United States District Court, D. Connecticut
SHANSHAN SHAO, HONGLIANG CHU, QIAN LIU, SONG LU, and XINSHAN KANG, Plaintiffs,
BETA PHARMA, INC., DON ZHANG, and BETA PHARMA (USA), INC., Defendants.
RULING ON DEFENDANT BETA PHARMA (USA), INC.'S
MOTION TO DISMISS
CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE.
Third Amended Complaint (“TAC”), filed by leave
of the Court, joined Beta Pharma (USA), Inc. (“BP
USA”) as a defendant on September 7, 2018. Doc. 222
(“TAC”). Before this Court now is BP USA's
Motion to Dismiss the TAC against it for lack of personal
jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(2). Doc. 232.
matter is a contract dispute, heard by this Court under the
federal diversity jurisdiction of 28 U.S.C. § 1332. The
recitation of facts in this Part is derived principally from
allegations in the TAC.
five individual Plaintiffs are investors in a non-party
“privately owned organization” (Plaintiffs'
phrase) established under the laws of the People's
Republic of China called Zhejiang Beta Pharma Co., Ltd.
(“Zhejiang” or “ZBP”). TAC at 2-3
¶¶ 6, 9. ZBP is affiliated with corporate
Defendant, Beta Pharma, Inc. (“Beta Pharma” or
“BP, Inc.”). Id. at 2 ¶ 5. The
individual Defendant, Don Zhang, is alleged to be the
majority stockholder and president of Beta Pharma, and the
vice-president and a director of ZBP. Id. at 2
¶¶ 3, 8. Plaintiffs assert claims for breach of
contract and tort against Beta Pharma and Zhang
(collectively, the “Original Defendants”).
Original Defendants formed BP USA in December 2014 when they
were involved in multiple lawsuits in Connecticut.
Id. at 28 ¶¶ 39-40. They allegedly caused
Beta Pharma to fraudulently transfer substantially all of its
disclosed American assets to BP USA and to offshore accounts
in turn, rendering the Original Defendants insolvent and
making it more difficult for plaintiffs in these Connecticut
lawsuits to collect judgment. Id. at 30-32
¶¶ 45, 54-55; id. at 34 ¶ 65. The
transfer of assets “was made with actual intent to
hinder, delay or defraud plaintiffs as creditors of [the
Original Defendants].” Id. at 30 ¶ 46.
is incorporated in Delaware, and its principal place of
business is also Delaware. Id. at 28 ¶ 40. BP
USA is not registered to do business in Connecticut.
Id. at 29 ¶ 41. Further, the TAC does not
allege that the fraudulent transfer was to or from
Connecticut. Doc. 232-2 ¶ 13. Nonetheless, Plaintiffs
allege that BP USA has committed tortious acts in
Connecticut, individually or through an agent, by receiving
fraudulently transferred assets and conspiring with the
Original Defendants to deprive Plaintiffs and others of their
rightful financial interests in Beta Pharma and ZBP. TAC at
29 ¶ 43.
BP USA moves to dismiss Plaintiffs' complaint for lack of
personal jurisdiction. It argues that it is not subject to
Connecticut's long arm statute and that the Fourteenth
Amendment's Due Process Clause does not permit
jurisdiction here. Doc. 232.
STANDARD OF REVIEW
motion to dismiss must be granted if a court lacks personal
jurisdiction over a defendant. Fed.R.Civ.P. 12(b)(2). On 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.” Metro. Life Ins. Co. v. Robertson-Ceco
Corp., 84 F.3d 560, 566 (2d Cir. 1996), cert.
denied, 519 U.S. 107 (1996) (citation omitted). Prior to
discovery, a plaintiff may defeat the motion “based on
legally sufficient allegations of jurisdiction.”
Id. A prima facie case of personal jurisdiction
“requires nonconclusory fact-specific allegations or
evidence showing that activity that constitutes the basis of
jurisdiction has taken place.” Chirag v. MT Marida
Marguerite Schiffahrts, 604 Fed.Appx. 16, 19 (2d Cir.
2015) (citing Jazini v. Nissan Motor Co., 148 F.3d
181, 186 (2d Cir. 1998)).
general, the district court may exercise discretion in
determining the best procedural approach to decide a 12(b)(2)
motion for lack of personal jurisdiction. Specifically,
“[i]n deciding a pretrial motion to dismiss for lack of
personal jurisdiction a district court has considerable
procedural leeway” and “may determine the motion
on the basis of affidavits alone; or it may permit discovery
in aid of the motion; or it may conduct an evidentiary
hearing on the merits of the motion.” Dorchester
Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d
Cir. 2013) (per curiam) (citation omitted); see
also, e.g., Blau v. Allianz Life Ins. Co. of N.
Am., 124 F.Supp.3d 161, 170 (E.D.N.Y. 2015).
a motion to dismiss for lack of personal jurisdiction is
“inherently a matter requiring the resolution of
factual issues outside of the pleadings . . . all pertinent
documentation submitted by the parties may be considered in
deciding the motion.” Energy Brands, Inc. v.
Spiritual Brands, Inc., 571 F.Supp.2d 458, 463
(S.D.N.Y. 2008) (quoting Pilates, Inc. v. Pilates Inst.,
Inc., 891 F.Supp. 175, 178 n.2 (S.D.N.Y. 1995)). When
considering the motion, the court must construe the pleadings
liberally for the benefit of the plaintiffs. See Hoffritz
for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d
evidentiary hearing is held, but extensive discovery has been
conducted, “the plaintiff's prima facie showing,
necessary to defeat a jurisdiction testing motion, must
include an averment of facts that, if credited by [the
ultimate trier of fact], would suffice to establish
jurisdiction over the defendant.” Ball v.
Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197
(2d Cir. 1990), cert. denied, 498 U.S. 854 (1990).
As described above, absent an evidentiary hearing, when the
motion is “decided on the basis of affidavits and other
written materials, the plaintiff need only make a prima facie
showing.” MacDermid, Inc. v. Deiter, 702 F.3d
725, 727 (2d Cir. 2012) (citation omitted). In that instance,
“the allegations in the complaint must be taken as true
to the extent they are uncontroverted by the defendant's
diversity or federal question case, personal jurisdiction is
determined by the law of the state in which the district
court sits. See Bensusan Restaurant Corp. v. King,
126 F.3d 25, 27 (2d Cir. 1997). If the exercise of
jurisdiction is appropriate under that state's statute,
the court then must decide whether such exercise comports
with the requisites of constitutional Fourteenth Amendment
due process. See Robertson-Ceco Corp., 84 F.3d at
567; see also World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980); Int'l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945).
Personal Jurisdiction Requirements
as the proponents of jurisdiction, have the burden of
establishing that this Court has personal jurisdiction over
BP USA. See Savin v. Ranier, 898 F.2d 304, 306 (2d
Cir. 1990). No. evidentiary hearing has been conducted to
date on this issue. In consequence, at this initial stage,
Plaintiffs need only allege facts constituting a prima facie
showing of personal jurisdiction. See Deiter, 702
F.3d at 727; PDK Labs, Inc. v. Friedlander, 103 F.3d
1105, 1108 (2d Cir. 1997). At this stage, further, the Court
construes pleadings and affidavits in Plaintiffs' favor.
defendant's conduct is sufficient for the exercise of
personal jurisdiction if: (1) the conduct satisfies the
requirements of the relevant state's long-arm statute,
and (2) the conduct satisfies the ‘minimum
contacts' requirement of the Due Process Clause of the
Fourteenth Amendment.” Ferra v. Munro, 585
B.R. 269, 282 (D. Conn. 2018) (citations omitted).
The Connecticut Long Arm Statute
first theory is that BP USA's receipt of transferred
assets from Beta Pharma constituted tortious conduct in
Connecticut, thereby subjecting BP USA to personal
jurisdiction in the state by virtue of Conn. Gen. Stat. Ann.
§ 33-929-i.e., Connecticut's long arm
statute for foreign corporations. Doc. 233, at 7. Section
33-929 provides in pertinent part:
Every foreign corporation shall be subject to suit in this
state, by a resident of this state or by a person having a
usual place of business in this state, whether or not such
foreign corporation is transacting or has transacted business
in this state and whether or not it is engaged exclusively in
interstate or foreign commerce, on any cause of action
arising . . . [o]ut of tortious conduct in this state,
whether arising out of repeated activity or single acts, and
whether arising out of misfeasance or
Conn. Gen. Stat. Ann. § 33-929(f)(4).
on the other hand, argues that the alleged transfers between
Beta Pharma and BP USA “have no connection to
Connecticut.” Doc. 232-1, at 5. In support of this
contention, BP USA states that “the assets could not
have been transferred from Connecticut because, years before
the alleged transfers occurred, BP moved its operations and
assets to New Jersey” and Beta Pharma ceased banking in
Connecticut. Id. BP USA further states that
“the alleged participants in the transfers-BP, Zhang,
and BP USA-all resided outside of Connecticut at the time of
the purported transfers, and have ever since.”
Id. Lastly, BP USA argues that “BP USA could
not possibly have committed a tort in Connecticut because it
never conducted business” in the state. Id. at
Second Circuit has previously addressed the meaning of the
“tortious conduct” provision of Connecticut's
long arm statute. Summarizing Connecticut case law, the
Second Circuit noted that “the defendant's literal
presence in Connecticut when engaging in the actionable
conduct” is not required for finding personal
jurisdiction, but “a defendant's tortious conduct
[must] be directly and expressly targeted at the forum
state.” Gen. Star Indemn. Co. v. Anheuser-Busch
Companies, Inc., 199 F.3d 1322 (2d Cir. 1999) (summary
order). In Gen. Star Indemn. Co., the plaintiff
argued that “the conduct in question was targeted at
the state, because it was targeted at a Connecticut company
that necessarily felt the sting of the defendants'
actions in its home state.” Id. The Second
Circuit rejected that argument, though, concluding that
“it would obliterate the longstanding distinction
between long-arm statutes that reach tortious conduct in a
given state and those that reach conduct which causes
tortious injury in the state by action outside the
state.” Id.; Am. Wholesalers Underwriting,
Ltd. v. Am. Wholesale Ins. Grp., Inc., 312 F.Supp.2d
247, 253 (D. Conn. 2004) (in analyzing Conn. Gen. Stat. Ann.
§ 33-929(f)(4), rejecting the argument that
“because the injury is felt in Connecticut, the tort
should be deemed to have been committed in Connecticut”
because such interpretation “ignore[d] the language
of” the statute); Bross Utilities Serv. Corp. v.
Aboubshait, 489 F.Supp. 1366, 1373, n.35 (D. Conn.),
aff'd, 646 F.2d 559 (2d Cir. 1980) (noting that
Connecticut's long-arm statute subjects non-resident
individuals to jurisdiction in the state for “torts
committed outside Connecticut which cause injury within the
state” but “contains no analogue governing
corporate defendants” and relying upon this distinction
to reject a more expansive reading of the “tortious
conduct in this state” provision). In sum, “[i]t
is not enough that the consequences of a defendant's acts
impact a plaintiff in Connecticut; the tortious conduct must
be directly and expressly targeted at the forum state to
support jurisdiction over a foreign corporation.”
Hamann v. Carpenter, No. 16 Civ. 501 (VAB), 2017 WL
421646, at *8 (D. Conn. Jan. 31, 2017) (citation omitted).
have not sustained their burden of persuasion that BP USA is
amenable to personal jurisdiction in this Court because they
have not alleged that BP USA has committed tortious acts in
Connecticut, which is a requirement of Conn. Gen. Stat. Ann.
§ 33-929(f)(4). Plaintiffs' only allegations of BP
USA's tortious conduct is that BP USA “has been the
recipient of assets fraudulently transferred to it”;
that the transfer was part of a larger “effort to
hinder the collection efforts” of Plaintiffs who have
pending claims in state and federal court against the
defendants; and that BP USA “participated with
defendants Zhang and Beta Pharma in a scheme to fraudulently
deprive plaintiffs . . . of the rightful value of their
interests in Beta Pharma and ZBP.” Doc. 233, at 8. None
of Plaintiffs' factual allegations indicate that BP USA
engaged in tortious conduct in Connecticut. As
Plaintiffs point out, BP USA is a Delaware corporation that
is not registered to do business in Connecticut. Id.
at 7. Its principal place of business is in Delaware.
Id. And there is no indication that the transfers
originated, or concluded, in Connecticut, or that Connecticut
banks or bank accounts were used in connection with such
transfers. Id. at 7-8.
recent Connecticut case, Dur-A-Flex, Inc. v. Dy,
discussed the types of activities that could indicate that a
foreign corporation had engaged in “tortious
conduct” directed toward Connecticut.
04HHD-CV-14-6049281S, 2016 WL 5415399 (Conn. Super. Ct. Aug.
24, 2016) (unpublished). In ruling that a foreign company was
subject to personal jurisdiction pursuant to
Connecticut's long arm statute, the court underscored
that a company official had visited Connecticut, that there
was an “extended series of electronic mail and
telephonic communications directed to and received from
Connecticut by many different . . . employees [of the
defendant] over many months, ” that “money [was]
sent to Connecticut for services presumably performed within
Connecticut, ” and that “at least one parcel
mailed to Connecticut from [the defendant's] offices [in
another state].” Id. at *5.
BP USA cites to a number of cases that address examples of
“tortious conduct” that is directed toward
Connecticut. In Foisie v. Foisie, for example, the
plaintiff claimed that the defendant committed tortious acts
within the state of Connecticut-in particular, “fraud,
negligent misrepresentation, breach of contract due to
tortious acts, common-law fraudulent transfer, and breach of
fiduciary duty”-by fraudulently concealing his assets
during the parties' divorce proceedings. No.
KNLCV176028794, 2017 WL 3011555, at *3 (Conn. Super. Ct. June
12, 2017). Although the opinion does not provide the factual
background in great detail, it appears that the plaintiff
alleged that the defendant committed tortious acts during
their mediation process (presumably by misrepresenting his
financial assets), and “while filing his financial
affidavit and motion for judgment upon the settlement
agreement.” Id. What appears in the case to be
clear, though, is that the entirety of the defendant's
tortious conduct occurred in Connecticut. See Id.
According to the court, therefore, the defendant's
conduct was sufficient to satisfy the state's long arm
statute.See id.; cf. Welsh v.
Martinez, No. X03HHDCV166072658S, 2017 WL 4106323, at *4
(Conn. Super. Ct. Aug. 7, 2017) ...