JCorps Int'l, Inc. v. Charles & Lynn Schusterman Fam. Found. ( 2020 )

19-3123
JCorps Int’l, Inc. v. Charles & Lynn Schusterman Fam. Found.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE
32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY ORDER MUST SERVE
A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 28th day of September, two thousand twenty.
PRESENT:
DENNIS JACOBS,
GERARD E. LYNCH,
RICHARD J. SULLIVAN,
Circuit Judges.
_____________________________________
JCorps International, Inc.,
Plaintiff-Appellant,
v. No. 19-3123
Charles and Lynn Schusterman Family
Foundation, Sanford Cardin, Lisa Eisen,
Lynn Schusterman, OneDay Volunteering,
Elad Blumental,
Defendants-Appellees.
_____________________________________
For Appellant JCorps International, ARIEL REINITZ, FisherBroyles, LLP, New
Inc.: York, NY.
For Appellees OneDay Social BENJAMIN C. FISHMAN, Yankwitt LLP,
Volunteering and Elad Blumental: White Plains, NY.
For Appellees Charles and Lynn HARRY SANDICK (Erik Haas and George
Schusterman Family Foundation, B. Fleming, on the brief), Patterson
Sanford Cardin, Lisa Eisen, and Belknap Webb & Tyler LLP, New York,
Lynn Schusterman: NY.
Appeal from the United States District Court for the Southern District of
New York (Alvin K. Hellerstein, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.
JCorps International, Inc. is a non-profit organization based in New York
that engages young Jewish adults in various charitable causes.1 OneDay Social
Volunteering is a non-profit based in Israel, which was founded by Elad
Blumental, an Israeli citizen and resident. The Charles and Lynn Schusterman
1 JCorps lost its non-profit status around 2013.
2
Family Foundation (the “Schusterman Foundation”) is an Oklahoma-based
charitable organization, which allegedly partnered with OneDay to jointly
orchestrate various charity events and other activities. Sanford Cardin, Lisa
Eisen, and Lynn Schusterman are affiliated with the Schusterman Foundation, and
are residents of either Oklahoma or Maryland.
In 2018, JCorps sued in New York federal court alleging that the Defendants
had misappropriated JCorps’s proprietary information. The district court
(Hellerstein, J.) dismissed JCorps’s first amended complaint for lack of personal
jurisdiction. JCorps sought leave to file a proposed second amended complaint,
which the district court denied. JCorps has appealed both those decisions.
We assume the parties’ familiarity with the underlying facts, procedural
history, and issues on appeal.
I. Standard of Review
We review de novo a decision dismissing a complaint for lack of personal
jurisdiction under Federal Rule of Civil Procedure 12(b)(2). DiStefano v. Carozzi
N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). “When responding to a Rule 12(b)(2)
motion . . . , the plaintiff bears the burden of establishing that the court has
jurisdiction over the defendant.” Id. (internal quotation marks omitted).
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“Where, as here, a court relies on pleadings and affidavits, rather than conducting
a full-blown evidentiary hearing, the plaintiff need only make a prima facie
showing that the court possesses personal jurisdiction over the defendant.” Id.(internal quotation marks omitted). In assessing whether the plaintiff has made
that showing, the court must “construe the pleadings and affidavits in the light
most favorable to [the plaintiff], resolving all doubts in [its] favor.” Id.Separately, “[w]e [ordinarily] review a district court’s denial of leave to
amend for abuse of discretion.” Williams v. Citigroup Inc., 659 F.3d 208, 212 (2d
Cir. 2011) (internal quotation marks omitted). “A district court abuses its
discretion when its ruling rests on an error of law or cannot be located within the
range of permissible decisions.” Id. (internal quotation marks omitted). We
review de novo a district court’s denial of leave to amend on the ground of futility.
See Yamashita v. Scholastic Inc., 936 F.3d 98, 107–08 (2d Cir. 2019).
II. Personal Jurisdiction
“[T]o exercise personal jurisdiction over a defendant, a district court must
possess a statutory basis for doing so.” Troma Ent., Inc. v. Centennial Pictures Inc.,
729 F.3d 215, 218 (2d Cir. 2013). When determining whether such authority exists,
a court typically consults “the law of the state in which [it] is located – here, New
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York.” Id. (internal quotation marks and citation omitted). In this case, none of
the Defendants are amenable to general jurisdiction in the state. So JCorps has
turned to a provision of New York’s long-arm statute – C.P.L.R. 302(a)(3)(ii) – as
authority for the district court to exercise specific jurisdiction over Defendants.
That provision requires a plaintiff seeking to establish jurisdiction to demonstrate
that “the tortious act [complained of] caused an injury to a person or property” in
the state and that “the defendant expected or should reasonably have expected
that his or her action would have consequences in New York.” Penguin Grp.
(USA) Inc. v. Am. Buddha, 609 F.3d 30, 35 (2d Cir. 2010) (citing LaMarca v. Pak-Mor
Mfg. Co., 95 N.Y.2d 210, 214 (2000)).
In addition to identifying such statutory authority, a plaintiff must also
demonstrate that the exercise of personal jurisdiction over the defendant would
comport with due process. 2 Id. A fundamental component of that analysis is to
“determine whether [the] defendant has sufficient minimum contacts with the
forum.” See Waldman v. Palestine Liberation Org., 835 F.3d 317, 331 (2d Cir. 2016).
2 It will often be the case that when the elements of C.P.L.R. 302(a)(3) are satisfied, due process
will also be met. See Ingraham v. Carroll, 90 N.Y.2d 592, 597 (1997) (explaining that the limitations
imposed by C.P.L.R. 302(a)(3) are “more stringent than any constitutional requirement”).
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“Where the claim arises out of, or relates to, the defendant’s contacts with
the forum – i.e., specific jurisdiction – minimum contacts exist where the defendant
purposefully availed itself of the privilege of doing business in the forum and
could foresee being haled into court there.” Bank Brussels Lambert v. Fiddler
Gonzalez & Rodriguez, 305 F.3d 120, 127 (2d Cir. 2002) (internal quotation marks
omitted); see also Walden v. Fiore, 571 U.S. 277, 284 (2014). Moreover, the lawsuit
“must arise out of contacts that the defendant himself creates with the forum.”
Walden, 571 U.S. at 284 (internal quotation marks omitted). This means that the
“analysis looks to the defendant’s contacts with the forum [s]tate itself, not the
defendant’s contacts with persons who reside there.” Id. at 285.
Alternatively, JCorps relies of Federal Rule of Civil Procedure 4(k)(2), which
provides that where a plaintiff asserts a federal claim, and the defendant is not
subject to personal jurisdiction in any state, any federal court may exercise
jurisdiction over the defendant for purposes of the federal claim if the defendant
has sufficient minimum contacts with the country (not the specific state in which
the federal court sits). See Porina v. Marward Shipping Co., 521 F.3d 122, 127 (2d
Cir. 2008).
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A. JCorps’s First Amended Complaint
The district court was plainly correct to dismiss JCorps’s first amended
complaint for lack of personal jurisdiction. The complaint failed to make a prima
facie showing either that the court had jurisdiction under New York’s long-arm
statute or that the Defendants had sufficient minimum contacts with the state (or,
in the case of the foreign Defendants, the country) to satisfy due process.
To start, long-arm jurisdiction is lacking because JCorps failed to allege any
New York-based harm as a result of the Defendants’ conduct. Under
C.P.L.R. 302(a)(3), the site of a commercial injury is not where the economic loss is
felt, “but where the critical events associated with the dispute took place.”
Benifits by Design Corp. v. Contractor Mgmt. Servs., LLC, 905 N.Y.S.2d 340, 344 (3d
Dep’t 2010) (internal quotation marks omitted). In this context, then, New York-
based injury means the loss of New York-based customers or accounts or some
other similar harm to in-state business. See Sybron Corp. v. Wetzel, 46 N.Y.2d 197,
205 (1978); see also Troma Ent., 729 F.3d at 220. A contrary rule that looked
primarily to the location of the economic loss would mean that a lost sale
anywhere in the world could be declared a New York-based harm so long as the
injured company resides in that state. That is insufficient for long-arm purposes.
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See Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 326–27 (1980).
The first amended complaint alleges that JCorps was domiciled in New
York, that Defendants intentionally stole JCorps’s proprietary information, and
that Defendants were aware that this proprietary information had immense value
to JCorps. But there are no allegations indicating that JCorps lost New York-
based participants or donors, or even that Defendants used this stolen information
in New York. So, at most, JCorps’s allegations demonstrate some “sort of
derivative commercial injury in the state [that] is only the result of [JCorps’s]
domicile here,” Am. Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d
428, 433 (2d Cir. 1971), which is plainly insufficient to invoke long-arm jurisdiction
under New York law, see Troma Ent., 729 F.3d at 218.
Perhaps recognizing this problem, JCorps’s founder submitted a declaration
to the district court stating, without further elaboration, that Defendants’ actions
caused JCorps to lose “participants and potential participants in New York,” as
well as “partnership opportunities[] and fundraising opportunities.” App’x
at 95. But that conclusory assertion does not fix the problems identified above.
See O’Neill v. Asat Tr. Reg. (In re Terrorist Attacks on Sept. 11, 2001), 714 F.3d 659, 676
(2d Cir. 2013) (holding that “conclusory” allegations are “insufficient for specific
8
personal jurisdiction purposes”). It does not, for instance, indicate how the
Defendants’ actions caused JCorps to lose those New York-based participants, who
those participants were, when the harm occurred, the significance of those
participants to JCorps’s operations, or even why this New York-based harm would
have been foreseeable to Defendants at all.
For many of the same reasons, JCorps’s attempt to hale Defendants into
court in New York also fails to meet the minimal contacts required for due process.
In particular, there are no allegations in the complaint or in JCorps’s founder’s
declaration that Defendants directly contacted New York-based individuals,
solicited donations in New York, or held volunteering events in the state. And
while JCorps asserts that Blumental “hack[ed]” into its LinkedIn account, App’x
at 27, JCorps alleged no facts showing that Blumental purposefully availed himself
of the privileges of conducting computing activities in New York. See MacDermid,
Inc. v. Deiter, 702 F.3d 725, 730 (2d Cir. 2012) (explaining that due process permitted
personal jurisdiction in Connecticut because the defendant “knew that the email
servers she used and the confidential files she misappropriated were both located
in Connecticut” and so could be said to have “purposefully avail[ed] herself of the
privilege of conducting computer activities in Connecticut”). So, according to the
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first amended complaint, the only connection between Defendants and New York
is the fact that JCorps is domiciled there. And the Supreme Court has made
abundantly clear that such a connection is insufficient, standing alone, to satisfy
due process. See Walden, 571 U.S. at 285 (looking to “the defendant’s contacts
with the forum [s]tate itself, not the defendant’s contacts with persons who reside
there”).
Likewise, JCorps cannot rely on Rule 4(k)(2) as a means to assert jurisdiction
over OneDay and Blumental – foreign Defendants who may not otherwise be
subject to jurisdiction in any particular state. 3 Nearly all the contacts alleged
between the foreign Defendants and the United States are the same contacts that
were discussed and rejected above. And those allegations are no more successful
in demonstrating a relationship between the foreign Defendants and this country
generally than they are in demonstrating a relationship between the foreign
Defendants and New York in particular.
The only other potentially relevant contact between the foreign Defendants
3 The parties dispute whether JCorps can rely on Rule 4(k)(2) at all given that JCorps has
expressly alleged that OneDay and Blumental are subject to specific jurisdiction in New York.
We need not resolve this issue because, as we explain, even assuming that JCorps can rely on
Rule 4(k)(2), OneDay and Blumental lack the required minimum contacts with the United States
to satisfy due process.
10
and the United States is the alleged relationship between the defendant non-profit
organizations themselves. But other than to indicate that OneDay partnered with
the Oklahoma-based Schusterman Foundation, the complaint fails to tie that
partnership to the United States or otherwise explain how OneDay or Blumental
availed themselves of the privileges of conducting business in this country. And
it is elementary that “an individual’s contract with an out-of-state party alone
can[not] automatically establish sufficient minimum contacts in the other party’s
home forum.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985).
B. JCorps’s Proposed Second Amended Complaint
Next, JCorps argues that the district court erred by denying JCorps leave to
file its proposed second amended complaint. We agree with the district court,
however, that JCorps’s proposed amendments are futile. Indeed, there are only
two material differences between JCorps’s proposed second amended complaint
and its first amended complaint, neither of which is sufficient to satisfy the
relevant long-arm statute or due process.
First, the proposed second amended complaint includes a series of
conclusory allegations that Defendants used information stolen from JCorps to
“target[]” numerous JCorps participants in New York, which caused those
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individuals to “curtail[] or stop[] their relationship with . . . JCorps.” App’x
at 155. But these new allegations are no less conclusory than the claims of loss of
participants in the original complaint.
This lack of specificity renders these conclusory allegations futile. See
O’Neill, 714 F.3d at 676. For instance, both the identity of and importance of the
lost New York participants are key components of the C.P.L.R. 302(a)(3) analysis.
See, e.g., Sybron, 46 N.Y.2d at 205–06 (identifying a specific “major customer”
relevant to the parties’ dispute and leaving open whether “the loss of [only] a small
New York account [could] suffice” to demonstrate New York-based harm); Cont’l
Indus. Grp., Inc. v. Altunkilic, No. 14-cv-790 (AT), 2016 U.S. Dist. LEXIS 61484, at *7
(S.D.N.Y. Apr. 6, 2016) (collecting cases for the proposition that to satisfy
C.P.L.R. 302(a)(3) a plaintiff must “[a]lleg[e] specific lost sales or lost customers that
are within the New York market” (emphasis added) (internal quotation marks and
alterations omitted)); BGC Partners, Inc. v. Avison Young (Canada) Inc., 5 N.Y.S.3d
327 (Table), 2014 WL 7201754, at *7 & n.6 (Sup. Ct. N.Y. Cnty. Dec. 15, 2014)
(distinguishing Sybron because, unlike that case, which concerned the threatened
loss of a “major New York customer,” the complaint alleged the misuse of a trade
secret “to solicit a customer for [only] a single deal in New York”). And yet, such
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details are entirely absent from the proposed second amended complaint. JCorps
has thus failed to make a prima facie case for jurisdiction under the long-arm
statute. For the same reasons, JCorps’s conclusory allegations fail to demonstrate
that Defendants availed themselves of the privileges of conducting business in
New York. See Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 86 (2d
Cir. 2018) (concluding that “sparse” and “conclusory” allegations are insufficient
“to make a prima facie showing of personal jurisdiction”).
Similarly, the proposed second amended complaint’s allegations that
OneDay used JCorps’s proprietary information to forge relationships with several
New York-based organizations are not enough to show New York-based harm to
JCorps; JCorps does not allege that it had previously partnered with those
organizations or that but for OneDay’s actions it would have done so. Nor do
those allegations demonstrate minimum contacts between OneDay and New York
(or the United States). Although those partner organizations were based in New
York, JCorps does not allege that OneDay planned any New York-based events
with them or otherwise conducted any business in the state other than simply
entering into the partnerships themselves. So, for all that is alleged in the
proposed amended complaint, the relationships could have been based primarily
13
in Israel, where OneDay is located. These allegations are thus insufficient to
permit the exercise of personal jurisdiction over OneDay or any of the other
Defendants. 4 See Burger King, 471 U.S. at 478; see also Savin v. Ranier, 898 F.2d 304,
307 (2d Cir. 1990) (holding that “simply receiving financing” from a forum resident
does not “automatically establish sufficient minimum contacts” with that forum
(internal quotation marks omitted)).
III. Conclusion
We have considered JCorps’s remaining arguments and find them to be
without merit. Accordingly, we AFFIRM the district court’s judgment
dismissing this case for lack of personal jurisdiction.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
4 The proposed second amended complaint also includes one stray allegation that OneDay
“participated in the coordination of several volunteering events in the United States.” App’x
at 153. But the allegation fails to provide any specifics, such as what those events were, when
they were held, or even what OneDay’s role was in the coordination of those unnamed events.
So we do not credit it. See Charles Schwab, 883 F.3d at 86.
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