Cosmetech International, LLC v. Der Kwei Enterprise & Co.

943 F. Supp. 311, 1996 U.S. Dist. LEXIS 14998, 1996 WL 583376
CourtDistrict Court, S.D. New York
DecidedOctober 9, 1996
Docket95 Civ. 9993 (RWS)
StatusPublished
Cited by21 cases

This text of 943 F. Supp. 311 (Cosmetech International, LLC v. Der Kwei Enterprise & Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cosmetech International, LLC v. Der Kwei Enterprise & Co., 943 F. Supp. 311, 1996 U.S. Dist. LEXIS 14998, 1996 WL 583376 (S.D.N.Y. 1996).

Opinion

OPINION

SWEET, District Judge.

Defendant Der Kwei Enterprise & Co., Ltd. (“Der Kwei”) moves, pursuant to Rules 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure, to dismiss this action as against Der Kwei for lack of personal jurisdiction, as well as insufficiency of service of process. For the reasons set forth below, the motion will be denied.

Parties

Plaintiff Cosmetech is a New York corporation engaged in the business of sourcing, designing and distributing supplies, packaging and sundries for the cosmetics business. Cosmetech’s customers are located in New York State, throughout the United States, and worldwide.

Der Kwei is a Taiwan corporation engaged in the manufacture and sale of, inter alia, injection-molded plastic packaging for use in the cosmetics industry.

Defendant Wormser Corporation (‘Worm-ser”), a New Jersey corporation, is a distributor of cosmetic supplies and is a direct competitor of Cosmetech.

Prior Proceedings

The complaint in this action was filed on November 27, 1995. The complaint asserted claims against Der Kwei for breach of contract, unfair competition, tortious interference with business relations and unlawful price discrimination pursuant to 15 U.S.C. § 13(a), and claims against Wormser for unfair competition, tortious interference with business relations, tortious interference with contract and violation of 15 U.S.C. § 13(f).

By letter dated December 20, 1995, counsel for Der Kwei demanded that plaintiff withdraw the complaint for lack of in person-am jurisdiction because Der Kwei has no presence, agents or offices in the United States. Der Kwei’s counsel threatened sanctions under Rule 11 of the Federal Rules of Civil Procedure if the complaint was not withdrawn as against Der Kwei.

On January 31, 1996 a pretrial conference was held before this Court, at .which the Court granted Cosmetech leave to take discovery on the issue of Der Kwei’s claim of lack of jurisdiction, with discovery to be completed and any motions filed by March 13. Der Kwei completed the production of doeu- *314 ments at the end of May 1996. On May 31, 1996, Der Kwei filed the instant motion to dismiss. The motion was considered fully submitted on July 10,1996.

Facts

In considering a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a district court must construe the facts from the pleadings and affidavits in the light most favorable to the plaintiff. See Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir.1985). The facts as presented here are construed accordingly, and they are limited to this motion.

Der Kwei sells and ships its products to various cosmetics companies throughout the world, including the United States and New York State. Many of Der Kwei’s major accounts are located in New York, including Revlon, Estee Lauder, Elizabeth Arden, Avon Products and Cosmair. In 1994, Der Kwei reported international sales totaling approximately $19 million.

In January 1988, Cosmetech and Der Kwei entered into an agreement whereby Cosme-tech agreed to offer Der Kwei products to Cosmetech’s customers, and Der Kwei agreed to accept Cosmetech’s orders. Der Kwei and Cosmetech also agreed to jointly develop certain products, together with customized tooling and processes, for the exclusive use of Cosmetech and its customers. Der Kwei agreed not to sell directly to Cos-metech’s customers, disclose any proprietary information concerning Cosmetech’s customers or its products to Cosmetech’s competitors, and not to assist any competitor in taking business from Cosmetech. The Cos-metech accounts which were to be protected by this agreement included several customers located in New York. The oral agreement was formed largely through telephone and telecopier communication between Cos-metech and Der Kwei.

Pursuant to the parties’ agreement, Cos-meteeh’s purchases were funded by letters of credit posted with New York banks. Der Kwei received payment by drawing on the New York letters of credit. All goods destined for sale in the Eastern United States were shipped to Cosmetech’s freight forwarder in New York. During the period from 1993 through August 1995, Cosmetech purchased $3.5 million of goods from Der Kwei.

In furtherance of its ongoing marketing efforts in the United States, Der Kwei frequently sent its top officials to New York. Documents produced by Der Kwei in discovery show that its officials traveled to New York in October 1989; February and March 1990; September 1990; May and June 1991; November 1991; January 1992; December 1992; May 1993; January 1994; June 1995; December 1995, and January 1996. The Der Kwei officials who came to New York most frequently were Chin-Te Wang (“Wang”), Der Kwei’s General Manager and a 20% shareholder, and Grace Tsai (“Tsai”), its Sales Vice President.

On each of these occasions, Der Kwei’s management met with customers and distributors in New York, such as Revlon, Estee Lauder, Lancome, Del Labs and Cosmair. On at least six of these visits — September 22, 1990; May 28,1991; November 4, 1991; December 8, 1992; May 5, 1993, and January 1, 1994 — Der Kwei’s management met with officials of Cosmetech. During the meetings with Cosmetech in New York, Der Kwei accepted orders for goods, discussed the design and manufacture of components for Cos-metech’s customers, discussed strategies for expanding Der Kwei’s sales in New York and the United States, met with Cosmetech’s customers, and reaffirmed the arrangement protecting Cosmetech’s customers and products, including extending the agreement to South America and Canada.

In December 1992 Wang and Tsai met with Cosmetech in New York City. Among other issues, the parties planned the design and building of a new tool to be utilized in the manufacture of a lipstick cup for Makeup Artists Corporation (“MAC”), a Canadian corporation. At the meeting in New York, Der Kwei and Cosmetech reviewed blueprints, reached agreement on sharing the cost of the new tool, and discussed price, quantity and production and shipment schedules. In addition, it was agreed that this new tool and cup were for the exclusive use of Cosmetech and its customer, MAC.

*315 Also in December 1992, Wang and Tsai, along with Bart Wolfe of Cosmeteeh, visited Del Labs, one of Cosmeteeh’s New York accounts. As a result of this meeting, Der Kwei ultimately shipped some 5,000,000 pieces to Del Labs in New York. Similarly, Cosmetéch met with Wang and Tsai in New York in May 1993.

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