IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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JOSEPH STEVENS & COMPANY, INC.

Petitioner,

vs. Case No. 07 CV 3385

DAVID CIKANEK HON. BARBARA JONES

Respondent 

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MEMORANDUM OF LAW IN SUPPORT OF RESPONDENT DAVID CIKANEK’S

MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION 

AND IN THE ALTERNATIVE FOR TRANSFER PURSUANT TO 28 U.S.C. §1404

Leslie A. Blau, Esq. Renan Sugarman, Esq.

BLAU & BONAVICH (pending admission pro hac vice)

140 South Dearborn, Suite 1610 30 North LaSalle, Suite 1530

Chicago, IL 60603-5202 Chicago, IL 60602

(312) 443-1600 fax-1665 (312) 578-9411 fax-9431

Of counsel

David G. Duggan

Paul D. Malmfeldt

Ari R. Madoff

Dated: June 14, 2007

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 1 of 11
 The declarations filed on this motion to dismiss do not convert it into a summary judgment motion. Unlike Rule 1

12(b)(6) motions, which do require conversion into a motion for summary judgment when accompanied by affidavits

or by extrinsic materials, it is well-settled that in considering jurisdictional motions, the Court may consider

evidence outside of the pleadings in reaching its decision without necessitating the use of Rule 56. Pilates, Inc., v.

Pilates Institute, Inc., 891 F.Supp. 175, 178 at n. 2 (S.D.N.Y. 1995); In re Magnetic Audiotape Antitrust Litigation,

171 F.Supp.2d 179, 183 at n.1. (S.D.N.Y. 2001), vacated on other grounds sub nom. Texas Intern. Magnetics, Inc. v.

BASF Aktiengellschaft, 31 Fed.Appx. 738 (2 Cir. 2002). nd

Respondent David Cikanek (“Cikanek”) respectfully submits this Memorandum of Law

in support of his motion, pursuant to Fed. R. Civ. P. 12(b)(2), to dismiss this matter for lack of

personal jurisdiction, and in the alternative to transfer to the United States District Court for the

Northern District of Illinois pursuant to 28 U.S.C. §1404.

BACKGROUND

Cikanek is a retired janitor who lives in Illinois. (Declaration of David Cikanek

(“Cikanek Decl.”) ¶1.) He has never been physically present in New York and owns no property

in New York. (Id., ¶¶ 3-4.) He filed arbitration against Petitioner (and others) before the 1

National Association of Securities Dealers (“NASD”). On March 30, 2007, following hearings

in Chicago, the arbitration panel issued a written award in his favor which included punitive

damages. (Petitioner’s Application to Vacate Award (“Petitioner’s App.”), Exhibit 1).

Unsatisfied with the outcome and evidently the state in which it was rendered, Joseph

Stevens & Company, Inc. brought this action to vacate the award. Cikanek now moves pursuant

to Fed. R. Civ. P. 12(b)(2) to dismiss for lack of personal jurisdiction and in the alternative to

transfer venue to Northern District of Illinois pursuant to 28 U.S.C. §1404. 

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 2 of 11
 Petitioner alleges that Cikanek signed a new account agreement (Petitioner’s App. ¶ 4-5), but does not allege 2

that the form contained any consent to personal jurisdiction provisions. Rather, Petitioner claims that the new

account agreement contained provisions pertaining to jurisdiction over judgment. (Id. ¶ 7). Petitioner never

produced any new account agreement signed by Cicanek to Cikanek’s counsel, or submitted it into evidence at the

arbitration (Decl. of Sugarman [Cikanek’s counsel], ¶¶ 3-4). In any event, the issue is moot since Petitioner admits

that its form merely contained a clause stating that “judgment may be entered in any court, state or federal, having

jurisdiction upon an award ....” (Pettitioner’s App. ¶ 7. 

ARGUMENT

I. THE COURT LACKS PERSONAL JURISDICTION OVER CIKANEK

Cikanek’s declaration accompanies this memorandum and shows that he had

jurisdictionally insignificant contacts with New York State. Once the issue of jurisdiction is

raised, Petitioner bears the burden of demonstrating that jurisdiction exists. Metro Life Ins. Co. v.

Roberston-Ceco Corp., 84 F.3d 560, 567 (2 Cir. 1996) cert. denied, 519 U.S. 1006 (1996). In nd

its Application, Petitioner alleges no basis for this Court to exercise of personal jurisdiction over

Cikanek.

Petitioner acknowledges that Cikanek is not a resident of New York. (Petitioner’s App.

¶2). Cikanek does not own, use or possess any property in the state of New York. (Cikanek

Decl. ¶5.) Finally, Petitioner makes no claim that Cikanek consented to personal jurisdiction in

New York.2

 Petitioner cannot establish personal jurisdiction in New York over Cikanek based on

residence, consent, or location of property. In this case, Petitioner claims that this Court has

jurisdiction over this matter under the diversity jurisdiction statute, 28 U.S.C. §1332, and under

the Federal Arbitration Act, 9 U.S.C. §10 (Petitioner’s App. ¶3). In diversity cases this Court

looks to New York law to determine if it has jurisdiction over Cikanek. PDK Labs, Inc. v.

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 3 of 11
 The Federal Arbitration Act, of which 9 U.S.C. §10 is a part, does not provide any independent basis for federal 3

jurisdiction. Petitioner admits as much, since 28 U.S.C. §1331 is not cited as a basis for jurisdiction. But in any

event, the law is the same: when a cause of action is based on a question of federal law, the issue of personal

jurisdiction must be determined according to the law of the forum state. Omni Capital Int’l v. Rudolf Wolff & Co.,

484 U.S. 97, 108 S. Ct. 404 (1987); Hubbell Inc. v. Pass & Seymour, Inc. 883 F. Supp. 955 (S.D.N.Y. 1995);

Whitaker v. American Telecasting, Inc., 261 F. 3d 196, 208 (2d Cir. 2001). 

 The other subdivisions of CPLR 302(a) clearly do not apply here. CPLR 302(a)(2) provides for jurisdiction in 4

the case of a commission of a tortious act within New York State; CPLR 302(a)(3) provides for jurisdiction in the

case of a commission of a tortious act without the state under certain circumstances; and CPLR 302(a)(4) provides

for jurisdiction with respect to a person who owns, uses or possesses any real property situated within the state. 

Section 302(a)(2) and (3) do not apply as this is a suit to vacate an arbitration award and there is no allegation of any

tortious act. (Cikanek Decl. ¶6.) Section 302(a)(4) does not apply as Cikanek does not own any real property in

New York. (Cikanek Decl. ¶5.) Thus, the only possible basis for personal jurisdiction over Cikanek under the New

York long-arm statute would be CPLR §302(a)(1).

Friedlander, 103 F.3d 1105, 1108 (2 Cir. 1997). For the Court to have jurisdiction, this Court nd

must determine if there is proper personal jurisdictional basis over Cikanek based on New York

law and whether the exercise of jurisdiction would comport with the requirements of due

process. Metro. Life Ins. Co., v. Roberston-Ceco Corp., 84 F.3d 560, 566, 567-568 (2 Cir.). nd 3

B. Respondent Does not Have Contacts with New York Sufficient to Satisfy the

Requirements of CPLR 302(a)(1), New York’s Long-arm Statute

Petitioner may wish that that any customer of a New York broker-dealer can be haled

into New York courts, but that is not the law. New York’s long-arm statute, codified in CPLR

302(a)(1), permits jurisdiction over a non-resident when the cause of action arises from

transacting business within the state. Cikanek did not maintain the minimal requisite contacts 4

with New York to be “transacting business” for the purposes of satisfying CPLR §302(a)(1). 

Petitioner solicited Cikanek’s business and all transactions in his account. (Cikanek Decl. ¶7,

¶8.) Petitioner’s telephone solicitations and its mailings, made to Cikanek by its representatives

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 4 of 11
while Cikanek was outside New York, are not significant enough to warrant personal jurisdiction

based on CPLR §302(a)(1). New York courts have consistently refused to apply §302(a)(1)

jurisdiction based solely on telephone or electronic communication from New York State to

another locale. Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 766 (2d Cir. 1983); accord,

Glassman v. Hyder, 23 N.Y.2d 354, 244 N.E.2d 259, 296 N.Y.S.2d 783 (1968) (interstate letters

and telephone calls did not establish personal jurisdiction under §302(a)(1)). Petitioner cannot

bootstrap its solicitation and mailings as the basis for jurisdiction.

In the specific case of broker-dealers, courts have held that telephone communications

regarding stock purchases between an out-of-state customer and New York based account

executives do not constitute “sufficient contact with New York to confer personal jurisdiction

over a non-resident under CPLR 302(a)(1).” L.F. Rothschild , Unterberg, Towbin v. McTamney,

59 N.Y.2d 651, 463 N.Y.S.2d 197, 449 N.E.2d 1275, aff’d, 89 A.D2d 540, 452 N.Y.S.2d 630

(1st Dep’t. 1982). See also Kimco Exhange Place Corp. v. Thomas Benz Inc., et al., 34 A.D. 3d

433, 434, 824 N.Y.S.2d 353 (2 Dep’t. 2006) (“Defendants’ acts of faxing executed contracts to

nd

New York and making a few telephone calls do not qualify as purposeful acts constituting the

transacting of business”); Milliken v. Holst, 205 A.D.2d 508, 509-510 (1994); J.E.T. Adv. Assoc.

v. Lawn King, 84 A.D.2d 744, 745 (1981); Forgash v. Paley, 659 F. Supp. 728, 730 (S.D.N.Y.

1995) (not “transacting business” under §302(a)(1) where only contact was by telephone call

initiated by claimant).

Joseph Stevens & Company contacted Cikanek, not the other way around. (Cikanek

Decl.¶8-9). Cikanek has never physically entered New York. (Cikanek Decl. ¶3) Petitioner

initiated all correspondence to him; any mail back from Cikanek was at Petitioner’s behest. 

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 5 of 11
 Petitioner does not plead a New York choice of forum or consent to jurisdiction clause in its broker-dealer 5

agreement, and does not append any to its complaint. That alone distinguishes this case from D.H. Blair & Co., Inc.

v. Gottdiener, 462 F.3d 95 (2 Cir. 2006). In addition, the investors in D.H. Blair engaged in forum shopping, nd

contending first that they were New Jersey residents, and then “in a collective change of mind” that they were

“Florida residents.” Id. at 100-101. The individual investors were so sophisticated as to have their own trading

company, Suan Investments, and they also executed “numerous stock trades” in their “active account.” Id. at 105.

(Cikanek Decl. ¶10). Cikanek had no contacts with New York sufficient to subject himself to

this Court’s long-arm jurisdiction.5

C. Cikanek Was Not a Sophisticated or Institutional Investor and Therefore His

Limited Contacts Do Not Vest this Court with Jurisdiction Under CPLR

302(a)(1)

In an era of e-mails, faxes and inexpensive long distance calls, New York courts have

required something else besides telephone calls and a few transactions to subject an out-of-state

customer to jurisdiction in New York. That “something else” is institutional power or market

sophistication. In Deutsch Bank Securities, Inc. v. Montana Board of Investments, the Court of

Appeals noted that:

“..the growth of national markets for commercial trade, as well as

technological advances in communication, enable a party to

transact enormous volumes of business within a state without

physically entering it...We held that ‘so long as a party avails

himself of the benefits of the forum, has minimum contacts with it,

and should reasonably expect to defend its actions there, due

process is not offended if that party is subjected to jurisdiction

even if not present in that state.’” 

Deutsch Bank Securities, Inc. v. Montana Board of Investment, 7 N.Y.S.

3d 65, 71, 818 N.Y.S.2d 164, 167, 850 N.E.2d 1140, 1142-43 citing Kruetter v.

McFadden Oil Corp., 71 N.Y.2d 460, 467, 527 N.Y.S.2d 195, 522 N.E.2d 40

(1988).

The facts in this case are worlds away from those in Deutsch Bank. In Deutsch Bank, personal

jurisdiction existed over a non-domiciliary corporation based on telephonic and e-mail

communications. However, the defendant in Deutsch Bank was a “sophisticated institutional

trader that entered New York to transact business...by knowingly initiating and pursuing a

negotiation...that culminated in the sale of $15 million in bonds.” Id. 7 N.Y.3d at 71-72, 818

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 6 of 11
N.Y.S.2d at 167, 850 N.E.2d at 1143. Indeed, the Court of Appeals cautioned that Deutsch Bank

was distinct from a case like Rothschild, where the Court did not exercise §302(a)(1) jurisdiction

over an individual investor based on phone calls to a New York stockbroker:

 [Defendant] should reasonably have expected to defend its

actions in New York. As distinct from an out-of-state individual

investor making a telephone call to a stockbroker in New York (see

L.F. Rothschild, Unterberg, Towbin v. Mctamney, 59 N.Y.2d 651,

463, N.Y.S.2d 197, 443 N.E.2d 1275[1983]), [Defendant] is a

sophisticated institutional trader that entered New York to transact

business here by knowingly initiating and pursuing a negotiation

with a DBSI [Claimant] employee in New York that culminated in

the sale of $15 million in bonds. Negotiating substantial

transactions such as this one was a major aspect of MBOI’s

mission...and thus has sufficient contacts with New York to

authorize our courts to exercise jurisdiction over its person...In

short, when the requirements of due process are met...a

sophisticated institutional trader knowingly entering our statewhether electronically or otherwise- to negotiate and conclude a

substantial transaction is within the embrace of the New York

long-arm statute. 7 N.Y.3d at 71-72, 818 N.Y.S.2d at 167,

850 N.E.2d at 1143 (emphasis added).

Cikanek is a 66-year-old retired janitor who lacked investment expertise, never

negotiated any contracts, and never initiated any trades. (Cikanek Decl. ¶1, 6 & 8.) Thus,

Petitioner’s telephone and mail communications with Cikanek do not subject him to personal

jurisdiction under CPLR §302(a)(1). Arguing otherwise would offend traditional notions of fair

play and substantial justice, precisely for the reasons set out by the Court of Appeals above. See

also International Shoe v. Washington, 326 U.S. 310, 166 S. Ct. 154 (1945); Helicopteros

Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868 (1984); Burger King

Corp. v. Rudzewicz, 471 U.S. 462, 105 S. Ct. 2174 (1985).

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 7 of 11
 Venue is proper in the U.S. District Court for the Northern District of Illinois under 28 U.S.C. § 1391(a) because 6

Respondent is a resident of Chicago, Illinois. (Cikanek Decl. ¶ 2.)

II. EVEN IF THIS COURT DETERMINES THAT IT MAY EXERCISE PERSONAL

JURISDICTION OVER CIKANEK, THIS COURT SHOULD TRANSFER THE

PRESENT ACTION TO THE U.S. DISTRICT COURT FOR THE NORTHERN

DISTRICT OF ILLINOIS

Pursuant to 28 U.S.C. § 1404(a), “a district court may transfer any civil action to any

other district or division where it might have been brought.” When a court rules on a motion to 6

transfer venue, it must make determinations of convenience and justice by weighing several

factors. Albert Fadem Trust v. Duke Energy Corp., 414 F. Supp.2d 341, 343 (S.D.N.Y. 2002). 

This Court has held that a transfer of venue is appropriate when the balance of factors weighs

“heavily in favor of transfer...” J.V.B. Industries, Inc. v. Federated Dept. Stores, Inc. 684

F.Supp. 22, 24 (S.D.N.Y. 1988). This Court should transfer the present action to the U.S.

District Court for the Northern District of Illinois because the balance of factors heavily favors

adjudication there. 

As shown below, Joseph Stevens & Company is far better positioned economically to

litigate in a distant forum than is Cicanek. Joseph Stevens & Company is an NASD registered

broker-dealer firm while Cicanek is a retired janitor of limited financial means who lives in

Chicago. In addition, the entire basis for the present action is Plaintiff’s allegation that an

arbitration panel “ignored Illinois law.” (Petitioner’s App. ¶ 22.) An Illinois federal court is

better equipped to adjudicate an action premised on an allegation that Illinois law was ignored. 

A. Joseph Stevens & Company is far better positioned economically to litigate

in a distant forum than is Cikanek. 

The Second Circuit has held that the “relative means of the parties” is a factor that

district judges should consider when ruling on motions to transfer venue. D.H. Blair & Co., Inc

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 8 of 11
v. Gottdiener, 462 F.3d at 107. Cikanek 

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 9 of 11
10

is a 66-year-old retired janitor who lives in Chicago and who has been diagnosed with cancer

and is in ill health. (Cikanek Decl. ¶¶ 1, 14.) Joseph Stevens & Company, in contrast, is an

NASD registered broker-dealer firm.

The present action will be significantly less expensive for Cikanek if it is adjudicated in

the U.S. District Court for the Northern District of Illinois. Cikanek is responsible for the travel

expenses of his attorneys who are located in Chicago. (Declaration of Renan Sugarman, ¶ 4.) 

Cikanek will suffer a financial hardship if his attorneys must travel to New York for hearings. 

Cikanek lost most of his net worth investing through Joseph Stevens & Company and its

employees (Cikanek Decl. ¶ 15); therefore, this Court should therefore pay particular attention to

the relative means of the parties. Since adjudication of this dispute in New York would be

financially burdensome for Cikanek, this Court should transfer venue to the U.S. District Court

for the Northern District of Illinois. 

 Illinois wouldB a.dvancTer tahnesfienrteorfe vstesn oufe jtuostihce Ube.Sc.a Dusiest trhicetaCpopulircta ftoiorn thaendNoinrtehreprrne Dtaitsitornic ot fo Ifllinois

law is central to this action. 

As the Supreme Court has noted, the interests of justice are advanced in diversity cases

when the adjudicating court is “at home with the state law that must govern the case.” Gulf Oil

Corp. v. Gilbert, 330 U.S. 501, 509 (1947). See also Piper Aircraft Co. v. Reyno, 454 U.S. 235,

241 (1981). Joseph Stevens & Company alleges that the arbitration panel “ignored the Illinois

law presented by [it].” (Petitioner’s App. ¶ 22.) This allegation is central to the present action. 

A district court in Illinois is best equipped to determine whether an arbitration panel in fact

“ignored Illinois law.” Transfer of venue to the U.S. District Court for the Northern District of

Illinois would therefore advance the interests of justice.

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 10 of 11
11

CONCLUSION

For the foregoing reasons, Cikanek respectfully requests that this Court dismiss the

Petition on the ground that this Court lacks personal jurisdiction over him. Alternatively,

Cikanek requests that this Court transfer this matter to the United States District Court for the

Northern District of Illinois, pursuant to 28 U.S.C. §1404.

/s/ Leslie A. Blau 

Leslie A. Blau, Esq. Renan Sugarman, Esq.

BLAU & BONAVICH (pending admission pro hac vice)

140 South Dearborn, Suite 1610 30 North LaSalle, Suite 1530

Chicago, IL 60603-5202 Chicago, IL 60602

(312) 443-1600 fax-1665 (312) 578-9411 fax-9431

Of counsel

David G. Duggan

Paul D. Malmfeldt

Ari R. Madoff

Dated: June 14, 2007

Case 1:07-cv-03385-BSJ-KNF Document 14 Filed 06/14/2007 Page 11 of 11