Defendants Rays & Associates and Rays Group is proper under
either New York Civil Practice Law and Rules § 301 as those
defendants, through Rays Apparel, Inc. and James Stark, do
business in New York, and also under § 302 as those defendants
have, through their agents, transacted business in New York upon
which Plaintiff's claims arise. Plaintiff's Memorandum at 8.
Prior to discovery, a plaintiff my defeat a motion challenging
jurisdiction by making a "prima facie showing" of jurisdiction.
Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197
(2d Cir.), cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112
L.Ed.2d 116 (1990); Hoffritz for Cutlery, Inc. v. Amajac, Ltd.,
763 F.2d 55, 57 (2d Cir. 1985); Fed.R.Civ.P. 12(b)(2). In
deciding a motion to dismiss for lack of personal jurisdiction,
the court has discretion to proceed either upon written
submissions or through a full evidentiary hearing on the merits.
Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.
If the court decides to determine the motion prior to
discovery, a plaintiff may defeat a motion to dismiss by making a
prima facie showing of jurisdiction either through "legally
sufficient allegations of jurisdiction" in the pleadings, Ball
v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d
Cir.), cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112 L.Ed.2d
116 (1990), or through its own affidavits and supporting
materials. Marine Midland, supra. Such a prima facie showing
does not, however, preclude the eventual need for the plaintiff
to establish the existence of personal jurisdiction by a
preponderance of the evidence either at a pretrial evidentiary
hearing or at trial. Id. Nevertheless, until an evidentiary
hearing is held, a prima facie showing of personal jurisdiction
is sufficient to withstand a motion to dismiss. Id. This
principle "remains true notwithstanding a controverting
presentation by the moving party." Hoffritz for Cutlery, Inc. v.
Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). Where doubts
exist, they should be resolved in the plaintiff's favor. Marine
Midland Bank, N.A., supra, at 904.
Personal jurisdiction over a defendant in a diversity case such
as the instant action is determined by reference to the law of
the state in which the court sits. Hoffritz Cutlery, supra, at
57; Vendetti v. Fiat Auto S.p.A., 802 F. Supp. 886, 889
(W.D.N.Y. 1992) (citing cases). The relevant New York law
consists of Sections 301 and 302 of New York's Civil Practice Law
and Rules ("N.Y.CPLR"), see N.Y. Civ.Prac. L. & R. § 301 et
seq. (McKinney 1990), as interpreted and applied by New York's
courts. Further, no discovery relative to the issue of personal
jurisdiction has been conducted and, as such, at this point
Plaintiff need make only a prima facie showing that personal
A. N.Y. CPLR § 301
Section 301 permits a New York court to exercise personal
jurisdiction over a foreign corporation that is "engaged in such
a continuous and systematic course of `doing business' in New
York as to warrant a finding of its `presence' in [the state]."
Landoil Resources v. Alexander & Alexander Services, Inc.,
918 F.2d 1039, 1043 (2d Cir. 1990) (quoting Delagi v. Volkswagenwerk
A.G. of Wolfsburg, Germany, 29 N.Y.2d 426, 328 N.Y.S.2d 653,
278 N.E.2d 895, 896-97 (1972) (applying New York Civ. Prac. L. & R. §
301)), even if the cause of action is unrelated to the
defendant's New York activities. Jazini v. Nissan Motor Company,
Ltd., 148 F.3d 181, 184 (2d Cir. 1998) (citing Taca Int'l
Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d 97,
256 N.Y.S.2d 129, 204 N.E.2d 329, 331 (1965)).
Where, as here, the claim is that the foreign corporation is
present in New York based on activities there of its subsidiary,
the presence of the subsidiary in New York will not, by itself,
establish the parent's jurisdiction in that state. Jazini,
supra, at 184 (citing Volkswagenwerk Aktiengesellschaft v.
Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984)). For a
New York court to have § 301 jurisdiction under those
circumstances, the subsidiary must be either an "agent" or a
"mere department" of the foreign parent. Jazini, supra, at 184
(citing Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d
That a subsidiary is an agent of the parent may be established
by showing that the subsidiary "does all the business which [the
parent corporation] could do were it here by its own officials."
Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533,
281 N.Y.S.2d 41, 227 N.E.2d 851, 854, cert. denied, 389 U.S. 923,
88 S.Ct. 241, 19 L.Ed.2d 266 (1967). With regard to Defendant
Rays & Associates, Plaintiff relies on the bald assertion that
Rays & Associates is the foreign parent corporation of Rays
Apparel, Inc., Complaint, ¶ 47. However, Plaintiff alleges no
facts supporting this allegation and, as such, Plaintiff's
conclusory statement is insufficient to make a prima facie
showing of agency between Rays & Associates, Ltd. and Rays
Apparel, Inc., sufficient for personal jurisdiction over Rays &
Associates, Ltd. under § 301. Jazini, supra, at 184.
With regard to Rays Group, Plaintiff asserts that this
Defendant is affiliated with and manufactures apparel for Rays
Apparel, Inc. Complaint, ¶¶ 49-50. Plaintiff also relies on
material submitted in opposition to the motion to dismiss
including a certificate of incorporation for Rays Apparel, Inc.,
filed in California, and a promotional brochure for Rays Group
("the brochure").*fn6 According to Plaintiff, the statement in
the brochure that "Rays Group has established its own sales
agency in the United States" refers to Rays Apparel, Inc. as Rays
Group's "distribution agent in the United States." Kirkpatrick
Affidavit, ¶ 50 (citing Brochure at 5, 7); Plaintiff's Memorandum
at 12. As James Stark avers that the brochure was not prepared by
him and in the absence of any indication its content is
attributable to Rays Apparel, Inc., its evidentiary weight should
be discounted. Nevertheless, assuming, arguendo, such
statements in the brochure are correct, and although there is no
dispute that Rays Apparel, Inc.'s sales force is headquartered in
New York's garment district, such fact does not require a finding
that Rays Apparel, Inc. markets, in New York, apparel
manufactured by Rays Group through that office. Further, that
James Stark resides in California and works out of an office of
Rays Apparel, Inc. in Los Angeles, yet remained involved, as
Plaintiff alleged, with Plaintiff's orders and that the brochure
by its terms refers to Rays Apparel, Inc. as present in
California only, Brochure at 3, 5, 12 and photo at 4, reinforces
the determination that, upon this record, Rays Group is not
present in New York for jurisdictional purposes.
Plaintiff further maintains that a statement in the brochure
that in 1986 Rays Group "purchased an American agency, and it has
set up its own office in Los Angeles, under the business
management of James Stark, to actively open up the U.S. market,"
refers to Rays Apparel, Inc. Kirkpatrick Affidavit, ¶¶ 49-50;
Plaintiff's Memorandum at 13. According to Rays Apparel, Inc.'s
certificate of incorporation filed with the California secretary
of state, however, its date of incorporation is March 10, 1993.
As such, Plaintiff's assertion that Rays Apparel, Inc. is the
American agency referred to in the brochure as the Los Angeles
office established by Stark in 1986, Brochure at 5, is incorrect.
In determining whether personal jurisdiction exists under § 301
on the basis that the subsidiary is a "mere department" of the
parent, the court must consider four factors including (1) common
ownership which is "essential," (2) the parent's
financial dependency on the subsidiary, (3) the degree to which
the parent is involved in the selection and assignment of the
subsidiary's executive personnel and failure to observe corporate
formalities, and (4) the amount of control exercised by the
parent over the subsidiary's marketing and operational policies.
Jazini, supra, at 184 (citing Beech Aircraft, supra, at 120,
121, 122). Here, Plaintiff makes no allegations with regard to
these four factors as to Defendant Rays & Associates or Rays
Group other than the single bald allegation that Rays &
Associates is the "foreign parent corporation of Rays Apparel
[Inc.]." Complaint, ¶ 47. However, in considering whether
personal jurisdiction exists, the court is "not bound to accept
as true a legal conclusion couched as a factual allegation."
Jazini, supra, at 185 (quoting Papasan v. Allain,
478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).
Nor does anything in the brochure, on which Plaintiff relies
only with regard to Rays Group, demonstrate the presence of any
of the four factors necessary to make a prima facie showing that
Rays Apparel, Inc. is a mere department of Rays Group. First,
nothing in the brochure demonstrates common ownership of Rays
Group and Rays Apparel, Inc. The brochure indicates that in 1993
James Stark "formed another company with Rays, which has become
an organization under the umbrella of the Rays Group, with James
[Stark] managing its headquarters in Los Angeles, charges with
the exclusive responsibility for handling sales of the Rays
series of products in the American market." Brochure at 3
(emphasis added). Although that statement, along with the
certificate of incorporation indicating that Rays Apparel, Inc.
was incorporated in California in 1993 supports Plaintiff's
contention that the statement "Rays Group has established its own
sales agency in the United States" refers to "Rays Apparel,
Inc.," See Kirkpatrick Affidavit, ¶ 49, Plaintiff's Memorandum
at 12-13, it does not establish common ownership of Rays Group
and Rays Apparel, Inc., an essential element to finding that Rays
Apparel, Inc. is but a "mere department" of Rays Group. Jazini,
supra, at 185. Moreover, Plaintiff has not argued that Rays
Group is the parent of Rays Apparel, Inc., asserting instead that
Rays & Associates is the parent of Rays Apparel, Inc. Complaint,
Nor does the brochure indicate that Rays Apparel, Inc. is
financially dependent on Rays Group as required for the second
factor. Although the brochure indicates that among the garments
manufactured by Rays Group are baby garments into which the Uh!Oh
label is sewn, and although the merchandise ordered by Plaintiff
was from the Uh!Oh line, there is no indication in the brochure
that Rays Group is the exclusive manufacturer of such garments.
In fact, Stark states in further support of the motion to dismiss
for lack of personal jurisdiction that although Rays Group
manufactures some apparel at a number of production facilities in
the Far East, from which Rays Apparel orders much of its solid
pants and shorts, the majority of Rays Apparel, Inc.'s apparel is
produced from unrelated companies in a variety of countries where
merchandise including solid pants and shorts, pattern yarn
shorts, sweaters, polo shirts, knitwear and tee shirts such as
those ordered by Plaintiff. Stark Reply Affidavit, ¶ 7. Stark's
statement thus indicates that there were other sources for the
Uh!Oh garments sold in the United States, including those
Plaintiff ordered, other than Rays Group such that Rays Apparel,
Inc.'s financial viability is not dependent on Rays Group.
As to the third factor, nothing in the brochure indicates that
even if Rays Group were shown to be the parent corporation of
Rays Apparel, Inc., that Rays Group is involved with the
selection or assignment of Rays Apparel, Inc.'s executive
personnel and fails to observe corporate formalities between the
two entities. Finally, with regard to the fourth factor, the
Brochure is devoid of anything tending to demonstrate that Rays
Group exercises any degree
of control over Rays Apparel, Inc.'s marketing and operational
Although the court recognizes it may be difficult to make a
prima facie showing of personal jurisdiction over a foreign
corporation without discovery, such "is the consequence of the
problems inherent in attempting to sue a foreign corporation that
has carefully structured its business so as to separate itself
from the operation of its wholly-owned subsidiaries in the United
States." Jazini, supra, at 186. As stated, Plaintiff has
neither argued nor established that Rays Apparel, Inc. is wholly
owned by Rays Group.
Defendants' motion to dismiss the complaint as against
Defendants Rays & Associates and Rays Group for lack of personal
jurisdiction under § 301 is, therefore, GRANTED.
B. N.Y. CPLR § 302
A defendant may not be "doing business" in New York within the
meaning of § 301, but may nevertheless be subject to jurisdiction
in New York based on a lesser showing of contacts with this
state, provided the cause of action arose from such contacts.
N YCiv.Prac. L. & R. § 302; Beacon Enterprises, Inc. v.
Menzies, 715 F.2d 757, 763 (2d Cir. 1983); Daniel v. American
Bd. of Emergency Medicine, 988 F. Supp. 127, 229 (W.D.N.Y. 1997).
Pursuant to § 302(a)(1), a court may exercise personal
jurisdiction over any nondomiciliary who, either in person or
through an agent, "transacts business within the state or
contracts anywhere to supply goods or services in the state."
N Y Civ. Prac. L. & R. § 302(a)(1) (McKinney 1990). In other
words, "[i]f the defendant has `transacted business' in New York,
it is suable on any cause of action that arises out of the
transaction." Hoffritz, supra, at 58; See N.Y. Civ.Prac. L. &
R. § 302(a)(1).
A demonstration that a defendant "transacted business" in New
York so as to be suable in New York under § 302 provided that a
cause of action arises from that transaction requires
considerably less contact with New York than a demonstration for
purposes of finding jurisdiction under § 301 based on "doing
business" in New York which renders the defendant suable on
unrelated causes of action. Beacon Enterprises, Inc., supra, at
763. Specifically § 302(a)(1) "is a `single act statute' and
`proof of one transaction in New York is sufficient to invoke
jurisdiction, even [if] the [defendant] never enters the state,
so long as the [defendant's] activities [in New York] were
purposeful and there is a substantial relationship between the
transaction and the claim asserted.'" Daniel, supra, 229
(quoting Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460,
527 N.Y.S.2d 195, 522 N.E.2d 40, 43 (1988), and citing Beacon,
supra, at 764) (bracketed text in original).
The court's determination as to whether a defendant has
transacted business in New York for purposes of § 302(a)(1)
requires examination of the totality of defendant's activities
within New York. Eck v. United Arab Airlines, Inc.,
360 F.2d 804, 810-11 (2d Cir. 1966): Falik v. Smith, 884 F. Supp. 862,
866-67 (S.D.N.Y. 1995) (citing GB Marketing USA Inc. v.
Gerolsteiner Brunnen GmbH & Co., 782 F. Supp. 763, 769 (W.D.N Y
1991)). "If, under the totality of the circumstances, a defendant
purposefully availed itself of the privilege of conducting
business in New York, thereby invoking the benefits and
protections of its laws, the defendant `transacts business.'"
Daniel, supra, at 229 (citing Broadcasting Rights
International Corp. v. Societe du Tour de France, S.A.R.L.,
675 F. Supp. 1439, 1443 (S.D.N.Y. 1987)).
Although Plaintiff maintains that the court may also exercise
personal jurisdiction over defendants Rays & Associates and Rays
Group pursuant to § 302, Plaintiff's Memorandum at 8, her support
for such is limited to that sole, conclusory statement.
Nevertheless, as the court considers this issue only in the event
that the district judge finds the complaint states a claim as to
Rays & Associates or Rays Group, such finding would necessarily
be predicated on a determination that the Complaint sufficiently
alleges involvement by Rays & Associates or Rays Group in the
actions which give rise to this suit under an agency or
respondeat superior theory. In that case, Plaintiff would have
made a prima facie showing that Rays & Associates or Rays Group
participated either in person, or through an agent, in at least
one transaction upon which the current dispute can be said to
arise and, thus, made a prima facie showing that this court has
personal jurisdiction over those Defendants. In such event,
Defendants' motion to dismiss for lack of personal jurisdiction
pursuant to § 302 as to Defendants Rays & Associates and Rays
Group should be denied.
Based on the foregoing, Defendants' motion to dismiss (Docket
Item No. 5) should be GRANTED in part and DENIED in part.
Pursuant to 28 U.S.C. § 636(b)(1), it is hereby
ORDERED that this Report and Recommendation be filed with the
Clerk of the Court.
ANY OBJECTIONS to this Report and Recommendation must be
filed with the Clerk of the Court within ten (10) days of service
of this Report and Recommendation in accordance with the above
statute, Rules 72(b), 6(a) and 6(e) of the Federal Rules of Civil
Procedure and Local Rule 72.3.
Failure to file objections within the specified time or to
request an extension of such time waives the right to appeal the
District Court's Order. Thomas v. Arn, 474 U.S. 140, 106 S.Ct.
466, 88 L.Ed.2d 435 (1985); Small v. Secretary of Health and
Human Services, 892 F.2d 15 (2d Cir. 1989); Wesolek v. Canadair
Limited, 838 F.2d 55 (2d Cir. 1988).
Let the Clerk send a copy of this Report and Recommendation to
the attorneys for the Plaintiff and the Defendants.