United States District Court, E.D. New York
[Copyrighted Material Omitted]
For the Plaintiff: Christopher K. Leung, Dana H. Biberman, Assistant Attorneys General, Eric T. Schneiderman, Attorney General of the State of New York, New York, NY.
For Mountain Tobacco Company d/b/a King Mountain Tobacco, Defendant: Kelli J. Keegan, Esq., Randolph Barnhouse, Esq., Of Counsel, Johnson Barnhouse & Keegan LLP, Los Ranchos De Albuq, NM.
For Mountain Tobacco Company d/b/a King Mountain Tobacco, Defendant: Nelson A. Boxer, Esq, Jill Caroline Barnhart, Esq., Of Counsel, Petrillo Klein & Boxer LLP, New York, NY.
For Delbert Wheeler, Sr., Defendant: Andrew K. Martingale, Esq., David N. Yaffe, Esq., Of Counsel, Hamburger, Maxson, Yaffe & McNally LLP, Melville, NY.
DECISION AND ORDER
ARTHUR D. SPATT, United
States District Judge
On December 21, 2012, the Plaintiff State of New York (the " State" ) filed this complaint against the Defendant King Mountain Tobacco Company, d/b/a/ King Mountain Tobacco Company Inc. (" King Mountain" ); Mountain Tobacco Distributing Company Inc.; and Delbert Lauren Wheeler, Sr., alleging violations of the Contraband Cigarette Trafficking Act, 18 U.S.C. § § 2341-2346 (" the CCTA" ), the Prevent All Cigarette Trafficking Act, 15 U.S.C. § § 375-378 (" the PACT Act" ), and New York State tax and executive laws concerning tax stamping and sale of cigarettes within the state. On February 12, 2013, the State of New York filed an amended complaint.
On May 9, 2013, the State of New York voluntarily dismissed the action against Mountain Tobacco Distributing Company, Inc. pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 41(a)(1).
On May 16, 2014, Wheeler moved pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 12(b)(5), (2), and (6) to dismiss the amended complaint for lack of proper service, lack of " minimum contacts" personal jurisdiction, and failure to state a claim upon which relief can be granted. King Mountain has not joined in Wheeler's motion.
Also presently pending before the Court are Wheeler's objections to an order of United States Magistrate Judge William D. Wall issued on July 30, 2014 denying his application pursuant to Fed.R.Civ.P. 26(c)(1)(D).
For the reasons set forth here, the Court denies that part of Wheeler's motion to dismiss for lack of proper service. The Court also denies without prejudice and, with leave to renew following the completion of jurisdictional discovery as to Wheeler, that part of Wheeler's motion to dismiss for lack of " minimum contacts" personal jurisdiction and for failure to state a claim upon which relief can be granted. Finally, the Court denies as moot Wheeler's objections to the order issued by Judge Wall denying his motion pursuant to Fed.R.Civ.P. 26(c)(1)(D).
Unless otherwise stated, the following facts are drawn from the amended complaint. " As this decision involves a motion to dismiss for lack of personal jurisdiction , the Court will also consider the various affidavits submitted by the parties." Photoactive Prods., Inc. v. AL-OR Int'l Ltd., 99 F.Supp.2d 281, 285 (E.D.N.Y. 2000).
A. The Parties
The Plaintiff State of New York is a sovereign entity that brings this action on behalf of its citizens and residents to protect the public health, safety, and welfare, and to enforce federal and state law for those purposes.
The Defendant King Mountain is a corporation formed under the laws of the Yakama Nation of Indians. According to the amended complaint, King Mountain is engaged in the business of manufacturing, selling, transferring, transporting, and shipping its cigarettes for profit. King Mountain advertises and offers its cigarettes for sale, transfer, transport, and shipment throughout the United States, including New York. Although King Mountain is not owned or operated by the Yakama Nation Tribe, King Mountain is located
within the Yakama Indian Reservation. King Mountain's principal place of business and cigarette-manufacturing factory are located at 2000 Fort Simcoe Rd., White Swan, Washington. Its warehouse and distribution facility are located at 2000 Signal Peak Road, White Swan, Washington. And its registered office is located at Box 669, White Swan, Washington.
The Defendant Wheeler, an individual, is a resident of Washington State and is the President, co-founder, and 50% co-owner of King Mountain.
B. Factual and Procedural History
King Mountain manufactures the King Mountain brand cigarettes on the Yakama Reservation in the State of Washington. It then sells, transfers or assigns the cigarettes to retailers and/or wholesalers in New York State. According to the Plaintiff, King Mountain has sold and shipped, and continues to sell and ship, large quantities of unstamped, untaxed, and unreported cigarettes into Indian reservations located in New York State in violation of N.Y. Tax Law § 470, et seq.
On December 21, 2012, the State filed its complaint against the Defendants.
On February 12, 2013, the State filed an amended complaint, which omitted the signature of the filing attorney. Although the amended complaint references Wheeler as an officer and partial owner of King Mountain, it contains no specific allegations as to him.
In a letter dated March 28, 2013, the State sought an order pursuant to Fed.R.Civ.P. 4(c)(3) authorizing service on these defendants via the CT Corporation, King Mountain's agent for service of process in Washington State, or in the alternative, service via a United States Marshal, Deputy Marshal, or a person specially appointed by the Court. In that letter, the State detailed its unsuccessful efforts to serve King Mountain and Wheeler on the Yakama Reservation in Washington State.
On April 4, 2013, United States Magistrate Judge E. Thomas Boyle denied the State's motion without prejudice to renewal at the initial conference.
On April 17, 2013, the State served King Mountain via the CT Corporation in Olympia, Washington, as opposed to the address in Seattle, Washington specified in the State's March 28, 2013 letter motion.
On April 18, 2013, Judge Boyle granted the State's motion with respect to the service of King Mountain " nunc pro tunc 4/17/13." He also authorized alternative service on Wheeler via the CT Corporation and alternative service on Wheeler via a United States Marshal, Deputy Marshal, or a person specially appointed by the Court. However, Judge Boyle did not identify who should complete service on Wheeler, nor when such service should be consummated.
On May 9, 2013, the State of New York voluntarily dismissed the action against Mountain Tobacco Distributing Company, Inc. pursuant to Fed.R.Civ.P. 41(a)(1).
On June 12, 2013, the State's 120-day time limit for effecting service upon Wheeler under Fed.R.Civ.P. 4(m) expired.
On July 17, 2013, the case was reassigned to United States Magistrate Judge William D. Wall.
On February 28, 2014, the State again moved for supplementation or clarification of the April 18, 2013 order entered by Judge Boyle. King Mountain opposed this request.
On March 27, 2014, Judge Wall granted the State's motion, reasoning:
The State has shown the difficulty and impracticability of the numerous attempts
they have made to serve Wheeler and have demonstrated Wheeler's awareness of the action, inasmuch as he is the president of defendant King Mountain. There is no prejudice to Wheeler in this approach and this case must move forward with all necessary parties.
The time for service is deemed extended to seven days from the date of this order, and service shall be made on Wheeler by facsimile and certified mail on King Mountain's business and P.O. box addresses.
(Doc No. 88.)
On March 28, 2014, the State served Wheeler by facsimile and certified mail on King Mountain's two business addresses and P.O. Box address. Each facsimile and mailing included a copy of the summons, first amended complaint, and revised proposed joint discovery plan, plus a letter addressed to " King Mountain Tobacco Company, Inc. Attn: Delbert Wheeler, Sr.", which, among other things, explained that Magistrate Judge Wall had authorized the service of process on Wheeler in the referenced action.
The State did not attach a copy of Judge Wall's March 27, 2014 ruling. Further, the amended complaint attached to the letter was unsigned.
Following the State's service on Wheeler, the State received a facsimile confirmation that the State's ...