FILED: NEW YORK COUNTY CLERK 06/29/ :31 PM INDEX NO /2015 NYSCEF DOC. NO. 10 RECEIVED NYSCEF: 06/29/2015

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1 FILED: NEW YORK COUNTY CLERK 06/29/ :31 PM INDEX NO /2015 NYSCEF DOC. NO. 10 RECEIVED NYSCEF: 06/29/2015 SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK X BONCHON U.S.A., INC., BONCHON FRANCHISE, LLC, and JINDUK SEH, Plaintiffs, - against - HYUK KIM a/k/a HENRY KIM, HYEAJIN EOM, SAMPSON DOUNG, INBOSTON, LLC, INBOSTON DOWNTOWN, LLC, INBOSTON CHICKEN LONG ISLAND CORP., JULIE P. CHUNG and JOHN DOE 1-5 (Fictitious name to be used until actual name is known). Defendants X Index No /2015 ORAL ARGUMENT REQUESTED MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS ALL COUNTS OF COMPLANT AGAINST INBOSTON, LLC, INBOSTON DOWNTOWN, LLC, HYEANJIN EOM, SAMPSON DOUNG AND JOHN DOES 1, 2, 4 & 5 and PARTIAL MOTION TO DISMISS COUNT IV OF COMPLAINT AGAINST HYUK KIM a/k/a HENRY KIM AND COUNT III OF COMPAINT AGAINST INBOSTON CHICKEN LONG ISLAND CORP. Donald W. Boyajian, Esq. DREYER BOYAJIAN LLP 75 Columbia Street Albany, NY (518) Harry M. Haytayan Jr. (motion pending for admission pro hac vice) HAYTAYAN & HAYTAYAN, PLLC One Tara Boulevard, Suite #200 Nashua, New Hampshire (603) Attorneys for defendants: Hyuk Kim, Hyeajin Eom, Sampson Doung, Inboston, LLC, Inboston Downtown, LLC, Inboston Chicken Long Island Corp. and John Does 1, 2, 4, and 5.

2 TABLE OF CONTENTS PRELIMINARY STATEMENT...1 ARGUMENT...1 POINT I THE COMPALINT SHOULD BE DISMISSED FOR LACK OF PERSONAL JURISDICTION...1 A. STANDARD OF REVIEW...1 B. LACK OF JURISDICTION UNDER CPLR Defendants John Doe 1, 2, 4 and Defendants Eom, Inboston, and Inboston Downtown Defendants Henry Kim and Sampson Doung...8 C. LACK OF JURISDICTION UNDER CPLR CPLR 302(a)(1) CPLR 302(a)(3)...14 D. INTERNET BASED ACTIVITIES...17 POINT II THE COMPLAINT FAILS TO STATE A CLAIM FOR ALLEGED CONSPIRACY TO DEFRAUD...19 CONCLUSION...20 i

3 TABLE OF AUTHORITUES Cases Page(s) Agency Rent a Car Sys., Inc. v. Grand Rent a Car Corp. 98 F.3d 25 (2d Cir. 1996). 11 Beacon Enterprises, Inc. v. Menzies 715 F.2d 757 (2d Cir. 1983). 11 Blue Fountain Media, Inc. v. Metasense, Inc N.Y. Slip. Op [U] *8-9; 2013 N.Y.Misc. LEXIS 2767 (Sup. Ct. New York County 2013) Brackett v. Griswold 112 N.Y. 454 (1889).19 Bryant v. Finnish Nat l Airline 15 N.Y.2d 426 (1965)...9 Bunkoff v. State Auto. Mut. Ins. Co. 296 A.D.2d 699 (3d Dep t 2002)..10 Fantis Foods, Inc. v. Standard Importing Co., Inc. 49 N.Y.2d 317 (1980)...16 Gaboury v. Central Vermont Railway Co. 250 N.Y. 233 (1929)...8 George Reiner & Co. v. Schwartz 41 N.Y.2d 648 (1977)...13 Gorman v. Gorman 88 A.D.2d 677 (3d Dep t 1982) 19 Greenberg v. Sirtech Canada, LTD 79 A.D.3d 1419 (3d Dep t 2010)..14 Haber v. Studium, Inc. 22 Misc.3d 1129(A); 881 N.Y.S.2d 363 (Sup. Ct. New York County 2009)...18 International Finance B.V. v. National Reserve Bank 98 N.Y.2d 238 (2002)...11 Lancaster v. Colonial Motor Freight Line, Inc. 177 A.D.2d 152 (1992). 8, 9, 13 ii

4 Landoil Resource Corp. v. Alexander & Alexander Servs., Inc. 77 N.Y.2d 28 (1990)...2 Laufer v. Ostrow 55 N.Y.2d 305 (1982).9 Lebel v. Tello 272 A.D.2d 103 (1st Dep t 2000)..10 Mobile Training & Education, Inc. v. Aviation Ground Schools of America 28 Misc.3d 1226(A), 958 N.Y.S.2d 59 (Sup. Ct. Kings County 2010).16 MPG Assoc., Inc. v. Roeske 112 A.D.3d 590 (1st Dep t 2013).. 11 Opticare Acquisition Corp. v. Castillo 25 A.D.3d 238 (2d Dep t 2005). 13 Parsons v. Kal Kan Food, Inc. 68 A.D.3d 1051 (3d Dep t 2009)....5, 8, 17 Paterno v. Laser Spine Institute 112 A.D.3d 34 (2d Dep t 2013)...1 Public Administrator of New York County v. Royal Bank of Canada 19 N.Y.2d 127 (1967)....9 Steinmetz v. Energy Automation Sys., Inc. 43 Misc.3d 1210(A), 990 N.Y.S.2d 440 (Sup. Ct. Kings County 2014)...17 Sybron v Wetzel 61 A.D.2d 697 (1978) Sybron v. Wetzel 41 N.Y.2d 197 (1978) Teplin v. Manafort 81 A.D.2d 531, 438 N.Y.S.2d 84 (1981). 2 Waggoner v. Caruso 68 A.D.3d 1 (1st Dep t 2009) 19 iii

5 Statutes Page(s) CPLR 3211(a)(8) 1 CPLR 3211(a)(7) 1 CPLR passim CPLR 302(a)(1)..10, 12 CPLR 302(a)(3)..14, 15 Other Authority Twelfth Ann. Report of N.Y. Judicial Conference, 1967, p iv

6 PRELIMINARY STATEMENT The moving defendants 1 submit this Memorandum of Law in support of their Motion to Dismiss the complaint pursuant to CPLR 3211(a)(8) and 3211(a)(7) as follows: Defendant Hyeajin Eom ( Eom ), Sampson Doung ( Doung ), Inboston, LLC ( Inboston ), Inboston Downtown, LLC ( Inboston Downtown ) and John Does 1, 2, 4, and 5 move to dismiss all counts for lack of personal jurisdiction; Hyuk Kim a/k/a Henry Kim ( Kim ) moves to dismiss Counts I, II, and III for lack of personal jurisdiction; and Inboston Chicken Long Island Corp. ( Inboston Chicken Long Island ) moves to dismiss Count III for failure to state a claim. A copy of the complaint is attached to the Boyajian Affidavit as Exhibit A (referred to herein as Compl. ). ARGUMENT POINT I THE COMPLAINT SHOULD BE DISMISSED FOR LACK OF PERSONAL JURISDICTION A. STANDARD OF REVIEW For the purpose of a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that a non-domiciliary defendant is subject to personal jurisdiction in New York. See, Paterno v. Laser Spine Institute, 112 A.D.3d 34 (2d Dep t 2013). Although the plaintiffs complaint does not identify on what basis they rely in asserting personal jurisdiction over the defendants, a plaintiff may establish 1 The undersigned attorneys do not represent named defendants JULIE P. CHUNG or JOHN DOE 3. 1

7 jurisdiction by asserting facts which satisfy CPLR 301 or the long-arm statute, CPLR 302(a). [A] plaintiff who seeks to invoke in personam jurisdiction of this court with respect to a nonresident defendant must expressly allege in the complaint facts bringing the nonresident within CPLR 301 & 302. Teplin v. Manafort, 81 A.D.2d 531, 531, 438 N.Y.S.2d 84 (1st Dep t 1981). As set forth below, the complaint fails to establish personal jurisdiction under either CPLR provision. B. LACK OF JURISDICTION UNDER CPLR 301 Section 301 of the Civil Practice Law Rules provides: A court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore. CPLR 301. Essentially, CPLR 301 codifies the traditional common law concept of jurisdiction based on the fact that a foreign corporation is doing business in New York and the State has power to exercise jurisdiction over those who are within its borders whether or not they have expressly consented to jurisdiction. See, Lancaster v. Colonial Motor Freight Line, Inc., 177 A.D.2d 152, 156 (1992). A foreign corporation is amenable to suit in New York courts under CPLR 301 if it has engaged in such a continuous and systematic course of doing business here that a finding of its presence rin this jurisdiction is warranted.the test for doing business is a simple [and] pragmatic one, which varies in its application depending on the particular facts of each case.the court must be able to say from the facts that the corporation is present in the State not occasionally or casually, but with a fair measure of permanence and continuity. Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, (1990) (internal citations omitted). Minimum contacts with New York are sufficiently established when it can be shown that a defendant 2

8 engaged in continuous, permanent, and substantial activity in New York. Id. at 34. To do this, a plaintiff must plead facts from which the court may conclude that the foreign defendant has sufficient contacts with the state to warrant the finding that it is present here. Such facts include whether the corporation has employees, agents, offices or property within the state; whether it is authorized to do business here and the volume of business which it conducts with New York residents; whether it has a bank or other accounts in state; or whether it conducts business affairs in the state. 1. Defendants John Doe 1, 2, 4 and 5 Plaintiffs, 2, 4 and 5iff must plead facts fr that the John Doe defendants have any contacts with New York whatsoever. The plaintiffs do not allege that the John Does or their restaurants are New York corporations or residents. The plaintiffs merely allege that some of the John Does may be related to Inboston, which is a Massachusetts LLC. Compl. 23. The plaintiffs also allege that Inboston was established in Allston, Massachusetts, Compl. 15, and later moved to 5 Montfern Avenue, Brighton, Massachusetts. Compl. 37. In a somewhat confused manner, the complaint alleges simply that certain Massachusett individuals or entities developed, obtained, purchased or produced the Inboston soy garlic sauce in Massachusetts, Coml. 97; that, while in Massachusetts, certain John Does have been using the alleged soy garlic sauce, which are allegedly a part of Bonchon s trade secret methods and alleged know-how and therefore somehow confused the public in Massachusetts, Compl. 99; that the Massachusetts John Does entered into a conspiracy while they were in Massachusetts to defraud the plaintiffs, to breach their respective fiduciary duties to plaintiffs and to procure for their own use and 3

9 benefits the plaintiffs customers and goodwill, Compl. 102; that the Massachusetts John Does, while they were in Massachusetts, established open kitchens, along with the other Massachusetts defendants, at various locations in Massachusetts, including Inboston Bedford, Massachusetts, and publicized the preparation process and the instruments used in preparation of alleged signature dishes of Bonchon in order to destroy their secrecy, Compl The complaint makes no specific allegations that any of the alleged wrongful acts (e.g., preparing chicken) took place anywhere in New York. In fact, by its plain reading, it is clear that the complaint alleges that all of the acts alleged to have been committed by the John Does took place solely in the Commonwealth of Massachusetts. The John Does and their restaurants are all located and operate in Massachusetts. Therefore, the alleged wrongful acts of using the alleged trade secrets must have happened at the restaurants in Massachusetts. None of the alleged disclosures or unauthorized uses by the John Does could have occurred in the State of New York. Moreover, none of the John Does are alleged to be registered in New York State, nor are they alleged to be authorized to do business in New York. They do not possess or lease property in New York, nor do any of their officers or directors reside here. They do not pay New York taxes. Their principal place of businesses and/or residences are in Massachusetts, where they are in the restaurant business. The plaintiffs do allege that, the John Doe defendants have organized, solicited and/or contracted with defendant Inboston Chicken Long Island Corp. ( Inboston Chicken Long Island ) to open another open-kitchen restaurant in Long Island, New York. Compl. om106. However, the mere solicitation of business within the State of 4

10 New York is not enough to confer personal jurisdiction on a foreign corporation. See, Parsons v. Kal Kan Food, Inc., 68 A.D.3d 1051, 1052 (3d Dep t 2009). Even with respect to the allegations concerning the John Does involvement with Inboston Chicken Long Island, the plaintiffs failed to allege facts that would establish that any of the John Doe defendants were doing business in New York. The complaint contains no allegations that they ever visited New York with respect to a contract with Inboston Chicken Long Island, executed any agreements in New York, communicated with anyone in New York, or otherwise were present in New York in such a way as to subject themselves to personal jurisdiction under CPLR Defendants Eom, Inboston, and Inboston Downtown As to defendants Eom, Inboston, and Inboston Downtown, there is only one allegation that they have or had any contacts with New York. That allegation, discussed below, is insufficient to establish personal jurisdiction over these defendants. Otherwise, the plaintiffs allege that both Inboston, and Inboston Downtown are Massachusetts limited liability companies, Compl. 15, 16, and that both have their principal place of business with addresses in Massachusetts. Compl. 16, 37. As for Eom, plaintiffs allege that she is a shareholder of Inboston, Compl. 11, and that she relocated that business from one location in Massachusetts to another location in Massachusetts. Compl. 37. As with the allegations against the John Doe defendants, none of the allegations against the Eom, Inboston, and Inboston Downtown defendants are actions alleged to have occurred in New York. Similarly, like with the John Doe defendants, the plaintiffs do not allege that Eom, Inboston, and Inboston Downtown are doing business in the 5

11 State of New York. The actions alleged against the Eom, Inboston and Inboston Downtown, in fact, could only have occurred in Massachusetts where the individual, corporations, principals, officers, directors, owners are located. The specific allegations include: that Eom and the entities supply or transport products to various Inboston restaurants in Massachusetts, Compl. 17; that Eom and the Massachusetts entities are in business with some or all of the other defendants located in Massachusetts, Compl. 43, 44, 45; that Eom and the Massachusetts entities developed, obtained, purchased, or produced the Inboston Soy Garlic Sauce in Massachusetts, Compl. 97; that Eom and the Massachusetts entities have been using the alleged Bonchon s trade secrets and alleged know-how in Massachusetts and confused the Massachusetts public where they do business, Compl. 99; that Eom and the Massachusetts entities possessed illegally produced sauce and trade secrets, Compl. 100 (the first of two paragraphs numbered 100); that Eom and the Massachusetts entities entered into an alleged conspiracy in Massachusetts to defraud the plaintiffs in Massachusetts, to breach their alleged fiduciary duties to plaintiffs in Massachusetts, and to procure, in Massachusetts, for their own use and benefit the plaintiffs Massachusetts customers, who are located in Massachusetts, Compl. 102; that Eom and the Massachusetts entities, in furtherance of the alleged conspiracy and scheme, established an open-kitchen restaurant at the Inboston Bedford, which is located in Massachusetts, and publicized, in Massachusetts, the preparation process and the instruments used in preparation of signature dishes of Bonchon in order to destroy the secrecy. Compl These allegations do not contain any facts to support any reasonable argument that any of the alleged wrongful acts occurred anywhere other than in Massachusetts. 6

12 The plaintiffs merely allege that Eom, Inboston, and Inboston Downtown organized, solicited and/or contracted with Inboston Chicken Long Island Corp. to open another open-kitchen restaurant in Long Island, New York. Compl This sole allegation does not confer personal jurisdiction upon the Eom, Inboston and Inboston Downtown defendants for the same reasons it does not confer jurisdiction on the John Doe defendants: Merely contracting with a corporation whose location is in New York does not confer jurisdiction over the contracting party. The plaintiffs must show that each individual defendant engaged in its own continuous, permanent, and substantial activity in New York. The plaintiffs have failed to even allege such facts. It bears mentioning that it is not even clear that the allegation contained in paragraph 106 of the Complaint applies to Eom, Inboston or Inboston Downtown as the plaintiffs seemed to have lumped all the defendants together for the purpose of this statement without regard to the specific facts. The plaintiffs do specifically allege that Inboston, Inboston Downtown, and Kim contracted with Inboston Chicken Long Island Corp. or granted a license, franchise, dealership and/or contracted to supply the Inboston sauces to Inboston Chicken Long Island. Compl. 46. However, plaintiffs fail to establish that any of the Massachusetts defendants, including Kim, ever traveled to New York for these or any related purpose. At most, the allegations suggest an occasional or casual business transaction between Massachusetts individuals or Massachusetts entities and a small New York restaurant located on Long Island. These allegations certainly fail to meet the doing business standard that is contemplated by CPLR 301. The complaint makes no allegations that any of the Massachusetts defendants are owners or otherwise involved with the Long 7

13 Island location except to sell sauce and ship it from Massachusetts to Long Island. The shipment of goods into New York does not ipso facto constitute doing business. Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 763 (2d Cir. 1983) (citations omitted). Similarly, in Parsons, supra, the Third Department held that a corporation whose principle place of business was in New Jersey, but whose product either originated or ended up in New York, was not amenable to jurisdiction in New York when it did not deliver or pick up the products itself. See, 68 A.D.3d at Even sporadic visits once or twice a year to solicit sales or maintain relationships with customers were inadequate to constitute a presence by a defendant. Id. at Thus, the supply of sauce to Inboston Chicken Long Island is insufficient to establish 301 jurisdiction over the defendants in this case under CPLR Defendants Henry Kim and Sampson Doung Unlike the other defendants, the plaintiffs allege a great number of facts and actions on the part of Kim and Doung that they claim did occur in New York. They allege that Kim and Doung actually lived and worked in New York for some or all of the defendants. For most of those allegations, it is not necessary to examine the various indicia which constitute doing business in New York. The salient point is that the plaintiffs do not allege that Kim and Doung can be shown to have been doing business at the time when the action was commenced. See, Lancaster v. Colonial Motor Freight Line, Inc., 177 A.D.2d 152, 156 (1st Dep t 1992) (citing Gaboury v. Central Vermont Railway Co., 250 N.Y. 233, (1929) (Cardoza, J.). This is crucial to the concept of presence rupon which the jurisdiction is based, since the defendant corporation must be here and therefore subject to the state s power at the very time of the exercise of 8

14 jurisdiction itself. Id. (citing Bryant v. Finnish Nat l Airline, 15 N.Y.2d 426 (1965); Public Adminstrator of New York county v. Royal Bank of Canada, 19 N.Y.2d 127 (1967)). This requirement applies equally to individuals. See id. at 288. Thus, any allegations with reference to Kim and Doung which occurred in New York over two years prior to this litigation cannot be used to confer jurisdiction upon them for unrelated acts under CPLR 301. The plaintiffs also make allegations against Kim and Doung which are similar to those alleged against the defendants John Does, Eom, Inboston, and Inboston Downtown, as discussed above. These allegations fail to establish personal jurisdiction over Kim and Doung for the same reasons that they fail to establish jurisdiction over the John Does, Eom, Inboston, and Inboston Downtown. In addition, while it has been held that a nonresident individual, like a corporation, can be deemed present for jurisdictional purposes by virtue of doing business in this state, even as to causes of action unrelated to the business done within the state, the individual cannot be subject to such jurisdiction unless doing business [in New York] individually, rather than on behalf of a corporation. Lancaster, 177 A.D.2d at 158 (citing Laufer v. Ostrow, 55 N.Y.2d 305, 313 (1982)) (internal citations omitted). Plaintiffs complaint contains no allegations that Kim or Doung conducted any business individually in the State of New York, since they left in Therefore, they cannot be individually subject to jurisdiction here. Because the plaintiffs complaint contains allegations which are insufficient to establish that the above named defendants have a presence in New York, the causes of actions against them must be dismissed. 9

15 C. LACK OF JURISDICTION UNDER CPLR 302(a) Although not pled, it is anticipated that because the complaint does not allege that any of the defendants own, possess, or use real property located in New York and because the alleged actives occurred outside of the State of New York, the plaintiffs may seek to establish jurisdiction under CPLR 302(a)(1) or 302(a)(3) CPLR 302(a)(1) CPLR 302(a)(1) provides in relevant part: As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary who transacts any business within the state or contracts anywhere to supply goods or services in the state. Under this provision, a court in New York may exercise jurisdiction over a non-domiciliary who transacts business within the state as long as the cause of action arises out of the business transaction. See, Lebel v. Tello, 272 A.D.2d 103, (1st Dep t 2000). To meet the jurisdictional requirements of CPLR 302(a)(1), plaintiff must establish that there was a transaction of business within New York. A single act will suffice, however, there must exist a substantial relationship between that transaction and the alleged injury. See, Bunkoff v. State Auto. Mut. Ins. Co., 296 A.D.2d 699, 700 (3d Dep t 2002). To determine whether a party has transacted business in New York a court must consider the totality of circumstances which rests on whether the defendant, by some act or acts, has purposefully availed itself of the privilege of conducting 2 Except with respect to the accounting and misappropriation of funds claims against Kim under CPLR 302(a)(2). 10

16 activities within [New York]. MPG Assoc., Inc. v. Roeske, 112 A.D.3d 590, 591 (1st Dep t 2013). Various factors to be considered by a court in determining whether a nondomiciliary has transacted business within the state include: i) whether the defendant has an on-going contractual relationship with a New York corporation; (ii) whether the contract was negotiated or executed in New York, and whether, after executing a contract with a New York business, the defendant has visited New York for the purpose of meeting with parties to the contract regarding the relationship; (iii) what the choice-oflaw clause is in any such contract; and (iv) whether the contract requires franchisees to send notices and payments into the forum state or subjects them to supervision by the corporation in the forum state. Agency Rent a Car Sys., Inc. v. Grand Rent a Car Corp., 98 F.3d 25, 29 (2d Cir. 1996). Once a court has determined that a defendant has transacted business pursuant to CPLR 302(a)(1), then it must determine whether the exercise of jurisdiction comports with due process. See, International Finance B.V. v. National Reserve Bank, 98 N.Y.2d 238 (2002). The only factual allegations in the plaintiffs complaint which purport to establish the transaction of business by the defendants are those alleging a business relationship between some of the defendants and the Inboston Long Island Chicken restaurant, Compl. 46, 106. Paragraph 106 appears to broadly allege that all the defendants, in furtherance of an alleged conspiracy, organized, solicited, and/or contracted with Inboston Chicken Long Island to open another open-kitchen restaurant in Long Island, New York. Compl This allegation is insufficient to establish that the defendants transacted business in New York. First, it fails to allege any facts to support its broad 11

17 conclusion that all the defendants were involved with Inboston Chicken Long Island. Second, there is no allegation of an ongoing contractual relationship between the defendants and the New York restaurant; there is no allegation that a contract was negotiated or executed in New York; there is no allegation that any of the defendants ever visited New York prior to or after execution in order to meet the parties to any contract regarding the relationship; there is no allegation as to where and how the alleged first conversations between the defendants and the New York restaurant occurred; there is no mention of a choice of law provision in any contract; there is no indication that any transactions at all occurred in New York. Paragraph 46 contains allegations against Kim, Inboston, and Inboston Downtown and asserts, similarly, that the three defendants contracted with Inboston Chicken Long Island or granted a license, franchise, dealership. Compl. 46. The plaintiffs go on to allege that the three defendants contracted to supply the Inboston sauces to Inboston Chicken Long Island with the right to sell or advertise the Inboston Chicken. Compl. 46. The plaintiffs appear to rely on these allegations to bring the defendants from paragraph 46 under the jurisdiction of New York pursuant to CPLR 302(a)(1) in that it applies to contracts anywhere to supply goods or services in the state. CPLR 302(a)(1). However, CPLR 302(a)(1) also requires that the business transacted bear a substantial relationship to the alleged injury. Any transactions occurring between the defendants cannot be a basis for jurisdiction in an action by the plaintiffs against the defendants. Thus, even if the allegations contained in 46 and 106 of the Complaint do establish that the defendants transacted business in New York, they have not satisfied the second requirement of the statute in that there is no substantial relationship between 12

18 either transaction and the alleged injury to the plaintiffs because the plaintiffs were not a party to any of the transactions, thus, the cause of action could not have arisen therefrom. See, Lancaster v. Colonial Motor Freight Line, Inc., 177 A.D.2d 152, 158 (1 st Dep t 1992). There are additional allegations against Kim and Doung which allege an employment relationship between them and the plaintiffs. However, none of the allegations make any reference to any employment agreement or continuing contractual relationship between them and the plaintiffs. Therefore, jurisdiction on the basis of their employment relationship with the plaintiffs cannot be established over Kim and Doung. New York courts have exercised jurisdiction over former employees of New York entities, even when the employee s job was not within the State of New York, so long as the claims are based on an alleged violation of the terms of an employment contract between the plaintiff and the defendant. See e.g., George Reiner & Co., Inc. v. Schwartz, 41 N.Y.2d 648, 653 (1977); Opticare Acquisition Corp. v. Castillo, 25 A.D.3d 238, (2d Dep t 2005). However, a former employee s transaction of business in New York, by itself, is not sufficient to establish personal jurisdiction under CPLR 302(a)(1). In the Opticare and George Reiner cases, supra, the defendants former employers sued the defendants on the basis of their employment contract. In George Reiner, the plaintiff alleged that the defendant, Reiner withdrew more commissions than was agreed upon in the employment contract. Opticare dealt with an alleged violation of non-disclosure provision of an employment contract. Similarly, Sybron v. Wetzel, 46 N.Y.2d 197 (1978), also involved a non-disclosure provision in a Patent & Trade Secret 13

19 Agreement with the plaintiff corporation. See id. at 197. In addition, although defendant Wetzel, the former employee, was no longer employed by the plaintiff, he had a continuing relationship with them working on special assignments and receiving pension checks from them at a New York address. See, Sybron v. Wetzel, 61 A.D.2d 697 (1978) (modified by Sybron v. Wetzel, 46 N.Y.2d 197 (1978)). And, in Greenberg v. Sirtech Canada, LTD., 79 A.D.3d, 1419 (3d Dep t 2010), there was also an agreement not to disclose information signed by the defendant as a well as a continuing relationship with the corporation after termination of the employment relationship. See id. at In the case at hand, the plaintiffs point to no such agreement or employment contract between Kim or Doung and the plaintiffs. There was no non-disclosure or noncompetition agreement between the parties. The only contract language to which the plaintiffs refer relates to franchise agreements between the plaintiffs and third parties. The only reason Kim s name appears in the language is as a contact whom potential franchisees may reach out to with regard to a financial disclosure document. Compl. 54. Neither Kim nor Doung were parties to the franchise contract between the plaintiffs and their franchisees. The plaintiffs merely allege that Kim was aware of an item in the Franchise Agreement pertaining to Proprietary Marks. Compl. 55. The plaintiffs do not assert that he is a party to any franchise agreement. The plaintiffs describe his role in Bonchon Allston as a shareholder, not a franchisee. As discussed above, the plaintiffs failed to provide the necessary facts which establish that his role at Bonchon Allston, a Massachusetts company amounted to doing or transacting business in New York. 2. CPLR 302(a)(3) The New York long-arm statute also provides for personal jurisdiction over non- 14

20 domiciles who commit tortious acts outside of New York that cause injury within New York. CPLR 302(a)(3). The statute confers such jurisdiction on non-domiciles only when the following criteria have been met: the defendant committed a tortious act outside the state; the cause of action arises from that act; the act caused injury to a person or property within the state; the defendant does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state; or the defendant expected or should reasonably have expected the act to have consequences in the state and defendant derives substantial revenue from interstate or international commerce. See, CPLR 302(a)(3). CPLR 302(a)(3) is applicable to an injury which is a result of a commercial tort. See, Sybron, 46 N.Y.2d at 205. Assuming, without conceding, for the sake of this motion to dismiss for personal jurisdiction, that the plaintiffs have sufficiently alleged that a tort was committed and that is was committed outside of New York, there are three elements under CPLR 302(a)(3) which the plaintiffs fail to meet in order for jurisdiction to attach to the above-named defendants. First, the plaintiffs have not shown that the defendants alleged tortious conduct caused injury within the State of New York. In fact, the plaintiffs allege loss of business and confusion of customers in Massachusetts, not New York. Remote injuries located in New York solely because of a corporation s domicile or incorporation here do not satisfy CPLR 302(a)(3). See, Sybron, 46 N.Y.2d at 205. Any allegations with respect to the Massachusetts restaurants and individuals causing injury in New York are too remote in nature. The plaintiffs cannot claim that their New York restaurants have lost any customers to the Massachusetts restaurants. Even the distance between their New York City restaurants and the Inboston Chicken Long Island 15

21 is such that any allegation that Bonchon lost customers to Inboston in New York is tenuous. To suggest that the plaintiffs have lost business in Manhattan to a small Long Island take out restaurant is too tenuous to be taken seriously. In fact, the plaintiffs do not allege any direct interference by the defendants with customers or business in New York. See, Mobile Trainging & Education, Inc. v. Aviation Ground Schools of America, 28 Misc.3d 1226(A), 958 N.Y.S.2d 59 (2010) (Sup. Ct., Kings County 2010). Although the plaintiffs do claim damages and irreparable harm, it is clear that the alleged damage had to take place in Massachusetts, where the restaurants are located. Any loss sustained by Bonchon in Massachusetts does not confer jurisdiction in New York. The loss must occur in New York as a result of something other than the plaintiffs incorporation here. 3 The plaintiffs cannot show that the defendants regularly conduct or solicit business, or engage in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in New York for the reasons stated above. Likewise, there is no reasonable expectation on the part of the defendants (aside from Kim with regard to the misappropriation of funds claim) of consequences in New York. To determine whether such a reasonable expectation exists, the court looks not at the specific event/events that led to injury within the state, but, rather, it looks at whether a defendant could have foreseen consequences in the forum generally. See, Fantis Foods, 3 There are some allegations specific to Kim which suggest that a financial loss did occur in New York with regard to the misappropriation of funds claim. These claims are directed solely at Kim or, at least, the facts alleged involve Kim and not the other defendants. Thus, the claim against Kim for misappropriation of funds would confer jurisdiction on Kim pursuant to CPLR 302(a)(2) in that the plaintiffs have alleged that Kim committed a tortious act within the state arising from the act. 16

22 Inc. v. Standard Importing Co, Inc., 49 N.Y.2d 317, 326 n.4 (1980) (citing Twelfth Ann. Report of NY Judicial Conference, 1967, p. 344). The defendants here could not have foreseen consequences within the state of New York for any of the actions alleged by the defendants. Indeed, the complaint fails to allege that a reasonable expectation of consequences in New York exists. Neither is the final element met. The plaintiffs have not shown or even alleged that the defendants derive substantial revenue from interstate or international commerce. CPLR 302(a)(3)(ii). The defendants requesting dismissal for lack of personal jurisdiction by this motion are individual residents of Massachusetts or limited liability companies of same. These companies operate restaurants in Massachusetts. With the exception of the allegation that some of the defendants supply sauce to the Inboston Long Island location, no connection with New York has been alleged. Although no figures are supplied by the plaintiffs, the supply of sauces to one New York restaurant can hardly be said to qualify as substantial revenue from interstate commerce. And, once again, the plaintiffs fail to allege such. D. INTERNET BASED ACTIVITIES Although the complaint does not specifically allege jurisdiction because of internet activity, the complaint does contain allegations that include social media and a website as to Kim, Doung, and John Doe 1. Compl. 40, 73. The publishing of a website accessible to New York residents is not the sort of incidental contact sufficient to establish general jurisdiction under CPLR 301. See, Steinmetz v. Energy Automation System, Inc., 43 Misc.3d 1210(A), 990 N.Y.S.2d 440 (Sup. Ct. Kings County 2014); see also, Parsons v. Kal Kan Food, Inc., 68 A.D.3d 1501, 1502 (3d Dep t 2009) (a New 17

23 Jersey corporation not otherwise found to be doing business in New York was not subject to personal jurisdiction because it had a Web site which was accessible worldwide because it only engaged in mere solicitation of business in New York, which was insufficient to constitute doing business under CPLR 301); Blue Fountain Media, Inc. v. Metasense, Inc., 2013 N.Y. Slip Op 31405[U], *8-9; 2013 N.Y.Misc. LEXIS 2767 (Sup. Ct. New York County 2013) ( interactive website, permitting New York customers to obtain information, communicate with (defendant), and edit and approve their documents, is insufficient to establish jurisdiction under CPLR 301, in the absence of evidence that the website allowed customers to purchase goods and services or other evidence of its systematic course of business in New York ); Haber v. Studium, Inc., 22 Misc.3d 1129 (A), 881 N.Y.S.2d 363 (Sup. Ct., New York County 2009) ( It has been repeatedly held that the fact that a foreign corporation has a website accessible to New York is insufficient to confer jurisdiction under CPLR 301 ). It s unclear from the complaint just who the website or social media pages belong to, but, in any case, the allegation that there is a website without other facts tying it to New York, is insufficient to confer jurisdiction. Nor is a passive website alone sufficient to exercise jurisdiction under CPLR 302(a) because the plaintiffs have not shown that, through this activity, Kim has purposefully directed his activity in a substantial way to the forum state. Nor does operating a website or social media page accessible to persons in New York, without more, establish that Kim engages in any business in New York or that he transmits goods or services to users, charges membership or other fees or that the website permits purchases, orders or other direct business transactions between him and consumers in New York. The plaintiffs have failed to show that Kim derives any revenue 18

24 from goods used or consumed or services rendered in New York. Thus, they have failed to establish jurisdiction over Kim by virtue of the existence of any website or social media page. POINT II THE COMPLAITN FAILS TO STATE A CLAIM FOR ALLEGED CONSPIRACY TO DEFRAUD The plaintiffs complaint includes a count of conspiracy to defraud. It is unclear what the underlying tort for this claim is (there is no separate cause of action for fraud in the plaintiffs complaint), but assuming is it either Count I - Breach of Fiduciary Duty or Count II - Misappropriation of Trade Secrets, the conspiracy count against Inboston Long Island Chicken must fail. There is no tort of civil conspiracy in and of itself. There must be pleaded specific wrongful acts which might constitute an independent tort. Gorman v. Gorman, 88 A.D.2d 677, 678 (3d Dep t 1982); Waggoner v. Caruso, 68 A.D.3d 1, 6 (1st Dep t 2009) aff d 14 N.Y.3d 874 (2010); Brackett v. Griswold, 112 N.Y. 454, 467 (1889). Since the claims against the other defendants which are party to this motion must be dismissed, the claim for conspiracy against Inboston Chicken Long Island must also be dismissed. The remaining defendants not a party to this motion are Julie P. Chung ( Chung ) and John Doe 3. There are no allegations in the complaint which connect these individuals in any way. There is no allegation that any of them have ever had any contact with each other or that they even know of each other s existence. There is no allegation of any agreement between them. 19

25 CONCLUSION Because the plaintiffs have failed to allege facts that establish jurisdiction over the defendants filing this Motion to Dismiss, all counts as to defendants Eom, Doung, Inboston, Inboston Downtown, John Doe 1, 2, 4 and 5 should be dismissed for lack of personal jurisdiction. As for defendant Kim, Counts I, II, III against him should be dismissed for lack of personal jurisdiction. In truth, it is not even clear that the conspiracy claim includes Inboston Chicken Long Island at all as all of the defendants are, again, lumped together in the allegations contained under Count III. However, erring on the side of caution and assuming that this claim includes Inboston Chicken Long Island, the cause of action should be dismissed as all the possible underlying torts for this claim should be dismissed for lack of personal jurisdiction, the claim is unable to stand alone and because the plaintiffs have not plead sufficient facts to allege that a conspiracy existed between the remaining defendants. Dated: June 29, 2015 Respectfully submitted, Donald W. Boyajian, Esq. DREYER BOYAJIAN LLP 75 Columbia Street Albany, NY (518) Harry M. Haytayan Jr. (motion pending for admission pro hac vice) HAYTAYAN & HAYTAYAN, PLLC One Tara Boulevard, Suite #200 Nashua, New Hampshire (603) Attorneys for Defendants: Hyuk Kim, Hyeajin Eom, Sampson Doung, Inboston, LLC, Inboston Downtown, LLC, Inboston Chicken Long Island, LLC and John Does 1, 2, 4 & 5. 20