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Litton v. Avomex Inc.

January 14, 2010

JOHN LITTON, PLAINTIFF,
v.
AVOMEX INC. AND AMS STAFF LEASING, DEFENDANTS.



The opinion of the court was delivered by: Norman A. Mordue, Chief U.S. District Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

Plaintiff John Litton ("plaintiff") commenced this action against defendants for age discrimination and retaliation under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 600 et seq. and New York State Executive Law § 290, et. seq. a/k/a "Human Rights Law" ("NYHRL").

Presently before the Court are motions by both defendants and a cross motion by plaintiff. Defendant AMS Staff Leasing moves for an order: (1) dismissing plaintiff's complaint for improper venue pursuant to Fed. R. Civ. P. 12(b)(3) or, in the alternative; (2) dismissing plaintiff's complaint pursuant to Fed. R. Civ. P. 12(b)(6) or, in the alternative; (3) for a transfer of venue to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a).*fn1 (Dkt. No. 10).

Defendant Avomex Inc. moves for an order: (1) dismissing plaintiff's complaint based upon lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) or, in the alternative; (2) dismissing plaintiff's complaint for improper venue pursuant to Fed. R. Civ. P. 12(b)(3) or, in the alternative; (3) for a transfer of venue to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). (Dkt. No. 14).

Plaintiff has opposed defendants' motions and has cross-moved to amend the complaint. (Dkt. Nos. 16, 18).

FACTUAL BACKGROUND

The facts of the case are taken from plaintiff's complaint and are, for the purpose of defendants' motions, presumed to be true. Avomex, Inc. ("Avomex") is a Texas corporation with its principal place of business in Fort Worth, Texas. Avomex claims to be a family-owned private corporation offering a variety of avocado products such as "Wholly Guacamole" and "Wholly Salsa". AMS Staff Leasing ("AMS") is a staff leasing company and is a Texas corporation with its principal place of business in Dallas, Texas. Plaintiff is a New York State resident and lives in New Paltz, New York.

From December 2003 until June 2006, plaintiff was employed by Avomex and/or AMS as Avomex's Northeast Regional Manager. Plaintiff alleges that in December 2003, Avomex and AMS entered into a staff-leasing agreement ("SLA") pursuant to which they became co-employers of plaintiff.*fn2 Plaintiff claims that pursuant to the SLA, Avomex and AMS were jointly responsible for the continuation of plaintiff's employment with Avomex, including the hiring, firing, disciplining, reassigning and/or termination of plaintiff.*fn3 Moreover, plaintiff contends that AMS maintained the right, as plaintiff's co-employer, to make personnel decisions regarding plaintiff and to pay plaintiff's salary, and provide him with Workers' Compensation Insurance coverage. Plaintiff claims that he "performed the vast majority of his duties of Northeast Regional Manager" out of his New Paltz office.*fn4 Plaintiff's day-to-day performance was supervised by Avomex's senior management. Plaintiff claims that he was paid by AMS and received "benefits through AMS".

In May 2006, plaintiff sent an email to Steven Parnell ("Parnell"), Avomex's President and Cindy Wong ("Wong"), Avomex's Vice President of Sales, expressing his interest in being considered for a sales management position with Avomex. In May 2006, during a national trade show in Chicago, Illinois, plaintiff spoke with Parnell about his interest in the position on "multiple occasions". On the last day of the trade show, Parnell told plaintiff to speak with Wong about the position. The next day, plaintiff met with Wong and alleges that Wong told him that, "he was too old to handle the demands of those positions because they required late nights and early mornings".*fn5 Plaintiff claims that Wong told him that she would not support him for any sales management position due to his age. The next day, plaintiff telephoned Parnell to discuss Wong's comments.*fn6

Approximately one week later, Parnell telephoned plaintiff and advised plaintiff that he was terminated "effective immediately".*fn7 Upon receiving notice of his termination, plaintiff telephoned AMS and was advised that AMS would, "acquiesce in and adhere to Avomex's termination decision".*fn8 Plaintiff filed a Charge of Discrimination with the New York District Office of the U.S. Equal Employment Opportunity Commission ("EEOC"). On September 16, 2008, plaintiff received a right to sue notification from the EEOC. On December 15, 2008, plaintiff filed the within complaint. The complaint was served upon defendants in January 2009.

Plaintiff asserts that defendants discriminated and retaliated against plaintiff and substantially interfered with plaintiff's continuing opportunities for professional advancement, career development, increased compensation and other benefits of employment. Plaintiff claims that he suffered serious pain, severe mental and emotional harm and distress.

DISCUSSION

I. Avomex's Motion to Dismiss for Lack of Personal Jurisdiction*fn9

Avomex moves to dismiss the complaint based upon lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). The amenability of a foreign corporation to suit in a federal court in a diversity action is determined in accordance with the law of the state where the court sits, with "federal law" entering the picture only for the purpose of deciding whether a state's assertion of jurisdiction contravenes a constitutional guarantee. Arrowsmith v. United Press Int'l., 320 F.2d 219, 223 (2d Cir. 1963). District courts resolving issues of personal jurisdiction must therefore engage in a two-part analysis. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). First, they must determine whether there is jurisdiction over the defendant under the relevant forum state's laws. Id. Second, they must determine whether an exercise of jurisdiction under these laws is consistent with federal due process requirements. Id.

Since there has been no discovery and no evidentiary hearing on jurisdiction, plaintiff need make only a prima facie showing that jurisdiction is proper. See Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 196-97 (2d Cir. 1990). The Court must construe the pleadings and supporting affidavits in the light most favorable to plaintiff. See PDK Labs v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997). The Second Circuit explains:

In deciding a pretrial motion to dismiss for lack of personal jurisdiction a district court has considerable procedural leeway. It may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion. If the court chooses not to conduct a full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction through its own affidavits and supporting materials. Eventually, of course, the plaintiff must establish jurisdiction by a preponderance of the evidence, either at a pretrial evidentiary hearing or at trial. But until such a hearing is held, a prima facie showing suffices, notwithstanding any controverting presentation by the moving party, to defeat the motion. Marine Midland Bank N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981) (citations omitted). Plaintiff argues that jurisdiction exists over defendant pursuant to N.Y. C.P.L.R. § 301 and alternatively, pursuant to § 302, the long-arm statute.

A. N.Y. C.P.L.R. § 301

Pursuant to C.P.L.R. § 301, a defendant is considered to be "present" in the state for the purpose of general jurisdiction if such corporation is "doing business" in the state. Sun Micro Med. Tech. v. Passport Health Commc'n, Inc., 2006 WL 3500702, at *6 (S.D.N.Y. 2007). The phrase "doing business" has been interpreted to mean that the defendant is "engaged in such a continuous and systematic course of doing business" as to warrant a finding of its "presence" in the jurisdiction. Ball, 902 F.2d at 198. Because a corporation amenable to jurisdiction under this section may be sued on causes of action wholly unrelated to the acts done in New York, a showing that it is doing business in New York must be made with "a fair measure of permanence and continuity". Id. (citing Laufer v. Ostrow, 55 N.Y.2d 305, 310 (1982)). Factors to consider include whether the defendant: (1) has an office in the state; (2) solicits business in the state; (3) owns property or bank accounts within the state; or (4) has employees or agents within the state.

Sun Micro Med. Tech., 2006 WL 3500702, at *6. Mere sales of a manufacturers product in New York and the solicitation of business alone have never made a foreign corporation amenable to suit in this jurisdiction. Landoil Res. Corp. v. Alexander, 77 N.Y.2d 28, 34 (1990). The defendant must engage in "substantial solicitation" of business in New York that is "continuous" and also engage in other activities of substance within New York. Stephan v. Babysport, LLC, 499 F.Supp.2d 279, 285 (E.D.N.Y. 2007) (citing Landoil, 918 F.2d at 1043-44). Telephone and email communications to New York are insufficient to satisfy CPLR § 301. Patel v. Patel, 497 F.Supp.2d 419, 426 (E.D.N.Y. 2007) (holding that one telephone call and two emails to the plaintiffs failed to establish that "doing business" in New York) (citing Avecmedia, Inc. v. Gottschalk, 2004 WL 1586411, at *6, n. 2 (S.D.N.Y. 2004)). The relevant time period for the jurisdictional inquiry is the time of service of the summons and complaint. Id.

In support of the motion, defendant submitted an affidavit from Parnell, the President of Avomex. Parnell states that at the time the complaint was filed, Avomex did not have any employees in New York, Avomex did not maintain an office in New York and Avomex did not have bank accounts or property in New York. Plaintiff does not dispute these assertions. However, plaintiff contends that Avomex's business operations in New York are "robust, systematic and ongoing" and provided an affidavit stating that Avomex sold and distributed food products within New York. Plaintiff provided monetary figures purporting to be the amount of those sales. Even assuming plaintiff's assertion to be true, the sales of defendant's product, however substantial, do not make defendant amendable to suit within New York. See Stephan, 499 F.Supp.2d at 285. Plaintiff must also demonstrate that defendant solicited business and engaged in some additional activities within New York. To this end, plaintiff relies upon defendant's "ongoing communication between Avomex and plaintiff in New York" in an attempt to obtain jurisdiction under this statute. As noted, the relevant time of inquiry for jurisdictional purposes is the time of the service of the summons and complaint, January 2009. Plaintiff has not allege that he had any communication with Avomex in 2009. Indeed, plaintiff does not claim that he spoke with anyone at Avomex at any time after he was terminated in 2006. Moreover, telephone and email communication, without more, does not establish that defendant was "doing business" in New York with a degree of permanency. As plaintiff has failed to allege any other substantial or continuous conduct necessary for this Court to find jurisdiction over defendant under CPLR § 301, the Court finds that Avomex was not "doing business" in New York with the continuity required to confer jurisdiction under Section 301. See Maurice-Silvera Inc. v. Nat'l Ctr. for Employment of the Disabled, 2003 WL 262508, at *3 (S.D.N.Y. 2008). B. N.Y. C.P.L.R. § 302(a)

Plaintiff contends that Avomex is subject to specific jurisdiction under New York's long-arm statute on the ground that plaintiff's claims arise from defendant's transaction of business and commission of torts outside New York causing injury to plaintiff in New York. See N.Y. C.P.L.R. § 302(a).*fn10

1. N.Y. C.P.L.R. § 302(a)(1)

N.Y.C.P.L.R. § 302(a)(1) authorizes personal jurisdiction over a non-domiciliary defendant who "transacts any business within the state". In New York, a non-domiciliary transacts business under C.P.L.R. § 302(a)(1) when "he purposefully avails himself of the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws". CutCo Indus. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986) (citations omitted). To obtain jurisdiction under § 302(a), the cause of action must "aris[e] from" the specific New York business transaction; this provision requires a "substantial relationship between the transaction and the claim asserted[.]" Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1998). A cause of action "arises from" a defendant's New York contacts if the contacts are "substantially proximate to the allegedly unlawful acts." Int'l Healthcare Exch. v. Global Healthcare Exch., LLC., 470 F.Supp.2d 345, 358 (S.D.N.Y. 2007) (citations omitted); see also Beatie and Osborn LLP v. Patriot Scientific Corp., 431 F.Supp.2d 367, 387 (S.D.N.Y. 2006) (holding that even if the "transacts business" requirement is satisfied, jurisdiction under § 302(a)(1) is not proper unless the cause of action "arises from" the defendant's contacts with the forum state). Jurisdiction is rarely based solely on a defendant's telephone calls into New York. Int'l Healthcare Exch., 470 F.Supp.2d at 358 (citing Whitaker v. Fresno Telesat, Inc., 87 F.Supp.2d 227, 230 (S.D.N.Y. 1999)). Ultimately, the court must examine the totality of the circumstances to determine whether activities within the state are sufficient to support jurisdiction. Id.

Plaintiff argues that Avomex purposefully engaged in business activity by employing plaintiff as a Northeast Regional Manager with an office in New York and further, having sustained communications with plaintiff within New York. Defendant argues that plaintiff has not established that any business that defendant transacted in New York gave rise to plaintiff's causes of action.

In support of jurisdiction, plaintiff cites to Avomex's business activity in New York and claims:

The fundamental nature of plaintiff's employment relationship with Avomex was to promote the sale and distribution of the company's goods within New York State . . . To this end, plaintiff engaged in substantial and sustained business activity on behalf of Avomex within New York State. As a direct result of this activity, Avomex entered into contractual relationships with customers within the State of New York for the sale and distribution of their goods therein. In these ways, Avomex "purposefully avail[ed] itself of the privilege of conducting activities" with the State of New York.

Even assuming that plaintiff's allegations are true, plaintiff has failed to establish, or even argue, that defendant's "business activity" has any relationship or nexus to the subject matter of plaintiff's lawsuit. See Curto v. Medical World Communications, Inc., 388 F.Supp.2d 101, 114 (E.D.N.Y. 2005) (holding that the plaintiff's defamation claim did not rise out of the defendant's purported acts within New York which included coming to New York for client meetings, executing contracts to supply goods and services in New York, and entertaining clients in New York). Plaintiff has not alleged that he suffered from any injury as a result of defendant's business in New York or from any transaction or sale of goods in New York.

Moreover, although plaintiff alleges that he communicated with Avomex employees via telephone, email and facsimile, plaintiff has failed to allege that any of those communications gave rise to his causes of action for discrimination or retaliation. Plaintiff submitted an affidavit stating that, "my direct supervisor, Cindy Wong, and to a lesser extent, Avomex's President, Steven Parnell, regularly and routinely communicated with me within the State of New York via telephone and email communications". Plaintiff further averred that, "[t]hese communications generally involved providing me guidance in the performance of my duties, and my reporting on the particulars of my sales activities". By plaintiff's own assertions, these communications have no relationship to plaintiff's age discrimination and retaliation claims.

In support of jurisdiction under this statute, plaintiff cites to International Healthcare Exchange, but plaintiff's reliance upon that holding is misplaced. In that case, the plaintiff alleged that she received work assignments by phone, email and fax and that these assignments were specific instances of illegal and disparate treatment and further, that discussions concerning her complaints about her work assignments took place via the same channels. Int'l Healthcare Exch., 470 F.Supp.2d at 358. Therefore, the court held that the defendant's conduct was sufficient to demonstrate a purposeful transaction of business that had a substantial nexus to the plaintiff's employment discrimination cause of action within the meaning of § 302(a)(1). Id.

In the complaint, plaintiff alleges that, "[a]pproximately one week after Litton raised concerns regarding age discrimination in the workplace at Avomex, Parnell telephoned Litton and notified him that his position at Avomex was being eliminated and the he was terminated effective immediately". Plaintiff has not provided any further information with regard to the telephone conversation. Even if the Court assumes that the conversation occurred while plaintiff was in New York and that the conversation has a substantial nexus to plaintiff's causes of action, one telephone phone call regarding plaintiff's termination is not enough to establish that Avomex was physically present within the state for jurisdictional purposes of a claim of discrimination and retaliation. See Team Obsolete Ltd. v. A.H.R.M.A. Ltd., 2002 WL 719471, *3 (E.D.N.Y. 2002) (the only direct contact between the defendant and the plaintiff were a few letters sent from Colorado via mail or fax to Brooklyn). Based upon the totality of the circumstances, defendant's activities within New York are insufficient to subject Avomex to jurisdiction under § 302(a)(1).

2. N.Y. C.P.L.R. § 302(a)(3)

Plaintiff also attempts to obtain jurisdiction over Avomex under this section of the long-arm statute and claims that the discriminatory and retaliatory termination of his employment caused him to suffer injury in New York. Moreover, plaintiff alleges that defendant derived substantial revenue from its sales and distribution of goods in New York and from interstate/international commerce. Under C.P.L.R. § 302(a)(3) personal jurisdiction may be asserted over a non-domiciliary if the non-domiciliary "commits a tortious act without the state" injuring a person within New York, and either (I) "regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.

a. Situs of Injury Test

The Court must first engage in a determination of whether or not defendant committed a tortious act outside of New York that injured a person within New York. "[C]courts determining whether there is injury in New York must generally apply a situs-of-injury test, which asks them to locate the original event which caused the injury." Bank Brussels Lambert, 171 F.3d at 791 (citations omitted). The original event occurs where the first effect of the tort, that produced the final economic injury, is located. DiStefano v. Carozzi North America, Inc., 286 F.3d 81, 85 (2d Cir. 2001). When a person is employed in New York (or performs a substantial part of the duties of his employment in New York), his experience of being removed from that employment (or from those duties) is a New York event that constitutes "the first effect of the tort" of discharging the employee. Id.(holding that the plaintiff experienced the "first effect" of losing his job in New York even though the decision to terminate the plaintiff was made outside New York) (citing Bank Brussels Lambert, 171 F.3d at 792).

In this case, plaintiff resided in and performed a substantial part of his employment in New York. Because plaintiff's employment took place in New York, the "original event" (plaintiff's termination) which allegedly caused injury to plaintiff, occurred in New York. Accordingly, the ...


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