The World in U.S. Courts: Spring 2015 - Personal Jurisdiction
March.03.2015
Plaintiff Ingenito brought suit against Defendants Riri USA, Inc., Benjamin Howell, II, Riri SA and Riri Group, alleging violations of Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Act of 1978, and the New York State Human Rights Law. The defendants filed a motion to dismiss for lack of personal jurisdiction.
"Riri Group" is an informal trade name used for marketing purposes to refer to Riri SA and its affiliates. Rira SA is a Swiss corporation whose principal place of business is in Switzerland. It manufactures and distributes zippers, buttons, fasteners, and snaps internationally. Riri USA is a wholly-owned subsidiary of Riri SA. It acts as sales and distribution representative for its parent, Riri SA, in the U.S. Riri USA is a Delaware corporation with its principal place of business in New York.
Ingenito worked for Riri USA in its New York office from between 2004 and 2010. In 2008 and 2009, Defendants claimed to have experienced "a dramatic drop in sales in revenue," which required a reduction in its workforce and the closing of a factory. In 2009, Riri SA's CEO Andrea Cerni instructed Howell, the President of Riri USA, to lay off at least one employee. Defendant Howell negotiated a delay of any immediate layoffs, but subsequently Cerni again instructed Howell to terminate Plaintiff's employment. He did so, but by then Ingenito informed Howell that she was pregnant. Ingenito alleged that Howell told her she was being terminated due to her pregnancy and desire to start a family, and that Cerni directed Howell to terminate her employment.
After determining that Plaintiff failed to allege facts to support the exercise of general jurisdiction, the District Court considered whether the complaint satisfied the two-prong test for satisfying New York's long-arm statute: (1) the defendant must "transact [] business" within the state, either itself or through an agent, and (2) the cause of action must "arise from" that business activity. The District Court noted that "[p]ersonal jurisdiction over a parent corporation whose subsidiary has transacted business in New York exists when the non-domiciliary parent corporation knew of and consented to the acts of the in-state subsidiary that gave rise to the cause of action and 'exercised some control over [the subsidiary] in the matter.'"
Applying these tests, the District Court found that a prima facie case for personal jurisdiction had been made. Riri SA was alleged to have engaged in sufficient purposeful activity in New York to conclude that it had "transacted business" because Ingenito's termination was allegedly executed for the benefit of Riri SA's business and that it "arose from" Riri's transaction of business through Riri USA in New York. Moreover, Cerni, as CEO of Riri SA, had allegedly directed Howell to terminate Plaintiff's employment.
The District Court then turned to the question of whether the exercise of personal jurisdiction over Riri SA would offend Due Process, considering (1) the burden on the defendant; (2) the interests of the forum State; (3) the plaintiff's interest in obtaining relief; (4) weighing the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) weighing the shared interest of the several States in furthering fundamental substantive social policies." It found factors (2)-(5) satisfied by allegations that Riri SA purposely availed itself of New York as a forum by establishing a United States-based subsidiary with its principal place of business in New York, soliciting business through that subsidiary, and otherwise maintaining a substantial and continuing relationship with the New York office of Riri USA. It concluded that the non-U.S. defendants would not suffer a substantial burden in litigating the case in the forum, given that Riri SA has had notice of the claims and has participated in the litigation on the merits. The District Court thus concluded that the exercise of personal jurisdiction over Defendant Riri SA comports with Due Process and denied its motion to dismiss.