The opinion of the court was delivered by: Gershon, District Judge.
Invoking the court's diversity jurisdiction, plaintiff Theodore
Rothstein brings this action against defendants Mark C. Carriere,
Multi-Media Distributing Co., Inc. ("Multi-Media"), which does
business as Leisure Time Entertainment, Inc., and Leisure Time
Products, Inc. for malicious prosecution, intentional infliction
of emotional distress and prima facie tort. Defendants move to
dismiss the first amended complaint under Rule 12(b)(2) of the
Federal Rules of Civil Procedure for lack of personal
jurisdiction over them. They also move to dismiss under Rule
12(b)(3) and 28 U.S.C. § 1406(a) on the basis that venue is
improper in the Eastern District of New York; in the alternative,
they seek transfer of the case to the Central District of
California, pursuant to 28 U.S.C. § 1404(a).
Plaintiff alleges the following in the first amended complaint:
Plaintiff, a resident of Brooklyn, New York, is lawfully engaged
in the adult entertainment business. Defendant Carriere, who
resides in Brentwood, California, is also engaged in the adult
entertainment business in this district. Carriere is the
president, chief executive officer and majority shareholder of
the corporate defendant Leisure Time Entertainment, Inc.
Leisure Time Entertainment, Inc., incorporated in Indiana,
maintains offices in California and Indiana and is engaged in the
adult entertainment business. Leisure Time Entertainment, Inc.
includes many affiliated entities, such as defendant Multi-Media
and defendant Leisure Time Products, Inc., which are also both
engaged in the adult entertainment business. Multi-Media is
incorporated in Indiana and maintains an office in Indiana.
Leisure Time Products, Inc. is incorporated in California and
maintains an office in California.
On June 3, 1993, Carriere was indicted in the State of Alabama
on criminal charges of possession with intent to distribute
obscene materials. Defendant Multi-Media was also indicted and
charged with violating Alabama's obscenity laws. On January 4,
1994, Carriere was indicted by a federal grand jury in
Louisville, Kentucky for violating federal obscenity laws.
Defendant Leisure Time Products, Inc. was also indicted on
similar charges. Carriere previously had been indicted and had
pled guilty in three separate federal jurisdictions to obscenity
and tax evasion charges.*fn1 Since one of the sentences he had
received included a sentence of probation, Carriere faced
possible incarceration for violating his probation if he were
convicted on felony charges in Alabama and Kentucky.
In an effort to receive leniency for possible future sentences,
Carriere met with Special Agent Matthew M. Pellegrino of the
Federal Bureau of Investigation ("FBI") on March 18, 1994 at the
Department of Justice in Washington, D.C. It was during this
meeting, plaintiff alleges, that Carriere falsely and maliciously
told investigators that plaintiff had been involved in criminal
activities with Carriere in 1990 and 1991 involving transactions
in obscene pornographic video tapes.
Carriere informed investigators that, on the recommendation of
his then-sales manager, Donald Sarnblad, Carriere entered into a
deal with Bizarre Video, located in Brooklyn, New York, in which
Carriere agreed to mail a limited listing of Bizarre Video's
tapes to a targeted group culled from Multi-Media's adult
entertainment customer list. Plaintiff alleges that Carriere
falsely and maliciously told investigators that plaintiff was the
owner of Bizarre Video. In this regard, Carriere falsely
explained that Morton Gordon, who is the actual owner of Bizarre
Video, was merely serving as a front to conceal plaintiff's
ownership. Carriere allegedly stated that it was plaintiff who
controlled all decision-making and that plaintiff intended
Carriere to sell and distribute obscene video tapes through
Multi-Media's distribution network. Carriere also allegedly
stated that, because of the success of the Bizarre Video
materials, he authorized Sarnblad to arrange for the printing of
a complete catalog of video tapes offered by Bizarre Video and
that he and plaintiff each paid half of the printing costs.
Moreover, it is alleged that Carriere falsely asserted that
plaintiff represented to Sarnblad that Bizarre Video's tapes were
"soft-core" pornography and that plaintiff had been selling them
for years. Finally, Carriere falsely stated that, on his personal
instructions, Sarnblad proposed to plaintiff that he accept cash
in payment for the Bizarre Video tapes and that thereafter
Sarnblad took cash to Brooklyn, New York, and plaintiff accepted
Six months after Carriere's meeting in Washington, D.C., in
September 1994, the State of Alabama dropped all charges against
Carriere individually. He agreed on behalf of Multi-Media to
plead guilty to certain obscenity charges and was sentenced to
pay $50,000 in restitution and a $450,000 fine.
In April 1995, Carriere pled guilty in the U.S. District Court
in the Western District of Kentucky based upon a cooperation
agreement which envisioned a prison term of six months or less
and a $500,000 fine. Just before sentencing on this plea, Special
Assistant United States Attorney Gene Malpas wrote in a February
6, 1996 letter to the court, in relevant part:
On February 7, 1996, the day after the letter to the court,
plaintiff along with Sarnblad, Morton Gordon and Bizarre Video
were indicted in U.S. District Court for the Northern District of
Florida in Tallahassee, Florida. The indictment charged seven
counts of federal obscenity violations based on the distribution
of Bizarre Video's obscene materials from Indiana and New York to
Florida. If convicted on these charges, plaintiff faced up to 10
years in jail and fines up to $250,000.
Two days later, on February 9, 1996, Carriere was sentenced in
the Western District of Kentucky. He received no prison time,
despite prosecutors' request for six months of incarceration. He
was assessed a $250,000 fine, and Multi-Media was fined $600,000.
During the pre-trial discovery proceedings in the prosecution
against plaintiff in the Northern District of Florida, the
government disclosed that Carriere was a cooperating witness in
the case. At the same time, an affidavit filed with the district
court revealed that Sarnblad denied the statements made by
Carriere to the FBI. Specifically, he expressly denied that it
was plaintiff who owned Bizarre Video or that plaintiff was
involved in the transaction that Carriere had described between
Multi-Media and Bizarre Video in New York. In addition, Eric
Gutterman, another employee of Multi-Media, identified Morton
Gordon as the owner of Bizarre Video and acknowledged that he
delivered cash to Gordon in New York as payment for Bizarre
Video's tapes. Documentary evidence, uncovered by the government
from Multi-Media, later substantiated Sarnblad's denials and
disputed Carriere's claims. After discovering that Carriere had
lied with regard to ...