Bailey v. Recreational Equipment, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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MATTHEW JAMES BAILEY,

Plaintiff, MEMORANDUM & ORDER

22-CV-1211(EK)(CLP)

-against-

RECREATIONAL EQUIPMENT, INC. a/k/a

R.E.I. d/b/a REI CO-OP, ERIC ARTZ,

Individually, and ANTHONY TRUESDALE,

Individually,

Defendants.

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ERIC KOMITEE, United States District Judge:

Plaintiff Matthew Bailey brings this products

liability action against retailer Recreational Equipment, Inc.

(“REI”). He also sued two individual defendants: Eric Artz,

REI’s CEO; and Anthony Truesdale, a member of REI’s board of

directors. Bailey alleges that on October 11, 2021, while

hiking in New York’s Catskill Mountains, his REI trekking poles

bent and gave way, causing him to fall. Bailey suffered broken

bones and required surgery. The complaint seeks monetary

relief.

Artz and Truesdale now move to dismiss Bailey’s claims

for lack of personal jurisdiction and failure to state a claim,

pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of

Civil Procedure, respectively. As set forth below, Bailey’s

claims against Artz and Truesdale are dismissed under Rule

12(b)(2). Given that conclusion, there is no need to reach the

question of whether Bailey has stated a claim for purposes of

Rule 12(b)(6).

Background

The facts herein are taken from the complaint and the

declarations submitted in support of (and opposition to) the

Rule 12(b)(2) motion. See Brady v. Basic Research, LLC, 101 F.

Supp. 3d 217, 229 (E.D.N.Y. 2015) (“In considering a motion to

dismiss for lack of personal jurisdiction, a court may rely on

materials beyond the pleadings.”); see also Phillips v. Reed

Group, Ltd., 955 F. Supp. 2d 201, 225 (S.D.N.Y. 2013) (when

considering a Rule 12(b)(2) motion, a court may consider

“affidavits and other supporting materials submitted in relation

to the motion”).

On or about April 29, 2021, Bailey’s spouse purchased

REI’s Trailbreak 7075T6 Trekking Poles via the company’s

website.1 The poles were subsequently shipped to Bailey’s

residence in Queens County, New York. Am. Compl. ¶ 1, ECF No.

17 (Bailey resides in Queens); id. ¶ 23 (poles were shipped to

Bailey’s residence). On or about October 11, 2021, Bailey used

1 While the operative complaint does not state explicitly whether

Bailey’s spouse, Daniel Iliescu, purchased the poles through REI’s website or

that of a third-party, Iliescu stated in a declaration that he purchased the

poles via REI’s website. See Decl. of Daniel Iliescu ¶ 3, ECF No. 28-1.

the poles while hiking in the Catskill Mountains in Shandaken,

New York. Id. ¶¶ 24-25. During the hike, the poles “suddenly

bent and gave way,” causing Bailey to “f[a]ll hard on the rocky

grounds.” Id. ¶ 25. As a result of his fall, Bailey suffered

“serious injuries,” including “shoulder arm fractures.” Id.

Bailey required unspecified “surgery procedures” and physical

therapy. Id. ¶ 24.

Bailey’s allegations concerning the actual conduct of

Artz and Truesdale are high-level, generic, and repetitive. He

asserts that the two executives “participated [in] and directed

the online marketing, selling and distribution” of REI’s

products, including the trekking poles at issue, id. ¶ 14; that

they were “responsible for the staffing and supervision of the

employees and / or agents” of REI, id.; that each “caused or

directed” REI “employees and staff to act as his agent in the

marketing, selling and distribution” of the trekking poles, id.

¶¶ 15-16; and that the “named defendants herein” — including

Artz and Truesdale — “manufactured” the trekking poles “or

caused [them] to be manufactured.” Id. ¶ 20.

Legal Standard

To survive a motion to dismiss for lack of personal

jurisdiction under Rule 12(b)(2), “the plaintiff bears the

burden of showing that the court has jurisdiction over the

defendant[s].” Metropolitan Life Ins. Co. v. Robertson-Ceco

Corp., 84 F.3d 560, 566 (2d Cir. 1996).2 Evidentiary hearings

are not generally required. Credit Lyonnais Sec. (USA), Inc. v.

Alcantara, 183 F.3d 151, 153 (2d Cir. 1999). When a court

chooses not to hold such a hearing, the plaintiff “need only

make a prima facie showing of personal jurisdiction.” Porina v.

Marward Shipping Co., 521 F.3d 122, 126 (2d Cir. 2008). A court

must construe the complaint and supplemental materials in the

light most favorable to the plaintiff. Id.

Discussion

A federal court in New York may exercise personal

jurisdiction over a non-resident defendant only if the defendant

has contacts with New York sufficient to satisfy both the New

York long-arm statute, N.Y. C.P.L.R. § 302, and the Due Process

Clause of the Fourteenth Amendment. See, e.g., Best Van Lines,

Inc. v. Walker, 490 F.3d 239, 242 (2d Cir. 2007). The moving

defendants contend that the exercise of personal jurisdiction

would contravene both the Due Process Clause and the New York

statute. Before considering due process, a court should first

determine whether the long-arm statute is satisfied. Id.

Bailey asserts jurisdiction over Artz and Truesdale —

who are residents of Washington State and Arizona, respectively,

Am. Compl. ¶¶ 4-5 — pursuant to N.Y. C.P.L.R. § 302(a)(1). Id.

2 Unless otherwise noted, when quoting judicial decisions this order

accepts all alterations and omits all citations, footnotes, and internal

quotation marks.

¶ 19 (citing Section 302(a)(1)); see also Pl. Mem. in Opp. to

Mot. to Dismiss (“Pl. Br.”) 13, ECF No. 27 (same). Under that

provision, a court may exercise personal jurisdiction over any

non-resident who, “in person or through an agent,” “transacts

any business within the state or contracts anywhere to supply

goods or services in the state.” N.Y. C.P.L.R. § 302(a)(1).

Despite the complaint’s allegations sounding in products

liability, Bailey does not invoke Section 302(a)(2) (relating to

the commission of “a tortious act within the state”).3

To determine whether jurisdiction exists under Section

302(a)(1), “a court must decide (1) whether the defendant

transacts any business in New York and, if so, (2) whether this

cause of action arises from such a business transaction.” Best

Van Lines, 490 F.3d at 246. A defendant transacts business in

New York when he engages in “some act by which [he] purposefully

avails [him]self of the privilege of conducting activities

within the . . . State, thus invoking the benefits and

3 Given that Bailey bears the burden to establish jurisdiction, see

Metropolitan Life, 84 F.3d at 566, the Court will not consider a basis for

jurisdiction that he does not raise. See, e.g., Infinity Consulting Grp.,

LLC v. Am. Cybersystems, Inc., No. 09-CV-1744, 2010 WL 2267470, at *3

(E.D.N.Y. May 30, 2010) (“the Court will not find jurisdiction sua sponte”);

cf. Maranga v. Vira, 386 F. Supp. 2d 299, 309–10 (S.D.N.Y. 2005) (because

plaintiffs bear the burden to establish jurisdiction, “the Court will not

find jurisdiction based [on] an argument that has not been explicitly made by

Plaintiffs”).

protections of its laws.” McKee Elec. Co. v. Rauland–Borg

Corp., 229 N.E.2d 604, 607 (N.Y. 1967).4

Artz and Truesdale submitted declarations and other

supporting materials in tandem with their motion to dismiss.

See ECF No. 26-1. Bailey also submitted declarations — his own

and his spouse’s. See ECF No. 28-1. Neither party has

requested a hearing, and the Court sees no material factual

dispute on the current record.5 Treating all of Bailey’s

assertions as true, they are inadequate to support the exercise

of personal jurisdiction over Artz or Truesdale under Section

302(a)(1). This conclusion holds when considering the

allegations of the individual defendants’ personal involvement,

allegations regarding their “agents,” and Bailey’s undeveloped

“alter-ego” theory, as discussed below.

A. Agency Theory of Personal Jurisdiction

Reading the complaint’s allegations charitably, Bailey

suggests that Artz and Truesdale both transacted business in New

4 The Second Circuit has noted the overlap between this statutory test

and the constitutional standard for due process: “New York decisions, at

least in their rhetoric, tend to conflate the long-arm statutory and

constitutional analyses by focusing on the constitutional standard: whether

the defendant’s conduct constitutes purposeful availment.” Chloe v. Queen

Bee of Beverly Hills, LLC, 616 F.3d 158, 169 (2d Cir. 2010).

5 Bailey notes the Court may order discovery or hold a hearing, see Pl.

Br. 15-16, but he has not actually requested either.

York personally and through (unnamed) agents.6 See Am. Compl.

¶ 15 (Artz “participated [in] and caused or directed the

defendant REI Co-op employees and staff to act as his agent in

the marketing, selling and distribution” of the poles); id. ¶ 16

(same for Truesdale).

A court may impute corporate acts undertaken by others

to an individual defendant under an agency theory where “(1) the

[agent] engages in purposeful activity in the forum state that

relates to the transaction underlying the lawsuit, (2) the

[agent]’s activity was taken for the benefit of and with the

knowledge and consent of the defendant, and (3) the defendant

exercised some control over the [agent’s] purposeful activity.”

Jonas v. Est. of Leven, 116 F. Supp. 3d 314, 328 (S.D.N.Y. 2015)

(citing Kreutter v. McFadden Oil Corp., 522 N.E.2d 40, 44 (N.Y.

1988)). Here, Bailey does not name any particular in-state

agent upon whose actions he relies, let alone specify what in-

state business they transacted. It should go without saying

that under those circumstances, he has not adequately pleaded an

agency theory. See First Cap. Asset Mgmt., Inc. v.

Brickellbush, Inc., 218 F. Supp. 2d 369, 395 (S.D.N.Y. 2002)

6 Bailey’s only seeming mention of a particular “agent” comes by way of

an oblique reference to employees at REI’s Manhattan store. See Pl. Br. 14-

15 (discussing the exercise of jurisdiction over a “nondomiciliary defendant

of a non-domiciliary corporation with agents in New York, (as the defendants

herein do in having a New York store location)”) (typos in original). But

Bailey levels no allegation that any store employee participated in the

transaction from which his injuries arise. See N.Y. C.P.L.R. § 302(a)

(stating the “arising from” requirement).

(granting Rule 12(b)(2) motion where plaintiffs advanced only

“the most conclusory” assertions of control by defendant over

putative agent without any support of “specific factual

allegations”); Merck & Co., Inc. v. Mediplan Health Consulting,

Inc., 425 F. Supp. 2d 402, 420 (S.D.N.Y. 2006) (noting

that control cannot be presumed and must be established by

allegations of specific actions).7

In addition to these shortfalls, Bailey has not

adequately alleged that the individual defendants exercised the

requisite control over any agent’s acts in respect of the

transaction at issue. To satisfy the control element, the

complaint “must sufficiently detail the defendant’s conduct so

as to persuade a court that the defendant was a primary actor in

the specific matter in question.” Jonas, 116 F. Supp. at 328;

see also Retail Software Servs., Inc. v. Lashlee, 854 F.2d 18,

22 (2d Cir. 1988) (long-arm statute satisfied where defendants

were “primary actors” in the New York transaction that was the

source of the litigation).

In other words, a plaintiff cannot show control based

merely on the individual defendant’s position on the

7 Bailey cites United States v. Montreal Trust Co., 358 F.2d 239 (2d

Cir. 1966), several times in his opposition brief, see, e.g., Pl. Br. 15-16,

but that case stands merely for the proposition that a court sitting in New

York may exercise personal jurisdiction over a nondomiciliary defendant based

on the acts of his agents in New York. See id. at 243-44. That proposition

is not in dispute here.

corporation’s organizational chart. Jones, 116 F. Supp. 3d at

328; see also Ontel Prods., Inc. v. Project Strategies Corp.,

899 F. Supp. 1144, 1149 (S.D.N.Y. 1995) (personal jurisdiction

over CEO lacking where plaintiff “presented no evidence, nor

even made any allegations, concerning [the CEO’s] personal

involvement with the activities giving rise to this suit”).

Bailey’s complaint says nothing concrete about what the

individual defendants actually did, apart from the conclusory

statement that each “participated [in] and caused or directed

the defendant REI Co-op employees and staff to act as his agent

in the marketing, selling and distribution of the defendant REI

defective trekking poles.” Am. Compl. ¶¶ 15-16. Bailey also

asserts that Artz and Truesdale “directed or caused . . . the

transactions of online business to supply goods or products in

the State of New York,” id. ¶¶ 12-13, but once again he says

nothing about how or when.

This is a classic instance of legal conclusions being

couched as factual allegations, and it is well established that

such conclusions need not be credited. See Wolo Mfg. Corp. v.

ABC Corp., 349 F. Supp. 3d 176, 196 (E.D.N.Y. 2018) (“conclusory

non-fact-specific jurisdictional allegations or a legal

conclusion couched as a factual allegation will not establish a

prima facie showing of jurisdiction”); ADP Inv. Commc’n Servs.,

Inc. v. In House Att’y Servs., Inc., 390 F. Supp. 2d 212, 219

(E.D.N.Y. 2005) (same).

Nor is it sufficient, as noted above, to rely on the

individual defendants’ job titles (about which Bailey says

precious little, in any event). See Jonas, 116 F. Supp. 3d at

328 (no personal jurisdiction over individual defendant where

“plaintiffs fail[ed] to allege even a single fact in support of

his involvement in the transaction, save for a bare allegation

that he was president and director” of a defendant corporation).8

This stands in contrast to Chloe, supra, for example, in which

the court relied on evidence (including deposition testimony and

shipping records) showing that the defendant “either physically

shipped or was responsible for the shipment of the counterfeit

handbag from California to New York.” 616 F.3d at 165.

The declarations of Artz and Truesdale only bolster

this conclusion. As Bailey acknowledges, Artz is a resident of

Washington State, while Truesdale is a resident of Arizona.

Decl. of Eric Artz (“Artz Decl.”) ¶ 1, ECF No. 26-1 at 16; Decl.

of Anthony Truesdale (“Truesdale Decl.”) ¶ 1; ECF No. 26-1 at

8 Courts have also held that claims seeking to impute liability for a

corporation’s actions to individual corporate employees solely on the basis

of their job titles cannot survive a motion to dismiss under Rule 12(b)(6).

See Krys v. Butt, 486 F. App’x 153, 156 (2d Cir. 2012); Trisvan v. Heyman,

305 F. Supp. 3d 381, 407 (E.D.N.Y. 2018). Nevertheless, this Court reads the

case law to dictate that when a plaintiff asserts personal jurisdiction based

on an analogous corporate-position argument, the claims must be dismissed

under Rule 12(b)(2) rather than 12(b)(6). See Trisvan, 305 F. Supp. 3d at

394-95.

18. Both Artz and Truesdale submit that they do not reside in;

own or conduct business in; own, use, or possess real property

in; pay taxes in; or derive revenue from New York. Artz Decl.

¶¶ 4-7; Truesdale Decl. ¶¶ 4-7. These declarations are

unnecessary to, but surely buttress, the legal conclusion that

personal jurisdiction is lacking over Artz and Truesdale

pursuant to Section 302(a)(1) on the current state of the

pleadings and record.

B. Alter-Ego Theory of Personal Jurisdiction

Bailey also alludes to the “alter ego” theory of

personal jurisdiction, contending (albeit obliquely) that Artz

and Truesdale are alter egos of REI and are thus subject to

jurisdiction for REI’s actions in New York. See Am. Compl.

¶¶ 15-16; see also Pl. Br. 17 (invoking the “alter ego theory”).

Under New York law, when an individual uses a corporation “to

accomplish his own and not the corporation’s business,” that

individual “may be held liable for the corporation’s commercial

dealings as well as for its negligent acts.” Wm. Passalacqua

Builders, Inc. v. Resnick Devs. S., Inc., 933 F.2d 131, 138

(2d Cir. 1991). This is akin to the analysis of a request to

pierce the corporate veil: the central question on the alter-ego

analysis is whether REI was essentially a “shell” for the

individual defendants to advance personal, rather than

corporate, ends. Id.

To prevail under an alter-ego theory, a plaintiff must

show that “the corporation has been so dominated by [the]

individual . . . , and its separate identity so disregarded,

that it primarily transacted the dominator’s business rather

than its own.” Id. In determining whether a plaintiff has made

the requisite showing, courts consider, among other factors,

(1) the absence of corporate formalities, (2) inadequate

capitalization, (3) the use of corporate resources for personal

purposes, and (4) the amount of discretion that the purported

alter-ego corporation exercises. See id. at 139; see also

Packer v. TDI Sys., Inc., 959 F. Supp. 192, 202 (S.D.N.Y. 1997)

(considering these factors).

Bailey’s allegations do not come close to satisfying

the factors identified by the Second Circuit. He makes only

conclusory assertions that REI is “believed to be the alter-ego”

of both Artz and Truesdale. Am. Compl. ¶¶ 12–13. He does not

allege, for example, that these defendants used REI’s corporate

funds for their own purposes, or that REI failed to observe

corporate formalities. See, e.g., In re Lyondell Chem. Co.,

543 B.R. 127, 146-47 (Bankr. S.D.N.Y. 2016). This theory, then,

provides no basis for the exercise of personal jurisdiction over

Artz and Truesdale under Section 302(a)(1).

Conclusion

For the foregoing reasons, Bailey has failed to meet

his burden to make a prima facie showing that this Court may

exercise personal jurisdiction over Artz and Truesdale under

Section 302(a)(1) of New York’s long-arm statute. Accordingly,

Bailey’s claims against these defendants are dismissed without

prejudice, pursuant to Rule 12(b)(2).

SO ORDERED.

/s/ Eric Komitee

ERIC KOMITEE

United States District Judge

Dated: September 23, 2023

Brooklyn, New York