The World in US Courts: Orrick's Quarterly Review of Decisions Applying US Law to Global Business and Cross-Border Activities

by Orrick, Herrington & Sutcliffe LLP
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Alien Tort Statute (ATS)/Torture Victims Protection Act (TVPA)/Anti-Terrorism Act (ATA)

District Court Dismisses ATS Claim Where Alleged Conduct in US Was Not Directly Linked to Injuries Claimed in Other Countries

Ate v. Gülen, U.S. District Court for the Middle District of Pennsylvania, June 29, 2016

Plaintiffs, citizens and residents of Turkey, sued a prominent Turkish cleric who is a permanent resident in the United States.  Among other things, the complaint alleged that the defendant, through a video speech posted on a U.S. website he controls, gave instructions resulting in the persecution and detention of the plaintiffs and others having similar religious beliefs, thereby violating the ATS.

The District Court observed that the ATS has no extraterritorial application, and that its scope is limited to activities that sufficiently “touch and concern” the “territory” of the U.S. to displace the presumption against application of the statute to events outside the U.S.  After an extensive review of precedent since the U.S. Supreme Court’s seminal decision in the Kiobel case, the Court described this inquiry as requiring consideration of (i) the relevant conduct to violate the ATS, (ii) the relationship between that conduct and the U.S., (iii) whether the conduct is of a nature sufficient to displace the presumption against extraterritorial effect, and (iv) whether the conduct itself states a claim for a violation of the law of nations (or aiding and abetting such a violation).  The Court found that these requirements were not met.  It observed that the speech did not direct that any specific action be taken against members of the movement of which the plaintiffs are part, only that some action be taken.  It concluded that the statement thus failed to constitute the “the minimum factual predicate” necessary to displace the presumption against extraterritoriality.  The plaintiffs also cited the defendant’s alleged approval of two episodes of a Turkish television series that allegedly contained instructions that the group be persecuted, but the Court similarly found this evidence to be only a “circumstantial and tenuous” allegation of a connection between the defendant and the claimed mistreatment in Turkey.  The Court also noted the absence of factors that had supported ATS claims in other cases:  Some involvement of the U.S. Government, conduct occurring over a long period of time, clear causal links between the conduct and injury alleged, the presence of organizations recognized by the U.S. Government as terrorist, and the presence in the U.S. of the individuals alleged actually to have carried out the violations of law.  For this and other reasons, the Court dismissed the complaint.

Editorial Board

 

District Court Dismisses ATS Claim Where None of the Plaintiffs, Defendants, or Activities Were Linked to the U.S.

Comparelli v. República Bolivariana De Venezuela, U.S. District Court for the Southern District of Florida, September 23, 2016

The plaintiffs, Italian citizens, sued Venezuela under the ATS in connection with the expropriation of interests they held in Venezuelan companies, allegedly in violation of international law.  The District Court in Florida stated that the ATS did not have extraterritorial application, and that claims could only proceed if they sufficiently “touch and concern” the territory of the U.S.  Observing that none of the plaintiffs or defendants resided in the US, and that none of the relevant activities occurred in the U.S., the Court concluded that “there is no U.S. focus whatsoever,” and dismissed the case.

Editorial Board

 

District Court Refuses to Enforce Third-Party Subpoenas Against Branches of Non-US Banks that would Require Them to Search for Records Worldwide

Leibovitch v. Islamic Republic of Iran, U.S. District Court for the Northern District of Illinois, May 19, 2016

This action, brought under the ATS, alleged that Iran was responsible for a terrorist attack in Israel that injured plaintiff family members.  The defendant did not appear, and the Court entered a default judgment in the amount of almost $67 million.  Subpoenas were issued to two non-US banks—the Bank of Tokyo-Mitsubishi UFJ, Ltd. and BNP Paribas Bank—to obtain discovery of and to freeze Iranian assets held by the banks anyplace in the world.  The banks responded by limiting their search to the knowledge of employees located in Chicago, the forum where the litigation was brought.  They argued principally that the Court lacked personal jurisdiction over them, that principles of international comity militate against permitting the expansive, global discovery requested, and that disclosing these records would potentially subject them to civil penalties in countries outside the US for violating local privacy laws. 

As a preliminary matter, the Court determined that it could not assert general personal jurisdiction over the banks based on the presence in the forum of branches that were not themselves related to any company having its headquarters or principal place of business in Illinois.  In so ruling, the Court determined that the Supreme Court’s Daimler rule requiring that a party be “at home” in a forum for general jurisdiction to attach applied equally to parties and non-parties.  It also rejected the argument that the bank branches’ registrations with the State of Illinois, which required the appointment of an agent for service of process, amounted to consent to be sued.

The Court likewise found the banks were not subject to specific personal jurisdiction, which requires that a defendant have “minimal contacts” with the forum and that the assertion of jurisdiction does not otherwise “offend traditional notions of fair play and substantial justice.”  “Minimal contacts” also carries the requirement that a plaintiff’s claim arise out of the defendant’s contacts with the forum, and the Court discussed whether, in the context of third party actions, it was required to focus on the underlying claims in the case or just the discovery sought.  The Court found no connection existed under either rule.  It also rejected the argument that it should look to the banks’ contacts with the US as a whole, because the ATS allowed for nationwide service of process, rather than just their contacts with Illinois.

Finally, the Court also concluded that the assertion of jurisdiction was separately prohibited because it would not satisfy the reasonableness requirement of the Due Process Clause, and that requiring the banks to conduct a worldwide records search would violate principles of international comity.  It credited the banks’ claims as to the burdensomeness of discovery, especially in connection with branches that bore no relationship to the allegations of the case, and accepted the banks’ argument that privacy laws in other countries would be violated by compliance with the discovery order.  In closing, the Court noted that alternative remedies might be available elsewhere.

Editorial Board

 

District Court Finds Claim Alleging Torture by a US CIA Contractor Not Barred by the “Political Question” Doctrine or Based on Improper Extraterritorial Application of the ATS

Salim v. Mitchell,  U.S. District Court for the Eastern District of Washington, April 28, 2016

The plaintiffs, citizens of non-U.S. countries, brought claims under the ATS alleging that they were abducted and tortured by US-led forces in Afghanistan and Pakistan over a period of years.  The defendants are alleged to be CIA contractors who designed and oversaw the torture described in the complaint.

The defendants moved to dismiss the complaint.  Among other things, they argued that the claims involved “political questions” and thus were not amenable to judicial resolution.  The Court disagreed, noting specifically that “torture” is now understood to be prohibited by “the law of nations,” and that “torture” is defined in various U.S. statutes so as to allow the issue to be adjudicated.  In so ruling, the Court acknowledged some disagreement among the courts on whether analogous claims involving contractors and governmental or military detention could proceed to trial.

The Court also rejected the argument that the plaintiffs were seeking an impermissibly extraterritorial application of the ATS.  It observed that the U.S. Supreme Court’s Kiobel decision found the ATS did apply extraterritorially, but would support actions based on facts that “touch and concern the territory of the United States.”  The Court found that standard met in the case at bar, with allegations that the defendants were U.S. citizens, committed the acts alleged through a company based in the U.S., devised the interrogation techniques at issue in the U.S., and proceeded pursuant to contracts with the US Central Intelligence Agency entered into domestically.

Editorial Board

 

Anti-discrimination Statute, 42 USC § 1981

District Court Dismisses Claim for Acts of Discrimination that Did Not Take Place in the U.S.

Khaled Salem v. Royal Air Maroc, U.S. District Court for the Southern District of New York, April 28,2016

Salem, an American citizen, and his Moroccan wife alleged that they were the targets of racially and religiously discriminatory conduct by representatives of Royal Air Maroc as they sought to board a flight from Cairo to Casablanca.  Salem sued the airline upon his return to the U.S. Claiming violations of Section 1981. The Court dismissed the case, concluding that the statute only reached covered discriminatory conduct within the “territorial jurisdiction” of the U.S., and was not to be given extraterritorial effect.

Editorial Board

 

Antitrust/Competition/Foreign Trade Antitrust Improvements Act (FTAIA)

District Court Upholds Antitrust Jury Verdict Against Non-U.S. Manufacturers of Price-Fixed Components even though Sales to U.S. Customers Were Made by Independent Importers

 

Costco Wholesale Corp. v. AU Optronics Corp., U.S. District Court for the Western District of Washington,  March 3, 2016

Plaintiff Costco prevailed at trial on antitrust claims that it paid too much for products containing thin-film transistor liquid crystal display panels (“TFT-LCD panels”), whose prices had been inflated as a result of conspiracy.  Two defendants brought various post-trial motions, all directed to the argument that they should not be liable as a matter of law.  As relevant here, the defendants argued that a reasonable jury could only have found that the plaintiffs’ claims were blocked by the FTAIA.  That statute prevents private litigation based on conduct outside the U.S. unless that conduct has a “direct, substantial, and reasonably foreseeable effect” on U.S. commerce.  It does not apply, however, to U.S. “import commerce,” and the Court concluded that exception was applicable in the case at bar.

The facts showed that the conspiring defendants sold to U.S. customers only indirectly, through middlemen that sold finished products containing TFT-LCD panels to U.S. customers.  The Court had instructed the jury that claims could proceed if products containing TFT-LCD panels “were sold in a transaction between a member of the conspiracy and a customer in the United States,” thus establishing that they were U.S. “import commerce” and not barred by the FTAIA.  The defendants argued that the presence of the middlemen made this test impossible to satisfy.  The Court disagreed, concluding that the “import commerce” exception could be triggered through indirect sales where there was evidence that sales to the U.S. were targeted by the component manufacturers.

Even if the “import commerce” exception was inapplicable, the Court found that the evidence supported a finding that the necessary effect on U.S. commerce had been shown.  In so doing the Court found that a plaintiff need only prove that the allegedly price-fixed products were a “substantial” cost component of finished products sold in the U.S., that prices for the finished products reflected the inflated component costs, that “substantial numbers” of finished products were destined for the U.S., and that the result was that U.S. consumers paid higher prices.  The Court also distinguished an appellate decision (the Motorola Mobility case, discussed in the Winter 2015 issue of The World in U.S. Courts) as holding that similar claims could not be brought where the “middlemen” were actually foreign subsidiaries of the plaintiffs.

Editorial Board

 

District Court Dismisses Price-Fixing Claims for Transactions in “Foreign” Currency Exchange Rates Except for Direct Transactions between U.S. Plaintiffs and Non-U.S. Trading Desks of Non-U.S. Banks

In Re Foreign Exchange Benchmark Rates Antitrust Litigation, U.S. District Court for the Southern District of New York, September 20, 2016

This large class action litigation alleges that many U.S. and non-U.S. banks conspired to fix prices in the “foreign exchange” or “foreign currency” (either referred to as “FX”) market in violation of Section 1 of the Sherman Act and the Commodities Exchange Act.  Among other issues, a number of the non-U.S. banks moved to dismiss the antitrust claims on grounds that they were based on transactions “executed” by U.S. entities outside the country, and thus were barred by the FTAIA as having an insufficient connection with the U.S.  

The District Court in New York explained that the FTAIA permitted antitrust claims based on non-U.S. conduct only insofar as the conduct caused “direct, substantial, and reasonably foreseeable” effect on U.S. commerce.  (The Court also noted that the FTAIA did not apply at all to potential claims arising from imports.)  Noting that the banks had not clearly defined the meaning of “executed,” the term on which their motion was based, the Court ruled on several different types of transactions arguably included in the case.  First, it held that transactions between a U.S. entity and the non-U.S. desk of a defendant bank constituted “import commerce” because the U.S. entity acquired an interest in FX from a non-U.S. bank; because the FTAIA does not apply to bar such “import” claims, these claims were not dismissed.  In contrast, it held that actions by U.S. entities transacting outside the U.S. with non-U.S. desks of the defendant banks did not involve “import” commerce.  Indeed, because those transactions did not affect U.S. commerce, antitrust claims based on them were precluded by the FTAIA.  The defendants tried to bring non-U.S. injuries within the scope of the Sherman Act by arguing that they only arose because of an alleged worldwide conspiracy, of which price-fixing effects in the U.S. integrally tied with conspiratorial pricing elsewhere.  But the Court rejected this argument, concluding that effects on commerce in the U.S. could not be considered to have been “proximately caused” by injuries suffered in other countries. 

[Editor’s Note:  The In re Foreign Exchange case is also addressed in the Securities Law/Commodities Exchange Act section of this report.]

Editorial Board

 

District Court Dismisses CEA Claim Where Relevant Transactions Occurred in Asia

Chan Ah Wah v HSBC North America Holdings Inc., U.S. District Court for the Southern District of New York, August 11, 2016

The plaintiffs are individuals who claim to have been overcharged as a result of a conspiracy among the 17 global-bank defendants to manipulate foreign exchange rates.

The District Court in New York stated that the CEA, being silent as to its territorial reach, required that claims be based on transactions occurring in the territory of the U.S.  In the case at bar, the Court read the complaint as alleging that the relevant transactions took place in Malaysia and Singapore, and concluded that the CEA claim should therefore be dismissed.  

[Editor’s note:  The Chan Ah Wah case is also addressed in the Antitrust/Foreign Trade Antitrust Improvements Act (FTAIA) section of this report.]

Editorial Board

 

Intellectual Property – Trademark (Lanham Act)

Court of Appeals Applies Lanham Act to Canadian Operations of Canadian Company Where No Allegedly Infringing Products Entered the U.S.

Trader Joe's Company v. Hallatt, U.S. Court of Appeals for the Ninth Circuit, August 26, 2016

Trader Joe’s is a U.S. supermarket chain selling a range of distinctive and popular products.  Hallatt owns a company called “Pirate Joe’s” which is based in Canada, just across the border from Trader Joe’s stores in Washington State.  Pirate Joe’s buys Trader Joe’s products at retail in Washington and resells them in Canada, where Trader Joe’s has no stores.  Trader Joe’s sued Pirate Joe’s for trademark infringement and unfair competition under the Lanham Act, claiming as injury a dilution in the value of its U.S. trademarks, consumer confusion, and injuries to reputation. 

The Court of Appeals stated that the Lanham Act applied extraterritorially where the alleged violations (i) create “some effect” on U.S. foreign commerce, (ii) the effect is great enough to present a cognizable injury, and (iii) U.S. interests and links to U.S. foreign commerce outweigh competing interests that other countries may have in the dispute.  The Court observed that, unlike most plaintiffs, Trader Joe’s had not sought to satisfy the first two factors by alleging sales in the U.S. of goods tainted by a Lanham Act violation.  Rather, Trader Joe’s alleged that its reputation was at risk because Canadian purchasers of Trader Joe’s food products sold under Pirate Joe’s allegedly poor quality control standards might become ill, news of the illness might receive news coverage in the U.S., and U.S. consumers might blame Trader Joe’s for the problem.  Likewise, Trader Joe’s said that its reputation for selling reasonably-priced merchandise might be injured by the allegedly “inflated” prices at which Pirate Joe’s resold its products.  The Court found these allegations sufficient:  They were “plausible” and demonstrated “some effect” on U.S. commerce.  Notably, the Court said the same conclusion would have attached under the slightly different standard employed by other courts of appeals, requiring not merely “some” effect on U.S. commerce but a “substantial” effect.  The Court also noted that a less significant showing by a Lanham Act plaintiff is required where, as here, some part of the alleged scheme took place in the U.S.

The third factor for extraterritorial application of U.S. trademark law focuses on international comity, and the Court found no reason that a U.S. court should defer to potential Canadian jurisdiction.  Most significantly, the Court cited: Trader Joe’s ownership of Canadian trademarks and the absence of pending trademark disputes in Canada, Hallatt’s “Lawful Permanent Resident” U.S. immigration status, and the ability of a U.S. court to secure relief for a violation.  The Court noted that the relative importance of Hallatt’s conduct in Canada compared to the U.S. counseled against extraterritorial application of the Lanham Act, but concluded that this factor did not outweigh the others.

Editorial Board

 

Intellectual Property – Patent

Court of Appeals Finds No U.S. “Sale or “Offer of Sale” in U.S. Despite U.S. Master Agreement and Price Negotiations

Halo Electronics, Inc. v. Pulse Electronics, Inc., U.S. Court of Appeals for the Federal Circuit, August 5, 2016

Halo is a supplier of electronic components protected by several U.S. patents.  Pulse, a competitor, designs and sells similar products in Asia.  Halo believed these products infringed Halo’s U.S. patents, and sued Halo for infringement. 

As relevant here, the U.S. Patent Act prohibits the manufacture, use, offer to sell, or sale of any patented product “within the United States,” without authority to do so.  The statute has no extraterritorial effect, but certain actions taken outside the U.S. can be part of activities that constitute infringement.  In this case, the U.S. Court of Appeals for the Federal Circuit, which has jurisdiction over all patent appeals, addressed the limits of this principle.

Some Pulse products were sold directly to U.S. customers, but most were sold to other companies in Asia, which incorporated them into finished products sold around the world, including to the U.S.  Pulse accepted purchase orders outside the U.S., but for certain ultimate U.S. customers engaged in price negotiations and entered into master agreements in the U.S.  Pulse employees in the U.S. also approved certain pricing for sales to affiliates of U.S. companies in Asia.  Pulse engaged in other activities in the U.S., including meetings with customers’ engineers and routine sales and post-sale support.

To determine whether Pulse’s conduct could constitute infringement, the Court first addressed the meaning of “sale,” concluding that the term was not limited to the location where legal title was transferred.  Rather, the Court stated:  “when substantial activities of a sales transaction, including the final formation of a contract for sale encompassing all essential terms as well as the delivery and performance under that sales contract, occur entirely outside the United States, pricing and contracting negotiations in the United States alone do not constitute or transform those extraterritorial activities into a sale.”  The Court thus found Pulse’s sales to Asian affiliates of U.S. companies not to be infringement, despite the existence of a U.S. master agreement under which purchase orders were issued and some U.S. price negotiation.  In so ruling, the Court rejected the argument that infringement occurred in the U.S. because economic injury was allegedly suffered by Halo in the U.S.

The Court then addressed the meaning of “offer of sale,” noting that the phrase has previously been construed to point to the location of the contemplated sale, not the place where an “offer” was made.  Assuming that Pulse’s activities in the U.S. could amount to an “offer of sale,” the Court thus concluded that no infringement occurred because the contemplated sale would have been in Asia, not the U.S.

Editorial Board

 

District Court Refuses to Assert Personal Jurisdiction Over Defendants in Declaratory Judgment Action Where Neither Took Steps to Enforce or Defend Its Patents in the Forum

Torrent Pharmaceuticals Limited v. Daiichi Sankyo, Inc., U.S. District Court for the Northern district of Illinois, July 25, 2016

Three drug manufacturers in this procedurally complicated case filed suit in Chicago seeking a judicial declaration that their proposed generic versions of the popular blood pressure medicine Benicar® do not infringe the defendant’s patent.  The suit was an effort to circumvent the 180-day head start on the marketing of a generic version of Benicar® that a different generic drug company would enjoy because it was the first to file an application to sell a copy of the drug.  The defendants—a Japanese corporation and its New Jersey-based U.S. subsidiary—sought to dismiss the case on grounds that they were not subject to the Court’s jurisdiction.

Because the personal jurisdiction question was “intimately related to patent law,” the Court used the jurisdictional test developed by the U.S. Court of Appeals for the Federal Circuit, to which all patent cases are sent for review.  That test required the Court to consider whether “(1) the defendant purposefully directed its activities at residents of the forum; (2) the claim arises out of or relates to the defendant's activities with the forum; and (3) assertion of personal jurisdiction is reasonable and fair.”  Of particular importance, the Court noted that in declaratory judgment actions such as the case at bar, the focus of the inquiry is the defendant’s enforcement or defense of the patent at issue, not efforts at commercialization.  In patent infringement cases, by contrast, the personal jurisdiction inquiry focuses on allegedly infringing conduct. 

In the case at bar, the Court observed that the defendants were not alleged to have enforced or defended their patent at all, and so took no actions on which a finding of personal jurisdiction could be based.  The defendants did license the patent at issue, but the Court said that could only form the basis for personal jurisdiction where the license “imposes enforcement obligations with a party residing or regularly doing business in the forum," which was not alleged.

The Court noted Federal Circuit precedent to the effect that, under the specific legislation authorizing the approval of generic drugs, a generic drug manufacturer seeking to copy a drug could likely be sued in any State by the patent holder.  The generics argued that the same result should apply in the mirror-image situation:  The generic also ought to be able to file a suit in any State seeking a declaration that the drug manufacturer’s patent is invalid.  But the Court disagreed, noting that the Federal Circuit rule on jurisdiction in the case of declaratory judgment actions was clear, and that “mirror-image” arguments are not persuasive in the declaratory judgment context, where the patent holder is the defendant.

The Court concluded that its decision did not leave the plaintiffs without a remedy:  Under 35 U.S.C. § 293, the so-called patent long-arm statute, the United States District Court for the Eastern District of Virginia has jurisdiction by statute over every U.S. patent holder.

Editorial Board

 

Intellectual Property – Copyright

District Court Dismisses Copyright Infringement Claim Directed To Thousands of Non-U.S. Websites Where No Targeting or Sales to Forum Shown

American Bridal & Prom Industry Association, Inc. v. Multiple defendants, U.S. District Court for the Northern District of Illinois, June 29, 2016

Plaintiffs are designers and manufacturers of bridal apparel, and their trade association.  They sued individuals and entities that allegedly operated thousands of non-U.S. websites selling garments that allegedly infringed on the plaintiffs’ trademarks, and sought a preliminary injunction.

The District Court in Chicago first considered whether it could assert personal jurisdiction over the defendants, employing the familiar test that asks whether the defendants have “minimum contacts with [Illinois] such that maintenance of the suit [here] does not offend 'traditional notions of fair play and substantial justice.’”  Only specific personal jurisdiction was alleged, and the only basis for that jurisdiction was the defendants’ alleged maintenance of interactive websites and sales and offers for sale of allegedly infringing garments that were allegedly made to residents in Illinois.  The Court entered a temporary restraining order based on this allegation, but for the relief to be continued through a preliminary injunction the Court required the plaintiffs to produce evidence to back up their allegations:  That each of the thousands of websites being challenged by the plaintiffs was actually targeting Illinois residents and selling and offering to sell them infringing garments.  The plaintiffs declined to attempt such a showing, arguing instead that the mere maintenance of interactive websites satisfied constitutional requirements for the assertion of jurisdiction.

The Court disagreed.  It found that the Due Process Clause requires that each defendant’s deliberate actions within the State be examined.  The mere capability of an interactive website to be used by an Illinois resident was not enough; rather, the Court stated it was required to look for evidence that a defendant “targeted” Illinois or otherwise.  Such targeting could be shown through evidence that the website was more accessible in Illinois than anywhere else in the world, that any Illinois residents actually accessed the websites; that an injury occurred in Illinois; or that any of the defendants specifically agreed to ship to Illinois or otherwise reached out to, or expressly aimed their activities at, Illinois or its residents.

Finding the plaintiffs unlikely able to establish personal jurisdiction, the Court denied their request for preliminary relief and dismissed the case.

Editorial Board

 

District Court Finds Canadian Architectural Firm Subject to Suit in California Based on Alleged Willful Infringement of Copyrights to CAD Software in Canada

Autodesk, Inc. v. Kobayashi + Zedda Architects Ltd., U.S. District Court for the Northern District of California, April 22, 2016

Plaintiff Autodesk has developed and licenses copyrighted computer aided design (“CAD”) software.  Defendant Kobayashi + Zedda is a Canadian architectural firm that licensed the software, and is alleged to have infringed on Autodesk’s copyright through unauthorized copying and the provision of unauthorized access to the CAD software.  Kobayashi + Zedda moved to dismiss the case, arguing that it was not subject to personal jurisdiction in San Francisco, where the case was brought.

The Court noted that California’s “long-arm” statute asserted jurisdiction to the full extent of the Due Process Clause of the U.S. Constitution, and thus required that Kobayashi + Zedda have “minimum contacts” with the forum for the case to proceed.  This required an evaluation of various factors, the first of which being whether Kobayashi + Zedda had “purposefully directed” conduct at the forum.  The Court stated that this inquiry required the allegation of an “intentional act” that was “expressly aimed” at the forum, and that the defendant knew would likely result in harm in the forum.  The Court found this standard to be satisfied by Kobayashi + Zedda’s alleged willful infringement of intellectual property that it knew was held by a company having its principal place of business in Northern California.  The second factor considered by the Court was whether Autodesk’s claim arose as a result of Kobayashi + Zedda’s activities directed towards the forum, which the Court interpreted to mean that the claim would not have arisen “but for” the forum-directed activities.  The Court concluded that this factor was also satisfied because the alleged conduct was the infringement itself.  Finally, the Court concluded that requiring a Canadian company to defend its conduct in California was “reasonable.”  In reaching this conclusion, it relied principally on the allegations of willful infringement, and dismissed Kobayashi + Zedda’s claim that litigating in California would be too burdensome.  The Court also acknowledged that Kobayashi + Zedda was a Canadian company, but could identify no particular Canadian interest that counseled against the assertion of jurisdiction.

Editorial Board

 

District Court Leaves For Trial Question whether Ex-U.S. Profits of Stairway to Heaven may be Recovered in U.S. Copyright Action

Skidmore v. Led Zeppelin, U.S. District Court for the Central District of California, April 8, 2016

This copyright infringement suit involves authorship of one of the iconic songs of Rock ‘n Roll:  Stairway to Heaven, written and recorded by the band Led Zeppelin.  The relevant issue for present purposes was the plaintiffs’ claim of damages based on revenues earned by Stairway to Heaven outside the U.S.

The District Court in Los Angeles stated that the Copyright Act did not cover “infringement” outside the U.S., but recited the familiar exception for courts in the Ninth Circuit that damages for U.S. infringement could include profits resulting from exploitation of the infringement in other countries.  Led Zeppelin argued that stairway to Heaven was written entirely outside the U.S., and so the exception did not apply.  Citing guitarist Jimmy Page’s testimony that an early version of the song had been mixed in the U.S., however, the Court concluded that the question whether there was U.S. infringement would have to be resolved at trial.

Editorial Board

 

Jones Act (Covering Injuries at Sea)

District Court Dismisses Case Where Ship Owner’s Only Significant Contact with the U.S. was the Maintenance of an Office

In re M/V MSC Flaminia, U.S. District Court for the Southern District of New York, April 27, 2016

A crew member was killed in an explosion aboard a cargo ship and his estate brought a wrongful death suit seeking damages under the Jones Act.  Defendant Conti owned the ship and defendant NSB operated the ship.  The defendants moved for summary judgment on grounds that the Jones Act did not apply for lack of sufficient contacts with the United States.

The Jones Act allows any seaman who suffers a personal injury during employment the right to a jury trial, but only if there is a substantial connection between the transaction and the United States.  The Jones Act has been applied to American seamen, regardless of the place of injury or the vessel’s origin, and to vessels registered in the U.S. (i.e. American-flagged vessels).  In this case, the deceased was not an American, the ship was not registered in the U.S., and NSB and Conti were both German companies.

The District Court in New York stated that the ultimate test for applicability of the Jones Act is whether the case has “substantial contacts” with the U.S.  To apply the test, courts have examined factors including (1) the place of the wrongful act; (2) the law of the ship's flag; (3) the allegiance or domicile of the injured seaman; (4) the allegiance of the ship owner; (5) the place where the shipping articles were signed; (6) the accessibility of the foreign forum; (7) the law of the forum; (8) the ship owner’s “base of operations”; and (9) the location of the managing and chartering agents for the vessel.

The Court concluded that the only factor arguably weighing in favor of retaining the case was that NSB had a permanent office in New York.  However, and unlike other cases where jurisdiction had been upheld based on that factor, a minority of the vessels that NSB managed traveled to and from U.S. ports and the defendants were non-U.S. companies, owned by non-U.S. persons and with neither U.S.-based executives nor U.S. subsidiaries. 

Concluding that contacts with U.S. ports, without more, are not sufficient to allow application of the Jones Act, the Court dismissed the case.

 

Editorial Board

 

Racketeer Influenced and Corrupt Organizations Act (RICO)

U.S. Supreme Court Concludes that Extraterritorial Application of RICO Depends on Extraterritorial Reach of Underlying Criminal Violations, but that Private Plaintiff Must Show U.S. Injury

RJR Nabisco Inc. v. European Community, U.S. Supreme Court, June 20, 2016

In resolving a three-way split among the U.S. courts of appeals, the U.S. Supreme Court ruled that the extraterritorial application of the RICO statute should follow the extraterritorial application of the underlying violations of law that combine together to form a violation of the RICO statute.  The Court further decided that the statutory element of an “enterprise”—an entity that can serve different purposes in connection with violations of different sections of the statute—is not limited to U.S. domestic enterprises, so long as the enterprise engages in or affects U.S. commerce.  Notably, however, the Court also ruled that a private right of action under RICO (as opposed to a civil or criminal RICO case brought by the U.S. Government) must be based on U.S. domestic injuries to businesses or property.

[Editor’s Note:  For a more detailed discussion of the RJR Nabisco case, please see our article, which originally appeared in the Law360 publication.

Editorial Board

 

District Court Dismisses RICO Claim on Finding that Plaintiff Suffered Injury in Panama, where He Resides, Even Though Funds Were Stolen From His Bank Account in New York

Bascuñan v. Elsaca, U.S. District Court for the Southern District of New York, September 28, 2016

The case involves allegations that the defendants, through various frauds, stole approximately U.S.D64 million from the plaintiff and affiliated companies, including the removal of funds from the plaintiff’s bank accounts in New York.  None of the plaintiffs or defendants is a U.S. resident or entity, and except for the actual withdrawals of funds, no part of the scheme was alleged to have been implemented in the U.S. 

The District Court in New York observed that the recent RJR Nabisco case [discussed above] established that RICO violations may be based on extraterritorial conduct to the extent the underlying criminal violations claimed to constitute the “pattern of racketeering activity” have extraterritorial reach.  But the Court also noted that private RICO actions could be brought only if the plaintiffs suffered injuries in the U.S.  This was the focus of the Court’s discussion:  where the plaintiffs’ injuries occurred.  After reviewing a number of alternative formulations for determining where an “injury” occurred, the Court parsed the language of the RJR Nabisco opinion and concluded that the focus of the inquiry for purposes of a private right of action should be where the plaintiff suffered the injury.  (By contrast, it concluded that the location of the defendants’ alleged conduct should be the focus in determining whether a substantive violation of the RICO statute occurred.)  The Court thus found that the plaintiff suffered his alleged injury in Panama, where he resided, even though the funds were physically located in New York.  The plaintiff’s RICO claims were thus dismissed.

Editorial Board

 

District Court Dismisses RICO Claim Where the Plaintiff’s Business was Injured in Brazil, and It did not Relinquish Possession of its Property in the U.S.

Elsevier v. Grossman, U.S. District Court for the Southern District of New York, August 4, 2016

As relevant here, Elsevier, a leading publisher of technical and medical journals, filed a RICO claim against a Brazilian individual and two related companies—one Brazilian and one U.S.—that allegedly bought multiple journal subscriptions at discounted rates and resold them at a profit to institutional recipients in Brazil that were ineligible for discounted pricing.  The present opinion followed a trial in which the defendants were found to have violated RICO.

As a preliminary matter, the District Court in New York noted that the RJR Nabisco decision [discussed above] made irrelevant the location of the RICO “enterprise” alleged in the case at bar to have been the engine of illegal activity.  It then turned to the substantive RICO claims, and observed that RJR Nabisco held that RICO violations may be based on extraterritorial conduct to the extent the underlying criminal violations claimed to constitute the “pattern of racketeering activity” have extraterritorial reach.  In the present case, those violations essentially were of the Mail Fraud Statute, which has no extraterritorial application. 

The Court then considered whether the individual defendant’s conduct should be considered “domestic.”  Disagreeing with a number of other courts to have addressed the question, the Court found that the “focus” of the Wire Fraud Statute was the frauds themselves, and not use of the mails, and so whether conduct was “domestic” should be judged in light of the conduct effectuating the fraud.  Using this analysis, the Court focused on the defendant’s establishment of a New York Corporation to effect fraudulent payments and his acquisition of a New York office for the corporation to which subscription periodicals were occasionally delivered.  The Court also considered important that the fraud could not have succeeded absent the defendant’s U.S. activities. 

RJR Nabisco also requires that a private plaintiff prove U.S. domestic injuries, and the Court concluded that Elsevier failed to do so.  Observing that the Supreme Court had not described a test for determining the location of a RICO “injury,” the Court concluded that it would apply two tests:  Where an injury to business was claimed, the location would be “where substantial negative business consequences occurred.”  By contrast, if the plaintiff claimed an injury to “property,” the location of the injury would be where the plaintiff parted with the property or where the property was damaged.  Using these tests, the Court concluded that Elsevier claimed an injury to its business in Brazil, where the subscriptions were illegally resold.  Its alleged injury to property was defined by the Court as where Elsevier physically “parted” with the journals that it sold for too low a price (not where title changed hands), and the Court concluded that no evidence suggested that occurred in the U.S.  With no U.S. domestic RICO “injury,” Elsevier could not recover.

Editorial Board

 

Court of Appeals Affirms RICO Convictions Where Murder in Mexico Affected Commerce in the U.S.

U.S. v. Leija-Sanchez, U.S. Court of Appeals for the Seventh Circuit, May 2, 2016

The defendants in this criminal case were convicted of a RICO conspiracy, among other crimes, for arranging a murder in Mexico to reduce competition against a Chicago-based criminal organization that created bogus immigration documents.  On appeal, they argued that their conviction was based on an impermissibly extraterritorial application of the RICO statute.

The Court of Appeals, which had previously rejected a similar argument, reaffirmed its decision in light of the intervening decision of the U.S. Supreme Court in the Morrison case, which set forth the modern rule for determining whether U.S. statutes should be given extraterritorial effect.   Specifically, the Court found that a section of RICO that prohibits murder in aid of racketeering could reach conduct anywhere in the world so long as commerce in the U.S. was significantly affected.  The defendants were convicted of an additional RICO “predicate crime,” conspiring “within the jurisdiction of the United States” to commit a murder, and two defendants argued that the statute could not reach them because they were in Mexico at the time.  The Court addressed whether the statute reached such situation but found no need to resolve the question because of its affirmance of the other convictions.

[Editor’s Note:  The Leija-Sanchez decision was issued less than two months before the U.S. Supreme Court’s clarification of the extraterritorial application of RICO in RJR Nabisco v. European Union, which is discussed in this issue.]

Editorial Board

 

District Court Finds Diminution in Value of Singaporean Company Whose Stock Was Owned by U.S. Parent Cannot be Claimed as a RICO “Injury”

Uthe Technology Corp. v. Allen, U.S. District Court for the Northern District of California, August 26, 2016

Uthe Technology, a manufacturer and distributor of semiconductor equipment, sued a competitor and one of the competitor’s employees under the RICO statute, claiming they participated in a conspiracy to divert business away from Uthe’s wholly-owned Singaporean subsidiary.  The case—which involved an arbitration in Singapore that lasted 19 years—finally returned to Court following the Supreme Court’s ruling in RJR Nabisco v. European Union, [discussed above] which among other things held that private RICO claims must be based on injuries to businesses and property in the U.S. 

The District Court in California entered judgment for the defendants.  It concluded that the injury alleged in the complaint occurred in Singapore, and that the U.S. parent’s interest in that injury was indirect and derivative of its status as a shareholder.  The Court found that the injury suffered by the Singaporean subsidiary could be addressed, if at all, through a claim brought by the subsidiary in Singapore.

Editorial Board

 

Securities Law/Commodities Exchange Act (CEA)

District Court Dismisses Price-Fixing Claims for Transactions in “Foreign” Currency Exchange Rates Except for Direct Transactions between U.S. Plaintiffs and Non-U.S. Trading Desks of Non-U.S. Banks

 

In Re Foreign Exchange Benchmark Rates Antitrust Litigation, U.S. District Court for the Southern District of New York, September 20, 2016

This large class action litigation alleges that many U.S. and non-U.S. banks conspired to fix prices in the “foreign exchange” or “foreign currency” (either referred to as “FX”) market in violation of Section 1 of the Sherman Act and the Commodities Exchange Act.  Among other issues, a number of the non-U.S. banks moved to dismiss the antitrust claims on grounds that they were based on transactions “executed” by U.S. entities outside the country, and thus were barred by the FTAIA as having an insufficient connection with the U.S.  

The District Court in New York explained that the FTAIA permitted antitrust claims based on non-U.S. conduct only insofar as the conduct caused “direct, substantial, and reasonably foreseeable” effect on U.S. commerce.  (The Court also noted that the FTAIA did not apply at all to potential claims arising from imports.)  Noting that the banks had not clearly defined the meaning of “executed,” the term on which their motion was based, the Court ruled on several different types of transactions arguably included in the case.  First, it held that transactions between a U.S. entity and the non-U.S. desk of a defendant bank constituted “import commerce” because the U.S. entity acquired an interest in FX from a non-U.S. bank; because the FTAIA does not apply to bar such “import” claims, these claims were not dismissed.  In contrast, it held that actions by U.S. entities transacting outside the U.S. with non-U.S. desks of the defendant banks did not involve “import” commerce.  Indeed, because those transactions did not affect U.S. commerce, antitrust claims based on them were precluded by the FTAIA.  The defendants tried to bring non-U.S. injuries within the scope of the Sherman Act by arguing that they only arose because of an alleged worldwide conspiracy, of which price-fixing effects in the U.S. integrally tied with conspiratorial pricing elsewhere.  But the Court rejected this argument, concluding that effects on commerce in the U.S. could not be considered to have been “proximately caused” by injuries suffered in other countries. 

[Editor’s Note:  The In re Foreign Exchange case is also addressed in the Securities Law/Commodities Exchange Act section of this report.]

Editorial Board

 

District Court Dismisses CEA Claim Where Relevant Transactions Occurred in Asia

Chan Ah Wah v HSBC North America Holdings Inc., U.S. District Court for the Southern District of New York, August 11, 2016

The plaintiffs are individuals who claim to have been overcharged as a result of a conspiracy among the 17 global-bank defendants to manipulate foreign exchange rates.

The District Court in New York stated that the CEA, being silent as to its territorial reach, required that claims be based on transactions occurring in the territory of the U.S.  In the case at bar, the Court read the complaint as alleging that the relevant transactions took place in Malaysia and Singapore, and concluded that the CEA claim should therefore be dismissed.  

[Editor’s note:  The Chan Ah Wah case is also addressed in the Antitrust/Foreign Trade Antitrust Improvements Act (FTAIA) section of this report.]

Editorial Board

 

District Court Finds Allegedly Inflated Profit Reports by Toshiba Cannot Support Securities Claim Arising out of Purchase of U.S. ADS

Stoyas v. Toshiba Corporation, U.S. District Court for the Central District of California, May 20, 2016

This was a class action lawsuit alleging that the plaintiffs purchased American Depository Shares (ADS) in Toshiba on a U.S. over-the-counter market at inflated prices, based on fraudulent profit reports by Toshiba.  Among other arguments, the defendants contended that the securities laws did not reach the conduct alleged because it occurred outside the U.S.

The District Court in Los Angeles stated that U.S. securities law does not have extraterritorial effect, and would only attach to transactions that either (i) involved the purchase or sale of securities on a U.S. exchange, or (ii) involved domestic U.S. transactions.  The Court determined that the first test was not satisfied, because the “over the counter” U.S. market on which the securities were purchased was not regulated in such a manner as to be an “exchange” for purposes of the extraterritoriality analysis.

With regard to the second test, the Court observed that the ADS at issue here were not, like some involving non-U.S. companies, “sponsored” by Toshiba—meaning that Toshiba played no role in the creation of the U.S. security and had no contractual relationship with the institution that sold it.  Thus, while the plaintiffs’ transactions clearly took place in the U.S., the Court found that they were not ones for which Toshiba could be found liable.

Editorial Board

 

Stored Communications Act (SCA)

Court of Appeals Refuses to Enforce Warrant Requiring Production of Email Information Held on Microsoft Server in Ireland

In the Matter of a Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corporation, U.S. Court of Appeals for the Second Circuit, July 14, 2016

The US Government obtained a warrant under the SCA that purported to require Microsoft to provide information, including information from a customer’s Email account maintained on a server in Ireland.  Microsoft complied with the warrant as regards data stored in the US, but refused as to the customer Email content data stored in Ireland.  The District Court required Microsoft to comply with the warrant in full, but the Court of Appeals disagreed.  A majority of the three judge panel (one judge agreed with the result but offered a somewhat different rationale) began its analysis with the parties’ agreement that the SCA did not contemplate or permit extraterritorial application.  Having concluded that the SCA does not have extraterritorial effect, the Court proceeded to determine whether a warrant served on a company in the United states should be considered an extraterritorial exercise of U.S. law if it seeks email content held abroad. To answer that question, the Court determined that the “focus” of the SCA warrant provisions is the protection of customers’ privacy interests in stored communications.  Because the stored communications sought by the Government are in Ireland, the majority concluded that the warrant effected an impermissible extraterritorial application of the SCA.  In so ruling, the majority distinguished warrants under the SCA seeking the email content of customers from subpoenas issued in federal cases, which routinely require the production of a company’s own records even if outside the US if within a proper defendant’s “custody or control.”

Having concluded that the SCA does not have extraterritorial effect, the Court proceeded to determine whether the warrant should nonetheless be considered appropriately domestic because it was served on a U.S. corporation in the U.S.  To answer this question the Court determined that the “focus” of the FCA is the appropriate protection of customers’ privacy.  Although the customer’s nationality and residence were not disclosed, the Court concluded that the relevant location for purposes of this inquiry was where the data would be accessed—in Ireland—and thus concluded that the warrant effected an impermissible extraterritorial application of the SCA.

Editorial Board

 

Personal Jurisdiction/Forum Non Conveniens/ Foreign Sovereign Immunity Act (FSIA)

Personal District Court Finds Specific Personal Jurisdiction over Nonresident Because He Traveled to Michigan and Successfully Solicited Investments from American Citizens

Akbar v. Bangash, U.S. District Court for the Eastern District of Michigan, July 29, 2016

Plaintiff Amin Khan, a Michigan resident, along with other American citizens, sued Global Health Services Limited (GHS), a Pakistani company, and its Chief Executive Officer, Bangash (a Pakistani resident), for soliciting them to enter into a contract and invest in allegedly “worthless” shares.  The complaint alleged that Bangash traveled to Khan’s home in Michigan and defrauded him into investing in the development of hospital facilities in Pakistan.  The defendants moved to dismiss the complaint, arguing that the Court lacked personal jurisdiction over them and that forum non conveniens required dismissal.

The District Court in Michigan rejected defendants’ arguments.  In finding that the plaintiffs established a prima facie showing of personal jurisdiction, the Court applied the traditional two-part analysis, examining whether personal jurisdiction over defendants satisfied both Michigan’s “long-arm” statute and the requirements of the Due Process Clause.  

First, the Court noted that Michigan’s long-arm statute extends specific personal jurisdiction over nonresidents who conduct “even the slightest act of business” in Michigan.  Given that Bangash visited Khan at his home in Michigan to persuade him to invest in GHS and persuaded Khan at that time to sign the investment contract and present an installment payment, the Court found that this transaction satisfied Michigan’s long-arm statute.

Second, the Court determined that exercising specific personal jurisdiction in this case comports with the Due Process Clause.  The Court evaluated three factors:  1) whether defendants purposefully availed themselves of acting in the forum state; 2) whether plaintiffs’ claims arose from defendant’s actions in the forum state; and 3) whether exercise of jurisdiction over defendants was reasonable.  The Court concluded that the three factors weighed in favor of subjecting defendants to personal jurisdiction in Michigan.  According to the Court, the facts that Bangash called Khan in Michigan to solicit investments and that the transaction was consummated in Khan’s home supported a finding that defendants purposefully availed themselves of acting in the forum state.  The Court also found that plaintiffs demonstrated a causal nexus between their claims and defendants’ activities in Michigan.  Finally, it concluded  that jurisdiction over defendants would not be unreasonable, particularly when Michigan has an interest in ensuring that its residents, like Khan, have an adequate recourse for harms inflicted by nonresidents.

Next, the Court applied a three-part test to determine whether the Court should, at its discretion, decline jurisdiction on forum non conveniens grounds.  First, the Court noted that defendants failed to overcome the presumption of deference afforded to a U.S. resident’s choice of a U.S. forum.  Then, the Court concluded that Pakistan is potentially an alternative forum because its laws may provide an adequate remedy for plaintiffs’ dispute.  Finally, the Court found that, upon balancing “public” and “private” interests, plaintiffs’ choice of forum was not unnecessarily burdensome.  As to the private interests, the Court concluded that the relative costs associated with obtaining witnesses and the ease of gathering evidence did not weigh in favor of dismissal.   Moreover, as to the public interests, the Court determined that any interest that Pakistan might have in the litigation did not outweigh the interest of plaintiffs’ connections to the local forum or the location of their injuries—both of which are in the U.S.  The Court also emphasized that the defendants failed to overcome the presumption that Michigan law applies to plaintiffs’ tort claims or to rebut the arguments that a Michigan juror would be minimally burdened in addressing those claims.  Thus, the Court declined to dismiss the case on forum non conveniens grounds.

Editorial Board

 

District Court Dismisses Case against Foreign Holding Company with No Direct Activities in the State

Barone v. InterContinental Hotels Group PLC, U.S. District Court for the Northern District of California, May 20, 2016

Defendant Barone brought a personal injury case in District Court in California against British holding company InterContinental Hotels Group (“IHG”) for burns sustained during a spa treatment at a Dublin InterContinental hotel.  The Court dismissed the case for lack of personal jurisdiction, finding that although IHG subsidiaries may have operated hotels in California, the holding company itself was not registered with the California Secretary of State, was not qualified to do business in California, and had no contracts or other presence in the State. 

In considering whether IHG’s contacts with the State of California were sufficient to warrant an exercise of personal jurisdiction, the Court found that it lacked both “specific” and “general” personal jurisdiction.  The Court first considered whether it could assert “specific personal jurisdiction” over IHG, which would have required a substantial connection between the defendant’s contacts with the State and the claims at issue.  Since plaintiff’s injury occurred in Ireland, the Court found that that injury lacked the significant relationship to the defendant’s forum-related activities required for such an exercise of jurisdiction. 

The Court then considered whether it could exercise “general personal jurisdiction” over IHG, which permits any and all claims against a defendant when their affiliations with a foreign State are so “continuous and systematic” as to render them essentially at home in the State.  The Court noted that this standard is “fairly high” and requires a corporate defendant’s contacts with the forum to “approximate physical presence.”  Accordingly, the Court declined to exercise general personal jurisdiction over IHG since IHG was not incorporated in California and did not maintain a principal place of business in the State. 

As an alternative to dismissal, plaintiff filed a motion for discovery arguing that the Court should permit jurisdictional discovery to determine the relationship between IHG’s Dublin hotel, where the injury occurred, and the California hotels allegedly owned by IHG subsidiaries.  Among the facts plaintiff cited in support of her request for jurisdictional discovery was a passage in IHG’s annual report “discussing the possibility of liability in the United States.”  However, the Court did not find this fact sufficient to warrant further discovery and dismissed it as too tenuous to establish personal jurisdiction even if true.  The Court therefore dismissed the case and denied plaintiff’s request for further discovery.

Editorial Board

 

Court of Appeals Finds No General Personal Jurisdiction Over Non-U.S. Companies Even Though the Focus of their U.S. Operations Was in the Forum State

Best Odds Corp. v. Ibus Media Limited, U.S. Court of Appeals for the Ninth Circuit, July 21, 2016

Best Odds, a Las-Vegas-based company, sued Ibus Media and a related holding company, both non-U.S. companies, for infringement and misappropriation of trademarks.  Unusually, Best Odds asserted only that the defendants were subject to the Court’s general personal jurisdiction—a demanding standard generally reserved for circumstances where the defendant is incorporated and has its principal place of business in the forum.  While the defendants conceded that their U.S.-based operations were “Nevada-centric,” no further showing of the defendants’ operations was apparently made. 

The Court concluded that no showing had been made to support a finding of general personal jurisdiction.  It added that neither defendant (1) maintained any offices or bank accounts in Nevada; (2) had a registered agent in Nevada; (3) had paid, or been required to pay, taxes in Nevada; or (4) was registered or licensed to do business in Nevada.

Editorial Board

 

District Court Finds Personal Jurisdiction over UK Managing Partner of California Investment Fund Company

Chassin Holdings Corp. v. Formula VC Ltd., U.S. District Court for the Northern District of California, April 19, 2016

This case involves two defendants jointly accused of fraud, violations of securities laws, and contractual and fiduciary breaches, all related to a failed venture capital firm.  One defendant, Formula VC Ltd., is a Cayman Islands company with its principal place of business in California.  The other defendant, Andrey Kessel, is a UK citizen and one of two managing partners of Formula VC. 

The District Court in California first considered defendant Kessel’s argument that it lacked personal jurisdiction over him, stating that it must determine whether Kessel’s conduct satisfied the two requirements of the Due Process Clause of the U.S. Constitution: That he have minimum contacts with the U.S., and that the exercise of jurisdiction would satisfy “traditional notions of fair play and substantial justice” and thus be reasonable. 

With respect to Chassin’s claim under the Securities Exchange Act of 1934, the Court observed that claims could be presented in any U.S. district and therefore the jurisdictional inquiry considered the defendants’ contacts with the U.S. as a whole, not just with the forum State.  Further, the Court noted that the plaintiff could take advantage of the jurisdictional test applied in either tort or contract cases—respectively, whether the defendant “purposefully directed” its conduct towards the forum, or whether it “purposefully availed” itself of the protection of the forum’s laws.  Given these standards, the Court found minimum contacts to exist.  First, Kessel had set up bank accounts in California and operated investment funds through those accounts.   Second, Kessel exercised control over the venture capital firm at issue in the litigation and established minimum contacts with the State of California through his involvement in that corporation, which had its principal place of business in California.  Third and finally, the Court found that Kessel purposely availed himself of the forum by taking advantage of U.S. laws and capital markets. 

The Court also found that its exercise of personal jurisdiction over Kessel would be reasonable, not least of all because Kessel failed to argue in his motion to dismiss that such exercise would be unreasonable.  The Court dismissed any idea that Kessel would be burdened by having to defend a suit in the U.S. given the conveniences of modern transportation and telecommunication, and also found that an exercise of jurisdiction would be proper given the absence of any expressed interest on the part of the UK in adjudicating plaintiff’s allegation.

Editorial Board

 

Court of Appeals Affirms Dismissal of Suit Against U.S. Corporation’s Foreign Parent Company for Lack of Personal Jurisdiction

Cox v. Koninklijke Philips, N.V., U.S. Court of Appeals for the Sixth Circuit, May 9, 2016

The plaintiffs sued Phillips Electronics North America (“Phillips”) and its Dutch parent company Koninklijke Phillips, NV. for injuries allegedly arising from exposure to toxic compounds during the Plaintiffs’ employment. The U.S. District Court for the Eastern District of Kentucky dismissed the claims against the defendant for lack of personal jurisdiction, and the plaintiffs appealed.

The plaintiffs argued that personal jurisdiction over the defendants was proper under three independent provisions of Kentucky’s “long-arm” jurisdictional statute.  They first argued that defendant had transacted business in Kentucky by signing a corporate agreement on Phillips’ behalf. The Court of Appeals rejected this argument, noting that such showings had been found inadequate to support jurisdiction under the federal Due Process Clause, and that the Kentucky statute was even narrower.

The plaintiffs next argued that personal jurisdiction existed because the defendants derived substantial revenue from Phillips’ facility in Kentucky. The Court disagreed, noting that if it accepted Plaintiffs’ argument every company with a Kentucky subsidiary would automatically be subject to suit in Kentucky.  

The Court of Appeals concluded that the plaintiffs had failed to satisfy the requirements for jurisdiction under Kentucky law, and so it did not ask the further question whether the exercise of jurisdiction would be “reasonable” under the Due Process Clause of the U.S. Constitution.

Editorial Board

 

Court of Appeals Reverses Dismissal on Forum Non Conveniens Grounds Where Defendants Claimed no Connection to India but Also maintained that India was an Alternative Forum for the Dispute

Deb v. Sirva, U.S. Court of Appeals for the Seventh Circuit, August 11, 2016

Plaintiff Deb hired Allied Lemuir, an Indian moving company, to ship his belongings from Calcutta, India to St. John’s, Canada.  His belongings never arrived, and he then sued two American companies, SIRVA and Allied Van Lines, in the United States.  Plaintiff alleged that Allied Lemuir was operating a joint venture with the defendants in India. 

The Court of Appeals reversed the district court’s dismissal of the case on forum non conveniens grounds, finding that the defendants failed to prove that India and Canada were available alternate forums.  Specifically, the Court of Appeals observed that the defendants had both relied on the terms of their joint venture agreement to claim no relation to the operative events in India, and at the same time maintained that they could be subject to an Indian court’s jurisdiction.  The Court of Appeals concluded that the defendants couldn’t “have it both ways.”

The Court emphasized that dismissal on forum non conveniens grounds is a remedy to be exercised “sparingly” and requires holding defendants to a “heavy burden.”  In this case, the defendants’ naked assertion that they could be subject to suit in India failed to satisfy any burden, let alone a heavy one.

Editorial Board

 

District Court Finds Personal Jurisdiction Based on Sales on Products into Forum State

Godo Kaisha v. TCL Communication, U.S. District Court for the District of Delaware, August 17, 2016

Plaintiff Godo Kaisha (a Japanese corporation) sued Defendant TCL Holdings (a Chinese corporation) for patent infringement.  Godo Kaisha also sued TCL’s subsidiaries TCT Hong Kong (a Hong Kong corporation) and TCT U.S. (a Delaware Corporation). Defendants TCT Holdings and TCT Hong Kong moved to dismiss for lack of personal jurisdiction.

The District Court explained that to establish personal jurisdiction, Godo Kaisha must demonstrate facts sufficient to satisfy Delaware’s long arm statute and also the requirements of the Due Process Clause of the U.S. Constitution.  In Delaware, a single intentional shipment of an infringing product into the State, or to a Delaware customer, satisfies the long arm statute.  TCT Hong Kong made direct sales to Delaware customers via its website, and both companies intentionally shipped infringing products to Delaware retailers; thus, the long arm statute was satisfied.

In the alternative, the long arm statute was satisfied under a “stream of commerce” theory, which requires that Plaintiff show: (1) an intent to serve the Delaware market, and (2) that the introduction of the product to the market gave rise to Plaintiff’s injury. The Court explained that a defendant’s intent to serve the U.S. market as a whole is sufficient to establish an intent to serve the Delaware market, unless there is evidence that the defendant specifically intended to exclude Delaware.  Here, both Defendants actively marketed their infringing phones in the U.S. and distributed them via national retailers like Amazon.com, Best Buy, and Walmart.  Because there was no evidence that Defendants intended to exclude Delaware from their distribution chain, the stream of commerce theory was satisfied.

In order to satisfy Due Process requirements, a plaintiff must show that a defendant purposefully directed activity at the forum state.  For the constitutional test, however, the mere placement of a product into the stream of commerce, without more, does not qualify as “purposeful direction.” Here, the Court found that the defendants intentionally shipped the infringing products into Delaware, knowing that retailers would sell the products in the State, and this satisfied the constitutional requirement.

Editorial Board

 

District Court Declines to Dismiss Case Against Japanese Bank Over Failed Bitcoin Exchange Despite Presence of Significant Evidence and Witnesses in Japan

Greene v. Mizuho Bank, U.S. District Court for the Northern District of Illinois, August 26, 2016

This class action lawsuit alleges that Mizuho Bank and others are liable for the failure of the “Mt. Gox” Bitcoin exchange.  After concluding that the complaint stated a claim under the governing State law, the District Court in Chicago considered whether the case should be dismissed on forum non conveniens grounds.  It first considered whether there was an “alternative and adequate” forum for the case, and focused on Mizuho’s proposal that the case should be heard in Japan.  The plaintiffs objected that Japanese law does not authorize class actions, but the Court concluded that this factor did not constitute so significant a disadvantage to litigation of the plaintiffs’ claims that it made a potential trial in Japan an inadequate substitute.

The Court then proceeded to balance considerations of private interests and concluded that they did not point strongly one way or another.  Most notably, the Court observed that Bitcoin maintained its accounts in Japan (where Mt. Gox’s operator also could be found), and that many records were located there and would have to be translated into English if the U.S. case were to continue.  But the Court was critical of Mizuho for identifying only a small range of potentially relevant documents that would be implicated by this inconvenience, and not arguing that the evidence in Japan would be inaccessible.

The Court also was required to balance factors of public interest, and concluded that they slightly favored retaining jurisdiction.  Dismissal would ease court congestion, which was much worse in District Court in Chicago than in Japan, but more importantly the Court concluded that U.S. law would apply to the case.  It acknowledged that both Japan and the U.S. had a strong interest in resolution of the case.  As a closing note, the Court noted that it would have denied Mizuho’s motion to dismiss the case even if the factors slightly favored dismissal, as U.S. citizens are entitled to deference in their selection of U.S. courts to hear disputes.

Editorial Board

 

District Court Declines to Dismiss Case on Forum Non Conveniens Grounds Even Though Adequate Alternative Forum Exists

Henning v. Arya, U.S. District Court for the District of Nevada, July 26, 2016

The plaintiff Henning brought tort and breach of contract claims against Arya, a resident of the United Arab Emirates (UAE), based on his alleged violent acts when he and Henning were cohabitating in UAE.  Among other relief, Arya sought to dismiss the case on forum non conveniens groundsThe Court stated that granting such a motion required that Arya show (1) the existence of an adequate alternative forum, and (2) that the balance of private and public interest factors favors dismissal.  It noted a strong presumption in favor of deferring to a U.S. citizen’s choice of a U.S. forum. 

Henning argued that UAE was not an adequate alternative forum because the defendant’s alleged wealth and influence, and the illegality of her cohabitation with Arya, made it impossible for her to receive a fair trial there.  While acknowledging that Henning had raised “serious concerns” about her ability to obtain a fair trial, the Court concluded that those concerns did not meet the very strict standard required:  that the alternative forum provide “no practical remedy” at all.

Even where an alternative forum exists, however, the Court observed that Arya was required to show that both private and public interests favored dismissal.  In the case at bar, the Court concluded that the private factors did not strongly weigh in favor of dismissal, noting principally that (i) certain witnesses and evidence was likely to be in the U.S., and the testimony of the parties and their experts in any event would be the most critical, (ii) Arya’s wealth made it easier for him to litigate in the U.S. than it would be for Henning to litigate in UAE, and (iii) that Henning’s experiences in UAE might suggest that litigation there might result in her suffering further mental trauma and security costs.

As to factors of public interest, the Court cited the State of Nevada’s strong interest in having its residents obtain redress for their injuries, and dismissed concerns that the possible application of UAE would prove too difficult.

For these reasons, the Court denied the motion to dismiss on forum non conveniens grounds.

Editorial Board

 

District Court Finds Personal Jurisdiction over Foreign Insurer and Rejects Dismissal Based on Forum Non Conveniens

Hill v. Assurance-Foreningen Skuld, U.S. District Court for the District of Guam, April 4, 2016

Plaintiff Hill, personal representative of the estate of David Hill, sued defendants Assurance-Foreningen Skuld and Skuld Mutual Protection and Indemnity Association Ltd., both Norwegian companies.  Hill’s husband had been killed when a boat insured by the defendants sank off the coast of Guam.  The defendants moved to dismiss the case for lack of personal jurisdiction and forum non conveniens

The Court began by examining whether it had personal jurisdiction over the defendants. The Court noted that Guam’s long-arm statute provides personal jurisdiction on any basis consistent with the U.S. Constitution, and that Plaintiff did not allege general personal jurisdiction over the defendants. Thus the sole issue was whether the defendants’ contacts with Guam were of such a quality and nature that they could reasonably expect to defend themselves in an action in Guam.  The Court used a three-factor test to determine whether it could exercise specific personal jurisdiction over the defendants, asking whether defendants purposefully availed themselves of the privilege of conducting business in Guam, whether Plaintiff’s claim arose out of defendants’ contact with Guam, and whether the exercise of personal jurisdiction would comport with fair play and substantial justice.

On the first factor, Hill argued that the defendants contracted to provide insurance to the owner of the boat, which was based in Guam, and that defendants filed several letters of undertaking in the U.S. District Court in Guam after the ship sunk.  The Court found this conduct sufficient to constitute “purposeful availment” because insurers should reasonably expect to defend coverage claims in their insured’s locality. Additionally, the Court found that the defendants’ letters of undertaking were further evidence of purposeful availment, as the letters arose from essentially the same facts as Plaintiff’s claim. The Court further found that the defendants’ contract with ship’s owner was the but-for cause of the litigation, and therefore that the Plaintiff’s claim “arose out of” the defendants’ contact with Guam.

The Court then considered whether jurisdiction over the defendants would comport with fair play and substantial justice.  Relying on the Ninth Circuit’s seven-factor test, the Court examined the extent of the defendants’ purposeful interjection into Guam, the burden on defendants of defending in Guam, the extent of any conflict with Norway, Guam’s interest in litigating the dispute, the most efficient judicial resolution of the dispute, Guam’s importance to the plaintiff’s interest in convenient and effective relief, and the existence of an alternate forum.  The Court found that defendants’ insuring the ship’s owner showed purposeful injection into Guam, that litigating in Guam would not pose an unfair burden on defendants given their familiarity with Guam’s legal system, that Guam had an interest in litigating the dispute, and that Guam was important to Plaintiff’s interest in relief. Thus, these four factors favored Plaintiff. On the other hand, the Court found there was a potential for conflict with Norway, that resolution in Norway would be slightly more efficient, and that Norway was a potential alternate forum. Thus, these three factors favored defendants. On balance, the Court concluded that the seven-factor test showed jurisdiction over defendants would comport with fair play and substantial justice. As a result, the Court held that personal jurisdiction over defendants was proper.

The defendants also argued the suit should be dismissed on forum non conveniens grounds. The Court noted that a domestic plaintiff’s choice of forum is entitled to considerable deference. Thus, courts dismiss for forum non conveniens only when an adequate alternate forum exists, and the balance of public and private interest factors favor dismissal.  Here, the Court concluded that Norway was an adequate alternate forum after defendants demonstrated they were amenable to process in Norway and satisfactory remedies were available in Norway. The Court then considered six private interest factors, including the relative ease and access to proof, location of witnesses and evidence, enforceability of a Norwegian judgment by U.S. courts, and any other practical problems.  Because the bulk of the defendants business was located in Norway, and there were no barriers to enforceability of the judgment, the Court concluded that that all the private interest factors favored defendants. The Court then turned to the public interest factors, including Guam’s interest in the litigation and the interest in avoiding application of Norwegian law by U.S. courts. While the Court noted trying the case in Guam would require the application of Norwegian law (in accordance with a contract provision), it nevertheless concluded the public interest factors generally favored Hill based on Guam’s connection to the underlying facts of Plaintiff’s claim. Because the private and public interests conflicted, the Court held that defendant had not managed to overcome the considerable deference due to Plaintiff’s choice of forum. As a result, the Court denied defendants’ motion to dismiss for forum non conveniens.

Editorial Board

 

District Court Finds No Personal Jurisdiction over Non-U.S. Banks Alleged to have manipulated LIBOR through Non-U.S. Conduct

In re: LIBOR-Based Financial Instruments Antitrust Litigation, U.S. District Court for the Southern District of New York, April 15, 2016

Plaintiffs in this expansive class-action litigation made LIBOR-based transactions on exchanges.  In the matter addressed in this opinion, they sought to amend their complaint to add two types of antitrust claims:  “trader” claims alleging the day-to-day manipulation of LIBOR by traders, and “persistent suppression claims” alleging longer-term manipulative conduct.  Non-U.S. defendant banks opposed, in part based on the argument that they were not amenable to personal jurisdiction in connection with the claims alleged.  The District Court in New York agreed.  Citing its prior holding with respect to trader-based claims, the Court reasserted its ruling that personal jurisdiction could be asserted only if the person who allegedly caused manipulation of LIBOR to occur acted in the U.S. was not alleged in the case at bar.  The Court rejected various arguments made by the plaintiffs to change that ruling, and to apply a different standard to the “persistent suppression” claims.

The Court also stated that it would apply to all claims the familiar requirements that the plaintiffs allege “minimum contacts” with the forum, a standard usually understood to require that the plaintiffs’ claims arise out of the defendants’ contacts with the forum.  In the process of reaching that conclusion, the Court rejected the plaintiffs’ argument that they should not be required to show that the defendants’ contacts with the forum were the “but-for” cause of the injuries alleged.  The plaintiffs did allege that the banks’ U.S. activities caused the recent financial crisis, which in led to the defendants' allegedly suppressed LIBOR submissions, but the Court found this too remote a connection to meet the test.  The Court also rejected the plaintiffs’ argument that the defendants, as “large traders” of LIBOR-denominated instruments, were motivated to engage in unlawful conduct, finding an allegation of motive alone to be insufficient to allege actual unlawful activity.  In so ruling, the Court distinguished a holding in which manipulation of the FOREX exchange rate was allegedly accomplished through trading strategies implemented in the U.S., and affecting billions of dollars of U.S. trades. 

Finally, the Court rejected the plaintiffs’ argument that non-U.S. banks consented to general personal jurisdiction as a consequence of their registering to operate branch banks in New York.  It found the registration statute limited consent to jurisdiction to claims arising out of transactions with the banks’ New York branches, and disagreed with other courts that held otherwise in the context of cases seeking to enforce post-judgment information subpoenas.

Editorial Board

 

Court Finds that “Corporate Shield” Doctrine Does Not Preclude Assertion of Personal Jurisdiction over Partner of Company on Whose Behalf he Acted in Forum

Kapu Gems, et al. v. Diamond Imports, Inc., U.S. District Court for the Northern District of California, August 12, 2016

In this procedurally complicated case, Diamond Imports, a U.S. importer and retailer of diamonds, countersued Kapu Gems (an Indian company), Kapu Gems Ltd. (a Hong Kong company), and Vaghani (an Indian citizen) over a failed business venture.  Vaghani moved to dismiss for lack of personal jurisdiction.

California’s personal jurisdiction requirements are the same as the requirements of the Due Process Clause of the U.S. Constitution, which provide that a defendant have certain minimum contacts with the forum and that maintenance of the suit not offend traditional notions of fair play and substantial justice.  Diamond Imports alleged that the Court had personal jurisdiction over Vaghani (who was not a plaintiff in the original suit) because Kapu Gems, over which the Court has jurisdiction, is merely Vaghani’s “alter ego.”  Under the alter ego doctrine, courts will “pierce the corporate veil” and hold its controlling individual liable if: (1) there is such a unity of interest and ownership between the corporation and the individual controlling it that their separate personalities no longer exist; and (2) inequity would result if the controlling individual were not held liable.  Factors that can support the first element include: commingling of funds or other assets, use of the same office or business location, employment of the same employees, and failure to maintain arm's length relationships among related entities.  Here, Diamond Imports failed to plead any facts tending to show that Kapu Gems is Vaghani’s alter ego. Thus, alter ego liability did not support the exercise of personal jurisdiction over Vaghani.

In the alternative, Diamond Imports argued that Vaghani personally had sufficient contacts with California to be subject to its specific personal jurisdiction.  Vaghani’s contacts included visiting San Francisco to set up the alleged joint venture and to meet with one of the customers that was allegedly unlawfully solicited.  In response, Vaghani asserted the “fiduciary shield doctrine,” which in some circumstances shields individuals from personal jurisdiction if their contacts with the forum occur only as an officer or employee of a company.  The District Court in California rejected the argument, finding that it only prevents courts from exercising personal jurisdiction over a corporate officer who performs activities solely in a corporate or employment capacity. Here, Vaghani was a partner of Kapu Gems and could not rely on the doctrine as a valid defense. Thus, the Court found that minimum contacts were adequately pleaded and refused to dismiss the counterclaim for lack of personal jurisdiction.

Editorial Board

 

District Court Finds Personal Jurisdiction over Icelandic Defendants That Installed Machinery in Minnesota

Lei Packaging, LLC v. Emery Silfurtun, Inc., U.S. District Court for the District of Minnesota, August 16, 2016

Plaintiff, Lei Packaging, sued Defendant Emery for breach of contract.  It also asserted related claims against Samey and Hedinn Ltd. (“Icelandic Defendants”).  The Icelandic Defendants moved to dismiss for lack of personal jurisdiction and improper venue.

Minnesota’s personal jurisdiction requirements are the same as those under the Due Process Clause of the U.S. Constitution, under which a defendant must have certain minimum contacts with the forum and that maintenance of the suit not offend traditional notions of fair play and substantial justice.  The governing precedent in the Eighth Circuit uses a five factor test to determine whether minimum contacts exist: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to these contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties.

Here, defendant Emery entered into a contract (“Machine Agreement”) to provide a manufacturing machine for Lei Packaging.  Emery subsequently contracted with the Icelandic Defendants to assist in carrying out its obligations under the Machine Agreement.  The contract between Emery and the Icelandic Defendants explicitly stated that the work was to be performed for Lei Packaging in Minnesota.  And, the Icelandic Defendants allegedly sent agents to Minnesota, for a significant amount of time, to install and perform maintenance on the machine.  The machine was faulty, so Lei Packaging and Emery executed a modification agreement.  The District Court in Minnesota first concluded that jurisdiction over the Icelandic defendants should be measured with reference to all of their dealings in connection with the contract, not just the modification.

The Court then found that sufficient contacts with Minnesota existed to support the assertion of jurisdiction.  The Icelandic Defendants’ employee visits to Minnesota were made to further their contractual obligation to install the machine at Lei Packaging’s Minnesota facility and directly related to the cause of action, so the Court found that the first three factors of the jurisdictional inquiry were satisfied.  The fourth factor was satisfied because the machine was installed in Minnesota and operated in Minnesota and the representatives for the Icelandic Defendants spent considerable time in Minnesota working on the machine.  Thus, Minnesota had an interest in providing a forum for Lei Packaging to litigate its claims.  The fifth factor was satisfied because Lei Packaging did not have any involvement in bringing the Icelandic Defendants onto the project, nor did any Lei Packaging representative travel to Iceland. Thus, it was more convenient for the Icelandic Defendants to litigate in Minnesota. As such, the Court had personal jurisdiction over the Defendants.

Editorial Board

 

District Court Transfers Case to Florida on Finding That Personal Jurisdiction Could be Based on Italian Company’s Prior Sale of Allegedly Defective Amusement Park Ride to Florida Company

Lidey v. Moser’s Rides, S.r.L., U.S. District Court for the Western District of Pennsylvania, May 12, 2016

Plaintiff Lidey brought suit in the Western District of Pennsylvania alleging defective design and manufacture for injuries he sustained while assembling defendant’s amusement park attraction known as the “Spring Ride.” Lidey’s injuries occurred in Pennsylvania. Moser Rides, an Italian company, manufactured the Spring Ride in Italy. The defendant then transported the ride to Jacksonville, Florida, showed the ride at a tradeshow in Orlando, Florida, stored the ride in Riverview, Florida for 3 years, and then sold the ride to a Florida company. The ride was then sold twice before arriving in Pennsylvania.

Moser Rides moved to dismiss the claim for lack of personal jurisdiction.  Lidey conceded that the Court lacked general or specific jurisdiction over the cause of action, hoping to keep his case alive through a transfer to U.S. District Court in Florida.  This required that the Court first find that the personal jurisdiction would attach in Florida.  To analyze whether this was the case, the Court stated that Lidey would be required to show that: (1) Moser Rides purposefully directed its activities at Florida; (2) the litigation arose out of or is related to at least one of those activities; and (3) maintenance of the suit would comport with notions of fair play and substantial justice.

The Court explained that Moser Rides had the requisite contacts with Florida because it “purposefully availed” itself of the privilege of doing business in that State by selling its product to a Florida company.  It was reasonable for Moser Rides to foresee that it would be required to defend itself in Florida in connection with matters relating to that contract.  Thus, Moser Rides was subject to the Florida court’s specific jurisdiction in virtue of Florida’s long arm statute.

The Court denied defendant’s motion to dismiss for lack of personal jurisdiction and instead transferred the case to U.S. District Court for the Middle District of Florida.

Editorial Board

 

 

District Court Dismisses Case against Japanese Corporations that only Sold Products to the U.S. Indirectly

Mitsui Sumitomo Ins. U.S.A, Inc. v. Kyocera Mita Corp., U.S. District Court for the Central District of California, July 25, 2016

Plaintiffs Mitsui Sumitomo Insurance U.S.A, Inc. and Mitsui Sumitomo Insurance Company of America sought reimbursement from Defendants Kyocera Mita Corporation, Kyocera Document Solutions, Inc. (“KDS”), and Kyocera Document Technology Co., Ltd. (“KTD”), to recover money the plaintiffs paid on behalf of an entity they insured, Kyocera Document Solutions America, Ltd. (“Kyocera America”).  Kyocera America is a copier distributor.  Plaintiffs claimed that the defendants designed and manufactured a defective copier that its affiliate Kyocera America later distributed, which caused a fire and resulted in the plaintiffs paying claims.  The defendants moved to dismiss the case, claiming that they did not have sufficient minimum contacts with California to support the assertion of personal jurisdiction over them.  KDS is a Japanese corporation and KDT is a Chinese corporation; the former has its principal place of business in Japan, and the latter, in China. Neither company has ever maintained an office or facility in California, sold products directly to customers in California, or employed agents or employees in California.  All of KDT’s products are sold to Kyocera Document Technologies, a Hong Kong-based corporation, which then sells them to KDS to be distributed internationally. All KDS products that are sold in the United States are distributed by Kyocera America, which is a wholly-owned subsidiary of KDS.

The Court stated that personal jurisdiction over a defendant generally is proper where authorized by the forum state’s long-arm statute and consistent with the Due Process Clause of the U.S. Constitution.  In this case, California’s long-arm statute allows for personal jurisdiction to the fullest extent allowed by the Due Process Clause.

The Court first considered general personal jurisdiction, which can only be found over a defendant corporation if the corporation conducts “continuous and systematic” activities in the forum state, such that it could be considered “essentially at home” there.  The plaintiffs asserted only that KDS loaned thirty-five employees to Kyocera America and Kyocera Document Solutions Development America (“KDDA”), and that this rendered KDS at home in California. The Court disagreed, concluding that KDS has no physical presence in the State, and that the “handful” of employees it loaned to Kyocera America and KDDA did not qualify it as being “at home” there.  Moreover, the Court found that the plaintiffs did not provide enough specific information as to the nature or duties of those employees, how long they had been in California, and how long they were likely to stay even to warrant serious consideration.  Because of these deficiencies and the fact that the plaintiffs did not make any general personal jurisdiction arguments regarding KDT, the Court found it had no general personal jurisdiction over the defendants.

The Court then considered whether it could exercise specific personal jurisdiction over the defendants, stating that to do so would require that a nonresident defendant have at least “minimum contacts” with the forum state and that the exercise of jurisdiction “does not offend traditional notions of fair play and substantial justice.”  Here, the Court found that neither KDS nor KDT had sufficient connections to California to support jurisdiction.  It explained that KDS did not have sufficient control over Kyocera America to create such a connection, and that the corporation did not take any affirmative action toward California.  The Court also explained that KDT’s connections to California were even further attenuated than KDS’s, and as such, specific personal jurisdiction could not be established with regard to KDT, either.

Because the Court lacked personal jurisdiction over the defendants, it granted their motion to dismiss the case.

Editorial Board

 

District Court Finds that Meetings in Forum Sufficient to Establish Personal Jurisdiction over Canadian Entities

Mueller Systems, LLC v. Robert Teti and ITET Corporation, U.S. District Court for the District of Massachusetts, August 4, 2016

Mueller Systems, located in Massachusetts and organized under Delaware law, sued Robert Teti, a resident of Canada and sole owner of ITET Corporation, an Ontario corporation. The parties previously collaborated to develop an electronic water valve system.  Mueller received an exclusive right to market the valve, while Teti retained ownership of the intellectual property and patents related to the valve.  Upon the lapse of the agreement in September 2012, Mueller developed a remotely controlled water valve and in October 2013 Teti filed suit against Mueller entities in Canada alleging, inter alia, misappropriation of confidential information and intellectual property. In July 2015, Mueller filed this case seeking a declaratory judgment that it did not misappropriate Teti’s confidential information or trade secrets.

The District Court in Massachusetts first determined that no general personal jurisdiction existed because Teti is a Canadian citizen and ITET a Canadian corporation that operates principally in Canada that, despite having four meetings with Mueller in Massachusetts, could not be deemed “at home” in the state.

Next, the Court determined that there were sufficient minimum contacts to invoke specific jurisdiction by considering three factors: the relation between the present suit and the defendants’ contact with the forum, the defendants’ “purposeful availment” of Massachusetts law, and the reasonableness of requiring the Canadian entities to defend themselves in a Massachusetts court.

Regarding relatedness, the Court found that the misappropriation of trade secrets and confidential information at issue allegedly arose from forum based meetings between the parties.  Second, the court found that Teti and ITET purposefully availed themselves of the forum by meeting voluntarily to develop the water valve system, in the process putting themselves in the position of looking to Massachusetts law to protect their interests.   Finally, the court determined that the reasonableness inquiry’s “Gestalt Factors” did not clearly weigh in favor or against jurisdiction:  The burden on Canadian defendants attendant to litigation in the U.S. was not great; however, Massachusetts does not have a clear interest in resolving a dispute between a Canadian citizen and corporation and a Delaware corporation, and the Court’s intervention would not provide effective or efficient relief because key evidence and witnesses were outside of the forum and there is a mirror-image suit in Canada.  Despite these equivocal facts, the Court was satisfied that plaintiff established Teti had sufficient minimum contacts for exercising personal jurisdiction.  

[Editor’s note:  Despite finding that it had personal jurisdiction over the Canadian defendants, the Court ultimately elected to exercise its discretion in this matter involving a declaratory judgment not to hear the case.]

Editorial Board

 

Court Finds No Personal Jurisdiction over Japanese Parent Company on Basis that Parent-Subsidiary Relationship Does Not Satisfy Minimum Contacts

Park-Kim v. Daikin Industries, LTD., U.S. District Court for the Central District of California, August 3, 2016

Park-Kim brought several causes of action against Daikin Industries (DIL), Daikin Applied Americas, and Daikin North America (Daikin NA) alleging injuries associated with the allegedly defective evaporation coils made with copper tubing used in the defendant’s heating, ventilation, and air conditioning units (HVAC units).  DIL and Daikin NA moved to dismiss on the basis that the Court did not have personal jurisdiction over them.  

In considering DIL’s motion to dismiss the District Court in California focused on “specific personal jurisdiction,” which arises when a defendant has sufficient “minimum contacts” contacts with the forum State relating to the plaintiff’s claims and the exercise of jurisdiction is otherwise “reasonable.”  In performing its analysis the Court used a three-part test.  First, it considered whether DIL had “purposefully availed” itself of the privilege of conducting business within the forum state such that being sued there would be a foreseeable event.  The Court rejected Park-Kim’s argument that the test could be satisfied by evidence that (1) the defendants had placed products into the “stream of commerce” and that each defendant was an agent, joint venturer, or employee of the other such that personal jurisdiction could be imputed to all defendants if there were jurisdiction over any one of them.  The Court explained that DIL had presented evidence that it did not place the product into the stream of commerce and noted that even if the evidence were otherwise, conduct more specifically directed towards the forum case was required.  Further, the Court reasoned that Park-Kim’s “legal conclusions” that a parent-subsidiary relationship imputes personal jurisdiction over all defendants was not persuasive or consistent with relevant case law. Finally, the Court explained that though DIL did sell certain products to Japanese distributors to be sold in the United States generally, the only pertinent contacts were those with California.

Second, the Court considered whether the plaintiff’s claims “arose out of” DIL’s forum-related activities, asking whether the claims would have arisen “but for” DIL’s contact with the California.  The Court concluded that Park-Kim had made only conclusory allegations that DIL manufactured the only named product in the complaint, unsupported by facts.  The defendants, by contrast, submitted a sworn affidavit denying their involvement in the design or manufacture of the alleged defective product as well as having any role in the supply chain.  Since the plaintiffs failed to satisfy the first two prongs of the test to establish personal jurisdiction, the court did not need to analyze the third:  that exercising personal jurisdiction over the defendant would be reasonable.  The court thus found that the requirements for personal jurisdiction had not been satisfied and dismissed the claims against DIL.

The court also dismissed the claims against Daikin NA for lack of personal jurisdiction, first finding that Daikin NA was not “at home” in California, and thus could not be subject to general personal jurisdiction.

Editorial Board

 

District Court Asserts Jurisdiction Over Canadian Company Based on Internet Sales Facilitated by Independent Contractors

Premium Nutraceuticals, LLC v. Leading Edge Marketing, Inc., U.S. District Court for the Southern District of Georgia, Augusta Division, July 12, 2016

Plaintiff Premium Nutraceuticals filed suit in U.S. District Court in Georgia against defendant Leading Edge, a Canadian corporation that developed and sold products (sexual enhancement supplements) similar to those developed and sold by Premium. Premium’s allegations against Leading Edge included claims for unfair business practices, unfair competition, illegal cybersquatting, false advertising, and misuse of Premium’s trademark.  Among other arguments, Leading Edge moved to dismiss Premium’s claims for lack of personal jurisdiction.

The Court used a two-part test to determine whether personal jurisdiction could be asserted against Leading Edge.  First, Leading Edge was required to have “minimum contacts” with the forum State of Georgia.  The Court found that Leading Edge had done business in Georgia (1.44% of Leading Edge’s sales relevant to Premium’s claim in the year preceding the motion’s filing were to Georgia residents) and that these sales related to Premium’s claims.  It thus found the necessary minimum contacts.

Second, the Court then turned to the question whether asserting jurisdiction would otherwise be fair.  Leading Edge argued that exercising personal jurisdiction over it would offend traditional notions of fair play and justice for two reasons: (1) because as a Canada-based company, it would incur great hardship and expense if it were required to defend itself in Georgia; and (2), because it would be fundamentally unfair to require its employees to travel to a foreign country to defend a lawsuit based on sales facilitated through the company’s affiliate websites, which were created by “independent marketers” over whom it allegedly asserted no control.

The Court rejected these arguments because (1) financial hardship alone is insufficient to show that an exercise of personal jurisdiction would offend traditional notions of fair play and justice; and (2) there exists no controlling authority supporting defendant’s proposition that because a party’s contacts with a forum state were facilitated by independent contractors, it would be unfair to require it to litigate there.  As a result, the Court found that the criteria required for it to exercise personal jurisdiction over Leading Edge were satisfied, and therefore denied defendant’s motion to dismiss on that basis.

Editorial Board

 

District Court Finds No personal Jurisdiction Over Sovereign Petroleum Company or Employment Recruiter having Limited Contacts with Forum

Sarkar v. Petroleum Co of Trinidad & Tobago, U.S. District Court for the Southern District of Texas, June 23, 2016

Plaintiff Sarkar, a U.S. citizen, sued defendant Petrotrin, a petroleum company incorporated in Trinidad and Tobago (“T&T”).  The T&T government owns and operates Petrotrin.  Sarkar and Petrotrin entered into an employment contract but Petrotrin was unable to obtain a work permit for Sarkar.  When Petrotrin terminated the contract, Sarkar sued Petrotrin for breach of contract and sued HRC (his recruiter) for negligence and negligent misrepresentation.  Petrotrin moved to dismiss on the basis that it was immune from suit under the FISA which, subject to certain exceptions, declares that foreign states and their agencies and instrumentalities are immune from suit in the U.S.

Sarkar conceded that Petrotrin is an agent/instrumentality of a foreign state within the meaning of FSIA, but argued that Petrotrin implicitly waived sovereign immunity through its agreement in Sarkar’s employment contract to comply with U.S. tax law. The District Court in Texas rejected this argument, noting that implicit waivers of sovereign immunity are narrowly construed and ordinarily occur in just three situations: (1) a foreign state agrees to arbitration in another country; (2) a foreign state agrees that the contract is governed by the laws of another country; or (3) a foreign state fails to raise the immunity defense in its answer.  Here, the Court explained that the employment contract recited that it was explicitly governed by T&T law and that the reference to U.S. tax law would not therefore be given the weight necessary for an implied waiver of sovereign immunity.

Petrotrin also moved to dismiss based on the “commercial activity” exception to FSIA—requiring a material connection between the cause of action and the sovereign's commercial acts, which must have a direct effect (or take place) in the U.S.  The Court explained that Petrotrin’s actions in recruiting in the U.S. had no material connection to the cause of action; Petrotrin and HRC’s communications with Plaintiff while he was in the U.S. were minimal, consisting of a few emails, a few phone calls, and one letter.  The Court held that these actions did not rise to the level of “commercial activity carried on in the U.S.”  Nor did the Court could consider Petrotrin’s other isolated or unrelated contacts in the U.S.  Finally, the Court noted that Petrotrin was not required to pay Plaintiff in the U.S., and because the contract was governed by T&T law, failure to pay Sarkar his termination fee had no direct effect in the U.S. despite Sarkar’s intention to transfer his compensation to the U.S. Thus, the Court granted Petrotrin’s motion to dismiss based on sovereign immunity.

Defendant HRC moved to dismiss for lack of personal jurisdiction.  The Court first rejected the assertion of general personal jurisdiction over HRC.  General personal jurisdiction requires contacts between a defendants and a forum that are so substantial and continuous that the defendants can be considered “at home” there—a standard usually reserved for the places where corporations were formed or have their principal place of business.  Neither test was met as to HRC, which is incorporated and has its principal place of business in T&T.

The Court then turned to specific personal jurisdiction, which it said could be exercised over a nonresident defendant if the defendant has “minimum contacts” with the forum State.  Minimum contacts require a showing that: (1) the defendant purposefully directed its activities at the forum state; and (2) the suit arose out of or is related to at least one of those activities.  If these requirements have been met, then a Court may exercise jurisdiction if it is additionally fair and reasonable to do so.

HRC’s employees and office were located entirely in T&T, and its recruiting activities in Texas consisted solely of job postings via LinkedIn.  HRC’s failure to submit a proper work permit application occurred in T&T.  Additionally, no HRC employee ever traveled to the U.S. to meet with Sarkar; all meetings between HRC and Plaintiff took place in in person in T&T, including HRC’s representation that the work permit process was merely a formality.  HRC did not purposefully recruit a Texas resident when it advertised the position on LinkedIn.  And, although HRC knew Plaintiff was a Texas resident when it reached out to him, Plaintiff’s negligence claim was not related to that contact, as the negligent acts occurred in T&T.  

The Court thus dismissed both defendants from the case.

Editorial Board

 

District Court Finds No Personal Jurisdiction over Indian Citizen Whose Presence in New York Was Inadequately Explained or documented by the Plaintiffs.

Singh v. Singh, U.S. District Court for the Southern District of New York, June 2, 2016

The defendant allegedly abused and tortured the plaintiffs, Indian citizens, in India.  The plaintiffs filed suit under the Torture Victim Protection Act (“TVPA”) in the Southern District of New York.  The defendant was an Indian citizen living in India, and the defendant contended that he was subject to the Court’s personal jurisdiction via general or specific jurisdiction.

As regards general jurisdiction, the plaintiffs alleged that the defendant was domiciled in New York, based on the fact that he was present in the State at the time the plaintiffs filed the complaint.  The District Court in New York disagreed, explaining that physical presence in the State at the time of filing was not enough to suggest that defendant was domiciled there.  Alternatively, general jurisdiction could be found if defendant’s business activities within New York were sufficiently continuous and systematic, but the Court observed that the plaintiffs failed to provide any factual allegations tending to show that defendant did any business in New York.

The Court then explained that a tortious act committed outside of New York that causes injury to “person or property within the state” can create specific jurisdiction under New York’s “long arm statute.  But it added that the location of the “injury” is the location of the original event which caused the injury, not the location where the Plaintiff experienced the resulting damages.  Thus, because defendant committed the alleged acts in India, the alleged injury cannot provide the basis for specific jurisdiction, even though the Plaintiffs ultimately traveled to the U.S. Thus, the court granted defendant’s motion to dismiss for lack of personal jurisdiction.

[Editor’s note:  The Court did not consider whether jurisdiction could be based on the physical service of a copy of the complaint on the defendant while he was in New York because the Plaintiffs were unable to provide sufficient proof that had occurred.]

Editorial Board

 

District Court Asserts General personal Jurisdiction over Non-U.S. Companies on Finding that they were “Mere Departments” of Affiliated U.S. Company

SPV Osus Ltd. v. AIA LLC, U.S. District Court for the Southern District of New York, May 24, 2016

Plaintiff SPV sued AIA LLC and several affiliates (the “Access Defendants”) for aiding and abetting in Bernie Madoff’s Ponzi scheme.  Defendants Patrick Littaye and Therry Magon de la Villehuchet co-owned AIA LLC.  While the Court ultimately dismissed the case for failure to state a claim, it first found that the Access defendants were subject to the Court’s personal jurisdiction despite being incorporated in foreign nations.

AIA LLC was a Delaware corporation with its principal place of business in New York and was thus subject to the New York Court’s jurisdiction.  But none of the Access Defendants was incorporated in the U.S.  The District Court in New York thus considered whether personal jurisdiction could be asserted against the defendants based on either of two theories.  First general personal jurisdiction could apply to a defendant whose contacts were so substantial and continuous that it was essentially “at home” in the forum.  Alternatively, specific personal jurisdiction would attach with a less demanding showing—one of minimum contacts—but would require that the claims arise out of those contacts.

As regards general jurisdiction, none of the Access Defendants met the usual test—whether it was a corporation organized under or having its principal place of business in New York.  But the Court also considered whether any was a “mere-department” or “alter ego” of another entity over which jurisdiction could be asserted.  The Court described that inquiry as requiring an examination of (1) the financial interdependence of the entities, (2) interference in personnel selection and assignment, (3) the extent to which corporate formalities are observed, and (4) the degree of control over marketing and operational policies.

The Court found that each of the four Access Defendants was at least 80% owned by Littave and Villehuchet, despite being incorporated in various foreign nations.  None of the Access Defendants had any employees and were entirely managed by Littave and Villehuchet personally or by employees from the AIA LLC office in New York.  In fact, all marketing and operational decisions were coordinated through the New York office.  Also, the plaintiff provided evidence that the Access Defendants held themselves out as a single integrated firm based in New York City, with employees divided not by office, but by function. Thus, the Court held that the plaintiff made a prima facie showing that the Access defendants were all mere departments of AIA LLC, which was enough to survive a motion to dismiss on jurisdictional grounds.  

The Court also considered specific personal jurisdiction, and concluded that held that Littaye’s alleged meetings with Madoff in New York on a quarterly basis satisfied the test for “minimum contacts,” and made the assertion of jurisdiction over him fair.

Editorial Board

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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