Roberts Gordon, L.L.C. v. Pektron plc a/k/a Pektron qa

Filing 15

DECISION AND ORDER DENYING Defendant's 9 Motion to Dismiss. Signed by William M. Skretny, Chief Judge on 2/13/2014. (MEAL)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ROBERTS-GORDON LLC,
Plaintiff,
v.

DECISION AND ORDER
13-CV-182S

PEKTRON PLC,
Defendant.

I. INTRODUCTION
Invoking this Court’s diversity jurisdiction, Roberts-Gordon LLC, with its principal
place of business in Buffalo, New York, brings this breach-of-contract action against its
fellow merchant, Pektron PLC, a corporation organized under the laws of the United
Kingdom with its principal place of business in the U.K. Pektron now moves to dismiss this
action for lack of personal jurisdiction. For the following reasons, that motion is denied.
II. BACKGROUND
Roberts-Gordon manufactures commercial heating and air conditioning equipment
in Buffalo, New York. In July 2008, Pektron, an electronics manufacturer with its factory
and corporate offices in Derby, England, issued a quotation to Roberts-Gordon for the sale
of ignition control units. In the beginning of September of that year, Roberts-Gordon, in
response to the quote, issued a purchase order for the ignition units. This resulted in the
first of many transactions. Over the course of their relationship, Roberts-Gordon bought
“tens of thousands” of ignition units. (Potts Aff., ¶ 17; Docket No. 9-1.) The units were
made in Derby, and picked up “FOB” in Derby by agents of Roberts-Gordon. In other
words, Pektron was not responsible for the delivery of the goods; rather, Roberts-Gordon
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was responsible for collecting them in Derby. (Id., ¶ 24.)
At some point in 2012, this apparently healthy business relationship turned sour.
Roberts-Gordon now alleges that Pektron sold it defective ignition units and has “refused
to honor its contractual obligations.” (Compl., ¶ 11; Docket No. 1.) Instead, Pektron has
“demanded that an outstanding invoice balance of $38,000 be paid by Plaintiff before [it]
would even discuss making Plaintiff whole.” (Id.)
Pektron now moves to dismiss the complaint, arguing that this Court lacks personal
jurisdiction over it.
III. DISCUSSION
A United States district court may exercise personal jurisdiction over a defendant
if the defendant “is subject to the jurisdiction of a court of general jurisdiction in the state
where the district court is located.” Fed. R. Civ. P. 4(k)(1)(A); Spiegel v. Schulmann, 604
F.3d 72, 76 (2d Cir. 2010). Jurisdiction conferred by the state, however, is constrained by
the Due Process Clause, which “gives a degree of predictability to the legal system that
allows potential defendants to structure their primary conduct with some minimum
assurance as to where that conduct will and will not render them liable to suit.” See
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62
L. Ed. 2d 490 (1980); see also Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.
Ct. 2846, 2851-52 180 L. Ed. 2d 796 (2011) (“A state court's assertion of jurisdiction
exposes defendants to the State's coercive power, and is therefore subject to review for
compatibility with the Fourteenth Amendment's Due Process Clause.”). Thus, this Court
can exercise jurisdiction over an out-of-state defendant provided that it is permitted by both
New York State's statutes and the strictures of due process. See Burger King Corp. v.
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Rudzewicz, 471 U.S. 462, 473, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985).
There are two types of personal jurisdiction: general and specific. Licci ex rel. Licci
v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 60 n.9 (2d Cir. 2012). “General jurisdiction
is authorized where the defendant's ‘affiliations with the State are so ‘continuous and
systematic’ as to render it essentially at home in the forum State.’” Id. (quoting Goodyear,
131 S. Ct. at 2851). This type of jurisdiction is codified in New York under N.Y. C.P.L.R.
§ 301. Id.
“‘Specific jurisdiction,’ however, ‘depends on an affiliation 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.’” Id. (quoting Goodyear, 131
S. Ct. at 2851). Jurisdiction of this type is permitted in New York under N.Y. C.P.L.R. §
302(a). Id.
At this stage of the proceedings, “[b]ecause the parties have not conducted
discovery, a plaintiff may carry his burden by “pleading in good faith legally sufficient
allegations of jurisdiction, i.e., by making a prima facie showing of jurisdiction.” Whitaker
v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2nd Cir. 2001) (internal citations, quotations
marks, and modifications omitted). “A plaintiff can make this showing through his own
affidavits and supporting materials, containing an averment of facts that, if credited, would
suffice to establish jurisdiction over the defendant.” Id. “[A]ll allegations are construed in
the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor.” Id.
***
Roberts-Gordon does not dispute that this Court lacks general jurisdiction over
Pektron. It asserts, however, that under N.Y. C.P.L.R. § 302(a), New York’s “long-arm”
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statute, this Court does have specific personal jurisdiction. That statute, in relevant part,
reads:
As to a cause of action arising from any of the acts
enumerated in this section, a court may exercise personal
jurisdiction over any non-domiciliary, or his executor or
administrator, 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.
§ 302(a)(1) (emphasis added).
Pektron contends that because it played no part in shipping the goods into New
York, it has not “suppl[ied] goods or services in the state.” This Court cannot agree.
As Roberts-Gordon notes, the various purchase orders and invoices, which were
produced during each of the parties’ many transactions, made it clear that the ignition units
were being shipped to New York. By way of example, an invoice and bill of lading from
March of 2010 shows that units would be shipped to Roberts-Gordon at 1250 William St.,
Buffalo, New York. In fact, Pektron does not argue that it was unaware that the goods were
destined for New York.1 Rather, it argues that this knowledge is insufficient to establish
personal jurisdiction.
But Judge Elfvin of this District has ably found that “if the [defendant] was aware that

1

There is likewise no dispute that this suit arises out of Pektron’s contacts (however substantial or
insubstantial they may be) with the forum state. See Daimler AG v. Bauman, 134 S. Ct. 746, 748-49 (2014)
(internal citations, quotation marks, and modifications omitted) (specific jurisdiction “encompasses cases in
which the suit arises out of or relates to the defendant's contacts with the forum”). Indeed, the contract (or
contracts) between the two parties acts as both the link to New York and the basis of this breach-of-contract
suit.

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New York was the ultimate destination of its computer chips when it contracted to
manufacture them for Plaintiff, . . . it follows that [the defendant] contemplated delivery of
its computer chips in New York. Within the meaning of subdivision 1 of CPLR § 302(a), [the
defendant] thereby contracted to supply goods in New York.” Columbus McKinnon Corp.
v. China Semiconductor Co., Ltd., No. CIV-88-211E, 1989 WL 82455, at *4 (W.D.N.Y. July
19, 1989).
That reasoning is sound. C.P.L.R. § 302(a) does not draw a distinction, as Pektron
contends, between goods “shipped” and goods “supplied.” Here, Pektron sent a
representative to New York at least once to meet with Roberts-Gordon, engaged in a
lengthy business relationship with a New York company, and purposely manufactured
goods for that company, all the while knowing that those goods – irrespective of who was
responsible for shipping costs or shipping liability – would end up in New York State. For
the purposes of New York’s long-arm statute, it has thus supplied those goods in the state.
Indeed, other courts in this district, and throughout the Second Circuit, have found similarly.
See GB Mktg. USA Inc. v. Gerolsteiner Brunnen GmbH & Co., 782 F. Supp. 763, 767
(W.D.N.Y. 1991) (Larimer, J.) (rejecting argument that personal jurisdiction was lacking
because defendant, Gerolsteiner, relinquished title and possession of the goods in
Germany, and finding that “Gerolsteiner clearly knew that some of that water was bound
for New York”); see also Eugene Iovine, Inc. v. Rudox Engine & Equip. Co., 786 F. Supp.
236, 241 (E.D.N.Y. 1992) (where defendant knew that goods “were destined for New York,
[and] assisted in specially designing those sets and in procuring final approval of the
contract . . . [the defendant] has supplied goods for New York pursuant to CPLR §
302(a)(1)”); Laumann Mfg. Corp. v. Castings USA, Inc., 913 F. Supp. 712, 717 (E.D.N.Y.
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1996) (“This court does not believe that the New York State legislature intended to allow
potential defendants to escape the reach of the Long–Arm statute by inserting out-of-New
York State F.O.B. terms into their contracts.”); Cavalier Label Co., Inc. v. Polytam, Ltd., 687
F. Supp. 872, 877 (S.D.N.Y. 1988) (“The amendment [creating § 302(a)] abrogated the
‘mere shipment rule’. . . .”).
Pektron relies on two New York Appellate Division cases from the Second
Department that, it argues, find to the contrary. In SBR Realty Corp. v. Pave-Mark Corp.,
the more recent of the two, the court found that “knowledge that a product may be destined
for a particular forum, in and of itself, is insufficient to sustain jurisdiction.”175 A.D.2d 240,
241, 572 N.Y.S.2d 705 (2d Dep’t 1991). The SBR court relied on an earlier Second
Department case, Paradise Products Corp. v. Allmark Equipment Co., to support this
proposition. 138 A.D.2d 470, 471, 526 N.Y.S.2d 119 (2d Dep’t 1988). Despite the apparent
relevance of this holding, for three reasons, this Court remains unpersuaded.
First, while this Court must give those decisions “proper regard,” they are not binding
on this Court. Travelers Ins. Co. v. 633 Third Associates, 14 F.3d 114, 119 (2d Cir. 1994).
Second, unlike the facts of this case, those cases each concerned a single
transaction. In fact, the Paradise court, on which the SBR court exclusively relied, deemed
this fact controlling. It reasoned that basing jurisdiction on a single transaction, where the
defendant only “may” have known the product would end up in New York, did not comport
with due process. 138 A.D.2d at 471. It did not truly discuss § 302(a) or the import of the
word “supply” as found in that section. Instead, it relied on due process principles, holding
that “[i]t cannot be said that [the defendant’s] conduct and connections with New York are
such that it should reasonably have anticipated being haled into court here.” Id. “Nor can
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it be said that [the defendant] purposefully availed itself of the privilege of conducting
activities here,” it concluded. Id. But those concerns are not as compelling here, where
Pektron purposely engaged in multiple transactions totaling over $1 million in sales, with
affirmative knowledge that the goods were destined for New York.
Finally, the Third Department of New York's Appellate Division has issued a ruling
more relevant to the question before this Court. And, like this Court, the Third Department
found it insignificant that the goods had not actually been “shipped” into the state. In
Anderson Dev. Corp. v. Isoreg Corp., the “[p]laintiff's purchase contract and defendant's
sales order and bill of lading provided for shipment to New York,” thus establishing
defendant's knowledge that its equipment “was destined for New York.” 154 A.D.2d 859,
860, 546 N.Y.S.2d 720, 721 (3rd Dep’t 1989). The court found jurisdiction to be proper
under C.P.L.R. § 302(a)(1), concluding, “Defendant has not come forward with anything
which indicates to us that the Legislature intended to give any jurisdictional import to []
delivery terms, and the 1979 amendment to CPLR [§] 302(a)(1), requiring only that
defendant contract to supply goods in the State, whether actually shipped or not, would
indicate to the contrary.” Id.
Thus, this Court finds those cases identified by Pektron offer little probative value.
Instead, based on the evidence currently before this Court and the clear weight of
reasoned authority, Roberts-Gordon has met its burden demonstrating that this Court has
personal jurisdiction over Pektron under § 302(a)(1).
****
Such a finding does not, however, necessarily end the matter. For personal
jurisdiction over Pektron to be permissible, federal constitutional due process standards
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must also be satisfied. See Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 164
(2d Cir. 2010) (“If the long-arm statute permits personal jurisdiction, the second step is to
analyze whether personal jurisdiction comports with the Due Process Clause of the United
States Constitution.”).
Pektron takes Roberts-Gordon to task for not providing a lengthy response to
Pektron’s argument that the exercise of jurisdiction here would offend the Due Process
Clause. But this Court is not as troubled by Roberts-Gordon’s response. Several courts,
the Second Circuit included, have determined that once § 302 is satisfied, further inquiry
is unnecessary. See D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 105 (2d Cir. 2006)
(“[T]he constitutional requirements of personal jurisdiction are satisfied because application
of N.Y. C.P.L.R. § 302(a) meets due process requirements.”); see also, e.g., Pieczenik v.
Dyax Corp., 265 F.3d 1329, 1333 (Fed. Cir. 2001) (internal citation omitted) (“Because
New York's long-arm statute does not reach to the limits of due process, the inquiry in this
case is confined to whether a New York court would have jurisdiction. . . .”).
But in any event, this Court finds that due process is satisfied independent of §
302(a).
There are two components to the due process analysis: (1) the minimum-contacts
inquiry and (2) the reasonableness inquiry. See Mario Valente Collezioni, Ltd. v. Confezioni
Semeraro Paolo, S.R.L., 264 F.3d 32, 37–38 (2d Cir. 2001).
As for the first component, “[t]he constitutional touchstone remains whether the
defendant purposefully established ‘minimum contacts’ in the forum State.” Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528 (1985).
Indeed, “it is essential in each case that there be some act by which the defendant
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purposefully avails itself of the privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its laws.” Id. at 475 (quoting Hanson v. Denckla,
357 U.S. 235, 253, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958)). As discussed above,
considering the totality of the factors here – including Pektron’s decision to contract with
a New York company, doing roughly $1 million in business with that company, and knowing
that the goods were destined to be used in a New York factory – it becomes evident that
Pektron has “purposefully avail[ed] itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.” Id. (internal quotation
marks omitted). Unlike simply placing a product in the stream of commerce, without more,
Pektron purposefully targeted New York by contracting with a New York company. Cf.
Asahi Metal Indus. Co., Ltd. v. Superior Court of California, Solano Cnty., 480 U.S. 102,
112, 107 S. Ct. 1026, 1032, 94 L. Ed. 2d 92 (1987) (opinion of O’Connor, J.) (to satisfy due
process, placing product in stream of commerce must be coupled with some act targeting
the forum state); J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2788, 180 L. Ed. 2d
765 (2011) (plurality opinion) (same).
For the second component, “[e]ven where an out-of-state defendant purposefully
avails himself of the forum state, plaintiff[] must still demonstrate that the exercise of
jurisdiction does not ‘offend traditional notions of fair play and substantial justice’ and is
thus reasonable under the Due Process Clause.” Chloé, 616 F.3d at 172–73 (quoting
Asahi, 480 U.S. at 113).
The Supreme Court has identified five factors that must be considered when
determining the reasonableness of a particular exercise of jurisdiction: (1) the burden on
the defendant, (2) the interests of the forum State, (3) the plaintiff's interest in obtaining
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relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution
of controversies, and (5) the shared interest of the several States in furthering fundamental
substantive social policies. Id. at 158 (citing Asahi, 480 U.S. at 113).
These factors are either neutral (1, 4, and 5) or weigh in Roberts-Gordon’s favor (2
and 3). Although this Court “acknowledge[s] that there will be some burden on [Pektron]
if [it] must travel to New York for trial[,] [t]he inconvenience . . . cuts both ways,” as RobertsGordon would be burdened if it had to travel to the U.K. Id. Ultimately, based on the
contacts described above, “it is consistent with the traditional notion of fair play that
[Pektron] could have reasonably expected to be haled into a New York court.” See
Laumann, 913 F. Supp. at 718.
IV. CONCLUSION
Pektron contracted with a New York company and supplied it with roughly $1 million
in goods – goods that it knew were destined for New York. New York courts, and thus, this
Court, therefore have personal jurisdiction over Pektron under N.Y. C.P.L.R. §302(a)(1).
For similar reasons, the assertion of jurisdiction here does not offend the Due Process
Clause.

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V. ORDERS
IT HEREBY IS ORDERED, that Defendant’s Motion to Dismiss (Docket No. 9) is
DENIED.
SO ORDERED.
Dated:

February 13, 2014
Buffalo, New York

/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court

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