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PHOTOACTIVE PRODUCTIONS, INC. v. AL-OR INT'L
June 14, 2000
PHOTOACTIVE PRODUCTIONS, INC., DOING BUSINESS AS CREATIVE PLACEMENT GROUP, PLAINTIFF,
AL-OR INTERNATIONAL LTD., DEFENDANT.
The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
On November 23, 1999, Photoactive Productions, Inc., doing
business as Creative Placement Group ("CPG" or the "plaintiff")
filed a complaint in New York Supreme Court, Suffolk County
(Index No. 99-26689) alleging that AL-OR International LTD
("AL-OR" or the "defendant") failed to pay it money due and owing
as a result of services in connection with the designing of
magazine advertisements. On December 22, 1999, AL-OR removed this
case to the United States District Court for the Eastern District
of New York pursuant to 28 U.S.C. § 1441. Presently before the
Court is AL-OR's motion to dismiss for lack of personal
jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of
Civil Procedure ("Fed.R.Civ.P."). Alternatively, AL-OR moves
28 U.S.C. § 1404(a) to transfer this matter to the United States
District Court for the Central District of California.
Unless otherwise stated, the facts set forth below are taken
from the plaintiff's complaint. As this decision involves a
motion to dismiss for lack of personal jurisdiction and a motion
to transfer, the Court will also consider the various affidavits
submitted by the parties. See Ball v. Metallurgie
Hoboken-Overpelt, S.A., 902 F.2d 194, 196-98 (2d Cir.)
(discussing procedure for challenging personal jurisdiction),
cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112 L.Ed.2d 116
(1990); see also Factors Etc., Inc. v. Pro Arts Inc.,
579 F.2d 215, 218 (2d Cir. 1978), cert. denied, 440 U.S. 908, 99 S.Ct.
1215, 59 L.Ed.2d 455 (1979) (holding that motion to transfer
venue must be supported by affidavit). As such, the facts set
forth below are also taken from the sworn affidavits and
declarations of Jack Zemer, Doron Basha, Marianne Terchunian,
Craig Mowry, and Ori Zemer.
CPG is a corporation duly organized and existing under the laws
of the State of New York with its principal place of business in
East Quogue, New York. AL-OR is a corporation organized and
existing under the laws of the State of California with its
principal place of business in La Jolla, San Diego County,
California. CPG alleges that AL-OR failed to pay for advertising
and related services that it rendered. CPG is in the business of
providing advertising, media planning and placement, and related
services (collectively "CPG Services"). Between the period of
April 1999 to December 1999, CPG provided Services to AL-OR. The
plaintiff contends that it is owed the sum of $896,294.50 from
AL-OR for CPG Services that remain unpaid.
AL-OR markets, manufacturers, and distributes for sale a line
of fine jewelry, watches, belts, handbags, and other accessories
marketed under the brand name Charriol ("Charriol Products").
CPG contends that a substantial portion of the money owed to it
by AL-OR represents out-of-pocket costs that CPG incurred to
coordinate, plan, and run print advertisements in nationally
circulated magazines for AL-OR.
In January 1999, discussions between AL-OR and CPG took place
regarding the possibility of AL-OR using CPG as its advertising
broker for the 1999 calendar year. All communications were done
by either telephone, fax, mail or email. In April 1999, CPG began
providing services for AL-OR. In October 1999 a dispute arose
over the quality of CPG services and the billing methodology of
AL-OR submits that it has no offices, warehouses, employees or
residences within New York. AL-OR further claims that it does not
maintain any officers, agents, or business representatives in New
York; it does not own any real or personal property in New York;
and it does not maintain any telephone numbers or directory
listings in New York. According to AL-OR, it's sales of Charriol
Products to retailers in New York are solicited primarily by way
of telephone contact by AL-OR's in house employees, from its
headquarters in La Jolla, California. Sales of Charriol Products
by AL-OR to retailers within New York represents approximately
three to five percent of AL-OR's total sales.
AL-OR contends that New York is an inconvenient forum because
all the evidence, documents, witnesses, principals, and officers
are located in California. Furthermore, AL-OR asserts that none
of its employees or representatives have ever traveled to New
York to negotiate, discuss or enter into a contract with CPG.
Therefore, AL-OR argues that it does not have sufficient minimum
contacts with New York to justify a finding of jurisdiction in
the Eastern District of New York.
On the one hand, CPG alleges that AL-OR does have purposeful
and substantial contacts with New York to support the exercise of
personal jurisdiction. CPG alleges that AL-OR requested that CPG
hire an employee who would coordinate all local cooperative
Charriol advertising throughout the Country. As a result, CPG
hired one David Nye. Nye was based in New York and worked
directly with AL-OR's customers to promote and facilitate all
cooperative Charriol advertising. While CPG supervised Nye, he
acted as a liaison to AL-OR. According to CPG, in 1999, a budget
of $332,000 was established for the Charriol advertising program,
which Nye managed from New York on behalf of AL-OR. As further
evidence of AL-OR's contact with New York, CPG submits that it
established a New York cellular number dedicated to Charriol,
which Nye answered, "Charriol, David Nye speaking."
CPG also contends that AL-OR's employees have visited New York
for business purposes. For example, in September 1999, Ori Zemer,
AL-OR's marketing director, traveled to Manhattan to meet with
Craig Mowry, chairman of CPG, and a representative of the Italian
edition of Vogue to discuss the publisher's production of a
photographic layout showing Charriol products. In addition, CPG
claims that Doron Basha, AL-OR's Vice President for Sales and
Marketing, traveled to New York in July 1999 to assist CPG in
selecting an outdoor site to shoot a commercial. According to
CPG, on the same trip, Basha also met with other CPG officers to
discuss strategies for achieving AL-OR's marketing objectives.
Further, CPG claims that representatives of AL-OR also attend and
maintain a vendor booth at the annual "JA" jewelry show held in
the winter and summer each year at the Jacob Javits Convention
Center in New York. Finally, CPG submits that in June 1999, Jack
Zemer, AL-OR's principal, and Doron Basha attended a consumer
show at the Jewelry Information Center in New York City.
With regard to a motion to dismiss the complaint pursuant to
Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction, the
plaintiff bears the burden of demonstrating that the court has
jurisdiction over the defendant. See Bank Brussels Lambert v.
Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999);
Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999)
(citing Metropolitan Life Ins. Co. v. Robertson-Ceco Corp.,
84 F.3d 560, 566 (2d Cir.), cert. denied, 519 U.S. 1006, 117 S.Ct.
508, 136 L.Ed.2d 398 (1996)). While the plaintiff will ultimately
have to prove the existence of personal jurisdiction over the
defendant by a preponderance of evidence, prior to discovery, a
plaintiff may defeat such a motion with legally sufficient
allegations of jurisdiction that are pleaded in good faith. See
Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir.
1998); see also Wilcock v. Equidev Capital L.L.C, 1999 WL
1129068, 1999 U.S.Dist. LEXIS 18898, *2 (S.D.N.Y. Dec. 9, 1999).
Motions to dismiss under 12(b)(2) test the plaintiff's theory
of jurisdiction and test the facts supporting the jurisdictional
theory. See Credit Lyonnais Sec. (U.S.A.), Inc. v. Alcantara,
183 F.3d 151, 153 (2d Cir. 1999). To survive such a motion to
dismiss, the plaintiff is required to make a prima facie showing
of jurisdiction, including an averment of facts that, if credited
by the ultimate trier of fact, sufficiently establish
jurisdiction over the defendant. See Kernan, 175 F.3d at 240;
Bank Brussels Lambert, 171 F.3d at 784.
In reaching a decision as to whether jurisdiction is
appropriate, the Court need only determine whether the facts
alleged by the plaintiff, if true, are sufficient to establish
jurisdiction. See Credit Lyonnais Sec., Inc., 183 F.3d at 153.
No evidentiary hearing or factual determination is necessary for
this purpose. See id. When considering various affidavits and
sworn declarations, the Court must construe them in the "light
most favorable to the plaintiff and doubts are resolved in the
plaintiff's favor, notwithstanding a controverting
presentation by the moving party." A.I. Trade Finance, Inc. v.
Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993).
Personal jurisdiction over a nonresident defendant in a federal
diversity action is determined by the law of the forum state.
See id.; Jazini, 148 F.3d at 183-84; Kronisch v. United
States, 150 F.3d 112 (2d Cir. 1998). Thus, in resolving
questions of personal jurisdiction in a diversity action,
a district court must conduct a two-part inquiry. . .
. "First, it must determine whether the plaintiff has
shown that the defendant is amenable to service of
process under the forum state's laws; and second, it
must assess whether the court's assertion of
jurisdiction under these laws comports with the
requirements of due process."
Kernan, 175 F.3d at 240 (quoting Metropolitan Life Ins., 84
F.3d at 567) (other citation omitted).
Before analyzing the merits of the defendant's motion to
dismiss for lack of personal jurisdiction and the defendant's
motion to transfer venue, the Court notes that the defendant's
argument that a forum selection clause contained in the agreement
between the parties choosing California as the proper forum is
without merit. The defendant states in its memorandum of law that
the "contract was executed by AL-OR in La Jolla, California, and
returned to CPG. As executed, the contract provided that any
disputes between AL-OR and CPG arising under the contract would
be resolved in a forum in Los Angeles, California, and that such
resolution would be made according to and under the laws of the
State of California."
However, upon reviewing the "forum selection clause," it is
clear that it is in fact an arbitration clause. The agreement
states that "any dispute between CHARRIOL and CREATIVE PLACEMENT
GROUP that arises out of this Agreement will be resolved through
a binding arbitration proceeding to be conducted under the
auspices and the commercial arbitration rules of the American
Arbitration Association." As neither party has apparently invoked
its right to arbitrate, the Court concludes that this clause is
not relevant in regard to the ...