Re: 2/23/05 - [UCSY] Defendant Terra Networks, S.A.'s Motion to Dismiss
UNITED STATES DISTRTCT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO. 05-201 49-CIV-MORENO/Garber
UNIVERSAL COMMUNICATION
SYSTEMS, INC., a Nevada corporation,
and MICHAEL J. ZWEBNER,
Individually and Others Similarly Situated,
Plaintiffs,
vs.
LYCOS, INC., d/b/a THE LYCOS NETWORK
& TERRA NETWORKS, S.A., et al.,
Defendants.
________________________________________________________________________/
DEFENDANT TERRA NETWORKS, S.A.’S MOTION TO DISMISS
Defendant Terra Networks, S.A. (“Terra”), appearing for the limited purpose of this motion, moves pursuant to Rule l2(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure to dismiss Plaintiffs’ Complaint and states:
I. INTRODUCTION
Plaintiffs’ manifest difficulty in crafting their jurisdictional allegations with respect to Terra is not without reason. Fiction is a more difficult undertaking than the recitation of fact. Plaintiffs allege “TERRA NETWORKS S.A. have [sic] and continue to conceal its whereabouts for the purpose of avoiding service of process in the related litigation.” But Plaintiffs elsewhere concede that Terra is readily found in Barcelona, Spain. See e.g., Complaint, ¶14. They allege “TERRA NETWORKS directly or indirectly, conducted its various business operations through a maize [sic] of companies throughout the world, including its operations in the United States.” This statement does not contain even a kernel of truth. Terra merely holds shares in a number of entities which pursue their own businesses in their own respective spheres of activity. Terra’s sphere of activity, however, is Spain, not Florida.
As more fully set forth in the Colchero Declaration submitted herewith, Terra is a holding company, duly organized and existing under the laws of Spain.[1] Colchero Decl., ¶2. It is headquartered in Barcelona, Spain, and has its principal place of business in Madrid, Spain. Id. It does not have a licence to do business in Florida, and has no agent for service of process in Florida. Id. It has no offices, agents, employees, representatives, personal or real property, bank accounts or other assets in Florida. Id., ¶3 Terra Network Operations, Inc., in contrast, is a Florida corporation with its principal place of business in Miami, Florida. Id., ¶4. It has an independent corporate existence from Terra. Id. It pursues its own business and has its own managers, its own accounts, its own facilities, and offers its own products and services. Id. Terra’s only interest in Terra Networks Operations, Inc. is its indirect interest as a shareholder. Id.
Terra cannot properly be served through Terra Networks Operations, Inc., and Plaintiffs’ purported service of Terra should be quashed accordingly. Moreover, even if Plaintiffs can properly effect service, this Court would still lack personal jurisdiction over Terra. The Complaint, therefore, should be dismissed with prejudice.
[1] See S & Davis Intern., Inc. v. The Republic of Yemen, 218 F.3d 1292, 1301 (11111 Cir. 2000) (court permitted to consider affidavits and other evidence on challenge to personal jurisdiction).
Terra has not been served so as to bring it within the jurisdiction of this Court. Service of process on a foreign corporation that is located outside the United States is governed by Fed. R. Civ. P. 4(h)(2), which requires that service be made, absent a waiver of service, in accordance with rules prescribed by Rule 4(f). In turn, Rule 4(f) provides that service outside the United States may be effected “by an internationally agreed means reasonably calculated to give notice, such as those means authorized by the Hague Convention . . . .“ Fed. R. Civ. P. 4(f)(1). See also, Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, Feb. 10, 1969, 20 U.S.T. 361, T.I.A.S. No. 6638 (the “Hague Convention”). Here, there is no dispute that Terra is a Spanish corporation, organized and existing under the laws of Spain. Nor can Plaintiffs dispute that the United States and Spain are signatories to the Hague Convention. Id., Ch. III, Art. 31 (Spain, Aug. 3, 1987).
Accordingly, to be effective, process must be served on Terra pursuant to the international requirements mutually agreed to by Spain and the United States and set forth in the Hague Convention. Id., n. 11(f). Plaintiffs, however, have purported to serve Terra, a corporation which does not conduct business within the United States, by delivering a Summons and Complaint to Terra Networks Sales, LLC, as Terra’s “agent in the USA.”
Under appropriate circumstances, not present here, Fed. R. Civ. P.4 does permit service upon a corporation “in a judicial district of the United States in the manner prescribed for individuals by subdivision (e)(l), or by delivering a copy of the summons and the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or law. . . .“ Id., (h)(emphasis supplied). Section (e)(1) provides, in pertinent part, that service may be accomplished “pursuant to the law of the state in which the district court is located.” Florida law provides that process may be served on any corporation by serving “an agent designated by the corporation.” Fla. Stat. §48.081(3). Further, §48.181(2) provides that with respect to a foreign corporation with a “resident agent” in the state, “process shall be served on the resident agent. . . .“ Alternatively, with respect to a foreign corporation “with no agent in this state,” Fla. Stat. §48.081(2) provides that “service may be made on any agent transacting business for it in this state.”
Here, Terra has not authorized or designated an agent within the State of Florida. There is no allegation in the Complaint to the contrary, and the Colchero Declaration makes quite clear that any such contention is, in any event, baseless. Accordingly, the attempted service by Plaintiffs was demonstrably improper.
Terra Network Operations, Inc. is an American business with an independent corporate existence, its own directors and officers, its own accounts, its own manufacturing facilities, its own products, personal, employees and customers. Controlling case law confirms that Plaintiffs’ attempted service of their Complaint on Terra through Terra Network Operations, Inc. is insufficient to bring Terra before this Court.
Consolidated Development Corp. v. Sheritt, Inc., 216 F.3d 1286 (1lt Cir. 2000), is dispositive. In Consolidated, the Eleventh Circuit recited the well known rule that “[c]onsiderations of due process require that a non-resident defendant have certain minimum contacts with the forum, so that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice,” and refused to subject a foreign corporation to the authority of the United States courts merely because its subsidiary operated in the forum state. Id. at 1291 (citing Borg- Warner- Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1057 (1 lthl Cir. 1996); International Shoe v. Washington, 326 U.S. 310, 316 (1945)). See also, Fed. R. Civ. P. 4(k)(2)(service gives rise to personal jurisdiction only if ‘the exercise of jurisdiction is consistent with the Constitution and the laws of the United States.”).
The essential factors in the Eleventh Circuit’s analysis were that one of the defendants was organized under Canadian law; had its principal place of business in Canada; was not registered to do business anywhere within the United States; owned no property in the United States; and had no employees in the United States. However, it did have a subsidiary that was incorporated and had its principal place of business in the United States. Consolidated, 216 F.3d at 1293-94.
The Eleventh Circuit affirmed the dismissal of the complaint against the foreign defendants, finding that the district court lacked personal jurisdiction over them, including the Canadian corporation described above, notwithstanding the plaintiffs allegations that this defendant had previously issued bonds within the United States, had appointed an agent for service of process in connection with that offering, and presently marketed its products through a United States based subsidiary. Id. at 1292. The court found the bond sales in the United States legally insufficient to establish sufficient contact for the exercise of personal jurisdiction, Id. at 1292-93, and with regard to the existence of the United States subsidiary, the court held: “It is well established that as long as a parent and a subsidiary are separate and distinct corporate entities, the presence of one in a forum state may not be attributed to the other.” Id. at 1293 (citing Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 337 (1925)). it is sufficient, noted the court, that “the subsidiary has preserved some semblance of independence from the parent . . . .“ Id. (quoting Potera v. Winn Dixie of Montgomery, Inc., 996 F. Supp. 1418, 1423 (M.D. Ala. 1998). Here, Terra has even less connection to the United States than did the dismissed Canadian parent in Consolidated.
The “minimum contacts” found lacking in Consolidated have been repeatedly identified by the Supreme Court as a prerequisite for personal jurisdiction. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286(1980); Hanson v. Denckla, 357 U.S. 235,251(1 958)(finding no personal jurisdiction by Florida court over foreign defendant that “has no office in Florida, and transacts no business there”). As Consolidated held, the mere existence of a subsidiary/parent relationship, without considerably more, is insufficient to find that a foreign corporation is “doing business” within the forum state of the subsidiary. This rule has been routinely enforced by courts within this circuit, as well as the courts of Florida. See e.g., McClenon v. Nissan Motor Corp. In USA., 726 F. Supp. 822, 826 (N.D. Fla. I 989)(”[t]he fact that a party served within the state is a wholly owned subsidiary of another company does not, by itself, support substituted service under Florida law”)(citing MacMillian-Bloedel, Ltd. v. Canada, 391 So.2d 749, 751 (Fla. 5th DCA 1980) and VolkswagenwerkAktiengesellschaJI v. McCurdy, 340 So.2d 544, 546 (Fla. 1 DCA 1976)). Florida’s courts, moreover, have “repeatedly held that statutes providing for substituted service must be strictly construed” and that where a subsidiary is served on behalf of a parent, the “plaintiff must show that the parent ‘exercised such a degree of control over its subsidiary that the activities of the subsidiary were in fact the activities of the parent within the state. . . .“ McClenon v. Nissan Motor Corp. In USA., 726 F. Supp. at 826 (citations omitted).
In Wads en v. Yahmaha Motor Co., 131 F.R.D. 206 (M.D. Fla. 1990), the district court found that a foreign Japanese corporation should have been served via the Hague Convention, rather than through its United States subsidiary as a purported agent because “a parent-subsidiary relationship alone does not establish the agency necessary for serving process on the parent through the subsidiary.” Id. at 209 (citations omitted). Similarly, in Aquila Steel Corp. v. Fontana, 585 So.2d 426,427 (Fla. 3d DCA 1991), jurisdiction was found lacking over an Australian corporation where service was attempted on its wholly owned subsidiary in Dade County because there was no evidence that “the parent thoroughly controlled the subsidiary.”
Here, as evidenced by the Colchero Declaration, the relationship between Terra and Terra Network Operations, Inc. does not go beyond that created by the indirect financial interest the former has over the latter. The Court only has jurisdiction over parties that have been properly served, and Terra has not been so served. Furthermore, even if proper service were effected, it would not be a proper party to this proceeding because the Court lacks personal jurisdiction over Terra since it lacks the requisite minimum contracts with the United States and the State of Florida.
III. CONCLUSION
Terra cannot properly be served through its subsidiary Terra Networks Sales, LLC, and Plaintiffs’ purported service of Terra should be quashed accordingly. Moreover, even if Plaintiffs can properly effect service, this Court would still lack personal jurisdiction over Terra. The Complaint, therefore, should be dismissed with prejudice.
Respectfully submitted,
STEARNS WEAVER MILLER WEISSLER
ALHADEFF & SITTERSON, P.A.
Attorneys for Defendant Terra Networks, S.A.
Suite 2200 - Museum Tower
150 West Flagler Street
Miami, Florida 33130
(305) 789-3200 - Telephone
(305) 789-3395 - Facsimile
By:
CERTIFICATE OF SERVICE
Florida Bar No. 0716091
CHRISTOPHER L. BARNETT
Florida Bar No. 0360510
cbarnett@swmwas.com
I HEREBY CERTIFY that a true and correct copy of the foregoing was served via U.S. Mail on this __ day of February, 2005, to:
JOHN H. FARO, ESQ.
Attorneys for Plaintiffs
44 West Flagler Street
Suite 1100
Miami, FL 33 130-1808
WEISSLER ALHADEFF & SITTERSON, P.A.
MUSEUM TOWER, 50 WEST FLAGLER STREET, MIAMI, FLORIDA 33130 • TELEPHONE (305) 789-3200 |
