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REALUYO v. ABRILLE

July 7, 2003

POMPEYO ROA REALUYO, PLAINTIFF,
v.
CARLOS VILLA ABRILLE, PHILIPPINE DAILY INQUIRER, INQ 7 INTERACTIVE, INC., AND BELINDA OLIVARES-CUNANAN, DEFENDANTS.



The opinion of the court was delivered by: John Koeltl, United States District Judge

OPINION AND ORDER

Pompeyo Roa Realuyo ("the plaintiff") brings this diversity action against Carlos Villa Abrille ("Villa Abrille"), the Philippine Daily Inquirer ("PDI"), INQ 7 Interactive, Inc. ("INQ 7"), and Belinda Olivares-Cunanan ("Olivares-Cunanan") (collectively, "the defendants"). The plaintiff alleges that Olivares-Cunanan wrote a newspaper article in which Villa Abrille defamed the plaintiff and which PDI and INQ 7 published. The plaintiff seeks damages of at least $100 million in addition to attorneys' fees and costs. The defendants contend that this Court lacks personal jurisdiction over them, and move for dismissal pursuant to Fed.R.Civ.P. 12(b)(2). The defendants alternatively move for dismissal pursuant to the doctrine of forum non conveniens.

I.

The relevant facts, as alleged in the Amended Complaint and the affidavits and declarations submitted by the parties in connection with the current motions, are as follows. The plaintiff is a United States citizen, resident of New Jersey, and a practicing attorney with offices in the Southern District of New York. (Aff. of Pompeyo Roa Realuyo sworn to Nov. 22, 2002 ("Pl.'s Aff.") ¶ 12.) He recently moved to New York after his home in New Jersey burned down, but does not indicate whether he intends to become either a resident or domiciliary of New York State. (Id.)

Defendant Villa Abrille is the former Philippine Ambassador to Argentina. He is a citizen of the Philippines who resides in Argentina and maintains a residence in the Philippines. (Declaration of Carols Villa Abrille dated Nov. 14, 2002 ("Villa Abrille Decl.") ¶¶ 2-3.) He neither owns any real property nor maintains any offices in New York. (Id. ¶¶ 5-7.)

Defendant PDI is an English language daily newspaper incorporated and headquartered in the Philippines. (Declaration of Raul J. Palabrica dated Oct. 30, 2002 ("Palabrica Decl.") ¶ 3.) Besides the Philippines, PDI is distributed in hard-copy in Bahrain, Hong Kong, Italy, Kuwait, Oman, Qatar, Saudi Arabia, Singapore, Taiwan, and the United Arab Emirates. (Id.) PDI owns no property, employs no agents, and maintains no bank accounts in New York. (Id. ¶¶ 4-6.) PDI only sends its employees to the United States to cover the Philippine president's occasional visits there. (Id. ¶ 8.) PDI does business with two corporations that maintain offices in New York: PDI purchases news content from the Associated Press ("AP"), and hires Orientation Global Network, Inc. ("Orientation Global") to distribute PDI's news content to third parties. (Id. ¶ 9; Defs.' Mem. Supp. Mot. to Dismiss at 3.) These corporations had no involvement in the publication or distribution of the allegedly defamatory article at issue here. (Palabrica Decl. ¶ 12.)

Defendant INQ 7 is an internet news service of which PDI owns 10 percent.*fn1 (Decl. of Javier Vincente D. Rufino dated Oct. 30, 2002 ("Rufino Decl.") ¶¶ 2-3.) INQ 7 publishes news of the Philippines in the English language. The news articles and other content that appears on the website include content appearing in PDI, including the article at issue in this case. (Id. ¶¶ 3, 10.) The INQ 7 website is maintained on computer network servers located in the Philippines. All of the content for the website is prepared in the Philippines by INQ 7 employees located there. (Id. ¶¶ 3-4.) INQ 7 owns no property, employs no agents, and maintains no bank accounts in New York. (Id. ¶¶ 5-6.) INQ 7 offers a free e-mail bulletin service to its users. (Id. ¶ 9.) Of 6,732 registered users worldwide, 332 list a New York State address. (Id.) INQ 7 has two business contacts with New York State corporations: an advertising agency occasionally purchases space on the site, and Global Vision New Media, Inc. purchases news content from INQ 7 for distribution to other news companies. (Id. ¶ 12.) As far as INQ 7 knows, Global Vision did not purchase the article at issue here. (Id.)

Defendant Olivares-Cunanan is an opinion columnist for PDI who wrote the allegedly defamatory article at issue here. (Declaration of Belinda Olivares-Cunanan dated Oct. 30, 2002 ("Olivares-Cunanan Decl.") ¶¶ 2, 5.) She is a resident of the Philippines who claims never to have done any business in New York State. (Id. ¶ 2.) Olivares-Cunanan maintains no residence or office, and owns no property or assets, in the United States. (Id. ¶ 8.)

On October 29, 2001, the allegedly defamatory article appeared in PDI and on the INQ 7 website. (Pl.'s Aff. ¶ 7; Palabrica Decl. ¶ 12.) The article is entitled "Villa-Abrille responds to charges against him." The article stated that "some time in April 1997, a certain New York based Filipino lawyer named Pompeyo Realuyo supposedly wrote a letter to then Foreign Secretary Domingo Saizon, raising allegations about the conduct of the Philippine ambassador." The article describes the allegations as "Villa-Abrille had been on the payroll of Manila Rep. Mark Jimenez, when he was doing extensive business in South America, to the tune of 5,000 dollars a month in retainer fees." Villa-Abrille responded to the allegations. In the course of doing so, Villa-Abrille referred to the plaintiff as "a character with a `shady reputation' . . . an extortionist of sorts." (Declaration of Susan R. Schick dated Nov. 14, 2002 ("Schick Decl.") Ex. 1.) Villa Abrille is described as being "advised . . . not to respond [to the plaintiff's calls] due to the [plaintiff's] reputation for extortion." (Id.) The plaintiff filed this action on July 1, 2002.

II.

The defendants move to dismiss the complaint for lack of personal jurisdiction. A district court has "broad discretion" in deciding such a motion, including the discretion to conduct an evidentiary hearing if the Court believes one is warranted. See CutCo Indus. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986). See also Clarendon Nat. Ins. Co. v. Lan, 152 F. Supp.2d 506, 515 (S.D.N.Y. 2001). To survive a motion to dismiss where no evidentiary hearing is held, the plaintiff need only make a prima facie case that the defendants are subject to the Court's personal jurisdiction. See PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997); Rubinbaum LLP v. Related Corporate Partners V, L.P., 154 F. Supp.2d 481, 486 (S.D.N.Y. 2001). The Court must construe the pleadings and supporting affidavits in the light most favorable to the plaintiff. See id.

A district court sitting in diversity must apply the forum state's law in determining whether it has personal jurisdiction over a defendant. See CutCo Indus., 806 F.2d at 365; Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc); Clarendon, 152 F. Supp.2d at 515. The Court must determine whether the forum state's law allows the exercise of personal jurisdiction and, if so, whether doing so comports with constitutional due process guarantees. See Int'l Shoe Co. v. State of Washington, 326 U.S. 310, 316 (1945); Clarendon, 152 F. Supp.2d at 515.

A.

New York State provides for both general and specific personal jurisdiction. The general provision, found in New York Civil Practice Law and Rules ("CPLR") § 301, empowers a court to "exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." CPLR § 301. Interpreting this provision, the New York Court of Appeals has concluded that a non-domiciliary defendant "is amenable to suit in New York courts under CPLR 301 if it has engaged in such a continuous and systematic course of `doing business' here that a finding of its `presence' in this jurisdiction is warranted." Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 565 N.E.2d 488, 490 (N.Y. 1990) (citations omitted). See also Frummer v. Hilton Hotels Int'l, Inc., 227 N.E.2d 851, 853 (N.Y. 1967); Simonson v. Int'l Bank, 200 N.E.2d 427, 429 (N.Y. 1964)). The test for "doing business" is fact-sensitive, see Landoil, 565 N.E.2d at 490, but even fairly substantial contacts can fail to satisfy the statute. See, e.g., id. at 491 (finding foreign corporation's underwriting of insurance policies sold in New York insufficient to constitute "doing business"). Factors to consider in a "doing business" inquiry include whether the defendant maintains offices and bank accounts, employs agents, and regularly solicits business in New York. See, e.g., Bryant v. Finnish Nat'l Airline, 208 N.E.2d 439, 441-42 (N.Y. 1965). As for "presence," the non-domiciliary must be present in New York "not occasionally or casually, but with a fair measure of permanence and continuity." Tauza v. Susquehanna Coal Co., 115 N.E. 915, 917 (N.Y. 1917) (Cardozo, J.). See also Landoil, 565 N.E.2d at 490.

There is no personal jurisdiction over any of the defendants under CPLR § 301 because none of them is present in New York as presence has been interpreted by the New York courts.

Taking the plaintiff's allegations to be true, the defendant Villa Abrille, neither a resident nor domiciliary of New York, pays for his son's New York apartment, maintains a bank account in the state, and travels to New York in connection with a beef exporting business. (Pl.'s Aff. ¶¶ 2-3, 6.) These contacts are insufficient to bring Villa Abrille within the scope of CPLR § 301. These contacts do not have the that fair measure of permanence and continuity such that Villa-Abrille could be considered "present" in New York to the extent that he could be sued in New York for anything he did throughout the world no matter how unconnected with New York. Simply paying a child's rent cannot reasonably constitute "doing business" under New York law. See, e.g., First Capital Asset Mgmt., Inc. v. Brickellbush, Inc., 218 F. Supp.2d 369, 393 (S.D.N.Y. 2002) (finding that foreign defendant's ownership and sale of a New York apartment, unspecified business transactions and New York bank accounts, did not constitute "doing business" under CPLR § 301); Falik v. Smith, 884 F. Supp. 862, 866 (S.D.N.Y. 1995) (finding that foreign defendant's agreement to indemnify third party for legal expenses arising out of New York lawsuit did not constitute "doing business" under CPLR § 301). Likewise, maintaining a single bank account — when it is not used to house "substantially all" of a defendant's business funds — will not support the exercise of general personal jurisdiction. See First Capital Asset Mgmt., Inc., 218 F. Supp.2d at 393; Georgia-Pacific Corp. v. Multimark's Int'l, Ltd., 706 N.Y.S.2d 82, 83 (App.Div. 2000). Lastly, Villa Abrille's business trips to New York regarding the beef exporting enterprise are also insufficient bases for subjecting him to personal jurisdiction. See, e.g., Savoleo v. Couples Hotel, 524 N.Y.S.2d 52, 52 (App.Div. 1988). Viewed in their totality, Villa Abrille's contacts with New York are insufficient to establish the kind of continuous and systematic presence that CPLR § 301 requires.

PDI, a foreign corporation headquartered in the Philippines, published the allegedly defamatory article. It owns no property, employs no agents, and maintains no bank accounts in New York. The plaintiff attempts to assert CPLR § 301 jurisdiction over PDI based on PDI's relations with two businesses that maintain New York offices. PDI buys news content from AP and pays Orientation Global to distribute PDI content to third parties. (Pl's Aff. ¶ 10; Palabrica Decl. ¶ 9.) These contacts, standing alone, fail to establish jurisdiction under CPLR 301. See Rolls-Royce Motors, Inc. v. Charles Schmitt & Co., 657 F. Supp. 1040, 1045-46 (S.D.N.Y. 1987) (noting that New York law is "clear that purchases in New York by a foreign defendant corporation of a major share of the merchandise to be sold at its place of business outside the state, even if systematic . . . do not warrant a finding that the defendant was present within the jurisdiction of New York" and collecting cases); Arbitron Co. v. E.W. Scripps, Inc., 559 F. Supp. 400, 402-03 (S.D.N.Y. 1983) (finding that newspaper's parent corporation purchasing of computer and advertising services in New York insufficient to constitute "doing business" under CPLR § 301); Dero Enterp., Inc. v. Georgia Girl Fashions, Inc., 598 F. Supp. 318, 321 (S.D.N.Y. 1984); see also Diesel Sys., Ltd. v. Yip Shing Diesel Eng'g Co., Ltd., 861 F. Supp. 179, 181-82 (E.D.N.Y. 1994) (finding foreign corporation's practice of purchasing goods from New York insufficient to establish personal jurisdiction).

The plaintiff also argues that PDI should be subject to jurisdiction in New York under CPLR § 301 because of its relationship with INQ 7, in particular, its 10% stock ownership. But a minority stock ownership standing alone is insufficient to establish jurisdiction under CPLR 301. For a parent corporation to be held to be doing business in New York, based on the presence of a subsidiary in New York, the subsidiary must be an agent or a "mere department" of the foreign parent. Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 184 (2d Cir. 1998). In this case, there is no proffer that INQ 7 was a subsidiary, an agent, or a mere department of PDI. In any event, INQ 7 could not be a basis for the presence of INQ 7 because INQ 7 itself has insufficient presence in this state for purposes of jurisdiction under CPLR § 301.

INQ 7, a foreign corporation, also owns no property, employs no agents, and maintains no bank accounts in New York. The plaintiff attempts to assert CPLR § 301 jurisdiction over INQ 7 based on INQ 7's relationships with New York corporations and the registered users of its website. INQ 7 sells advertising space on its website to a New York advertising agency, and sells content to Global Vision New Media, Inc., a news distributor. (Rufino Decl. ¶ 12.) In addition, up to 332 of INQ 7's 6,732 registered users, who register to receive e-mail bulletins of news articles on the website but who pay no fee for the service, live in New York. Like those of PDI, these contacts fail to satisfy CPLR 301. See Cornell v. Assicurazioni Generali, S.p.A., Nos. 97 Civ. 2262, 98 Civ. 9186, 2000 WL 284222, at *2 (S.D.N.Y. Mar. 16, 2000) (collecting cases and noting that "a firm does not `do[] business' in New York simply because New York citizens can contact the firm via the worldwide web"); Meteoro Amusement Corp. v. Six Flags, No. 02 Civ. 990, 2003 WL 21221959, at *5 (N.D.N.Y. May 27, 2003) ("[C]ourts in this circuit have repeatedly found that ownership and operation of a website within the district, without more, is not enough . . . for doing business pursuant to CPLR section 301."); In re Ski Train Fire in Kaprun, Austria, No. 01 Civ. 7342, 2003 WL 1807148, at *6 (S.D.N.Y. Apr. 4, 2003).

Olivares-Cunanan, the author of the article at issue here, claims never to have visited New York on assignment from PDI. (Olivares-Cunanan Decl. ¶ 2.) The plaintiff disputes this claim, asserting that Olivares-Cunanan has visited several times to cover visits of the president of the Philippines. (Pl.'s Aff. ¶ 8.) Even if these visits had occurred, such contacts fall far short of CPLR 301's requirements. See Liquid Carriers Corp. v. Am. Marine Corp., 375 F.3d 951, 953 (2d Cir. 1967); Rolls Royce, 657 F. Supp. at 1046; Savoleo, 524 N.Y.S.2d at 52 ("The mere periodic sending of corporate officers or ...


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