Gundlach v. International Business Machines Inc. et al
Filing
86
OPINION AND ORDER: Defendants' Motion to Dismiss is GRANTED. The Clerk of Court is directed to terminate this Motion, (Doc. 75), and close the case. SO ORDERED. (Signed by Judge Cathy Seibel on 11/21/2013) The Clerks Office Has Mailed Copies. (lnl)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------------------------------------------x
FREDERICK GUNDLACH,
Plaintiff,
OPINION AND ORDER
- against IBM JAPAN, LTD., COGNOS K.K., KUNIYA TSUBOTA,
and JOHN DOES or JANE DOES,
No. 11-CV-846 (CS)
Defendants.
----------------------------------------------------------------------x
Appearances:
Frederick W. Gundlach
Denver Borough, Pennsylvania
Pro Se Plaintiff
Allan S. Bloom
Erin E. LaRuffa
Paul Hastings LLP
New York, New York
Counsel for Defendants
Seibel, J.
Before the Court is the Motion to Dismiss of Defendants IBM Japan, Ltd. (“IBM Japan”)
and Kuniya Tsubota (collectively, “Defendants”). (Doc. 75.) IBM Japan seeks dismissal of
Plaintiff’s Japanese Labor Law claims under Federal Rule of Civil Procedure 12(b)(2) for lack of
personal jurisdiction, or in the alternative, under Rule 12(b)(6) for failure to state a claim.1 Mr.
Tsubota seeks dismissal of Plaintiff’s state-law tortious interference claim under Rule 12(b)(6)
and on the ground that he was improperly added as a Defendant under Rule 15(a)(2) and this
Court’s prior Order. For the following reasons, Defendants’ Motion is GRANTED.
1
Cognos K.K. (“Cognos”) is also a named Defendant in this action. Cognos, however, was acquired by IBM Japan,
(see Second Amended Complaint (“SAC”), (Doc. 57), at 2 (“Defendants”), ¶ 25; Memorandum of Law of
Defendants IBM Japan, Ltd. and Kuniya Tsubota in Support of Their Motion to Dismiss Plaintiff’s Second
Amended Complaint, (“Ds’ Mem.”), (Doc. 79), at 2), and has never appeared in this action.
1
I. Background
All of Plaintiff’s factual allegations are accepted as true for purposes of Rule 12(b)(6) and
construed in the light most favorable to Plaintiff.
In February 2008, Plaintiff commenced employment as a financial consultant in Japan
with Cognos, a Japanese company. (SAC ¶ 26.) Plaintiff signed an employment contract, dated
February 25, 2008, which laid out the conditions of his employment and included, among other
things, the following terms: (1) Plaintiff’s job would begin on February 25, 2008 and end on
July 11, 2008, with the possibility of renewal if both parties consented; (2) Plaintiff would
perform accounting work as a financial consultant; (3) Plaintiff would be based in Tokyo, Japan;
and (4) Cognos could terminate Plaintiff at any time with thirty days’ advance notice. (Id. Ex. C,
at 1-3.) Plaintiff asserts that this contract contained a number of “irregularities” and “flaws”
such that the contract was “invalid,” (id. ¶ 29), and that ultimately Cognos did not honor it, (id. ¶
35).
On March 7, 2008, Plaintiff took over the role of Financial Controller. (Id. ¶ 37.)
Plaintiff alleges that this new position did not come with a written contract, (id. ¶ 38); rather,
terms were deleted from Plaintiff’s February 25, 2008 contract, (id). Specifically, the provision
concerning the limited duration of employment was crossed out, making the contract into one for
“regular” or permanent employment under Japanese law. (Id., id. Ex. C, at 1.) The deletions are
accompanied by a round stamp, which functions as the seal of the corporation. (Id. ¶¶ 40-41.)
Plaintiff affixed the seal himself, but alleges that Steve Gazzard, a Cognos manager in Australia,
authorized the modifications. (Id. ¶ 41.) Plaintiff contends that these contractual changes
converted him from a term-limited employee to a sei sha’in, or permanent, employee. (Id. ¶ 38.)
2
In early 2008 IBM Japan acquired Cognos, and all Cognos employees were transferred to
IBM Japan effective May 1, 2008. (See id. ¶¶ 25, 45.) IBM Japan and John Doe(s) allegedly
insisted that Plaintiff not be transferred. (Id. ¶ 47.) Plaintiff contends that these same John
Doe(s) “interfered” with his employment relationship with Cognos by saying that Cognos could
no longer pay Plaintiff and that to continue to be paid he would have to accept a contract with
IBM Japan. (Id. ¶¶ 48-50.) Plaintiff signed the IBM Japan contract – which was term-limited –
on April 22, 2008. (Id.¶¶ 55-56.)
In October 2008, Plaintiff notified the Human Resources (“HR”) department at both IBM
Japan and International Business Machines Corporation (“IBM US”) of his concerns regarding
the new contractual provisions. (SAC ¶ 66.) Specifically, Plaintiff e-mailed Mr. Tsubota, who
Plaintiff alleges was responsible for employment modifications at IBM Japan, (id. ¶ 82), and
who “did nothing to insure that plaintiff’s employment would continue within Cognos and
successor corporation IBM Japan,” (id. ¶ 85). Plaintiff’s employment with IBM Japan
terminated on January 31, 2009, although he contends that his “permanent” employment with
Cognos still exists under Japanese law. (Id. ¶ 72.)
Plaintiff commenced this lawsuit on February 7, 2011 by filing a Complaint, (Doc. 1),
which he amended for the first time on July 29, 2011, (Doc. 28). On May 1, 2012, I dismissed
all claims against IBM US, but permitted the parties to engage in jurisdictional discovery to
determine whether personal jurisdiction could be asserted over IBM Japan (the “May 1 Order”).
(Doc. 53.) Plaintiff filed his SAC on May 23, 2012, naming Mr. Tsubota as a Defendant for the
first time. (Doc. 57.) Defendants subsequently submitted this Motion to Dismiss. (Doc. 75.)
3
II. Legal Standards
A. Personal Jurisdiction
At the motion to dismiss stage, the plaintiff generally must make a prima facie showing
by his pleadings and affidavits that the court has jurisdiction over each of the defendants. See
CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364-65 (2d Cir. 1986) (at evidentiary hearing or
trial, plaintiff must demonstrate personal jurisdiction by preponderance of the evidence). A
federal court sitting in diversity looks to the law of the state in which it sits to ascertain whether
it may exercise personal jurisdiction over a foreign defendant. See Bank Brussels Lambert v.
Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir. 2002). In such cases, the court must
first determine if the forum’s law would confer jurisdiction through its long-arm statute and then
decide if the exercise of such jurisdiction is permissible under the Due Process Clause of the
Fourteenth Amendment. Id.
B. Motion to Dismiss
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id. “While a
complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Twombly, 550 U.S. at 555 (alteration, citations, and internal quotation marks
omitted). While Federal Rule of Civil Procedure 8 “marks a notable and generous departure
4
from the hyper-technical, code-pleading regime of a prior era, . . . it does not unlock the doors of
discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 556 U.S. at 678-79.
In considering whether a complaint states a claim upon which relief can be granted, the
court “begin[s] by identifying pleadings that, because they are no more than conclusions, are not
entitled to the assumption of truth,” and then determines whether the remaining well-pleaded
factual allegations, accepted as true, “plausibly give rise to an entitlement to relief.” Id. at 679.
Deciding whether a complaint states a plausible claim for relief is “a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.” Id.
“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not ‘shown’ – ‘that the pleader is entitled to
relief.’” Id. (alteration omitted) (quoting Fed. R. Civ. P. 8(a)(2)).
“While pro se complaints must contain sufficient factual allegations to meet the
plausibility standard, [courts] read them with ‘special solicitude’ and interpret them ‘to raise the
strongest arguments that they suggest.’” Roman v. Donelli, 347 F. App’x 662, 663 (2d Cir.
2009) (summary order) (emphasis in original) (quoting Triestman v. Fed. Bureau of Prisons, 470
F.3d 471, 474-75 (2d Cir. 2006)). Where the plaintiff is an attorney, however, as Plaintiff is here,
he or she is not entitled to the same liberality afforded other pro se plaintiffs. See Cohen v. Cnty.
of Nassau, No. 10-CV-5836, 2011 WL 2604345, at *1 n.1 (E.D.N.Y. June 29, 2011) (“Given
that plaintiff is an attorney, his pleadings are not entitled to the degree of liberality ordinarily
given to pro se plaintiffs.”); Fenner v. City of N.Y., No. 08-CV-2355, 2009 WL 5066810, at *3
(E.D.N.Y. Dec. 21, 2009) (“Although pro se litigants are generally entitled to a broad reading of
their submissions because of their lack of familiarity with the law, that is not the case with
attorneys who have chosen to proceed pro se. It is well settled in the Second Circuit that since
5
the reason for affording pro se litigants special deference is not present when the litigant is an
attorney, no special consideration is required.”) (internal citation omitted).
III. Discussion
A. Personal Jurisdiction over IBM Japan
Under New York law, a foreign corporation is subject to general personal jurisdiction in
New York if it is “doing business” in the state. See N.Y. C.P.L.R. § 301. To meet that standard,
a plaintiff must demonstrate that a defendant engaged in “continuous, permanent, and substantial
activity in New York.” Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d
1039, 1043 (2d Cir. 1990).2
In particular circumstances, however, the “continuous, permanent, and substantial
activity in New York” does not need to be conducted by the foreign corporation itself. For
example, under the theory of jurisdiction on which Plaintiff relies,3 if the local entity’s control of
the foreign entity “extends far beyond mere ownership,” a New York court may assert
2
Plaintiff seems to argue that IBM Japan is doing business in New York because “IBM Japan has [previously] been
a plaintiff in [the] Southern District.” Plaintiff’s Memorandum of Law in Opposition to Defendants IBM Japan’s
and Kuniya Tsubota’s Motion to Dismiss (“P’s Opp.”), (Doc. 81), at 6 n.7.) He cites Recyclers Consulting Group,
Inc. v. IBM Japan Ltd., No. 96-CV-2137, 1997 WL 615014 (S.D.N.Y. Oct. 3, 1997), as an example of IBM Japan
availing itself of the forum court. (Id.) Recyclers Consulting is inapposite. In that case, IBM Japan was the
defendant, and removed the case to federal court in New York pursuant to a forum selection clause. Recyclers, 1997
WL 615014, at *1. Plaintiff cites another case in which IBM Japan was a plaintiff – IBM Japan, Ltd. v. Nippon
Cargo et al., 93-CV-5574 – which was voluntarily dismissed three months after it was filed. (No. 93-CV-5574,
Doc. 3.) That IBM Japan brought one lawsuit in New York twenty years ago (or even another four years later)
hardly shows “continuous, permanent, and substantial” activity here at the time Plaintiff commenced this lawsuit,
and is thus insufficient to establish personal jurisdiction.
3
In his SAC, Plaintiff contends that this Court has personal jurisdiction over IBM Japan under both the “agency”
and “mere department” theories of jurisdiction. Plaintiff has not argued for agency jurisdiction in his motion papers,
nor has he addressed Defendants’ argument that my May 1 Order – which found that “Plaintiff’s construction of
agency jurisdiction is insufficient to establish personal jurisdiction over IBM Japan,” (Doc. 53 at 18) – precluded
Plaintiff from asserting jurisdiction under an agency theory. Accordingly, Plaintiff has abandoned any claim that the
Court has jurisdiction over IBM Japan under an agency theory, and only Plaintiff’s arguments concerning the “mere
department” theory will be addressed herein. Cf. Kamanou v. Exec. Sec’y of Comm’n of Econ. Cmty. of W. African
States, No. 10-CV-7286, 2012 WL 868700, at *3 (S.D.N.Y. Mar. 14, 2012) (plaintiff faces obligation, in response to
defendant’s motion to dismiss, to “present arguments as to each of her causes of action. Plaintiff’s failure to do so
constitutes abandonment of those claims”).
6
jurisdiction over the foreign corporation as a “mere department” of the local corporation.
Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984);
see Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998) (Where a plaintiff alleges that a
“foreign corporation is present in New York state because of the activities there of its subsidiary,
the presence of the subsidiary alone does not establish the parent’s presence in the state. For
New York courts to have personal jurisdiction in that situation, the subsidiary must be either an
‘agent’ or a ‘mere department’ of the foreign parent.”) (internal citation omitted).4
In deciding whether a foreign entity is a “mere department” of a New York corporation,
courts look to four factors: (1) “common ownership,” (2) “financial dependency of the
subsidiary on the parent corporation,” (3) “the degree to which the parent corporation interferes
in the selection and assignment of the subsidiary’s executive personnel and fails to observe
corporate formalities,” and (4) “the degree of control over the marketing and operational policies
of the subsidiary exercised by the parent.” Volkswagenwerk, 751 F.2d at 120-22 (citing Taca
Int’l Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d 97, 101 (1965)).5
The first factor is “essential,” id. at 120, and the parties do not dispute that it is met.6
Nevertheless, “the presence of a local corporation does not [automatically] create jurisdiction
4
As I stated in my May 1 Order, Plaintiff argues the reverse of the situation described in Jazini, attempting to show
that Defendant IBM Japan is subject to jurisdiction here because it is a mere department or agent of its New Yorkbased parent corporation. Courts have, under certain circumstances, found this reverse jurisdictional theory
plausible. See, e.g., Sayles v. Pac. Eng’g & Constructors, Ltd. (PECL), No. 08-CV-676, 2010 WL 5334272, at *5
(W.D.N.Y. Dec. 20, 2010) (jurisdictional discovery issue related to whether foreign defendants were mere
departments of parent corporations with contacts in New York); Freeman v. Gordon & Breach, Sci. Publishers, Inc.,
398 F. Supp. 519, 521-22 (S.D.N.Y. 1975) (subsidiary subject to personal jurisdiction in New York because while
“not ‘physically’ present in New York,” it was “doing business in this State” due to relationship with parent).
5
Plaintiff cites Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (2d. Cir. 2000), as “the case which would most
influence the analysis of [the Volkswagenwerk] factors.” (P’s Opp. 6.) Wiwa, however does not address the “mere
department” doctrine but instead analyzes jurisdiction under agency theory, id. at 95, and is therefore irrelevant to
the inquiry at bar.
6
IBM US does not own IBM Japan directly, but owns 100% of intermediary companies that in turn own 100% of
IBM Japan. (See SAC Ex. F, at 2.) Thus, for the purposes of this analysis, common ownership is established. See
7
over a related, but independently managed, foreign corporation.” Id. The other factors comprise
a balancing test, see Advance Coating Tech., Inc. v. LEP Chem. Ltd., 142 F.R.D. 91, 95
(S.D.N.Y. 1992), that, applied here, weighs against exercising jurisdiction over IBM Japan.
1. Financial Dependence
Plaintiff contends that although it is “not clear” if IBM Japan is financially dependent
upon IBM US, IBM US does “loan[] money to the intermedia[ry] parents for the benefit of IBM
Japan.” (SAC ¶ 5; see P’s Opp. 3.) In support of his contention, Plaintiff submits a treatise
discussing two recapitalizations of IBM Japan, allegedly accomplished by IBM US, occurring
sometime between 1937 and 1950.7 (P’s Mem. 5, id. Ex. D.) The relevant time period for
jurisdictional inquiry under CPLR § 301, however, is the time of service of the summons and
complaint, see Andros Compania Maritima S.A. v. Intertanker Ltd., 714 F. Supp. 669, 675
(S.D.N.Y. 1989); Top Form Mills, Inc. v. Sociedad Nationale Industria Applicazioni Viscosa,
428 F. Supp. 1237, 1246 n.12 (S.D.N.Y. 1977), so these ancient and apparently isolated
transactions are not relevant.8
Storm LLC v. Telenor Mobile Commc’ns AS, No. 06-CV-13157, 2006 WL 3735657, at *1-2, *13 (S.D.N.Y. Dec. 15,
2006).
7
The statements in the treatise are hearsay – Plaintiff has not authenticated it as a learned treatise under Federal
Rule of Evidence 803(18) – and “hearsay evidence submitted by plaintiff is not sufficient to defeat a motion to
dismiss for lack of personal jurisdiction.” Park W. Galleries, Inc. v. Franks, No. 12-CV-3007, 2012 WL 2367040,
at *7 (S.D.N.Y. June 20, 2012) (internal quotation marks omitted).
8
Plaintiff also submits a newsletter concerning a tax avoidance transaction entered into among IBM US, IBM Asia
Pacific Holdings, and IBM Japan. (P’s Opp. 3; id. Ex. J (Doc. 82).) First, the newsletter is hearsay. Further, I
previously ruled that minor beneficial transactions, such as the tax avoidance transaction noted by Plaintiff, do not
suffice to demonstrate dependence. (Doc. 53 at 21 (citing Reers v. Deutsche Bahn AG, 320 F. Supp. 2d 140, 157
(S.D.N.Y. 2004) (financial dependency showing lacking where plaintiffs alleged facts indicating “some measure of
control over the broad financial policies of its subsidiaries,” but “have not clearly alleged dependency”); Jerge v.
Potter, No. 99-CV-0312, 2000 WL 1160459, at *3 (W.D.N.Y. Aug. 11, 2000) (“Examples of situations in which
financial dependency has been found are no-interest loans, control of finances of subsidiary by parent and financing
of inventory by parent.”) (footnotes omitted)).) That companies engage in a mutually beneficial transaction hardly
shows that one of them is dependent on the other.
8
Defendant, on the other hand, has submitted an affidavit from Masaki Sakaue, the HR
Manager in Employment & Labor Relations for IBM Japan, (Sakaue Decl. ¶ 1),9 which states
that IBM Japan is financially independent from IBM US. Sakaue testifies that IBM Japan is
financially solvent and does not rely on IBM US or any other company for financial support.
(Id. ¶ 4.) Sakaue further states that IBM Japan purchases and finances its own inventory, (id. ¶¶
12-13), and earns significant annual profits from its own sales in Japan, (id. ¶ 5). Moreover,
IBM Japan maintains its own bank accounts, (id. ¶ 8), and, when in need of credit, IBM Japan
borrows from Japanese banks without having the loans guaranteed by IBM US, (id. ¶¶ 9-10).
Finally, according to Sakaue, IBM US does not make no-interest or below-market interest loans
to IBM Japan. (Id. ¶ 11.) Plaintiff has not presented any evidence to the contrary. As such,
factor two weighs against exercising jurisdiction over IBM Japan.
2. Management and Corporate Formalities
Plaintiff asserts that IBM US and IBM Japan have “common management.” (SAC ¶¶ 1217.) Specifically, he alleges that Virginia Rometty, Chairman and Chief Executive Officer
(“CEO”) of IBM US, (id. ¶ 12), “was treated as someone who had authority over at least some of
the operations of IBM Japan, if not all the operations of IBM Japan,” (id. ¶ 14), and that IBM
Japan’s management is ultimately responsible to Ms. Rometty, albeit through other managers,
(id. ¶ 12). Defendants contend that IBM Japan has its own officers and executives separate and
apart from IBM US, (Sakaue Decl. ¶ 21, see id. Ex. B), and that the two entities do not share any
9
“Sakaue Decl.” refers to the Declaration of Masaki Sakaue. (Doc. 77.) On a motion to dismiss, parties may
submit affidavits to resolve jurisdictional disputes. See S. New England Tel. Co. v. Global NAPS Inc., 624 F.3d 123,
138 (2d Cir. 2010) (district court adjudicating motion to dismiss for lack of personal jurisdiction may rely on
pleadings and affidavits or conduct evidentiary hearing); Hunter v. Deutsche Lufthansa AG, No. 09-CV-3166, 2012
WL 1059417, at *4 (E.D.N.Y. Mar. 28, 2012) (in deciding motion to dismiss for lack of personal jurisdiction, court
may make determination on basis of affidavits); Freeman, 398 F. Supp. at 520 (“With regard to motions addressed
to personal jurisdiction, it is proper for the Court to rely on affidavits to establish jurisdictional facts.”) (internal
quotation marks omitted).
9
of the same officers, (id. ¶ 22). Sakaue further testifies that IBM Japan’s Board of Directors
reviews and approves the appointments of all officers and senior executives, even those on
assignment to IBM Japan from other entities. (Id. ¶ 24.)
Plaintiff adduces no evidence to support his conclusory allegation that IBM US and IBM
Japan have “common management.” Even if Plaintiff is correct that Rometty has authority over
IBM Japan’s operations, one overlapping executive (especially one like Rometty, who is at the
highest level and unlikely to participate in any day-to-day operational or personnel decisions) is
insufficient to support the exercise of jurisdiction over IBM Japan. See Gallelli v. Crown
Imports, LLC, 701 F. Supp. 2d 263, 273 (E.D.N.Y. 2010) (“[S]ome overlapping executive
personnel” insufficient for finding of “mere department”; “common directors and officers is [sic]
a normal business practice of a multinational corporation and absent complete control there is no
justification to labeling a subsidiary a mere department of the parent”); In re Ski Train Fire in
Kaprun, Austria on Nov. 11, 2000, 230 F. Supp. 2d 403, 412 (S.D.N.Y. 2002) (“It has been
established that overlapping officers and directors are intrinsic to the parent-subsidiary
relationship, and that they are not determinative as to whether the subsidiary is a mere
department of the parent.”) (internal quotation marks omitted).
Plaintiff also makes much of the fact that employees from IBM entities worldwide are
seconded to IBM Japan. (P’s Opp. 3-4.) That several employees are “on assignment” from IBM
US to IBM Japan (and vice-versa) is supported by interrogatories and is not disputed by IBM
Japan. (Ds’ Mem. 11; Bloom Aff., Ex. B, at 3-7.) 10 The fact that a multinational corporation
occasionally seconds its employees to other offices, however, is insufficient to support the
exercise of jurisdiction over a foreign subsidiary. See Morse Typewriter Co. v. Samanda Office
10
“Bloom Aff.” refers to the Affirmation of Allan S. Bloom. (Doc. 76.)
10
Commc’ns Ltd., 629 F. Supp. 1150, 1153 (S.D.N.Y. 1986) (finding transfers of employees
between subsidiary and parent not sufficient for finding of mere department).
Finally, there is no dispute that IBM Japan maintains corporate formalities. Plaintiff does
not contest this issue. Defendants have submitted evidence that IBM Japan maintains its own
board of directors. (Sakaue Decl. ¶ 15, id. Ex. B.) These directors hold regular meetings at
which minutes are taken, (id. ¶ 17, id. Ex. C), and decisions regarding IBM Japan are discussed
and voted on, (id. ¶¶ 16-17, id. Ex. C). IBM Japan maintains its own corporate records, general
ledger, and corporate governance policies. (Id. ¶ 19.) The maintenance of these corporate
formalities weighs against the exercise of jurisdiction. See Linde v. Arab Bank, PLC, 262 F.R.D.
136, 143 (E.D.N.Y. 2009) (observation of corporate formalities weighs against exercising
jurisdiction); In re Ski Train Fire, 230 F. Supp. 2d at 410-11 (same).
3. Marketing and Operational Control
Plaintiff also alleges that IBM US controls IBM Japan’s marketing and operational
policies, “directly, and through the intermediate affiliates.” (SAC ¶ 7.) In support of this
contention, Plaintiff asserts that IBM US and IBM Japan have a “globally integrated enterprise
policy.” (Id.; P’s Opp. 5.) His evidence consists of various statements to this effect: a public
statement by the head of operations for IBM Japan, (P’s Opp. 5), statements in IBM US’s annual
reports, (SAC Ex. U), and the IBM US CEO’s discussion of multiculturalism, (id. Ex. H). In
response, Defendants submit an affidavit declaring that IBM Japan controls its own operations,
(Sakaue Decl. ¶ 26), sets its own prices, develops its own strategy for marketing, and sells
through its own distribution network, (id. ¶ 36). According to Defendant (and Plaintiff has
presented no contrary evidence), IBM Japan uses IBM US’s products and services only as a
11
starting point, modifies them for the Japanese market, and develops client-specific solutions
implemented solely by IBM Japan staff without oversight by IBM US. (Id. ¶¶ 35-37.)
The statements Plaintiff submits are not sufficient to warrant the exercise of jurisdiction.
Besides the fact that some of these statements are inadmissible hearsay, “[s]tatements of global
cooperation among a parent and its subsidiaries do not support a finding of the pervasive control
necessary to support a mere department holding.” Gallelli, 701 F. Supp. 2d at 274; see Jazini,
148 F.3d at 185 (“None of this material [statements in annual reports], and especially not a
request for world-wide cooperation, shows the pervasive control over the subsidiary that the
‘mere department’ standard requires.”); J.L.B. Equities, 131 F. Supp. 2d at 550 (“[T]he Court is
not persuaded that a failure to distinguish between parent and subsidiary on a web page is
sufficient to show that the parent controls the subsidiary’s marketing and operational policies.”).
*
*
*
Considering all the factors, I find substantial evidence that IBM US does not exercise
sufficient control or domination over IBM Japan for the latter to be considered a “mere
department” of the former. Plaintiff thus has not carried his burden to establish personal
jurisdiction over IBM Japan.
Accordingly, I need not reach whether asserting jurisdiction over IBM Japan would
comport with Due Process – although it seems clear that it would not, for the reasons stated by
Defendant, (Ds’ Mem. 15-17) – nor do I need to address the sufficiency of the allegations against
IBM Japan.
B. Tortious Interference
Plaintiff did not name Mr. Tsubota as a Defendant until he filed his SAC on May 23,
2013. (SAC ¶ 81-87.) Defendants argue that Mr. Tsubota was improperly added because my
12
May 1 Order only gave Plaintiff leave to amend his claims against IBM Japan. (Ds’ Mem. 20
(citing Doc. 53 at 27).) Plaintiff responds that the May 1 Order only prohibited Plaintiff from
amending his claims against IBM US, but was silent as to his claims against “John Doe,” and
thus his amendment was permitted.11 (P’s Opp. 13.)
Under Federal Rule of Civil Procedure 15, after the initial period for amendment
expires, a party may only amend its pleading “with the opposing party’s written consent or the
court’s leave.” Fed. R. Civ. P. 15(a)(1), (2). In my May 1 Order, I granted Plaintiff leave to
“amend his [First Amended Complaint] as to IBM Japan” and advised him that “he may wish to
clarify exactly what breaches [of contract] he is alleging, as well as the theory of his Labor Law
claim.” (Doc. 53 at 27.) I did not, however, grant Plaintiff leave to amend his tortious
interference claim or add Mr. Tsubota as a Defendant. Further, in my June 8, 2012 Order, I
concluded that Plaintiff could not have intended to substitute Mr. Tsubota as a newly identified
defendant previously known to him only as “John Doe,” as Plaintiff has known Mr. Tsubota’s
identity since 2008. (Doc. 59.) Accordingly, even if my specifying the areas in which
amendment was permitted in the May 1 Order could reasonably be interpreted as permitting
other amendments – which it cannot – adding Mr. Tsubota as a Defendant was improper.
In any event, Plaintiff fails to state a claim for tortious interference with contractual
relations. Under New York law, tortious interference with contractual relations requires that the
plaintiff plead “(1) the existence of a valid contract between the plaintiff and a third party; (2) the
defendant’s knowledge of the contract; (3) the defendant’s intentional procurement of the third11
Plaintiff also argues that Mr. Tsubota was properly added because Krupski v. Costa Crociere S.p.A., 560 U.S. 538
(2010), held that relation back under Federal Rule of Civil Procedure 15(c)(1)(C) depends on what the party to be
added knew or should have known, not on the amending party’s knowledge or timeliness in seeking to amend the
pleading, and Mr. Tsubota should have known that he was one of the “John Does” named in Plaintiff’s original
Complaint. (P’s Opp. 12 (citing Krupski, 560 U.S. at 2498).) While Defendant argues that the limitations period
expired before Mr. Tsubota was added in May 2013, the antecedent question, which I address here, is whether
Plaintiff had leave to amend his claim for tortious interference at all.
13
party’s breach of the contract without justification; (4) actual breach of the contract; and (5)
damages.” Kirch v. Liberty Media Corp., 449 F.3d 388, 401 (2d Cir. 2006) (internal quotation
marks omitted).
Plaintiff has specifically alleged that his contract with Cognos was not valid. (See SAC
¶ 29 (Plaintiff’s contract with Cognos contained several “irregularities and flaws . . . such that
[it] is not valid”).) Failure to allege a valid contract by itself warrants dismissal. See Brady v.
Calyon Sec. (USA), 406 F. Supp. 2d 307, 314 (S.D.N.Y. 2005) (dismissing claim where plaintiff
failed to allege existence of contract between him and third party); Martin Ice Cream Co. v.
Chipwich, Inc., 554 F. Supp. 933, 945 (S.D.N.Y. 1983) (same).12 Further, Plaintiff fails to allege
Mr. Tsubota intentionally interfered with Cognos’s performance of the contract. Plaintiff merely
alleges that Mr. Tsubota “did nothing” to ensure that Plaintiff’s employment would continue
with Cognos, (SAC ¶ 85), but there are no facts suggesting that Mr. Tsubota took any action
whatsoever to induce Cognos to breach its contract with Plaintiff. As such, Plaintiff fails to
plausibly allege a claim for tortious interference with contractual relations. See Boehner v.
Heise, 734 F. Supp. 2d 389, 404 (S.D.N.Y. 2010) (“Plaintiffs must show Defendants’ direct
interference with a contract. That is, Defendants must have directed some activities toward the
customers whose contracts are alleged to have been breached.”) (collecting cases); Fonar Corp.
v. Magnetic Resonance Plus, Inc., 957 F. Supp. 477, 481 (S.D.N.Y. 1997) (“[I]n order to
establish a claim under the tort of interference with contractual relations, a third party must
breach the contract after being induced to do so by the defendant.”) (emphasis added).
12
Plaintiff alleges that under Japanese law, an employer-employee relationship is considered contractual even if
there is no contract. (Ps’ Opp. 8.) Even if this counterintuitive proposition is true as a matter of Japanese law, there
is no reason to believe that New York law – under which this claim arises – would recognize the existence of a
contract in these circumstances.
14
Accordingly, Plaintiff’s claim for tortious interference against Mr. Tsubota is
dismissed.13
IV. Conclusion
For the reasons stated above, Defendants’ Motion to Dismiss is GRANTED. The Clerk
of Court is directed to terminate this Motion, (Doc. 75), and close the case.
SO ORDERED.
Dated: November 21, 2013
White Plains, New York
_____________________________
CATHY SEIBEL, U.S.D.J.
13
I decline to sua sponte grant leave to amend this claim, both because it is, as described earlier, procedurally
defective as well as substantively insufficient, and because there is in any event, after two prior amendments, no
indication that Plaintiff is in possession of facts that could cure the deficiencies described in this Opinion. See
Ruotolo v. City of N.Y., 514 F.3d 184, 191 (2d Cir. 2008); In re Eaton Vance Mut. Funds Fee Litig., 380 F> Supp. 2d
222, 242 (S.D.N.Y. 2005).
15
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