IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
September 6, 2012
IT'S ALL WIRELESS, INC. T/A PRO MOBILE GEAR, PLAINTIFF,
WOOT, INC. ET AL. , DEFENDANTS.
The opinion of the court was delivered by: Rufe, J.
MEMORANDUM OPINION AND ORDER
Defendants Shai International, Inc., Mike Mohnani (a/k/a Manoj Mohnani), Gemma Mohnani, Sundri Mohnani, and Shalina R. Daswani, have moved to dismiss the First Amended Complaint, arguing that this Court lacks personal jurisdiction over them. *fn1
Plaintiff It's All Wireless, trading as Pro Mobile Gear ("PMG"), initially filed suit in state court against Defendants Woot, Inc. and S&D Cellular. Woot removed the case to this Court pursuant to 28 U.S.C. § 1441(a), invoking this Court's diversity jurisdiction, and asserted counterclaims against PMG. PMG then filed the First Amended Complaint, asserting claims against the original Defendants, Woot and S&D, and also asserting claims against the moving Defendants, Dilip C. Daswani, and a number of other Defendants who are not relevant to the current motions.
The First Amended Complaint alleges that for several years before
the events that gave rise to the litigation, PMG had purchased items
for resale from S&D, a company owned by Shalina and Dilip
Daswani. *fn2 PMG also alleges that it had in
the past purchased merchandise as a buyer's agent or broker for Woot,
an online retailer and subsidiary of Amazon.com. *fn3
In the autumn of 2010, S&D offered to sell to PMG Kindle
devices manufactured by Amazon.com. *fn4
PMG accepted the offer and contracted to purchase the Kindles from S&D on Woot's behalf, as a buyer's agent. PMG then arranged for shipment directly from S&D to Woot. *fn5 PMG wired funds to S&D to pay for the Kindles, but although Woot received at least one shipment of Kindles, Woot failed to remit payment to PMG, citing allegations that the Kindles had been stolen from Amazon.com. *fn6 Woot refused to provide evidence that the Kindles were stolen goods, and Woot or Amazon.com retained the Kindles without paying PMG. *fn7
PMG does not allege that it had any direct dealings with Shai or the Mohnani Defendants. Instead, PMG alleges that these Defendants are suppliers who sold the allegedly stolen Kindles to S&D and were paid with PMG's funds. *fn8
II. STANDARD OF REVIEW
"[C]courts reviewing a motion to dismiss a case for lack of in personam jurisdiction must accept all of the plaintiff's allegations as true and construe disputed facts in favor of the plaintiff." *fn9 The burden of establishing that jurisdiction is proper rests with the plaintiff. *fn10 The plaintiff cannot rely on general averments in the complaint or unsupported statements in his response; instead, he must "establish with reasonable particularity sufficient contacts between the defendant and the forum state," *fn11 by providing jurisdictional facts supported by affidavits or competent evidence. *fn12
The Federal Rules of Civil Procedure allow a district court to assert personal jurisdiction over a non-resident to the extent allowed by the law of the state in which the court sits. *fn13
Pennsylvania's long-arm statute permits the exercise of jurisdiction over non-resident defendants to the full extent permitted under the Due Process Clause of the United States Constitution. *fn14 To establish general jurisdiction-jurisdiction based on contacts with the state that are unrelated to the cause of action-due process requires the plaintiff to demonstrate that the non-resident defendant's contacts with Pennsylvania were "continuous and systematic." *fn15 This standard is demanding. *fn16 Specific jurisdiction may be found where the plaintiff's claim is "related to or arises out of the defendant's contacts with the forum," and the defendant had "the minimum contacts with the forum necessary for the defendant to have reasonably anticipate[d] being haled into court there." *fn17 Upon a finding that the first two criteria are met, specific jurisdiction requires the Court to find that exercising jurisdiction "comport[s] with fair play and substantial justice." *fn18
A. Personal Jurisdiction as to Shai and the Mohnani Defendants
There is no dispute that Shai and the Mohnani Defendants are citizens of California. *fn19
Plaintiff does not allege that these Defendants have conducted any business in Pennsylvania at all, with respect to the disputed Kindle shipments or otherwise. Plaintiff alleges only that there is some connection between S&D and these Defendants, and seeks discovery to establish personal jurisdiction. The Court finds that jurisdictional discovery is not warranted as to these Defendants.
"As a general rule, jurisdictional discovery is allowed unless the claim of jurisdiction is clearly frivolous. In order to demonstrate that the claim is not clearly frivolous, the plaintiff must present factual allegations that suggest with reasonable particularity the possible existence of the requisite contacts between [the party] and the forum state." *fn20 The Court of Appeals has warned against permitting "a fishing expedition based only upon bare allegations, under the guise of jurisdictional discovery." *fn21 In this case, Plaintiff has not alleged any facts that would suggest that these Defendants committed any acts in Pennsylvania. Plaintiff's argument that jurisdictional discovery "will clearly assist the parties in gathering the specific facts necessary to determine the extent of Shai and the Mohnanis' role in this case," *fn22 establishes that Plaintiff is angling for facts to support the claim, not pursuing a genuine effort to establish jurisdiction, as even if, as Plaintiff contends, these Defendants supplied the Kindles to S&D, there is still no basis for asserting personal jurisdiction. *fn23 The motion of Shai and the Mohnani Defendants to dismiss for lack of personal jurisdiction will be granted. *fn24
B. Personal Jurisdiction as to Shalina Daswani
PMG alleges upon information and belief that Shalina Daswani is a citizen of California, while Daswani avers that she moved from California to Texas in June 2011. In any event, there are no allegations in the First Amended Complaint that Daswani herself has contacts with Pennsylvania; instead, the basis for jurisdiction rests upon PMG's allegation of alter ego status between S&D and Shalina Daswani; in other words, that jurisdiction over S&D may be imputed to the individual shareholders, the Daswanis.
Under Pennsylvania law, "[t]he alter ego theory comes into play in
piercing the corporate veil when one seeks to hold liable an
individual owner who controls the corporation." *fn25
To assert an alter ego theory, Plaintiff must allege that
the corporate form was a sham. The factors to be considered in
determining alter ego status include "the failure to observe corporate
formalities; non-payment of dividends; insolvency of debtor
corporation; siphoning the funds from [the] corporation by dominant
shareholders; non-functioning of other officers and directors; absence
of corporate records; whether the corporation is a mere facade for the
operations of a common shareholder or shareholders; and gross
In the First Amended Complaint, Plaintiff alleges, without any
factual allegations in support, that S&D and the Daswanis "failed to
adhere to requisite corporate formalities, were constantly
undercapitalized, substantially intermingled corporate and personal
monies and affairs, and used the corporate form to perpetrate a
fraud." *fn27 These rote allegations,
standing alone, are not sufficient to establish a basis for asserting
personal jurisdiction. *fn28 However, in
response to Daswani's motion to dismiss, Plaintiff has attached a
transfer slip from S&D's corporate account in a California bank
showing that Shalina Daswani withdrew $10,000 from S&D's
corporate checking account on October 26, 2010, *fn29
and argues that this transaction undercuts Shalina
Daswani's assertion that she has had no ownership interest or
involvement with the operations of S&D during late 2010.
There is no dispute that this Court has jurisdiction over S&D *fn31 ; and Plaintiff's evidence offers some possibility that the alter ego allegation could be sustained against Shalina Daswani and jurisdiction established. The Court therefore will deny Shalina Daswani's motion without prejudice, and permit limited jurisdictional discovery, after which the motion may be renewed.
This Court lacks personal jurisdiction over Shai and the Mohnani Defendants, and Plaintiff has not established a basis for allowing jurisdictional discovery as to these Defendants. Because Plaintiff may be able to establish personal jurisdiction as to Shalina Daswani, her motion to dismiss will be denied without prejudice. An appropriate order will be entered.