and it does not use VSA to finance the purchase and/or lease of any of its fleet of vehicles.