Millennium Products Group, LLC. v. World Class Freight, Inc.
ORDER granting in part and denying in part 10 Motion to Dismiss: Defendant's motion to dismiss pursuant to Rule 12(b)(2) is denied, but the motion to dismiss pursuant to Rule 12(b)(3) is granted. See attached Order. The matter is dismissed without prejudice for improper venue, and the Clerk of Court is directed to close the case. Ordered by Judge Denis R. Hurley on 3/9/2018. (Bochner, Francesca)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
MILLENNIUM PRODUCTS GROUP, LLC.,
MEMORANDUM AND ORDER
- against –
WORLD CLASS FREIGHT, INC.,
Attorney for Plaintiff
285 Southfield Road, PO Box 585
Calverton, NY 11933
CHARLES M. FARANO
Attorney for Defendant
243a Lakeview Ave.
Placentia, CA 92870
HURLEY, Senior District Judge:
Plaintiff Millennium Products Group, LLC. (“Plaintiff”) brought this action against
Defendant World Class Freight, Inc. (“Defendant”) for breach of contract related to shipping,
storing, inventorying, and distributing certain consumer products including toys. (Compl. [DE 1]
¶¶ 5–6.) Presently before the Court is Defendant’s motion to dismiss pursuant to Fed. R. Civ. P.
Rule 12(b)(2) for lack of personal jurisdiction and Rule 12(b)(3) for improper venue. (Def.’s
Mem. in Supp. [DE 10] at 3 (hereinafter “Mem. in Supp.”).) Defendant’s original motion is also
brought under 12(b)(1) for lack of subject matter jurisdiction, as Defendant argues that “[t]he
basis for jurisdiction of the above entitled court has not been specifically stated” with regards to
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both diversity of citizenship and the amount in controversy. (Id. at 1.) However, Defendant’s
counsel then concedes in his Reply Memorandum that “[a]dmittedly, there appears to be a basis
for federal jurisdiction[.]” (Reply Mem. [DE 10-2] at 2.) Therefore, the Court will not analyze
Defendant’s motion under Rule 12(b)(1).1
For the reasons explained below, the motion to dismiss under Rule 12(b)(2) for lack of
personal jurisdiction is denied, but the motion to dismiss under Rule 12(b)(3) for improper venue
is granted and the case is dismissed.
The following relevant facts come from the Parties’ submissions and the Complaint.
Plaintiff is an importer and distributor of consumer goods such as toys. (Compl. [DE 1] ¶
5.] Defendant provides “freight forwarding, warehousing, inventory management, product
distribution, and other services for a variety of importers and other companies.” (Id. ¶ 6.) At
some time, Plaintiff and Defendant entered into a presumably oral agreement (no reference is
made to a written contract) for Defendant to provide warehousing, inventory services, and
product distribution for Plaintiff and Plaintiff’s customers. (Id. ¶ 7.)
Plaintiff alleges that on or about November 2014, Defendant made several errors that
caused Plaintiff to lose money and clients, and be subject to significant liability. (See id., ¶¶ 10–
While the Complaint does not specifically state where Defendant’s principle place of business is,
Defendant’s President and CEO states in her sworn declaration that Defendant is based in Carson
California and has been a California Corporation since it was first organized. (De Leon Decl. [DE 10]
¶ 2.) “In resolving a motion to dismiss for lack of subject matter jurisdiction, the Court may consider
affidavits and other materials beyond the pleadings to resolve jurisdictional questions.” Cunningham v.
Bank of New York Mellon, N.A., 2015 WL 4104839, * 1 (E.D.N.Y. July 8, 2015) (citing Morrison v. Nat’l
Australia Bank, Ltd., 547 F.3d 167, 170 (2d Cir. 2008)); see also McDowall v. Metropolitan Correctional
Center, 2010 WL 649744, at *1 n.1 (Feb. 22, 2010) (“Consideration of the Johnson Declaration is proper
in ruling on Defendants’ motions under Rules 12(b)(1) and 56.”) . The Complaint does not allege a total
amount in controversy in the jurisdiction section, but it includes numerous allegations of financial losses
in the Background section which add up to more than $75,000. (See, e.g., Compl. ¶¶ 13–17, 20, 23.)
Therefore, there is complete diversity and the amount in controversy exceeds the required threshold so the
Court has subject matter jurisdiction.
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11.) Plaintiff lists several specific instances from November through December 2014, when
Defendant failed to deliver orders on time or delivered incomplete orders, causing Plaintiff’s
customers to miss critical sales days like “Black Friday.” (Id. ¶¶ 14–15.) Plaintiff also claims
that Defendant failed to invoice Plaintiff and its customers properly, and that Defendant refused
to take responsibility for the damages it caused. (Id. ¶¶ 20–25.) Plaintiff fails to allege a total
damages amount in the Complaint, however, in its opposition papers Plaintiff states that by
adding the various amounts in the Complaint together “the amount in controversy here actually
exceeds $75,000 by leaps and bounds.” (Mem. in Opp. [DE 10-1] at 9 (hereinafter “Mem. in
Opp.”).) Interestingly, Plaintiff does not add up these amounts for the Court, but Plaintiff does
separately allege that Defendant is holding and refusing to release Plaintiff’s cargo valued in
excess of $466,000. (Id. at 10.)
On January 12, 2017, Plaintiff brought this action. On March 16, 2017, Defendant filed a
letter requesting a pre-motion conference for a motion to dismiss. Defendants filed the instant
motion on May 5, 2017.
As explained above, in Defendant’s original notice of motion and motion to dismiss,
Defendant’s states that the Complaint does not state a basis for jurisdiction. (Notice of Motion
[DE 10] at 1.) However, Defendant’s counsel retracts his 12(b)(1) argument in his reply
memorandum. (Reply Mem. at 2.)2 Therefore, the Court will only analyze the motion to dismiss
under Rules 12(b)(2) and 12(b)(3).
The Court also finds in the footnote supra, that it does have subject matter jurisdiction.
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The Motion to Dismiss Pursuant to Rule 12(b)(2) Is Denied
A. Rule 12(b)(2) Legal Standard
On a motion to dismiss under Rule 12(b)(2), the plaintiff bears the burden of establishing
jurisdiction over the defendant. See Metro. Life Ins. Co. v. Robertson–Ceco Corp., 84 F.3d 560,
566 (2d Cir. 1996). Where, as here, the parties have not yet conducted discovery, plaintiff may
defeat defendant's Rule 12(b)(2) motion “by making a prima facie showing of jurisdiction by
way of the complaint’s allegations, affidavits, and other supporting evidence.” Mortg. Funding
Corp. v. Boyer Lake Pointe, L.C., 379 F. Supp. 2d 282, 285 (E.D.N.Y.2005). Moreover, given
the early stage of the proceedings here, the Court must view the pleadings in a light most
favorable to the plaintiff, see Sills v. The Ronald Reagan Presidential Found., Inc., 2009 WL
1490852, *5 (S.D.N.Y. May 27, 2009), and when evidence is presented, “doubts are resolved in
the plaintiff's favor, notwithstanding a controverting presentation by the moving party,” A.I.
Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 80 (2d Cir. 1993). However, the Court is not bound
by conclusory statements, without supporting facts. Jazini v. Nissan Motor Co. Ltd., 148 F.3d
181, 185 (2d Cir. 1998).
In a diversity case, a federal district court exercises personal jurisdiction over a party in
accordance with the law of the forum state, subject to the requirements of due process under the
United States Constitution. See Whitaker v. American Telecasting, Inc., 261 F.3d 196, 208 (2d
Cir. 2001). In New York, courts may exercise either general or specific jurisdiction over
defendants. Pursuant to general jurisdiction, courts in New York can adjudicate all claims
against an individual or a corporation, even those unrelated to its contacts with the state. Sonera
Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 225 (2d Cir. 2014). “[G]eneral
jurisdiction [over a corporation] exists only when a corporation’s contacts with [New York] are
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so continuous and systematic as to render [it] essentially at home” in New York. Id. (internal
quotation marks and citations omitted).
The existence of specific jurisdiction “depends on an affiliation between the forum [state]
and the underlying controversy, principally, activity or an occurrence that takes place in the
forum State and is therefore subject to the State's regulation.” Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal quotation marks and citations
omitted). C.P.L.R. § 302(a), New York’s “long-arm” statute, allows for specific jurisdiction
over non-domiciliaries and provides that “a court may exercise personal jurisdiction over any
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.” Courts have found that this
subsection of New York’s long-arm statute effectively has two prongs: “(1) ‘[t]he defendant
must have transacted business within the state,’ either itself or through an agent, and (2) ‘the
claim asserted must arise from that business activity.’” Powell v. Monarch Recovery
Management, Inc., 2016 WL 8711210, at *6 (E.D.N.Y. 2016) (quoting Licci ex rel Licci v.
Lebanese Canadian Bank, SAL ,732 F.3d 161, 168 (2d Cir. 2013) (quoting Solé Resort, S.A. de
C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 103 (2d Cir. 2006))).
“When analyzing jurisdiction under the [‘]transacts business[’] clause, courts examine
‘the totality of the defendant’s activities within the forum’ in order to determine if the
defendant’s ‘transacted business’ can be considered purposeful.” Powell, 2016 WL 8711210, at
*6 (quoting Levans v. Delta Airlines, Inc., 988 F. Supp. 2d 330, 335 (E.D.N.Y. 2013) (quoting
Sterling Nat’l Bank & Trust Co. of N.Y. v. Fidelity Mortg. Investors, 510 F.2d 870, 873 (2d Cir.
1975))). Conclusory allegations of transacting business are insufficient; in fact, “courts have
regularly held that a plaintiff asserting jurisdiction must tender specific allegations about the
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defendant’s contact with the forum state.” See id.; Doe v. Del State Police, 939 F. Supp. 2d 313,
332 (S.D.N.Y. 2013). On the other hand, the Second Circuit has explained that “proof of one
transaction, or a single act, in New York [is] sufficient to invoke long-arm jurisdiction even
though the defendant never enters New York.” Allied Dynamics Corp. v. Kenmetal, Inc., 965 F.
Supp. 2d 276, 293 (E.D.N.Y. 2013) (quoting Best Van Lines, Inc. v. Walker, 490 F.3d 239, 248
(2d Cir. 2007)) (internal quotation marks omitted).
B. The Court has Personal Jurisdiction
Based on Defendant’s motion and memoranda, it seems that Defendant is arguing that the
Court does not have personal jurisdiction because “all of the activities of Defendant World
Class—right or wrong—took place in Carson, California.” (Mem. in Supp. at 6.) Beyond that
conclusory assertion, Defendant does little to address his contacts with the forum state. (See
Mem. in Supp.; Reply Mem.)
As this motion was brought pursuant to Rule 12(b)(2), Plaintiff bears the burden of
establishing jurisdiction over Defendant “by making a prima facie showing of jurisdiction by
way of the complaint's allegations, affidavits, and other supporting evidence.” Mortg. Funding
Corp., 379 F. Supp. 2d at 285. Plaintiff argues that this Court has both general and specific
jurisdiction over Defendants. (Mem. in Opp. at 7–8.) Regarding general jurisdiction, Plaintiff
notes that “Defendant’s website provides direct electronic mail reply means, and provides direct
on-line form submissions for quotes.” (Mem. in Opp. at 7.) Plaintiff also asserts that Defendant
has had multiple business meetings and “even set up a satellite office in New Jersey for ease of
dealing with New York companies.” (Id. at 9.) Finally, Plaintiff states that it believes that
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Defendant also does ongoing business with other New York companies, but does not proffer any
evidence of such. (Id. at 11.)
An analysis of the law and facts supports a determination that this Court does not have
general jurisdiction over Defendant. As quoted above, a court only has general jurisdiction when
a corporation’s contacts with New York “are so continuous and systematic as to render [it]
essentially at home” in New York. Sonera Holding B.V., 750 F.3d at 225. Plaintiff’s assertion
that because Defendant has a website with a contact form means it is soliciting business and
therefore makes the company subject to general jurisdiction in New York is unconvincing.
Holding such would effectively undermine the principle of general jurisdiction for any company
with a website with a contact form (which is to say, almost every company) would be subject to
general jurisdiction in every state. Plaintiff cites to cases that directly contradict its proposition.
See, e.g., Jacobs v. Felix Block Erben Verlag fur Buhne Film und Funk KG, 160 F. Supp. 2d 722,
733 (S.D.N.Y. 2001) (explaining that “mere solicitation of business in New York does not
subject a corporation to ‘doing business’ jurisdiction”) (quoting Laufer v. Ostrow, 55 N.Y. 2d
305, 310 (1982)). As the Second Circuit has explained, “‘only a limited set of affiliations with a
forum will render a defendant amendable to all-purpose jurisdiction there’” such as the
corporation’s principle place of business or headquarters. Sonera Holding B.V., 750 F.3d at 225
(quoting Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014)). Defendant is not headquartered in
New York, does not have its principle place of business in New York, and does not have such
continuous and systematic contacts with New York as to render it at home in the state.
Therefore, this Court does not have general jurisdiction over Defendant.
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Regarding specific jurisdiction, Plaintiff argues that “Defendant’s specific transactions
with companies in New York—and especially Plaintiff—are also more than sufficient[.]” (Id. at
8.) Specific jurisdiction depends on an “‘affiliatio[n] between the forum and the underlying
controversy,’ principally, activity or an occurrence that takes place in the forum State and is
therefore subject to the State’s regulation.” Goodyear, 564 U.S. at 919; see also Sonera Holding
B.V., 750 F.3d at 225. The Court analyzes where Defendant is subject to specific jurisdiction
under the two-part test for New York’s long-arm statute discussed above; namely, “(1) ‘[t]he
defendant must have transacted business within the state,’ either itself or through an agent, and
(2) ‘the claim asserted must arise from that business activity.’” Solé Resort, S.A. de C.V., 450
F.3d at 103. The defendant must have “‘purposefully availed himself of the privilege of
conducting activities within New York and thereby invoked the benefits and protections of its
laws.’” Fort Knox Music Inc. v. Baptiste, 203 F.3d 193, 196 (2d Cir. 2000) (quoting ParkeBernet Galleries v. Franklyn, 26 N.Y.2d 13, 18 (1970)).
Under the first prong, it is undisputed that Plaintiff is and at all relevant times has been a
New York Corporation. (Compl. ¶ 3.) Defendant transacted business in New York by working
directly with and for Plaintiff for numerous years in shipping, distributing, and storing Plaintiff’s
imported goods. (De Leon Aff. [DE 10] ¶¶ 3–5.) Defendant also invoiced Plaintiff’s clients for
Plaintiff—which invoicing related to business conducted with Plaintiff in New York. The Court,
concludes, therefore that the first prong of the “transacts business” test is satisfied.
Under the second prong, the claims here arose from the business activity at issue, namely
Defendant’s role in shipping, storying, distributing, and invoicing imported goods for Plaintiff.
The Complaint alleges that Defendant’s failure to properly perform these services caused
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significant monetary damage to Plaintiff. While the shipments pass through California and are
stored in California, Defendant is transacting business with Plaintiff in New York and the goods
are imported and owned by Plaintiff in New York. Plaintiff’s conclusory allegation that
Defendant has attended business meetings in New York (Plaintiff does not say with whom) does
little to support its case. (See Mem. in Opp. at 9.) However, based on the nature of Plaintiff’s
and Defendant’s relationship and business dealings, Defendant does appear to have
“purposefully availed himself of the privilege of conducting activities within New York” by
working with and for Plaintiff over an extended period of time. See Fort Knox Music Inc., 203
F.3d at 196; see also John Mezzalingua Associates, Inc. v. ASKA Communiations Corp., 2010
WL 11541970, at *6 (N.D.N.Y. March 31, 2010) (finding that “entering into non-exclusive
distributor agreements with companies located in New York through which it shipped products
into New York” was evidence of a purposeful activity directed at New York). Therefore,
Defendant is subject to New York’s long arm statute and the Court has specific jurisdiction. See
C.P.L.R. § 302(a); see also Allied Dynamics Corp. v. Kennametal, Inc., 965 F. Supp. 2d 276, 294
(E.D.N.Y. 2013) (“Viewing [defendant’s] alleged New York business activities in connection
with the contracts upon which this lawsuit is based, the Court concludes that there is a substantial
nexus between those activities . . . and the alleged breach.”)
The Motion to Dismiss Pursuant to Rule 12(b)(3) Is Granted
A. Rule 12(b)(3) Legal Standard
When a defendant challenges the venue of the court, the plaintiff has the burden to
establish that venue is proper. See Cold Spring Harbor Lab. v. Ropes & Gray LLP, 762 F. Supp.
2d 543, 551 (E.D.N.Y. 2011). Courts may consider materials outside the pleadings when
deciding a motion for improper venue. See e.g., Martinez v. Bloomberg LP, 883 F. Supp. 2d
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511, 513 (S.D.N.Y. 2012). “If the court chooses to rely on pleadings and affidavits” as opposed
to conducting an evidentiary hearing, “the plaintiff need only make a prima facie showing of
venue.” Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005) (internal quotation
marks, citation, and brackets omitted). In analyzing whether a plaintiff has made the requisite
showing, courts “view all the facts in a light most favorable to plaintiff.” Phillips v. Audio Active
Ltd., 494 F.3d 378, 384 (2d Cir. 2007).
A civil action may be brought in:
(1) a judicial district in which any defendant resides, if all defendants are residents
of the State in which the district is located, (2) a judicial district in which a
substantial part of the events or omissions giving rise to the claim occurred, or a
substantial part of property that is the subject of the action is situated, or (3) if there
is no district in which an action may otherwise be brought as provided in this
section, any judicial district in which any defendant is subject to the court’s
personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b). Under § 1391(b) “‘[v]enue is appropriate in each district where a
substantial part of the events or omissions occurred, and thus venue may be appropriate in a
given district even if a greater portion of events occurred elsewhere.’” Cold Spring Harbor
Laboratory v. Ropes & Grey LLP, 762 F. Supp. 2d 543, 553 (E.D.N.Y. 2011) (quoting
Continental Ins. Co. v. Securi Enters., Inc., 2010 WL 3702559, at *2 (E.D.N.Y. Aug. 16, 2010)).
Courts consider “substantiality” for venue purposes qualitatively rather than quantitatively, and it
is “determined by assessing the overall nature of the plaintiff’s claims and the nature of the
specific events or omissions in the forum, and not simply by adding up the number of contacts.”
Cold Spring Harbor Lab, 762 F. Supp. 2d at 553 (quoting Daniel v. Am. Bd. of Emergency Med.,
428 F.3d 408, 432 (2d Cir. 2005)). The Second Circuit has explained that district courts must
“take seriously the adjective ‘substantial’” and thus “for venue to be proper, significant events or
omissions material to the plaintiff’s claim must have occurred in the district in question.” Gulf
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Ins. Co. v. Glasbrenner, 417 F.3d 353, 357 (E.D.N.Y. 2011). Courts will look at “‘where the
contract was negotiated or executed, where it was to be performed, and where the alleged breach
occurred.’” Matera v. Native Eyewear, Inc., 355 F. Supp. 680, 686 (E.D.N.Y. 2004) (quoting PI,
Inc. v. Quality Prods., Inc., 907 F. Supp. 753, 757 (S.D.N.Y. 1995)).
B. Venue Is Not Proper in the Eastern District of New York
Defendant argues in its memorandum in support that venue is improper in the Eastern
[Defendant] maintains its offices and warehouse facilities in California. It is a
California corporation and reading between the lines of the complaint, all of the
activities that form the basis of the action took place at [Defendant’s] facility. All
of the witnesses as to the conduct of [Defendant] are in California and the conduct
complained of took place in California. The remaining goods stored have been in
storage for months and are stored pursuant to the California warehouseman's lien
law California Commercial Code Section 7209.
(Mem. in Supp. at 5–6.) Plaintiff counters that the alleged damage to Plaintiff occurred and
continues to occur in New York, and that its witnesses and records are located in New York.
(Id.) Notably, Plaintiff does not cite to a single legal authority in support of its proposition that
venue is proper in the Eastern District of New York based on the claims asserted in the
In the instant action, Defendant is not a resident of New York, therefore § 1391(b)(1) is
not available to support venue in the Eastern District of New York. Although Plaintiff asserts
that venue is proper in the Eastern District of New York under § 1391(b)(2) because of
Defendant’s interactions with Plaintiff, this argument is unavailing. While the Court must view
all the facts in the light most favorable to the Plaintiff, Phillips v. Audio Active Ltd., 494 F.3d at
383, Plaintiff has failed to present enough facts to make out even a prima facie showing of
venue. Venue requires a showing that significant events material to the claims occurred in this
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District; as compared with personal jurisdiction under the “transacts business” clause, which
requires only that the claims arise from the business contacts with the forum.
Here, Plaintiff does not state where the alleged contract between the Parties was
negotiated. Moreover, it is clear that the alleged contract for shipping, distributing, storing, and
invoicing was to be performed in California as Defendant is a California-based corporation.
Unsurprisingly, the acts and omissions alleged in the Complaint did in fact occur in California.
The fact that Plaintiff suffers damages in New York does not mean that “significant events or
omissions material to the plaintiff’s claim” occurred here in the Eastern District of New York.
See Gulf Ins. Co., 417 F.3d at 357. Therefore, venue is improper and the motion to dismiss
pursuant to Rule 12(b)(3) is granted.3
For the foregoing reasons, Defendant’s motion to dismiss pursuant to Rule 12(b)(2) is
denied, and the motion to dismiss pursuant to Rule 12(b)(3) is granted. The matter is dismissed
for improper venue without prejudice and the Clerk of Court is directed to close the case.
Dated: Central Islip, New York
March 9, 2018
Denis R. Hurley
Unites States District Judge
Neither party has requested to transfer the case to the proper venue.
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