Court Opinion

ID: 9753487
Source: CourtListenerOpinion
Date Created: 2023-08-28 19:15:35.067483+00
Date Added: 2024-06-11T10:00:29.800577
License: Public Domain

*147WESLEY, Circuit Judge,
concurring:
I join the majority’s opinion in full. I write separately to express concerns with the jurisdictional analysis conducted by the court below. While I fully agree with the majority’s conclusion that this affirmative defense was waived, I am concerned that others might embrace the district court’s jurisdictional analysis. In my view, that would be a mistake because the district court’s jurisdictional analysis has no basis in New York law.
The claims brought by the City of New York against defendants Mickalis Pawn Shop, LLC and Adventure Outdoors, Inc. were pled as torts under New York law. See N.Y. Penal Law §§ 240.45, 400.05(1). The district court’s subject matter jurisdiction was grounded in 28 U.S.C. § 1332(a)(1). Therefore, the court was permitted to “exercise personal jurisdiction to the same extent as the courts of general jurisdiction” in the State of New York. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 124 (2d Cir.2002). And yet, the district court devised a test that has no basis in the New York statute governing long-arm jurisdiction.1 See N.Y. C.P.L.R. § 302(a)(3)(ii). In my view, the court had no authority to apply a novel jurisdictional test that created an unwarranted expansion of the meaning of personal jurisdiction under New York law.
The district court termed this case one of “first impression” and created, out of whole cloth, a seven-factor test for determining whether personal jurisdiction exists over “retail gun establishments.” City of New York v. A-1 Jewelry & Pawn, Inc., 501 F.Supp.2d 369, 374, 424 (E.D.N.Y.2007) (Weinstein, J.). This case, however, is not one of first impression. In fact, this particular federal judge has decided a number of other cases involving the firearms industry in which he has declined to apply the long-arm statute as interpreted by the New York Court of Appeals. See, e.g., Johnson v. Bryco Arms, 304 F.Supp.2d 383, 397 (E.D.N.Y.2004) (Weinstein, J.); N.A.A.C.P. v. A.A. Arms, Inc., Nos. 99 Civ. 3999, 99 Civ. 7037, 2003 WL 21242939, at *4 (E.D.N.Y. Apr. 1, 2003) (Weinstein, J.). And, in any event, federally licensed out-of-state firearms distributors, such as defendants in this case, are governed by the same long-arm statute as are all other out-of-state defendants alleged to have committed a tortious act outside of New York that causes injury in the State of New York.
On August 8, 2006, following limited discovery, defendants moved to dismiss the complaint against them for lack of personal jurisdiction. By an order dated August 15, 2007, the district court denied defendants’ motion to dismiss. A-1 Jewelry & Pawn, 501 F.Supp.2d at 374. In declining to grant defendants’ motion to dismiss, the district court applied a test to assess whether defendants were properly subject to personal jurisdiction not previously employed by a New York court. The district judge appears to be of the view that there should be no limits on the exercise of personal jurisdiction over a defendant “except those of reasonable forum (venue) and a rational state interest in the litigation.”2 Jack B. Weinstein, Mass *148Tort Jurisdiction and Choice of Law in a Multinational World Communicating by Extraterrestrial Satellites, 37 Willamette L.Rev. 145, 146 (2001). Specifically, the district court concluded that defendants’ “knowing cumulative illegal parallel conduct outside New York causing widespread injury in New York made them amenable to suit in” New York. 501 F.Supp.2d at 374. The court asserted that “the extent of the combined harm” could provide a basis for the exercise of personal jurisdiction over each individual defendant, even if the allegedly illegal out-of-state conduct of a single defendant would not suffice to establish jurisdiction. Id. at 422. The district court took the view that “[wjhere a defendant deals in [ ] inherently dangerous products, a lesser showing than is ordinarily required will support jurisdiction.” Id. at 420 (internal quotation marks omitted).
Prior to defendants’ default, the City filed an amended complaint, which sought injunctive relief against defendants for the creation of a public nuisance. See N.Y. Penal Law §§ 400.05(1), 240.45. Defendants then made a renewed motion to dismiss in which they reasserted their objection to the exercise of personal jurisdiction to no avail.3 City of N.Y. v. A-2 Jewelry & Pawn, Inc., 247 F.R.D. 296, 338 (E.D.N.Y.2007). In denying defendants’ renewed motion to dismiss, the district court again relied, in part, on the allegedly “knowing parallel conduct” of the defendants. Id. at 336. The district court implied that, perhaps, a different standard for assessing personal jurisdiction was warranted because jurisdiction was “sought ... not simply to vindicate an individual right or to resolve an individual commercial dispute” but rather was “sought to protect the safety of an entire community.” Id. at 339.
While the district judge below may take issue with the limitations placed on New York’s long-arm statute as an academic matter, these limitations “were deliberately inserted to keep the provision well within constitutional bounds,” Ingraham v. Carroll, 90 N.Y.2d 592, 597, 665 N.Y.S.2d 10, 687 N.E.2d 1293 (1997), and a federal district court is not free to read them out of the statute. In addition, the exercise of personal jurisdiction over these defendants does not, in my view, “comport[ ] with the requirements of due process.” Met. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir.1996) (citing Savin v. Rarnier, 898 F.2d 304, 306 (2d Cir.1990)).
In evaluating whether personal jurisdiction exists as to a particular defendant the court must examine the “quality and nature” of the defendant’s contacts with the forum. Best Van Lines, Inc. v. Walker, 490 F.3d 239, 242-43 (2d Cir.2007). Here, the defendants’ connection to the forum was tenuous at best.4 Defendants did not “transact!] any business within the state or contract[ ] • • • to supply goods ... in the state,” N.Y. C.P.L.R. § 302(a)(1), and defendants did not commit any tortious act in New York State, id. § 302(a)(2). More to the point, nothing in the record supports the conclusion that they conducted *149or solicited business in New York or that they “engage[d] in any other persistent course of conduct, or derivefd] substantial revenue from goods used ... in the state.” Id. § 302(a)(3)(i).
There is nothing in the record that supports the conclusion that defendants knew or should have known that sales of guns in their home states were having consequences in New York. Id. § 302(a)(3)(h). Moreover, section 302(a)(3)(h) provides that in order to form the basis for the exercise of personal jurisdiction over a non-domiciliary, the defendant must know (or be deemed to know) of the consequences of its conduct and “derive[ ] substantial revenue from interstate or international commerce.” Id. Here, even if we were to impute knowledge to the defendants, the record does not reveal anything approaching “substantial revenue” that could be said to have resulted from guns that made their way to New York. The conjunctive requirement present in section 302(a)(3)(h) could be understood to be constitutionally mandated. As the Supreme Court has explained, “foreseeability alone has never been a sufficient benchmark for personal jurisdiction.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (internal quotation marks omitted). To the contrary, a “defendant’s awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.” Asahi Metal Indus. v. California, 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).
The district court concluded that when a defendant deals in inherently dangerous products a lesser showing is required in order to establish personal jurisdiction. However, neither the New York Court of Appeals nor this Court have ever so held.5 If the City “could satisfy the requirements of [section 302(a)(3)(ii)] on so attenuated a consequence of defendants’] act[s] as has been accepted by the court[] below, it would burden unfairly non-residents whose connection with the state is remote.” Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 327, 425 N.Y.S.2d 783, 402 N.E.2d 122 (1980).
A particularly troubling aspect of the jurisdictional analysis conducted below is the reliance on what the district judge termed the defendants’ “cumulative parallel conduct” as a basis for establishing personal jurisdiction. According to the district court’s theory, although the “out-of-state activities of a single defendant alone may not suffice to establish jurisdiction,” because of “knowing parallel conduct, the extent of the combined harm may provide a basis for jurisdiction over each one.” 501 F.Supp.2d at 422. The New York Court of Appeals has never adopted a theory pursuant to which combined or parallel conduct may be relied upon to establish a basis for the exercise of personal jurisdiction over a defendant when jurisdiction does not otherwise exist.
The New York Court of Appeals has instructed that “[t]o determine whether a non-domiciliary may be sued in New York, *150[the court must] first determine whether [New York’s] long-arm statute ... confers jurisdiction over [the non-domiciliary] in light of its contacts with [New York] State. If the defendant’s relationship with New York falls within the terms of [section 302(a)(3)(ii) ], [the court must then] determine whether the exercise of jurisdiction comports with due process.” LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214, 713 N.Y.S.2d 304, 735 N.E.2d 883 (2000). Rather than follow the instructions of the New York Court of Appeals, the district court created a seven-factor test for analyzing whether long-arm jurisdiction exists over “retail gun establishments.”6 501 F.Supp.2d at 424.
The district court determined that an “inflexible application of a traditional jurisdictional analysis that fails to take account of unique practical commercial factors does not effectively insure the fair and orderly administration of the law.” Id. at 419. The court preferred to adopt what it termed a “reality-based pragmatic jurisdictional analysis.” Id. However, the district court was not free to depart from “traditional jurisdictional analysis” in order to hold defendants subject to suit in New York. The “fair and orderly administration of the law” is best achieved by applying the same standards to all litigants and by adherence to well-defined legal principles.
The district court’s jurisdictional analysis undermines the protection afforded to out-of-state defendants by section 302(a)(3)(ii). As both this Court and the New York Court of Appeals have previously explained, this provision “is intended to ensure some link between a defendant and New York State to make it reasonable to require a defendant to come to New York to answer for tortious conduct committed elsewhere.” LaMarca, 95 N.Y.2d at 215, 713 N.Y.S.2d 304, 735 N.E.2d 883 (quoting Ingraham, 90 N.Y.2d at 598, 665 N.Y.S.2d 10, 687 N.E.2d 1293). The relevant long-arm provision is specifically “designed to ... preclude the exercise of jurisdiction over nondomiciliaries who might cause direct, foreseeable injury within the State but ‘whose business operations are of a local character.’ ” Id. (quoting Ingraham, 90 N.Y.2d at 599, 665 N.Y.S.2d 10, 687 N.E.2d 1293). Here, it is indisputable that defendants’ businesses are of a local character.
The district court also asserted that “[t]here is no specific dollar threshold at which revenue becomes substantial for purposes of [section] 302(a)(3)(ii).”7 501 *151F.Supp.2d at 417. Even if this is so, it was error to excuse the City from making any showing that defendants derived substantial revenue from interstate commerce. See Bensusan Rest. Corp. v. King, 126 F.3d 25, 29 (2d Cir.1997). Indeed, it “offendfs] ‘traditional notions of fair play and substantial justice’ ” to subject a non-domiciliary defendant to jurisdiction when that defendant does not have the requisite “minimum contacts” with the forum state. LaMarca, 95 N.Y.2d at 216, 713 N.Y.S.2d 304, 735 N.E.2d 883 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). The record in this case is devoid of information that would allow anyone to conclude that defendants had “meaningful ‘contacts, ties, or relations’ ” with New York. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Int'l Shoe, 326 U.S. at 319, 66 S.Ct. 154).
The seven-factor test for personal jurisdiction relies heavily on alleged conduct by third parties — specifically, straw purchasers of handguns — in establishing a basis for the assertion of jurisdiction. However, the “unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.” Id. at 474, 105 S.Ct. 2174 (internal quotation marks omitted); see also World-Wide Volkswagen, 444 U.S. at 298, 100 S.Ct. 559. Rather, it is “essential ... that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Burger King, 471 U.S. at 475, 105 S.Ct. 2174 (internal quotation marks omitted). Here, the City did not come forward with any evidence that defendants purposefully established any meaningful contacts with New York state.
The district court maintained that New York City has a strong interest in adjudicating this case, and that “fb]y enacting strong gun control laws to protect its citizens from gun-related crimes New York has expressed a special public policy interest in the subject matter of this litigation.” 501 F.Supp.2d at 428, 429. It is indisputable that “New York has a strong interest in the safety of its residents and territory from handgun violence.” Id. at 429; see generally Bach v. Pataki, 408 F.3d 75 (2d Cir.2005). However, the City’s efforts to “regulatfe] the illegal flow of handguns into its territory,” 501 F.Supp.2d at 429, cannot violate the due process rights of defendants it alleges played some attenuated role in the presence of illegal guns in New York City. As the Supreme Court has explained:
[The limits on the exercise of personal jurisdiction over a defendant] are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States.... Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.
World-Wide Volkswagen, 444 U.S. at 294, 100 S.Ct. 559. Here, although defendants are federally licensed to sell firearms, they *152are “small-town [stores that have] no ongoing contacts with New York and [their] interstate activities [if any] are not the sort which make [them] generally equipped to handle litigation away from [their business] location[s].” Markham v. Anderson, 531 F.2d 634, 637 (2d Cir.1976) (internal quotation marks omitted).
In sum, the district court’s analysis with respect to defendants’ affirmative defense based on lack of personal jurisdiction was a substantial and unjustified deviation from well-known and easily understood principles of New York law. The jurisdictional analysis performed by the court below appears to be based on one federal judge’s view of how the law of New York ought to be constructed, rather than on how it is clearly delineated by statute and in the decisions of the state and federal courts.
By virtue of their default prior to trial, defendants waived their defense based on lack of personal jurisdiction. See Transaero, Inc. v. La Fuerza Aerea Boliviana, 162 F.3d 724, 729 (2d Cir.1998). Therefore, I join the majority’s well-written opinion. But an affirmance here is not an endorsement of the jurisdictional analysis conducted below. One’s agreement or disagreement with the policies that animate liability rules for firearms retailers cannot bear on jurisdictional analysis. The district court was bound to apply New York’s long-arm statute, as clearly interpreted by the New York Court of Appeals. The court below did not do so in this case.

. This appeal concerns only two defendants among many implicated by a "series of civil cases brought by the City of New York” before this district court. City of N.Y. v. Bob Moates’ Sport Shop, Inc., 253 F.R.D. 237, 238 (E.D.N.Y.2008) (Weinstein, J.).

. Judge Weinstein has acknowledged in his academic writing that "New York's long-arm statute, unlike that of most states, has not been interpreted as going to the constitutional limit[]." Jack B. Weinstein, Mass Tort Jurisdiction and Choice of Law in a Multinational World Communicating by Extraterrestrial Sat*148ellites, 37 Willamette L.Rev. 145, 148 (2001). Judge Weinstein is, however, critical of New York’s long-arm statute because, in his view, it "inhibit[s] the expansion of personal jurisdiction to its full potential” and its limitations "should be eliminated.” Id. at 149.

. Defendant Adventure Outdoors also filed an unsuccessful motion for summary judgment based in part on its contention that it was not properly subject to the district court's exercise of personal jurisdiction.

. As characterized by the City, defendant Adventure Outdoors is a "storefront establishment in Smyrna, Georgia" and defendant Mickalis Pawn Shop is "a store in Summer-ville, South Carolina.”

. As a substantive matter, the New York Court of Appeals has rejected the argument that a "general duty of care arises out of [a] gun manufactureras] ability to reduce the risk of illegal gun trafficking through control of the marketing and distribution of [its] products.” Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222, 235, 727 N.Y.S.2d 7, 750 N.E.2d 1055 (2001). The hazardous materials doctrine, which is based on a products liability theory, id., does not support the loosening of the requirements for establishing personal jurisdiction.

. As announced by the district court, these factors are as follows:
1) Number of "trace” handguns linked to criminal investigations in New York and elsewhere that are attributable to the defendant;
2) Distribution practices and their possible effects on crimes in New York;
3) Time-to-crime of the retailer's guns recovered in New York ...;
4) Sales price, type of gun and the intended use of the retailer's handguns
5) Crimes committed in New York with the retailer's handguns;
6) Total number of handguns the retailer ... sold in the United States and retailer's total revenue from the United States and New York markets; and
7) Actions of regulatory authorities related to the retailer’s distribution practices.... 501 F.Supp.2d at 424-25.

. Other courts have sensibly held that "[wjhether revenue is 'substantial' under New York law is determined on both relative and absolute scales.” Ronar, Inc. v. Wallace, 649 F.Supp. 310, 316 (S.D.N.Y.1986); see also Vecchio v. S & T Mfg. Co., 601 F.Supp. 55, 57 (E.D.N.Y.1984); Allen v. Canadian Gen. Elec. Co., 65 A.D.2d 39, 410 N.Y.S.2d 707, 708-09 (3d Dep't 1978). Adventure Outdoors asserts that "uncontroverted evidence demonstrates that over the six year period preceding the institution of this action, [it] derived an average of $3,619.89 from interstate or international commerce, constituting a paltry 0.36% of its overall revenue.” Mickalis Pawn Shop *151denies receiving any revenue from interstate sales and asserts that the City never alleged, or showed — and the trial court never found— "a sum certain amount of revenue” it allegedly derived from interstate commerce.