owns 70% of Labatt U.S.A. (Govt.'s Supp. Memo at 8); (Affidavit of James West, Director of Legal Services, Canada, and Assistant Secretary of Labatt Brewery Ltd., United States v. International Bhd. of Teamsters, 88 Civ. 4486 ("West Aff."), P 3 (Nov. 1, 1996).) In addition, the Government submits several exhibits which it claims "confirm that Labatt is doing business in the United States through its United States subsidiary," (Govt.'s Supp. Memo at 8), such as: (1) a copy of Labatt's site on the World Wide Web which contains a page devoted to "Labatt in the United States," id. at Ex. A; (2) Labatt's 1994 Annual Report stating that Labatt U.S.A. is a "division" of the company which "competes in the high-quality segment of the United States beer business," id. at Ex. B; and (3) evidence that Labatt U.S.A. is qualified to do business in New York, and maintains an agent for service of process in New York State. Id. at Ex. E.
Based on this documentation, the Government concludes that "Labatt's purposeful conduct of business in the United States and New York through a United States subsidiary constitutes 'continuous and systematic' contacts with the United States and New York." Id. at 10. Accordingly, the Government argues that "it is entirely consistent with the notions of fair play and justice for this Court to exercise its jurisdiction over Labatt to order compliance with the Election Rules and the Election Officer's order." Id.
In response to this Court's request, the Government addressed the applicability of Rule 4(k)(2) to the instant dispute. The Government stated that Rule 4(k)(2) is applicable to the instant case, and that it empowers this Court to exercise personal jurisdiction over Labatt. ((Hearing, United States v. International Bhd. of Teamsters, 88 Civ. 4486 (Nov. 6, 1996) ("Nov. 6 Tr."), 5-6.) The Government explained that Rule 4(k)(2) demands that a foreign defendant have sufficient contacts with the United States to satisfy constitutional due process requirements, and that three possible bases exist for satisfying these requirements: (1) transacting business in the United States; (2) doing an act in the United States; and (3) having an effect in the United States by an act done elsewhere. Id. at 5. Referring to its earlier arguments, the Government stated that Labatt both has transacted business in the United States and caused an effect in the United States by an act done elsewhere. Id. at 5-6. Accordingly, the Government concluded that Labatt has sufficient contacts with the United States to support this Court's exercise of personal jurisdiction over Labatt, and that such exercise would comport with traditional notions of fair play and substantial justice, pursuant to the requirements of Rule 4(k)(2). Id. at 6.
Labatt contests the Government's assertion that this Court has personal jurisdiction over it, and raises three claims in opposition to the Government's arguments. First, Labatt states that "there is absolutely no basis for the Court's exercise of personal jurisdiction over Labatt." (Labatt's Memo at 1.) Labatt explains that it is a corporation organized under the laws of Canada with its principal place of business in Toronto, engaged in the business of brewing and selling beer. Id. Labatt operates several breweries in Canada, including the facility in LaSalle, Quebec that is the focus of the instant dispute. Id. It further states that it "conducts no business in the United States and has no property or employees here," but that "Labatt's beer is sold in the United States by a partially owned subsidiary, which takes title to the beer at the breweries in Canada." Id. at 1-2. In addition, Labatt affirms to this Court that it does not advertise, solicit business, sell goods or otherwise conduct business, own property, hold bank accounts, or have employees in the United States. (West Aff. PP 2-5.) Based on these facts, Labatt contends that it lacks sufficient "'minimum contacts' with the forum state so that the assertion of personal jurisdiction . . . is consistent with 'traditional notions of fair play and substantial justice.'" (Labatt's Memo at 2.)
Second, Labatt contends that case law cited by the Government in support of its case fails to support this Court's exercise of personal jurisdiction over Labatt. Id. Labatt explains that two of the Government's cited cases-- United States v. International Bhd. of Teamsters [Yellow Freight], 948 F.2d 98 (2d Cir. 1992), vacated with directions to dismiss as moot, 506 U.S. 802, 121 L. Ed. 2d 4, 113 S. Ct. 31 (1992), and United States v. International Bhd. of Teamsters [Star Market], 954 F.2d 801, cert. denied, 505 U.S. 1205, 120 L. Ed. 2d 870, 112 S. Ct. 2993 (1992)--address Consent Decree jurisdictional issues entirely unrelated to that at bar. Id. at 3; (Nov. 6 Tr. 8.) Labatt declares that Yellow Freight "held only that the All Writs Act gives this Court power to enforce the 1989 Consent Decree against non-parties if the Court has personal jurisdiction over the non-party." (Labatt's Memo at 3.) It further professes that "the only issue in Star Market was whether the Court had nationwide jurisdiction to enforce the 1989 Consent Decree" on a non-party that "indisputably has substantial United States contacts." Id. at 3-4.
Third, Labatt argues that the Government's reliance on the "effects doctrine" is misplaced. It contends that the cases cited by the Government in support of this doctrine arose from criminal proceedings, that "there is no allegation of any criminal conduct nor that any law of the United States had been violated" in the instant case, and that, therefore, the effects doctrine is inapplicable. Id. at 4-6; (Nov. 6 Tr. 9.)
As for Rule 4(k)(2), counsel for Labatt was entirely unfamiliar with both the provision and its interpretive case law. (Nov. 6 Tr. 12-13.) After listening to the Court read Rule 4(k)(2), however, he attempted to fashion a response by boldly asserting that "Rule 4(k)(2) does not add anything" to the instant inquiry, and that "there is nothing in Rule 4(k)(2) that diminishes the minimum-contacts test." Id.
It is a basic principle of first-year civil procedure that questions of personal jurisdiction go to "whether the controversy or defendant has sufficient contact with the forum to give the court the right to exercise judicial power over defendant. . . ." Santos v. State Farm Fire and Cas. Co., 902 F.2d 1092, 1095 (2d Cir. 1990). Plaintiff bears the burden of establishing a district court's personal jurisdiction over defendant, but his burden varies depending on the procedural posture of the litigation. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 196-97 (2d Cir. 1990). "Prior to discovery, a plaintiff challenged by a jurisdictional testing motion may defeat the motion by pleading in good faith . . . legally sufficient allegations of jurisdiction." Id. at 197. At such preliminary stage, plaintiff's prima facie showing may be met solely by allegations, the truth of which must be assumed by the district court. Id.
In light of this standard, the positions advanced by both the Government and Labatt, and relevant case law, this Court finds that it is proper to exercise personal jurisdiction over Labatt in the instant case, pursuant to Rule 4(k)(2). For the benefit of Labatt's counsel, this Court will explain the Rule itself and review the legal principles underlying it before explaining its applicability to the case at bar.
A. Rule 4(k)(2)
Rule 4(k)(2) is a relatively new provision of the Federal Rules of Civil Procedure. As amended in 1993, Rule 4(k)(2) provides that
if the exercise of jurisdiction is consistent with the Constitution and the laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.