Sokka International Ent Ltd v. Oregon Tools Inc

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

SOKKA INTERNATIONAL ENT LTD,

Plaintiff,

MEMORANDUM AND ORDER

23-cv-7088

-against-

OREGON TOOLS, INC,

Defendant.

LASHANN DEARCY HALL, United States District Judge:

Sokka International Ent. Ltd. (“Plaintiff” or “Sokka”), brings the instant action against

Oregon Tool, Inc. (“Defendant”), asserting claims for breach of contract, breach of covenant of

good faith and fair dealing, and equitable accounting. Defendant moves, pursuant to Rules

12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the complaint in its

entirety.

BACKGROUND1

Plaintiff is a corporation organized and existing under the laws of Nigeria with its

operations and principal place of business located in Nigeria. (Compl. ¶ 5, ECF No. 1.)

Defendant is a Delaware corporation, registered to transact business in New York, with a

principal place of business in Oregon. (Id. ¶ 6.) In 2005, the Carlton Company appointed

Plaintiff as the exclusive distributor for its chain saw and accessories products in some African

countries (the “Territory”). (Id. ¶ 9.) Subsequently, but sometime in 2008, Defendant acquired

1The following facts are taken from the Complaint and are assumed to be true for the purpose of this memorandum

and order, unless otherwise indicated.

the Carlton Company. (Id.) Thereafter, in or around October 2008, Defendant entered into an

agreement (“Exclusive Distributorship Agreement”) to appoint Plaintiff as the exclusive

distributor of its Carlton and Tiger branded power-operated chain saws, guide bars, sprockets,

and files for its forestry, garden, farm, ranch, and agriculture machines, including tools, parts,

and accessories (the “Products”) in five African countries. (Id. ¶¶ 10–11.) The Exclusive

Distributorship Agreement between Plaintiff and Defendant was “to be valid and effective for an

initial period from 2008 to 2014, and thereafter to be renewed annually upon agreement of both

parties.” (Id. ¶ 12.) Plaintiff’s purchase of the Products averaged approximately $10,000,000

every year. (Id. ¶ 21.) In or around 2019, Defendant began appointing other distributors in the

Territory, effectively reducing Plaintiff’s share in the sale and control of the Products from 100%

to less than 50%. (Id. ¶¶ 19–20, 22.) Plaintiff made repeated protests to Defendant regarding the

additional distributors within the Territory. (Id. ¶ 23.) Thereafter, in or around April 2022,

Defendant terminated the Exclusive Distributorship Agreement effective July 31, 2022. (Id.)

Since the termination, Defendant has refused to supply Plaintiff with the Products and instead

directed Plaintiff to order the Products from a current distributor in the Territory. (Id. ¶¶ 23–24.)

STANDARD OF REVEIW

It is well-established in the Second Circuit that “[i]n deciding a pretrial motion to dismiss

for lack of personal jurisdiction[,] a district court has considerable procedural leeway” to

consider materials outside of the pleadings. Dorchester Financial Securities, Inc. v. Banco BRJ,

S.A., 722 F.3d 81, 84 (2d Cir. 2013) (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899,

904 (2d Cir.1981)). Unlike a Rule 12(b)(6) motion to dismiss, a Rule 12(b)(2) motion is

inherently a matter requiring the resolution of factual issues outside of the pleadings. Zibiz Corp.

v. FCN Tech. Solutions, 777 F. Supp. 2d 408, 416 (E.D.N.Y.2011). It follows, therefore, that all

pertinent documentation submitted by the parties may be considered in deciding the motion. See

id. “In the absence of an evidentiary hearing on the jurisdictional allegations, or a trial on the

merits, all pleadings and affidavits are construed in the light most favorable to plaintiff, and

where doubts exist, they are resolved in the plaintiff’s favor.” Hoffritz for Cutlery, Inc. v.

Amajac, Ltd., 763 F. 2d 55, 57 (2d Cir. 1985). That said, the Court will not “accept as true a

legal conclusion couched as a factual allegation.” In re Terrorist Attacks on Sept. 11, 2001, 714

F.3d 659, 673 (2d Cir. 2013).

To defeat a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), “a

plaintiff must have a state-law statutory basis for jurisdiction and demonstrate that the exercise of

personal jurisdiction comports with due process.” Charles Schwab Corporation v. Bank of

America Corporation, 883 F.3d 68, 82 (2d Cir. 2018). The plaintiff bears the burden of showing

that the court has jurisdiction over the defendant. In re Magnetic Audiotape Antitrust Litigation,

334 F.3d 204, 206 (2d Cir. 2003). “[T]he showing a plaintiff must make to defeat a defendant’s

claim that the court lacks personal jurisdiction over it ‘varies depending on the procedural

posture of the litigation.’” Dorchester Financial Securities, Inc., 722 F.3d at 84 (quoting Ball v.

Metallurgie Hoboken–Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). Specifically, prior to

discovery, a plaintiff may defeat a motion to dismiss for lack of personal jurisdiction by pleading

legally sufficient allegations of jurisdiction in good faith. Id. at 84. At that preliminary stage,

the plaintiff’s prima facie showing may be established “solely by allegations” that, when credited

by the ultimate trier of fact, would suffice to establish jurisdiction over the defendant. Id. at 85;

Jerusalem NY Enterprises LLC v. Huber Erectors & Hoisting, LLC, No. 21-CV-376, 2021 WL

4711821, *3 (E.D.N.Y. Oct. 9, 2021). Plaintiff’s allegations of jurisdiction must consist of “non-

conclusory fact-specific allegations or evidence showing that activity that constitutes the basis of

jurisdiction has taken place.” Chirag v. MT Marida Marguerite Schiffahrts, 604 F. App’x 16, 19

(2d Cir. 2015).

DISCUSSION

Personal jurisdiction over a defendant in a diversity action, such as this one, is

determined by reference to the law of the jurisdiction in which the court sits. Hoffritz for

Cutlery, Inc., 763 F.2d at 57; Daimler AG v. Bauman, 571 U.S. 117, 125 (2014) (“Federal courts

ordinarily follow state law in determining the bounds of their jurisdiction over persons.”). Here,

New York law applies. To establish personal jurisdiction over a defendant under New York law,

a plaintiff must demonstrate either general jurisdiction or specific jurisdiction, both of which are

governed by NY CPLR sections 301 and 302, respectively. Zibiz Corp., 777 F. Supp. 2d at 416,

420. Defendant argues that Plaintiff cannot satisfy the statutory requirements for either. The

Court agrees.

1. General Jurisdiction

New York law subjects a foreign corporate defendant to general jurisdiction when the

defendant is “engaged in such a continuous and systematic course of doing business” in the state.

Landoil Resources Corp. v. Alexander & Alexander Services, Inc., 918 F.2d 1039, 1043 (2d Cir.

1990). The Second Circuit has made clear that the foreign corporate defendant must not “do

business” in the state occasionally or casually, “but with a fair measure of permanence and

continuity.” Wiwa v. Royal Dutch Petroleum Co, 226 F.3d 88, 95 (2d Cir. 2000) (citation and

internal quotation marks omitted). To determine whether a defendant is sufficiently doing

business in New York pursuant to section 301, courts consider whether the defendant (1)

maintains an office in New York; (2) has any bank accounts or other property within the state;

(3) has a telephone listing in the state; (4) does public relations work or solicits business within

the state; and (5) has employees or agents located within the state. Zibiz Corp., 777 F. Supp. 2d

at 416–417 (citation omitted). That said, when a corporation is not incorporated in New York

and does not maintain its principal place of business in the state, mere contacts, no matter how

“systematic and continuous, are extraordinarily unlikely to add up to an exceptional case.”

Brown v. Lockheed Martin Corp., 814 F.3d 619, 629 (2d Cir. 2016) (citation and internal

quotation marks omitted).

Here, Plaintiff supports its contention that the Court has general jurisdiction over

Defendant by emphasizing that Defendant is registered to transact business in New York; files

annual corporate tax returns and pays franchise taxes in New York; ships the Products to

Plaintiff and its other distributors through the port of New York; has several store locations in

New York through which it sells the Products; appointed numerous permanent agents, dealers,

and distributors in New York; and continuously negotiates and enters into contracts to market,

ship, distribute, and sell the Products in New York through its store locations, agents, dealers,

and distributors. (Pl.’s Opp’n. to Mot. to Dismiss (“Pl.’s Opp’n”) at 3, ECF No. 18.) However,

even when taken collectively, these facts do not sufficiently establish general jurisdiction over

Defendant in New York. Instead, some of the facts relied upon by Plaintiff have been rejected as

a basis for finding general jurisdiction by courts in this circuit. For example, the Second Circuit

has made plain that a foreign corporation does not consent to general jurisdiction in New York

simply by virtue of registering to transact business in the state. Chufen Chen v. Dunkin’ Brands,

Inc. 954 F.3d 492, 499 (2d Cir. 2020). Likewise, the fact that a party ships products using New

York ports does not clear Plaintiff’s burden. Presumably, Plaintiff suggests that by using the

New York ports, Defendant has placed its goods in the New York stream of commerce. (Pl.’s

Opp’n. at 4.) But, to that fact, the Supreme Court has held that “although the placement of a

product into the stream of commerce may bolster an affiliation germane to specific jurisdiction . .

. such contacts do not warrant a determination that, based on those ties, the forum has general

jurisdiction over a defendant[.]” See Daimler AG, 571 U.S. at 132 (citation and internal

quotation marks omitted). Plaintiff’s allegation that the Defendant appointed agents, dealers, and

distributors in New York fares no better. (See Pl.’s Opp’n. at 6.) Absent from the complaint is

any allegation that these individuals were employees of Defendant or anything other than

independent representatives without the authority to bind the Defendant to contracts or to open

new account locations. Holey Soles Holdings, Ltd. v. Foam Creations, Inc., No. 05 CIV. 6939,

2006 WL 1147963, at *6 (S.D.N.Y. May 1, 2006).

That Plaintiff alleges that Defendant sells the Products in New York is of no help to its

claim of general jurisdiction. Instead in Daimler, the Supreme Court clarified that sizable sales

within a state do not reach the level of “continuous and systematic” affiliations with a state to

subject a defendant to general jurisdiction. 571 U.S. at 139. In fact, the Supreme Court warned

that an overly generous finding of general jurisdiction would subject a defendant to general

jurisdiction in every state where their sales are sizable which presents policy concerns. Id. In

sum, Plaintiff has not sufficiently alleged that Defendant’s contacts or affiliations with New

York are so ‘continuous and systematic’ that this Court should render Defendant ‘at home’ in the

State of New York.

2. Specific Jurisdiction

In the absence of general jurisdiction, Plaintiff maintains that the Court may nonetheless

exercise specific jurisdiction over Defendant. According to Plaintiff, personal jurisdiction may

be exercised by a defendant contracted to provide goods or services in New York. (Pl.’s Opp’n.

at 4.). Plaintiff’s argument reveals its gross misapprehension of the law. At a minimum,

Plaintiff’s argument relies on an incomplete articulation of New York law, which requires more.

Specific jurisdiction may be established under CPLR Section 302(a) where (1) the non-

domiciliary contracts business within the state and (2) the claim arises out of that business

activity. N.Y. C.P.L.R. § 302(a). To trigger specific jurisdiction under Section 302(a), there

must be an “articulable nexus or substantial relationship between the business transaction and the

claim asserted.” See Zibiz Corp., 777 F. Supp. 2d at 423. However, here, Plaintiff fails to allege

any such relationship.

Rather than support its claim to jurisdiction with facts that support the requisite

affiliation. Planitff’s argument relies instead on the fact that, pursuant to the Exclusive

Distributorship Agreement, Defendants shipped the Products to Sokka through the ports of New

York. (Pl.’s Opp’n. at 4.) This fact is of no consequence here. The relevant inquiries, rather, are

where the contract was negotiated or executed, and where the good or service was to be

provided. See Zibiz Corp., 777 F. Supp. 2d at 423. The case of Zibiz Corp v. FCN Technology

Solutions is instructive here. Id. On similar facts, the court in Zibiz found that no articulable

nexus or substantial relationship existed where the parties’ contract giving rise to the breach of

contract claim was neither negotiated nor executed by foreign defendant in New York and the

service giving rise to the claim was not provided in New York. Id. at 423. Similarly, here,

Plaintiff does not allege that the Exclusive Distributorship Agreement was negotiated or

executed in New York. And, under the Exclusive Distributorship Agreement, Plaintiff received

the Products in Nigeria, Ghana, Cote D’Ivoire, Gabon, Uganda, Benin, Cameroon, and Togo; not

New York. (Compl. ¶¶ 11, 13.) Simply put, Plaintiff has failed to articulate a nexus or

substantial relationship between its business transaction with Defendant and the causes of action

for which it has sued Defendant to warrant a finding of specific jurisdiction over Defendant in

New York.2

CONCLUSION

For the foregoing reasons, Defendant’s motion to dismiss is GRANTED. The Clerk of

Court is respectfully directed to enter judgment and close the case.

SO ORDERED.

Dated: Brooklyn, New York /s/ LDH

March 31, 2025 LASHANN DEARCY HALL

United States District Judge

2 Defendant argues that a finding of personal jurisdiction in New York in this action “would be contrary to due

process.” (Def.’s Mem. of L. in Supp. of Mot. to Dismiss at 6, ECF No. 17.) Because this Court has found that

there is no statutory basis for personal jurisdiction under New York’s long-arm statute, the Court need not analyze

whether jurisdiction comports with due process. In re Dental Supplies Antitrust Litig., No. 16 Civ. 696, 2017 WL

4217115, at *8 (E.D.N.Y. Sept. 20, 2017).