Davey v. PK BENELUX B.V. d/b/a/ LUCOVITAAL

Background

Jon-Michael Davey sued PK Benelux B.V. doing business as Lucovitaal, and an unknown corporate entity identified as “DOE” Corporation. Davey alleged that he bought cannabidiol, or CBD, supplements from PK Benelux through its website in October 2019 and February 2020, with delivery to his home in New York. He alleged that he understood the products’ “100% pure CBD” marketing to mean they would not contain illegal amounts of delta-9-tetrahydrocannabinol, or THC, and would not cause him to fail an employer drug test.

Davey alleged that he tested positive for THC during a random workplace drug test on May 7, 2020, because of PK Benelux’s supplements. He further alleged that he was fired and suffered a nervous breakdown. PK Benelux is organized in the Netherlands. The court had previously denied the company’s first motion to dismiss for lack of personal jurisdiction without prejudice and allowed jurisdictional discovery. After that discovery ended, PK Benelux renewed its motion to dismiss and also moved for sanctions.

Personal Jurisdiction

Personal jurisdiction is a court’s authority to exercise power over a particular defendant. The court explained that it first had to determine whether New York’s long-arm statute authorized jurisdiction and, only if it did, whether jurisdiction would comply with the Constitution’s due-process requirement.

Davey relied on New York Civil Practice Law and Rules sections 302(a)(1) and 302(a)(3). Section 302(a)(1) requires a defendant to have transacted business in New York and requires the claim to arise from that business. The court acknowledged that PK Benelux’s website was fully interactive and that the company clearly conducted business online. But website interactivity alone did not establish jurisdiction. The court found no evidence that PK Benelux purposefully targeted New York, such as through targeted advertising, products tailored to New York, or significant New York transactions. Davey’s evidence of two shipments to him in New York was insufficient under the total circumstances, and the website appeared to be principally in Dutch.

Section 302(a)(3) concerns certain out-of-state torts that cause injury in New York. It requires proof that the defendant derives substantial revenue from New York or from interstate or international commerce, depending on the provision invoked. The court found Davey’s conclusory allegation of substantial revenue insufficient. It also found that PK Benelux’s evidence showed only $1,403.65 in New York revenue—0.00092% of its total revenue from 2018 through 2020—which was not substantial. Because New York’s long-arm statute did not authorize jurisdiction, the court did not decide whether exercising jurisdiction would satisfy due process.

Leave to Amend

Davey requested permission to file another amended complaint if the motion to dismiss was granted. The court denied that request, finding that further pleading would be futile. Davey had already amended his complaint, and the jurisdictional defects remained after jurisdictional discovery. The court stated that further delay would be unwarranted.

Sanctions

PK Benelux sought sanctions under the court’s inherent authority and under 28 U.S.C. § 1927. Sanctions under those authorities require clear evidence that the claims were entirely meritless and that the party acted for an improper purpose. The court found no evidence that Davey’s claims were entirely meritless or that he acted improperly, so it denied the sanctions motion.

Disposition

The court granted PK Benelux’s motion to dismiss the amended complaint, denied Davey’s request for leave to file a second amended complaint, and denied PK Benelux’s motion for sanctions. The clerk was directed to terminate the motion and close the case.