12‐4280‐cv(L) Sonera Holding B.V. v. Cukurova Holdings A.S.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ______________

August Term, 2013

(Argued: August 22, 2013 Decided: April 25, 2014)

Docket Nos. 12‐4280‐cv(L), 13‐73‐cv(CON), 13‐1880‐cv(CON) ____________

SONERA HOLDING B.V.,

Petitioner‐Appellee,

–v.–

ҪUKUROVA HOLDING A.Ș.,

Respondent‐Appellant.*

______________

Before: WINTER, WESLEY, and CARNEY, Circuit Judges.

______________

Appeal from orders of the United States District Court for the Southern District of New York (Denise L. Cote, Judge) dated September 21, 2012; December 21, 2012; April 18, 2013; and May 10, 2013. The district court held that it had personal jurisdiction over Ҫukurova based primarily on the New York contacts

* The Clerk of the Court is directed to amend the official caption as noted above. of several companies with which Ҫukurova is affiliated. The Supreme Court’s decision in Daimler AG v. Bauman,

(2014), reaffirms that general jurisdiction extends beyond an entity’s state of incorporation and principal place of business only in the exceptional case where its contacts with another forum are so substantial as to render it “at home” in that state. For the reasons stated below, even assuming the activities of Ҫukurova’s affiliates can be ascribed to it for the purposes of a general jurisdictional analysis, Ҫukurova lacks sufficient contacts with New York to render it “at home” there. We therefore REVERSE the district court’s judgment denying Ҫukurova’s motion to dismiss for lack of personal jurisdiction, VACATE the subsequent judgments of the district court, REMAND the case to the district court, and direct the court to DISMISS the action for lack of personal jurisdiction.

RICHARD J. HOLWELL (Michael Shuster, Dorit Ungar Black, Karen Andrea Grus, on the brief), Holwell Shuster & Goldberg LLP, New York, NY, for Respondent‐ Appellant.

PIETER VAN TOL (Andrew M. Behrman, Erin Marie Meyer, on the brief), Hogan Lovells US LLP, New York, NY, for Petitioner‐Appellee. ______________

PER CURIAM:

Appeal from orders of the United States District Court for the Southern

District of New York (Denise L. Cote, Judge) dated September 21, 2012; December

21, 2012; April 18, 2013; and May 10, 2013. The district court held that it had

personal jurisdiction over Ҫukurova based primarily on the New York contacts

of several companies with which Ҫukurova is affiliated. The Supreme Court’s

decision in Daimler AG v. Bauman,

(2014), reaffirms that general

2 jurisdiction extends beyond an entity’s state of incorporation and principal place

of business only in the exceptional case where its contacts with another forum

are so substantial as to render it “at home” in that state. For the reasons stated

below, even assuming the activities of Ҫukurova’s affiliates can be ascribed to it

for the purposes of a general jurisdictional analysis, Ҫukurova lacks sufficient

contacts with New York to render it “at home” there. We therefore REVERSE the

district court’s judgment denying Ҫukurova’s motion to dismiss for lack of

personal jurisdiction, VACATE the subsequent judgments of the district court,

REMAND the case to the district court, and direct the court to DISMISS the

action for lack of personal jurisdiction.

BACKGROUND

Sonera Holding B.V. (“Sonera”), a Dutch holding corporation, brought suit

in the United States District Court for the Southern District of New York to

enforce a final arbitration award against Ҫukurova Holding A.Ș. (“Ҫukurova”),

the parent company of a large Turkish conglomerate. The parties’ underlying

dispute arose out of negotiations for Ҫukurova’s sale to Sonera of shares in

Turkcell Holding A.Ș. (“Turkcell Holding”), a Turkish joint stock company that

owns a controlling stake in Turkey’s largest mobile phone operator. Following

3 failed negotiations and a protracted proceeding before an arbitral tribunal in

Geneva, Switzerland, the tribunal found that the parties concluded a share

purchase agreement and ordered Ҫukurova to pay Sonera $932 million in

damages for its failure to deliver the shares.

Sonera filed applications for enforcement in jurisdictions across the world,

including the British Virgin Islands, Switzerland, the Netherlands, and, as

relevant here, the Southern District of New York.

Rejecting Ҫukurova’s contention that New York lacked personal

jurisdiction over it, the district court issued four orders, from which Ҫukurova

now appeals, confirming the arbitration award in favor of Sonera; denying a

motion to reconsider; issuing a preliminary injunction preventing Ҫukurova

from engaging in transactions to shield its assets; and denying dissolution of the

preliminary injunction.1

Ҫukurova is a Turkish holding company with its registered office in

Istanbul, Turkey. It holds investments in other companies and has no operations

and owns no property in New York or any of the United States. Sonera asserts

1 Sonera Holding B.V. v. Ҫukurova Holding A.Ș,

(S.D.N.Y. 2012); No. 11 Civ. 8909(DLC),

(S.D.N.Y. Dec. 21, 2012); No. 11–CV– 08909(DLC)(FM),

(S.D.N.Y. Apr. 18, 2013); No. 11 Civ. 8909(DLC),

(S.D.N.Y. May 10, 2013). 4 that Ҫukurova is nonetheless subject to general jurisdiction in New York based

on Ҫukurova’s own actions and the actions of Ҫukurova’s affiliates, which,

according to Sonera, should be imputed to Ҫukurova.

The actions on which Sonera predicates its assertion of general jurisdiction

include (1) negotiations by Ҫukurova or one of its affiliates (which occurred

outside the United States and were ultimately unsuccessful) to sell an interest in

Show TV, a Turkish television broadcaster, to two New York–based private

equity funds; (2) Ҫukurova’s sale of American Depository Shares (“ADS”) in

Turkcell to an underwriter in London, which subsequently offered the ADS for

sale on the New York Stock Exchange; (3) the agreement of Digiturk, a Turkish

Ҫukurova affiliate, to provide digital television content to a U.S.‐based company;

(4) use of a New York office used by Baytur Insaat Taahhüt A.Ș. (“Baytur”) and

Equipment and Parts Export, Inc. (“EPE”), two Turkish companies affiliated with

Ҫukurova; and (5) statements on EPE’s website describing itself as having been

“[f]ounded in New York City in 1979” and as Ҫukurova’s “gateway to the

Americas.”

On appeal, Ҫukurova (1) challenges the district court’s denial of its

motions to dismiss for lack of personal jurisdiction and for forum non

5 conveniens; (2) seeks reversal of the district court’s decision deferring to the

jurisdictional determinations of the arbitral tribunal; and (3) challenges the

district court’s refusal, on Ҫukurova’s motion to vacate, to reconsider its finding

of personal jurisdiction. Because we find Ҫukurova’s contacts with New York

insufficient to subject it to general jurisdiction and accordingly reverse the

district court’s judgment denying Ҫukurova’s motion to dismiss for lack of

personal jurisdiction, there is no need to reach Ҫukurova’s remaining arguments.

DISCUSSION

A. Personal Jurisdiction

Personal jurisdiction over a foreign defendant in a federal‐question case

requires a two‐step inquiry. Licci ex rel. Licci v. Lebanese Canadian Bank, SAL,

(2d Cir. 2013). First, we determine whether the defendant is subject

to jurisdiction under the law of the forum state—here, New York. Second, we

consider whether the exercise of personal jurisdiction over the defendant

comports with the Due Process Clause of the United States Constitution.

Sonera asserts that Ҫukurova is subject to general jurisdiction in New York

pursuant to N.Y. C.P.L.R. 301, which confers jurisdiction where a company “has

engaged in such a continuous and systematic course of ‘doing business’ [in New

6 York] that a finding of its ‘presence’ [in New York] is warranted.” Landoil Res.

Corp. v. Alexander & Alexander Servs.,

(1990) (citations omitted).

In Wiwa v. Royal Dutch Petroleum Co., we reasoned that the continuous course of

“doing business” in New York “do[es] not necessarily need to be conducted by

the foreign corporation itself.”

, 95 (2d. Cir. 2000). Rather, we

interpreted New York law to include an agency theory of jurisdiction that

subjects a corporation to general jurisdiction when it relies on a New York

representative entity to render services on its behalf “that go beyond mere

solicitation and are sufficiently important to the foreign entity that the

corporation itself would perform equivalent services if no agent were available.”

Id.

According to Sonera, even if Ҫukurova’s own contacts with New York are

insufficient for general jurisdiction, the contacts of Digiturk, Baytur, and EPE

should be imputed to Ҫukurova, and these combined contacts with New York

render Ҫukurova subject to the general jurisdiction of New York. Ҫukurova

contends that New York law does not permit personal jurisdiction on these facts

and that even if it did, the agency theory of personal jurisdiction is incompatible

with due process.

7 B. Due Process

In light of the Supreme Court’s decision in Daimler AG v. Bauman,

(2014), we need not determine whether the district court correctly found

Ҫukurova subject to its general jurisdiction under New York law.2 Whatever the

purported scope of N.Y. C.P.L.R. 301 and the agency‐based theory of jurisdiction

articulated in Wiwa, Daimler confirmed that subjecting Ҫukurova to general

jurisdiction in New York would be incompatible with due process.

In the area of personal jurisdiction, “[t]he canonical opinion . . . remains

International Shoe, in which [the Supreme Court] held that a State may authorize

its courts to exercise personal jurisdiction over an out‐of‐state defendant if the

defendant has ‘certain minimum contacts with [the State] such that the

maintenance of the suit does not offend traditional notions of fair play and

substantial justice.’” Goodyear Dunlop Tires Operations, S.A. v. Brown,

There is no need to address the scope of general jurisdiction under New York law because the exercise of general jurisdiction over Ҫukurova is clearly inconsistent with Daimler. However, we note some tension between Daimler’s “at home” requirement and New York’s “doing business” test for corporate “presence,” which subjects a corporation to general jurisdiction if it does business there “not occasionally or casually, but with a fair measure of permanence and continuity.” Tauza v. Susquehanna Coal Co.,

(1917) (Cardozo, J.) (codified along with other “doing business” case law by N.Y. C.P.L.R. 301). Not every company that regularly “does business” in New York is “at home” there. Daimler’s gloss on due process may lead New York courts to revisit Judge Cardozo’s well‐known and oft‐repeated jurisdictional incantation. 8 2846, 2853 (2011) (second alteration in original) (internal quotation marks

omitted) (quoting Int’l Shoe Co. v. Wash.,

(1945)).

There are two types of personal jurisdiction: specific and general. Specific

or conduct‐linked jurisdiction, which Sonera does not assert, “depends on an

affiliation[n] between the forum and the underlying controversy, principally,

activity or an occurrence that takes place in the forum state and is therefore

subject to the State’s regulation.” Id. at 2851 (alteration in original) (internal

quotation marks omitted). By contrast, general jurisdiction exists only when a

corporation’s contacts with a state are “so ‘continuous and systematic’ as to

render [it] essentially at home in the forum State.” Id. A court with general

jurisdiction over a corporation may adjudicate all claims against that

corporation—even those entirely unrelated to the defendant’s contacts with the

state.

The natural result of general jurisdiction’s “at home” requirement is that

“only a limited set of affiliations with a forum will render a defendant amenable

to all‐purpose jurisdiction there.” Daimler,

. “A corporation that

operates in many places can scarcely be deemed at home in all of them.”

at

762 n.20. The paradigm forum for general jurisdiction over an individual is the

9 individual’s domicile, his home. For a corporation, it is an equivalent place, with

the place of incorporation and the principal place of business being the paradigm

bases. “Those affiliations have the virtue of being unique—that is, each

ordinarily indicates only one place—as well as easily ascertainable.”

.

C. Ҫukurova’s Contacts with New York

Daimler expressed doubts as to the usefulness of an agency analysis, like

that espoused in Wiwa, that focuses on a forum‐state affiliate’s importance to the

defendant rather than on whether the affiliate is so dominated by the defendant

as to be its alter ego. “[T]he inquiry into importance stacks the deck, for it will

always yield a pro‐jurisdiction answer: Anything a corporation does through [its

affiliate] is presumably something that the corporation would do ‘by other

means’ if the [affiliate] did not exist.”

. (internal quotation marks

omitted).

For our purposes, we need not consider whether the agency principles

announced in Wiwa survive in light of Daimler. Even assuming that all of

Digiturk’s, Baytur’s, and EPE’s contacts should be imputed to Ҫukurova, the

company’s contacts with New York do not come close to making it “at home”

there.

10 As noted above, Sonera would predicate general jurisdiction on (1)

Ҫukurova’s unsuccessful negotiations to sell a portion of Show TV to two New

York–based private equity funds; (2) Ҫukurova’s sale of ADS in Turkcell to an

underwriter in London, which subsequently offered the ADS for sale on the New

York Stock Exchange; (3) Digiturk’s agreement with a U.S.‐based company to

provide digital television content; (4) a New York office location used by Baytur

and EPE; and (5) statements on EPE’s website promoting it as Ҫukurova’s

connection to the United States.

Ҫukurova is organized under the laws of the Republic of Turkey, with

operations, properties, and assets predominantly located in Turkey. New York is

neither Ҫukurova’s place of incorporation nor its primary place of business. Even

assuming Digiturk’s, Baytur’s, and EPE’s New York contacts should be imputed

to Ҫukurova, they do not shift the company’s primary place of business (or place

of incorporation) away from Turkey. And although Daimler and Goodyear “d[o]

not hold that a corporation may be subject to general jurisdiction only in a forum

where it is incorporated or has its principal place of business,”Daimler,

, those cases make clear that even a company’s “engage[ment] in a

substantial, continuous, and systematic course of business” is alone insufficient

11 to render it at home in a forum,

. Ҫukurova’s contacts fall short of those

required to render it at home in New York. To subject it to all‐purpose general

jurisdiction in that state would deny it due process.

D. Contractual Consent to Personal Jurisdiction

Lastly, Sonera argues that even if Ҫukurova’s contacts with New York are

insufficient to support personal jurisdiction, we should still affirm the District

Court’s decision because Ҫukurova expressly consented to the forum’s

jurisdiction.

In March 2005, Sonera and Ҫukurova entered into an agreement (the

“Letter Agreement”) that required the parties to make good faith efforts to

execute a final share purchase agreement allowing Sonera to purchase

Ҫukurova’s interests in Turkcell Holding. The Letter Agreement specifies that

any disputes arising out of it are to be settled by arbitration under the rules of the

International Chamber of Commerce in Geneva, Switzerland, and that any

award of the tribunal shall be final and binding on the parties. As relevant here,

Article 5.4(e) of the Letter Agreement further provides as follows:

Any award of the arbitral tribunal may be enforced by judgment or otherwise in any court having jurisdiction over the award or over the person or the assets of the owing Party or Parties. Applications

12 may be made to such court for judicial recognition of the award and/or an order for enforcement, as the case may be.

Sonera reads this provision as an implicit agreement to waive any defense based

on lack of personal jurisdiction and to consent to the jurisdiction of any court in

any country in the world with subject matter jurisdiction over enforcement

actions brought pursuant to the 1958 United Nations Convention on the

Recognition and Enforcement of Foreign Arbitral Awards—including, under

, the United States District Court for the Southern District of New

York.

We do not read the provision so broadly. Article 5.4(e) appears to be a

standard entry‐of‐judgment clause designed to clarify that, following any

arbitration award, a court of the arbitral venue or in any jurisdiction in which the

parties’ persons or assets are located would have jurisdiction to enter judgment

on that award.3 Article 5.4(e) does not speak to personal jurisdiction, and we

3 Although a jurisdictional stipulation to entry of judgment in international arbitration contracts is technically unnecessary given 9 U.S.C. § 203’s conferral on U.S. district courts of original subject matter jurisdiction over Convention awards, consent to entry of judgment is required, under

, for enforcement of domestic arbitration awards, and authorities on international arbitration recommend such clauses be included even in international agreements out of an abundance of caution. See, e.g., R. Doak Bishop, Drafting the ICC Arbitral Clause, in Transnational Litigation § 41:8 (J. Fellas ed., Westlaw 2014). 13 decline to interpret the provision as Ҫukurova’s consent to personal jurisdiction

in New York.

CONCLUSION

We have considered all of Sonera’s arguments in support of jurisdiction

and find them to be without merit. We therefore REVERSE the district court’s

judgment denying Ҫukurova’s motion to dismiss for lack of personal

jurisdiction, VACATE the subsequent judgments of the district court, REMAND

the case to the district court, and direct the court to DISMISS the action for lack of

personal jurisdiction.

14