Exponential Biotherapies, Inc. v. Houthoff Buruma N.V.Exponential Biotherapies, Inc. v. Houthoff Buruma N.V.
MEMORANDUM OPINION
Plaintiff Exponential Biotherapies, Inc. (“EBI”) has sued Houthoff Buruma N.V. (“HB”), the Netherlands law firm EBI hired to handle a corporate restructuring and financing transaction. The crux of the dispute between the parties centers on HB’s subsequent representation of parties that were allegedly adverse to the transaction in which HB represented EBI. HB has moved to dismiss the case based on lack of personal jurisdiction, the applicability of a forum selection clause binding EBI to bring this suit in the Netherlands, and forum non conveniens. Before the Court are HB’s motion to dismiss [Dkt. No. 5], EBI’s opposition [Dkt. No. 12], and HB’s reply [Dkt. No. 17], as well as EBI’s motions in the alternative for jurisdictional discovery or transfer [Dkt. Nos. 13, 14], HB’s opposition [Dkt. No. 16] and EBI’s reply [Dkt. No. 19]. For the reasons set forth herein, the Court will dismiss this case for lack of personal jurisdiction and deny plaintiffs motions.
BACKGROUND
Plaintiff EBI is a Delaware corporation which discovers and develops compounds to treat severe inflammatory disorders. (Compl. ¶ 4.) EBI maintained its corporate headquarters and principal place of business in Washington, D.C., from 2004 to 2006, but has since moved to McLean, Virginia. (Id.) Defendant HB is a Netherlands-based law firm with its principal place of business in Amsterdam (Compl. ¶ 5) and additional offices in Europe. (Def.’s Mot. to Dismiss Pl.’s Compl. Based on Jurisdictional Issues [“Mot.”] [Dkt. No. 5], Attach. 2, Decl. of Dirk Knottenbelt [“Knottenbelt Deck”] at ¶ 3.) HB is not a resident of and has never had an office in the District of Columbia or any part of the United States. (Knottenbelt Deck at ¶ 4.) HB’s attorneys are not licensed to and do not practice law anywhere in the United States 1 (id. at ¶ 4), however, HB may represent United States clients abroad. (Def.’s Reply in Further Supp. of Its Mot. to Dismiss [“Reply”] [Dkt. No. 17], Attach. 1, Suppl. Deck of Dirk Knottenbelt [“Suppl. Knottenbelt Deck”] at ¶ 13; see also PL’s Opp’n to Def.’s Mot. to Dismiss [“Opp’n”] [Dkt. No. 12] at 18-19.) HB’s website describes, in both Dutch and English, its affiliation with the American Bar Association, among other organizations, and touts the “international dimension” of its work. (Opp’n at 8 n. 6.) EBI claims that HB’s website also boasts an “impressive list” of “many U.S. based clients.” (Id. at 18-19.)
EBI alleges that in April 2004, it “engaged [HB], without a retainer agreement, to provide legal services for a transnational financing and corporate structuring.”
2
In June 2008, “by letter from [HB] on behalf of [one of the Adverse Parties],” EBI learned that HB had been retained by three of the Adverse Parties “tо challenge the validity of parts of the corporate transaction that had been undertaken for [EBI] by [HB] in 2004.” (Compl. ¶¶ 7,13; Berns Decl. ¶¶ 25-28.) In July 2008, EBI was served with a writ of summons (the Dutch equivalent of a complaint) naming as defendants two of EBI’s subsidiaries and, in its “Introduction of the Parties,” EBI itself. (Berns Decl.. ¶ 29; Knottenbelt Decl. ¶¶ 25-26.) According to HB, the writ merely “seeks payment of certain unpaid license fees and a declaratory judgment that [one of the Adverse Parties] properly terminated a patent license it had issued to [an EBI subsidiary].” (Knottenbelt Decl. ¶ 29.) Plaintiff claims that, by representing Adverse Parties on a claim allegedly related to its previous work for EBI, HB has committed legal malpractice and breached its fiduciary duty to EBI. (Compl. ¶¶ 17-19, 21-22.) EBI alleges that HB intended to and did disrupt EBI’s worldwide financing, “dilute EBI equity”, deprive EBI of “ownership and control” over technology licensed through the 2004 financing and structuring transaction, and divert all or most of EBI’s “prospective licensing income stream” to the Adverse Parties. (Id. at ¶ 1; Opp’n at 2, 30.)
HB has moved to dismiss EBI’s claims based on: 1) lack of personal jurisdiction, 2) the applicability of a forum selection clause binding EBI to bring this suit in the Netherlands
(see supra
note 2), and 3)
forum non conveniens.
EBI opposes HB’s motion, claiming that the D.C. long-arm statute (§ 13-423(a)(l) and (a)(4)) provides for personal jurisdiction, that no forum selection clause applies, and that D.C. is a convenient forum. EBI requests that, if this Court determines it lacks personal jurisdiction or that D.C. is an inconvenient forum, it either grant jurisdictional discovery (Pl.’s Mot. for Disc, in the Alternative, In Aid of Jurisdiction [Dkt. No. 14] [“Disc. Mot.”]) or transfer EBI’s claims to the District Court for the Eastern District of
STANDARD OF REVIEW
“The plaintiff has the burden of establishing a factual basis for the exercise of personal jurisdiction over the defendant.”
Crane v. New York Zoological Society,
ANALYSIS
I. Personal Jurisdiction
“In a diversity case, the federal district court’s personal jurisdiction over the defendant is coextensive with that of a District of Columbia court.”
Helmer v. Doletskaya,
EBI claims that
A District of Columbia court may exercise persоnal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person’s—
(1) transacting any business in the District of Columbia;
(4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia.
To satisfy the Due Process Clause, a plaintiff must show that the defendant “purposefully avail[ed] himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws,”
Kopff,
A.
“[C]ourt[s] must determine whether there is personal jurisdiction pursuant to (a)(1) ‘on a case-by-case basis, noting in each the particular activities relied upon by the resident plaintiff as providing the supposed basis for jurisdiction.’ ”
Formica v. Cascade Candle Co.,
Neither HB’s act of contracting to provide legal services to EBI, nor its representation of EBI in the Netherlands, subjects HB to suit in D.C. While negotiating or performing business contracts has qualified as “transacting business” for purposes of
HB’s telephone calls, emails, facsimiles and mailings, including invoices, to EBI’s D.C. office are insufficient to subject it to this Court’s personal jurisdiction.
Dove,
HB’s website similarly does not subject it to personal jurisdiction in D.C. Plaintiff suggests HB’s website solicits business from U.S. clients by emphasizing its “Anglo-American friendly capabilities,” including use of English, its “impressive list of U.S. based clients,” and its international pedigree. (Opp’n at 18-19; Berns Decl. at ¶¶ 8-10.) While D.C. courts have established that a defendant’s extensive advertising activity aimed at D.C. residents can subject it to the personal jurisdiction of the D.C. courts,
see, e.g., Shoppers Food Warehouse v. Moreno,
EBI’s final argument for the exercise of рersonal jurisdiction over HB— the remittance of EBI’s proceeds from the 2004 transaction to U.S. banks, some of which were in D.C., and HB’s use of Atradius, possibly based in Illinois, to collect legal fees from EBI — is also insufficient. “A plaintiff may not ... depend upon his own activity to establish the existence of minimum contacts; the defendant must in some way have voluntarily and purposefully availed himself of the protection of the forum state’s laws.”
COMSAT,
B.
To establish personal jurisdiction over a defendant pursuant
EBI argues that in 2008 it suffered economic and reputational injury as a result of HB’s malpractice and breach of fiduciary duties. (See, e.g., Compl. ¶¶ 19, 22; Opp’n at 2, 28, 31.) EBI, however, has resided in Virginia since before 2008 and thus could only have suffered its financial losses, if any, in Virginia, not in D.C. 6 (See Compl. ¶ 4; Opp’n at 39.) EBI twice has admitted as much. (See Opp’n at 39 (“[EBI] has a principal place of business in the [Eastern District of Virginia] and injury resulting from the alleged reputational and financial damage will be sustained [there].”); Pl.’s Reply to Def.’s Opp’n to PL’s Mot. for Jurisdictional Disc, and Transfer [“Disc, and Transfer Reply”] [Dkt. No. 19] at 2 (“[T]he core damage sought to be inflicted by HB should also be presumed to be sustained principally in the residence of the intended victim.”).)
D.C. case law furthеr shows that EBI was not injured “in D.C.” for purposes of
EBI alleges that its lost revenue would have flowed to U.S. banks, some of which have branches in D.C. (Opp’n at 1), but this is a far cry from losing revenue derived from D.C. consumers.
See Kaiser Stuhl Wine,
Additionally, since EBI has not established this Court’s personal jurisdiction over HB pursuant to either
II. Jurisdictional Discovery
EBI requests leave to conduct limited jurisdictional discovery on HB’s contacts in D.C., Virginia, where EBI currently has its principal place of business, and New York, where EBI maintains a license to do business. (Disc. Mot. at 1; Opp’n at 38-39.) “ ‘As a general matter, discovery ... should be freely permitted, and this is no less true when discovery is directed to personal jurisdiction.’ ”
Kopff,
EBI’s request for jurisdictional discovery is based on its own contacts with D.C., Virginia and New York
(see
Disc. Mot. at 1-2), and its hope that jurisdictional discovery will reveal thаt HB has substantial specific and general jurisdictional contacts due to 1) HB’s solicitation of U.S. clients, in part through its participation in various legal organizations; 2) HB’s visits to its U.S. clients and 3) HB’s attendance at legal education seminars in the U.S.
8
(See
Opp’n at 5-6, 8; Disc, and Transfer Reply at 1-2
&
Ex. A at 6-8.) Of course, personal jurisdiction over a foreign defendant cannot be based on the plaintiffs contacts with the forum,
see, e.g., NAWA USA Inc. v. Bottler,
Under D.C. law, both specific and general personal jurisdiction require contacts with D.C.
See
Furthermore, since EBI’s claim does not arise out of HB’s organizational affiliations, HB’s travel to the U.S., or legal seminars, its attempt to establish specific personal jurisdiction will not be helped by discovery pertaining to these activities.
See
EBI’s factual allegations are similarly insufficient to support general jurisdiction. Section 13-334(a) provides for general jurisdiction “ ‘over a foreign corporation as to claims not arising from the corporation’s conduct in the District [] if the corporation is “doing business” in the District.’ ” Under the Due Process clause, such general jurisdiction ... is only permissible if the defendant’s business contacts with the forum are “continuous and systematic,”
FC Investment Group LC,
III. Transfer to the Eastern District of Virginia
EBI asks that, if this Court finds it lacks personal jurisdiction and denies EBI’s request for jurisdictional discovery, it transfer the case tо the District Court for the
Virginia’s long-arm statute is, in relevant part, identicаl to D.C.’s.
10
Compare
Va.Code § 8.01-328.1(A)
with
Virginia courts only have general personal jurisdiction over “a defendant whose activities in Virginia are ‘continuous and systematic^]’ ... [and] the threshold level of minimum contacts to confer general jurisdiction is significantly higher than for specific jurisdiction.”
RZS Holdings AW v. PDVSA Petroleos S.A,
CONCLUSION
For the foregoing reasons, the Court will grant HB’s motion and dismiss this case, without prejudice, for lack of personal jurisdiction. The Court will deny EBI’s motions for jurisdictional discovery and transfer to the District Court for the East
Notes
. While certain HB attorneys have been admitted to practice law in California and New York, they either have never practiced there or have not done so since 1994, when they were employed not by HB, but by a United States law firm. (Knottеnbelt Decl. at ¶ 4.)
. In January 2004, EBI B.V., a wholly-owned Dutch subsidiary of EBI (Compl. at ¶ 6), retained HB for "relatively small routine corporate matters.” (Opp'n, Attach. 1, Deck of Bob Berns ["Berns Deck”] at ¶ 11.) The written retainer agreement incorporated HB’s general terms and conditions, which in turn contained a forum selection clause that provided that "[t]he legal relationship between [HB] and those who retain its services is governed by Dutch law” and required "any disputes arising out of [the] relationship [to] be resolved by the competent court of The Hague” in the Netherlands. (Knottenbelt Deck at ¶¶ 12-13.) In Decеmber 2004, HB
. The parties offer conflicting facts regarding these collections and whether Atradius is based in the Netherlands or Illinois. Both parties assert that EBI disputed payment of some amounts, based on its belief that HB’s services were inadequate. (Compl. ¶ 12; Knottenbelt Decl. ¶¶ 22-24; Berns Decl. ¶¶ 22-25; Mot. at 9-10.) EBI repeatedly clarifies that any inadequacies in HB’s 2004 services are not the basis for the claims in this suit. (Opp’n at 1-2, 5 & n. 3, 11 n. 9, 12 n. 10; Berns Decl. ¶ 25; Opp’n, Attach. 3, Decl. of David A. Holzworth [“Holzworth Decl.”] at ¶¶ 4, 6, 10.) Rather, EBI offers this only to show that HB “clearly understood the locus of [EBI's] operations.” (Opp'n at 12 n. 10, 32.)
.
See, e.g., Helmer,
.
See Sawtelle v. Farrell,
. Plaintiff, on one occasion, suggests that "HB breached its fiduсiary duties of confidentiality and loyalty to EBI the minute it undertook representation of the [Adverse Parties], regardless of how and when accusations [in the 2008 writ of summons] were made against EBI.” (Opp’n at 13 n. 11.) Since plaintiff has not offered facts to show that HB began representing the Adverse Parties prior to 2008, this Court cannot presume that the injury somehow occurred when EBI still resided in D.C.
. EBI's attempt to analogize its case to
Calder v. Jones,
. At the outset, this Court notes that no amount of discovery will establish personal jurisdiction under
. Nor does EBI allege that HB conducts any of these activities in Virginia or New York.
. Virginia’s long-arm statute states, in relevant part:
A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person’s:
(1) Transacting any business in this Commonwealth;
(2) Contracting to supply services or things in this Commonwealth;
(3) Causing tortious injury by an act or omission in this Commonwealth;
(4) Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this Commonwealth.
Va.Code § 8.01-328.1(A);
see also Pearson v. White Ski Co., Inc.,
. EBI's argument that HB's website constitutes solicitation of business is as unavailing under Virginia law.as under D.C. law.
See Pearson,