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Roz Trading Ltd. v. Zeromax Group

September 28, 2007

ROZ TRADING LTD, ET AL., PLAINTIFFS,
v.
ZEROMAX GROUP, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

Currently pending before the Court is Defendants' Consolidated Motion to Dismiss the Amended Complaint in its Entirety. Plaintiffs, Roz Trading Ltd. ("ROZ") and Roz Trading Ltd. (Uzbekistan) ("ROZ (U)") (collectively, "Plaintiffs"), brought this action against Defendants Zeromax Group, Inc., Zeromax Logistics, Inc., Zeromax LLC (collectively, the "U.S. Zeromax Defendants"), and Zeromax GmbH (with the U.S. Zeromax Defendants, "Defendants") alleging that Defendants and others "willfully and deliberately deprived" Plaintiffs of their ownership interest in a joint venture in the soft drink industry in Uzbekistan. Plaintiffs' Amended Complaint includes eight claims: breach of contract (Count I), tortious interference (Count II), conspiracy to commit tortious interference (Count III), conversion (Count IV), conspiracy to commit conversion (Count V), action to quiet title (Count VI), unjust enrichment (Count VII), and fraudulent conveyance (Count VIII).

Defendants have moved to dismiss Plaintiffs' Amended Complaint in its entirety on six grounds, arguing that (1) the Court lacks subject matter jurisdiction over Plaintiffs' claims; (2) the Court lacks personal jurisdiction over Defendant Zeromax GmbH; (3) the act of state doctrine bars Plaintiffs' claims; (4) Plaintiffs lack standing to assert claims against Defendants; (5) Plaintiffs fail to state a claim upon which relief may be granted; and (6) the District of Columbia is an inconvenient and inadequate forum.

Upon a searching review of Defendants' Consolidated Motion to Dismiss the Amended Complaint in its Entirety, Plaintiffs' Opposition, Defendants' Reply, the exhibits attached thereto, and the relevant case law and statutes, the Court concludes that it lacks personal jurisdiction over Defendant Zeromax GmbH, and therefore must dismiss Defendant Zeromax GmbH from this action, as well as all claims brought against Zeromax GmbH. The U.S. Zeromax Defendants have specifically acknowledged that they have submitted to the personal jurisdiction of this Court and, as discussed below, the Court's dismissal of Zeromax GmbH moots Defendants' argument that the Court lacks subject matter jurisdiction over this action. Nevertheless, the Court shall hold in abeyance the remainder of Defendants' Motion to Dismiss, because the Court's dismissal of Zeromax GmbH may change the posture of the parties. As set forth below and in the accompanying Order, before addressing the merits of Defendants' other arguments for dismissal, the Court shall provide the remaining parties to this action--Plaintiffs and the U.S. Zeromax Defendants--the opportunity to consider how best to proceed with this litigation in light of the dismissal of Zeromax GmbH.

I. BACKGROUND

The Court does not address herein the majority of the allegations included in the Amended Complaint, which form the basis for Plaintiffs' eight claims. Rather, the Court addresses below only those allegations that are relevant to the Court's jurisdictional inquiries, which must be resolved before turning to the merits of Plaintiffs' claims.

Plaintiff ROZ Trading Ltd. is a limited liability company located in the Cayman Islands. Am. Compl. ¶ 1. According to Plaintiffs, ROZ is organized under the laws of the Cayman Islands, British West Indies, and has its principal place of business in Morristown, New Jersey. Id. Plaintiff ROZ Trading Ltd. (Uzbekistan) was a wholly-owned subsidiary of ROZ, organized under the laws of Uzbekistan and with its principal place of business in Uzbekistan, before it was purportedly dissolved in connection with the events alleged in the Amended Complaint. Id. ¶ 2.

Defendant Zeromax Group, Inc. was incorporated in Delaware on September 4, 2002, and filed a certificate of dissolution with the State of Delaware on August 2, 2005. Id. ¶ 3. While in existence, Zeromax Group had its principal place of business at 1725 I Street, NW, Washington, DC 20006 (hereinafter "1725 I Street"). Id. Plaintiff alleges that, as of the time of the filing of the Amended Complaint, Zeromax Group held itself out as maintaining its principal place of business and United States headquarters at 1725 I Street, and also alleges that on February 2, 2006--following Zeromax Group's dissolution--the corporation established a business address in Davidsonville, Maryland, at the home of Harry Eustace, Sr. Id. Zeromax Group's last directors and officers in office were Harry Eustace, Sr. and Miradil Djalalov. Id. Defendant Zeromax Logistics, Inc. was incorporated in Delaware on December 6, 2002, and filed a certificate of dissolution on August 2, 2005. Id. ¶ 4. Plaintiffs allege that Zeromax Logistics was a wholly-owned subsidiary of one of the Zeromax entities, that its last directors and officers in office were Harry Eustace, Sr. and Miradil Djalalov and, on information and belief, that it operated out of 1725 I Street. Id.

Defendant Zeromax LLC was formed in Delaware on September 20, 1999 and cancelled its certificate of formation on September 28, 2005. Id. ¶ 5. In 2003, Zeromax LLC and Tijorat, an Uzbek state-owned food distribution company, formed a joint venture called Muzimpex. Id. Plaintiffs allege, on information and belief, that Zeromax LLC also operated out of 1725 I Street. Id. Defendant Zeromax GmbH is a Swiss-registered company that was incorporated in July 2005. Id. ¶ 6. Its partners are Miradil Djalalov and Fatima Makhmudovna Djalalova; however, Plaintiffs allege on information and belief that its prior partners included Harry Eustace, Sr. and an entity known as Zeromax Holdings AG. Id. Zeromax GmbH acquired Zeromax LLC's interest in Muzimpex after Zeromax LLC was dissolved. Id. As of December 2005, Zeromax GmbH held an 87.5% interest in Muzimpex, which in turn held a 57.1% interest in Coca-Cola Bottlers of Uzbekistan ("CCBU"). Id. Plaintiffs allege that Zeromax GmbH is the successor in interest to the other Defendants and "party to a transfer of an interest in CCBU designed to frustrate the ability of Plaintiffs and the courts of the United States to recover Plaintiffs' interest or assets from other Defendants." Id.

Plaintiffs allege that Defendants are "engaged in regular, systematic and continuous business activities in D.C. through their agent or alter ego, Defendant Zeromax Group, Inc., which maintains, and for the relevant period maintained, its principal place of business in Washington, D.C., as reflected on its website and signage at the office building." Id. ¶ 9. Plaintiffs further allege that "Zeromax Group, Inc. is an agent or alter ego of the remaining Defendants in that the activities of Zeromax Group, Inc. were of such a character as to amount to doing the business of the other entities and in such a way as to disregard their separate corporate structures." Id. ¶ 10. Finally, Plaintiffs allege upon information and belief that "Zeromax GmbH, Zeromax Logistics and Zeromax LLC engaged in a persistent course of conduct, or derived substantial revenue from goods used or consumed, or services rendered in the District of Columbia by and through their agent or alter ego, Zeromax Group, Inc." Id. ¶ 11.

Plaintiffs filed their initial Complaint in this action on June 6, 2006 against only Zeromax Group, and filed an Amended Complaint on September 1, 2006, which named as Defendants Zeromax Group, Zeromax Logistics, Zeromax LLC, and Zeromax GmbH. Defendants filed their Consolidated Motion to Dismiss the Complaint in its Entirety (hereinafter "Defs.' Mot.") on November 6, 2006; Plaintiffs filed their Opposition (hereinafter "Pls.' Opp'n) on December 11, 2007; and Defendants filed their Reply Memorandum of Points and Authorities (hereinafter "Defs.' Reply") on February 7, 2007.

Defendants' Reply raised for the first time an argument that ROZ could not avail itself of New Jersey citizenship because it was not, at the time that the original Complaint was filed, either conducting business or authorized to conduct business in New Jersey. Defs.' Reply at 2. As Plaintiffs had not had the opportunity to respond to that argument, on September 24, 2007, the Court issued an Order requiring Plaintiffs to "provide the Court with factual evidence in support of their allegation that, as of the filing of the initial Complaint in this matter, Plaintiff ROZ Trading Ltd. (the entity Plaintiffs allege held an ownership interest in Coca-Cola Bottlers of Uzbekistan Ltd.) had its principal place of business in New Jersey." See Order, ROZ Trading Ltd. v. Zeromax Group, Inc., Civil Action No. 06-1040 (D.D.C. Sept. 24, 2007). Plaintiffs accordingly filed a Response to the Court's Order on September 26, 2007, asserting that ROZ's "primary business function has been the winding up of its affairs and its legal efforts to protect and recover what were substantial assets in Uzbekistan," and that these "wind-up functions have been and continue to be carried out in New Jersey." Pls.' Resp. at 3.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(2), a plaintiff bears the burden of establishing a factual basis for personal jurisdiction over the defendant(s). See Crane v. N.Y. Zoological Soc'y, 894 F.2d 454, 456 (D.C. Cir. 1990). As such, the plaintiff must allege specific acts connecting the defendant(s) with the forum. See Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). In contrast to its analysis under Rule 12(b)(6), the Court need not treat all of the plaintiff's allegations as true when determining whether personal jurisdiction exists over the defendant(s). Instead, the Court "may receive and weigh affidavits and any other relevant matter to assist it in determining the jurisdictional facts." United States v. Phillip Morris, Inc., 116 F. Supp. 2d 116, 120 n.4 (D.D.C. 2000) (citation omitted). However, the Court should resolve any factual discrepancies with regard to the existence of personal jurisdiction in favor of the plaintiff. See Crane, 894 F.2d at 456.

III. DISCUSSION

A. The Court Lacks Personal Jurisdiction Over Defendant ...


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