Tanner v. Heath Graphics LLC et al
MEMORANDUM-DECISION AND ORDERED, that Mabegs Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. No. 43) is GRANTED; and it is further ORDERED, that the Clerk of the Court terminate Mabeg as a defendant in this case. Signed by Senior Judge Lawrence E. Kahn on March 08, 2017. (sas)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
HEATH GRAPHICS LLC, et al.,
MEMORANDUM-DECISION AND ORDER
This case returns to the Court on defendant Mabeg Systems GmbH’s second motion to
dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Dkt. No.
43 (“Motion”). In a previous order, this Court denied Mabeg’s first motion to dismiss for lack of
personal jurisdiction and insufficient service of process and allowed plaintiff Phelicia Tanner to
conduct jurisdictional discovery. Dkt. No. 38 (“March Order”) at 1. After discovery closed,
Mabeg filed the pending Motion, to which Tanner—together with defendant and cross-claimant
Heath Graphics LLC—responded. Dkt. Nos. 54 (“Heath Response”), 56-7 (“Tanner Response”).
Mabeg then filed a reply. Dkt. No. 59-1 (“Reply”). For the following reasons, the Court grants
Tanner is a resident of Corinth, New York. Dkt. No. 1 (“Complaint”) ¶ 1. Heath Graphics
is a corporation organized under the laws of the State of Washington; its principal place of
business is in King County, Washington. Id. ¶¶ 6, 8. Mabeg is a foreign corporation organized
under the laws of Germany, and it maintains its principal and sole place of business in
Mörfelden-Walldorf, Germany. Id. ¶¶ 16–17; Dkt. No. 19-2 (“Grübel Affidavit”) ¶ 2.2 Tanner
conclusorily asserts that both Defendants were authorized to and did conduct and transact
business within the State of New York. Compl. ¶¶ 9–10, 18–19.
Tanner was employed at Web/Graphics/Amsterdam Printing (“Web Graphics”) in
Queensbury, New York. Id. ¶ 38. On January 30, 2012, Tanner was injured while working with a
Heath Sheet-fed Microcheck Press, which is a device used to print checks in industrial settings.
Id. ¶¶ 35, 39, 41. Tanner was attempting to adjust the device’s air pressure using an air valve
located on the device when her left thumb became caught in a moving part. Id. ¶¶ 40–41. As a
result of the injury, Tanner’s left thumb had to be amputated. Id. ¶ 48. She also suffered
disfigurement, nerve damage, and Complex Regional Pain Syndrome. Id.
Because this matter is before the Court on a motion to dismiss pursuant to Federal Rule
of Civil Procedure 12(b)(2), the allegations of the Complaint are accepted as true. See
Seetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co., Kommanditgesellschaft v.
Navimpex Centrala Navala, 989 F.2d 572, 580 (2d Cir. 1993) (“The allegations in the complaint
must be taken as true to the extent they are uncontroverted by the defendant’s affidavits. If the
parties present conflicting affidavits, all factual disputes are resolved in the plaintiff’s favor.”
(quoting Taylor v. Phelan, 912 F.2d 429, 431 (10th Cir. 1990) (per curiam))).
Mabeg submitted the Affidavit of Michael Grübel in support of its first motion to
dismiss. Grübel Aff. Grübel is Mabeg’s Chief Financial Officer. Id. ¶ 1.
Heath Graphics designs, develops, and manufactures the Heath Sheet-fed Microcheck
Press. Id. ¶¶ 26–29. Heath Graphics is also responsible for the assembly, inspection, repair,
distribution, and sale of its machines. Id. ¶¶ 30–34. Tanner alleges that Heath Graphics sold a
Heath Sheet-fed Microcheck Press to Web Graphics. Id. ¶¶ 37–38.
Mabeg is a German corporation that operates in the “planning, design, manufacture and
sale of machinery, components and equipment, in particular for the graphic industry and the
general mechanical and plant engineering.” Grübel Aff., Ex. A. Tanner alleges that Mabeg
designed, engineered, developed, manufactured, assembled, inspected, repaired, distributed,
and/or sold the Heath Sheet-fed Microcheck Press and/or some component parts thereof. Compl.
¶ 136. In support of this assertion, Tanner submits a photograph of the identification plate
adhered to the printing press that caused Tanner’s injuries, which shows that the machine was
manufactured by Mabeg Maschinenbau GmbH & Co. KG. Dkt. No. 29-23. Tanner contends that
Mabeg sold, supplied, or provided the Heath Sheet-fed Microcheck Press or some of its
component parts to Heath Graphics, which then sold the device to Web Graphics. Compl. ¶ 138.
Mabeg was founded on February 25, 2010. Grübel Aff. ¶ 3. Mabeg contends that it has
never delivered or sold a Microcheck Press or a similar product to Heath Graphics in the State of
Washington or to any other state in the United States. Id. ¶ 6. Mabeg contends that it is
impossible for Mabeg to have manufactured the device at issue in this case or its component
parts because Mabeg was not in existence at the time when the machine would have had to have
been manufactured prior to Tanner’s injury. Id. ¶ 7. But in its response to one of Tanner’s
interrogatories, Mabeg stated that it had sold three items to Heath Graphics since 2010. Dkt. No.
43-1 (“Grogan Affidavit”) Ex. B, at 8.3 Mabeg did not say what these items were. Id.
Grübel asserts that he is aware of another company that manufactured sheet feeders
“identical to the product described in the Complaint” called “Mabeg Maschinenbau GmbH &
Co.KG,” which was dissolved after undergoing bankruptcy proceedings in Germany several
years ago. Id. ¶¶ 8–9. He contends that although Mabeg has used “the historically valuable name
‘Mabeg’” since 2010, it has not assumed by contract or otherwise the liabilities of Mabeg
Maschinenbau GmbH & Co.KG or any other company. Id. ¶ 10.
Grübel states that Mabeg has never been incorporated or authorized to do business in
New York, nor has it sought the privilege of doing so. Id. ¶¶ 11–12. Mabeg does not maintain
any offices, warehouses, or places of business, nor does it lease, rent, or control any real estate in
New York. Id. ¶¶ 13, 25. Mabeg does not employ any officers or agents in New York. Id. ¶ 14.
Grübel further states that Mabeg does not solicit business, advertise, or otherwise participate in
the sale, purchase, distribution, resale, or service of any goods in New York State. Id. ¶¶ 15–17;
Grogan Aff. Ex. B, at 6. Mabeg has never contracted with any New York entity to complete any
work or project in New York. Grübel Aff. ¶ 18. Additionally, Mabeg does not have a mailing
address, telephone listing, or bank account in New York, nor has it ever paid any taxes in New
York. Id. ¶¶ 20–21, 23–24.
Mabeg entered into an exclusive agency agreement with TM Design & Engineering, LLC
(“TMDE”) in April 2011. Dkt. No. 29-15 (“Alio Affidavit Exhibit H”) at 1. TMDE is based in
Wisconsin, id. at 2, and under the agreement, which became effective on May 1, 2011, TMDE
The page numbers for this exhibit come from the bottom-right of the pages.
would serve as the exclusive distributor of Mabeg’s products in the United States, id.; Heath
Resp. at 14. TMDE would also “advertis[e] Mabeg products, mak[e] calls on potential clients,
[and] support customer service for specific products as requested by Mabeg.” Heath Resp. at 14.
In responding to one of Tanner’s interrogatories, Mabeg said it had “sold numerous items to TM
Design and Engineering since its inception in 2010.” Grogan Aff. Ex. B, at 9. Mabeg did not
describe these items. Id.
Mabeg has international reach. In 2012, Mabeg’s sales to the United States accounted for
1.72% of total sales, 61.55% of sales involved German, Swiss, or Austrian entities, and the
remainder involved thirty-eight other countries. Id. at 13. In 2013, Mabeg’s United States sales
accounted for 3.44% of total sales, its German, Swiss, and Austrian sales accounted for 55.65%,
and the remainder went to forty-five other countries. Id. at 14. In 2014, 7.58% of Mabeg’s sales
were made in the United States, 72.08% were made in Germany and Switzerland, and the
remainder went to forty-four other countries. Id. at 15. Finally, in 2015, Mabeg’s United States
sales accounted for 1.74% of total sales, 76.18% of sales went to German and Swiss entities, and
the remainder involved forty-six other countries. Id. at 17.
The origins of the machine (or its component parts) that injured Tanner remain unclear.
Tanner notes that she “is unable to produce facts to ascertain the chain of sale of the subject
machine press; if it was manufactured specifically for [Tanner’s] former employer in New York
State; and how it made its way into New York.” Tanner Resp. at 7. She blames Mabeg for this,
suggesting that its discovery responses on this and other points were inadequate. Id. at 6. As
noted above, Tanner’s Complaint alleges that Mabeg sold the machine (or its component parts)
to Heath Graphics, which then sold it to Web Graphics. Compl. ¶ 138. It is at least possible that
Mabeg instead sold the relevant item to TMDE, which then sold it to Heath Graphics, which
finally sold it to Web Graphics.4 In any event, aside from the item that injured Tanner, there is no
evidence (or allegation) that any Mabeg products have ended up in New York, though Mabeg’s
sales figures indicate that a not insubstantial portion of its products ended up somewhere in the
United States from 2012 to 2015. Grogan Aff. Ex. B, at 13–17.
Where a party moves to dismiss an action for lack of personal jurisdiction pursuant to
Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of showing that the court
has jurisdiction over the defendant. Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560,
566 (2d Cir. 1996). When ruling on a motion to dismiss under Rule 12(b)(2) for lack of personal
jurisdiction, a court is not limited to considering “the four corners of the complaint.” Phillips v.
Reed Grp., Ltd., 955 F. Supp. 2d 201, 225 (S.D.N.Y. 2013). “[T]he Court may also rely on
submitted affidavits and other supporting materials submitted in relation to the motion.” Id.
Where a court relies only upon the pleadings and supporting affidavits, a plaintiff need only
make a prima facie showing of personal jurisdiction over a defendant. Grand River Enters. Six
Nations, Ltd. v. Pryor, 425 F.3d 158, 165 (2d Cir. 2005); Cutco Indus., Inc. v. Naughton, 806
F.2d 361, 364 (2d Cir. 1986).
“A prima facie showing of jurisdiction ‘does not mean that plaintiff must show only some
evidence that defendant is subject to jurisdiction; it means that plaintiff must plead facts which, if
Mabeg suggests that it is “undisputed” that TMDE had nothing to do with the item that
caused Tanner’s injury. Reply at 5. True, Heath Graphics and Tanner do not say TMDE was
involved in the transactions surrounding the product at issue in this case, but the record fails to
establish that TMDE did not play a role in these transactions.
true, are sufficient in themselves to establish jurisdiction.’” Tamam v. Fransabank Sal, 677 F.
Supp. 2d 720, 725 (S.D.N.Y. 2010) (quoting Bellepointe, Inc. v. Kohl’s Dep’t Stores, Inc., 975 F.
Supp. 562, 564–65 (S.D.N.Y. 1997)). Pleadings that assert only “conclusory non-fact-specific
jurisdictional allegations” or state a “legal conclusion couched as a factual allegation” do not
meet this burden. Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998). While a court
should assume the truth of all well-pleaded factual allegations that support a finding of personal
jurisdiction, Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990), it
should “not draw ‘argumentative inferences’ in the plaintiff’s favor,” Robinson v. Overseas
Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994) (quoting Atl. Mut. Ins. Co. v. Balfour
Maclaine Int’l Ltd., 968 F.2d 196, 198 (2d Cir. 1992)).
A. Personal Jurisdiction
In determining whether it may exercise personal jurisdiction, the Court must engage in a
two-part inquiry. “First, it must determine whether the plaintiff has shown that the defendant is
amenable to service of process under the forum state’s laws; and second, it must assess whether
the court’s assertion of jurisdiction under these laws comports with the requirements of due
process.” Metro. Life, 84 F.3d at 567. New York law provides two bases for personal
jurisdiction: New York Civil Practice Law and Rules (“N.Y. C.P.L.R.”) 301, which authorizes
general jurisdiction, and N.Y. C.P.L.R. 302(a), which authorizes long-arm jurisdiction.
The Court focuses on the applicability of N.Y. C.P.L.R. 302(a)(3)(ii), since it offers the
only promising avenue for personal jurisdiction over Mabeg. N.Y. C.P.L.R. 302(a)(3)(ii)
provides personal jurisdiction over a non-resident who “commits a tortious act without the state
causing injury to person or property within the state” where she “expects or should reasonably
expect the act to have consequences in the state and derives substantial revenue from interstate or
international commerce.” Jurisdiction under N.Y. C.P.L.R. 302(a)(3)(ii) therefore depends on
four elements: “(1) defendant committed a tortious act outside the state, (2) defendant’s tortious
activity caused injury to a person within the state, (3) defendant should reasonably have expected
the act to have consequences in the state, and (4) defendant derives substantial revenue from
interstate or international commerce.” Cortlandt Racquet Club, Inc. v. Oy Saunatec, Ltd., 978 F.
Supp. 520, 523 (S.D.N.Y. 1997).
Mabeg concedes that the third element—whether it should reasonably have expected its
allegedly tortious act to have consequences in New York—is the “only one . . . seriously at issue
on this motion.” Dkt. No. 59-1 (“Memorandum”) at 6. The tortious act here is the production, in
Germany, of the allegedly defective item that caused Tanner’s injuries, and there is little question
that Mabeg obtains significant revenue from international commerce. While it is still unclear that
Mabeg in fact built the item in question, Mabeg has not suggested in its latest series of filings
that it was not responsible for the product. Thus, the Court will assume, for purposes of this
Motion, that Mabeg produced the item. The question, then, is whether Mabeg could reasonably
foresee that its act of producing the allegedly defective item would have consequences in New
“The test of whether a defendant expects or should reasonably expect his act to have
consequences within the State is an objective rather than a subjective one.” Allen v. Auto
Specialities Mfg., Co., 357 N.Y.S.2d 547, 550 (App. Div. 1974). “Moreover, the statutory
requirement of foreseeability relates to forum consequences generally and not to the specific
event which produced the injury within the State.” Id. But “mere foreseeability of in-state
consequence and failure to avert that consequence is not sufficient to establish personal
jurisdiction under New York’s long-arm statute.” Cortlandt Racquet Club, 978 F. Supp. at 523.
“There must be ‘some act by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the benefits and protection of its
laws.’” Martinez v. Am. Standard, 457 N.Y.S.2d 97, 99 (App. Div. 1982) (quoting Hanson v.
Denckla, 357 U.S. 235, 253 (1958)). This assumes “a discernible effort, by the manufacturer or
distributor, to serve, directly or indirectly, a market in the forum state.” Darienzo v. Wise Shoe
Stores, Inc., 457 N.Y.S.2d 831, 834 (App. Div. 1980).
As noted above, the record does not disclose how the item that caused Tanner’s injuries
got to Web Graphics, Tanner’s employer. Suppose Mabeg sold it to Heath Graphics, which then
sold it to Web Graphics. Heath Graphics is a Washington limited-liability company whose
principal place of business is in Washington. Compl. ¶¶ 6–8. Unfortunately, the Court knows
almost nothing else about Heath Graphics. Tanner describes Heath Graphics as “a distributor of
Mabeg products,” Tanner Resp. at 4, but Mabeg stated in its response to one of Tanner’s
interrogatories that it had sold only three products to Heath Graphics since 2010, Grogan Aff. Ex.
B, at 8, and there is no other evidence suggesting that Heath Graphics acted as a distributor for
Mabeg products in the United States.
Even if one of the three products sold to Heath Graphics were the defective item at issue,
that would not be enough to show that Mabeg could reasonably expect its tortious act to have
effects in New York. Again, there is simply no evidence that Mabeg knew that Heath Graphics, a
Washington entity, would sell any Mabeg products in New York. For all the Court knows at this
point, Heath Graphics might never have served as a distributor for Mabeg products. Heath
Graphics might have simply purchased a few Mabeg products for its own purposes, realized that
the products did not meet their needs, and then resold them to Web Graphics. Thus, the Court
cannot say that Mabeg should have reasonably expected that its production of the defective item
for sale to Heath Graphics would have effects in New York. That in turn means the Court cannot
exercise long-arm jurisdiction over Mabeg based on this understanding of the supply chain.
But long-arm jurisdiction would be appropriate if Mabeg sold the defective item to
TMDE, which then sold it to Heath Graphics, which finally sold it to Web Graphics. If there
were evidence to support this chain of sale—which at present there is not—then Kernan v. KurzHastings, Inc., 175 F.3d 236 (2d Cir. 1999), would require this Court to exercise long-arm
jurisdiction over Mabeg. In Kernan, the plaintiff suffered injuries while “operating a hot
stamping press at Forbes Products Corporation in Dansville, New York.” 175 F.3d at 239. KurzHastings, a Pennsylvania corporation, had sold the press to Forbes. Id. After the plaintiff sued
Kurz-Hastings, it filed a third-party complaint against Navitas Co., Ltd., “the Japanese
manufacturer of the press in question that sold and shipped the press to Kurz-Hastings.” Id.
Navitas did not transact any business in New York. Id. It did have an exclusive sales agreement
with Kurz-Hastings, which was to act as Navitas’s United States distributor, but Navitas did not
know where in the United States any of its presses would end up. Id. The defective machine was
sold to Forbes under the agreement between Navitas and Kurz-Hastings. Id. at 239–40. This
machine was the only identifiable one sold in New York during the relevant period. Id. The
court, applying N.Y. C.P.L.R. 302(a)(3)(ii), held that Navitas could reasonably foresee that its
production of the defective machine would lead to consequences in New York. Id. at 242. The
Court reasoned that “Navitas did indeed attempt to serve the New York market, even if it did so
indirectly,” and the fact “that the agreement did not specify New York, but instead . . . permitted
the sale of Navitas’s . . . presses throughout the world, cannot serve to defeat jurisdiction.” Id.
Here, under the second possible version of the supply chain, the defective item was
ultimately sold to Web Graphics as a result of TMDE’s exclusive sales agreement with Mabeg.
That agreement required TMDE to act as the exclusive United States distributor for Mabeg
products. Heath Resp. at 14. While the agreement did not specifically mention New York, that is
not enough to defeat jurisdiction under Kernan. 175 F.3d at 242. It is sufficient that TMDE was
the exclusive Mabeg distributor in the United States. See Stone v. Ranbaxy Pharm., Inc., No.
10-CV-8816, 2011 WL 2462654, at *4 (S.D.N.Y. June 16, 2011) (finding personal jurisdiction
on the ground that “[t]he exclusive relationship between Ranbaxy Lab and Ranbaxy Pharm
echoes the relationship between the Japanese manufacturer and American distributor in
Kernan”). Thus, assuming the truth of this version of the supply chain, the Court could exercise
long-arm jurisdiction over Mabeg under N.Y. C.P.L.R. 302(a)(3)(ii).5
Yet that does not end the inquiry. Even if the Court could exercise long-arm jurisdiction
over Mabeg under this theory, it would still need to “assess whether [its] assertion of jurisdiction
[would] comport with the requirements of due process.” Metro. Life, 84 F.3d at 567. In order
for an exercise of jurisdiction to comport with due process, it must satisfy both a “minimum
contacts” test and a “reasonableness” inquiry. Id. “With respect to minimum contacts, [the court]
must determine whether the defendant has sufficient contacts with the forum state to justify the
Kernan would not help Tanner establish long-arm jurisdiction if Mabeg sold the
defective item to Heath Graphics, which later sold it to Web Graphics, because there is no
evidence (or allegation) that Heath Graphics had any kind of distribution agreement with Mabeg.
court’s exercise of personal jurisdiction.” Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d
156, 164 (2d Cir. 2010). “The minimum contacts test asks whether a defendant has engaged in
‘purposeful availment’—that is, whether the contacts indicate the defendant’s intent to invoke
the benefits and privileges of New York law.” Weisblum v. Prophase Labs, Inc., 88 F. Supp. 3d
283, 289 (S.D.N.Y. 2015). Further, “the claim [must] arise out of or relate to the defendant’s
contacts with the forum.” Jonathan Adler Enters., LLC v. Ins & Outs Pottery, Inc., No.
12-CV-4866, 2012 WL 4471540, at *1 (S.D.N.Y. Sept. 26, 2012).
Kernan held that the “‘exclusive sales rights’ agreement [in question] constitutes the type
of purposeful action sufficient to support a finding of minimum contacts.” 175 F.3d at 244. The
court argued that “the ‘exclusive sales rights’ agreement, which contemplates that Kurz–Hastings
will sell Navitas’s machines in North America and throughout the world, serves as evidence of
Navitas’s attempt to serve the New York market, albeit indirectly.” Id. at 243. And it held that
the “reasonableness” factors “weigh in favor of exercising jurisdiction.” Id. It would seem, then,
that this Court could exercise long-arm jurisdiction over Mabeg without violating due
process—assuming again that Mabeg sold the defective item under its exclusive sales agreement
But not so fast. Kernan was decided in 1999, twelve years before the Supreme Court’s
decision in J. McIntyre Machinery Ltd., v. Nicastro, 564 U.S. 873 (2011). Nicastro involved facts
that are strikingly similar to those in Kernan. The plaintiff “seriously injured his hand while using
a metal-shearing machine manufactured by J. McIntyre Machinery, Ltd.” Id. at 878. The injury
happened in New Jersey, “but the machine was manufactured in England, where J. McIntyre is
incorporated and operates.” Id. J. McIntyre did not market or ship any goods to New Jersey, but
“an independent company agreed to sell J. McIntyre’s machines in the United States.” Id. Also,
“J. McIntyre officials attended annual conventions for the scrap recycling industry to advertise J.
McIntyre’s machines alongside the distributor,” but none of the conventions took place in New
Jersey. Id. Finally, at most four, and perhaps only one, of J. McIntyre’s machines ended up in
New Jersey. Id.
No single opinion garnered five votes, but six Justices agreed that the assertion of
personal jurisdiction over J. McIntyre on these facts violated due process. See Williams v.
Romarm, SA, 756 F.3d 777, 784 (D.C. Cir. 2014) (“[S]ix justices [in Nicastro] agreed the forum
state could not constitutionally assert personal jurisdiction over the foreign manufacturer . . . .”).
Three Justices joined Justice Kennedy’s opinion, which stated that “[t]he defendant’s
transmission of goods permits the exercise of jurisdiction only where the defendant can be said to
have targeted the forum; as a general rule, it is not enough that the defendant might have
predicted that its goods will reach the forum State.” Nicastro, 564 U.S. at 882. Justice Kennedy
found that J. McIntyre had not “engaged in conduct purposefully directed at New Jersey.” Id.
at 886. Justice Breyer’s concurrence, which was joined by Justice Alito, rejected the “rule of
broad applicability” set out in Justice Kennedy’s plurality opinion. Id. at 887 (Breyer, J.,
concurring). Yet Justice Breyer agreed with the plurality opinion’s bottom line, stating that
“Nicastro failed to meet his burden to demonstrate that it was constitutionally proper to exercise
jurisdiction over . . . J. McIntyre.” Id. He differed from Justice Kennedy in finding that “the
outcome of this case is determined by our precedents.” Id.
“When a fragmented Court decides a case and no single rationale explaining the result
enjoys the assent of five Justices, the holding of the Court may be viewed as that position taken
by those Members who concurred in the judgments on the narrowest grounds.” Marks v. United
States, 430 U.S. 188, 194 (1977) (internal quotation marks omitted). Under the Marks rule, then,
“Justice . . . Breyer’s concurrence in Nicastro controls.” Ikeda v. J. Sisters 57, Inc., No.
14-CV-3570, 2015 WL 4096255, at *7 (S.D.N.Y. July 6, 2015); accord Ainsworth v. Moffett
Eng’g, Ltd., 716 F.3d 174, 178 (5th Cir. 2013) (“In Nicastro, Justice Breyer’s concurring
opinion, joined by Justice Alito, furnished the narrowest grounds for the decision and controls
here.”); AFTG-TG, LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1363 (Fed. Cir. 2012) (“The
narrowest holding [in Nicastro] is that which can be distilled from Justice Breyer’s
concurrence . . . .”). Indeed, it is hard to imagine a more straightforward application of Marks:
Justice Breyer concurred in the plurality opinion’s result, but he preferred to stick to the Court’s
precedents, finding that the case was “an unsuitable vehicle for making broad pronouncements
that refashion basic jurisdictional rules.” Nicastro, 564 U.S. at 890 (Breyer, J., concurring).
So what does this mean for Kernan and the present case? In his controlling opinion,
Justice Breyer noted that “[n]one of our precedents finds that a single isolated sale, even if
accompanied by the kind of sales effort indicated here, is sufficient.” Id. at 888. Indeed, “a single
sale of a product in a State does not constitute an adequate basis for asserting jurisdiction over an
out-of-state defendant, even if that defendant places his goods in the stream of commerce, fully
aware (and hoping) that such a sale will take place.” Id. at 888–89. Justice Breyer suggested that
additional facts—such as a “regular flow” or “regular course” of sales in New Jersey, or “special
state-related design, advertising, advice, marketing, or anything else”—may have made the
exercise of personal jurisdiction over J. McIntyre constitutionally proper. Id. at 889; accord
Williams, 756 F.3d at 785 (holding that Nicastro requires that “at a minimum, a plaintiff trying to
establish personal jurisdiction over a foreign corporation must show a ‘regular flow or regular
course of sales’ in the forum state, or some additional efforts directed toward the forum state,
such as ‘special state-related design, advertising, advice, [or] marketing’” (alteration in original)
(quoting Nicastro, 564 U.S. at 889)). But those additional facts were missing from the record.
Nicastro, 564 U.S. at 889.
Recall that in Kernan, the record disclosed only one sale in New York. 175 F.3d
at 239–40. There was also no indication that Navitas, the Japanese manufacturer, engaged in
“special state-related design, advertising, advice, [or] marketing.” Nicastro, 564 U.S. at 889. Yet
the Second Circuit found that personal jurisdiction over Navitas could be exercised without
offending due process. Kernan, 175 F.3d at 245. Thus, Kernan’s holding on this score conflicts
with Justice Breyer’s concurrence in Nicastro and is no longer good law. See Oscar G. Chase &
Lori Brooke Day, Re-Examining New York’s Law of Personal Jurisdiction After Goodyear
Dunlop Tires Operations, S.A. v. Brown and J. McIntyre Machinery, Ltd. v. Nicastro, 76 Alb. L.
Rev. 1009, 1046 (2012–2013) (noting that, in light of Nicastro, “[p]erhaps the most troubling
precedent for New York courts is a Second Circuit case, Kernan v. Kurz-Hastings, Inc.”). And if
Nicastro means that Kernan is no longer good law on this issue, it also means that this Court
could not constitutionally exercise personal jurisdiction over Mabeg even if—as is far from clear
on the record before the Court—the defective item were first sold to TMDE under the exclusive
sales agreement. That is because Mabeg is just like J. McIntyre in this scenario: there was only
one documented sale to New York, that sale took place under a nationwide distribution
agreement that did not explicitly target New York, and there is no indication that Mabeg engaged
in any New York-focused activities.6
To sum up, on the record as it stands, the Court cannot exercise personal jurisdiction over
Mabeg. If the defective item were sold to Heath Graphics and then to Web Graphics, Tanner and
Heath Graphics could not show that Mabeg reasonably expected its production of the defective
product to have effects in New York under N.Y. C.P.L.R. 302(a)(3)(ii), because the Court knows
next to nothing about Heath Graphics. It is a Washington entity to which Mabeg has sold three
items since 2010, but several crucial questions remain unanswered: was it ever a distributor of
those items, and if so, what was the geographic scope of that distribution network? Was it simply
a purchaser of a few Mabeg items that it then resold to Heath Graphics when it decided it did not
need them? Without information about the nature of Mabeg’s relationship to Heath Graphics, the
Court cannot exercise long-arm jurisdiction over Mabeg on this version of the supply chain. On
the other hand, if the defective item were sold to TMDE under the exclusive sales agreement and
then ultimately sold to Web Graphics, long-arm jurisdiction under N.Y. C.P.L.R. 302(a)(3)(ii)
would be proper because of Kernan, but the assertion of jurisdiction on that ground would violate
due process due to Nicastro absent additional information about other New York-related contacts
on Mabeg’s part.7
The lack of any indication in the record that Mabeg, through TMDE, engaged in any
New York-related conduct also explains why long-arm jurisdiction cannot be premised on N.Y.
C.P.L.R. 302(a)(1), under which a court may exercise personal jurisdiction over a nondomiciliary that, in person or through its agent, “transacts any business within the state or
contracts anywhere to supply goods or services in the state.”
Another possibility is that the defective item was sold to Heath Graphics, but that
independently of that sale, Mabeg was simultaneously distributing its products under the
exclusive sales agreement with TMDE. Even if TMDE had, with Mabeg’s knowledge, targeted
The Court has already ordered one round of jurisdictional discovery, but Tanner and
Heath Graphics complain that Mabeg’s responses to their discovery requests were evasive.
Tanner Resp. at 11–16; Heath Resp. at 7–9. There is something to this. For example, Mabeg was
asked to “[s]tate whether any contracts existed, or currently exist, which define any business
relationship between [Mabeg] and TM[DE].” Grogan Aff. Ex. B, at 9. Mabeg responded in part
by saying that “[a]s there is no assertion that TM[DE] is an entity either headquartered or formed
in New York State, any relationship between the two entities is irrelevant to the question of
whether [Mabeg] has sufficient ties to New York State to justify the exercise of personal
jurisdiction.” Id. That is simply not true. If TMDE and Mabeg had a distribution agreement that
explicitly targeted New York for sales of Mabeg’s products, that would strongly suggest
minimum contacts with New York. The location of TMDE’s headquarters would be largely
But it is far too late in the game for Heath Graphics and Tanner to ask the Court to
remedy any deficiencies in Mabeg’s discovery responses. Discovery in this case closed in July
2016. Neither Heath Graphics nor Tanner informed the Court of any problems with Mabeg’s
discovery responses until January 2017, when both parties filed their papers in opposition to
Mabeg’s Motion. Docket. The Second Circuit has held that a “district court did not abuse its
New York, Tanner and Heath Graphics would still fail to satisfy N.Y. C.P.L.R. 302(a)(3)(ii) if
they could not provide information about Heath Graphics suggesting that Mabeg could
reasonably expect that its production of the defective item for sale to Heath Graphics would have
consequences in New York. That is because N.Y. C.P.L.R. 302(a)(3)(ii) “requires that it would
have been foreseeable that the allegedly tortious act would have consequences in New York; not
that it would have been foreseeable that other of the defendant’s acts would have had
consequences in New York.” Cortlandt Racquet Club, 978 F. Supp. at 525.
discretion in denying [a] Plaintiff’s motion to compel discovery, which was filed over one month
after the close of discovery, as untimely.” Richardson v. City of New York, 326 F. App’x 580,
582 (2d Cir. 2009). Here, Heath Graphics and Tanner waited over six months after discovery
closed to bring to the Court’s attention their issues with Mabeg’s conduct during discovery. And
neither Heath Graphics nor Tanner has explained why a motion to compel could not have been
filed before discovery closed. See Matusick v. Erie Cty. Water Auth., No. 07-CV-489, 2010 WL
681062, at *2 (W.D.N.Y. Feb. 22, 2010) (“The Court declines to re-open discovery in this matter
[because] the plaintiff has not demonstrated why the sought after discovery, or the instant motion
[to compel], could not have been made in a timely manner.”). Thus, the Court will not order
additional discovery in this case.
Accordingly, it is hereby:
ORDERED, that Mabeg’s Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. No.
43) is GRANTED; and it is further
ORDERED, that the Clerk of the Court terminate Mabeg as a defendant in this case; and
it is further
ORDERED, that the Clerk of the Court serve a copy of this Memorandum-Decision and
Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
March 08, 2017
Albany, New York
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