The opinion of the court was delivered by: SWEET
Defendant Der Kwei Enterprise & Co., Ltd. ("Der Kwei") moves, pursuant to Rules 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure, to dismiss this action as against Der Kwei for lack of personal jurisdiction, as well as insufficiency of service of process. For the reasons set forth below, the motion will be denied.
Plaintiff Cosmetech is a New York corporation engaged in the business of sourcing, designing and distributing supplies, packaging and sundries for the cosmetics business. Cosmetech's customers are located in New York State, throughout the United States, and worldwide.
Der Kwei is a Taiwan corporation engaged in the manufacture and sale of, inter alia, injection-molded plastic packaging for use in the cosmetics industry.
Defendant Wormser Corporation ("Wormser"), a New Jersey corporation, is a distributor of cosmetic supplies and is a direct competitor of Cosmetech.
The complaint in this action was filed on November 27, 1995. The complaint asserted claims against Der Kwei for breach of contract, unfair competition, tortious interference with business relations and unlawful price discrimination pursuant to 15 U.S.C. § 13(a), and claims against Wormser for unfair competition, tortious interference with business relations, tortious interference with contract and violation of 15 U.S.C. § 13(f).
By letter dated December 20, 1995, counsel for Der Kwei demanded that plaintiff withdraw the complaint for lack of in personam jurisdiction because Der Kwei has no presence, agents or offices in the United States. Der Kwei's counsel threatened sanctions under Rule 11 of the Federal Rules of Civil Procedure if the complaint was not withdrawn as against Der Kwei.
In considering a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a district court must construe the facts from the pleadings and affidavits in the light most favorable to the plaintiff. See Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). The facts as presented here are construed accordingly, and they are limited to this motion.
Der Kwei sells and ships its products to various cosmetics companies throughout the world, including the United States and New York State. Many of Der Kwei's major accounts are located in New York, including Revlon, Estee Lauder, Elizabeth Arden, Avon Products and Cosmair. In 1994, Der Kwei reported international sales totaling approximately $ 19 million.
In January 1988, Cosmetech and Der Kwei entered into an agreement whereby Cosmetech agreed to offer Der Kwei products to Cosmetech's customers, and Der Kwei agreed to accept Cosmetech's orders. Der Kwei and Cosmetech also agreed to jointly develop certain products, together with customized tooling and processes, for the exclusive use of Cosmetech and its customers. Der Kwei agreed not to sell directly to Cosmetech's customers, disclose any proprietary information concerning Cosmetech's customers or its products to Cosmetech's competitors, and not to assist any competitor in taking business from Cosmetech. The Cosmetech accounts which were to be protected by this agreement included several customers located in New York. The oral agreement was formed largely through telephone and telecopier communication between Cosmetech and Der Kwei.
Pursuant to the parties' agreement, Cosmetech's purchases were funded by letters of credit posted with New York banks. Der Kwei received payment by drawing on the New York letters of credit. All goods destined for sale in the Eastern United States were shipped to Cosmetech's freight forwarder in New York. During the period from 1993 through August 1995, Cosmetech purchased $ 3.5 million of goods from Der Kwei.
In furtherance of its ongoing marketing efforts in the United States, Der Kwei frequently sent its top officials to New York. Documents produced by Der Kwei in discovery show that its officials traveled to New York in October 1989; February and March 1990; September 1990; May and June 1991; November 1991; January 1992; December 1992; May 1993; January 1994; June 1995; December 1995, and January 1996. The Der Kwei officials who came to New York most frequently were Chin-Te Wang ("Wang"), Der Kwei's General Manager and a 20% shareholder, and Grace Tsai ("Tsai"), its Sales Vice President.
On each of these occasions, Der Kwei's management met with customers and distributors in New York, such as Revlon, Estee Lauder, Lancome, Del Labs and Cosmair. On at least six of these visits -- September 22, 1990; May 28, 1991; November 4, 1991; December 8, 1992; May 5, 1993, and January 1, 1994 -- Der Kwei's management met with officials of Cosmetech. During the meetings with Cosmetech in New York, Der Kwei accepted orders for goods, discussed the design and manufacture of components for Cosmetech's customers, discussed strategies for expanding Der Kwei's sales in New York and the United States, met with Cosmetech's customers, and reaffirmed the arrangement protecting Cosmetech's customers and products, including extending the agreement to South America and Canada.
In December 1992 Wang and Tsai met with Cosmetech in New York City. Among other issues, the parties planned the design and building of a new tool to be utilized in the manufacture of a lipstick cup for Makeup Artists Corporation ("MAC"), a Canadian corporation. At the meeting in New York, Der Kwei and Cosmetech reviewed blueprints, reached agreement on sharing the cost of the new tool, and discussed price, quantity and production and shipment schedules. In addition, it was agreed that this new tool and cup were for the exclusive use of Cosmetech and its customer, MAC.
Der Kwei uses an American company, ("Package Works"), to provide technical consulting services to Der Kwei's United States customers. Bernard Braun ("Braun") is the President and sole shareholder of Package Works, a Connecticut corporation with its principal place of business at Mr. Braun's home in Wilton, Connecticut. When performing technical consulting services for Der Kwei, Package Works uses the "doing business as" name of "Der Kwei Enterprise Technical Services, U.S.A." ("DK/USA"), and uses DK/USA letterhead. Documents prepared by Der Kwei frequently refer to DK/USA as the "U.S. Office" of Der Kwei. In connection with the establishment and operation of DK/USA, Der Kwei paid for the purchase and/or installation of telephones, telephone lines, answering machines, computers, and automated drafting equipment. In addition, Der Kwei paid for business cards and stationery displaying the names of both DK/USA and Der Kwei. "Der Kwei Enterprises" is listed in the Fairfield County, Connecticut telephone directory.
Braun's responsibilities and activities on behalf of Der Kwei in the United States included at least the following:
Communications with United States customers, including Cosmetech, concerning pending orders, design issues, customer complaints, defective merchandise and technical support;
Marketing strategy for Der Kwei in the United States, including plans to increase demand for Der Kwei products;
Preparation of technical drawings bearing Der Kwei's logo;
Policies regarding Der Kwei's relationships with existing customers, such as Cosmetech;
Arranging and attending meetings in New York between Der Kwei's management and its New York ...