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Big Apple Pyrotechnics and Multimedia Inc. v. Sparktacular Inc.

March 9, 2007


The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.


Plaintiffs are a New York corporation that sells fireworks and fireworks delivery systems, and the president of that corporation. Defendants are corporations and individuals with whom Plaintiffs contracted for the exclusive right to distribute various fireworks products in New York and other Northeastern states. Plaintiffs' suit alleges that Defendants bypassed Plaintiffs and directly sold fireworks products to customers in the Northeast. Defendants, all citizens of Florida, now move to dismiss the case for lack of personal jurisdiction or to transfer to another venue. Defendants Ralph Santore and Ralph Santore & Sons Inc. ("Santore & Sons") also move to dismiss for improper venue.*fn1 For the reasons stated below, the motions to dismiss are granted in part and denied in part, and the motions to transfer are denied.


Plaintiff Anthony Capicotti is the president of Big Apple Pyrotechnics and Multimedia, Inc. ("Big Apple"). (Capicotti Aff. ¶ 1.) Both Plaintiffs are citizens of New York. (Compl. ¶¶ 1-2.) Defendant Ralph Santore is the president of defendant Santore & Sons. (Santore Aff. ¶ 1, Mar. 14, 2006.) Both Santore and Santore & Sons (collectively, the "Santore Defendants") are citizens of Florida. (Id. ¶¶ 5-6.) Defendant Steven Freedman is the president of defendants Sparktacular, Inc. ("Sparktacular") and American-Made Pyrotechnics Supplies, Inc. ("AMPS"). (Freedman Decl. ¶¶ 2-3, Mar. 17, 2006.) Freedman and his corporations (collectively, the "Freedman Defendants") are all Florida citizens. (Id. ¶¶ 2-3, 15.)

Plaintiffs allege the following facts in their Complaint. In 2002, Santore proposed to Capicotti that Plaintiffs become the exclusive Northeast distributors of an indoor fireworks system to which Defendants possessed U.S. rights. (Compl. ¶¶ 16, 18, 20-21.) Capicotti and another Big Apple employee traveled repeatedly to Florida to inspect the system and conduct negotiations. (Id. ¶¶ 17, 19.) The parties signed the distribution agreement in August 2002, and Plaintiffs paid Defendants an initial fee of $100,000. (Id. ¶ 24.) Although Plaintiffs then opened offices and began preparing marketing materials, Defendants did not provide the fireworks and delivery systems for which Plaintiffs had contracted. (Id. ¶ 25-26.) Sometime after February 2004, Plaintiffs demanded the products or a $100,000 refund, at which point Defendants insisted on new, more favorable terms. (Id. ¶ 27-29.) Plaintiffs then learned that Defendants had been directly marketing the indoor fireworks system in the Northeast the entire time. (Id. ¶ 31.)



A. Standard of Review

Although Defendants have moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b), the Court should apply the standard of review used for motions for summary judgment. Both Plaintiffs and Defendants have submitted affidavits and exhibits in support of their positions on the motions. Rule 12(b) does not allow the Court to convert these motions to motions for summary judgment, as would be permissible for a motion to dismiss for failure to state a claim, because a successful motion to dismiss for lack of personal jurisdiction or improper venue strips the Court of power to hear the case and thus to issue any judgment, summary or otherwise. But while a motion pursuant to Rules 12(b)(2) or 12(b)(3) cannot be converted into a Rule 56 motion, the Court may nevertheless consider the documents submitted outside the pleadings, using the legal standard of Rule 56 as an guide. See Kamen v. AT&T Co., 791 F.2d 1006, 1011 (2d Cir. 1986); Melnick v. Adelson-Melnick, 346 F. Supp. 2d 499, 503 & n.19 (S.D.N.Y. 2004) (citing Kamen and using summary judgment standard for Rule 12(b)(2) motion). I will evaluate Defendants' motions to dismiss using the standard of review for motions for summary judgment, granting Defendants' motions only if there are no genuine issues of material fact, and viewing the facts in the light most favorable to Plaintiffs, the nonmoving party. Cotarelo v. Vill. of Sleepy Hollow Police Dep't, 460 F.3d 247, 251 (2d Cir. 2006).*fn2 Because these motions were filed before discovery was completed, Plaintiffs need make only a prima facie showing as to jurisdiction; if, after discovery, the remaining Defendants contest the factual allegations underpinning that showing, Plaintiffs will need to show by a preponderance of the evidence that jurisdiction is proper. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990).

B. Personal Jurisdiction

In a case that comes before the Court pursuant to diversity jurisdiction, the Court may exercise personal jurisdiction over Defendants to the same extent as could a New York state court. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002). To resolve a motion to dismiss for lack of personal jurisdiction, I must therefore consider (1) whether New York law would permit a New York state court to exercise jurisdiction over Defendants and (2) whether that exercise of jurisdiction would comport with the Due Process Clause of the Fourteenth Amendment. Id.

1. New York Law

New York law offers two possible bases for the exercise of personal jurisdiction over out-of-state defendants: traditional general jurisdiction, New York Civil Practice Law and Rules ("CPLR") § 301; and the long-arm statute, CPLR § 302.

a. General Jurisdiction

CPLR § 301 states simply, "A court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." N.Y. C.P.L.R. § 301 (McKinney 2007). The enactment of the long-arm statute, CPLR § 302, did not eliminate any of the traditional bases for general personal jurisdiction, such as physical presence, consent, domicile, or business activity. See Seaweed, Inc. v. DMA Prod. & Design & Marketing LLC, 219 F. Supp. 2d 551, 554 (S.D.N.Y. 2002). The only basis for Plaintiffs' claim of general personal jurisdiction here is their contention that Defendants have done business in New York State.

"[A] corporation is 'doing business' and is therefore 'present' in New York and subject to personal jurisdiction with respect to any cause of action, related or unrelated to the New York contacts, if it does business in New York 'not occasionally or casually, but with a fair measure of permanence and continuity.'" Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir. 1985) (quoting Tauza v. Susquehanna Coal Co., 115 N.E. 915, 917 (N.Y. 1917)). New York courts have personal jurisdiction over such a corporation for any claim, regardless of whether the events giving rise to the claim took place within the state. See Laufer v. Ostrow, 434 N.E.2d 692, 696 (N.Y. 1982).

Although each case must be decided on its own facts, Sterling Novelty Corp. v. Frank & Hirsch Distrib. Co., 86 N.E.2d 564, 565 (N.Y. 1949), some common indicia of "doing business" in the state include maintaining a New York office, bank account, or phone listing; conducting "public relations work" within the state; or basing permanent employees here, Wiwa v. Royal Dutch Petrol. Co., 226 F.3d 88, 98 (2d Cir. 2000). By contrast, "mere solicitation" of business in New York is insufficient to constitute doing business here. Miller v. Surf Props., Inc., 151 N.E.2d 874, 876 (N.Y. 1958). To qualify as more than "mere solicitation," solicitation must be "substantial and continuous" and coupled with "other activities of substance in the state." Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d 1039, 1043 (2d Cir. 1990). In evaluating the existence of other activities of substance, courts "tend to focus on a physical corporate presence," Artemide SpA v. Grandlite Design & Mfg. Co., 672 F. Supp. 698, 703 (S.D.N.Y. 1987), such as solicitation "from a permanent locale within the state," Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 763 (2d Cir. 1983) (internal quotation marks omitted), but temporary visits by employees based out of state may also qualify, see Thompson Med. Co. v. Nat'l Ctr. of Nutrition, Inc., 718 F. Supp. 252, 254 (S.D.N.Y. 1989).

With these principles as a guide, I turn to the claims of "doing business" with respect to each Defendant.

(1) Sparktacular . Plaintiffs allege that Sparktacular had various ongoing business contacts in New York State. Specifically, they claim that Freedman and another employee visited New York to participate in demonstrations and trade shows (Capicotti Aff. ¶¶ 3, 5), as well as meetings with Plaintiffs (id. ¶ 6); that Sparktacular shipped goods to Plaintiffs in New York (id., Ex. C); that it printed a brochure with Plaintiffs' phone number beneath the name "Sparktacular New York" (id., Ex. B); and that Sparktacular maintained a list of about 280 "customer contacts" in New York (id., Ex. D). Plaintiffs also allege that Freedman stated that Sparktacular made between $400,000 and $600,000 in annual sales to customers in the Northeast, although they do not specify what percentage of these sales were made to New York customers. (Id. ¶ 4.) Finally, Capicotti names two New York companies that allegedly purchased Sparktacular products and adds that he is aware of "several" others. (Id.)

Plaintiffs do not allege any of the traditional markers of doing business --- office, bank account, phone number, public relations, or permanent employees --- nor any permanent physical presence in New York. Sparktacular's solicitation of New York business, as measured by employee visits, sales, and customer contacts, would thus have to be "substantial and continuous" to sustain general personal jurisdiction.

I cannot dismiss Plaintiffs' claims against Sparktacular at this stage, because there is a genuine issue of material fact about whether Plaintiffs have made a prima facie case for personal jurisdiction over Sparktacular. The list of customers and the allegation that Sparktacular made about $400,000 to $600,000 in Northeast sales could be evidence of "substantial and continuous" solicitation; the testimony that Sparktacular employees made repeated visits to New York to meet with Plaintiffs and conduct sales could satisfy the "plus" prong of the "solicitation-plus" standard, even though these facts would not establish jurisdiction on their own. See Aquascutum of London, Inc. v. S.S. Am. Champion, 426 F.2d 205, 211 (2d Cir. 1970) ("[O]nce solicitation is found in any substantial degree very little more is necessary to a conclusion of 'doing business.'"). Accordingly, at this stage I cannot find that this Court has no general personal jurisdiction over Sparktacular.*fn3

(2) AMPS . Plaintiffs have failed to make a prima facie case that AMPS is subject to the general personal jurisdiction of this Court, because the allegations about AMPS are not sufficiently specific or detailed. AMPS, like Sparktacular, is headed by Freedman, but Plaintiffs fail to distinguish between the two when they refer generally to "the Sparktacular Defendants" and to "Mr. Freedman and his companies." In addition to these general references, Plaintiffs' pleadings and affidavits contain several ...

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