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SALEMI v. BOCCADOR

April 28, 2004.

JONELLE SALEMI, Plaintiff
v.
BOCCADOR, INC., D/B/A, RENE MANCINI, RENE MANCINI S.A., MOHAMMED ABDARI, AND JOHN, DOES 1-5, Defendants



The opinion of the court was delivered by: GERARD E. LYNCH, District Judge

OPINION AND ORDER

This lawsuit concerns alleged sexual harassment by defendant Mohammed Abdari ("Abdari") that plaintiff claims led to her constructive discharge from her position as a salesperson at defendant Boccador, Inc.'s Manhattan shoe store, which does business under the name Rene Mancini ("Boccador"). Plaintiff brings suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq.; the Civil Rights Act of 1991, 42 U.S.C. § 1981a; the New York State Executive Law § 290, et seq.; Title 8 of the New York Administrative Code § 8-101; and "principles of common law." Abdari is a salesperson and manager at Boccador's Manhattan store. Defendant Rene Mancini, S.A. ("Mancini") is Boccador's French parent company.

  Defendants moved to dismiss before the Honorable Kimba Wood, to whom this case was originally assigned, for (1) insufficiency of service of process on defendant Mancini; (2) lack of in personam jurisdiction over defendant Mancini; (3) lack of subject matter jurisdiction; and (4) failure to state a claim on which relief could be granted. By Order dated September 29, 2003, Judge Wood denied the defendants' motion to dismiss for insufficient service of process and for lack of subject matter jurisdiction, and converted the motion to dismiss for failure to state a claim into a motion for summary judgment on whether defendants fall within the definition of "employers" for purposes of plaintiff's Title VII claim. Judge Wood allowed the parties to conduct limited discovery related to the personal jurisdiction and summary judgment motions, and conducted a hearing on the motions on November 20, 2003. Following that hearing, Judge Wood recused herself due to some previous commercial dealings with defendant Abdari as a customer at Boccador's Manhattan store, and the case was transferred to this Court on December 8, 2003, with both motions sub judice. For the reasons that follow, defendants' motions to dismiss for lack of personal jurisdiction and for summary judgment will be denied, except to the extent that the Title VII claim as to defendant Abdari will be dismissed.

  BACKGROUND

  Defendant Boccador is a New York corporation that operates a high-fashion women's retail shoe store in Manhattan under the name "Rene Mancini." Boccador is wholly owned by defendant Mancini, a French corporation that does not maintain its own offices or facilities in New York. Mancini owns and operates a women's shoe and accessory business through a set of entities variously formed as divisions, franchises, and wholly-owned subsidiaries (the "Rene Mancini Group"), which together conduct nearly all of the activities necessary to create, control, and sell the Rene Mancini trademark, including the manufacture, distribution, and sales of Rene Mancini-trademarked products. Through its manufacturing subsidiary, Mancini supplies all of the merchandise sold by Boccador, as well as all of the shopping bags, letterhead, business cards, sales forms, promotional materials, and social stationery used by Boccador to run its business. (See, e.g., Abdari Tr. at 29:6 — 30:24, 73:13, 84:16 (Ex. 10 to Plaintiff's Rule 56.1 Statement)). Mancini licenses the "Rene Mancini" name to Boccador and exercises extensive control over the operations of the Boccador store through a Boutique License Agreement, which governs such details as hours of operation, requires Mancini's prior approval for all advertising and promotional materials, and mandates detailed quarterly reporting on the store's activities. (See Ex. 5 to Plaintiff's Rule 56.1 Statement.) Non-party Francois Bellenguez ("Bellenguez") is the sole shareholder and president of Mancini, and also serves as Boccador's president and managing director.

  The parties dispute the level of control that Mancini exercises over the operations of Boccador. While the undisputed evidence establishes that Bellenguez has tremendous involvement in and authority over both the operations of Boccador and the employment decisions with respect to Boccador's senior management, defendants assert that Bellenguez exercises this authority as president of Boccador, not as president of Mancini. Plaintiff argues that this distinction elevates form over substance and cannot suffice to insulate Mancini from this Court's jurisdiction or immunize defendants from liability under Title VII.

  Plaintiff Salemi was employed at Boccador as a salesperson from early 2000 until her alleged constructive discharge in August 2001. Defendant Abdari was employed at Boccador for the entirety of this period as well, first as a salesperson and, following his promotion in late May 2001, as store manager. Salemi alleges that, during the approximately eighteen months of her employment at Boccador, she was subjected to a continuous and escalating campaign of sexual harassment by Abdari, which included repeated sexual comments, unwanted sexual touching and gestures, threats of physical violence, and requests for sexual acts in exchange for pay raises. (See Compl. ¶¶ 25-28, 31-46, 48-53.) Salemi alleges that, during the first year or so of her employment, then-manager Antonio Amato was aware of the ongoing harassment by Abdari and responded to the behavior by occasionally sending Abdari out of the store after an incident and by instituting rules prohibiting Abdari from being in the same parts of the store as Salemi and from exercising supervisory control over her work. (Id. at ¶¶ 29-30.) In late May 2001, Bellenguez terminated Amato and promoted Abdari to the position of manager of Boccador. Salemi alleges that after Abdari was promoted, the harassment became more threatening and more explicitly tied to her employment. (Id. at ¶¶ 48-53.)

  DISCUSSION

 I. Personal Jurisdiction

  Defendants have moved pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss for lack of in personam jurisdiction over Mancini, a French corporation that defendants contend has insufficient contacts with New York to be subject to personal jurisdiction here. The plaintiff bears the burden of establishing that the Court has jurisdiction over the defendant. See, e.g., Metropolitan Life Ins. Co. v. Robertson-Ceco. Corp., 84 F.3d 560, 566 (2d Cir. 1996). Where, as here, the parties have conducted some discovery that bears on the jurisdictional issue, and defendants contest the plaintiff's factual assertions regarding jurisdiction, "a hearing is required, at which the plaintiff must prove the existence of jurisdiction by a preponderance of the evidence." Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). The jurisdiction hearing in this matter was held before Judge Wood on November 20, 2003. Because Title VII does not explicitly provide for nationwide service of process, plaintiff's burden at the Hearing was to establish by a preponderance of the evidence that Mancini is subject to personal jurisdiction under New York law. PDK Labs v. Friedlander, 103 F.3d 1105 (2d Cir. 1997). It is clear from the hearing testimony, and from documentary evidence submitted in advance of the hearing, that Mancini is not subject to the jurisdiction of New York courts based on its own direct business activities — for example, it does not maintain an office or employees in New York and does not own real property here. Rather, plaintiff contends that this Court may exercise personal jurisdiction over Mancini because of the activities and presence in the forum of its wholly-owned subsidiary, Boccador.

  A New York subsidiary can confer jurisdiction over a foreign parent where the subsidiary is so dominated by the parent as to be, in practice, a "mere department" of the parent rather than a truly independent entity. See Public Administrator v. Royal Bank of Canada, 19 N.Y.2d 127 (1967); Taca Int'l Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d 97, 101-102 (1965). The Second Circuit has developed a four-factor test for determining whether a particular subsidiary-parent relationship meets this domination standard under New York law: (1) whether the two entities share common ownership; (2) the extent of the subsidiary's financial dependence on the parent; (3) the degree of parental interference in the selection and assignment of the subsidiary's executive personnel and the failure to observe corporate formalities; and (4) the degree of control exercised by the parent over the subsidiary's marketing and operational policies. Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120-22 (2d Cir. 1984).

  The parties do not contest that Boccador and Mancini share a common ownership, which Beech Aircraft terms the "essential factor" in the jurisdictional analysis. As to the other three "important" factors, the only one that appears in any doubt is the financial dependence of Boccador on Mancini. However, in light of the evidence presented on the other factors, the dispute over this factor does not alone suffice to deny personal jurisdiction over Mancini.

  For example, although in response to direct questions about degree of control both Bellenguez and Abdari attempted to minimize Bellenguez's role in the operation of Boccador and magnify Abdari's, the documentary evidence combined with the greater weight of the testimonial evidence indicates that Mancini exercises near-total control over the marketing and operational policies of Boccador, both through the terms of the Boutique Licensing Agreement and through Bellenguez's direct involvement. (See, e.g., Boutique Licensing Agmt. at ¶¶ 1(a), 2(c), 6 (Ex. 5 to Plaintiff's Rule 56.1 Statement); Rene Mancini Group website (Ex. 3 to Plaintiff's Rule 56.1 Statement); D-00039, D-00040, D-00042, D-00043 (Ex. 7 to Plaintiff's Rule 56.1 Statement); Abdari Tr. at 41:22 — 42:23.) Furthermore, Bellenguez appears to exercise complete control over the hiring and firing of Boccador's general manager — the company's only executive other than Bellenguez himself. (See Abdari Tr. at 41:10 — 41:21; Bellenguez Tr. at 143:5.) While defendants argue that Bellenguez makes these decisions as president of Boccador and not as president and owner of Mancini, nothing in the record, other than self-serving and unsupported statements by Bellenguez himself (see, e.g., Bellenguez Tr. at 116:13-14), indicates that Bellenguez distinguished between these roles in exercising his authority at Boccador, that employees of Boccador or Mancini perceived any distinction between these roles, or that the asserted distinction had any practical significance in the operation of the Rene Mancini Group businesses during the ...


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