PEPSICO BEVERAGE SALES LLC BOTTLING GROUP LLC v. MINERALS RESORT SPA INC CRYSTAL SPRINGS RESORTS MINERALS HOTEL MINERALS RESORT SPA MANAGEMENT INC (2025)

The following papers numbered 1 to 6 were read on this motion:

Papers Numbered

Notice of Motion, Affirmation and Exhibits 1

Memorandum of Law 2

Affirmations and Exhibits in Opposition 3

Memorandum of Law in Opposition 4

Affidavit Reply 5

Memorandum of Law in Reply 6

Defendants bring their motion seeking to dismiss the complaint in its entirety pursuant to CPLR § 3211(a)(8), for a lack of personal jurisdiction. According to the complaint, plaintiffs (collectively, "Pepsi") seek damages for defendants' breach of an agreement for the purchase of plaintiffs' beverages "for sale and distribution within their hotel/resort facilities." There is no dispute that all of these "hotel/resort facilities" are located in New Jersey. Nor is there any dispute that, as set forth in the complaint, the principal places of business of all three defendants are in New Jersey. There is further no dispute that defendants do not have offices in New York, own real property in New York or own, operate or manage any businesses in New York.

There is also no dispute that defendants' initial contact with someone from Pepsi was Roseann Isasi, who at all relevant times was located in New Jersey, not New York.¹ Nor is there any dispute that the parties' agreement actually states that it is between two New Jersey-based entities: plaintiff "Bottling Group, LLC, on behalf of itself and its affiliates and/or their respective subsidiaries collectively comprising Pepsi Beverages Company, a Delaware limited liability company with its principal offices located at 15 Melanie Ln, East Hanover, NJ 07936 ('Pepsi') and Crystal Springs Resorts/Minerals Hotel, with its principal place of business at 2 Chamonix Drive, Vernon, NJ 07462." (Emphasis added). There is no allegation, either in the complaint or in opposition to this motion, that the parties ever had a single meeting in New York. All of their meetings were in New Jersey. In fact, Pepsi's Director of Sales concedes that he "met with Tom Barone [a representative of defendants] at Defendants' location in New Jersey."

A review of the complaint and plaintiffs' papers shows that they largely rest their claims for jurisdiction on three grounds: (1) defendants advertised on their website that their resorts are convenient for New Yorkers ("Defendants' website describes Crystal Springs as 'NYC'S CLOSEST LUXURY RESORT,' and that, '[n]estled along the edge of the Appalachian Mountains just an hour outside New York City sits one of the country's most spectacular resorts . . .,' and that they 'are only one hour from the George Washington Bridge and New York City's closest resort. Furthermore, we are the closest resort to the 3 New York Metro area airports."); (2) plaintiffs are headquartered in New York ("The action was venued in Supreme Court, Westchester County, based upon, inter alia, Plaintiffs' headquarters and principal place of business  ² being located in Westchester"); and (3) the agreement contains a New York choice of law provision.

As the Second Department has explained, "The ultimate burden of proving a basis for personal jurisdiction rests with the plaintiff." Econ. Premier Assurance Co. v. Miflex 2 S.p.A., 212 AD3d 775, 776, 182 N.Y.S.3d 189, 190 (2d Dept. 2023). This is not initially a heavy burden because a plaintiff, "in opposition to a motion to dismiss pursuant to CPLR 3211(a)(8), need only make a prima facie showing that the defendants were subject to the personal jurisdiction of the Supreme Court. When opposing a motion to dismiss a complaint pursuant to CPLR 3211(a)(8) on the ground that discovery on the issue of personal jurisdiction is necessary, plaintiffs . . . need only demonstrate that facts 'may exist' to exercise personal jurisdiction over the defendant." Daniel B. Katz & Assocs. Corp. v. Midland Rushmore, LLC, 90 AD3d 977, 978, 937 N.Y.S.2d 236, 238—39 (2d Dept. 2011).

In this case, there is no dispute that defendants are all located in New Jersey, as plaintiffs allege in the complaint. Moreover, as the contract between the parties makes clear, plaintiffs' "principal offices" are in New Jersey. The Court may only exercise personal jurisdiction over a nondomiciliary if they transact any business within the state, as set forth in CPLR § 302(a)(1). It has long been the case that "a nondomiciliary will be deemed to be subject to the jurisdiction of a New York court pursuant to CPLR 302(a)(1) if he or she has engaged in some purposeful activity within the State and there is a substantial relationship between this activity and the plaintiff's cause of action. Purposeful activities are those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Whitcraft v. Runyon, 123 AD3d 811, 812, 999 N.Y.S.2d 124, 126 (2d Dept. 2014).

Plaintiffs rely heavily on the Court of Appeals case of State v. Vayu, Inc., 39 NY3d 330, 332—33 (2023). In this case, the Court of Appeals explained that "When assessing whether there is personal jurisdiction over a defendant pursuant to the 'transacts any business' clause of New York's long-arm statute, courts must ask whether what the defendant did in New York constitutes a sufficient 'transaction' to satisfy the statute. Examination of a defendant's actions in New York is primarily a fact-based inquiry that requires an assessment of whether the non-domiciliary's activities in the state were purposeful. . . . Although determining what facts constitute 'purposeful availment' is an objective inquiry, it always requires a court to closely examine the defendant's contacts for their quality." Id. at 332—33.

In State of New York, the parties negotiated for two years, including holding a meeting in New York, about a relationship that the defendant described in a grant application as a partnership. Eventually, the defendant sold its products to plaintiff. When a problem arose, the defendant went to New York for another meeting with plaintiff, at which "the two parties also discussed an ongoing business relationship and future opportunities between Vayu and SUNY Stony Brook." Id. at 334.

According to the Court of Appeals, "These facts demonstrate a clear intent by Vayu to engage purposefully in business activities within the meaning of CPLR 302 (a)(1). For two years, Vayu projected itself into the state via calls and emails with Small and others at SUNY Stony Brook that resulted in the sale. . . . Long-arm jurisdiction is appropriately exercised over commercial actors who have . . . used electronic and telephonic means to project themselves into New York to conduct business transactions. And, although being physically present in New York is not required, the fact that Pepper traveled to New York to meet with Small in furtherance of the ongoing business relationship is significant." Id.

The facts in State of New York are very different from those present here. First, in this case, plaintiffs appear to concede that all of the meetings between the parties occurred in New Jersey. Second, according to the parties' contract, plaintiffs were located in New Jersey, as was their initial point person on the transaction. Third, and not insignificantly, as defendants have noted, Pepsi is an international entity,³ while there is no dispute that defendants are located wholly within New Jersey.

The fact that defendants advertise their proximity to New York on their website is inadequate to establish jurisdiction in New York. As the Third Department held in an analogous case where "some of its customers are New York residents and some of the products they store at defendant's facility either come from or are shipped to New York," and where "defendant mailed brochures to customers in New York and its Web site was accessible worldwide, mere solicitation of business in New York is insufficient to constitute doing business here." Parsons v. Kal Kan Food, Inc., 68 AD3d 1501, 1502, 892 N.Y.S.2d 246, 247 (3d Dept. 2009). See also Duffy v. Grand Circle Travel, Inc., 302 AD2d 324, 324—25, 756 N.Y.S.2d 176, 177—78 (1st Dept. 2003) ("New York jurisdiction would not be established pursuant to CPLR 301 by the circumstance that the cruise package . . . included an airline ticket from New York to France (where the ship departed); or that defendant advertises in its brochures that New York (along with other major cities) is a "gateway city"; or that defendant has guides or representatives that meet customers at unspecified airports. . . .").

Plaintiffs also direct the Court to the First Department case of Robins v. Procure Treatment Centers, Inc., 157 AD3d 606, 607, 70 N.Y.S.3d 457 (1st Dept. 2018). This case is also substantially distinguishable. In that case, "the record contains a State filing in which PPM identified itself as having a principal place of business in Manhattan — 'tangible evidence' upon which to question PPM's claims to the contrary." Not only that, but the defendant in that case also took a much more aggressive stance on recruiting New Yorkers to its facilities in New Jersey: "PPM chose and marketed its Somerset, New Jersey, location to target New York residents, touting its proximity to New York in advertising, entered into an agreement with a consortium of New York City hospitals for the referral of cancer patients for treatment at its facility, and provided the consortium's doctors with privileges at its facility." Id. That agreement contemplated New York doctors referring patients to a New Jersey facility, and the New York doctors practicing at the location in New Jersey.

Nor does the New York choice of law provision help plaintiffs establish jurisdiction over defendants. It has long been settled that "A choice of law provision in an agreement, while relevant, is insufficient by itself to confer personal jurisdiction over a defendant in New York under CPLR 302(a)(1)." Am./Int'l 1994 Venture v. Mau, 146 AD3d 40, 59, 42 N.Y.S.3d 188, 202 (2d Dept. 2016) ("the mere fact that the Subscription Agreement provided that its terms would be construed in accordance with the laws of New York does not mean that this action to recover on the note should be venued in New York."). See also Shalik v. Coleman, 111 AD3d 816, 818, 975 N.Y.S.2d 741, 743 (2d Dept. 2013) ("The only connections that the appellant has with New York are that the promissory note provides that it should be governed and construed in accordance with the laws of New York, that there were communications made between the appellant and the plaintiff via telephone and email, and that the appellant mailed payments due on the note to the plaintiff's office in New York. These contacts are insufficient to support jurisdiction under CPLR 302(a)(1).").

As the Court of Appeals has explained, "New York court may not exercise personal jurisdiction over a non-domiciliary unless two requirements are satisfied: the action is permissible under the long-arm statute (CPLR 302) and the exercise of jurisdiction comports with due process. If either the statutory or constitutional prerequisite is lacking, the action may not proceed. Due process requires that a nondomiciliary have 'certain minimum contacts' with the forum and 'that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Williams v. Beemiller, Inc., 33 NY3d 523, 528—29 (2019).

In this action, the Court finds that "the defendants did not conduct sufficient purposeful activities in New York, which bore a substantial relationship to the subject matter of this action, so as to avail themselves of the benefits and protections of New York's laws." Daniel B. Katz & Assocs. Corp. v. Midland Rushmore, LLC, 90 AD3d 977, 978, 937 N.Y.S.2d 236, 239 (2d Dept. 2011). See also Shatara v. Ephraim, 137 AD3d 1248, 1249, 29 N.Y.S.3d 406, 408 (2d Dept. 2016) ("Accepting as true the plaintiff's allegations . . . the plaintiff failed to present any evidence that DiGiovanni regularly did or solicited business, or engaged in any persistent course of conduct, or derived substantial revenue from goods used or consumed or services rendered in this State (see CPLR 302[a][3][i]), or derived substantial revenue from interstate or international commerce.").

As for plaintiffs' plea to be allowed to conduct discovery,⁴ "the plaintiffs' opposition to the [ ] motion to dismiss the complaint . . . failed to demonstrate that facts may exist to exercise personal jurisdiction over the appellant and, thus, the plaintiffs failed to make a sufficient start to warrant further discovery on the issue of personal jurisdiction." Doe v. McCormack, 100 AD3d 685, 685—86, 954 N.Y.S.2d 140, 141 (2d Dept. 2012). See also Altman v. DiPreta, 204 AD3d 965, 967, 168 N.Y.S.3d 86, 89 (2d Dept. 2022) ("the plaintiffs failed to make a sufficient showing to warrant holding Slagle's motion [to dismiss] in abeyance while discovery is conducted on the issue of jurisdiction.").

Accordingly, the Court grants the motion to dismiss the action for lack of personal jurisdiction. The Court also denies the motion to stay discovery, also filed by defendants, as moot. The Court does not make any finding as to whether plaintiffs may commence a new action in New Jersey, or as to which party will prevail in any subsequent litigation.

The foregoing constitutes the decision and order of the Court.

Dated: February 7, 2025

White Plains, New York

HON. LINDA S. JAMIESON

Justice of the Supreme Court

FOOTNOTES

1.   In his affidavit in opposition to this motion, Pepsi's Director of Sales admits that "Roseann Isasi was initially responsible for leading the negotiations of the contract between PepsiCo and Crystal Springs. . . . At the relevant time, Roseann worked at a PepsiCo office located within New Jersey."

2.   This is in contrast to the contract at issue here, which states that plaintiffs' "principal offices" are in New Jersey.

3.   It simply cannot be the case that Pepsi is able to commence an action in New York against any entity to which it sells its products, no matter where in the country or the world that buyer is located. Nor can it be the case that a company located entirely within one state can be haled into court in any state in the United States in which their suppliers are located if they have a simple customer supply agreement.

4.   "Complete responses to Plaintiffs' Demands may very well allow Plaintiffs to buttress their demonstration of 'long-arm' jurisdiction and/or to argue that Defendants are subject to general jurisdiction, given (for example) Plaintiffs' regular and direct website solicitation of New York customers and other interstate commerce."

Linda S. Jamieson, J.