Elsevier, Inc. v. Grossman
77 F. Supp. 3d 331
S.D.N.Y.2015Background
- Elsevier (Delaware corp., NY principal place of business) sells journals via individual (discounted) and institutional (full) subscriptions and requires agents/end‑users to warrant that individual subscriptions are for personal use only.
- Defendants: Pierre Grossman (Brazilian resident; owns NY apartment; CEO of IBIS and PTI), IBIS (Brazilian corp with an office at Grossman’s Garden City apartment), PTI (Brazilian corp), and various John Does allegedly used false names/addresses to buy individual subscriptions and resold them to institutions.
- Elsevier’s consultant identified patterns of overlapping names/addresses and e‑mails tied to defendants between 2009–2010; Elsevier alleged 50 specific subscription orders in the Amended Complaint (with invoice dates and addresses).
- Procedural posture: Elsevier sued under civil RICO and New York law in 2012; after earlier proceedings the Court considered defendants’ motion to dismiss for lack of personal jurisdiction and for failure to state claims based on the Amended Complaint.
- The court found sufficient prima facie facts to exercise personal jurisdiction over PTI and Grossman under N.Y. C.P.L.R. § 302(a)(1) and (2), largely imputing IBIS’s New York contacts to PTI/Grossman by agency; jurisdiction under § 302(a)(3) and (4) was rejected.
- The court denied dismissal of the RICO claims (timeliness, pattern, and continuity adequately alleged) and denied dismissal of the conversion claim, but granted dismissal of the state‑law fraud claim (fraud alleged was promissory/breach‑related, not a misrepresentation of present fact).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over PTI and Grossman | RICO and NY long‑arm permit jurisdiction; IBIS’s NY activities impute to PTI/Grossman | RICO §1965 cannot reach foreign defendants; PTI/Grossman did not transact business in NY and due process bars jurisdiction | Court: RICO §1965 does not extend to foreign defendants here; but NY CPLR §302(a)(1) and (2) permit jurisdiction by imputing IBIS’s NY acts to PTI/Grossman; due process satisfied |
| Jurisdiction under CPLR §302(a)(3) (tort outside NY causing injury in NY) | Elsevier argues injury to its NY business and loss of customer data supports §302(a)(3) | Defendants say injury did not occur in NY | Held: §302(a)(3) not satisfied—plaintiff failed to show situs of the original injury in NY |
| Civil RICO: timely filing (statute of limitations/inquiry notice) | Consultant identified scheme by Nov 2010; suit filed within four years of discovery | Defendants: inquiry notice existed earlier (e.g., institutional addresses visible in 2004) | Held: Timeliness adequately pleaded; on a 12(b)(6) motion defendants failed to meet heavy burden to show inquiry notice as matter of law |
| Civil RICO: pattern and continuity of racketeering activity | 50 specified, timely alleged mail/wire fraud acts over 2004–2011 show related, closed‑ended continuity | Defendants argue acts taper off post‑2008 and lack relatedness/continuity | Held: Pattern and closed‑ended continuity adequately alleged (multi‑year, repeated predicate acts) |
| State law fraud claim | Misrepresentations in warranties were actionable fraud | Defendants: statements were promissory/breach matters | Held: Fraud claim dismissed — allegations concern promissory statements tied to contract, not separate misrepresentations of present fact |
| Conversion claim (loss of revenue and customer data) | Elsevier alleges conversion of revenues and loss of end‑user customer data | Defendants: monetary loss not proper basis for conversion | Held: Conversion claim survives (court declines to foreclose conversion where customer data and related revenues alleged as converted property) |
Key Cases Cited
- DiStefano v. Carozzi N. Am., 286 F.3d 81 (2d Cir.) (plaintiff bears burden to establish personal jurisdiction)
- In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659 (2d Cir.) (prima facie showing of jurisdiction at pleading stage)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plaintiff must plead facts making relief plausible)
- Daimler AG v. Bauman, 134 S. Ct. 746 (general jurisdiction requires defendant to be at home in forum)
- PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65 (2d Cir.) (§1965(b) nationwide service pertains to parties residing in other districts, not foreign defendants)