Opinion
98 Civ. 9186 (MBM)
July 11, 2002
ELIZABETH J. CABRASER, ESQ. MORRIS A. RATNER, ESQ. CARYN BECKER, ESQ. Lieff, Cabraser, Heimann Bernstein, LLP, New York, NY., MELVYN I. WEISS, ESQ., DEBORAH M. STURMAN, ESQ., Milberg Weiss Bershad Hynes Lerach LLP., New York, NY., Attorneys for Plaintiffs.
WILLIAM M. BRODSKY, ESQ., SUSAN R. KAPLAN, ESQ., Baden Kramer Huffman Brodsky, P.C., New York, NY., JAMES M. DAVIS, ESQ., MARK D. BRADFORD, ESQ. ANITA TUCKER SMITH, ESQ., New York, NY., Attorneys for Defendant.
OPINION AND ORDER
Plaintiffs bring this diversity class action against certain named and unnamed European insurance companies that issued policies in about a dozen different countries from 1920 to 1945. It is alleged, in both this case and in a parallel case, Cornell v. Assicurazioni Generali S.p.A., et al., 97 Civ. 2262, that those companies refused to pay benefits to policy beneficiaries or their surviving family members following the death of the policy holders or damage to their property during the German campaign of extermination before and during World War II, known as the Holocaust.
Pursuant to Fed.R.Civ.P. 12(b)(2), two Swiss corporations — defendants Basler, Vericherungs-Gesellschaft ("Basler") and Winterthur Leben ("Winterthur") now move to dismiss for lack of personal jurisdiction. Basler and Winterthur first moved to dismiss for lack of personal jurisdiction in July 1999, but the court deferred consideration of those motions to allow plaintiffs to include in an amended complaint jurisdictional allegations made only in their memoranda. See Cornell v. Assicurazioni Generali S.p.A., et al., Winters v. Assicurazioni Generali S.p.A., et al., Nos. 97 Civ. 2262, 98 Civ. 9186, 2000 WL 1191124 (Aug. 22, 2000). Since then, all German companies that were a part of this action have been voluntarily dismissed pursuant to the "Berlin Agreements." See Winters v. Assicurazioni Generali S.p.A., et al., 98 Civ. 9186 (December 8, 2000). In an opinion dated December 19, 2000, the court denied Basler's and Winterthur's motion to be deemed "German Companies" covered by those agreements. See Cornell v. Assicurazioni Generali S.p.A.. et al., Winters v. Assicurazioni Generali S.p.A., et al., Nos. 97 Civ. 2262, 98 Civ. 9186, 2000 WL 1858482, at *3 (Dec. 19, 2000). On February 2, 2001, plaintiffs filed an Amended Complaint, and on April 30, 2001, plaintiffs filed a Corrected Amended Complaint. Basler and Winterthur now renew their motions to dismiss for lack of personal jurisdictAon. For the reasons set forth below, both Basler's and Winterthur's motions to dismiss are granted, and plaintiffs' request for jurisdictional discovery is denied.
Defendants are sued as "Basler Versicherungen AG" and "Winterthur Lebensversicherungs-Gesellschaft," respectively. (Corrected Am. Compl.) Instead of these names, the court uses the names indicated in the text, which defendants have indicated are the proper corporate names. (Davis Decl. ¶ 3 n. 4; Winterthur Mem. of 4/26/01 at 1)
Basler and Winterthur are currently defendants only in the present action; the companies are not defendants in the Cornell action. See Cornell v. Assicurazioni Generali S.p.A., et al., 97 Civ. 2262 (Dec. 13, 2000).
The court did grant two other corporations' motions to dismiss for lack of personal jurisdiction in response to motions made in 1999. The court dismissed the French corporation Union des Assurances de Paris-Vie ("UAP-Vie") from both this action and the Cornell action in March 2000. See Cornell v. Assicurazioni Generali S.p.A., et al., Winters v. Assicurazioni Generali S.p.A., et al., Nos. 97 Civ. 2262, 98 Civ. 9186, 2000 WL 284222 (S.D.N.Y. Mar. 16, 2000) ("Cornell I"). The court dismissed the Austrian corporation Der Anker Allgemeine Versicherungs AG P'Der Anker") from the Cornell action in August 200Q. Cornell v. Assicurazioni Generali S.p.A.. et al., No. 97 Civ. 2262, 2000 WL 1099844 (S.D.N.Y. Aug. 7, 2000) ("Cornell II").
In both the original Complaint and the Amended Complaint, this action was captioned Winters v. Assicurazioni Generali S.p.A., et al. However, as reflected in the Corrected Amended Complaint, the action is now entitled Schenker v. Assicurazioni Generali S.p.A., et al.
I.
A plaintiff bears the ultimate burden of establishing jurisdiction over a defendant by a preponderance of the evidence. See Hoffritz for Cutlery, Inc. v. Amalac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). However, when a Rule 12(b) (2.) motion is brought at this stage of the litigation — before substantial discovery and without an evidentiary hearing — plaintiffs need make only a prima facie showing that personal jurisdiction exists. See PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997); A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79 (2d Cir. 1993). To do so, plaintiffs may rely entirely on mere allegations of fact, which will be taken as true. See Cornell I, 2000 WL 284222, at *1 (collecting cases)
In a diversity action, personal jurisdiction over a defendant in federal court is determined by reference to the jurisdictional laws of the state in which the court sits. Beacon Enters. v. Menzies, 715 F.2d 757, 762 (2d Cir. 1983). If the exercise of jurisdiction would be valid under New York law, the court must then determine whether such exercise is consistent with the Due Process Clause of the United States Constitution's Fifth Amendment. See Bensusan Rest. Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997).
In this ease, plaintiffs assert that the court has personal jurisdiction over both Basler and Winterthur pursuant to (i) New York Civil Practice Lawand Rules ("CPLR") § 301 and (ii) New York's long-arm statute, CPLR § 302(a).
II.
Under CPLR § 301, a New York court may exercise general personal jurisdiction over a non-domiciliary corporation that is "doing business" in New York. See McGowan v. Smith, 52 N.Y.2d 268, 272, 437 N.Y.S.2d 643, 645 (1981) (internal quotation marks omitted). A corporation is "doing business" in New York "if it does business in New York `not occasionally or casually, but with a fair measure of permanence and continuity.'" Hoffritz, 763 F.2d at 58 (quoting Tauza v. Susguchanna Coal Co., 220 N.Y. 259, 267 (1917)). The traditional indicia of such "permanence and continuity" include: "1) the existence of an office in New York; 2) the solicitation of business in New York; 3)the existence of bank accounts or other property in New York; and 4) the presence of employees in New York." See Insight Data Corp. v. First Bank Systems1 Inc., No. 97 Civ. 4896, 1998 WL 146689, at *4 (S.D.N.Y. Mar. 25, 1998) (citing Hoffritz, 763 F.2d at 58). "[N]o single factor is dispositive." Palmieri v. Estefan, 793 F. Supp. 1182, 1187 (S.D.N.Y. 1992).
A. Basler
Plaintiffs claim that this court has § 301 jurisdiction over Basler because the company "transacts extensive business" in New York through:
pooling agreements or other financial arrangements, marketing efforts, brokerage, security, custodian, or other accounts, customers, brokers, sales intermediaries, visits to New York and the United States by its representatives, business ventures such as participation in limited partnerships, firms, joint ventures and other business entities, employees, officers, board members, agents, representatives and brokers who reside in, are located in, visit and/or perform work including but not limited to the sale of insurance, in New York or the United States on defendants' behalf, insured or reinsureds residing or located in New York or the United States, individual or combined debts, assets or revenues, services offered or performed, locales used by defendants, including for office and meeting purposes, public relations efforts, obtainment of legal services, political donations or contributions, phone or fax numbers or mailing addresses, websites, business licenses, registrations or authorization, contracts and other business arrangements, United States-targeted policies or other services, customer service or referral networks, document depositories, and solicitation or promotional activities.
(Corrected Am. Comp). ¶ 15) However, "`conclusory non-factspecific jurisdictional allegations' . . . are insufficient to establish even a prima facie showing of personal jurisdiction under § 301." Cornell II, 2000 WL 1099844, at *1 (quoting Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998)); Cornell I, 2000 WL 284222, at *2 (quoting Jazini, 128 F.3d at 185, and collecting cases). Although plaintiffs allege that Basler has engaged in virtually every type of imaginable, contact with New York, they allege no facts specific to Basler that would distinguish the text of the complaint from a list that one might generate by simply reading from a practice manual or engaging in a brainstorming exercise. "[L]egal conclusions couched as factual allegations are not facts and cannot substitute for facts." Cornell II, 2000 WL 1099844, at *1 (citing Papasan v. Allain, 478 U.S. 265, 286 (1985)); see Cornell I, 2000 WL 284222, at *2 (same). Plaintiffs have failed to allege specific contacts that Basler has had with New York, and instead rely upon a generic list of activities that could give rise to jurisdiction.
The only allegation in the complaint for which there is specific support is one admitted by Basler — that Basler maintains a $2.8 million trust account with Citibank in New York City. (Corrected Am. Compl. ¶ 15; Pls.' Mem. of 7/20/01 at 7; Scharer Decl. ¶ 6(i)) However, a bank account or trust account in New York, standing alone, is not enough, absent extraordinary circumstances, to constitute "doing business" in New York. See Alexander Alexander Servs., Inc. v. Lloyd's Syndicate 317, 925 F.2d 44, 46-47 (2d Cir. 1991) (per curiam); Insight Data Corp., 1998. WL 146689, at *5; Semi Conductor Materials, Inc. v. Citibank Int'l PLC, 969 F. Supp. 243, 246 (S.D.N.Y. 1997); Grove Valve Regulator Co. v. Iranian Oil Servs., Ltd., 87 F.R.D. 93, 95 n. 1 (S.D.N.Y. 1980) (Weinfeld, J.); Landoil Resources Corp. v. Alexander Alexander Servs., Inc., 77 N.Y.2d 28, 35-36, 53 N.Y.S.2d 739, 742-43 (1990). In those limited cases when a single bank account was found sufficient to establish jurisdiction, that account was central and integral to the defendant's business. See United Rope Distribs., Inc. v. Kimberly Line, 785 F. Supp. 446, 450-51 (S.D.N.Y. 1992) (finding personal jurisdiction based solely on a New York bank account that received "substantially all" of a foreign corporation' s income); see also Holtzman v. Lauder, 91 Civ. 1893, 1994 WL 88013, at *5 (S.D.N.Y. Mar. 11, 1994) (same). In this case, Basler's $2.8 million account is not alleged to be central or integral to Basler's business, and it constitutes a small fraction of the corporation's total assets (Scharer Decl. ¶ 6). See Semi Conductor Materials, 969 F. Supp. at 246 (declining to exercise jurisdiction where defendant did not "transact `substantially all' of its business through its New York bank accounts").
Plaintiffs claim also that even if Basler does not directly conduct business, in the United States, it conducts business in New York indirectly through its U.S. subsidiary and "alter ego," the Providence Washington Group ("PWG"), which, is incorporated in Previdence, Rhode Island. (Corrected Am. Compl. ¶ 15) Although a parent-subsidiary relationship is not in itself sufficient to establish personal jurisdiction over a foreign parent based on its subsidiary's in-state contacts, Jazini, 148 F.3d at 184, the acts of a New York subsidiary may be attributed to a foreign parent for jurisdictional purposes when the subsidiary is a "mere department" or "agent" of the foreign parent, id.; Insight Data Corp., 1998 WL 146689, at *5.
This seems to be an incorrect categorization of the corporate relationship. According to Basler, the Prqvidence Washington Group is, one of three U.S. companies that were once indirectly owned by Baloise-Holding, Basler's corporate parent. (Scharer Decl. ¶ 10 n. 3).
However, the court need not consider plaintiffs' assertion that Basler is subject to personal jurisdiction through its subsidiary, because Basler has refuted plaintiffs' allegation that PWG is a subsidiary. In a sworn statement, Jurg Scharer, a member of Basler's senior management, states that Basler did not own any U.S. subsidiaries at the time the complaint was filed, and that although Basler's parent corporation Baloise-Holding once indirectly owned PWG, it sold PWG and all other U.S. subsidiaries in October 1998 — two months before the complaint in this action was filed on December 30, 1998. (Scharer Decl. ¶¶ 7-10) Although plaintiffs' allegations are ordinarily accepted as true at this stage of the litigation, see A.I. Trade Finance, 989 F.2d at 79-80, where, as here, defendant rebuts plaintiffs' unsupported allegations with direct, highly specific, testimonial evidence regarding a fact essential to jurisdiction — and plaintiffs do not counter that evidence — the allegation may be deemed refuted, see Kulas v. Adachi, 96 Civ. 6674, 1997 WL 256957, at *5 (S.D.N.Y. May 16, 1997); Bear, Stearns Co. v. Ralph C. Wilson Indus., Inc., 91 Civ. 2223, 1991 WL 211203 , at *23 (S.D.N.Y. Oct. 9, 1991). Therefore, even assuming that PWG does business in New York (an allegation not made in the complaint), such activity could not give rise to jurisdiction because Basler's specific testimonial evidence shows that neither Basler nor Baloise-Holding owned PWG at the. time the complaint was filed.
That PWG's activities in New York on behalf of BaloiseHolding or Basler might previously have been sufficient to give rise to jurisdiction is irrelevant. Personal jurisdiction is determined as of the time of service of the summons and complaint, i.e., the date the action was commenced. See Darby v. Coin a nie National Air France, 735 F. Supp. 555, 560 (S.D.N.Y. 1990); Andros Compania Maritima S.A. v. Intertanker Ltd., 714 F. Supp. 669, 675 (S.D.N.Y. 1989); Arrow Trading Co. v. Sanyei. Corp. (Hong Kong), Ltd., 576 F. Supp. 67, 69 (S.D.N.Y. 1983). Courts sometimes have considered contacts that occurred at least as far as a year before the filing of the complaint, but those contacts are generally considered only to establish the pattern of contacts that existed at the moment the complaint was filed. See, e.g., Mayatextil, S.A. v. Liztex U.S.A., Inc., No 92 Civ. 4528, 1995WL 131774, at *2 n. 1 (S.D.N.Y. Mar. 23, 1995). In the present case, no historical information would be helpful. The only relevant inquiry is whether Basler or its parent Baloise-Holding had an "agency" or "mere department" relationship with PWG when the complaint was filed, such that any of PWG's past or present New York contacts could be attributed to Basler. Because the evidence is clear that Baloise-Holding had sold any interest it once had in PWG as of December 30, 1998, PWG's contacts with New York cannot form a basis for personal jurisdiction over Basler. See ICC Primex Plastics Corp. v. LA/ES Laminati Estrusi Termoplastici S.p.A., 775 F. Supp. 650, 652 n. 2 (S.D.N.Y. 1991) (holding that a business relationship that ended three months prior to the filing of the complaint could not give rise to § 301 personal jurisdiction); Andros, 714 F. Supp. at 675 (holding that when contacts and thus presence ceases, a corporation is no longer "doing business" under § 301); Aaacon Auto Transport, Inc. v. Barnes, 603 F. Supp. 1347; 1351 (S.D.N.Y. 1985) (Weinfeld, J.) (same).
B. Winterthur
Plaintiffs allege that Winterthur does business directly in the state of New York:
Winterthur . . . maintains at least three New York bank accounts, directly solicits business in New York, obtained a partnership interest in an investment fund domiciled in Delaware and managed in New York, and cooperates with the American International Group ["AIG"], a company headquartered in New York, in the marketing and servicing of multinational employee benefit clients.
(Corrected Am. Compl. ¶ 14) Plaintiffs allege also that "Winterthur seeks and obtains business [1 for itself and its subsidiaries in New York through membership in referral organizations, and its employees travel regularly to New York for business purposes." (Id.) Even accepting these New York contacts as true, such contacts do not establish that Winterthur does permanent and continuous business in the state; rather, they show "occasional and isolated" contacts with the state and the existence of business relationships with New York entities, which are insufficient for personal jurisdiction under § 301. Hvide Marine Int'l, Inc. v. Employers Ins. of Wausau, 724 F. Supp. 180, 185 (S.D.N.Y. 1989)
As indicated above, the four criteria that the New York courts use to evaluate "permanence and continuity" are "1) 2the. existence of an office in New York; 2) the solicitation of business in New York; 3)the existence of bank accounts or other property in New York; and 4) the presence of employees in New York." See supra pp. 4-5 (citing Insight Data Corp., 1998 WL 146689, at *4). As for two of the factors, plaintiffs do not allege that Winterthur has any offices or permanent employees in New York, or that it is even licensed to do business in the state. Plaintiffs do claim, however, that Winterthur "solicits business in New York," in part through an agreement with New York-based AIG for the sale of employee benefit policies to multinational corporations. (Corrected Am. Compl. ¶ 14) However, the types of solicitation that plaintiffs allege, even if they occur in New York, are not specifically directed at New York. Rather, Winterthur's solicitations are targeted at the employee benefit departments of large multinational corporations that do business abroad and happen also to do business in New York. Rather than permanent or continuous, Winterthur's solicitation of business in New York is contingent upon how and where Winterthur's multinational clients choose to structure their business operations. Plaintiffs' allegations thus provide only limited support for the proposition that Winterthur does business in New York. Cf. Hvide, 724. F. Supp. at 185 (holding that even where solicitation of business in New York is clearly shown, it is insufficient on its own to form a basis for personal jurisdiction); Grill v. Walt Disney Co., 683 F. Supp. 66, 68 (S.D.N.Y. 1988) (same).
Plaintiffs allege also that Winterthur owns at least three New York bank accounts and an ownership interest in an investment fund managed in New York. (Corrected Am. Compl. ¶ 14) Dr. Jurg Spiller of Winterthur states, and plaintiffs do not seem to contest, that two of the three New York bank accounts are custodial accounts holding certain investments. (Spiller Decl. ¶ 5; Pls.' Mem. of 7/20/01 at 4-5) However, investing money in New York alone cannot be considered a form of "doing business" for the purpose of § 301; "if it were, then almost every company in the country would be subject to New York's jurisdiction." Clarke v. Fonix Corp., No. 98 Civ. 6116, 1999 WL 105031, at *5 (citing Daniel v. American Bd. of Emergency Med., 988 F. Supp. 127, 224 (W.D.N.Y. 1997); Robbins v. Ring, 166 N.Y.S.2d 483, 484-85 (Sup.Ct. New York County 1957)) (holding that "raising financing" in New York is not a form of "doing business" in the state). Nor is Winterthur's third New York bank account of much assistance to plaintiffs' efforts to establish jurisdiction. That account belongs to Winterthur's corporate parent, the Winterthur Swiss Insurance Company ("Winterthur Swiss"), and seems to be used to move funds into and out of the accounts of Winterthur Swiss's various subsidiaries (including Winterthur). (Spiller Decl. ¶ 5; Cornell Pls.' Mem. of 12/8/97 at 46) The account is not alleged to be significant or integral to Winterthur's business in any way that would support the exercise of jurisdiction in New York without additional evidence suggesting that jurisdiction would be appropriate. See Semi Conductor Materials, 969 F. Supp. at 246 (declining to find jurisdiction based on New York bank accounts alone where defendant did not "transact "substantially all' of its business through its New York bank accounts")
Taking into account the totality of plaintiffs' allegations with regard to Winterthur's New York contacts, Winterthur cannot be considered to be directly "doing business" in New York. "Perhaps the most important factor needed for a finding of jurisdiction under CPLR § 301 is the in-state presence of employees engaged in business activity." Lane v. Vacation Charters, Ltd., 750 F. Supp. 120, 125 (S.D.N.Y. 1990). It is undisputed that Winterthur lacks such a presence, and plaintiffs' allegations that Winterthur solicits some multinational business in New York and holds some investments there, even if true, are inadequate to make up for this deficiency. Winterthur is essentially a Swiss corporation with its base of operations in Europe. That Winterthur solicits some business from multinational corporations that do business in New York, and makes some New York investments, does not mean that this European company is itself "doing business" in New York under § 301.
Even if Winterthur is not subject to personal jurisdiction through its own business activities, plaintiffs allege that Winterthur conducts business in New York through its U.S. subsidiaries, the Winterthur International American Insurance Company and Winterthur International (the "Winterthur International Companies"), both of which "are alter egos and/or agents of the defendant." (Corrected Am. Compl. ¶ 14) Winterthur counters that it has no U.S. subsidiaries, and that only parent Winterthur Swiss has subsidiaries in the United States. (Spiller Decl. ¶ 3; Winterthur Mem. of 4/26/01 at 16) It may well be that the Winterthur International Companies are (or were on the. date the complaint was filed) subsidiaries not of Winterthur, but of parent Winterthur Swiss. However, for the purposes of this motion, especially where Winterthur has not clarified its precise relationship to the Winterthur International Companies, the court accepts as true plaintiffs' allegation that the Winterthur International Companies are subsidiaries of defendant Winterthur.
In a memorandum of law submitted to the court in the Cornell action, the Cornell plaintiffs make the further allegation that Winterthur Swiss has eight U.S. subsidiaries Blue Ridge Insurance Company, General Casualty of Wisconsin, Regent Insurance Company, Republic Insurance Company, Unigard Indemnity Company, Unigard Insurance Company, Vanguard Insurance Company, and Winterthur Reinsurance Company of America — all of which do business in New York and all of which, along with Winterthur, are part of a "single economic entity" under common parent Winterthur Swiss. (Cornell Pls.' Mem. of 12/8/97 at 46-51; 66-69) However, in an opinion dated August 22, 2000, the court warned plaintiffs that factual allegations made only in memoranda and that do not appear in complaints or affidavits cannot be considered. Cornell, Winters, 2000 WL 1191124, at *1 (collecting cases). The court reserved judgment on all personal jurisdiction motions at that time and explicitly instructed plaintiffs to amend their complaint to include such allegations. Id. However, plaintiffs have not done so and have not referenced the factual allegations in the Cornell memorandum in any subsequent pleading or memorandum. Accordingly, the above allegation cannot be considered.
Plaintiffs assert that the Winterthur International Companies are "alter egos and/or agents" of Winterthur. However, the complaint and affidavits submitted to the court do not establish a prima facie case that the Winterthur International Companies in fact serve as the "agent" or "mere department" of Winterthur. See Jazini, 148 F.3d at 184 (requiring an "agency" or "mere department" relationship for the attribution of jurisdictional contacts between related entities); Insight Data Corp., 1998 WL 146689, at *5 (same).
To make a prima facie case that a New York company does business in New York as the "agent" of a foreign company, plaintiffs must allege that the New York company/companies (the Winterthur International Companies) do all the business in New York that the foreign company (Winterthur) could do were it here through its own officials. See Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 537, 281 N.Y.S.2d 41, 44 (1967). Courts have interpreted this to mean that the agent's activities in New York must be "sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporations s own officials would undertake to perform substantially similar services." Gelf and v. Tanner Motor Tours, Ltd., 385 F.2d 116, 121 (2d Cir. 1967), quoted in Palmieri v. Estefan, 793 F. Supp. 1182, 1190 (S.D.N.Y. 1992).
Plaintiffs offer in this regard only a reference to the Winterthur website, which allegedly states that "Winterthur conducts direct insurance business throughout the U.S. insurance market" and lists on the same page several of Winterthur's U.S. subsidiaries, including the Winterthur International Companies. (Corrected Am. Compl. ¶ 14) However, the website that plaintiffs identify is no longer a valid web address. Moreover, the general website that plaintiffs identify, http://www.winterthur.com, is the website of parent Winterthur Swiss, not Winterthur. Although that site mentions certain U.S. subsidiaries of Winterthur Swiss, it makes no mention of the Winterthur International Companies or any U.S. subsidiaries belonging to defendant Winterthur. See Winterthur Worldwide Website, at http://www.winterthur.com. The website is thus of no help to plaintiffs in showing an "agency" relationship. Furthermore, plainiffs do not identify any other activities that the Winterthur International Companies undertake on behalf of Winterthur. By. not identifying any such activities plaintiffs have failed to allege, as they must, that the Winterthur International companies perform specific services in New York that are sufficiently important that Winterthur would itself have to perform them were it not for the presence of the Winterthur International companies. See Gelfand, 385 F.2d at 121; Palmieri, 793 F. Supp. at 1190. Plaintiffs' allegations do not make a prima facie case that the Winterthur International Companies do business in New York as "agents" of Winterthur.
That web address is: http://www.winterthur.com/groups/ns/ worldwide/locations/americas/united-states, htm. A visit to the site produces the following error message,"The document you requested does not exist."
Nor have plaintiffs stated facts to show that the Winterthur International Companies do business in New York as "mere departments" of Winterthur. A "mere department" relationship exists "only if the foreign parent's control of the subsidiary is pervasive enough that the corporate separation is more formal than real." H. Heller Co. v. Novacor Chems. Ltd., 726 F. Supp.. 49, 54 (S.D.N.Y. 1998), aff'd without opinion, 875 F.2d 856 (2d Cir. 1989). To evaluate whether a subsidiary is a "mere department" of a parent,
the court must consider four factors . . .: first, "common ownership" which is "essential" [;] second, "financial dependency of the subsidiary on the parent corporation;" third, "the degree to which the parent corporation interferes in the selection and assignment of the subsidiary's executive personnel and fails to observe corporate formalities;" and fourth, "the degree of control over the marketing and operational policies of the subsidiary exercised by the parent."
Jazini, 148 F.3d at 185 (quoting Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120-22 (2d Cir. 1984)), cited in Cornell I, 2000 WL 284222, at *3.
The only relevant allegations that plaintiffs make with respect to the four "mere department" factors are that Winterthur maintains a website that references the Winterthur International Companies, and that "Winterthur seeks and obtains business [I for itself and its subsidiaries in New York through membership -In referral organizations." (Corrected Am. Compl. ¶ 14) However, as discussed above, the website to which plaintiffs make reference is of no help because it is defunct and part of the broader Winterthur Swiss website, which makes no mention of the Winterthur International Companies as subsidiaries of Winterthur.
Plaintiffs' allegation that Winterthur belongs to a referral organization addresses only one of the four factors relevant to "mere department" status the degree of control that the parent. exercises over the marketing and operational policies of the subsidiary. The allegation falls well short of the necessary assertion that the parent controls "virtually every aspect of [the subsidiary's] marketing efforts." Morse Typewriter Co. v. Samanda Office Communications Ltd., 629 F. Supp. 1150, 1154 (S.D.N.Y. 1986) (Weinfeld, J.) (quoting Volkswagenwerk, 751 F.2d at 122) (internal quotation marks omitted).
Missing from the complaint entirely is any allegation as to the other three "mere department" factors, including common ownership, which is essential to a finding of jurisdiction under the "mere department" theory. See Volkswagenwerk, 751 F.2d at 120. Because plaintiffs have made only a weak allegation with respect to one of the four factors relevant to "mere department" jurisdiction, and have made no allegations with regard to the other three factors (one of which is essential), plaintiffs' assertion that Winterthur does business in New York through its "alter ego," the Winterthur International Companies, is insufficient.
III.
Plaintiffs seek also to obtain specific personal jurisdiction over Basler and Winterthur pursuant to § 302(a), New York's long-arm statute. The first three subsections of the long-arm statute allow a New York court to exercise specific jurisdiction over a non-domiciliary defendant when that defendant, in relevant part:
(1) transacts any business within the state or contracts anywhere to supply goods or services in the state; or
(2) commits a tortious act within the state . . .; or
(3) commits a tortious act without the state causing injury to person or property within the state.
CPLR § 302(a)(1)(3).
A. § 302(a)(1)
Under the first subsection, a New York court may
exercise jurisdiction over an entity that "transacts any business within the state or contracts anywhere to supply goods or services in the state," so long as the cause of action arises out of that activity. CPLR § 302(a)(1).
The showing necessary to establish that a defendant has "transacted business" under § 302(a)(1) is "considerably less" than that required to show that the company was "doing business" under § 301, New York's general jurisdiction statute. See Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir. 1985). "[Al single transaction would be sufficient to fulfill this requirement," but only "so long as the relevant cause of action also arises from that transaction." Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 279, 787 (2d Cir. 1999) (citations omitted) (internal quotation marks omitted).
However, plaintiffs' allegations fail even under the looser "transacting business", standard of § 302(a)(1) because the Corrected Amended Complaint does not explain how plaintiffs claims (seeking damages for defendants' refusal to pay Holocaustera insurance proceeds) arise from any of Basler's or Winterthur's, or any of their subsidiaries', business transactions in New York. Plaintiffs allege that Basler maintains various liaisons with New York banks and insurance companies and acts indirectly through the Providence Washington Companies in order to participate in the New York insurance market (Corrected Am. Compl. ¶ 15; supra pp. 5-6), but plaintiffs do not allege. that their Holocaust-era claims arise-out of these activities. Similarly, plaintiffs allege that Winterthur solicits the business of multinational corporations in New York, maintains bank accounts in the state, and conducts business there through several U.S. subsidiaries. (Corrected Am. Compl. ¶ 14, supra p. 11) However, plaintiffs do not explain how their Holocaust-era claims could possibly arise out of those business activities. See Nat'l Tel. Directory Consultants, Inc. v. Bellsouth Adver. Publ'g Corp., 25 F. Supp.2d 192, 197 (S.D.N.Y. 1998) (declining to exercise jurisdiction under § 302(a)(1) where plaintiff did not allege a nexus between the cause of action any defendant's in-state activities).
The only possible argument to support a finding of jurisdiction under § 302(a)(1) is that Basler and Winterthur either transact business or have contracted to provide goods or services in New York by virtue of having sold insurance to transient policy holders in Nazi-dominated Europe who defendants should have anticipated given the turmoil on the contiment — might emigrate to the United States. (Cornell Pls.' Mem. of 12/8/97 at 51-53, 85-89) In support of this argument, the Cornell plaintiffs suggest an analogy to the provision of maritime insurance for transient goods. (Id. at 86-89) However, the court has already twice rejected this argument in opinions dismissing defendants from this action and the Cornell action for lack of personal jurisdiction. See Cornell II, 2000 WL 1099844, at *2 n. 4; Cornell I, 2000 WL 284222, at *7 For the reasons expressed in those opinions, the analogy is inapt, and Basler's and Winterthur's sale of insurance policies in Europe during the Holocaust era do not constitute a sufficiently purposeful availment of the laws of New York to give rise to personal jurisdiction under § 302(a)(1). Id.; see also Ringers' Dutchocs, Inc. v. S.S. S.L. 180, 494 F.2d 678, 679-80 (2d Cir. 1974) (holding that the insurance of transient goods "merely shipped" into New York does not subject a foreign insurer to jurisdiction in New York).
B. § 302(a)(2)
Under the second subsection of New York's long-arm statute, a New York court may exercise personal jurisdiction over a non-domiciliary that "commits a tortious act within the state," so long as plaintiffs' claim arises out of that tortious act. CPLR § 302(a)(2). The Corrected Amended Complaint alleges that Basler and Winterthur committed tortious acts by seizing, between 1933 and 1948, certain insurance assets belonging to the European parents of plaintiffs Marc Rubinstein, Mayer Horovitz, and Henry Shery. (Corrected Am. Compl. ¶¶ 9-11) However, plaintiffs do not allege that any of these seizures took place in New York, so none of their. allegations is sufficient. This failure to specify any tortious act that the moving parties committed in New York State is the same defect that the court identified in its earlier opinion dismissing UAP-Vie from this action and the Cornell action for lack of personal jurisdiction. See Cornell I, 2000 WL 284222, at *7.
Plaintiffs do make the allegation, absent from the original complaint and new in the Corrected Amended Complaint, that all "[diefendants have committed and continue to commit tort[i]ous acts both inside and outside of New York, inclucding continuing refusals to honor insurance policies, which acts. continue to have effects in New York, and to cause harm to residents of New York." (Compare Compl. ¶ 46, with Corrected Am. Compl. ¶ 24) However, this statement is conclusory, absent an allegation that Basler or Winterthur in particular denied a claim by a specific New York resident or that Basler or Winterthur engaged in some other specific tortious activity in the state. There is no such allegation, and none of the named plaintiffs who have claims against Basler or Winterthur reside in New York. See infra pp. 28-29.
The court also rejects plaintiffs' "conspiracy theory" of jurisdiction. Plaintiffs argue that Basler and Winterthur should be subject to jurisdiction in New York by virtue of having participated in a conspiracy with nonmovinq defendants that acted as in-state "agents" to conceal and unlawfully retain insurance assets belonging to plaintiffs. (Pls.' "Conspiracy Theory" Mem. of 10/18/99 at 1-7; Pls.' Mem. of 10/18/99 at 5-6) Plaintiffs' argument is based on the theory that, under § 302(a)(2), "[tlhe [tortious] acts of a co-conspirator may be attributed to a defendant for the purpose of obtaining personal jurisdiction over that defendant." See Cornell I, 2000 WL 284222, at *5 (quoting Reeves v. Phillips, 54 A.D.2d 854, 855, 388 N.Y.S.2d 294, 296 (1st Dep't 1976)). However, plaintiffs' argument fails because, as in plaintiffs' prior attempt to establish jurisdiction over UAP-Vie, "the bland assertion of conspiracy . . . is insufficient to establish jurisdiction for the purposes of § 302(a)(2)." Id. (quoting Lehigh Valley Indus., Inc. v. Birenbaum, 527 F.2d 87, 93-94 (2d Cir. 1975)). The Corrected Amended Complaint, like the original complaint, contains insufficiently detailed allegations of conspiracy to make a prima facie case against Basler or Winterthur. (Compare Compl. ¶¶ 48-56, with Corrected Am. Compl. ¶¶ 26-43) "[Sluch wholly non-specific allegations" cannot form the "sole basis" for connecting the moving parties to the alleged conspiracy. Id. at *6 (collecting cases).
C. § 302(a)(3)
Under the third subsection of New York's long arm statute, "a court may exercise personal jurisdiction over any non-domiciliary . . . who . . . commits a tortious act without the state causing injury to person or property within the state" where that injury gives rise to the cause of action. CPLR § 302(a)(3). To assert jurisdiction under this subsection, plaintiffs must allege "(1) that the defendant committed a tortious act outside of New York, (2) that the defendant's conduct caused injury within New York, (3) that the defendant expects or reasonably should have expected the act to have consequences in New York, and (4) that the defendant derives substantial revenue from interstate or international commerce." See Levisohn, Lerner, Berger Langsam v. Medical Taping Sys., Inc., 10 F. Supp.2d 334, 342 (S.D.N.Y. 1998).
Plaintiffs argue that defendants' tortious conversion of insurance assets, and related tortious acts, have caused and continue to cause reasonably foreseeable injury to plaintiffs in New York. (Pls.' Mem. of 10/18/99 at 6-9) However, like plaintiffs' arguments with respect to jurisdiction under § 302(a)(2), this argument has already been rejected by the court. See Cornell I, 2000 WL 284222, at *8.9. In an earlier opinion dismissing UAP-Vie for lack of personal jurisdiction, the court held that despite plaintiffs' attempt to cast "continuing refusals, over time, to pay on policies, or to disgorge ingotten gains" as part of the "original event" that caused injury in New York (Pls.' Mem. of 10/18/99 at 7-8), the "original event" in this case took place and caused injury in Europe during the Holocaust era. See id. at *8 (citing Mareno v. Rowe, 910 F.2d 1043, 1046 (2d Cir. 1990) ("[T]he situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff.")); see also Sterling Nat'l Bank Trust Co. v. Southern Scrap Export Co., 468 F. Supp. 1100, 1104 (S.D.N.Y. 1979) (holding that the injury resulting from the. tort of conversion occurs "at the place where the critical events took place"). The court reasoned that however unique plaintiffs' allegations, plaintiffs could not ignore the "established distinction between an original event (which necessarily occurs at a particular moment and may trigger the exercise of § 302(a)(3) jurisdiction) and the "continuing' consequences of the original event (which occur "over time'and can not trigger § 302(a)(3) jurisdiction)." Cornell I, 2000 WL 284222, at *8 (citing Bank Brussels Lambert, 171 F.3d at 791-92). Because the original event in this case both occurred and caused injury in Europe, jurisdiction in New York under § 302(a)(3) would not be appropriate.
Apart from plaintiffs' failure to acknowledge the "original event/continuing consequences" distinction, plaintiffs have not alleged that any individual plaintiffs suffered harm in New York as a result of the actions of Basler or Winterthur. Marc Rubinstein, a resident of Florida, Mayer Horovitz, a resident of California, and Henry Shery, a resident of New Jersey, are the only plaintiffs against whom Basler or Winterthur is alleged to have committed a tort. However, there is no allegation that Marc Rubinstein, Mayer Horovitz, or Henry Shery ever lived in New York or have any connection to the state. The court pointed out this same defect in its decision dismissing UAP-Vie for lack of personal jurisdiction. See Cornell I, 2000 WL 284222, at *8 (hoting the injured plaintiff's lack of connection to the state of New York). Hence, plaintiffs have not made a prima facie showing that jurisdiction under § 302(a)(3) of the New York long-arm statute would be appropriate.
Both Basler's and Winterthur's Rule 12(b)(2) motions are granted because New York law does not permit the exercise of personal jurisdiction. Therefore, it is not necessary to determine whether the exercise of personal jurisdiction over either defendant would be consistent with the Due Process Clause of the Fifth Amendment. Plaintiffs' complaints as to both Basler and Winterthur are dismissed, and plaintiffs request for jurisdictional discovery is denied. See Scenck v. Walt Disney Co., 742 F. Supp. 838, 840 n. 1 (S.D.N.Y. 1990) ("[T]o be permitted jurisdictional discovery, plaintiff must at least allege facts that would support a colorable claim of jurisdiction.").