District Court Finds Personal Jurisdiction Over Non-U.S. Defendants Based on Agency Theory and Maintenance of Residence

The World in U.S. Courts: Spring 2015 - Racketeer Influenced and Corrupt Organizations Act (RICO)

Elsevier v. Grossman, U.S. District Court for the Southern District of New York, January 5, 2015

Plaintiff Elsevier, a leading publisher of scholarly books and journals, sued multiple customers who allegedly bought low-price individual subscriptions and, contrary to contractual limitations, resold those subscriptions to numerous institutional entities. Elsevier's RICO claim was based on an allegation of multiple and related instances of fraud in the procurement of the subscriptions.

Defendant Grossman, a citizen and resident of Brazil, and defendant PTI, a corporation organized under the laws of Brazil and having its principal place of business in Brazil, moved to dismiss for lack of personal jurisdiction. At issue first was the scope of a venue provision in the RICO statute authorizing service on nonresidents of the district where a case was brought if one defendant could properly be sued there, and doing so would serve "the ends of justice." The District Court in New York found this provision applicable only to defendants resident in the U.S., holding that non-U.S. defendants could be sued in the U.S. only where authorized by the laws of the state where the court sits.

[Editor's note: The Elsevier case is also discussed under the Personal Jurisdiction section of this report.]

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