District Court Finds No Personal Jurisdiction over Malaysian Company Acting as Receiver of Malaysian Subsidiary of U.S.-Based Biotechnology Company

The World in U.S. Courts: Spring 2016 - Personal Jurisdiction/Foreign Sovereign Immunities Act (FSIA)/Forum Non Conveniens

Viropro, Inc., v. PriceWaterhouseCoopers Advisory Services Sdn Bhd, U.S. District Court for the Southern District of New York, January 19, 2016

Plaintiff Viropro, Inc., a Nevada biotechnology company with its principal place of business in California, operated primarily through Alpha Biologics Sdn Bhd, a wholly-owned Malaysian subsidiary. Alpha had obtained loans from Malaysian banks prior to its acquisition by Viropro, and under the terms of the loans the banks apparently had a unilateral right to appoint a "receiver" for Alpha. They exercised that right, appointing as receiver PwC Advisory Services, a Malaysian corporation. PwC liquidated Alpha, whereupon Viropro sued PwC in District Court in New York, alleging that the liquidation breached PwC's fiduciary duty to Viropro.

Viropro maintained that the Court had jurisdiction over PwC derivatively, because personal jurisdiction over Alpha existed in New York. And Viropro argued that personal jurisdiction over Alpha existed in New York because Viropro was subject to personal jurisdiction there, and Alpha was an integral part of Viropro's business. Viropro's assertion that it was subject to jurisdiction in New York was based on the fact that one of its three directors resided in New York and conducted business associated with Alpha's operations there, and that its former Chief Operating Officer resided in New York and had exclusive knowledge of the business relationship between Viropro and Alpha. Viropro also asserted that PwC was subject to personal jurisdiction in New York because of its connection to PricewaterhouseCoopers LLP, which has its principal place of business in New York.

The Court dismissed Viropro's suit for lack of personal jurisdiction. The Court succinctly rejected Viropro's assertion of general personal jurisdiction, finding that a foreign corporation's advertisements claiming to be part of a "global network" that included PwC LLP in New York "would not come close to satisfying the 'essentially at home' test" of general personal jurisdiction. The Court then dispatched Viropro's assertion of specific personal jurisdiction under New York's long-arm statute, noting that PwC's operations with respect to Alpha were effectively confined to Malaysia, and that Viropro's complaint contained no allegations of purposeful acts by which PwC availed itself of doing business in New York. Further, the Court expressly rejected Viropro's assertion that PwC could be subjected to personal jurisdiction in New York based on Viropro's activities in that forum. Such a finding, the Court concluded, would "upend" the basic notions of jurisdiction. PwC's sole alleged contacts with Viropro in New York involved communications with an officer of Viropro residing in that State, which the Court held fell well short of establishing PwC's "purposeful availment" of the protections of the law of the forum. For the same reasons, the Court also held that the exercise of jurisdiction over PwC would fail to satisfy the requirements of the Due Process Clause of the U.S. Constitution because PwC lacked the necessary "minimum contacts" with New York.

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