Farsura v. QC Terme US Corp

Background

Stefano Farsura and SF Capital Partners LLC sued QC Terme US Corp., alleging, among other things, that QC Terme breached a contract by excluding Farsura from the parties’ spa business. On September 13, 2022, the court granted in part and denied in part QC Terme’s motion to dismiss. The plaintiffs later requested permission to file an amended complaint.

Judge Lehrburger initially granted leave to amend, but later reconsidered that decision after finding that it had been based on an incomplete record. After briefing, he issued a report and recommendation recommending that the plaintiffs’ motion for leave to amend be denied and vacating the earlier order that had allowed amendment.

Objections and Review

QC Terme objected to Judge Lehrburger’s use of a report and recommendation rather than an order, arguing that the amendment decision was a non-dispositive pretrial matter. The court reviewed that objection for clear error because it was general and did not identify a specific finding. The court held that Judge Lehrburger’s decision to issue a report and recommendation was not clearly erroneous and overruled QC Terme’s objection. To the extent QC Terme made separate requests concerning how the ruling should be treated, the court denied those requests.

The plaintiffs objected to the recommendation on several grounds, including the use of allegedly new facts, the refusal to allow amendment after the dismissal ruling, and the proposed amendments concerning Whitebridge and QC Terme s.r.l. The court found that most of these objections repeated arguments already made to Judge Lehrburger or were otherwise general, and it found no clear error.

Whitebridge and Personal Jurisdiction

The court reviewed de novo the plaintiffs’ specific objection concerning proposed allegations that Whitebridge participated in retaining New York counsel. De novo review means that the district judge independently considers the challenged issue rather than deferring to the magistrate judge’s conclusion.

The plaintiffs argued that Whitebridge’s involvement with New York lawyers supported specific personal jurisdiction under New York Civil Practice Law and Rules § 302(a)(1). Specific personal jurisdiction is a court’s authority over a defendant based on that defendant’s forum-related conduct connected to the dispute. The court explained that a proposed amendment is futile when the amended complaint would not survive a motion to dismiss, including a motion challenging personal jurisdiction.

After drawing reasonable inferences in the plaintiffs’ favor, the court concluded that the record did not support their conclusory allegations about Whitebridge’s conduct. The proposed agency theory also failed because the allegations were too conclusory to make the required initial showing of jurisdiction. The proposed amendments concerning Whitebridge therefore would not cure the deficiencies identified in the earlier dismissal order and were futile.

Other Proposed Amendments and Relief

The court found no clear error in the recommendation concerning the proposed amendments involving QC Terme s.r.l. It also rejected the plaintiffs’ argument that they were entitled to partial judgment under Federal Rule of Civil Procedure 54(b), which can permit judgment on fewer than all claims or parties in appropriate circumstances. The court declined to grant that relief.

Disposition

Judge Torres overruled the parties’ objections to the report and recommendation, adopted its conclusions, and denied the plaintiffs’ motion for leave to amend. The court also denied the plaintiffs’ request to seal materials because QC Terme had not timely moved to keep them under seal. The parties were ordered to file a joint letter by July 19, 2023, stating how they wished to proceed. The clerk was directed to terminate the motions identified as ECF Nos. 246 and 271 and make ECF No. 272 publicly viewable.