Vodopia v. Koninklijke Philips Electronics N.V. , 398 F. App'x 659 ( 2010 )

09-4747-cv
Vodopia v. Koninklijke Philips Electronics N.V., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after
January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s
Local Rule 32.1.1. When citing a summary order in a document filed with this court, a party must cite either
the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a
summary order must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on
the 25th day of October, two thousand ten.
PRESENT:
GUIDO CALABRESI
DEBRA ANN LIVINGSTON,
Circuit Judges,
PAUL A. CROTTY
District Judge.*
JOHN F. VODOPIA
Plaintiff-Appellant,
-v.- No. 09-4767-cv
KONINKLIJKE PHILIPS ELECTRONICS, N.V.
also known as ROYAL PHILIPS ELECTRONICS,
and PHILIPS ELECTRONICS OF NORTH
AMERICA CORPORATION.
Defendants-Appellees.
RAYMOND NARDO, Mineola, New York, for Plaintiff-Appel-
lant.
*
The Honorable Paul A. Crotty, Judge of the United States District Court for the Southern
District of New York, sitting by designation.
ROBERT C. PETRULIS, (Kristin Ulrich Somich on the brief)
Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Cleveland, Ohio,
for Defendants-Appellees.
Appeal from the United States District Court for the Southern District of New York
(Barbara S. Jones, Judge.)
UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, AND DECREED
that the district court’s August 17, 2009 Order dismissing plaintiff’s complaint for failure to state
a claim is AFFIRMED.
Plaintiff John F. Vodopia appeals from the district court’s dismissal of his complaint, which
alleges unlawful retaliation in violation of 18 U.S.C. § 1514A. Specifically, Vodopia’s complaint
alleges that he was unlawfully terminated after his various attempts to report that several patents
acquired by defendants from an outside company had been obtained through fraud on the Patent
Office and were thus likely to be declared invalid. Defendants moved before the district court to
dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(2) and (b)(6). The district court concluded
that even if credited, Vodopia’s allegations failed to state a claim pursuant to section 1514A because
they failed to allege that he was terminated in retaliation for engaging in “protected activity” within
the meaning of the statute. Accordingly, the court determined that dismissal pursuant to Rule
12(b)(6) was appropriate. We presume the parties’ familiarity with the underlying facts, the
procedural history, and the issues on appeal.
I. Personal Jurisdiction
As noted, defendants below challenged the jurisdiction of the court over them and renew that
challenge on appeal. While the district court did not directly address the issue, because “the first
question for an appellate court ordinarily is that of its jurisdiction and the jurisdiction in the lower
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court,” Monegasque de Reassurances S.A.M. v. Nak Naftogaz, 311 F.3d 488, 497 (2d Cir. 2002), we
begin there.
Both here and below, defendants, without further explanation, assert that “Vodopia does not
set forth a basis for this Court’s personal jurisdiction over [any defendant].” Defs.’ Br. at 27.
However, the complaint specifically alleges that defendant Royal Philips Electronics (“RPE”)
“conducts business in the state of New York and . . . in the Southern District” and that defendant
Philips Electronics of North America (“PENAC”) is a “corporation duly licensed to conduct
business in the state of New York.” Moreover, the complaint can be read to allege that plaintiff’s
employment – which, of course, is the basis for this litigation – occurred in New York.
Under New York law, which governs our jurisdictional inquiry, see PDK Labs, Inc. v.
Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997), these allegations are sufficient to establish
personal jurisdiction over both defendants. With respect to PENAC, the allegations in the complaint
– which are neither questioned nor challenged by defendants – establish specific jurisdiction because
they make clear that this suit “arise[s] from” PENAC’s “transact[ion] of business within the state”
– specifically, its employment of plaintiff. N.Y. C.P.L.R. § 302; Best Van Lines, Inc. v. Walker, 490
F.3d 239, 246 (2d Cir. 2007) (“A suit will be deemed to have arisen out of a party’s activities in New
York if there is an articulable nexus, or a substantial relationship, between the claim asserted and
the actions that occurred in New York.” (internal quotations, alternations omitted)).
With respect to RPE, the complaint’s allegations – that RPE “conducts business in the state
of New York and . . . in the Southern District” – coupled with the activities of its wholly owned
subsidiary, PENAC, in the state, and its choice to be listed and traded on the New York Stock
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Exchange1 are sufficient to establish general jurisdiction over it within the state because they make
clear its “presence” within the state “not occasionally or casually, but with a fair measure of
permanence and continuity.” Landoil Resources Corp. v Alexander & Alexander Svcs., Inc., 918
F.2d 1039, 1043 (2d Cir. 1992) (internal citations omitted) (collecting cases). While we
acknowledge that the allegations are neither voluminous nor specific, we emphasize again that their
accuracy is neither questioned nor challenged by defendants.2
Accordingly, we conclude that the district court properly exercised jurisdiction over
defendants and proceed to evaluate the sufficiency of Vodopia’s allegations on the merits.
II. Sufficiency of the Allegations to State a Claim
This Court reviews dismissal of a complaint pursuant to Rule 12(b)(6) de novo, “construing
the complaint liberally, accepting all factual allegations in the complaint as true, and drawing all
reasonable inferences in the plaintiff’s favor.” Chambers v. Time Warner, Inc., 282 F.3d 147, 152
(2d Cir. 2002). So reading the complaint, we evaluate whether plaintiff’s allegations are sufficient
to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007); see also Ashcroft v. Iqbal, -- U.S. --, 129 S.Ct. 1937, 1949 (2009). To state a plausible claim
to relief, a complaint’s “[f]actual allegations must be enough to raise a right to relief above the
1
In evaluating a motion to dismiss pursuant to 12(b)(2), the Court may properly look
beyond the four corners of the complaint to satisfy itself of its jurisdiction to hear a case. See
DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). Moreover, we note that while
a listing on the New York Stock Exchange is, without more, insufficient to establish general
personal jurisdiction, it is “of some importance in determining whether the corporation is doing
business in the state.” Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 97 (2d Cir. 2000).
2
At oral argument, defense counsel asserted that an affidavit in the record below
contradicts the allegation that RPE “conducts business” within the state. The affidavit
referenced, does not, in fact, challenge that allegation but instead states that RPE “does not have
a place of business in New York.” (Aff. of Warren T. Oates dated Sept. 18, 2007 ¶ 4.)
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speculative level,” Twombly, 550 U.S. at 555, and thus “where the well-pleaded facts do not permit
the court to infer more than the mere possibility of misconduct” the complaint must be dismissed.
Iqbal, 129 S.Ct. at 1950.
Section 1514A makes it unlawful for certain employers to “discharge . . . or in any other
manner discriminate against an employee in the terms or conditions of employment because of any
lawful act done by the employee . . . to provide information . . . or otherwise assist in an
investigation regarding any conduct the employee reasonably believes constitutes a violation” of
certain, enumerated federal laws. 18 U.S.C. § 1514A. To state a claim pursuant to section 1514A,
a plaintiff thus must allege four elements: (1) that he engaged in protected activity, (2) the employer
knew of the protected activity, (3) he suffered an unfavorable personnel action, and (4) circum-
stances exist to suggest that the protected activity was a contributing factor to the unfavorable action.
Fraser v. Fiduciary Trust Co., Int’l, 417 F. Supp. 2d 310, 322 (S.D.N.Y. 2006); see also Gattegno
v. Admin. Review Bd., No 08-3297, 2009 U.S. App. LEXIS 24904, at *3-4 (2d Cir. Nov. 13, 2009)
(same).
The principal element in dispute here is the first element – i.e., whether Vodopia engaged
in “protected activity” within the meaning of the statute. Section 1514A defines protected activity
to include the provision of information regarding conduct the employee “reasonably believes
constitutes” a violation of: (1) 18 U.S.C. §§ 1341, 1343, 1344, or 1348; (2) “any rule or regulation
of the [SEC],” or (3) “any provision of Federal law relating to fraud against shareholders.” See 18
U.S.C. § 1514A(a)(1). As numerous courts have observed, that list is exhaustive, and therefore, to
qualify as protected activity, the “employee’s communications must definitively and specifically
relate to [one] of the listed categories of fraud or securities violations [in] 18 U.S.C. § 1514A(a)(1).”
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Van Asdale v. Int'l Game Tech., 577 F.3d 989, 996-97 (9th Cir. 2009) (internal quotations omitted)
(emphasis added, first alteration in original); see also Day v. Staples, Inc., 555 F.3d 42, 56 (1st Cir.
2009) (same); Welch v. Chao, 536 F.3d 269, 275 (4th Cir. 2008) (same); Allen v. Admin. Review Bd.,
514 F.3d 468, 476 (5th Cir. 2008) (same).
Here, Vodopia’s complaint, read in the light most favorable to him, does not allege that he
engaged in protected activity because the communications at issue did not “directly and
specifically” relate to any of section 1514A’s enumerated federal laws or rules. Instead, the
complaint alleges that Vodopia communicated information relating to alleged fraud on the Patent
Office and the potential invalidity of certain patents as a result. As such, the complaint’s allegations
are insufficient, even if credited, to establish that he engaged in protected activity within the
meaning of section 1514A.
Vodopia argues on appeal that his complaint can be read to allege that he was reporting
“fraud upon [ ] shareholders” insofar as defendants were “knowingly assigning an eight figure value
to worthless patents.” Pl.’s Br. at 12. The argument fails for two reasons: first, the complaint clearly
centers on plaintiff’s concern that the patents were invalid, not on the value the company was
assigning to them. Indeed, Vodopia devotes just three lone sentences in his eight-page complaint
to the value of the patents. Second, and more important, the complaint does not allege that the $50
million value assigned to those patents was ever reported to the public or to shareholders. Nor does
the complaint contain any additional factual allegations that, if proven, would support an inference
that this item would have been included in any public reporting or disclosures and thus could
possibly have misled investors. As such, the complaint fails to allege that Vodopia reasonably
believed that he was reporting potential securities fraud as opposed to patent-related malfeasance.
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Cf. Day, 555 F.3d at 55-56 (“To have an objectively reasonable belief that there has been
shareholder fraud, the complaining employee’s theory of such fraud must at least approximate the
basic elements of a claim for securities fraud.”).
Because we thus determine that the complaint does not plausibly allege the first, necessary
element of a section 1514A claim, we conclude in accordance with the district court, that Vodopia’s
complaint fails to state a claim to relief as a matter of law and must therefore be dismissed. To the
extent Vodopia raises other arguments with respect to the Order entered below, we have considered
them and reject them as meritless.
III. CONCLUSION
Accordingly, for the foregoing reasons, the judgment of the district court is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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