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In re Baan Company Securities Litigation

June 10, 2002

IN RE BAAN COMPANY SECURITIES LITIGATION


The opinion of the court was delivered by: John M. Facciola, United States Magistrate Judge

THIS DOCUMENT RELATES TO ALL ACTIONS

REPORT AND RECOMMENDATION

Judge Huvelle has asked for a Report and Recommendation as to the disposition of J.G. Paul Baan's Renewed Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(2) and Defendant Vanenburg Group's Renewed Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2). *fn1

I recommend that both motions be granted for the reasons stated below.

Applicable Principles of Law

When a defendant challenges the jurisdiction of the court over his person, the case law indicates that the analysis should take place in three distinct stages. First, the court must ascertain whether the allegations in the complaint establish, on a prima facie basis, jurisdiction over the defendant's person. Second Amendment Foundation v. U.S. Conference of Mayors, 274 F.3d 521, 523 (D.C. Cir. 2001). If they do, then in this Circuit, the plaintiff, who has the burden of establishing jurisdiction, must be permitted adequate discovery to establish that the court's assertion of jurisdiction over the defendant's person meets statutory and constitutional standards. In re: Baan Co. Securities Litigation, 81 F. Supp. 2d 75 (D.D.C. 2000). At this stage, allegations no longer suffice; plaintiff must "adduce any concrete" evidence that the defendant is subject to the court's personal jurisdiction. First Chicago. Int'l v. United Exchange Co., Ltd, 836 F.2d 1375, 1377 (D.C. Cir. 1988). Accord: GTE New Media Services, Inc. v. Bellsouth Corp., 199 F.3d 1343, 1349 (D.C. Cir. 2000). This proposition is self-evident; if allegations sufficed without discovery, there would be no need for the discovery permitted.

At the final stage, the Federal Rules of Evidence are as operative as they are at any other stage of the proceedings. Thus, as has been specifically held, plaintiff must establish personal jurisdiction by admissible evidence. Barrett v. Lombardi, 239 F.3d 23, 27 (1st Cir. 2001).

The Court's Task

In this case, I have permitted discovery on the jurisdictional issues and defined with precision and in detail the discovery plaintiffs were permitted to take to try to support their allegations as to the court's jurisdiction over the defendant J.G. Paul Baan ("Baan") and Vanenburg Group ("Vanenburg").

Plaintiffs did take the discovery as to Baan but, due to their extraordinary dilatoriness, I was compelled to conclude that they had forfeited the right I had granted them to take discovery from Vanenburg by taking a deposition from a Vanenburg designee pursuant to Fed. R. Civ. P. 30(b)(6). As a result, the analysis as to these two defendants is radically different.

As to Baan, I assess whether the evidence in the form of Baan's affidavits and his deposition support the exercise of personal jurisdiction over him.

As to Vanenburg, I have to determine whether the information tendered in support of plaintiffs' allegations qualifies as evidence. If I conclude that it is does not, I then have to determine whether the information that would qualify as evidence or is admitted to be true by Vanenburg supports the exercise of personal jurisdiction over Vanenburg. I begin with Baan.

Baan's Affidavit

The two affidavits Baan submitted negate, of course, plaintiffs' claim that he has sufficient contacts with the United States. In these affidavits Baan states:

1. He is a citizen of the Netherlands where he has lived all of his life.

2. He has never maintained a residence in the United States nor owned any property in the United States. He has no bank accounts in the United States.

3. He was Managing Director of Vanenburg during the class period; Vanenburg is registered to do business only in the Netherlands. His office is in the Netherlands and he did not have an office in the United States during the class period.

4. Vanenburg did not maintain an office in the United States during the class period. It never employed any staff (other than counsel), signed any leases, had any business addresses, or advertised in the United States during the class period.

5. He never executed any contracts on behalf of Vanenburg in the United States. Baan had little involvement in matters that relate to Vanenburg's sales and accounting. Meetings of Vanenburg's Board of Directors and Board of Managing Directors took place in the Netherlands and never in the United States.

6. He visited the United States on four isolated occasions during the class period to meet with companies that were affiliates or attractive acquisition prospects. Each trip lasted a few days; in all, he spent less than 15 days in the ...


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