State of New York v. Mountain Tobacco Company et al

Filing 193

MEMORANDUM & ORDER granting 169 Motion to Dismiss for Lack of Jurisdiction; granting 169 Motion to Dismiss for Failure to State a Claim; For the foregoing reasons, defendant Delbert Wheeler, Sr.'s motion to dismiss for lack of personal j urisdiction is GRANTED and the State's claims against Wheeler are DISMISSED WITH PREJUDICE. The Clerk of the Court is directed to TERMINATE defendant Delbert Wheeler, Sr. as a defendant in this action. So Ordered by Judge Joanna Seybert on 1/26/2016. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
STATE OF NEW YORK,
Plaintiff,

MEMORANDUM & ORDER
12-CV-6276(JS)(SIL)

-against–
MOUNTAIN TOBACCO COMPANY, d/b/a
KING MOUNTAIN TOBACCO COMPANY, INC.,
and DELBERT WHEELER, SR.,
Defendants.
---------------------------------------X
APPEARANCES:
Plaintiff:
Christopher K. Leung, Esq.
Dana H. Biberman, Esq.
Marc A. Konowitz, Esq.
Sara Beth Evans, Esq.
NYS Office of the Attorney General
120 Broadway, 3rd Floor
New York, NY 10271
For Defendants:
Mountain Tobacco
Company

Kelli J. Keegan, Esq.
Randolph Barnhouse, Esq.
Johnson Barnhouse & Keegan LLP
7424 4th St NW
Los Ranchos De Albuq, NM 87107
Nelson A. Boxer, Esq.
Jill C. Barnhart, Esq.
Philip Nathan Pilmar, Esq.
Petrillo Klein & Boxer LLP
655 3rd Avenue, 22nd Floor
New York, NY 10017

Delbert Wheeler

David N. Yaffe, Esq.
Andrew K. Martingale, Esq.
William P. Caffrey, Esq.
Hamburger, Maxson, Yaffe & McNally LLP
255 Broadhollow Road, Suite 301E
Melville, NY 11747

SEYBERT, District Judge:
Presently pending before the Court is defendant Delbert
Wheeler, Sr. (“Wheeler”)’s motion to dismiss pursuant to Federal
Rules of Civil Procedure 12(b)(2) and (b)(6).

(Docket Entry 169.)

For following reasons, Wheeler’s motion is GRANTED.
BACKGROUND
I.

The Amended Complaint1
The State’s Amended Complaint dated May 21, 20142 asserts

claims

pursuant

to

the

Contraband

Cigarette

Trafficking

Act

(“CCTA”), the Prevent All Cigarette Trafficking Act (“PACT Act”),
New York Executive Law § 156-c, and New York Tax Law §§ 471, 1814,
and

480-b

against

defendant

Mountain

Tobacco

Company

doing

business as King Mountain Tobacco Company, Inc. (“King Mountain”)
and Wheeler (collectively, “Defendants”).
Entry 96.)

(Am. Compl., Docket

The State seeks to enjoin Defendants from making

allegedly illegal cigarette sales and shipments in and into New
York and also requests civil penalties, attorney fees, and costs.
(Am. Compl. ¶ 3.)

The following facts are taken from the Amended Complaint and
are presumed to be true for the purposes of this Memorandum and
Order.
1

The State initially filed an unsigned Amended Complaint on
February 13, 2013. (Docket Entry 6.) The Amended Complaint was
subsequently signed and refiled on May 21, 2014. (Docket Entry
96.)
2

2

The

Amended

Complaint

alleges

that

Wheeler

is

the

President, co-founder, and fifty percent owner of King Mountain,
a corporation formed pursuant to the laws of the Yakama Nation,
that “advertises and offers its cigarettes for sale, transfer,
transport, and shipment throughout the United States, including
New York.”

(Am. Compl. ¶¶ 8, 10.)

King Mountain is located within

the Yakama Indian Reservation; however, the Yakama Nation does not
own or operate King Mountain.

(Am. Compl. ¶ 8.)

King Mountain brand cigarettes are manufactured on the
Yakama Reservation in Washington State and then sold, transferred,
or assigned to New York State retailers and/or wholesalers.
Compl. ¶ 55.)

(Am.

Plaintiff New York (“the State”) alleges that

Defendants have, “upon information and belief, knowingly shipped,
transported, transferred, sold and distributed large quantities of
unstamped and unreported cigarettes to on-reservation wholesalers
in New York State.”

(Am. Compl. ¶ 56.)3

Although substantial

quantities of King Mountain cigarettes have been offered for sale

The Amended Complaint alleges that New York State, with certain
exceptions, requires that “all cigarettes possessed for sale in
New York must be stamped.” (Am. Compl. ¶ 26.) The State
further avers that under New York State’s amended tax law,
cigarettes that are transported to qualified reservations for
sale must contain a cigarette tax stamp on the package. (Am.
Compl. ¶ 37.) “As a result, cigarettes shipped, delivered, or
otherwise transferred to reservations in New York State by
manufacturers, distributors, wholesalers, or stamping agents,
must be stamped, regardless of whether they are to be sold to an
Indian nation or tribe or its members or reservation cigarette
sellers.” (Am. Compl. ¶ 38.)
3

3

at New York State on-reservation retailers, no New York statelicensed

stamping

agent

has

reported

sales

of

King

Mountain

cigarettes in New York to the New York State Department of Taxation
and Finance.

(Am. Compl. ¶¶ 31, 57-58.)

On November 6, 2012, investigators from the New York
State Office of the Attorney General purchased a carton of King
Mountain cigarettes for $25.00 at the Rising Native Sisters smoke
shop located on the Poospatuck Reservation in Mastic, New York.
(Am. Compl. ¶¶ 61-62, 64.)

The New York State excise tax is $43.50

per carton. (Am. Compl. ¶ 66.) Additionally, the carton purchased
by the investigator did not bear a New York State cigarette tax
stamp.

(Am. Compl. ¶ 65.)
On December 3, 2012, New York State police stopped a

truck at a commercial checkpoint in Clinton County, New York. (Am.
Compl. ¶ 67.)

Upon inspection, the State Police discovered 8,400

cartons (84,000 packs) of unstamped King Mountain cigarettes. (Am.
Compl. ¶ 67.)

According to the State Police, “the truck was en

route to land occupied by the Ganienkeh Group in Clinton County,
New York.”
II.

(Am. Compl. ¶ 67.)

Wheeler’s First Motion to Dismiss
On May 16, 2014, Wheeler moved to dismiss the Amended

Complaint pursuant to Federal Rule of Civil Procedure 12(b)(5),
(b)(2),

and

(b)(6).

See

New

York

v.

Mountain

Tobacco

Co.,

55 F. Supp. 3d 301, 306 (E.D.N.Y. 2014) (“Mountain Tobacco I”)
4

(Spatt, J.).

Wheeler’s motion seeking dismissal based on the

State’s alleged failure to properly effect service was denied.
Id. at 310.
Judge Spatt held that the State’s federal claims do not
provide for nationwide service of process and, accordingly, New
York’s long-arm statute controls.
Amended

Complaint

does

not

Id.

assert

The Court noted that the
that

Wheeler

personally

transacted business or committed a tortious act in New York;
instead, the State relied on an agency theory “to argue that
Wheeler used King Mountain as his agent and, therefore, King
Mountain’s contacts can be imputed to Wheeler.” Id. at 312. Judge
Spatt held that the State’s agency theory failed on two grounds:
(1) the State did not sufficiently establish that King Mountain
engaged in purposeful activities in New York State for Wheeler’s
benefit, and (2) the State did not demonstrate that King Mountain
directed

Wheeler

to

perform

any

acts

in

New

York.

Id.

Specifically, “[b]y grouping [his] activities with the alleged
conduct of [King Mountain], [the State] provide[s] no basis for
the Court to determine whether [Wheeler] was a primary actor
orchestrating the allegedly tortious conduct, or [whether he was]
named in the complaint simply because [his] name appeare[d] at the
top of [King Mountain’s] masthead.”

Id. (internal quotation marks

and citation omitted; alterations in original).

5

Additionally, Judge Spatt noted that the State submitted
a declaration that contained statements relating to the assertion
of personal jurisdiction over Wheeler.

Id. at 313.

The assistant

attorney general who submitted the declaration “attested to facts
to which he does not have personal knowledge” and conceded that
his allegations regarding “the actions of non-State actors [are]
based on information and belief.”

Id. (internal quotation marks

omitted; alteration in original).

Thus, the State’s declaration

was disregarded to the extent that it asserted facts that were not
based on the assistant attorney general’s personal knowledge.

Id.

Nevertheless, Judge Spatt granted the State’s request for
jurisdictional discovery “so that the State may develop a record
relevant to the extent of Wheeler’s contacts with New York State.”
Id. at 314.

Wheeler’s motion seeking dismissal pursuant to Rule

12(b)(6) was also denied without prejudice and with leave to renew
after the completion of jurisdictional discovery.
III.

Id. at 314-15.

Wheeler’s Motion
On August 14, 2015, Wheeler filed the instant motion to

dismiss pursuant to Rule 12(b)(2) and (b)(6) alleging the absence
of personal jurisdiction and the State’s failure to state a claim
upon which relief can be granted.4

(Def.’s Mot., Docket Entry

The Court notes that on November 12, 2014, prior to filing the
instant motion, Wheeler filed a motion to dismiss pursuant to
Rule 12(b)(1), which was denied by Judge Spatt on December 16,
4

6

169.)

With

respect

to

Rule

12(b)(2),

Wheeler

alleges

that

jurisdictional discovery has not remedied the Amended Complaint’s
failure

to

include

sufficient

jurisdiction over him.

allegations

to

confer

personal

(Def.’s Br., Docket Entry 169-6, at 22.)

Wheeler asserts that such an exercise of jurisdiction would not
comport with due process because Wheeler resides in the Yakama
Nation in Washington State, has never been to New York, and does
not transact business, possess an office, or own real property in
New York.
A.

(Def.’s Br. at 24.)
The State’s Opposition
The State opposes Wheeler’s motion and alleges that

personal jurisdiction over Wheeler is appropriate.
Docket Entry 171, at 6.)

(Pl.’s Br.,

The State’s opposition consists of a

memorandum of law and an attorney declaration.

(See Pl.’s Br.;

Pl.’s Decl., Docket Entry 171-1.) The State’s attorney declaration
cites to numerous documents, including but not limited to the
transcripts of depositions taken in this matter; however, the State
failed to annex any of these documents to its opposition.

(See

generally Pl.’s Decl.)
The

State

alleges

that

King

Mountain

is

Wheeler’s

“agent” and that Wheeler is a primary actor who has benefited from
King

Mountain’s

activities

and

is

significantly

financially

2014. New York v. Mountain Tobacco, 66 F. Supp. 3d 293
(E.D.N.Y. 2014) (“Mountain Tobacco II”).
7

interrelated with the activities of the corporation.
at 7, 9.)

(Pl.’s Br.

The State also argues that the exercise of personal

jurisdiction over Wheeler comports with due process requirements
because Wheeler has the requisite minimum contacts with New York;
the exercise of jurisdiction over Wheeler will cause minimal burden
to him; court appearances in this action have been infrequent and
Wheeler has retained local counsel; New York has a substantial
interest in a New York court interpreting its state law claims;
and New York is the most convenient forum because the State of New
York commenced this action on behalf of all New Yorkers.

(Pl.’s

Br. at 9-11.)
B.

Wheeler’s Reply
In his reply brief, Wheeler alleges that the State’s

declaration is not factually supported because it “does not assert
that [the attorney] has personal knowledge of the ‘facts’ attested
to therein, is rife with attorney argument, attests to facts to
which

attorney

Leung

could

not

possibly

have

any

personal

knowledge, and summarizes documents and testimony which are not
before the court.”

(Def.’s Reply Br., Docket Entry 179, at 7.)

Additionally, Wheeler argues that the State inappropriately relies
on pleadings filed in other actions “as if they are proven facts.”
(Def.’s Reply Br. at 8.)

Notwithstanding the alleged defects of

the State’s declaration, Wheeler avers that the State has not
demonstrated that Wheeler was a “primary actor” in the New York
8

transactions giving rise to this litigation, namely, the presence
of unstamped cigarettes for sale at the Poospatuck Reservation,
the presence of unstamped cigarettes on a truck in Clinton County,
and the failure to file documents with the New York State tobacco
tax administrator.

(Def.’s Reply Br. at 9-10.)

Wheeler further alleges that the State failed to amend
or move for leave to amend the Amended Complaint following the
close

of

warning

jurisdictional
that

the

State

discovery

despite

may

save

not

the

Court’s

deficient

allegations by way of an attorney declaration.

prior

substantive

(Def.’s Reply Br.

at 1-2.)
IV.

The December 2015 Electronic Order
The Court’s Electronic Order dated December 14, 2015

directed the State to file copies of all documents cited in its
declaration

on

ECF

on

or

before

December

28,

2015.

On

December 28, 2015, the State filed an additional declaration that
contains a list of numbered exhibits along with the exhibits
themselves.

(See Docket Entries 190 and 191.)

The Court notes

that the State’s original declaration does not reference any
numbered exhibits and instead cites to document names.

(See

generally Pl.’s Decl.)
V.

Oral Argument
The Court conducted oral argument regarding Wheeler’s

motion on January 8, 2016.
9

DISCUSSION
I.

Personal Jurisdiction
Prior to addressing Wheeler’s motion to dismiss pursuant

to Rule 12(b)(6), the Court must first determine the preliminary
issue of personal jurisdiction.

Hertzner v. U.S. Postal Serv.,

No. 05-CV-2371, 2007 WL 869585, at *3 (E.D.N.Y. Mar. 20, 2007).
See also Mende v. Milestone Tech., Inc., 269 F. Supp. 2d

246, 251

(S.D.N.Y. 2003) (“Before addressing Defendants’ Rule 12(b)(6)
motion to dismiss, the Court must first address the preliminary
questions of service and personal jurisdiction.”)
A.

Legal Standard
The plaintiff bears the burden of demonstrating personal

jurisdiction over the person or entity being sued.

Penguin Grp.

(USA) Inc. v. Am. Buddha, 609 F.3d 30, 34 (2d Cir. 2010) (citation
omitted).

The nature of the plaintiff’s obligation to establish

personal jurisdiction varies based on the litigation’s procedural
posture.

Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d

194, 197 (2d Cir. 1990).

Prior to discovery, the plaintiff may

defeat a jurisdiction testing motion by “pleading in good faith,
legally sufficient allegations of jurisdiction.”
citation omitted).

Id. (internal

However, after discovery has been conducted

“the plaintiff’s prima facie showing . . . must include an averment
of facts that, if credited by the trier, would suffice to establish
jurisdiction over the defendant.”
10

Id.

Accord Overseas Media,

Inc. v. Skvortsov, 277 F. App’x 92, 94 (2d Cir. 2008); McGlone v.
Thermotex, Inc., 740 F. Supp. 2d 381, 383 (E.D.N.Y. 2010) (Holding
that plaintiffs’ jurisdictional showing following the completion
of discovery “must be supported by facts that, if credited, would
establish personal jurisdiction.

Conclusory allegations based

only on information and belief are not sufficient.”) (citations
omitted).

Nevertheless, “a Rule 12(b)(2) motion . . . assumes the

truth of the plaintiff’s factual allegations for purposes of the
motion and challenges their sufficiency.”

Ball, 902 F.2d at 197.

The resolution of personal jurisdiction issues require
a two-part analysis.

First, the Court determines whether it has

jurisdiction over the defendant pursuant to the forum state’s laws.
Second, the Court determines whether such exercise of jurisdiction
would be consistent with the requirements of federal due process.
Grant River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158, 165
(2d Cir. 2005) (citations omitted).
1.
New
claims.

New York State Long-Arm Statute
York’s

long-arm

statute

applies

to

the

See Mountain Tobacco I, 55 F. Supp. 3d at 311.

N.Y. CPLR § 302.

State’s
See also

New York Civil Practice Laws and Rules Section

302 provides, in relevant part, that personal jurisdiction may be
exercised over a non-domiciliary who either in person or through
an agent “transacts any business within the state or contracts
anywhere to supply goods or services in the state.”
11

N.Y. CPLR

§ 302(a)(1).

As the Amended Complaint does not contain any

allegations that Wheeler personally transacted business in New
York,

“the

State

relies

on

an

agency

theory

to

impute

King

Mountain’s New York contacts to Wheeler.” N.Y. v. Mountain Tobacco
Co., No. 12-CV-6276, 2015 WL 893625, at *2 (E.D.N.Y. Feb. 26, 2015)
(Locke, M.J.) (“Mountain Tobacco III”).
“[T]o

establish

that

a

corporation

acted

as

its

principal’s agent, a plaintiff must show that the corporation
‘engaged in purposeful activities in this State . . . for the
benefit of and with knowledge and consent of the [principals] and
that

[the

principals]

exercised

corporation] in the matter.’”

some

control

over

[the

Barron Partners, LP v. Lab 123,

Inc., No. 07-CV-11135, 2008 WL 2902187, at *10 (S.D.N.Y. July 25,
2008) (quoting Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467,
522 N.E.2d 40, 43, 527 N.Y.S.2d 195 (1988)).

See also Mountain

Tobacco I, 55 F. Supp. 3d at 312.

The operative question is

whether

officer

the

out-of-state

corporate

defendant

is

the

primary actor in the underlying New York transaction giving rise
to the litigation.

Barron Partners, 2008 WL 2902187, at *10

(citation omitted).
The

plaintiff

must

demonstrate

that

the

defendant

exercised some level of control over the corporate actions that
took place in New York; however, control will not be established
“based merely upon a defendant’s title or position within the
12

corporation, or upon conclusory allegations that the defendant
controls the corporation.”
citation omitted).

Id. (internal quotation marks and

Accord Shostack v. Diller, No. 15-CV-2255,

2015 WL 5535808, at *4 (S.D.N.Y. Sept. 16, 2015) (noting that it
is well-settled that general allegations respecting an officer’s
control

of

jurisdiction).

a

corporation

will

not

establish

personal

See also Karabu Corp. v. Gitner, 16 F. Supp. 2d

319, 324 (S.D.N.Y. 1998) (noting that Rule 12(b)(2) motions are
routinely granted where plaintiff’s allegations regarding the
defendant’s participation are “broadly worded and vague.”)
Additionally,

the

exercise

of

jurisdiction

over

a

corporate officer is appropriate where the officer “‘benefit[s]
from the [agent-corporation’s] course of dealing in New York.’”
Mountain Tobacco III, 2015 WL 893625, at *3 (quoting Rainbow
Apparel Dist. Ctr. Corp. v. Gaze U.S.A., Inc., 295 F.R.D. 18, 27
(E.D.N.Y. 2013) (alterations in original).

See also Karabu, 16 F.

Supp. 2d at 324 n.6 (noting that cases finding that the defendant
satisfied the “benefit prong” of the test for personal jurisdiction
based on an agency theory “typically have involved claims against
the controlling shareholders of closely held corporations.”)
2.

Due Process

To the extent that Wheeler falls within the reach of New
York’s long-arm statute, the Court must determine if its exercise
of jurisdiction comports with due process guarantees.
13

Asahi Metal

Indus. Co., Ltd. v. Super. Ct. of Cal., Solano Cnty., 480 U.S.
102, 108-09, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987).

These

guarantees are satisfied when a defendant has certain minimum
contacts with the forum state such that maintenance of the suit
would not “offend traditional notions of fair play and substantial
justice.”
Ct.

Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.

154,

90

L.

Ed.

citations omitted).

95

(1945)

(internal

quotation

marks

and

The Court analyzes the nature and quality of

the defendant’s forum contacts in applying a totality of the
circumstances test.

Zelouf Int’l Corp. v. Na El, Inc., No. 13-

CV-1788, 2014 WL 1318372, at *4 (S.D.N.Y. Mar. 28, 2014).

See

also Grand River Ent. Six Nations, Ltd. V. Pryor, 425 F.3d at 158,
166

(2d

Cir.

2005)

(“No

single

event

or

contact

connecting

defendant to the forum state need be demonstrated; rather, the
totality of all defendant’s contacts with the forum state must
indicate that the exercise of jurisdiction would be proper.”)
(internal
original).

quotation

marks

and

citation

omitted;

emphasis

in

However, the defendant will not be subjected to

personal jurisdiction based on “‘random, fortuitous, or attenuated
contacts . . . or of the unilateral activity of another party or
a third person.’”

Zelouf, 2014 WL 1318372, at *4 (quoting Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S. Ct. 2174, 85 L.
Ed. 2d 528 (1985)).

14

With respect to reasonableness, the Supreme Court has
set forth the following factors as part of the Court’s analysis:
(1) the burden on the defendant, (2) the interests of the forum
state, (3) the plaintiff’s interest in obtaining relief, (4) “‘the
interstate

judicial

system’s

interest

in

obtaining

the

most

efficient resolution of controversies,’” and (5) “‘the shared
interest

of

the

several

States

substantive social policies.’”

in

furthering

fundamental

Asahi, 480 U.S. at 113-14 (quoting

World-Wide Volkswagon, 444 U.S. 286, 292, 100 S. Ct. 559, 564, 62
L. Ed. 2d 490 (1980).
B. Analysis
The State’s attempt to establish a basis for personal
jurisdiction over Wheeler has been rife with issues that date back
to Wheeler’s first motion to dismiss filed in May 2014.

See

generally Mountain Tobacco I, 55 F. Supp. 3d at 311-14.

As

previously noted, Judge Spatt held that the State failed to
establish personal jurisdiction over Wheeler based on an agency
theory

but

granted

the

State’s

request

for

jurisdictional

discovery “so that the State may develop a record relevant to the
extent of Wheeler’s contacts with New York State.”
14.

Id. at 312-

Despite the fact that jurisdictional discovery has been

completed and Wheeler filed the instant motion to dismiss, the
State has not sought leave to amend its Amended Complaint.

Thus,

the Amended Complaint before this Court is the same Amended
15

Complaint that Judge Spatt reviewed in holding that the State
failed to set forth a prima facie statutory basis for personal
jurisdiction over Wheeler.

Id. at 313.

Further, the State’s opposition to Wheeler’s motion
consists of a memorandum of law and an attorney declaration that
references various documents without labeling or annexing those
documents as exhibits.

(See generally Pl.’s Decl.)

The State’s

reliance on an attorney declaration as its sole evidentiary support
is particularly troubling as Judge Spatt previously declined to
consider

the

State’s

prior

attorney

declaration

“containing

assorted statements that relate to personal jurisdiction over
Wheeler” to the extent that it asserted facts that were not based
on personal knowledge.

Mountain Tobacco I, 55 F. Supp. 3d at 313.

Although the State ultimately filed the documents referenced in
its declaration in response to the Court’s December 14, 2015
Electronic Order, the Court is mindful of the absence of these
documents from the State’s initial submission.

The Court finds

that a bare attorney declaration does not suffice to satisfy the
State’s burden of establishing “facts that, if credited by the
trier,

would

defendant.”

suffice

to

establish

jurisdiction

over

the

Ball, 902 F.2d at 197.

Notwithstanding

its

failure

to

amend

the

defective

Amended Complaint and its inappropriate reliance on an attorney
declaration, the State has still failed to establish a viable basis
16

for personal jurisdiction over Wheeler.

The State’s CPLR Section

302(a)(1) analysis relies on a string of conclusory statements-namely, that Wheeler benefited from King Mountain’s activities, is
“financially interrelated” with the corporation, and is a “primary
actor”--and refers to a large portion of the State’s declaration.
(Pl.’s Br. at 9.)

However, the State’s declaration and the

documents referenced by the State fail to demonstrate that Wheeler
was the “primary actor” in the underlying transactions giving rise
to this action: the presence of unstamped, unreported King Mountain
cigarettes on the Poospatuck Reservation and the State Police’s
discovery of unstamped, unreported King Mountain cigarettes in a
truck on its way to land occupied by the Ganienkeh group. (See Am.
Compl. ¶¶ 61-67.)
The State’s sole references to the presence of King
Mountain

cigarettes

on

the

Poospatuck

Reservation

are

the

allegations that Wheeler told ERW Wholesale that King Mountain
cigarettes were not to be sold on the Poospatuck Reservation and
that Wheeler and King Mountain entered into a Stipulated Consent
Order in another civil action in which they agreed to refrain from
“selling

and

shipping

unstamped,

untaxed,

and

unreported

cigarettes to persons, not otherwise licensed by the State of New
York within the Poospatuck Indian reservation.”
¶¶ 58, 82.)

(Pl.’s Decl.

The State’s reference to the Ganienkeh group is

limited to the allegation that King Mountain paid a fee to Mohawk
17

Marketing for the marketing and distribution of King Mountain
cigarettes at certain stores that included two stores located on
land occupied by the Ganienkeh group.

(Pl.’s Decl ¶ 57(a).)

The

Court’s review of the portions of Wheeler’s deposition transcript
submitted by the State reveals that Wheeler did not testify that
he was involved in the sale of King Mountain cigarettes to the
Poospatuck Reservation or the Ganienkeh group.

(See generally Tr.

of Wheeler Deposition, Pl.’s Decl. at Ex. 22, Docket Entry 19034.)

Needless to say, Wheeler’s deposition testimony certainly

does not establish that he was the “primary actor” in these
transactions.
While Wheeler testified that he negotiated a distributor
agreement with ERW Wholesale, which is located in Irving, New York,
and that he negotiated with the Onondaga Nation 5 to reach an
agreement

with

the

Onondaga

Nation

Smoke

Shop,

the

Amended

Complaint does not contain any allegations pertaining to these
agreements or the distribution of King Mountain cigarettes to ERW
Wholesale or the Onondaga Nation.

(See Tr. of Wheeler Dep. at

61:20-25, 78:12-166; KMTA00266, Pl.’s Decl. at Ex. 12-4, Docket

5

The Onondaga Nation is a recognized “Indian nation” with “a
population primarily located on its reservation south of Nedrow,
New York.” Onondaga Nation v. State of N.Y., No. 05-CV-0314,
2010 WL 3806492, at *1 (N.D.N.Y. Sept. 22, 2010), aff’d,
500 F. App’x 87 (2d Cir. 2012).
The Court notes that the portions of the transcript of
Wheeler’s deposition annexed as an exhibit to the State’s
6

18

Entry 190-17; see generally Am. Compl.) Similarly, while the State
alleges that in 2006, “Wheeler brokered the sale and shipment of
King Mountain cigarettes to Oneida Wholesale, a company located
within the State of New York,” the Amended Complaint is silent
with regard to this transaction.
generally Am. Compl.)

(See Pl.’s Decl. at ¶ 55; see

The Court declines to take the Amended

Complaint’s conclusory statement that “the defendants have, upon
information

and

belief,

knowingly

shipped,

transported,

transferred, sold and distributed large quantities of unstamped
and unreported cigarettes to on-reservation wholesalers in New
York

State,”

and

transform

it

transaction” for this litigation.

into

a

blanket

“underlying

(Am. Compl. ¶ 56.)

The State

has failed to make its required showing that Wheeler was personally
involved

in

the

two

underlying

identified in the Amended Complaint.

transactions

specifically

See Rainbow Apparel, 295

F.R.D. at 26 (“The facts must indicate personal involvement on
behalf of the corporate officer in the activities giving rise to
the suit.”); Ontel Prods., Inc. v. Project Strategies Corp., 899
F. Supp. 1144, 1148 (S.D.N.Y. 1995) (Holding that the plaintiff
could not obtain personal jurisdiction over the defendant on the
sole basis of his position as president of the corporate defendant;

opposition are not
reference, page 61
page number 50 and
at ECF page number

in chronological order. For ease of
of Wheeler’s deposition can be found at ECF
page 78 of Wheeler’s deposition can be found
42.
19

rather, the plaintiff “must show that [the defendant] personally
took part in the activities giving rise to the action at issue.”)
(citation omitted).
In light of the State’s failure to establish that Wheeler
is a “primary actor” in the underlying transactions of this
litigation, the Court need not address the remaining elements of
personal jurisdiction based on an agency theory or whether the
exercise of jurisdiction over Wheeler would violate due process.
Accordingly, Wheeler’s motion to dismiss for lack of personal
jurisdiction is GRANTED and the State’s claims against Wheeler are
DISMISSED WITH PREJUDICE.

The Court finds that granting the State

leave to amend the Amended Complaint would be futile as the State
has

already

multiple

had

the

benefit

opportunities

to

jurisdiction over Wheeler.

of

jurisdictional

establish

a

basis

discovery
for

and

personal

See Carpenter v. Republic of Chile,

No. 07-CV-5290, 2011 WL 2490947, at *4 (E.D.N.Y. Jun. 22, 2011),
aff’d, 487 F. App’x 669 (2d Cir. 2012) (“[T]he Court should deny
leave when any amendment would be futile.”).
Based

on

the

absence

of

personal

jurisdiction

over

Wheeler, the Court need not reach the merits of Wheeler’s motion
to the extent it requests dismissal under Rule 12(b)(6).
CONCLUSION
For the foregoing reasons, defendant Delbert Wheeler,
Sr.’s motion to dismiss for lack of personal jurisdiction is
20

GRANTED and the State’s claims against Wheeler are DISMISSED WITH
PREJUDICE.

The Clerk of the Court is directed to TERMINATE

defendant Delbert Wheeler, Sr. as a defendant in this action.

SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
DATED:

January
26 , 2016
Central Islip, New York

21