Newman et al v. EADS N.V. et al

Filing 131

Chief Judge Mark L. Wolf: MEMORANDUM AND ORDER entered. For the foregoing reasons, it is hereby ORDERED that: 1. The Motion to Dismiss of Defendants SimCom International, Inc., and SimCom, Inc. (Docket No. 7) is ALLOWED. 2. Defendant Socata North Ame rica, Inc.'s Motion to Dismiss For Lack of Personal Jurisdiction (Docket No. 51-1) is ALLOWED. 3. The plaintiffs' requests for leave to conduct additional jurisdictional discovery regarding the SimCom defendants and Socata are DENIED.(O'Leary, Dennis)

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS HARRY NEWMAN, Administrator Pendente Lite of the Estate of Lauren B. Angstadt, Deceased, et al, Plaintiffs, v. EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V., et al, Defendants. ) ) ) ) ) ) ) ) ) ) ) )

C.A. No. 09-cv-10138

MEMORANDUM AND ORDER WOLF, D.J. March 30, 2010

This action arises out of a February 2, 2007 crash of a Socata TBM 700 aircraft near the New Bedford Regional Airport in

Massachusetts. Three individuals died in this accident: Michael J. Milot, a pilot; Peter John Karoly, a pilot and owner of the airplane; and Lauren Angstadt, Karoly's wife. Plaintiffs, who

initiated this suit on January 29, 2009, are the administrators pendente lite of the decedents' estates. In their complaint,

plaintiffs assert claims for breach of warranty, negligence, strict liability, and punitive damages against several defendants,

including the defendants who filed the motions to dismiss now at issue, SimCom International, Inc.1 and SimCom, Inc.
1

("the SimCom

The complaint names SimCom International, Inc., and SimCom International, Inc., d/b/a SimCom Training Centers. These named defendants are the same entity. Affidavit of Tracy Brannon

defendants"), and Socata North America, Inc.("Socata").

Subject

matter jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. §1332. As described below, defendants' motions to

dismiss the complaint for lack of personal jurisdiction are being allowed because the contacts between these defendants and

Massachusetts are insufficient to satisfy the requirements of the Due Process Clause of the United States Constitution.

I.

Standard of Review for Questions of Personal Jurisdiction Once it has been challenged, plaintiffs have the burden of

showing that the court has personal jurisdiction over each of the defendants. See Daynard v. Ness, Motley, Loadholt, Richardson & The extent of that

Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002).

burden depends on the trouble to which the defendants would be put by defending on the merits before the personal jurisdiction issue has been conclusively decided. Usually, the plaintiff is required

to make only a prima facie showing of jurisdiction, in which "the district court is not acting as a factfinder" but instead "accepts properly supported proffers of evidence by a plaintiff as true," provided that plaintiffs' jurisdictional pleadings do not "rely on unsupported allegations." Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 675 (1st Cir. 1992) (citations omitted). The district court

then "add[s] to the mix facts put forward by the defendants, to the extent they are uncontradicted," and on the basis of these facts ("Brannon Aff."), ¶2. -2-

determines

whether

the

plaintiff

has

made

an

adequate

jurisdictional showing. prima facie standard

Daynard, 290 F.3d at 51. and denying the motion

Applying the to dismiss

"implicitly...order[s] that hearing and determination of the motion to dismiss be deferred until the trial." Boit, 967 F.2d at 676.

Where a court determines that it would be unfair "to force an out-of-state defendant to incur the expense and burden of a trial on the merits in the local forum without first requiring more of the plaintiff than a prima facie showing," it may employ one of two alternative standards, the "preponderance of the evidence" standard or the "likelihood" standard. those standards are not Boit, 967 F.2d at 676-77. for here, where none However, of the

called

proffered evidence is conflicting and no issues of credibility are presented. See Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 All parties and the court agree

F.3d 138, 146 (1st Cir. 1995).

that the prima facie standard is most appropriate.

II.

Factual Background All decedents were Pennsylvania citizens, as are those suing

on their behalf. A. The SimCom Defendants

The SimCom defendants are the alleged providers of flight training to decedent Michael Milot. Both SimCom defendants have Affidavit

their principal place of business in Orlando, Florida.

of Walter W. David ("First David Aff."), ¶1; Brannon Aff., ¶1. -3-

SimCom, Inc. is incorporated in Delaware.

First David Aff., ¶1. Brannon

SimCom International, Inc. is incorporated in Florida. Aff., ¶1. Neither SimCom defendant has officers or

employees

in

Massachusetts, conducts business in Massachusetts, owns real estate in Massachusetts, is registered to do business in Massachusetts, has an agent for service of process in Massachusetts, has licenses in Massachusetts, has advertising campaigns that specifically target Massachusetts, or maintains telephone lines or bank accounts in Massachusetts. 11. First David Aff., ¶¶ 6-11; Brannon Aff., ¶¶ 6-

SimCom, Inc. does not conduct direct mailings to customers in First David Aff., ¶11. Nor

any state, including Massachusetts.

has it ever provided training for the Socata TBM 700. Aff., ¶5.

First David

SimCom International, Inc., which has been wholly owned by SimCom, Inc.,2 since 1999, does provide training courses for the Socata TBM 700. Plaintiffs' Response to the Motion to Dismiss

Filed by Defendants SimCom International, Inc., and SimCom, Inc. ("Plaintiffs' Response ¶¶16, to 22. SimCom"), Since March Ex. 1, I 1999, ("SimCom SimCom

Interrogatories"),

International, Inc., and Socata have had an agreement under which SimCom is the only entity promoted by Socata to provide pilot or maintenance training for the TBM 700 in North America. Plaintiffs'
2

Prior to July 14, 2006, SimCom, Inc. was known as Pan Am International Flight Academy, Inc. First David Aff., ¶2. -4-

Response to SimCom, Ex. K.3 address www.simulator.com.4

It also operates a website with the Id. at ¶23. This website is not See Defendants

interactive and does not support online ordering.

SimCom, Inc., and SimCom International, Inc.'s Reply to Plaintiffs' Opposition to Motion to Dismiss ("SimCom Defendants' Reply"), Ex. 10, ¶15; Ex. 11, ¶¶15, 24. SimCom International, Inc. engages in

direct mailing to owners of aircraft in which it offers flight training, including to owners in Massachusetts, and communicates with its Massachusetts-based customers regarding scheduling and other administrative issues related to the trainings that it provides in Florida and Arizona. SimCom Interrogatories, ¶3.

Since July of 2008, SimCom International, Inc., has sent two sets of training materials to customers located in Massachusetts.5
3

Id.

The plaintiffs characterize this agreement as "mandat[ing]...anyone who desired to operate a Socata TBM 700...to obtain their training at a SimCom facility." Plaintiffs' Response to SimCom at 10. However, the exclusivity language of the agreement ­ that "SimCom shall...be the only entity promoted by Socata to provide pilot or maintenance Training for the [TBM 700] in [North America]" ­ does not support that contention. Id., Ex. K, Bates 00063.

4

Prior to July 14, 2006, Pan Am International Flight Academy, Inc. also had a website: www.panamacademy.com. SimCom Interrogatories, ¶23. That website was sold in July, 2006. Id.
5

These contacts are relevant to the general, but not to the specific, personal jurisdiction analysis. This is because a court assessing a defendant's contacts with the forum state under the specific jurisdiction analysis may only consider those contacts that occurred prior to the date upon which the claims accrued, which in this case is February 2, 2007. See Harlow v. Children's Hospital, 432 F.3d 50, 61 (1st Cir. 2005). In contrast, under the general personal jurisdiction analysis, the court may consider defendant's contacts with the forum state up until the date upon which the suit was filed. See Harlow, 432 F.3d at 65. -5-

Between 2000 and December 2008,6 the percentages of SimCom International's customers who were located in Massachusetts, and the percentages of its total revenue that it derived from those customers, are as follows: ­ 2000: 1.18% of customers;7 1.18% of revenue ­ 2001: 1.82% of customers; 1.46% of revenue ­ 2002: 1.67% of customers; 1.30% of revenue ­ 2003: 1.53% of customers; 2.21% of revenue ­ 2004: 1.62% of customers; 1.68% of revenue ­ 2005: 1.52% of customers; 1.82% of revenue ­ 2006: 1.63% of customers; 1.47% of revenue ­ 2007: 1.36% of customers; 0.97% of revenue ­ 2008: 0.98%8 of customers; 0.64% of revenue SimCom Interrogatories, ¶¶7, 19.
6

These percentages represent 1469

This date range exceeds that which may be considered under the specific jurisdiction analysis. See Harlow, 432 F.3d at 61, discussed supra, note 5. However, because the court has no reason to believe that the percentage of business that SimCom International, Inc., derives from Massachusetts customers differs significantly from year to year, and because under the prima facie standard, the court must view the evidence in the light most favorable to the plaintiff, it assumes that 1.36% represents the percentage of total revenue that SimCom International, Inc., derived from Massachusetts customers between 2000 and February 2, 2007, the date the plaintiffs' claims accrued.
7

The percentage of customers is based on the figures from July to December 2000 only. SimCom Interrogatories, ¶7.
8

The 2008 percentage is only relevant to the general personal jurisdiction analysis. See Harlow, 432 F.3d at 61, 65. The plaintiffs misstate this figure as "over 450" in their Response. See Plaintiffs' Response to SimCom at 6. Plaintiffs acknowledged this error at the March 4, 2010 hearing. -69

of SimCom International's 12,092 customers during this time period (1.21%), and $2,615,889 of SimCom's total revenue of $192,441,619 (1.36%). Id. at ¶¶1, 18; Plaintiffs' Response to SimCom, Ex. J.

Between 2001 and February 2, 2007, a SimCom International instructor traveled to an airport in Massachusetts to provide training eleven times. SimCom made Interrogatories, six additional ¶2. SimCom to

International

instructors

visits

Massachusetts between February 2, 2007 and January 29, 2009,10 for a total of seventeen visits to six Massachusetts-based customers between 2001 and January 29, 2009.11 such trainings constitutes Id. The revenue derived from .033% of SimCom

approximately

International's total revenue since 2001.

Id. at ¶1.

In July, 2006, SimCom International, Inc., provided decedent Milot with an initial training course for the Socata TBM 700 at its training center in Orlando, Florida. Brannon Aff., ¶5. On July

14, 2006, it issued Milot a certificate stating that he had "satisfactorily completed a TBM700 Initial course in accordance with the standards of SimCom Training Centers." Response to SimCom, Ex. 2.
10

Plaintiffs'

These visits may only be considered in the general jurisdiction analysis because they occurred after the date on which the plaintiffs' claims accrued, placing them beyond the scope of the specific jurisdictional analysis. See Harlow, 432 F.3d at 65; n. 5, supra.
11

The second affidavit of SimCom president Walter W. David states that the answers provided to the plaintiffs' SimCom Interrogatories misstated the number of Massachusetts customers as seven. David Aff. 2, ¶14. -7-

Both SimCom, Inc., and SimCom International, Inc., are owned by SimCom Holdings, Inc., in which J.W. Childs Equity Partners II, LP, is the majority stockholder. Plaintiffs' Response to SimCom,

Ex. B; Glenn A. Hopkins Affidavit ("Hopkins Aff."), ¶4; Walter W. David Affidavit 2 ("David Aff. 2"), ¶¶3, 8. J.W. Childs

Associates, L.P., is located in Boston, Massachusetts. Plaintiffs' Response to SimCom, Ex. D. John W. Childs, Chairman and CEO of Id.

J.W. Childs Associates, L.P., is a director of SimCom.12
12

The plaintiffs argue that "[t]he purchase of SimCom International, Inc. specifically contemplated the J.W. Childs personnel maintaining substantial involvement in the control of SimCom." Plaintiffs' Response to SimCom at 3-4. They cite in support of this statement the November 24, 1998 Stock Purchase Agreement's definition of "contemplated transactions" as "all of the transactions contemplated by this Agreement, including [] buyer's acquisition and ownership of the shares and exercise of control over the Acquired Companies." Id. at 4; see also Plaintiffs' Response to SimCom, Ex. F, Bates 00098. Plaintiffs also highlight the fact that the Agreement lists the Boston, Massachusetts address of J.W. Childs Associates, L.P. as the address to which all communications directed to "Buyer" must be delivered. Plaintiffs' Response to SimCom at 5, Ex. F, Bates 00150. However, inspection of the referenced Agreement reveals that it identifies the Buyer of SimCom International, Inc., not as J.W. Childs, but as Pan Am International Flight Academy, Inc. See Plaintiffs' Response to SimCom, Ex. F, Bates 00092, 00097. This is confirmed by uncontested affidavits submitted by the SimCom defendants. See First David Aff., ¶2; Brannon Aff., ¶14. These affidavits also confirm that Pan Am International Flight Academy was at that time owned by Pan Am International Flight Academy Holdings (the entity that became SimCom Holdings in 2006), in which J.W. Childs was and is the majority shareholder. Nevertheless, the uncontested second affidavit of SimCom International, Inc., president Walter W. David states that the November 1998 Agreement "did not contemplate any substantive involvement, management or control by PAIFA/SimCom, or any J.W. Childs firm or personnel, with regard to the flight training business of SimCom International." Second David Aff., ¶8 (emphasis in original). Thus, the plaintiffs' evidence to the contrary does not constitute the "affirmative proof" that plaintiffs must proffer for the court to accept the foregoing allegation as true under the prima facie -8-

B.

Socata

Socata sells, services, and provides technical support for Socata aircraft. See Socata North America, Inc.'s Response to Plaintiffs' Requests for Production on the Issue of Personal Jurisdiction and on the Issues Raised in the Defendants' Rule 12(b)(2) Motion to Dismiss ("Socata Interrogatories"), ¶1. It is

incorporated in New York, and maintains its principal place of business in Florida. See id.; Declaration of Nicolas Chabbert It is not licensed to do business in

("Chabbert Decl."), ¶2.

Massachusetts, has never had a registered agent for service of process in Massachusetts, has never had any employees based in Massachusetts, has never maintained any offices in Massachusetts, has never had any bank accounts in Massachusetts, has never had a Massachusetts telephone listing, has never paid taxes to

Massachusetts, and has never owned any real or personal property in Massachusetts. Chabbert Decl., ¶3. Socata does not advertise or

send mailings specifically targeted to people in Massachusetts, although it does advertise in national publications and online. Socata Interrogatories, ¶¶2, 9, 18. Socata did not design, manufacture, or sell the aircraft in question. Chabbert Decl. at ¶4. However, Socata does conduct Between 1998 and January

business with Massachusetts customers.

29, 2009, Socata sent three employees to Massachusetts for Socata standard. Chlebda v. H.E. Fortna & Bro., Inc., 609 F.2d 1022, 1024 (1st Cir. 1979). -9-

business.

Id., ¶15.

Sales to Massachusetts customers constituted

between 0.010% and 0.576% of Socata's total sales between January 6, 1998 and March 9, 2009,13 for an average of approximately 0.2% of total sales between January 1998 and December 2008, or roughly $1.3 million. Plaintiffs' Response to Defendant Socata North

America, Inc. Motion to Dismiss Pursuant to Mass. [sic] R. Civ. P. 12(B)2 ("Plaintiffs' Response to Socata"), Ex. B, Bates 00073, Bates 00074 (filed under seal); Socata Interrogatories, ¶17.14

III.

Discussion Because none of the defendants challenging this court's

jurisdiction are alleged to be residents of Massachusetts, to own property here, or to have otherwise consented to this court's jurisdiction, personal jurisdiction is only appropriate if the defendants fall within the Massachusetts long-arm statute, Mass. Gen. Laws ch. 223A §3, and exercising jurisdiction comports with the requirements of the Due Process Clause. See Evans Cabinet

Corporation v. Kitchen International, Inc., 593 F.3d 135, 146 (1st For the purposes of the general jurisdiction inquiry, only the contacts through January 29, 2009 may be considered. See Harlow, 432 F.3d at 65. 14 Plaintiffs also state in support of their jurisdictional argument that Socata maintains a website, www.socata.com. Plaintiffs' Response to Socata at 5. While they do not cite any evidence to support this contention, Socata's response to the interrogatories put to it acknowledge the existence of a website. Declaration of Eric Strain ("Strain Decl."), Ex. A, ¶¶44, 45. However, these responses reveal that Socata does not makes sales through its website. Id. On this record, the existence of the website does not help the plaintiffs to establish jurisdiction. See discussion infra, p. 24. -1013

Cir. 2010); Nowak v. Tak How Inv., Ltd., 94 F.3d 708, 712 (1st Cir. 1996); World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980); Caplan v. Donovan, 450 Mass. 463, 879 N.E.2d 117, 120 (2008). Because the Massachusetts Supreme Judicial Court has

interpreted the state's long-arm statute to extend to the limits permitted by the United States Constitution, the court "'may sidestep the statutory inquiry and proceed directly to the

constitutional analysis.'" (quoting Daynard, 290 F.3d

Evans Cabinet Corp., 593 F.3d at 146 at 52) (internal quotation marks

omitted)); see also Cossaboon v. Maine Medical Center, 2010 WL 1078342, *11 n.1 (C.A.1 (N.H.) March 25, 2010); Fiske v. Sandvik Mining and Const. USA, LLC, 2009 WL 3163329, *5 (D. Mass. Sept. 25, 2009). Accordingly, the court is determining whether personal

jurisdiction exists over these defendants by applying the standards of the Due Process Clause. A. Constitutional Requirements 1. The Underlying Principles inquiry is of the the constitutional non-resident personal defendant

central

jurisdiction

analysis

whether

possesses the necessary "minimum contacts" with the forum state so that subjecting it to that forum's jurisdiction will not offend the "'traditional notions of fair play and substantial justice.'" United Electrical Workers v. 163 Pleasant Street Corp., 960 F.2d 1080, 1087 (1st Cir. 1992) ("Pleasant -11Street I") (quoting

International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). This focus is necessary to assure that jurisdiction is only exercised where "the defendant's conduct and connection with the forum State are such that [it] should reasonably anticipate being haled into court there." 444 U.S. 286, 297 (1980). World-Wide Volkswagen Corp. v. Woodson, The two recognized types of personal

jurisdiction are "general" and "specific" jurisdiction: General jurisdiction exists when the litigation is not directly founded on the defendant's forum-based contacts, but the defendant nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state . . . Specific jurisdiction may be asserted where the cause of action arises directly out of, or relates to, the defendant's forum-based contacts. Pleasant Street I, 960 F.2d at 1088-89. Plaintiffs contend that the court may exercise either specific or general jurisdiction over the SimCom defendants, but only general jurisdiction over Socata. Thus, the court is addressing

both types of jurisdiction with regard to the SimCom defendants, but only general jurisdiction with regard to Socata. Because the

specific jurisdiction argument with regard to Socata is not plead, it has been waived. See Pacamor Bearings, Inc. v. Minebea Co.,

Ltd., 892 F. Supp. 347, 355 n. 8 (D.N.H. 1995) ("[B]ecause this argument was not properly raised and briefed...the court will not consider it here."); Malone v. Signal Processing Technologies, Inc., 826 F. Supp. 370, 378 (D. Col. 1993) ("Because this argument was not raised in [defendant's] initial brief, I decline to consider it."). -12-

In the present case, the plaintiffs have not established either general or specific jurisdiction over the SimCom defendants, or general jurisdiction over Socata. Accordingly, the court's

exercise of personal jurisdiction over these defendants in this case would violate the Due Process Clause. 2. Specific Jurisdiction

The First Circuit has established a tripartite test for determining whether specific jurisdiction exists: First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's forum-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's court foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable. Nowak, 94 F.3d at 712-13. This test is not a "mechanical

exercise," and "a failure to demonstrate the necessary minimum contacts eliminates the need even to reach the issue of

reasonableness: '[t]he [g]estalt factors come into play only if the first two segments of the test for specific jurisdiction have been fulfilled.'" Sawtelle v. Farrell, 70 F.3d 1381, 1394 (1st Cir. A court

1995) (quoting Pleasant Street I, 960 F.2d at 1091 n. 11).

that analyzes specific personal jurisdiction should only consider contacts that occurred "before and surrounding the accrual of the cause of action," to ensure the "fair warning" required by the Due

-13-

Process Clause.

Harlow, 432 F.3d at 61.15 a. Relatedness

The First Circuit standard for determining whether a claim "arises out of" the defendant's activities within the state lies somewhere between a "but for" and a "proximate cause" test. Nowak, 94 F.3d at 713-16 (describing the First Circuit standard as "a small overlay of 'but for' on 'proximate cause'"). Plaintiffs

allege that this standard is satisfied because the crash arose out of SimCom's exclusive training arrangement with Socata, which was reached in February, 1999, after Boston-based J.W. Childs had acquired SimCom. Plaintiffs argue that in light of the

relationship between SimCom and J.W. Childs, the arrangement "would have been developed and approved, at least in part, in Boston by the officers located there." Plaintiffs' Response to SimCom at 10. They further argue that "[w]ithout this exclusive agreement, Milot would not have been obliged to attend the SimCom Socata training," and that "for aircraft insurance to be in effect, a member of the flight crew was required to obtain training through an authorized flight training academy."16 Id. at 10, 12. Plaintiffs also contend

that the evidence that SimCom International, Inc. sends flight instructors to Massachusetts, sends unsolicited advertisements to potential Massachusetts customers, and obtains substantial revenue
15

This is in contrast to the general personal jurisdiction analysis, under which all contacts up until the filing of the complaint can be considered. See Harlow, 432 F.3d at 65.
16

Plaintiffs do not support this assertion in their proffers. -14-

from

Massachusetts

customers

makes

a

prima

facie

showing

of

specific jurisdiction. This evidence does not support a finding of specific

jurisdiction. flight

The facts that SimCom International, Inc. sends and direct mailings to Massachusetts, and

instructors

derives revenue from Massachusetts customers, do not bear on the specific jurisdictional inquiry, as the plaintiffs neither allege nor provide evidence to support a finding that the accident in question arose out of these contacts with Massachusetts. The

connection between J.W. Childs and the SimCom defendants does not supply the missing necessary nexus. In Pleasant Street I, the First Circuit found that a

Massachusetts court could not exercise jurisdiction over a company headquartered and incorporated in Scotland. Pleasant Street I, 960 F.2d at 1083. It reached this conclusion despite the fact that one of the principals of the Scottish corporation had been involved in negotiating the collective bargaining agreement that was alleged to have been breached, and despite the fact that the Scottish

corporation had appointed its subsidiary's directors, sent two of its salaried principals to serve as high-level executives of the Massachusetts subsidiary, and invested approximately $8,000,000 in the Massachusetts corporation. 1083-84. Pleasant Street I, 960 F.2d at company's

The court reasoned that only the Scottish

involvement in the negotiations over the collective bargaining agreement could have given rise to the cause of action, and that -15-

this

involvement

was

insufficient

to

establish

the

court's Id. at

jurisdiction over the Scottish company in its own right. 1089-91.

Jurisdiction could not be based on the actions of the

Massachusetts subsidiary, the court held, because the limited liability principle prevented the attribution of the Massachusetts company's actions to the Scottish parent. Id. at 1091-97.

There are several material similarities between the facts of Pleasant Street I and those in the instant case. As in Pleasant

Street I, there is only one contact between the out-of-state defendant and the forum state out of which the cause of action can be said to have arisen ­ the exclusivity contract between SimCom International, Inc., and Socata. Yet the connection between the

exclusivity agreement and the crash is far more attenuated than the connection between the collective bargaining negotiations and the plaintiffs' cause of action in Pleasant Street I, where the plaintiffs alleged breach of the contract that had resulted from those negotiations. Id. at 1089.

Here, plaintiffs argue that the exclusivity agreement, which was allegedly reached with the involvement of Boston-based J.W. Childs, obliged decedent Milot to receive training on the accident aircraft from SimCom International, Inc. The terms of the

agreement belie this contention.17 The agreement states that SimCom International, Inc. will be the only flight trainer promoted by Socata.
17

Plaintiffs' Response to -16-

SimCom, Ex. K.

It does not

See supra, n. 3.

require that all Socata pilots be trained by SimCom International, Inc., however. Id. The uncontested affidavit of SimCom

International president Walter David confirms this conclusion. David states that the exclusivity of the agreement related only to the promotion of training services, and that there are "at least three other well-established TBM trainers in the United States." Second David Aff., ¶15; Ex. G. David further notes that Peter John Karoly, the other pilot on board the accident aircraft at the time of the crash, did not receive flight training from SimCom

International, Inc.

Id., ¶17.

Thus, the agreement does not

support the plaintiffs' assertion that decedent Milot was required to receive flight training from SimCom International, Inc. Also weakening the plaintiffs' argument concerning relatedness is the fact that Walter David's uncontested affidavit states that "no J.W. Childs firm or personnel was involved in any respect in soliciting, approving developing, Training negotiating, Agreement, or structuring, any drafting or

the

Amendments

thereto,

between SimCom International and ...Socata Aircraft." Second David Aff., ¶9. and Socata David further states that SimCom International, Inc., began "exploring a potential training provider

relationship...long before any contact between SimCom International and [SimCom] or any representative of J.W. Childs with respect to a potential acquisition of SimCom International by [SimCom]." Second David Aff., ¶12. This is in contrast to the negotiations at issue in Pleasant Street I, in which a principal of the parent -17-

company was involved "[d]uring the period when purchase was under consideration." Pleasant Street I, 960 F.2d at 1083. The

plaintiffs have not presented any evidence that calls David's statements into question. There is a third factor that weighs against finding that the accident arose out of J.W. Childs' involvement in reaching the exclusivity agreement. In Pleasant Street I, the First Circuit

held that the evidence did not justify piercing the corporate veil. Pleasant Street I, 960 F.2d at 1091. As subject matter

jurisdiction was based on a federal question, the court applied a federal standard that it described as "sometimes...less rigorous than its state law counterparts." Id. at 1092.18 It nevertheless

found that the litigants had failed to show the "lack of corporate independence, fraudulent intent, and manifest injustice" necessary to justify piercing the corporate veil. Id. at 1093. The court

emphasized that "corporations which simply try to limit their overall liability by establishing, do not or acquiring, transgress separately legal or

incorporated

subsidiaries

thereby

ethical norms," and reasoned that "a more free-wheeling approach to veil piercing would hamstring established businesses in their legitimate efforts of to expand into new fields; and undermine a the huge It

predictability

corporate

risk-taking;

provide

disincentive for the investment of venture capital."
18

Id.

In contrast, the First Circuit noted that "[u]nder Massachusetts law, disregarding the corporate form is permissible only in rare situations." Id. at 1091. -18-

concluded that "there is a glaring shortfall in the proof," as the district court had not found that the subsidiary was "a sham or inadequately capitalized," or that the parent company had used its independent relationship with its subsidiary to deceive or

corruptly avoid its legal obligations.

Id. at 1094.

Evidence of such questionable behavior is also lacking in the instant case. The plaintiffs do not argue that either J.W. Childs

or the SimCom defendants acted with intent to defraud, and present no evidence or argument regarding the capitalization of the SimCom defendants. Moreover, the applicable standard in the instant case

is the more stringent Massachusetts standard, not the federal standard. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); see

also Pepsi-Cola Metro. Bottling Co., Inc. v. Checkers, Inc., 754 F.2d 10, 15 (1st Cir. 1985) (describing the Massachusetts standard for veil piercing, and permitting it where the defendant had incorporated a new organization and transferred $100,000 to it the day after stopping payment on a check for $110,000 for goods already delivered). The record before this court does not justify

piercing the corporate veil to attribute the actions of the SimCom defendants to J.W. Childs. Because the plaintiffs have failed to establish that the aircraft accident arose out of or was related to the SimCom defendants' Massachusetts activities, the inquiry into specific jurisdiction need go no further. For the foregoing reasons,

plaintiffs have failed to make the prima facie showing necessary to -19-

permit the exercise of specific personal jurisdiction over the SimCom defendants. 3. General Jurisdiction

The First Circuit interprets the Due Process Clause "to impose three requirements on the exercise of general jurisdiction over out-of-state defendants[:] (1) the defendant must have sufficient contacts with the forum state, (2) those contacts must be

purposeful, and (3) the exercise of jurisdiction must be reasonable under the circumstances." (citations omitted). Cossaboon, 2010 WL 1078342 at *4

As explained earlier, in determining whether

the exercise of general jurisdiction is proper, courts in the First Circuit "'consider all of a defendant's contacts with the forum state prior to the filing of the lawsuit.'" Id. at *1 (quoting Harlow, 432 F.3d at 65.) To satisfy the first prong of this test, a defendant must either be domiciled in the forum state or engage in activities there are "continuous and systematic." Helicopteros Nacionales de

Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984); see also Cossaboon, 2010 WL 1078342 at *4. These contacts must be "so

substantial and of such a nature as to justify suit against [the defendant] on causes of action arising from dealings entirely different from those activities." International Shoe, 326 U.S. at

318. This standard is "considerably more stringent" than the minimum contacts standard required for the exercise of specific jurisdiction. Glater, 744 F.2d 213, 216 (1st Cir. 1984). -20-

To satisfy the second requirement of this test, a defendant's contacts with the forum state must be "purposeful." Cossaboon, This and

2010 WL 1078342 at *4 (quoting Harlow, 432 F.3d at 57). standard is only met "'when the defendant purposefully

voluntarily directs his activities toward the forum so that he should expect, by virtue of the benefit he receives, to be subject to the court's jurisdiction based on these contacts." Id. (quoting United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 624 (1st Cir. 2001)). This analysis ­ which is often combined with the analysis

under the "continuous and systematic" prong of the test ­ is necessarily qualitative, and is "'guided by the types of contacts deemed sufficiently continuous and systematic in other cases.'" Id. at *5 (quoting Noonan v. Winston Co., 135 F.3d 85, 93-94 (1st Cir. 1998)). Like the reasonableness inquiry in the analysis of specific personal jurisdiction, the reasonableness third prong of the

general personal jurisdiction analysis is "'secondary rather than primary; unless the defendant has some cognizable contacts with the proposed forum, the court cannot assert general jurisdiction.'" Id. (quoting Sandstrom v. Chem-Lawn Corp., 904 F.2d 83, 89 (1st Cir. 1990)). Thus, if the plaintiff fails to satisfy the first two

prongs of the general jurisdiction test, the test is not met, and the court need not inquire into the reasonableness of the exercise of jurisdiction in that case. Id. -21-

a. SimCom Defendants Plaintiffs argue that the SimCom defendants have purposefully conducted "continuous and systematic business dealings within the Commonwealth." that Plaintiffs' Response to SimCom at 4. provide to support this The evidence is the

plaintiffs

assertion

relationship between J.W. Childs and the SimCom defendants; the fact that between July, 2000 and December, 2008, SimCom

International, Inc. generated over $2.5 million from Massachusetts customers; the fact that the SimCom defendants have sent flight instructors and direct mailings to Massachusetts; and the fact that SimCom maintains a website. These facts are insufficient to establish "continuous and systematic" or "purposeful" contacts with Massachusetts. As

discussed earlier, the principle of corporate separateness does not permit this court to attribute the actions of J.W. Childs to the SimCom defendants, where the plaintiffs have not justified a piercing of the corporate veil. See Pleasant Street I, 960 F.2d at 1091. The remaining contacts with Massachusetts fall short of the

level of contacts that the First Circuit and the Supreme Court have held are necessary for the exercise of general personal

jurisdiction over an out-of-state defendant. See, e.g., Cossaboon, 2010 WL 1078342 at *10; Helicopteros, 466 U.S. at 414. In Perkins v. Benguet Consol. Mining Co., in which the Supreme Court upheld the exercise of general personal jurisdiction over an -22-

out-of-forum defendant, the Court held that a Philippine mining company that maintained its general business operations in Ohio had continuous and systematic contacts with that state. Benguet Consol. Min. Co., 342 U.S. 437, 448 (1952). Perkins v. The chief

officer of the corporation maintained an office in Ohio, company files were kept there, company finances were handled through instate banks, correspondence originated there, and board meetings were held in the state. Id. at 447-48. In contrast, in

Helicopteros, the Court held that a defendant that over a seven year period had purchased more than $4,000,000 of helicopters and equipment in-state, sent its Chief Executive Officer to negotiate a contract in-state, accepted checks drawn on in-state banks, and trained employees in the forum state could not be subjected to general jurisdiction. See Helicopteros, 466 U.S. at 414. The

Court reasoned that a one-time business trip could not be the basis of general jurisdiction, that a payee usually has no influence regarding the bank from which checks to it are drawn, that the trainings were simply an aspect of the helicopter purchases, and that the purchases themselves, "even if occurring at regular intervals, were not enough to warrant a State's assertion of in personam jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions." Id. at 418.

The contacts of the SimCom defendants are far less than those of the defendants in either Perkins or Helicopteros. They are also less than the contacts of defendants over whom the First Circuit -23-

has found the exercise of jurisdiction unwarranted.

The 1.36% of

total revenue that the SimCom defendants derived from Massachusetts customers between 2000 and 2008, for example, is less than half of the percentage of total revenue derived from in-state residents (3.24%) that the First Circuit found insufficient to support a New Hampshire court's exercise of general jurisdiction over Maine Medical Center ("MMC") in Cossaboon. Cossaboon, 2010 WL 1078342 at *3. In that case, the First Circuit held the following contacts

insufficient to establish general jurisdiction over the MMC: (1) the hospital advertised an to New Hampshire website residents; accessible (2) in the New

hospital

operated

interactive

Hampshire; (3) the hospital was registered to do business in New Hampshire hospital and had had an one New Hampshire-based with New employee; (4) the

agreement

Hampshire-based

Dartmouth

Medical School under which Dartmouth students would do rotations at the hospital; and (5) the hospital treated "a substantial number" of New Hampshire residents. Id. at *5.

The SimCom defendants' contacts are both less "continuous and systematic" and less "purposeful." Unlike the website in

Cossaboon, which enabled users to make online donations, complete pre-registration, register for classes, and find a doctor, SimCom International, Inc.'s website is not interactive. See SimCom

Defendants' Reply, Ex. 10, ¶15; Ex. 11, ¶¶15, 24; see also McBee v. Delica Co., 417 F.3d 107, 124 (1st Cir. 2005) ("the mere existence of a website that is visible in a forum and that gives information -24-

about a company and its products is not enough, by itself, to subject a defendant to personal jurisdiction in that forum.

Something more is necessary, such as interactive features which allow the successful online ordering of the defendant's products.") (citations omitted). Unlike the MMC, the SimCom defendants are not registered to do business employees. in Massachusetts and have no Massachusetts-based

First David Aff., ¶¶6, 10; Brannon Aff., ¶¶6, 10.

Indeed, there is no evidence that its employees have had contact with Massachusetts beyond the seventeen instructor trips, to assist only six individual customers, over the course of eight years. Nor do the SimCom defendants have any arrangement with an in-state institution approximating MMC's relationship with Dartmouth Medical School. New Hampshire patients made up a larger percentage of

MMC's total patient population (1.23%) and provided a larger percentage of total revenue (3.24%) than do the Massachusetts-based customers of SimCom (0.033% and 1.36%, respectively). Interrogatories, ¶1. Moreover, while SimCom International, Inc.'s direct mailings to Massachusetts residents and advertisements in nationwide trade publications are not clearly less "purposeful" or less "continuous and systematic" than MMC's issuance of periodic press releases to forty-five media outlets, including two in New Hampshire, and its placement of a job opening ad in a regional trade publication, neither are they clearly more so. See Cossaboon, 2010 WL 1078342 -25SimCom

at

*6.

There

is

no

evidence

that

the

SimCom

defendants'

advertisements or mailings targeted Massachusetts residents in particular. SimCom International, Inc., sends its direct mailings

to TBM 700 owners in whatever state and country in which they reside. SimCom Interrogatories, ¶3; cf. Turpin v. Mori Seiki Co.,

Ltd., 56 F. Supp. 2d 121 (D. Mass. 1999) (holding that to justify a Massachusetts court's exercise of general jurisdiction, an outof-state corporation must do more than supply brochures for

distribution to the United States as a whole).

Moreover, as the

First Circuit noted in Cossaboon, it has previously found that even extensive advertising contacts with the forum state are Id.

insufficient to permit the exercise of general jurisdiction. at *6 (citing Glater, 744 F.2d at 215).

For the foregoing reasons, the plaintiffs have failed to establish that the SimCom defendants' contacts with Massachusetts are either "substantial and continuous" or "purposeful." It is,

therefore, unnecessary to pursue the general jurisdiction inquiry further. Plaintiffs have not made a prima facie showing that

general jurisdiction exists over the SimCom defendants. b. Socata North America, Inc. Plaintiffs contend that Socata's contacts with Massachusetts ­ the three business trips to Massachusetts conducted by Socata employees, the advertisements in national publications, and the sales to Massachusetts customers generating approximately

$1,300,000, or roughly 0.2% of Socata's total sales during that -26-

time period ­ demonstrate that Socata purposefully established continuous and systematic contacts with Massachusetts sufficient to justify the exercise of general jurisdiction over it. This

contention is, however, not correct because these contacts were neither continuous and systematic nor purposeful. Because Socata's contacts with Massachusetts fail to satisfy the first two prongs of the general jurisdiction inquiry, it is unnecessary to consider the reasonableness prong. In Donatelli v. Nat'l Hockey League, the First Circuit found no general personal jurisdiction over the National Hockey League (the "NHL"), despite the facts that for ten years the League had provided officials for exhibition hockey games in-state, conducted scouting in-state, broadcast games in-state, and sold NHL logo products in-state. Donatelli, 708 F. Supp. 31, 35 (D.R.I. 1989), In Glater, the First Circuit

rev'd 893 F.2d 459 (1st Cir. 1990).

found that a manufacturer who employed eight in-forum advertising representatives and sold products to in-state distributors did not have the "continuous and systematic" contacts with the forum state to justify the exercise of general jurisdiction. at 216-17. Glater, 744 F.2d

Similarly, in Noonan, the First Circuit held that the

foreign defendant's regular solicitation of business from an instate book distributor ­ which involved telephone, fax, and written communications as well as two trips from England to Massachusetts, and which had generated $585,000 in a one-and-a-half year period ­ -27-

did not justify the exercise of general jurisdiction over the outof-forum defendant. Noonan, 135 F.3d at 92-93.

Here, Socata's advertising efforts and business trips were no more continuous and systematic or purposeful than those deemed insufficient in Donatelli, Glater, and Noonan. Socata

representatives' three business trips to Massachusetts are far less than the presence of NHL "officials [at] one or two exhibition hockey games" a year in Donatelli, 708 F. Supp. at 35, or the eight in-forum sales representatives in Glater. Socata's non-targeted

advertising in national trade publications and online is less systematic and purposeful than the active solicitation of business through multiple media, as well as two trans-Atlantic visits in less than two years, that was present in Noonan. decisions, Socata's business trips and In light of these marketing

nationwide

campaigns are neither continuous and systematic nor purposeful. Whether Socata's sales activity constitutes a basis for

general jurisdiction is a closer question. The record does reflect Socata's involvement in hundreds of transactions with

Massachusetts-based customers between 1998 and 2008, pursuant to which Socata shipping its products into Massachusetts, generating $1,300,000 in sales. Socata's other Such contacts are more substantial than with Massachusetts and have been

contacts

scrutinized by the court. A comparison between the record in this case and the facts in Helicopteros is instructive. In Helicopteros, the Supreme Court -28-

found no general jurisdiction over a Columbian corporation in the business of providing helicopter transportation, which had

purchased approximately 80% of its fleet from companies in Texas over a seven year period, and spent more than $4,000,000 in the state. See Helicopteros, 466 U.S. at 411. The company also

regularly sent its pilots to Texas for training and to ferry the purchased aircraft to South America. Id. Nevertheless, the

Supreme Court held that an exercise of general jurisdiction over the petitioner was not justified. Id. at 414.

The sales contacts between Socata and Massachusetts residents are of lesser magnitude than the contacts at issue in Helicopteros. The scattered sales record in the instant case does not reveal any sizable or regular business relationships with Massachusetts

customers.

In Helicopteros, the Court found significant the fact

that the petitioner did not have any offices, employees, or property in Texas. Id. at 411. Socata has no offices, employees, Chabbert Decl., ¶3. Given the lack

or property in Massachusetts.

of such telltale ties to Massachusetts, as well as the absence of any advertising or direct mail campaigns targeting Massachusetts, Socata must be found to have had only casual contacts with

Massachusetts customers, driven by the purchasers' initiative. This is not enough to subject Socata to the "obligations" that may arise from enjoying "the benefits and protection of the laws" of Massachusetts. International Shoe Co., 326 U.S. at 319. In light

of the Supreme Court's holding that the far more systematic, -29-

continuous and purposeful forum contacts in Helicopteros did not justify an exercise of general jurisdiction over a defendant, the court concludes that Socata's contacts with Massachusetts were insufficient to permit the exercise of general jurisdiction over it in the instant case. 4. The Additional Jurisdictional Discovery request permission to conduct additional

plaintiffs

jurisdictional discovery should this court seek additional evidence upon which to determine if a prima facie showing has been made with regard to both the SimCom defendants and Socata. discovery is not warranted. Such additional

The First Circuit has explained that

while "a diligent plaintiff who sues an out-of-state corporation and who makes out a colorable case for the existence of in personam jurisdiction may well be entitled to a modicum of jurisdictional discovery[,]...that entitlement is not absolute." Bank, Ltd., 274 F.3d at 625. Swiss Amer.

In Swiss American, the First Circuit

found that the plaintiff had not made an adequate showing on the relatedness prong of the specific jurisdiction inquiry and,

therefore, had not clearly presented a colorable claim for personal jurisdiction sufficient to warrant additional discovery. 626. Id. at

Similarly, the plaintiffs in the instant case have failed to

present a colorable claim regarding the court's jurisdiction over either the SimCom defendants or Socata. Thus, the plaintiffs'

request for leave to conduct additional discovery is being denied. -30-

IV.

ORDER For the foregoing reasons, it is hereby ORDERED that: 1. The Motion to Dismiss of Defendants SimCom International, SimCom, Inc. (Docket No. 7) is ALLOWED. Defendant Socata North America, Inc.'s Motion to Dismiss

Inc., and 2.

For Lack of Personal Jurisdiction (Docket No. 51-1) is ALLOWED. 3. The plaintiffs' requests for leave to conduct additional

jurisdictional discovery regarding the SimCom defendants and Socata are DENIED.

/s/ Mark L. Wolf UNITED STATES DISTRICT JUDGE

-31-