Hood v. Ascent Medical Corp.

16-2512-cv

Hood v. Ascent Med. Corp.

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 “SUMMARY ORDER”). A PARTY CITING 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 24th day of May, two thousand seventeen.

PRESENT: REENA RAGGI,

SUSAN L. CARNEY,

Circuit Judges,

LEWIS A. KAPLAN,

District Judge.*

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CIARAN HOOD,

Plaintiff-Appellant,

v. No. 16-2512-cv

ASCENT MEDICAL CORPORATION, SALALAH

MEDICAL DEVICE MANUFACTURING COMPANY,

SAOC, ASCENT MEDICAL TECHNOLOGY FUND II,

L.P., SALALAH MEDICAL SUPPLIES

MANUFACTURING COMPANY, L.L.C., and ASCENT

PRIVATE EQUITY II, L.L.C.,

Defendants-Appellees.

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APPEARING FOR APPELLANT: EAMONN DORNAN, Dornan & Associates

PLLC, Yonkers, New York.

FOR APPELLEES: No appearance.

*

Judge Lewis A. Kaplan, of the United States District Court for the Southern District of

New York, sitting by designation.

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Appeal from a judgment of the United States District Court for the Southern

District of New York (Robert W. Sweet, Judge; Debra Freeman, Magistrate Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment entered on June 20, 2016, is AFFIRMED.

Plaintiff Ciaran Hood appeals from the vacatur of a partial default judgment in his

favor as to liability and from the dismissal of his complaint without prejudice for lack of

personal jurisdiction. Hood challenges the district court’s authority to order vacatur and

its adverse ruling as to personal jurisdiction. We review both the district court’s legal

authority and its order of dismissal de novo, reviewing any underlying factual

determinations only for clear error. See U.S. D.I.D. Corp. v. Windstream Commc’ns,

Inc., 775 F.3d 128, 134 (2d Cir. 2014); Frontera Res. Azer. Corp. v. State Oil Co. of Azer.

Republic, 582 F.3d 393, 395 (2d Cir. 2009). In so doing, we assume the parties’

familiarity with the facts and record of prior proceedings, which we reference only as

necessary to explain our decision to affirm.

1. Authority To Vacate Partial Default Judgment

Hood argues that, absent a motion to vacate under Fed. R. Civ. P. 60(b), the

district court could not revisit its award of partial default judgment on liability. The

argument fails because the district court “expressly left unresolved . . . the proper amount

of damages,” and with “the inquest on damages . . . pending, the District Court’s order,

though styled a default judgment, was a non-final order.” Swarna v. Al-Awadi, 622 F.3d

123, 140 (2d Cir. 2010). Such an order, which “does not end the action,” could be

altered by the district court “at any time before the entry of a judgment adjudicating all

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the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b). Nor had the

district court certified that there was “no just reason for delay” and thereby directed entry

of a final judgment. See O’Bert ex rel. Estate of O’Bert v. Vargo, 331 F.3d 29, 41–42

(2d Cir. 2003) (explaining that Rule 54(b) certification must be explicit and generally

accompanied by “reasoned explanation”). Accordingly, the district court possessed the

authority to vacate its partial grant of default judgment.

2. Absence of Personal Jurisdiction

While we have “left open the question whether a district court must investigate its

personal jurisdiction over a defendant” when considering a motion for default judgment,

the district court was entitled to raise the matter sua sponte here because the defaulting

defendant did not “appear[]” or “consent[] . . . to the jurisdiction of the court.” City of

New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133 (2d Cir. 2011) (internal

quotation marks and alteration omitted) (emphasis in original). In determining the

propriety of exercising personal jurisdiction over a foreign corporation, we look—in the

absence of a federal statute to the contrary—to the law of the forum state, subject to

federal constitutional limitations. See Brown v. Lockheed Martin Corp., 814 F.3d 619,

624 (2d Cir. 2016); see also Fed. R. Civ. P. 4(k)(1)(A). In so doing, we recognize that

courts may exercise two forms of personal jurisdiction over a corporate defendant

properly served with process: “specific (also called ‘case-linked’) jurisdiction and general

(or ‘all-purpose’) jurisdiction.” Brown v. Lockheed Martin Corp., 814 F.3d at 624.

The district court, adopting the magistrate judge’s well-reasoned report and

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recommendation, concluded that Hood established neither basis for personal jurisdiction

here. We agree.

a. General Jurisdiction

Hood contends that exercising general jurisdiction was consistent with New York

state law and the federal Constitution. We need address only the latter, which is

dispositive here. See Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014); see also

Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 224–25 & n.2 (2d Cir.

2014) (declining to address “scope of general jurisdiction under New York law” where

exercising general jurisdiction “clearly inconsistent with Daimler”). General

jurisdiction may constitutionally be asserted over corporate entities only if “their

affiliations with the [s]tate are so continuous and systematic as to render them essentially

at home in the forum State.” Daimler AG v. Bauman, 134 S. Ct. at 754 (internal

quotation marks omitted). “[E]xcept in a truly ‘exceptional’ case, a corporate defendant

may be treated as ‘essentially at home’ only where it is incorporated or maintains its

principal place of business—the ‘paradigm’ cases.” Brown v. Lockheed Martin Corp.,

814 F.3d at 627; see Daimler AG v. Bauman, 134 S. Ct. at 761 n.19.

Hood fails to demonstrate that defendants were incorporated or principally did

business in New York, or that this is otherwise an extraordinary case in which general

jurisdiction would be appropriate. Hood alleges that defendants Salalah Medical Device

Manufacturing Company and Salalah Medical Supplies Manufacturing Company are

registered in the Sultanate of Oman, and seeks to exercise jurisdiction over them only

insofar as the remaining defendants, alleged to be Delaware corporations and limited

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partnerships, are their agents or affiliates. As an initial matter, the Supreme Court has

rejected so expansive an understanding of “agency” as a basis for general jurisdiction.

See Daimler AG v. Bauman, 134 S. Ct. at 760 (holding that foreign corporations may not

be subject to general jurisdiction “whenever they have an in-state subsidiary or affiliate”).

In any event, the asserted bases for general jurisdiction over the Delaware entities, i.e.,

the existence of product sales and an office in New York, are legally insufficient. See,

e.g., Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d at 226 (explaining that

even “substantial, continuous, and systematic course of business,” including negotiations,

transactions, and office in New York, was insufficient to warrant exercise of general

jurisdiction (internal quotation marks omitted)). Hood’s contention that general

personal jurisdiction requires only a showing of “continuous and systematic” contact with

the state, Appellant’s Br. 23 (emphasis in original), is likewise incorrect. See Daimler

AG v. Bauman, 134 S. Ct. at 761 (“[T]he inquiry . . . is not whether a foreign

corporation’s in-forum contacts can be said to be in some sense continuous and

systematic, it is whether that corporation’s affiliations with the State are so continuous

and systematic as to render it essentially at home in the forum State.” (internal quotation

marks and alteration omitted)). Finally, Hood’s supporting affidavits do not assist him

because they suggest that the “US Head Office” for these defendants was in Minnesota,

D. Ct. Dkt. No. 49-11, at 1, which is also where the CEO preceding Hood was based, and

where his employment agreement was drafted. General personal jurisdiction could not,

therefore, be exercised over the defendants in this case in New York.

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b. Specific Jurisdiction

Hood argues that specific jurisdiction was appropriate under New York’s long-arm

statute. See N.Y. C.P.L.R. § 302(a)(1). To establish personal jurisdiction under that

statute, a plaintiff must show (1) that the defendant “transacted business within the state”

and (2) that the claim “arise[s] from that business activity.” Eades v. Kennedy, PC Law

Offices, 799 F.3d 161, 168 (2d Cir. 2015). While even “one transaction in New York”

may suffice, New York’s long-arm statute authorizes specific jurisdiction only where that

transaction has a “substantial relationship” to the claim asserted in the instant case. Id.

(internal quotation marks omitted). Because Hood established no basis for specific

personal jurisdiction under the long-arm statute, we need not address whether applying it

here would be constitutional.

Hood’s claims here in no way “arise from” defendants’ activities in New York.

The gravamen of the complaint is that Hood (a Northern Ireland resident) was hired by

corporations in Oman to perform work in Oman, and that defendants terminated him and

breached their agreement when they failed to obtain funding from financial backers in

Oman. Whether or not defendants also sought to sell products in New York—one of

many states where they sought to do so—is beside the point, and cannot serve as a basis

for haling defendants into a federal court in New York on this complaint. No different

conclusion is warranted by the fact that Hood’s employment contract—executed outside

of New York—was to be interpreted by reference to New York law. See

America/International 1994 Venture v. Mau, 146 A.D.3d 40, 59, 42 N.Y.S.3d 188, 202

(2d Dep’t 2016) (“A choice of law provision in an agreement, while relevant, is

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insufficient by itself to confer personal jurisdiction over a defendant in New York under

C.P.L.R. § 302(a)(1).”); see also Borden, Inc. v. Meiji Milk Prods. Co., 919 F.2d 822, 827

(2d Cir. 1990) (“[A] New York choice of law clause in the parties’ agreement is not the

equivalent of a choice of forum clause.”).

Hood argues that specific jurisdiction was nevertheless proper here because a

board member, Peggy Farley, defamed him in New York. See N.Y. C.P.L.R.

§ 302(a)(2)–(3) (authorizing court to exercise personal jurisdiction over out-of-state

defendant who “commits a tortious act within the state” or “commits a tortious act

without the state causing injury to person or property within the state”). Hood’s

complaint did not tie that allegation to New York, and he initially argued that the New

York choice-of-law provision was the only basis for jurisdiction under the statute, a

conclusion we have already rejected. Hood did not suggest that Farley’s conduct

occurred in New York until after the report and recommendation had issued. Further,

Hood failed to proffer facts supporting a plausible claim of defamation by Farley, who

had herself been dismissed from the action for improper service of process. Finally, and

in any event, the statute provides no specific jurisdiction in New York where the tort

alleged is defamation. See Best Van Lines, Inc. v. Walker, 490 F.3d 239, 244–45 (2d

Cir. 2007) (“[S]ections 302(a)(2) and (3) . . . explicitly exempt causes of action for the

tort of defamation from their scope, whether or not such jurisdiction would be consistent

with due process protection.”).

Accordingly, the district court correctly concluded that there was no basis for

exercising specific personal jurisdiction over defendants.

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3. Conclusion

We have considered Hood’s remaining arguments and conclude that they are

without merit. Accordingly, the June 20, 2016 judgment of the district court is

AFFIRMED.

FOR THE COURT:

CATHERINE O’HAGAN WOLFE, Clerk of Court

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