Defendant Robeco USA, fka Weiss, Peck & Greer, LLC ("WPG"), moves to dismiss the complaint under the doctrine of collateral estoppel (CPLR 3211[a][5]) and for failure to state a claim (CPLR 3211[a][7]; CPLR 3016[b]).

This is an action alleging misappropriation of trade secrets and related torts. According to the complaint, Cartesian Broadcasting Network, Inc. ("Cartesian"), an internet advertising company, solicited financing from WPG in the spring of 1999. In connection with that effort, Cartesian submitted a "Business Development Plan" and an "Intellectual Property Portfolio" to WPG Senior Vice President Raj Mehra ("Mehra"). The documents allegedly contained information regarding Cartesian's financial and operational models, business contracts, potential agreements,

corporate structure, licensed and intellectual property, including a pending application for a provisional patent.

WPG informed Cartesian that it would not provide financing in July 1999. However, the complaint alleges that Mehra and another WPG employee, Ben Taylor ("Taylor") gave copies of the Business Plan and other documents to a competitor of Cartesian, Predictive Systems Inc. ("Predictive"), in which they had made significant personal investments. Predictive later revised its business model using Cartesian's information and obtained financing from AT&T, a source from which plaintiff had also solicited funds.

The complaint asserts that Mehra and Taylor were at all relevant times acting in their capacities as employees of WPG. It is further alleged that in view of WPG's policy requiring advance disclosure of all investments by its officers, the company knew or should have known of the conflicts arising from the financial interests of Mehra and Taylor in Predictive. Asserting claims for breach of fiduciary duty, tortious interference with prospective business relationships, misappropriation of trade secrets, unfair competition, conversion, fraud, deceptive acts and practices under GBL § 349, breach of contract and implied-in-fact contract and negligence, plaintiff seeks damages exceeding $100 million.

WPG is a limited liability company headquartered in New York. Plaintiff originally commenced an action based upon the same facts against WPG in Massachusetts state court in 2002 (the "Massachusetts Action"), naming as additional defendants Mehra, Taylor, Predictive and its president Devin Hosea. After WPG, Mehra and Taylor moved to dismiss for lack of personal jurisdiction, the court granted discovery as to whether the employees' contacts with Massachusetts were sufficient to confer jurisdiction over WPG. By order dated October 15, 2003 (the "Massachusetts Order"), the court granted the motion to dismiss as to WPG. Rejecting the argument that jurisdiction could be asserted under a theory of respondeat superior, the court held:

The fatal flaw in this argument is that all the evidence presented to date demonstrates [*2]without dispute that Mehra and Taylor both invested their personal funds in Cartesian, not any of the assets of the WPG funds they managed. Nothing indicates that in making these personal investment decisions or in their dealings with Hosea and Predictive, Mehra and Taylor were acting within the scope of their employment so as to render WPG liable for their acts. Without evidence of the necessary agency relationship, there is no personal jurisdiction over WPG on a theory of respondeat superior. (Massachusetts Order at 9-10). The court further stated that "while it may be that WPG, through one or more of its funds, regularly does business with or derives revenue from Massachusetts companies, there is no evidence the WPG itself (or any of its funds) has directly caused any injury to Cartesian in Massachusetts or anywhere else" (Massachusetts Order at 9).

In moving to dismiss, defendant asserts that this ruling collaterally estops plaintiff from pursuing its claim against WPG in this action. Plaintiff counters that under the applicable Massachusetts law, collateral estoppel does not apply to a jurisdictional dismissal, but only to a final adjudication on the merits.

The motion is granted and the complaint is dismissed. Collateral estoppel "precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunal or causes of action are the same" (Ryan v NY Tel. Co., 62 NY2d 494, 500 [1984]). It is a doctrine "grounded in the facts and realities of a particular litigation, rather than rigid rules" (Buechel v Bain, 97 NY2d 295, 303 [2001]). However, two requirements must be met for the doctrine to apply: "there must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling" (Id. at 303-04). The party invoking collateral estoppel bears the burden of demonstrating that the relevant issue was necessarily decided against a party, and the party opposing preclusion must demonstrate the absence of a fair opportunity to litigate the question (Id. at 304). Under the full faith and credit clause of the Federal Constitution, a New York court is required to give a sister state judgment the same collateral estoppel effect it would be accorded there (Harvester Chem. Corp., Inc. v Aetna Cas. and Sur. Co., 212 AD2d 392 [1st Dept 1995]).

The Massachusetts court squarely held that liability could not be imputed to WPG based upon the conduct of its employees. The record demonstrates that plaintiff had a full and fair opportunity to litigate the issue of corporate liability, obtaining document production and the depositions of both Mehra and Taylor. Plaintiff argued, in its submissions, that WPG was directly and vicariously liable for the theft of trade secrets and other tort. The Massachusetts court considered, addressed, and ultimately rejected plaintiff's position.

Although the court ruled on the respondeat superior issue in the context of a motion challenging personal jurisdiction, the specific factual findings set forth in the Massachusetts Order are dispositive here on the merits of the question of corporate liability (see, e.g., Monroe v NuMed, 173 Misc 2d 817 [Sup Ct, St. Lawrence Co 1997][giving collateral estoppel effect to factual findings of Florida court, although that court's factual inquiry and findings were limited to the issue of personal jurisdiction]). As noted by one commentator:

[I]n some situations a decision on the jurisdiction of a court may depend upon questions of fact which are also material in determining the merits of the cause of action. The weight of the cases, expressly or by inference, supports the rule that where a question of fact material to the merits has been decided by and is essential to a judgment for defendant based on lack of jurisdiction, such determination is conclusive upon the parties in a subsequent action either for the same or a different cause of action.

A brings an action against B for personal injuries arising out of an automobile accident. Jurisdiction is asserted over B, a nonresident, on the basis that the automobile involved in the accident was being operated in the state by or on his behalf. After trial of this issue, the action is dismissed for lack of jurisdiction. In a subsequent action by A against B for the same injuries, brought in the state of B's residence, the prior determination that the automobile was not being operated by or on behalf of B is conclusive.

The inquiry as to whether WPG committed tortious acts

sufficient to support jurisdiction in Massachusetts was, in this case, identical to the question of whether it committed acts sufficient to support a finding of corporate liability. Plaintiff's argument that Massachusetts gives collateral estoppel effect only to determinations which are "on the merits" as opposed to "jurisdictional" is misguided, as is its related contention that the Massachusetts Order cannot be accorded full faith and credit because the court lacked jurisdiction over WPG. While a dismissal for mere failure of service of process would clearly not have preclusive effect, the Massachusetts Order did address the factual merits of WPG's corporate liability. The fact that the determination arose in the context of a challenge to jurisdiction is irrelevant. All that matters, for the purpose of collateral estoppel, is that the resolution of those facts was "material to the first action or proceeding and essential to the decision rendered therein" (Ryan, supra at 500).

Plaintiff further asserts that the Massachusetts court

applied the wrong burden of proof and made its determination after insufficient discovery. In essence, plaintiff contends that the Massachusetts Order was wrongly decided. Such argument must be left to appeal or reargument in Massachusetts. In this connection, it should be noted that were this court to make new factual findings consistent with plaintiff's theory of corporate liability, those facts would also compel a finding of jurisdiction in Massachusetts - effectively reversing the Massachusetts Order. That is not the function of this court.

Finally, in view of the preclusive effect of the doctrine of collateral estoppel upon the claims against WPG, the court need not address the parties contentions regarding the legal sufficiency of the complaint (see, e.g., McDonald v Lengel, 2 AD3d 1182; McKenna v Gordon & Gordon, P.C., 254 AD2d 70 [1st Dept 1998]); Bartkowski v Friedman, 213 AD2d 873 [3rd Dept 1995]).

Accordingly, it is

ORDERED, that the motion to dismiss is granted, and it is further

ORDERED, that the complaint is dismissed, with costs and

disbursements to defendant as taxed by the Clerk of the Court, and it is further

ORDERED that the Clerk is directed to enter judgment

accordingly.

Dated: June 6, 2005

_________________________

J.S.C.

Counsel are hereby directed to obtain an accurate copy of this Court's opinion from the record room and not to rely on decisions obtained from the internet which have been altered in the scanning process.