Document Technologies, Inc. et al v. West et alOPPOSITION BRIEF to Defendants' Motion to Dismiss for lack of Personal Jurisdiction. DocumentS.D.N.Y.May 23, 2017IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re Document Technologies Litigation ) ) ) ) ) ) ) ) ) ) ) ) ) 1:17-cv-2405 (JSR) 1:17-cv-3433(JSR) PLAINTIFFS’ RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 1 of 22 i TABLE OF CONTENTS FACTUAL AND PROCEDURAL BACKGROUND.................................................................... 1 ARGUMENT AND CITATION OF AUTHORITIES ................................................................... 3 I. THE EASTERN DISTRICT OF VIRGINIA HAS ALREADY DETERMINED THAT THIS COURT HAS PERSONAL JURISDICTION OVER LDISCOVERY. .............................................................. 4 II. DEFENDANT CONSENTED TO PERSONAL JURISDICTION IN NEW YORK. .......................................................................................................... 7 A. Defendant is Registered to do Business in New York and Appointed an Agent For Service of Process in New York, Indicating Its Consent To Personal Jurisdiction. ........................................ 7 B. Defendant Consented to Jurisdiction in New York When it Attempted to Arbitrate its Dispute with Plaintiffs in This State. ................ 8 III. DEFENDANT IS SUBJECT TO SPECIFIC JURISDICTION IN NEW YORK. .................................................................................................................... 9 A. LDiscovery Transacts Business Within New York State. ........................ 10 B. LDiscovery Committed Tortious Acts Within the State. .......................... 11 C. LDiscovery Committed Tortious Acts Outside The State That Caused Injury Within The State. ............................................................... 13 IV. DEFENDANT IS SUBJECT TO GENERAL JURISDICTION IN NEW YORK. .................................................................................................................. 15 CONCLUSION ............................................................................................................................. 16 Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 2 of 22 ii TABLE OF AUTHORITIES Federal Cases Advance Realty Assocs. v. Krupp, 636 F. Supp. 316 (S.D.N.Y. 1986) ............................................................................................7 Allstate Life Ins. Co. v. Linter Grp. Ltd., 782 F. Supp. 215 (S.D.N.Y. 1992) ..........................................................................................12 American Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349 (2d Cir. 1999).......................................................................................................8 Beach v. Citigroup Alternative Invs., LLC, No. 12 Civ. 7717(PKC), 2014 WL 904650 (S.D.N.Y. Mar. 7, 2014) .....................................16 Beacon Enters., Inc. v. Menzies, 715 F.2d 757 (2d Cir. 1983).....................................................................................................11 Beck v. Levering, 947 F.2d 639 (2d Cir. 1991).......................................................................................................5 Boyce v. Cycle Spectrum, Inc., 148 F. Supp. 3d 256 (E.D.N.Y. 2015) ...............................................................................13, 14 Calder v. Jones, 465 U.S. 783 (1984) .................................................................................................................14 Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d Cir. 2010).................................................................................................5, 15 Chrysler Capital Corp. v. Century Power Corp., 778 F. Supp. 1260 (S.D.N.Y. 1991).........................................................................................12 D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006).......................................................................................................11 Daimler AG v. Bauman, 134 S. Ct. 746 (2014) ...............................................................................................................16 Doctor’s Assocs., Inc. v. Distajo, 107 F.3d 126 (2d Cir. 1997).......................................................................................................8 Document Technologies Inc. et al. v. Hosford, No. 17-cv-2586 ..........................................................................................................................2 Document Technologies, Inc., et al. v. LDiscovery, LLC, d/b/a KrolLDiscovery, No. 1:17-cv-03433-UA ..........................................................................................................1, 8 Document Technologies, Inc., et al. v. LDiscovery, LLC d/b/a/ KrolLDiscovery, No. 1:17-cv-405(AJT/IDD) .......................................................................................................1 Document Technologies Inc. et al. v. West et al., No. 17-cv-2405(JSR) .....................................................................................................2, 3, 4, 9 Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 3 of 22 iii Emerald Asset Advisors, LLC v. Schaffer, 895 F. Supp. 2d 418 (E.D.N.Y. 2012) .....................................................................................12 Fernando v. Fernando, No. 09-CV-1390 (KAM) (SMG), 2010 WL 3119729 (E.D.N.Y. Aug. 5, 2010) ......................6 First Capital Inv. Holdings LLC v. Wilson Capital Grp., Inc., No. 10 CIV 2948(JSR), 2010 WL 4967833 (S.D.N.Y. Nov. 30, 2010) ..................................12 Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011) .............................................................................................................16 Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158 (2d Cir. 2005).....................................................................................................10 Gucci Am., Inc. v. Weixing Li, 768 F.3d 122 (2d Cir. 2014).......................................................................................................8 Hein v. Cuprum, S.A. de CV., 136 F. Supp. 2d 63 (N.D.N.Y. 2001) .......................................................................................14 Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55 (2d Cir. 1985).........................................................................................................3 Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982) ...................................................................................................................7 Kernan v. Kurz-Hastings, Inc., 175 F.3d 236 (2d Cir. 1999).....................................................................................................14 Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50 (2d Cir. 2012).......................................................................................................10 In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204 (2d Cir. 2003).......................................................................................................3 Merrill Lynch, Pierce, Fenner & Smith Inc. v. Lecopulos, 553 F.2d 842 (2d Cir. 1977).......................................................................................................9 Moscato v. MDM Grp., Inc., No. 05 Civ. 10313(KMW), 2008 WL 2971674 (S.D.N.Y. July 31, 2008)........................4, 5, 6 Packer v. TDI Sys., Inc., 959 F. Supp. 192 (S.D.N.Y. 1997) ............................................................................................7 Penguin Grp. (USA) Inc. v. American Buddha, 609 F.3d 30 (2d Cir. 2010).......................................................................................................14 People’s United Bank v. Peoplesbank, No. 3:08cv01858 (PCD), 2009 WL 928641 (D. Conn. Apr. 6, 2009) .......................................6 Reich v. Lopez, 38 F. Supp. 3d 436 (S.D.N.Y. 2014)..........................................................................................4 Rockefeller Univ. v. Ligand Pharms., Inc., 581 F. Supp. 2d 461 (S.D.N.Y. 2008)........................................................................................7 Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 4 of 22 iv In re Satyam Computer Servs. Ltd. Sec. Litig., 915 F. Supp. 2d 450 (S.D.N.Y. 2013)......................................................................................12 Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100 (2d Cir. 2006)...............................................................................................10, 11 Speed v. Pelican Resort N.V., No. 91 Civ. 7686 (SWK), 1992 WL 147646 (S.D.N.Y. June 16, 1992) ...................................7 STX Panocean (UK) Co. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127 (2d Cir. 2009).......................................................................................................7 Transporte Ltda. v. Mitsui Sumitomo Seguros S.A., No. 15 CIV. 8221 (AKH), 2016 WL 3476430 (S.D.N.Y. June 20, 2016) ................................8 Victory Transp. Inc. v. Comisaria Gen. de Abastecimientos y Transportes, 336 F.2d 354 (2d Cir. 1964).......................................................................................................8 Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117 (2d Cir. 1984).......................................................................................................3 Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d Cir. 2000).......................................................................................................15 State Cases Muollo v. Crestwood Village, Inc., 155 A.D.2d 420 (2d Dep’t 1989) ...............................................................................................7 Sybron Corp. v. Wetzel, 46 N.Y.2d 197 (1978) ..............................................................................................................13 State Statutes N.Y. Bus. Corp. Law § 304 .............................................................................................................7 Rules N.Y. C.P.L.R. § 301 ...................................................................................................................4, 15 N.Y. C.P.L.R. § 302 ...............................................................................................................4, 9, 10 N.Y. C.P.L.R. § 302(a)(1) ........................................................................................................10, 11 N.Y. C.P.L.R. § 302(a)(2) ..............................................................................................................11 N.Y. C.P.L.R. § 302(a)(3) ..............................................................................................................13 Other Authorities ABOUT KROLLDISCOVERY, https://ldiscovery.com/about-us/ (last visited May 23, 2017 at 3:05 PM) ...................................................................................................................1, 2 Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 5 of 22 1 Plaintiffs Document Technologies, Inc., Epiq Systems, Inc., and Epiq eDiscovery Solutions, Inc. (referred to collectively herein as “DTI,” “Plaintiffs” or “Company”), respectfully submit this response in opposition to Defendant LDiscovery, LLC’s (“LDiscovery” or “Defendant”) Motion to Dismiss for Lack of Personal Jurisdiction. See ECF Nos. 41, 42, 46.1 Despite deliberately engaging in regular and suit-specific conduct in New York and towards New York residents, LDiscovery contends that is not amenable to suit in this state. LDiscovery is well within the jurisdiction of the New York courts, however, as this Court and the United States District Court for the Eastern District of Virginia already determined. Further, LDiscovery should not be permitted to avoid the jurisdiction of this Court while simultaneously attempting to force DTI to arbitrate based upon a contract that provides for arbitration in New York. For these reasons and others set forth below, LDiscovery’s motion to dismiss for lack of personal jurisdiction (the “Motion”) should be denied. FACTUAL AND PROCEDURAL BACKGROUND LDiscovery promotes itself as a global leader in e-discovery management solutions.2 It is registered to do business in New York and has appointed an agent for service of process in 1 Unless indicated otherwise, the docket entries identified in this brief reference pleadings filed in the preceding action in the United States District Court for the Eastern District of Virginia styled as Document Technologies, Inc., et al. v. LDiscovery, LLC d/b/a/ KrolLDiscovery, No. 1:17-cv-405(AJT/IDD), and later transferred to this Court as Document Technologies, Inc., et al. v. LDiscovery, LLC, d/b/a KrolLDiscovery, No. 1:17-cv-03433-UA. The latter case was consolidated into the master docket styled In re Document Technologies Litigation, No. 1:17-cv-2405(JSR) on May 19, 2017. 2 Attached as Exhibit A to the accompanying Declaration of Harold R. Shaftel (the “Shaftel Decl.”) is a true and correct copy of Kroll Discovery’s “About Us” webpage, ABOUT KROLLDISCOVERY, https://ldiscovery.com/about-us/ (last visited May 23, 2017 at 3:05 p.m.) (“KrolLDiscovery is one of the fastest growing companies in North America . . . The company has 43 offices in 19 countries, 12 data centers and 14 data recovery labs around the globe.”). Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 6 of 22 2 New York.3 LDiscovery also leases property and maintains an office in New York, where it employs and supervises personnel and conducts business. See ECF No. 25, at ¶¶ 4, 5, 7. It has merged with or acquired at least nine companies in the past four years, including the acquisition of a New York target company in order to “accelerate the momentum LDiscovery was building in the New York market.”4 On April 3, 2017, DTI filed this action in the United States District Court for the Eastern District of Virginia for claims arising from the wrongful actions of LDiscovery and four former employees of DTI: Steve West, John Parker, Seth Kreger, and Mark Hosford (the “Former Employees”).5 That action alleged that as part of a conspiracy with LDiscovery-their soon-to- be employer and a direct competitor of DTI-the Former Employees used DTI resources and DTI-issued credentials to misappropriate DTI’s trade secret and proprietary and confidential information for the benefit of LDiscovery, and violated their respective employment agreements with DTI in the process. Upon the Eastern District of Virginia’s sua sponte issuance of an order directing the parties to show cause why that case should not be transferred to this district, see ECF No. 15, LDiscovery filed a formal objection to the transfer, and claimed the suit could not be brought in New York because LDiscovery was not subject to personal jurisdiction in this state. See ECF No. 24. The Eastern District of Virginia disagreed, finding that this case “could have been brought” in New York because “the Complaint alleges facts sufficient for the Court to 3 See Shaftel Decl., Exhibit B, LDiscovery’s New York State Department of State Registration. 4 ABOUT KROLLDISCOVERY, supra note 2 (noting that KrolLDiscovery’s acquisition of New York-based companies FlashData Solutions and Turnstone Solutions “helped accelerate the momentum LDiscovery was building in the New York market.”) 5 DTI also filed a related action against three of the four Former Employees in this Court, Document Technologies Inc. et al. v. West et al., No. 17-cv-2405(JSR), and against Mark Hosford in the Northern District of Illinois, Document Technologies Inc. et al. v. Hosford, No. 17-cv-2586. An order transferring the case to this district was issued on May 10, 2017. Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 7 of 22 3 conclude there has been a prima facie showing that LDiscovery would be subject to personal jurisdiction in the Southern District of New York under New York’s long-arm statute.” See ECF No. 37, at 4. LDiscovery now renews the same jurisdictional objection in the form of the instant motion. Furthermore, on April 24, 2017 this Court denied a motion by defendants West, Parker, and Kreger’s to transfer their case to the Eastern District of Virginia. See ECF No. 30.6 Rejecting Defendants’ argument that transfer was necessary to avoid the inefficiency and unfairness of litigating parallel cases involving overlapping facts, claims, and parties, this Court found that the allegations in the Complaint were “sufficient to sustain personal jurisdiction” over LDiscovery in New York. Id. at 7-9. ARGUMENT AND CITATION OF AUTHORITIES LDiscovery’s motion should be denied. In assessing LDiscovery’s jurisdictional challenge, DTI’s averments of jurisdictional facts are credited as true, all pleadings and affidavits are to be construed in the light most favorable to DTI, and any doubt is to be resolved in DTI’s favor. See In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003); Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). “[W]hen the issue is decided initially on the pleadings and without discovery, the plaintiff need show only a prima facie case.” Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984). A prima facie case consists of proper service of process, a statutory basis for personal jurisdiction, and compliance with constitutional due process principles. Reich v. Lopez, 38 F. Supp. 3d 436, 454 (S.D.N.Y. 2014). Each of these requirements is satisfied here. 6 This docket entry refers to this Court’s docket in Document Technologies Inc., et al. v. West et al., 1:17-cv-2405(JSR). Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 8 of 22 4 As an initial matter, LDiscovery is estopped from relitigating issues that have already been decided by this and another district court. In transferring this case to the Southern District of New York, the Eastern District of Virginia specifically found that New York courts have jurisdiction over LDiscovery. See ECF No. 37, at 4. This Court also independently held that the allegations in DTI’s Complaint against LDiscovery are “sufficient to sustain personal jurisdiction over LDiscovery in this district.” ECF No. 30, at 8.7 Furthermore, there is a statutory basis for personal jurisdiction over LDiscovery which complies with constitutional due process principles. First, LDiscovery has consented to personal jurisdiction in New York. LDiscovery is registered to do business and has appointed an agent for service of process in New York. It has also attempted to compel arbitration in this case pursuant to a contract providing for arbitration in New York-an action inconsistent with its current jurisdictional objection. Second, it is subject to personal jurisdiction under CPLR § 302-the New York “long arm statute”-the application of which to LDiscovery is entirely constitutional. Finally, it is subject to general jurisdiction in New York under C.P.L.R. § 301 as evidenced by its conduct in and directed to this State and its residents. I. THE EASTERN DISTRICT OF VIRGINIA HAS ALREADY DETERMINED THAT THIS COURT HAS PERSONAL JURISDICTION OVER LDISCOVERY. This Court should deny Defendant’s motion because the doctrine of collateral estoppel precludes Defendant from relitigating whether this Court has personal jurisdiction over LDiscovery. “The doctrine of collateral estoppel prevents previously litigated issues from being relitigated, thereby producing finality in judgments.” Moscato v. MDM Grp., Inc., No. 05 Civ. 10313(KMW), 2008 WL 2971674, at *2 (S.D.N.Y. July 31, 2008) (quoting Beck v. Levering, 7 This docket entry refers to this Court’s docket in Document Technologies Inc., et al. v. West et al., 1:17-cv-2405(JSR). Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 9 of 22 5 947 F.2d 639, 642 (2d Cir. 1991)). Importantly, “[t]he principals of collateral estoppel apply to jurisdiction issues, including personal jurisdiction.” Collateral estoppel applies where: (1) the issues in both proceedings are identical; (2) the issue in the prior proceeding was actually litigated and actually decided; (3) there was a full and fair opportunity for litigation in the prior proceeding; and (4) the previously-litigated issue was necessary to support a valid and final judgment on the merits. Id. at 3. All four elements are satisfied here, and necessitate the application of collateral estoppel to Defendant’s jurisdictional argument. First, the issue of this Court’s personal jurisdiction over Defendant was addressed in the preceding action in the Eastern District of Virginia. See generally ECF No. 37. In fact, in its order transferring the preceding action to this Court, the Eastern District of Virginia specifically found that “the facts alleged in the Complaint make a prima facie showing that the Southern District of New York could have exercised personal jurisdiction over LDiscovery in this action had it been filed there.” Id. at 4 (citing Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163-64 (2d Cir. 2010)). Second, Defendant cannot dispute that the issue of personal jurisdiction was litigated and actually decided. A party has a full and fair opportunity to litigate personal jurisdiction when it submits briefing and evidence regarding personal jurisdiction. See e.g., Moscato, 2008 WL 2971674, at *4. Upon the Eastern District of Virginia’s directive to show cause as to why this action should not be transferred to the Southern District of New York, see ECF No. 15, Defendant filed an 18-page brief which argued that the Southern District of New York lacks personal jurisdiction over Defendant. See ECF No. 24. Defendant also attached a number of exhibits to its briefing, including an affidavit from its Chief Executive Officer specifically addressing the merits of its jurisdictional objection. See ECF No. 25. In addition, Defendant Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 10 of 22 6 filed a supplemental brief that articulated the same arguments regarding the purported lack of personal jurisdiction in New York. See ECF No. 28. Notwithstanding Defendant’s extensive briefing and proffered evidentiary support, the Eastern District of Virginia ultimately transferred the preceding action to this Court and determined that the Southern District of New York indeed possessed personal jurisdiction over Defendant. See ECF No. 37. Thus, the issue of personal jurisdiction over LDiscovery has been litigated and decided. Likewise, Defendant had a full and fair opportunity to litigate the issue of personal jurisdiction in the Eastern District of Virginia. See, e.g., Moscato, 2008 WL 2971674, at *4 (party had full and fair opportunity to litigate the issue when it submitted briefing and court considered arguments before granting order regarding personal jurisdiction). Finally, the Court’s ruling on the issue of the Southern District of New York’s personal jurisdiction over Defendant was necessary to support its order transferring the action to this Court. Because the aforementioned factors support the application of collateral estoppel to this action, Defendant should be bound by the Eastern District of Virginia’s personal jurisdiction determination. See Moscato, 2008 WL 2971674, at *4; see also Fernando v. Fernando, No. 09- CV-1390 (KAM) (SMG), 2010 WL 3119729, at *5 (E.D.N.Y. Aug. 5, 2010) (collateral estoppel precluded relitigation of personal jurisdiction issue decided in state court).8 8 To the extent Defendant argues that the prior court’s transfer order is not a final judgment, Plaintiffs note that courts have determined that such orders should be barred from reconsideration in the absence of any evidence that the party seeking to appeal the order - in this case, Defendant - was not afforded a full and fair opportunity to litigate the matter. People’s United Bank v. Peoplesbank, No. 3:08cv01858 (PCD), 2009 WL 928641, at *2 (D. Conn. Apr. 6, 2009). But as explained supra, Defendant had ample opportunity to litigate the issue of transfer, and the Eastern District of Virginia’s order should be deemed valid and final. Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 11 of 22 7 II. DEFENDANT CONSENTED TO PERSONAL JURISDICTION IN NEW YORK. A. Defendant is Registered to do Business in New York and Appointed an Agent For Service of Process in New York, Indicating Its Consent To Personal Jurisdiction. Well-established New York law deems a foreign corporation registered to do business in this State a resident for jurisdictional purposes. STX Panocean (UK) Co. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 131 (2d Cir. 2009); Rockefeller Univ. v. Ligand Pharms., Inc., 581 F. Supp. 2d 461, 467 (S.D.N.Y. 2008) (finding defendant’s authorization to do business and designation of registered agent for service of process amounted to consent to personal jurisdiction in New York); Speed v. Pelican Resort N.V., No. 91 Civ. 7686 (SWK), 1992 WL 147646, at *1 (S.D.N.Y. June 16, 1992) (“[I]f a foreign corporation is authorized to do business in th[e] state, a court is justified in inferring that it is doing business so that it is subject to jurisdiction of the courts.”) (internal quotations omitted); Advance Realty Assocs. v. Krupp, 636 F. Supp. 316, 317 (S.D.N.Y. 1986) (“A foreign corporation is deemed to have consented to general jurisdiction over it when it registers to do business in New York pursuant to N.Y. Business Corp. Law § 304, without regard to the actual volume of business done there.”); Muollo v. Crestwood Village, Inc., 155 A.D.2d 420, 421 (2d Dep’t 1989) (“[A] foreign corporation is deemed to have consented to personal jurisdiction over it when it registers to do business in New York and appoints the Secretary of State to receive process. . . .”); see also Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 704 (1982) (holding that a court may find “constructive consent to . . . personal jurisdiction” where a party makes “voluntary use of certain state procedures”). When jurisdiction is based on consent, there are no due process concerns. Packer v. TDI Sys., Inc., 959 F. Supp. 192, 203 (S.D.N.Y. 1997) (“[C]onsent to jurisdiction in a given forum obviates the necessity of a minimum contacts analysis.”). Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 12 of 22 8 LDiscovery is not only registered to do business in New York, it appointed an agent for service of process in New York. Accordingly, this Court may consider whether LDiscovery consented to personal jurisdiction in New York by applying to conduct business in this State and by designating the New York Secretary of State as its agent. See e.g., Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 137 (2d Cir. 2014). B. Defendant Consented to Jurisdiction in New York When it Attempted to Arbitrate its Dispute with Plaintiffs in This State. LDiscovery has also attempted to invoke an arbitration provision contained in each of the Former Employees’ employment agreements with DTI. See ECF No. 43.9 This action constitutes its consent to the jurisdiction of New York courts. “It is well-settled that federal courts applying New York law have personal jurisdiction over parties that agree to arbitrate their disputes in New York.” American Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 352 (2d Cir. 1999). “Such a designation functions as the party’s consent to jurisdiction . . . .” Alstom Brasil Energia e Transporte Ltda. v. Mitsui Sumitomo Seguros S.A., No. 15 CIV. 8221 (AKH), 2016 WL 3476430, at *5 (S.D.N.Y. June 20, 2016); see also Doctor’s Assocs., Inc. v. Distajo, 107 F.3d 126, 136 (2d Cir. 1997) (recognizing the long-standing principle that a party who agrees to arbitrate in a state in which the FAA makes arbitration agreements enforceable “also consents to jurisdiction in whatever court could compel arbitration in that state”); Victory Transp. Inc. v. Comisaria Gen. de Abastecimientos y Transportes, 336 F.2d 354, 363 (2d Cir. 1964) (noting that by agreeing to arbitrate in New York, party “must be deemed to have 9 This entry refers to the docket in Document Technologies Inc., et al. v. LDiscovery, LLC, d/b/a KrolLDiscovery, 1:17-cv-03433-UA. As outlined more fully in Plaintiffs’ response in opposition to Defendant’s Motion to Compel Arbitration, Or Alternatively, To Dismiss, Plaintiffs deny that Defendant is entitled to invoke the arbitration provisions in the Former Employees’ respective employment agreements with DTI. Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 13 of 22 9 consented to the jurisdiction of the court that could compel the arbitration proceeding in New York”). Defendant claims that the Former Employees’ employment agreements require all disputes relating to the employer/employee relationship to be arbitrated in New York. ECF No. 44, p. 11. Despite not being a party to any of these employment agreements, LDiscovery sought to compel DTI to arbitrate its claims against LDiscovery pursuant to these contracts.10 Notwithstanding LDiscovery’s lack of foundation to compel arbitration of this case,11 LDiscovery’s attempt to invoke New York arbitration provisions against DTI signals its agreement thereto and, consequently, consent to personal jurisdiction in New York. LDiscovery cannot have it both ways by shopping among fora first, and then when unsuccessful, shopping among dispute resolution procedures second. By asserting its chosen position, it is now estopped from taking a position inconsistent with that of a party who has agreed to arbitration in this State. As a consequence, LDiscovery is subject to personal jurisdiction in this State. III. DEFENDANT IS SUBJECT TO SPECIFIC JURISDICTION IN NEW YORK. Although this Court “need not consider whether [CPLR] section 302 confers jurisdiction here because . . . the jurisdictional argument based upon [a party’s] consent to arbitrate is determinative,” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Lecopulos, 553 F.2d 842, 844 (2d Cir. 1977), the Court’s specific jurisdiction over LDiscovery provides a wholly independent 10 Former Employees West, Kreger, and Parker have also moved to compel arbitration pursuant to this provision in their employment agreements. DTI maintains that these former employees have waived their right to arbitrate by engaging in extensive discovery proceedings since this action was initiated. See generally ECF Nos. 33, 40 in Document Technologies Inc., et al. v. West et al., 1:17-cv-2405(JSR). 11 LDiscovery’s only connection to the employment agreements between DTI and the Former Employees is its tortious interference therewith and attempt to undermine the parties’ agreements by inducing the Former Employees to breach their fiduciary obligations in exchange for extraordinary kickbacks. Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 14 of 22 10 basis to adjudicate the claims in this action. According to CPLR § 302, New York’s long-arm statute authorizes the exercise of personal jurisdiction over a non-domiciliary who in person or through an agent: 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, except as to a cause of action for defamation of character arising from the act; or 3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (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[.] CPLR § 302 (2008). Satisfying even one of these subsections would subject LDiscovery to the jurisdiction of this Court, but the circumstances here support personal jurisdiction over LDiscovery under all three of the subsections of Section 302(a). A. LDiscovery Transacts Business Within New York State. In order to establish personal jurisdiction under the “transacting business” provision of CPLR § 302(a)(1), the “defendant must have transacted business within the state; and . . . the claim asserted must arise from that business activity.” Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 103 (2d Cir. 2006). The totality of defendant’s contacts with the forum state is considered to determine whether the exercise of jurisdiction is proper. See Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158, 166 (2d Cir. 2005). Yet a “single act within New York will, in the proper case, satisfy the requirements of section 302(a)(1).” Licci ex Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 15 of 22 11 rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 62 (2d Cir. 2012). Further, a claim “aris[es] from a particular transaction when there is some articulable nexus between the business transacted and the cause of action sued upon.” Sole Resort, 450 F.3d at 103 (alteration in original) (internal quotations omitted) (holding New York’s long-arm nexus requirement is satisfied unless “the event giving rise to the plaintiffs injury had, at best, a tangential relationship to any contacts the defendant had with New York”). “Section 302(a)(1) is typically invoked for a cause of action against a defendant who breaches a contract with plaintiff . . . or commits a commercial tort against plaintiff in the course of transacting business or contracting to supply goods or services in New York.” Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 764 (2d Cir. 1983). LDiscovery does not dispute that it transacts business in New York. To the contrary and as discussed above, LDiscovery admits it conducts business in New York, recently opened and maintains an in-state office, and employs individuals there. D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 104 (2d Cir. 2006) (A defendant transacts business if he has “‘purposely availed [himself] of the privilege of conducting activities within New York and thereby invoked the benefits and protections of its laws. . . .’”) (internal citations omitted). Moreover, DTI’s causes of action “arise” from in-state transactions; specifically, LDiscovery’s conspiracy with the Former Employees to steal DTI’s trade secrets and gain a competitive advantage in the marketplace, such advantage logically extending to its ongoing business in New York and this judicial district. LDiscovery’s conduct certainly satisfies the first and second prongs of the “transacting business” test of Section 302(a)(1). B. LDiscovery Committed Tortious Acts Within the State. LDiscovery is also subject to personal jurisdiction in New York by “commission of a tortious act within the state.” CPLR § 302(a)(2). As this Court has previously acknowledged, Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 16 of 22 12 New York courts recognize a “conspiracy theory of jurisdiction” under which defendants are imputed with the contacts of their alleged coconspirators. First Capital Inv. Holdings LLC v. Wilson Capital Grp., Inc., No. 10 CIV 2948(JSR), 2010 WL 4967833, at *2 (S.D.N.Y. Nov. 30, 2010); see also Allstate Life Ins. Co. v. Linter Grp. Ltd., 782 F. Supp. 215, 220-22, n.6 (S.D.N.Y. 1992) (asserting personal jurisdiction based upon conspiracy theory); Chrysler Capital Corp. v. Century Power Corp., 778 F. Supp. 1260, 1266 (S.D.N.Y. 1991) (“It is well established that acts committed in New York by the co-conspirator of an out-of-state defendant pursuant to a conspiracy may subject the out-of-state defendant to jurisdiction under CPLR 302(a)(2).”). The Court may also exercise personal jurisdiction over all participants in the conspiracy alleged in the Complaint. In re Satyam Computer Servs. Ltd. Sec. Litig., 915 F. Supp. 2d 450, 484 (S.D.N.Y. 2013) (noting that the acts of a co-conspirator can be imputed to another defendant for personal jurisdiction purposes). To establish jurisdiction on this basis, a plaintiff must “make a prima facie showing of a conspiracy and allege specific facts warranting the inference that the defendants were members of the conspiracy.” Emerald Asset Advisors, LLC v. Schaffer, 895 F. Supp. 2d 418, 431 (E.D.N.Y. 2012) (internal quotations omitted). DTI has demonstrated both that LDiscovery was a member of a conspiracy and that acts in furtherance of the conspiracy were committed in New York. In its Complaint, DTI plausibly pleads the existence of a conspiracy between LDiscovery and the Former Employees. DTI specifically alleges that the Former Employees, inter alia, used their company-issued electronic devices to conspire with direct competitor LDiscovery to misappropriate trade secrets, and accessed their New York employer’s web servers using company-issued laptops and credentials in order to download confidential and proprietary information and transfer it out of state. See ECF No. 1. LDiscovery further “enticed” the Former Employees to use the goodwill and Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 17 of 22 13 customer relationships garnered during their employment and transfer DTI’s confidential and proprietary information to LDiscovery by promising the Former Employees nearly $24 million in guaranteed payments. This conspiracy caused injury in New York and to a New York resident, Epiq eDiscovery Solutions. LDiscovery certainly knew that these activities would have effects in New York, as Epiq is based in New York, and many of DTI’s customers are based in New York. Therefore, DTI’s burden as to the existence of a conspiracy and LDiscovery’s membership is satisfied. LDiscovery’s assertions that the Complaint does not explicitly identify acts of LDiscovery in New York are plainly irrelevant to the jurisdictional question. C. LDiscovery Committed Tortious Acts Outside The State That Caused Injury Within The State. Finally, DTI’s allegations sufficiently confer jurisdiction over LDiscovery under CPLR § 302(a)(3) based upon its commission of a tort outside the state causing injury within the state. Even assuming LDiscovery’s tortious actions were undertaken out of state, they certainly caused injury within the state to Plaintiff Epiq eDiscovery Solutions, headquartered in New York, and to the economic harm to be inflicted on DTI in the form of lost customers and profits in New York. See e.g., Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 206 (1978) (pursuing customers in New York renders New York, as the place injury will occur, foreseeable). And as previously discussed, DTI’s causes of action against LDiscovery clearly arise from this conduct, and the injuries it caused. DTI similarly satisfies the showings under subsections (i) and (ii) of CPLR § 302(a)(3). There is no question that LDiscovery “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.” Boyce v. Cycle Spectrum, Inc., 148 F. Supp. 3d 256, 266 Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 18 of 22 14 (E.D.N.Y. 2015) (internal quotations omitted).12 And where here, LDiscovery “should reasonably have expected that [its tortious conduct] would have consequences in New York,” and “derives substantial revenue from interstate or international commerce,” jurisdiction over LDiscovery is appropriate. Penguin Grp. (USA) Inc. v. American Buddha, 609 F.3d 30, 35 (2d Cir. 2010). “[F]oreseeability must be coupled with evidence of a purposeful New York affiliation, for example a discernible effort to directly or indirectly serve the New York market.” Hein v. Cuprum, S.A. de CV., 136 F. Supp. 2d 63, 68 (N.D.N.Y. 2001). That is established here. LDiscovery regularly transacts business and makes money in New York and takes actions both inside and outside New York which have a foreseeable effect in New York. A state can exercise personal jurisdiction over a non-resident with whom it has “certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 242 (2d Cir. 1999) (quoting Calder v. Jones, 465 U.S. 783, 788 (1984)). Here, because LDiscovery has minimum contacts with New York, the exercise of personal jurisdiction over LDiscovery is reasonable and does not offend the traditional notions of fair play and substantial justice. The Supreme Court has held that courts must evaluate the following factors as part of this “reasonableness” analysis: (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff’s interest in obtaining convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies. 12 There does not need to be any nexus between the additional New York state contacts required by this condition and the cause of action being sued upon. . . . The ‘substantial revenue’ option may be met either through a substantial sum of money or a substantial percentage of the defendant’s revenue.” Id. (internal quotations omitted). Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 19 of 22 15 Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 164 (2d Cir. 2010). Putting aside LDiscovery’s failure to even mention, much less apply the relevant factors in this regard, none cut against the exercise of personal jurisdiction. A defendant must make a “compelling case that the presence of some other considerations would render jurisdiction unreasonable” to overcome a threshold showing of minimum contacts. Id. at 165. LDiscovery caters its services to a vast national and even international market. It alleges no extraordinary burden from having to defend this lawsuit in New York, and any modest inconvenience of litigating here is not excessive. It is a business enterprise that may readily cope with being forced to defend a lawsuit away from home. Thus, the burden of LDiscovery’s litigating this case in New York is not so severe that the exercise of personal jurisdiction over it offends fundamental principles of ordered liberty. Importantly, both DTI and New York share an interest in resolving injuries caused to New York businesses by acts so connected to the state. Therefore, no balancing of the equities could weigh in LDiscovery’s favor. IV. DEFENDANT IS SUBJECT TO GENERAL JURISDICTION IN NEW YORK. Finally, this Court may exercise general personal jurisdiction over LDiscovery. Under CPLR § 301, this Court may exercise jurisdiction over non-resident corporations that maintain a continuous presence in New York and engage in substantial activities so as to constitute “doing business” in New York. See Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000). LDiscovery has registered as a foreign corporation and designated a local agent in New York.13 And as LDiscovery’s CEO concedes, LDiscovery maintains an office, supervises employees, leases property, and undoubtedly does business (deriving revenues from providing 13 See Shaftel Decl., Exhibit B. Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 20 of 22 16 services to customers) in New York. See ECF No. 25 at ¶¶ 4, 7. Yet LDiscovery claims that under Daimler AG v. Bauman, 134 S. Ct. 746 (2014), this Court does not have personal jurisdiction because as a nondomiciliary corporate defendant it will only be deemed to be “doing business” in New York for purposes of general personal jurisdiction when its “affiliations with the State are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.” Id. at 754 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011)). Although the locations where a corporation is “at home” for purposes of personal jurisdiction are typically limited to its principal place of business and place of incorporation, id. at 761 n.19, the ultimate determination of a corporation’s “home” “calls for an appraisal of a corporation’s activities in their entirety, nationwide and worldwide.’” Id. at 762 n.20; see also See Beach v. Citigroup Alternative Invs., LLC, No. 12 Civ. 7717(PKC), 2014 WL 904650, at *6 (S.D.N.Y. Mar. 7, 2014). Where here, LDiscovery derives significant revenue from customers located in New York, maintains an office and employees in New York, and routinely conducts business in New York, it simply cannot claim that New York courts have no jurisdiction over it. Indeed, LDiscovery itself represents that it is actively trying to “accelerate the momentum . . . building in the New York market.” See supra note 4. Thus, general personal jurisdiction in New York is proper. CONCLUSION For the foregoing reasons, Plaintiffs respectfully request that the Court deny Defendant LDiscovery’s Motion to Dismiss for Lack of Personal Jurisdiction. Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 21 of 22 17 Dated: May 23, 2017 Respectfully submitted, /s/ Harold S. Shaftel Harold S. Shaftel GREENBERG TRAURIG, LLP Metlife Building 200 Park Avenue New York, NY 10166 Tel: (212) 801-2164 Fax: (212) 801-6400 shaftelh@gtlaw.com Of Counsel: David W. Long-Daniels (adm. pro hac vice) Richard J. Valladares (adm. pro hac vice) GREENBERG TRAURIG, LLP Terminus 200 3333 Piedmont Rd. NE, Suite 2500 Atlanta, GA 30305 Phone: (678) 553-2100 Fax: (678) 553-2212 long-danielsd@gtlaw.com valladaresr@gtlaw.com Attorneys for Plaintiffs Case 1:17-cv-02405-JSR Document 47 Filed 05/23/17 Page 22 of 22