Sonera Holding B.V. v. Cukurova Holding A.S., No. 12-4280 (2d Cir. 2014)
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Sonera, a Dutch holding corporation, filed suit in district court to enforce a final arbitration award against Cukurova, the parent company of a large Turkish conglomerate. The district court held that it had personal jurisdiction over Cukurova based primarily on the New York contacts of several companies with which Cukurova is affiliated. The Supreme Court's decision in Daimler AG v. Bauman reaffirms that general jurisdiction extends beyond an entity's state of incorporation and principal place of business only in the exceptional case where its contacts with another forum are so substantial as to render it "at home" in that state. Even assuming that the activities of Cukurova's affiliates can be ascribed to it for the purpose of general jurisdiction analysis, Cukurova lacks sufficient contacts with New York to render it "at home" there. Accordingly, the court reversed in part, vacated in part, and remanded.
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12 4280 cv(L) Sonera Holding B.V. v. Òªukurova Holdings A.È . UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ______________ August Term, 2013 (Argued: August 22, 2013 Decided: April 25, 2014) Docket Nos. 12 4280 cv(L), 13 73 cv(CON), 13 1880 cv(CON) ____________ SONERA HOLDING B.V., Petitioner Appellee, v. ÒªUKUROVA HOLDING A.È ., Respondent Appellant.* ______________ Before: WINTER, WESLEY, and CARNEY, Circuit Judges. ______________ Appeal from orders of the United States District Court for the Southern District of New York (Denise L. Cote, Judge) dated September 21, 2012; December 21, 2012; April 18, 2013; and May 10, 2013. The district court held that it had personal jurisdiction over Òªukurova based primarily on the New York contacts * The Clerk of the Court is directed to amend the official caption as noted above. of several companies with which Òªukurova is affiliated. The Supreme Court s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), reaffirms that general jurisdiction extends beyond an entity s state of incorporation and principal place of business only in the exceptional case where its contacts with another forum are so substantial as to render it at home in that state. For the reasons stated below, even assuming the activities of Òªukurova s affiliates can be ascribed to it for the purposes of a general jurisdictional analysis, Òªukurova lacks sufficient contacts with New York to render it at home there. We therefore REVERSE the district court s judgment denying Òªukurova s motion to dismiss for lack of personal jurisdiction, VACATE the subsequent judgments of the district court, REMAND the case to the district court, and direct the court to DISMISS the action for lack of personal jurisdiction. RICHARD J. HOLWELL (Michael Shuster, Dorit Ungar Black, Karen Andrea Grus, on the brief), Holwell Shuster & Goldberg LLP, New York, NY, for Respondent Appellant. PIETER VAN TOL (Andrew M. Behrman, Erin Marie Meyer, on the brief), Hogan Lovells US LLP, New York, NY, for Petitioner Appellee. ______________ PER CURIAM: Appeal from orders of the United States District Court for the Southern District of New York (Denise L. Cote, Judge) dated September 21, 2012; December 21, 2012; April 18, 2013; and May 10, 2013. The district court held that it had personal jurisdiction over Òªukurova based primarily on the New York contacts of several companies with which Òªukurova is affiliated. The Supreme Court s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), reaffirms that general 2 jurisdiction extends beyond an entity s state of incorporation and principal place of business only in the exceptional case where its contacts with another forum are so substantial as to render it at home in that state. For the reasons stated below, even assuming the activities of Òªukurova s affiliates can be ascribed to it for the purposes of a general jurisdictional analysis, Òªukurova lacks sufficient contacts with New York to render it at home there. We therefore REVERSE the district court s judgment denying Òªukurova s motion to dismiss for lack of personal jurisdiction, VACATE the subsequent judgments of the district court, REMAND the case to the district court, and direct the court to DISMISS the action for lack of personal jurisdiction. BACKGROUND Sonera Holding B.V. ( Sonera ), a Dutch holding corporation, brought suit in the United States District Court for the Southern District of New York to enforce a final arbitration award against Òªukurova Holding A.È . ( Òªukurova ), the parent company of a large Turkish conglomerate. The parties underlying dispute arose out of negotiations for Òªukurova s sale to Sonera of shares in Turkcell Holding A.È . ( Turkcell Holding ), a Turkish joint stock company that owns a controlling stake in Turkey s largest mobile phone operator. Following 3 failed negotiations and a protracted proceeding before an arbitral tribunal in Geneva, Switzerland, the tribunal found that the parties concluded a share purchase agreement and ordered Òªukurova to pay Sonera $932 million in damages for its failure to deliver the shares. Sonera filed applications for enforcement in jurisdictions across the world, including the British Virgin Islands, Switzerland, the Netherlands, and, as relevant here, the Southern District of New York. Rejecting Òªukurova s contention that New York lacked personal jurisdiction over it, the district court issued four orders, from which Òªukurova now appeals, confirming the arbitration award in favor of Sonera; denying a motion to reconsider; issuing a preliminary injunction preventing Òªukurova from engaging in transactions to shield its assets; and denying dissolution of the preliminary injunction.1 Òªukurova is a Turkish holding company with its registered office in Istanbul, Turkey. It holds investments in other companies and has no operations and owns no property in New York or any of the United States. Sonera asserts 1 Sonera Holding B.V. v. Òªukurova Holding A.È , 895 F. Supp. 2d 513 (S.D.N.Y. 2012); No. 11 Civ. 8909(DLC), 2012 WL 6644636 (S.D.N.Y. Dec. 21, 2012); No. 11 CV 08909(DLC)(FM), 2013 WL 4405382 (S.D.N.Y. Apr. 18, 2013); No. 11 Civ. 8909(DLC), 2013 WL 1935325 (S.D.N.Y. May 10, 2013). 4 that Òªukurova is nonetheless subject to general jurisdiction in New York based on Òªukurova s own actions and the actions of Òªukurova s affiliates, which, according to Sonera, should be imputed to Òªukurova. The actions on which Sonera predicates its assertion of general jurisdiction include (1) negotiations by Òªukurova or one of its affiliates (which occurred outside the United States and were ultimately unsuccessful) to sell an interest in Show TV, a Turkish television broadcaster, to two New York based private equity funds; (2) Òªukurova s sale of American Depository Shares ( ADS ) in Turkcell to an underwriter in London, which subsequently offered the ADS for sale on the New York Stock Exchange; (3) the agreement of Digiturk, a Turkish Òªukurova affiliate, to provide digital television content to a U.S. based company; (4) use of a New York office used by Baytur Insaat Taahhüt A.È . ( Baytur ) and Equipment and Parts Export, Inc. ( EPE ), two Turkish companies affiliated with Òªukurova; and (5) statements on EPE s website describing itself as having been [f]ounded in New York City in 1979 and as Òªukurova s gateway to the Americas. On appeal, Òªukurova (1) challenges the district court s denial of its motions to dismiss for lack of personal jurisdiction and for forum non 5 conveniens; (2) seeks reversal of the district court s decision deferring to the jurisdictional determinations of the arbitral tribunal; and (3) challenges the district court s refusal, on Òªukurova s motion to vacate, to reconsider its finding of personal jurisdiction. Because we find Òªukurova s contacts with New York insufficient to subject it to general jurisdiction and accordingly reverse the district court s judgment denying Òªukurova s motion to dismiss for lack of personal jurisdiction, there is no need to reach Òªukurova s remaining arguments. DISCUSSION A. Personal Jurisdiction Personal jurisdiction over a foreign defendant in a federal question case requires a two step inquiry. Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 168 (2d Cir. 2013). First, we determine whether the defendant is subject to jurisdiction under the law of the forum state here, New York. Second, we consider whether the exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution. Id. Sonera asserts that Òªukurova is subject to general jurisdiction in New York pursuant to N.Y. C.P.L.R. 301, which confers jurisdiction where a company has engaged in such a continuous and systematic course of doing business [in New 6 York] that a finding of its presence [in New York] is warranted. Landoil Res. Corp. v. Alexander & Alexander Servs., 77 N.Y.2d 28, 33 (1990) (citations omitted). In Wiwa v. Royal Dutch Petroleum Co., we reasoned that the continuous course of doing business in New York do[es] not necessarily need to be conducted by the foreign corporation itself. 226 F.3d 88, 95 (2d. Cir. 2000). Rather, we interpreted New York law to include an agency theory of jurisdiction that subjects a corporation to general jurisdiction when it relies on a New York representative entity to render services on its behalf that go beyond mere solicitation and are sufficiently important to the foreign entity that the corporation itself would perform equivalent services if no agent were available. Id. According to Sonera, even if Òªukurova s own contacts with New York are insufficient for general jurisdiction, the contacts of Digiturk, Baytur, and EPE should be imputed to Òªukurova, and these combined contacts with New York render Òªukurova subject to the general jurisdiction of New York. Òªukurova contends that New York law does not permit personal jurisdiction on these facts and that even if it did, the agency theory of personal jurisdiction is incompatible with due process. 7 B. Due Process In light of the Supreme Court s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), we need not determine whether the district court correctly found Òªukurova subject to its general jurisdiction under New York law.2 Whatever the purported scope of N.Y. C.P.L.R. 301 and the agency based theory of jurisdiction articulated in Wiwa, Daimler confirmed that subjecting Òªukurova to general jurisdiction in New York would be incompatible with due process. In the area of personal jurisdiction, [t]he canonical opinion . . . remains International Shoe, in which [the Supreme Court] held that a State may authorize its courts to exercise personal jurisdiction over an out of state defendant if the defendant has certain minimum contacts with [the State] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2 There is no need to address the scope of general jurisdiction under New York law because the exercise of general jurisdiction over Òªukurova is clearly inconsistent with Daimler. However, we note some tension between Daimler s at home requirement and New York s doing business test for corporate presence, which subjects a corporation to general jurisdiction if it does business there not occasionally or casually, but with a fair measure of permanence and continuity. Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267 (1917) (Cardozo, J.) (codified along with other doing business case law by N.Y. C.P.L.R. 301). Not every company that regularly does business in New York is at home there. Daimler s gloss on due process may lead New York courts to revisit Judge Cardozo s well known and oft repeated jurisdictional incantation. 8 2846, 2853 (2011) (second alteration in original) (internal quotation marks omitted) (quoting Int l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)). There are two types of personal jurisdiction: specific and general. Specific or conduct linked jurisdiction, which Sonera does not assert, depends on an affiliation[n] between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum state and is therefore subject to the State s regulation. Id. at 2851 (alteration in original) (internal quotation marks omitted). By contrast, general jurisdiction exists only when a corporation s contacts with a state are so continuous and systematic as to render [it] essentially at home in the forum State. Id. A court with general jurisdiction over a corporation may adjudicate all claims against that corporation even those entirely unrelated to the defendant s contacts with the state. The natural result of general jurisdiction s at home requirement is that only a limited set of affiliations with a forum will render a defendant amenable to all purpose jurisdiction there. Daimler, 134 S. Ct. at 760. A corporation that operates in many places can scarcely be deemed at home in all of them. Id. at 762 n.20. The paradigm forum for general jurisdiction over an individual is the 9 individual s domicile, his home. For a corporation, it is an equivalent place, with the place of incorporation and the principal place of business being the paradigm bases. Those affiliations have the virtue of being unique that is, each ordinarily indicates only one place as well as easily ascertainable. Id. at 760. C. Òªukurova s Contacts with New York Daimler expressed doubts as to the usefulness of an agency analysis, like that espoused in Wiwa, that focuses on a forum state affiliate s importance to the defendant rather than on whether the affiliate is so dominated by the defendant as to be its alter ego. [T]he inquiry into importance stacks the deck, for it will always yield a pro jurisdiction answer: Anything a corporation does through [its affiliate] is presumably something that the corporation would do by other means if the [affiliate] did not exist. Id. at 759. (internal quotation marks omitted). For our purposes, we need not consider whether the agency principles announced in Wiwa survive in light of Daimler. Even assuming that all of Digiturk s, Baytur s, and EPE s contacts should be imputed to Òªukurova, the company s contacts with New York do not come close to making it at home there. 10 As noted above, Sonera would predicate general jurisdiction on (1) Òªukurova s unsuccessful negotiations to sell a portion of Show TV to two New York based private equity funds; (2) Òªukurova s sale of ADS in Turkcell to an underwriter in London, which subsequently offered the ADS for sale on the New York Stock Exchange; (3) Digiturk s agreement with a U.S. based company to provide digital television content; (4) a New York office location used by Baytur and EPE; and (5) statements on EPE s website promoting it as Òªukurova s connection to the United States. Òªukurova is organized under the laws of the Republic of Turkey, with operations, properties, and assets predominantly located in Turkey. New York is neither Òªukurova s place of incorporation nor its primary place of business. Even assuming Digiturk s, Baytur s, and EPE s New York contacts should be imputed to Òªukurova, they do not shift the company s primary place of business (or place of incorporation) away from Turkey. And although Daimler and Goodyear d[o] not hold that a corporation may be subject to general jurisdiction only in a forum where it is incorporated or has its principal place of business, Daimler, 134 S. Ct. at 760, those cases make clear that even a company s engage[ment] in a substantial, continuous, and systematic course of business is alone insufficient 11 to render it at home in a forum, id. at 761. Òªukurova s contacts fall short of those required to render it at home in New York. To subject it to all purpose general jurisdiction in that state would deny it due process. D. Contractual Consent to Personal Jurisdiction Lastly, Sonera argues that even if Òªukurova s contacts with New York are insufficient to support personal jurisdiction, we should still affirm the District Court s decision because Òªukurova expressly consented to the forum s jurisdiction. In March 2005, Sonera and Òªukurova entered into an agreement (the Letter Agreement ) that required the parties to make good faith efforts to execute a final share purchase agreement allowing Sonera to purchase Òªukurova s interests in Turkcell Holding. The Letter Agreement specifies that any disputes arising out of it are to be settled by arbitration under the rules of the International Chamber of Commerce in Geneva, Switzerland, and that any award of the tribunal shall be final and binding on the parties. As relevant here, Article 5.4(e) of the Letter Agreement further provides as follows: Any award of the arbitral tribunal may be enforced by judgment or otherwise in any court having jurisdiction over the award or over the person or the assets of the owing Party or Parties. Applications 12 may be made to such court for judicial recognition of the award and/or an order for enforcement, as the case may be. Sonera reads this provision as an implicit agreement to waive any defense based on lack of personal jurisdiction and to consent to the jurisdiction of any court in any country in the world with subject matter jurisdiction over enforcement actions brought pursuant to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards including, under 9 U.S.C. § 203, the United States District Court for the Southern District of New York. We do not read the provision so broadly. Article 5.4(e) appears to be a standard entry of judgment clause designed to clarify that, following any arbitration award, a court of the arbitral venue or in any jurisdiction in which the parties persons or assets are located would have jurisdiction to enter judgment on that award.3 Article 5.4(e) does not speak to personal jurisdiction, and we Although a jurisdictional stipulation to entry of judgment in international arbitration contracts is technically unnecessary given 9 U.S.C. § 203 s conferral on U.S. district courts of original subject matter jurisdiction over Convention awards, consent to entry of judgment is required, under 9 U.S.C. § 9, for enforcement of domestic arbitration awards, and authorities on international arbitration recommend such clauses be included even in international agreements out of an abundance of caution. See, e.g., R. Doak Bishop, Drafting the ICC Arbitral Clause, in Transnational Litigation § 41:8 (J. Fellas ed., Westlaw 2014). 3 13 decline to interpret the provision as Òªukurova s consent to personal jurisdiction in New York. CONCLUSION We have considered all of Sonera s arguments in support of jurisdiction and find them to be without merit. We therefore REVERSE the district court s judgment denying Òªukurova s motion to dismiss for lack of personal jurisdiction, VACATE the subsequent judgments of the district court, REMAND the case to the district court, and direct the court to DISMISS the action for lack of personal jurisdiction. 14
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