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Uebler v. Boss Media AB

03 CV 4790 (E.D.N.Y., June 5, 2006)

Court Excercises Jurisdiction Over Foreign Parent Based On New York Activities Of Subsidiary

Court holds it can exercise personal jurisdiction over defendant Boss Media AB ("Boss Media"), a Swedish corporation, based on the New York activities of a wholly-owned subsidiary found to be acting as its agent.  This subsidiary - Web Dollar - processed online financial transactions for individuals engaged in web-based gambling at websites utilizing defendant Boss Media's software, including the website at issue, and distributed funds it collected to Boss Media, its subsidiaries and licensees.  As a result of this determination, the Court permitted plaintiff to proceed with claims against Boss Media, and its licensee Cyber Croupier, seeking the recovery of in excess of $900,000 due plaintiff as result of having won an online contest.

Boss Media Operates Via Divisions And Subsidiaries

Plaintiff participated and won an online promotional trivia contest run by the Oriental Casino web site.  Plaintiff's prize was $1 million dollars, to be paid out monthly over a period of 25 years.  After receiving payments for 25 months however, plaintiff was notified she would not be receiving any further payments, leaving due in excess of $900,000.  This lawsuit followed.

"Boss Media is in the business of developing and licensing software to be used by a licensee to operate online casino games."

Boss Media conducts its business activities through various divisions.  The Boss Operations division provides payment management, maintenance and operations support to licensees through both Boss Casinos and Web Dollar, each wholly-owned subsidiaries of Boss Media.  The Best Games division provides gambling services, which are performed by Boss Casinos.

According to the court's decision on defendants' initial motion to dismiss (363 F. Supp. 2d 499) the Oriental Casino website at issue was operated and controlled, for jurisdictional purposes, by Boss Media's Boss Casino subsidiary.  The website itself was developed by Boss Media, and is operated for the licensee Cyber Croupier by Boss Casinos.  This online casino apparently operates under a governmental license issued to Boss Casino, at a domain name registered to it. 

Web Dollar issued those prize payments that were in fact made to plaintiff, and also "set up her online money transfers."  The Court, in its initial decision (363 F. Supp. 2d at 506), found that both Web Dollar and Boss Casinos were present in New York for jurisdictional purposes, given the aforementioned activities, and the highly interactive nature of the Oriental Casino's website. 

Web Dollar Subsidiary Acts As Boss Media's Agent

When a wholly-owned subsidiary acts as an "agent" or "mere department" of its parent, its acts in the forum can be imputed to its parent for jurisdictional purposes.  Here, the Court found that Web Dollar was acting as Boss Media's agent for jurisdictional purposes. 

To establish that a subsidiary is an agent of the parent, the plaintiff must show that the subsidiary does all the business which [the parent corporation] could do were it here by its own officials.  In practical terms, this test requires the Court to examine whether the subsidiaries presence in the New York market is in lieu of the parent and, also, "whether the parent would have to enter the market directly if the subsidiaries were absent because the market is too important to the parent's welfare." 

As stated above, Web Dollar processed online financial transactions for gambling websites that used Boss Media's software, including those of Oriental Casino, and distributed the proceeds to, among others, Boss Media and its licensee Cyber Croupier.  According to the Court: "Absent the existence of Web Dollar to perform these functions, in the Court's view, with reasonable certainty Boss Media would conduct these activities itself."  The Court accordingly found that, as its agent, Web Dollar's New York activities could be imputed to Boss Media.  Because Web Dollar was present in New York for jurisdictional purposes, so too was its parent Boss Media, which mandated the denial of defendant's motion to dismiss.

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