Jurisdiction games between Japan and America. (IBM + Left Behind Parents issue)

I am actually going veer away a bit from talking about the Left Behind Parents, since there was so much in the comments again, in my post last week.

What I couldn’t emphasize enough, and what was being roundly ignored by one side in the discussion/pissing match, was that getting the right jurisdiction is very important. Particularly, you want to avoid Japanese jurisdiction. You may not want to avoid Japanese laws, but you don’t want to be stuck playing the games that go on in the civil court system in Japan. See my lawyer-acquaintance Timothy Langley’s recent comment for reasons why.

My own case is a bit of a hybrid, because I have a clear federal claim, based on Title VII of U.S. Civil Rights Act, as it applies to American-controlled firms abroad. I also have a claim for violations of Japanese labor law, which would be breach of contract in our system. IBM Japan, Ltd. is under New York jurisdiction because of either/both the “mere department” and/or “agency” doctrines. IBM USA is the parent, and Japan is the subsidiary, but New York has adopted enterprise theory of corporate organization, so it doesn’t really matter that the corporations are separate entities in separate countries. If the one entity meets a “mere department” or an “agency” test for “doing business in New York”, then it’s under New York jurisdiction.

My third claim was the tortious interference one, that I mentioned last month. We are in discovery on that one, and the IBM parties objected to my 20 questions. In objecting, they failed to even include obvious names of possible Japan employees who would have been involved in breaching the Cognos 2008 deal. (Cognos was, by that time, a unit of IBM.)

What surprises me is one of the corporate officers is now working in New York:

Depending on how discovery goes (the Judge has not ruled, or set up pre-motion yet), am I to believe that the former head of HR in Japan—who now works in New York state—is somehow outside the jurisdiction of New York? I haven’t heard the argument yet, because, right now, the opposition is pretending that Mr. Tsubota doesn’t exist.

IBM’s first objections were finally briefed on January 13. It’s now three months, and so, obviously, the jurisdictional objections have been under consideration (sub judice) by the judge for most of this year. They actually were introduced as pre-motion topics last April, a little over one year ago.

Federal district court is packed, because the Senate is holding up five judicial appointments. Five of the 27, which is a full complement on the federal Southern District of New York. So the waiting is no surprise. But backlog or no, if the judge weren’t considering each jurisdictional argument, it would be a surprise. Once jurisdiction is had, then, that is it. If jurisdiction is not recognized, there is only the appeal to the U.S. Court of Appeals for the Second Circuit (New York, Vermont and Connecticut).

What is interesting about IBM’s strategy is that they are insisting that the jurisdiction for the labor law claim can only be Japan (where they’ve delayed things long enough that the statute of limitations has already expired). They also seem to be saying that the extraterritorial Title VII claim should also go to Japan, even though Japan has no jurisdiction over IBM USA, the parent company. Moreover, Japan itself does not have the Title VII, obviously! It kind of defeats the whole purpose of extraterritorial Title VII.

It’s clear that the federal court must accept jurisdiction where Congress has granted it. Sapient Corp. v. Singh, 149 F. Supp. 2d 55 (S.D.N.Y 2001). Foreign subs that meet the right tests are under New York jurisdiction as well, but I could see some pages about that, if the Judge does not agree. I should at least have the right to show that the elements are met.

It seems like the big question IBM doesn’t want to answer this month, though, is:

Is a Japanese working in New York under New York jurisdiction?

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15 comments

  1. Christopher Savoie (@cjsavoie) · April 24, 2012

    Few questions. Is Rothstein v. Tennessee Gas Pipeline Co., 664 N.Y.S.2d 213, 222 still good law in New York? What factors are used pursuant to the alter ego doctrine in recent cases? In TN, we have a lead case out of a Federal district trial court that was based on *Rothstein* that outlines 11 specific factors that has been adopted by the state courts here as the test. Also, in NY is the alter ego question considered a matter of law for the judge or an issue for the trier of fact?

    • hoofin · April 24, 2012

      Chris, I am not a New York lawyer, so obviously I wouldn’t know about other cases aside from the one that I researched heavily. As I am always saying to people, “do your own homework”. Obviously, that is my advice.

      • hoofin · April 24, 2012

        By the way, the case you mention involves product liability and “alter ego”. What I am on in the post is NYCPLR Section 301 “doing business”, and whether a foreign subsidiary of a New York parent is doing business for purposes of New York jurisdiction. This would be, exactly, Freeman v. Gordon & Breach.

        • Christopher Savoie (@cjsavoie) · April 24, 2012

          My point was that pursuant to that case, one can in some circumstances make a parent liable for conduct of the subsidiary, meaning that the parent company, (in your case IBM U.S.?), might be a direct defendant, giving obvious jurisdiction (personal and subject matter) over the entire case via the parent, without having to even reach the question of personal jurisdiction over the foreign subsidiary. The case I cited has apparently been used as authority for torts outside of the realm of product liability as well, and in many jurisdictions. I just do not know what it takes as far as factors go to invoke the doctrine. That seems to be different in different states.

          • Christopher Savoie (@cjsavoie) · April 24, 2012

            However in this specific case I do recognize that IBM Japan is a unique hybrid type of Japanese company, different from the U.S. parent as to its board composition, shareholders etc. to make that a tough go as an argument, but with smaller non public Japan subsidiaries there is often much more overlap in officers, management and funding so as to offer the possibility of tagging the parent with liability.

            • hoofin · April 24, 2012

              Here, you might be interesting in what I’ve said before: https://hoofin.wordpress.com/2011/07/20/new-yorks-civil-practice-law-rules-cplr-their-own-remarkable-thing/.

              IBM Japan is an actual K.K. or Y.K. (kabushiki kaisha or yugen gaisha), but it is 100% owned, if even through 100% owned intermediaries, by IBM USA. This is the first element of the “mere department”/Tauza test, the only one that is a MUST of the four.

            • Christopher Savoie (@cjsavoie) · April 24, 2012

              No, and they certainly do not cover NY statutory frameworks which I will not even attempt to decipher, but the interplay between common law agency theory and corporate (statutory) liability and statutory immunity in the context of the conduct of subsidiaries is obviously fair game for exams, as is jurisdiction over foreign corps in the local forum state. Those are the basics and like it or not C[a]rdozo finds his way even into Hog Wollow casebooks. Man, them Jews is good legal writers and judges, ain’t they. LOL

            • Christopher Savoie (@cjsavoie) · April 24, 2012

              And someone needs to teach me to spell Cardozo, before I graduate, too! 😉

            • hoofin · April 24, 2012

              Cardozo was no bozo.

          • hoofin · April 24, 2012

            Chris,

            IBM USA is a direct defendant under the U.S. Civil Rights Act, as amended in 1991, because it is a “single employer”. Obviously, there is New York jurisdiction. 42 USC Section 2000e et seq.

            IBM Japan is a direct defendant because it is a “mere department” and/or “agent” of IBM USA, under the Tauza and/or Frummer doctrines. NY CPLR Section 301. No “alter ego” or “veil piercing”. These are distinct lines of cases that give long-arm jurisdiction to New York courts, and thus, the federal district court there.

            A key “John Doe” party is likely working in New York right now, having been transferred there by the headquarters unit that claims it does not operate as a “single employer”.

            • Christopher Savoie (@cjsavoie) · April 24, 2012

              Got it, thanks. The statutory § 2000e approach is interesting in combination with the Tauza doctrine, especially with the seconding of employee intermingling you have noted. Had not thought that agency theory would allow one to reach foreign subsidiaries as defendants. Interesting. Careful who you hire for a role stateside, seems to be one lesson, eh?

            • hoofin · April 24, 2012

              Careful who you hire for a role stateside, seems to be one lesson, eh?

              Close, but not exact. That’s what supports (at least) one John Doe tort.

              You get agency, but there is also “mere department”. Four elements, one essential. Started with a case called Tauza, written by a guy named Cordozo.

            • Christopher Savoie (@cjsavoie) · April 24, 2012

              I get the Tauza “doing business” test as a baseline, and I thought that you meant that the John Doe employee of the K.K. “doing business in NY” as an agent of the K.K. (with control by the K.K.) was how you get over the hump of showing the commingling with “so much control” as to make it a “mere department” as per Delagi v. VW. Am I missing something? Probably better to read your *actual* pleadings and not try to infer them from what I have read posted here in prose format. Also hope like hell this level of detail will not be on my Biz Assoc. final! Hope my Prof. is not out Googling students’ posts and/or twitter feeds, lest she get some ideas to use your fact pattern on the test, which would make a heck of an essay question… Ugggh. Maybe I should stop posting and not give her any ideas!

            • hoofin · April 24, 2012

              You are touching the surface, Chris, but you have it a bit confused. Good yeoman’s job though:

              1) “Agency” under NY CPLR 301 means that a foreign corporation is doing the things that the parent corporation would have to do, if it were in the foreign location. In reverse, it means that the parent company in New York is performing things that the foreign company would have to do in the foreign location. It does not necessarily involve the relocation of personnel. This is shorthanded as Frummer.

              2) The “mere department” test is distinct from Frummer, and not a baseline. It also is codified by NY CPLR 301.

              3) An actual individual, like Mr. Tsubota, residing in New York creates his own jurisdiction. It’s garden variety personal jurisdiction (PJ).

              I don’t know if the so-called Hog Wallow school would teach the fine points of New York long-arm jurisdiction. I know the 125-year-old fly-by-nighter night school I went to in Philadelphia did not. Maybe because it’s in Pennsylvania.

          • Christopher Savoie (@cjsavoie) · April 24, 2012

            Somebody needs to teach me how to post my replies in the correct column, it seems… 😦

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