Spencer Stuart Human Resources Consultancy (Shanghai) Co. Ltd. v. American Industrial Acquisition Corporation et al
OPINION AND ORDER: Defendant American Industrial Acquisition Corporation (AIAC) has moved to dismiss this diversity action on the grounds of lack of personal jurisdiction, failure to join an indispensable party, and forum non conveniens. For the following reasons, the motion is to dismiss on the ground of forum non conveniens is conditionally granted..... (Signed by Judge Denise L. Cote on 10/12/2017) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SPENCER STUART HUMAN RESOURCES
CONSULTANCY (SHANGHAI) CO. LTD., a
Wholly Foreign-Owned Enterprise
organized under the laws of the
People’s Republic of China,
AMERICAN INDUSTRIAL ACQUISITION
CORPORATION, a Delaware corporation,
OPINION AND ORDER
For the Plaintiff:
Jayaram Law Group
125 S. Clark Street
Chicago, IL 60603
For the Defendant:
Oliver E. Twaddell
711 3rd Avenue
New York, NY 10022
DENISE COTE, District Judge:
Defendant American Industrial Acquisition Corporation
(“AIAC”) has moved to dismiss this diversity action on the
grounds of lack of personal jurisdiction, failure to join an
indispensable party, and forum non conveniens.
following reasons, the motion is to dismiss on the ground of
forum non conveniens is conditionally granted.
This is a breach of contract case.
The following facts are
taken from the Amended Complaint and the parties’ submissions.
They are undisputed except when noted.
Spencer Stuart Human Resources Consultancy (Shanghai) Co.
Ltd. (“Spencer Stuart”) is an executive search firm based in
On April 13, 2016, Spencer Stuart entered into an
agreement with AIAC and a non-party, Allegion China, to perform
executive searches for the benefit of Bocom Wincent, a Chinese
company that AIAC and Allegion China owned.
The agreement was
negotiated, executed and was to be performed in China.
Stuart claims that it performed the services required under the
agreement, and was partially paid for those services, but has
been unable to collect its last four invoices, totaling
AIAC contests whether Spencer Stuart
adequately performed under the agreement, and claims that the
agreement had been canceled.
AIAC, a Delaware corporation, denies that personal
jurisdiction exists over it in New York.
bear on the jurisdictional inquiry.
The following facts
According to Brandon
Stewart, a Vice President at AIAC, AIAC does not own or lease
office space, solicit business, pay taxes, hold itself out as
having a principal place of business in, or have any employees
that live or work in New York.
Stewart further states that the
agreement at issue in this case was negotiated by AIAC’s Asia
location, and not any location it may have in the United States.
Spencer Stuart disputes Stewart’s representations.
submitted evidence showing that AIAC’s own website lists its
address as 250 Park Avenue, New York, New York.
has also submitted other evidence tending to show that AIAC has
its principal place of business in New York, including: (1)
evidence purporting to show that when AIAC’s listed telephone
number is called, the representative who answers states that
AIAC is located at 250 Park Avenue; and (2) certain LinkedIn
pages tending to show that a number of AIAC employees live in or
around New York City.
Statements that AIAC has made in other litigations tend to
connect it to New York City.
The Court takes judicial notice of
two documents filed in the United States Bankruptcy Court for
the Northern District of New York, apparently filed on behalf of
AIAC, in which AIAC represented that it had an address of 250
Park Avenue, New York, New York.
See In re Endicott
Interconnect Technologies, Inc., Dkt. 141, Dkt. 188 at 6 (Bankr.
N.D.N.Y. Aug. 15, 2013).
It also appears that, according to a
deposition taken in a case in the Eastern District of Michigan,
the Chairman of AIAC, Leonard Levie, responded to the question
“Where is AIAC’s main office?,” with “AIAC maintains a shared
office arrangement at that 250 Park Avenue location.”
Grammer Indus., Inc. v. Beach Mold & Tool, Inc., No. 2:15-cv12694-PDB-RSW, Dkt. 150-2 at 16 (E.D. Mich. Aug. 21, 2017).
On March 27, 2017, Spencer Stuart filed this action against
AIAC and an Irish corporation, Allegion, PLC (“Allegion”), which
is apparently the parent corporation of Allegion China.
31, AIAC answered and asserted an affirmative defense of lack of
A June 2 Order required Spencer Stuart
to show cause why the case should not be dismissed for lack of
subject matter jurisdiction in view of Allegion’s presence in
the case, because “diversity is lacking where . . . on one side
there are citizens and aliens and on the opposite site there are
In re Arab Bank PLC Alien Tort Statute Litig.,
808 F.3d 144, 160 (2d Cir. 2015) (citation omitted).
On June 9,
Spencer Stuart submitted a response to the Order, and in the
alternative, filed an amended complaint which removed Allegion
as a defendant.
On June 14, an Order dismissed the case against
Allegion for lack of jurisdiction, and accepted the June 9
amended complaint as the operative complaint in this action.
AIAC’s June 9 motion to dismiss the original complaint is
treated as filed against the amended complaint.
became fully submitted on August 3.
I. Personal Jurisdiction
Spencer Stuart contends that AIAC’s motion, to the extent
it concerns personal jurisdiction, is untimely, because AIAC had
answered prior to moving to dismiss.
The Federal Rules of Civil
Procedure require that a motion based upon any of the defenses
under Rule 12(b), including motions under Rule 12(b)(2) for lack
of personal jurisdiction “shall be made before pleading if a
further pleading is permitted.”
Fed. R. Civ. P. 12(b).
motion based upon Rule 12(b)(2) is therefore untimely when it is
served after the answer.”
Tyco Int’l Ltd. v. Walsh, No.
02cv4633, 2003 WL 553580 at *2 (S.D.N.Y. Feb. 27, 2003).
motion is untimely because it had answered prior to filing its
motion to dismiss the complaint.
In response, AIAC argues that its motion should be
considered timely because Spencer Stuart later amended its
complaint, which AIAC asserts “revived” its right to file a Rule
But that argument fails in light of Gilmore v.
Shearson/American Express, Inc., 811 F.2d 108, 112 (2d Cir.
1987), overruled on other grounds by Gulfstream Aerospace Corp.
v. Mayacamas Corp., 485 U.S. 271 (1988).
Gilmore holds that
“[a]lthough an amended complaint ordinarily supercedes the
original pleading, it does not automatically revive all of the
defenses and objections that a defendant has waived in response
to the original complaint.”
In particular, “the Rule 12
defenses of lack of personal jurisdiction, improper venue,
insufficiency of process and insufficiency of service, if waived
by the defendant’s failure to raise those objections in response
to the original complaint, may not be resurrected merely because
a plaintiff has amended the complaint.”
Although AIAC has
waived its right to file a Rule 12 motion raising lack of
personal jurisdiction, it has not lost its right to contest
Because AIAC pleaded the lack of personal jurisdiction as a
defense, AIAC can obtain review of this defense in two ways.
“There are generally three means by which a party may challenge
venue or personal jurisdiction: (1) a timely motion under Rule
12(b), Fed. R. Civ. P., (2) a motion under Rule 56, Fed. R. Civ.
P., or (3) a request for adjudication of disputed jurisdictional
facts, either at a hearing pursuant to Rule 12([i]), Fed. R.
Civ. P., or in the course of a trial on the merits.”
The former Rule 12(d), Fed. R. Civ. P., was recodified in 2007,
and is now Rule 12(i), Fed. R. Civ. P. See Charles Alan Wright
and Arthur R. Miller, 5C Fed. Prac. & Proc. § 1373 (3d ed.
2003 WL 553580 at *2.
Although the untimeliness of AIAC’s
motion means that the first option is unavailable, Rule 56 or
Rule 12(i) would remain possibilities following discovery.
Failure to Join an Indispensable Party
AIAC also seeks dismissal of this action under Rule
12(b)(7), Fed. R. Civ. P, contending that Allegion is an
indispensable party under Rule 19(b), Fed. R. Civ. P., and
cannot be joined because its presence would defeat diversity
Rule 19 sets forth a two-step test for
determining whether the court must dismiss an action for failure
to join an indispensable party.
Viacom Int’l, Inc. v. Kearney,
212 F.3d 721, 724 (2d Cir. 2000); Fed. R. Civ. P. 19(b).
the court must determine whether an absent party is a
“necessary” party under Rule 19(a).
A party is “necessary”
under Rule 19(a) where:
(1) in the person's absence complete relief cannot be
accorded among those already parties, or
(2) the person claims an interest relating to the
subject of the action and is so situated that the
disposition of the action in the person's absence may
as a practical matter impair or impede
the person's ability to protect that
(ii) leave any of the persons already
parties subject to a substantial risk
of incurring double, multiple, or
otherwise inconsistent obligations by
reason of the claimed interest.
Fed. R. Civ. P. 19(a).
If a court makes a threshold determination that a party is
necessary under Rule 19(a), and determines that joinder of the
absent party is not feasible, then the court must determine
whether the absent party is “indispensable” under Rule 19(b).
Fed. R. Civ. P. 19(b).
Rule 19(b) provides that:
The court shall determine whether in equity and good
conscience the action should proceed among the parties
before it, or should be dismissed, the absent person
being thus regarded as indispensable. The factors to
be considered by the court include: first, to what
extent a judgment rendered in the person's absence
might be prejudicial to the person or those already
parties; second, the extent to which, by protective
provisions in the judgment, by the shaping of relief,
or other measures, the prejudice can be lessened or
avoided; third, whether a judgment rendered in the
person's absence will be adequate; fourth, whether the
plaintiff will have an adequate remedy if the action
is dismissed for nonjoinder.
Fed. R. Civ. P. 19(b).
“The language of Rule 19(b) leaves the
district court with substantial discretion in considering which
factors to weigh and how heavily to emphasize certain
considerations in deciding whether the action should go forward
in the absence of someone needed for a complete adjudication of
Envirotech Corp. v. Bethlehem Steel Corp., 729
F.2d 70, 75 (2d Cir. 1984) (citation omitted).
Although Allegion may qualify as a necessary party, it is
Under Rule 19(a), all parties to a contract
are generally regarded as necessary parties, particularly when
issues such as cancellation of the agreement are at issue.
MasterCard Int’l Inc. v. Visa Int’l Service Ass’n, Inc., 471
F.3d 377, 386-87 (2d Cir. 2006); Global Discount Travel Servs.,
LLC v. Trans World Airlines, Inc., 960 F. Supp. 701, 708-09
(S.D.N.Y. 1997) (collecting cases).
And Allegion cannot be
joined as a defendant under Rule 19 without destroying this
Court’s subject matter jurisdiction.
indispensable under Rule 19(b).
But Allegion is not
On the most important factor,
prejudice, there is unlikely to be prejudice to Allegion or the
current parties from either a damages judgment against AIAC, or
a finding that the contract had been canceled, when there is no
suggestion that additional services are likely to be performed
under the agreement.
A damages judgment against AIAC would
completely satisfy Spencer Stuart’s request for relief.
even though Spencer Stuart does have other remedies if this case
were dismissed for nonjoinder, that factor alone does not
justify dismissal under Rule 19(b).
Therefore, AIAC’s motion to
dismiss for failure to join an indispensable party is denied.
III. Forum Non Conveniens
Finally, AIAC seeks dismissal of this action under the
doctrine of forum non conveniens, in favor of litigation of the
case in China.
The framework for analyzing a forum non
conveniens motion is well established.
“The decision to dismiss
a case on forum non conveniens grounds lies wholly within the
broad discretion of the district court.”
Iragorri v. United
Technologies Corp., 274 F.3d 65, 72 (2d Cir. 2001) (en banc)
First, the district court determines the “degree of
deference properly accorded the plaintiff’s choice of forum.”
Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 153
(2d Cir. 2005).
Although there is a “strong presumption in
favor of the plaintiff’s choice of forum,” Piper Aircraft Co. v.
Reyno, 454 U.S. 235, 255 (1981), the presumption is entitled to
less weight when a foreign plaintiff chooses a United States
Id. at 255-56.
This is because the “central purpose of
any forum non conveniens inquiry” is “to ensure that the trial
is convenient,” id. at 256, and “when a foreign plaintiff
chooses a U.S. forum, it is much less reasonable to presume that
the choice was made for convenience.”
Iragorri, 274 F.3d at 71
Even a foreign plaintiff, however, can
choose to sue in a United States court for “legitimate reasons”
and those reasons are to be accorded some deference.
v. Coca-Cola Co., 448 F.3d 176, 179 (2d Cir. 2006).
legitimate reasons include: “‘ the convenience of the
plaintiff's residence in relation to the chosen forum,  the
availability of witnesses or evidence to the forum district, 
the defendant's amenability to suit in the forum district, 
the availability of appropriate legal assistance, and  other
reasons relating to convenience or expense.’”
Norex, 416 F.3d
at 155 (quoting Iragorri, 274 F.3d at 71-72).
reasons include “‘ attempts to win a tactical advantage
resulting from local laws that favor the plaintiff's case, 
the habitual generosity of juries in the United States or in the
forum district,  the plaintiff's popularity or the
defendant's unpopularity in the region, or  the inconvenience
and expense to the defendant resulting from litigation in that
Id. (quoting Iragorri, 274 F.3d at 72).
Second, the district court “considers whether the
alternative forum proposed by the defendants is adequate to
adjudicate the parties’ dispute.”
Id. at 153.
forum is adequate if the defendants are amenable to service of
process there, and if it permits litigation of the subject
matter of the dispute.”
Id. at 157 (citation omitted).
Finally, at step three, the district court “balances the
private and public interests implicated in the choice of forum.”
Id. at 153.
Even if the plaintiff’s choice of forum is entitled
to little deference and there is an adequate alternative forum,
dismissal is not appropriate unless the “chosen forum is shown
to be genuinely inconvenient and the selected forum
Iragorri, 274 F.3d at 74-75.
private interest factors include
the relative ease of access to sources of proof;
availability of compulsory process for attendance of
unwilling, and the cost of obtaining attendance of
willing, witnesses; possibility of view of premises,
if view would be appropriate to the action; and all
other practical problems that make trial of a case
easy, expeditious, and inexpensive.
Id. at 73-74 (citation omitted).
The public interest factors
the court may consider include: the administrative inefficiency
in trying a case in a busy court and away from the locus of the
injury; the burden that jury duty may impose on the community if
the case is tried in a venue with no connection to the issues in
dispute; a community’s interest in having a local case decided
at home; and the benefits to having a matter tried in the forum
whose law will govern the case.
Id. at 74.
Although Spencer Stuart is a foreign plaintiff suing in the
United States, there is no indication that its reasons for suing
in the United States were illegitimate.
Spencer Stuart states
that it chose New York because it was led to believe that New
York was AIAC’s home forum, and it thought that it would have
had difficulty convincing a Chinese court to accept jurisdiction
Although AIAC now represents that it would
voluntarily consent to jurisdiction in the Chinese courts, there
is no indication that AIAC made that representation prior to
Spencer Stuart bringing this action.
Spencer Stuart’s choice of
forum is therefore entitled to deference.
Spencer Stuart does not contend that China is an
inadequate alternative forum.
AIAC represents that it is
amenable to service of process in the Chinese courts, and that
China permits litigation over the subject matter of this
Therefore, AIAC has proposed an adequate alternative
At step three, the private and public interest factors
favor litigation of this case in China.
On the face of the
agreement, there are five named individuals, two of which appear
to reside in China (the Spencer Stuart employees), one in Miami,
Florida (Stewart), one in Singapore, and one in Europe.
undisputed that the services contemplated by the agreement were
to be performed primarily in China.
AIAC also asserts, without
contradiction, that important witnesses related to adequacy of
performance of the contract are based there.
And Spencer Stuart
does not dispute that the records and papers related to the
negotiation, execution, and performance of the contract are
based in China.
Therefore, the applicable private interest
factors weigh in favor of China.
The public interest factors also weigh in favor of China.
Some of the public interest factors are neutral: for instance,
this case will have no meaningful impact on court congestion,
and because a jury has not been demanded, there will be no
burden on the local community in having the case heard in New
But AIAC argues, without contradiction, that under New
York choice of law principles, Chinese law will likely govern
this dispute, a factor that weighs heavily in a forum non
Although the possibility of needing
to apply foreign law, standing alone, does not justify
dismissal, it does complicate adjudication of the dispute in New
See Piper Aircraft, 454 U.S. at 251 (“The doctrine of
forum non conveniens . . . is designed in part to help courts
avoid conducting complex exercises in comparative law.”)
China, which is the undisputed site of negotiation, contracting,
and performance of the underlying agreement, has a meaningful
interest in hearing this dispute, whereas the United States and
New York have, at best, a weak interest.
Therefore, the private and public interest factors, which
favor China, substantially outweigh the deference due to Spencer
Stuart’s choice of forum.
The dispute is China-centric, its
resolution will likely involve application of Chinese law, and
Spencer Stuart’s primary reason for choosing the United States
as its preferred forum -- although legitimate -- is no longer
decisive in light of AIAC’s promise to subject itself to the
jurisdiction of the Chinese courts.
The case is therefore
subject to dismissal on the ground of forum non conveniens.
The dismissal of this case on forum non conveniens grounds
is subject to conditions to ensure that the case is eventually
heard on the merits.
AIAC must agree to accept service and
submit to the jurisdiction of the Chinese courts, and waive any
statute of limitations defense that may have arisen since the
filing of the present action.
The parties shall submit an
agreement to litigate in China implementing these conditions in
accordance with the accompanying scheduling order.
The June 9, 2017 motion to dismiss is conditionally granted.
New York, New York
October 12, 2017
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