Full opinion text
I. USE OF JUDICIAL NOTICE .............. 1327 II. FACTS................................. 1329 A. Parties.............................. 1329 B. Allegations........................... 1330 C. Moriya’s Crucial Role .................. 1331 III. JURISDICTION OVER K. HATTORI & CO., LTD........................ 1333 A. Doing Business, N.Y. CPLR 301 .......... 1333 1. The Law ......................... 1333 2. Multinational Operations in General ... 1335 3. Japanese Multinationals in General____ 1338 4. Japanese Hierarchical Structures ..... 1339 5. Application of Law to Facts.......... 1340 B. Long Arm Jurisdiction, N.Y. CPLR 302 ____ 1345 1. The Law ......................... 1345 2. Application of Law to Facts.......... 1346 IV. JURISDICTION OVER INDIVIDUAL DEFENDANTS .................... 1347 A. The Law ............................ 1347 B. Application of Law to Facts............. 1348 L Sega!............................ 1348 2. Murphy.......................... 1348 3. Moriya........................... 1349 4. Waldman......................... 1349 V. CONCLUSION........................... 1349 WEINSTEIN, Chief Judge. This motion to dismiss for lack of personal jurisdiction (F.R.Civ.P. 12(b)(2)), presents a classic problem in adjudicating claims against a multinational corporation using subsidiaries to penetrate the American market. Under current doctrine, to be subject to personal jurisdiction by a state, the parent must 1) itself be present because it is doing business in the state (N.Y. CPLR 301) ; or, 2) under a “long arm” concept, have conducted specific activities out of which the cause of action arose either in the state or outside the state with foreseeable substantial effects in the state (N.Y. CPLR 302) ; in addition, exercise of judicial power over the person of defendant must not offend our notions of fairness. See, e. g., International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Restatement (Second) of Conflict of Laws § 27(l)(g)(h) (“doing business in the state” and “an act done in the state” are bases for exercise of jurisdiction); Restatement (Second) of Judgments § 8, Comment a (Tent. Draft No. 5, 1978) (where party, inter alia, does business in state or does act in state relationship is “such that the exercise of jurisdiction is reasonable”). Largely for reasons of historical, and conceptual development, the doing business concept treats a defendant corporation as if it were present for all purposes in any kind of a suit to the same extent as a real person living and working here would be. The long arm alternative was designed to be used only in limited situations in which an outsider has a transient impact on activities in the state and it applies only to claims arising from that narrow contact. Multinational activities such as those before us present a factual pattern that sometimes does not quite fit into either of the two tidy conceptual categories reflected in N.Y. CPLR 301 and 302. Here the foreign parent corporation may be considered to be doing business under 301 for limited purposes during the period of penetration of the American market before its subsidiaries have matured to relatively full independence. The implications of this view are that the foreign parent may be deemed to be present for the purpose of expanding into a new market by setting up subsidiaries and dealing with competition, while it may not be doing business for the purposes of day-to-day commercial activity such as dealing in watches, cars or sealing wax — e. g., when a suit is based upon negligent operation of a car operated by an employee of a locally organized subsidiary. Similarly, while not within the strict limits of the 302 long arm provision, the parent’s actions might be sufficiently within the CPLR’s penumbra so that the combination of 301 and 302 read together covers the particular claims asserted and long arm personal jurisdiction lies. None of this would violate any constitutional requirements. We do not suggest that the present jurisdictional bases be eliminated — a proposal for the legislature rather than a trial court in any event. Nor do we ignore traditional indicia utilized to measure parent-subsidiary control for jurisdictional purposes. Rather, we note that in this as in so many other areas of the law, stuffing new and complex factual patterns into absolutely rigid legal cubbyholes often results in distortion of the facts. Some give in the categories is desirable lest the law lose touch with the real world. To any layman it would seem absurd that our courts could not obtain jurisdiction over a billion dollar multinational which is exploiting the critical New York and American markets to keep its home production going at a huge volume and profit. This perception must have a bearing on our evaluation of fairness. The law ignores the common sense of a situation at the peril of becoming irrelevant as an institution. An apparent growing tendency by the Supreme Court to view jurisdictional bases narrowly in the interest of what it considers to be fairness to defendants is reflected in a few recent cases. Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977); Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980), on remand, 290 N.W.2d 633 (Minn.1980); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Unreasoned extrapolation of such cases can lead to unfairness to plaintiffs who may be denied a natural forum unless the court carefully analyzes the economic and social realities of the “significant contacts between the litigation and the forum.” Rush v. Savchuk, 444 U.S. at 329, 100 S.Ct. at 578. Cf. Kamp, Beyond Minimum Contacts: The Supreme Court’s New Jurisdictional Theory, 15 Ga.L.Rev. 19 (1980) (criticizing recent cases as “not based on present constitutional or social reality”); Comment, Federalism, Due Process and Minimum Contacts: World-Wide Volkswagen Corp. v. Woodson, 80 Colum.L.Rev. 1341 (1980) (“abstract notions of territoriality are too mechanical to achieve consistently desirable results”). I. USE OF JUDICIAL NOTICE A common sense appraisal of economic relationships is often more useful than prior cases based on situations different in detail. Meat Systems Corp. v. Ben Langel-Mol, Inc., 410 F.Supp. 231, 231-232 (S.D.N.Y.1976), remanded without opinion, 551 F.2d 300 (2d Cir. 1976). We tend to come closer to the mark when we examine a business relationship from the practical viewpoint of businessmen rather than through the distorting lens of a legal conceptual framework established in an earlier era. In the multidimensional complexity of real life a two dimensional straight line provides a misleading boundary. A court cannot simply “isolate each contact of the defendant with New York and say that each such contact does not constitute the doing of business.” Potter’s Photographic Applications Co. v. Ealing Corporation, 292 F.Supp. 92, 100 (E.D.N.Y.1968). Rather it must look to the “cumulative significance” of all activities of a foreign corporation within the state in order to determine whether the corporation is doing business within the state for jurisdictional purposes. Id. In doing so it must make use of so much of judicial notice as is required to understand general commercial settings and the particular relationships of the parties and their dispute. Judicial notice may be resorted to on a motion to dismiss for lack of jurisdiction. Fed.R.Evid. 201(f) (“judicial notice may be taken at any stage of the proceeding”); Singleton v. City of New York, 632 F.2d 185, 204 (2d Cir. 1980) (dissent) (motion to dismiss for lack of timeliness); St. Louis Baptist Temple, Inc. v. Federal Deposit Insurance Corp., 605 F.2d 1169, 1172 (10th Cir. 1979) (summary judgment); United States ex rel. McLaughlin v. People of the State of New York, 356 F.Supp. 988, 990 (E.D.N.Y. 1973) (motion to dismiss on merits); Fox v. Kane-Miller Corp., 398 F.Supp. 609, 651 (D.Md.1975), sit’d, 542 F.2d 915 (4th Cir. 1976) (motion for judgment notwithstanding verdict); Webb v. Nolan, 361 F.Supp. 418, 420 (M.D.N.C.1972), aff’d, 484 F.Supp. 1049 (4th Cir. 1973) (motion to dismiss for lack of jurisdiction). The information that may be noticed where jurisdiction is sought over a multinational is much broader than the narrow form of “adjudicative” fact either “generally known within the territorial jurisdiction” or capable of “determination by resort to sources whose accuracy cannot reasonably be questioned,” Fed.R.Evid. 201(a)(b) — e. g., the day of a week of a certain date. The judgments involved in determining questions of jurisdiction such as the one before us involve mixed questions of law and fact. Inextricably intertwined in the decision is a normative judgment of what is fair and reasonable — a question primarily of law rather than an adjudicative fact. Thus the factual issues are closer on a spectrum to legislative facts necessary in interpreting the meaning of law and filling in its interstitial detail. The data noticed also provide the general knowledge needed to understand and draw inferences from the particular evidence in the controversy before the court to those material propositions of fact necessary in determining jurisdiction. There is always a danger in the superficial sociological musings of lawyers and judges who must perforce be relatively ignorant of the realities underlying the diverse situations with which they must deal and which they must try to understand. Yet, whether we explore the economic, political or social settings to which the law must be applied explicitly, or suppress our assumptions by failing to take note of them, we cannot apply the law in a way that has any hope of making sense unless we attempt to visualize the actual world with which it interacts — and this effort requires judicial notice to educate the court. A court’s power to resort to less well known and accepted sources of data to fill in the gaps of its knowledge for legislative and general evidential hypothesis purposes must be accepted because it is essential to the judicial process. See, generally, Davis, Facts in Lawmaking, 80 Colum.L.Rev. 931 (1980). Here flexible judicial notice is required first, in interpreting N.Y. CPLR 301 and 302, and, second, in understanding the relationship of the Japanese parent to its American subsidiaries. In view of the extensive judicial notice taken, based partly upon the court’s own research, the court issued a preliminary memorandum and invited the parties to be heard on the “propriety of taking judicial notice and the tenor of the matter noticed” upon motion made within ten days. This procedure complies with the spirit of Rule 201(e) of the Federal Rules of Evidence reading as follows: (e) Opportunity to Be Heard. A party is entitled upon timely request to an opportunity to be heard as to the propriety of taking judicial notice and the tenor of the matter noticed. In the absence of prior notification, the request may be made after judicial notice has been taken. Inviting parties to participate in such ongoing colloquy has the advantage of reducing the possibility of egregious errors by the court and increases the probability that the parties may believe they were fairly treated, even if some of them are dissatisfied with the result. Accepting this invitation, the defendant Hattori submitted affidavits and separate materials and reargued the motion. These submissions were most helpful and resulted in the court’s modifying a number of conclusions, but not the final result. II. FACTS A. Parties Plaintiff Bulova Watch Co., Inc. charges K. Hattori & Co., Ltd. and individual defendants Moriya, Segal, Murphy, Waldman and others with unfair competition and disparagement and with engaging in a conspiracy to raid plaintiff’s marketing staff in order to appropriate plaintiff’s trade secrets. Bulova is a New York corporation with its principal place of business in Flushing, New York. It manufactures and sells watches and claims to have the largest direct sales marketing system in the watch business. Hattori is a company incorporated under the laws of Japan with its principal offices in Tokyo. It owns all the stock of Seiko Corporation of America (SCA), a New York corporation. SCA owns all the stock of Seiko Time Corp., Pulsar Time, Inc. and SPD Precision, Inc., all New York corporations. Hattori contracts in Japan for the manufacture of its watches and sells them under the Seiko, Pulsar and other brand names to its three American sub-subsidiaries. The Japanese parent’s annual sales in 1978 were in excess of $1 billion. While the “Hattori group” manufactures many products including computers, measuring instruments, industrial robots, spectacle lenses and electric shavers, Moriya Affidavit of January 21, 1981 at ¶ 3, watches and clocks account for approximately ninety percent of Hattori’s sales. Securities Report Series 1979, Exhibit 5 to Defendant’s Supplemental Memorandum at 8. A very substantial amount of its total revenue is derived from exports of watches and timepieces, the United States being its largest foreign market. In 1980 over four million Hattori timepieces were sold in this country at prices to the consumer of one hundred twenty-five dollars and higher — far more than half a billion dollars at retail. Oral Statement of Defendant, Hearing, February 11, 1981. Hattori sells products to distributors in over one hundred countries around the world. Wholly-owned subsidiaries of Hat-tori handle distribution of Hattori’s products in about ten of those countries, including the United States. In the rest, or the great majority of the countries in which Hattori’s products are sold, sales are made by Hattori or its subsidiaries to independent distributors who conduct their own advertising and other marketing activities and maintain their own repair centers pursuant to agreement or arrangements with Hattori. Moriya Affidavit of January 21,1981 at ¶4. Hattori has never directly marketed its products in any country except Japan. Id. Hattori’s United States subsidiaries sold Seiko-branded products totalling over $50,-000,000 in wholesale dollars in 1979 to retail customers and wholesale distributors in the Caribbean, South America and Europe. SCA has also made substantial investments in third countries to assist Hattori in selling its Japanese manufactured timepieces. It owns one hundred percent of the capital stock of Pulsar subsidiaries which it has established in Canada and Europe during the past two years. Seiko Time Canada, Ltd., in 1979, represented an investment of $5,000,000 and accounted for Canadian sales of Hattori products in excess of $35,000,000 in wholesale dollars. In 1980, Seiko Corporation of America also acquired one hundred percent of the stock of a Brazilian corporation, Seiko Time, Ltd., which in turn acquired all the stock of Hase, S. A., a company which sells Hattori’s Seiko-branded products in Brazil. Memorandum of Hattori, January 21, 1981 at 20. From 1967 to 1971, and again from 1975 to July, 1979, Moriya was assigned by Hat-tori to New York. During the period when the events complained of occurred he was president and director of SCA and its corporate predecessor, sole director of Pulsar Time and SPD Precision, director of Seiko Time, an officer of two other of Seiko’s American distributors and a director of a third. While in New York, Moriya held the following positions with Hattori: Deputy Manager and Manager, International Marketing Department and Manager, Personnel Department. Securities Report Series 1979, Exhibit 5 to Defendants’ Memorandum in Relation to the Motion to Dismiss at 6,7. Moriya’s immediate superior was Reijiro Hattori, Chairman of SCA and second-in-command at Hattori. At the date of the filing of the complaint Moriya was a director of Hattori, to which he was elected upon his return from his American assignment. After this action was started he was named Chairman of SCA and apparently he did not resign his position as its president upon his return to Tokyo until sometime after the complaint was filed. Exhibit 2 to Codraro Affidavit. Segal, a domiciliary of California, was Bulova’s Western regional sales manager; he left Bulova in July, 1978 to join Omichron, Inc., a Seiko distributor. Murphy, a resident of Texas, is a former Bulova Chicago regional sales manager who left Bulova in late October, 1978 to join TexChron, a Seiko distributor partly owned by SCA. Waldman, who has lived in Texas for many years, is a former Bulova Southwestern regional sales manager who left Bulova in early December, 1978 to join SPD Precision, Inc.; after the incorporation of Pulsar Time, Inc., in early January, 1979, he became field sales manager for that company. Two other defendants, Lich and Cohen, do not object to personal jurisdiction. B. Allegations Between July and December of 1978, six members of Bulova’s staff — three regional sales managers and three more senior executive personnel — left Bulova to join either a Seiko subsidiary or a Seiko distributor. During December, 1978 four Bulova salesmen joined SPD Precision’s Pulsar division which in January, 1979 was separately incorporated as Pulsar Time, Inc. Sometime during 1979 a number of Bulova salesmen were hired by Pulsar Time. What sharply divides plaintiff from defendant is the question of whether these hirings were the result of a conspiracy among defendants to appropriate Bulova’s trade secrets and marketing system and to damage Bulova and destroy its business and reputation. Plaintiff alleges that Hattori and Moriya decided during 1978 to market a new line of watches, Pulsar, a trademark that was acquired by Seiko Time in September, 1978. Defendants’ Reply Memorandum at 18. Plaintiff also alleges that the decision was taken by Hattori and Moriya to organize a clock division of Seiko Time. Codraro Affidavit at ¶ 19. Seiko watches had been marketed through fifteen Seiko regional distributors, Id. and Moriya Deposition at 160-161, but the Pulsar watches were to be marketed directly to retail outlets. To accomplish this, a direct sales network had to be put quickly into place. Codraro Affidavit at ¶ 20. It is contended that as part of the plan Moriya hired Schwartz, who had been vice-president and director of marketing at Bulova, to head the Pulsar operation. In the beginning of October, Schwartz and Moriya met to discuss the Pulsar marketing strategy and Schwartz recommended that Moriya hire Cohen as director of sales. Meetings were held between Cohen and Schwartz, and Cohen was offered employment at SPD Precision with the view to directing Pulsar sales. Codraro Affidavit at ¶ 19. Moriya, Cohen and Schwartz decided that a sales force of twenty would be required for the first year, 1979, Cohen Deposition at 35-36, and Cohen was told not to “divulge the name of his new employer” for one month. Hattori Memorandum, January 21, 1981 at 27, Codraro Affidavit at ¶ 19, Cohen Deposition at 47. He recommended the hiring of Waldman, a Bulova regional sales manager. In early December of 1978, Waldman met with Cohen and Schwartz in New York, and the next day Waldman left Bulova to join Pulsar as field sales manager. In order to implement the goal of hiring twenty salesmen by January 1, 1979, the three ex-Bulova employees actively solicited other Bulova employees. Codraro Affidavit at ¶ 19. The hirings that ensued apparently resulted in a meeting between Bulova’s then head, Flick, and Moriya at the end of the year, following which the solicitation of Bulova salesmen abated. Codraro Affidavit at ¶ 19, Moriya Deposition at 180-181. Subsequently, however, additional solicitations are alleged to have been made, Codraro Affidavit at ¶ 19, and more Bulova salesmen were hired. Cohen Responses to Interrogatories ¶ 5(a). During December, special letters were drafted to be signed by Bulova salesmen joining SPD Precision, Pulsar’s parent. The letters stated that the employees would not use any Bulova trade secrets and that SPD Precision was not interested in such secrets. It is plaintiff’s theory that singling out Bulova personnel for use of these apparently self-serving letters suggests awareness of the impropriety of hiring such personnel. A Bulova regional sales manager and a Bulova salesman stated that they were solicited by Segal after he left Bulova. McGann Affidavit at ¶ 2, Pierce Affidavit at ¶ 2. Another regional sales manager was solicited by Waldman. Donchin Affidavit at ¶ 2. During July and August, Moriya met four times with Lich, Bulova’s director of department store sales and its merchandising manager, and hired him for Seiko Time’s ongoing clock operations in early September, 1978. Codraro Affidavit at ¶ 21. Bulova contends that the concerted action of Hattori, Moriya and the other individual defendants caused serious dislocation and disruption at Bulova’s corporate headquarters. The departure of six high level employees is alleged to have damaged sales throughout the country and in New York, and to have contributed substantially to a decrease in sales of some $18 million. Codraro Affidavit at ¶ 22. C. Moriya’s Crucial Role Moriya joined Hattori in Japan in 1954 after finishing his schooling. Exhibit 5 to Defendants’ Memorandum in Relation to the Motion to Dismiss at 6, 7. He has never worked for any employer aside from Hattori or its American subsidiaries. Moriya Deposition at 90. As already noted, during the course of his employment with the American subsidiaries he simultaneously held the Hattori positions of Deputy Manager and Manager of the International Division and Manager of the Personnel Department. Exhibit 5 to Defendants’ Memorandum in Relation to the Motion to Dismiss at 6, 7. Nonetheless, defendants assert that while in the United States “he performed services for the United States subsidiaries and none for Hattori.” Defendants’ Letter Filed September 30, 1980 at 2. The court has not been able to see its way to reading the undisputed facts in such an unusual fashion. Common sense, which need not be banished from our reckoning, dictates the conclusion that while in the United States Moriya loyally performed substantial services for Hattori. Moriya was no mere liaison officer, and his assignment by Hattori was far from casual. He testified that both his tours were undertaken at the behest of his superiors at Hattori. He was sent first in 1967 when Hattori recognized the potential of America as a market for the sale of its watches, Moriya Deposition at 96, and he was ordered to New York “to take care of marketing.” Id. at 94-95. Moriya understood that his assignment was undertaken to further the interests of Hattori and he admitted that he endeavored to carry out this task. Id. at 96. Although he was employed by the Hattori subsidiaries he would not deny that he considered Mr. Unno of Hattori his superior. Id. at 98. While he was in New York as executive vice president of SCA’s corporate predecessor, Moriya apparently was instrumental in formulating the marketing strategy that enabled Hattori to establish a formidable position in the American market. Id. at 160-163. In 1969 he made the crucial recommendation that a network of independent distributors be established to obviate the need for slowly building up a direct sales network. Id. This decision was made jointly with Reijiro Hattori, second in command at Hattori. Moriya also testified that Hattori’s board of directors is the architect of the worldwide strategy of marketing Hattori products. Id. at 63. It seems plain from Moriya’s testimony that he was attempting to advance Hattori’s interests and its international marketing aims by formulating plans for the United States in cooperation with Reijiro Hattori and the Hattori Board. Even if we did not need to view the record in a light favorable to plaintiff, Loria & Weinhaus v. H.R. Kaminsky & Sons, 80 F.R.D. 494, 497 (S.D.N.Y.1978), motion granted, 495 F.Supp. 253 (S.D.N.Y.1980), there could be no doubt who Moriya’s true master was. It is beyond cavil that the establishment of a major presence in the American market is of critical importance to a firm like Hattori. See, generally, E. Vogel, Japan as Number One, 134-136 (1979) (Japanese firms usually prefer even to defer profits in order to maximize sales and market share); K. Haitani, The Japanese Economic System: An Institutional Overview, 93 (1976) (same). The establishment of such a posture required major marketing planning. Moriya was directly responsible for formulating and implementing that strategy, and at all times his primary allegiance was to Hattori. In 1975, Moriya was again assigned to New York as head of American operations. During his second term, as during his first, Moriya was intimately involved with developing a new marketing system permitting Hattori to sell its newly acquired Pulsar line and its clocks. Moriya testified that he was “organizing the clock department.” Moriya Deposition at 175. He decided to build up a direct sales force for the Pulsar line, Id. at 176, and he was directly involved in at least two of the hirings of Bulova personnel that are the subject of this action. Id. at 174, 177. Even the advertising for Seiko artfully suggests to the reader the lack of distinction between the manufacturer in Japan and United States subsidiary distributors. It speaks, for example, of “the watch you buy from us” after reference to care in manufacture. A recent advertisement for “Seiko” in a major department store in The New York Times included the following copy: * * * * * * There’s even a chance that the watch you buy is not a real Seiko at all, but an imitation or forgery designed to exploit Seiko’s popularity in the U.S. market. * * * * * * When Seiko produces a watch for the U.S. market, certain important identification must be stamped or engraved on the movement and the case. Seiko does that before final assembly, before final quality control testing. So the watch you buy from us is in mint condition, truly representing the best of Seiko technology and craftsmanship. s}: sje * $ * $ When the objective is just to make a sale, not necessarily to make a long-term customer, slick salespeople become more important than knowledgeable ones. And if you need any servicing, they’ll probably send you to Seiko. Seiko will give you great service of course, but if the watch is not covered by the valid Seiko warranty, you’ll have to pay for it. However, if you buy an obsolete watch, or one that’s not meant to be sold in the U.S. at all, don’t hold your breath while you’re waiting for parts. Because not even Seiko can inventory every part for every watch all the time. The N.Y. Times, Dec. 8, 1980, p. B6 (emphasis in original). We credit the affidavit of the present president of Seiko Time that he “personally devised” this advertising campaign, “without any consultation with any officer, director or other employee of Hattori.” Pliskin Affidavit of January 15, 1981 at ¶ 6. The reason for Seiko’s and Hattori’s concern was that Hattori was selling watches to third-country markets and these third countries were then shipping watches into the United States market as “parallel” exporters competing with Seiko Time which had to face discounters’ price cutting. In support of Seiko’s contention that the advertising indicated Seiko Time’s independence, there was submitted an article from the November 1980 issue of Jewelers’ Circular Keystone (p. 104), apparently a reputable journal in this field, describing the deleterious effects of this “parallel distribution pipeline” which accounted for nearly one million timepieces in 1979. What is interesting about this article is that it reveals how subtle and close is the cooperation between the United States subsidiaries and Hattori. To implement the American advertising campaign Hattori in Japan simultaneously took action by cutting down shipments to foreign countries in “efforts to tighten the spigot for parallel pipeline goods.” Id. The Keystone article notes that Seiko’s “$500,000 public relations campaign” is part of the Hattori-Seiko effort to stabilize the American market. Id. It is not credible that the Japanese head office— and Moriya in particular — was unaware of Hattori’s worldwide integrated policies reflected in Seiko’s American advertising copy. III. JURISDICTION OVER K. HATTORI & CO., LTD. In a diversity action such as this, the question of personal jurisdiction is determined in accordance with the law of the state in which the court sits. Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir. 1963); Wright and Miller, Federal Practice and Procedure: Civil § 1075, n.50. We need not consider whether the Arrow-smith limitation on federal jurisdiction is reasonable in a controversy with national and international implications, or whether a question such as the one we now face should be addressed through nationwide service of process and adjustment of venue by “transfer to the most convenient forum” —a matter for Congress rather than the courts. C.A. Wright, Law of Federal Courts, 303-305 (3d ed. 1976). Here New York in personam jurisdictional bases suffice to support federal personal jurisdiction and New York is a convenient forum. A. Doing Business, N.Y. CPLR 301 1. The Law CPLR 301 permits the exercise of such jurisdiction over “persons, property, or status as might have been exercised heretofore.” It confers personal jurisdiction over unlicensed foreign corporations that are “doing business” in New York. Simonson v. International Bank, 14 N.Y.2d 281, 251 N.Y.S.2d 433, 200 N.E.2d 427 (1964); Bryant v. Finnish National Airline, 15 N.Y.2d 426, 260 N.Y.S.2d 625, 208 N.E.2d 439 (1965). The definition of “doing business” has been variously stated, but the common denominator is that the corporation is operating within the state “not occasionally or casually, but with a fair measure of permanence and continuity.” Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915, 917 (1917); see, also, Liquid Carriers Corp. v. American Marine Corp., 375 F.2d 951, 953 (2d Cir. 1967) (doing business in New York is carrying out systematic and regular activity within the state); Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533, 536, 281 N.Y.S.2d 41, 43, 227 N.E.2d 851, 853, remittitur amended, 20 N.Y.2d 737, 283 N.Y.S.2d 99, 229 N.E.2d 696, cert. denied, 389 U.S. 923, 88 S.Ct. 241, 19 L.Ed.2d 266 (1967) (“continuous and systematic course” of doing business). It is no longer a matter of doubt that a foreign corporation can do business in New York through its employees, Bryant v. Finnish National Airline, 15 N.Y.2d 426, 260 N.Y.S.2d 625, 208 N.E.2d 439 (1965); Scanapico v. Richmond, Fredericksburg & Potomac R. Co., 439 F.2d 17, aff’d en banc, 439 F.2d 25 (2d Cir. 1972), or through independent agents. Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 121 (2d Cir. 1967), cert. denied, 390 U.S. 996, 88 S.Ct. 1198, 20 L.Ed.2d 95 (1968). Equally settled is the concept that a corporation may be amenable to New York personal jurisdiction when the systematic activities of a subsidiary in this state may fairly be attributed to the parent. The line of cases from Taca International Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d 97, 256 N.Y.S.2d 129, 204 N.E.2d 329 (1965), through Public Administrator of New York County v. Royal Bank of Canada, 19 N.Y.2d 127, 278 N.Y.S.2d 378, 224 N.E.2d 877 (1967), and Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533, 281 N.Y.S.2d 41, 227 N.E.2d 851 (1967), establishes the rule that a foreign corporation does business in New York if its affiliated company is in effect a "local department separately incorporated,” Taca International Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d at 102, 256 N.Y.S.2d at 132, 204 N.E.2d at 331, or it acts as agent by “do[ing] all the business which [the principal] could do were it here by its own officials.” Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d at 537, 281 N.Y.S.2d at 44, 227 N.E.2d at 854; Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d at 121 (independent representative was acting as agent for purposes of the statute). The parent-subsidiary relationship has not in itself been treated as sufficient to establish personal jurisdiction over the foreign parent. Saraceno v. S.C. Johnson & Son, Inc., 83 F.R.D. 65 (S.D.N.Y.1979) (100% owned subsidiary); Baird v. Day & Zimmerman, Inc., 390 F.Supp. 883 (S.D.N.Y.1974) (82% owned subsidiary); Restatement (Second) of Conflicts § 52, Comment b (1971). Some additional factor has been needed. Top Form Mills v. Sociedad National Ind., Etc., 428 F.Supp. 1237, 1242 (S.D. N.Y.1977). Such circumstances include direct and indirect control of the local distributor, Delagi v. Volkswagenwerk AG of Wolfsburg, 29 N.Y.2d 426, 432, 328 N.Y.S.2d 653, 657, 278 N.E.2d 895, 897 (1972), treating the subsidiary as an “incorporated division”, Titu-Serban Ionescu v. E.F. Hutton & Co., 434 F.Supp. 80 (S.D.N.Y. 1977), aff’d without opinion, 636 F.2d 1202 (2nd Cir. 1980), as an agent or as both, Tokyo Boeki (U.S.A.), Inc. v. SS Navarino, 324 F.Supp. 361, 366 (S.D.N.Y.1971). One scholarly analysis suggests that the cases should be read as treating the principal and subsidiary as one for jurisdictional purposes where parent and subsidiary are part of a “single economic entity.” See, generally, Wellborn, Subsidiary Corporations in New York: When is Mere Ownership Enough to Establish Jurisdiction over the Parent, 22 Buffalo L.Rev. 681 (1973) (criticizing the need to show more than “mere ownership”). Much depends on details of the relationship as is indicated by the detailed analysis in Part III A 5, infra, of Saraceno v. S.C. Johnson & Son, Inc., 83 F.R.D. 65 (S.D.N.Y. 1979) and Marantis v. Dolphin Aviation, Inc., 453 F.Supp. 803 (S.D.N.Y.1978). The two tests that have been utilized in determining the closeness of the economic connection both look to realities rather than to formal relationships. The parent corporations will be found to be present in New York: “First, if the relationship between the foreign parents and local subsidiaries gives rise to a ‘valid inference’ of an agency relationship;” and second, “if control by the parent of the subsidiary is ‘so complete that the subsidiary is, in fact, merely a department of the parent’ ”. Freeman v. Gordon & Breach, Science Publishers, Inc., 398 F.Supp. 519, 522 (S.D.N.Y.1975), quoting Sunrise Toyota, Ltd. v. Toyota Motor Co., 55 F.R.D. 519, 528 (S.D.N.Y.1972). Although the “agency” and “mere department” theories of jurisdiction are stated as separate principles, it should be clear from the mass of cases dealing with this problem that a line cannot be simply drawn between the two. See, e. g., Tokyo Boeki (U.S.A.), Inc. v. SS Navarino, 324 F.Supp. 361, 366 (S.D.N.Y.1971) (subsidiary was the same entity as parent for some purposes and its agent for others); Delagi v. Volkswagenwerk AG of Wolfsburg, 29 N.Y.2d 426, 432, 328 N.Y.S.2d 653, 657, 278 N.E.2d 895, 897 (1972) (dictum that control over agent-subsidiary must be such as to render it a mere department of parent). The apparently distinct notions are metonyms for a jurisdictional balancing assessing the fairness of requiring an out-of-state party to defend itself in New York when it derives benefits from in-state activities. The factors to be weighed include the significance of the New York business to the defendant’s overall activities. See Marantis v. Dolphin Aviation, Inc., 453 F.Supp. 803, 807 (S.D.N.Y.1978). While “litigation in a foreign jurisdiction is a burdensome inconvenience for any company, in the appropriate case, where defendant’s activities abroad, either directly or through an agent, become as widespread and energetic as the activities in New York conducted by [defendant],” Frummer v. Hilton Hotels Interna tional, Inc., 19 N.Y.2d 533, 539, 281 N.Y.S.2d 41, 45, 227 N.E.2d 851, 854 (1967), such litigation is “part of the price which may be properly demanded of those who extensively engage in international trade.” Id. A New York subsidiary of a Japanese parent could — and no doubt would — invoke whatever rights its parent had under applicable Japanese-American treaties. This would be so even though the subsidiaries were actually New York, not Japanese entities. See Avigliano v. Sumitomo Shoji America, Inc., 638 F.2d 552, 556 (2d Cir. 1981) (“To hold that the Japanese business enterprise forfeits its rights under the Treaty merely because it chooses to function through a wholly-owned locally-incorporated subsidiary would in our view disregard substance for form... ”). It would be unfair as well as paradoxical if the parent could transfer to its subsidiaries benefits without shouldering the corresponding burdens. The test of whether a foreign corporation does business here has been said to be a “simple pragmatic” one, Bryant v. Finnish National Airline, 15 N.Y.2d 426, 432, 260 N.Y.S.2d 625, 629, 208 N.E.2d 439, 441 (1965); Carbone v. Fort Erie Jockey Club, Ltd., 47 A.D.2d 337, 339, 366 N.Y.S.2d 485, 487 (4th Dep’t 1975), but the problem with that classic formulation is that simplicity and pragmatism are, more often than not, mutually exclusive. Thus, it would often be a simple solution to find for a defendant on the basis of the relatively immaculate formal separation it has engineered between itself and its subsidiaries. But the pragmatic command of CPLR 301 emphatically rejects such niceties of etiquette. The realities and not the formalities must be dealt with. Boryk v. deHavilland Aircraft Co., 341 F.2d 666, 669 (2d Cir. 1965). 2. Multinational Operations in General When Cardozo enunciated the standard for doing business in New York, Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915, 917 (1917), there would have been little need to consider how, or whether, a foreign-based multinational enterprise would be found to be doing business in New York. For one thing, the term “multinational firm,” so common in today’s parlance, was first used only in 1960. Aharoni, On the Definition of a Multinational Corporation, in The Multinational Enterprise in Transition, 4 (A. Kapoor and P. Grub, eds. 1972). For another, it was not until after World War II that the phenomenon of the multinational enterprise, as we now know it, became a major factor in the world scene. P. Buckley and M. Casson, The Future of the Multinational Enterprise, 1 (1976). Since then tens of. thousands of subsidiaries have been created or acquired by parent enterprises located in other countries. R. Vernon, The Economic Environment of International Business, 200 (1972). By 1972 it was estimated that in a world that produced about $3,000 billion of goods and services a year, something like one-eighth of the output moved across international boundaries. Id. at 3. In that same year the value of American investments abroad was $94 billion. N. Fatemi and G. Williams, Multinational Corporations: The Problems and the Prospects, 20 (1975). After the Second World War investment in the United States by foreign parent companies also expanded tremendously so that by the early 1970s non-United States corporations owned more than seven hundred “major manufacturing enterprises” in this country. R. Barnet and R. Muller, Global Reach, 27 (1974). Direct foreign investment, defined as ownership by foreign parents of at least ten percent of the equity of an American enterprise, was $3.4 billion at the start of the 1950s, $6.6 billion in 1959 and $26.5 billion by 1974. U.S. Department of Commerce, Foreign Direct Investment in the United States, 4,11 (1976). Total assets of foreign-owned affiliates in the United States in 1974 were $174.3 billion, of which more than one-fifth was Japanese-owned. Id. at xiii. These trends have accelerated. The vehicles of this modern international economic growth were and are the multinational enterprises. Their size is often awesome: the annual sales of General Motors exceeded the gross national products of Switzerland, Pakistan, or South Africa. R. Barnet and R. Muller, Global Reach, 15 (1974). The phenomenon of penetration into the economies of distant areas can be traced through artifacts back into pre-history. But the current situation is in many respects quite different in the sophisticated organizational and legal techniques utilized from even that of earlier periods in American history when foreign financing made so much of our industrial and commercial expansion possible and when American companies like Singer, the American sewing machine company, established manufacturing plants abroad. M. Wilkins, The Emergence of Multinational Enterprise: American Business Abroad from the Colonial Era to 1914, 37 ff. (1970); R. Vernon, The Economic Environment of Business, 203 (1972). Aside from their magnitude, today’s mulmultinationals are unique in the way vast investments in myriad locations are made to serve the interests of a single organization. Large advantages lie in the possibility of making centralized management and investment decisions on the basis of the situations and opportunities prevailing in various host countries. R. Hellmann, Transnational Control of Multinational Corporations, 6 (1977); Hadari, The Structure of the Private Multinational Enterprise, 71 Mich.L.Rev. 729, 749 (1973); Vagts, The Multinational Enterprise: A New Challenge for Transnational Law, 83 Harv.L. Rev. 739, 746 (1970). Such an organization has the resources and scope to plan and to utilize world-wide markets and resources. N. Fatemi and G. Williams, Multinational Corporations: The Problems and the Prospects, 58 (1975). The profit motivation for international expansion is common to multinationals. See United States Department of Commerce, Foreign Direct Investment in the United States, 97 (1976) (basic reason investments outside home countries are made is search for profits); C. Kindleberger, American Business Abroad, 8 (1969) (“like Monsieur Jourdain in Moliére’s Le Bourgeois Gentilhomme who spoke prose all his life without having been aware of it, [businessmen] doubtless maximize profits rather than merely follow markets”); but cf. R. Vernon, The Economic Environment of International Business, 200 (1972) (studies indicate decisions to invest abroad have little structure or rationality). Nevertheless, the means by which the multinational exercises control over its far-flung elements vary. The degree and nature of control may depend upon the nationality of the corporate parent. R. Vernon, The Economic Environment of International Business, 10 (1972) (European and Japanese enterprises preserve signs of their origins in banking and trading); Business International, Managing the Multinationals: Preparing for Tomorrow, 116 (1971) (U.S. based firms more centralized than European counterparts). The formal structure of the parent’s form of ownership also has control implications. Choice among the various corporate modes of entering a market, e. g., by means of licensing arrangement, joint venture, minority-, majority- or wholly-owned subsidiary, has very significant implications for the control exercised by the parent. R. Vernon, The Economic Environment of International Business, 214 (1972). Utilization of a wholly-owned marketing-based subsidiary is found where “the .. . retention of unambiguous control of foreign operations is critical to the firm’s strategy.” J. Stopford and L. Wells, Jr., Managing the Multinational Enterprise: Organization of the Firm and Ownership of Subsidiaries, 107 (1972) (most of the sales subsidiaries of the multinationals were wholly-owned in 1966). The decision of marketing-oriented firms to choose wholly-owned subsidiaries means that they can exercise more control over their foreign operation in subtle, indirect ways as well as directly. Id. at 112. Another criterion that will determine the “corporate intimacy” joining a parent and its subsidiary, Marantis v. Dolphin Aviation, Inc., 453 F.Supp. 803, 805 (S.D.N.Y.1978), is the type and range of products being sold. Enterprises with narrow product lines tend to organize their operations on a highly integrated basis, linking production and marketing into tight strategic patterns. R. Vernon, The Economic Environment of International Business, 231 (1972). While Hattori manufactures a number of products, the overwhelming concern of its American marketing operation is with its timepieces — constituting ninety percent of its total production by value. Thus sales subsidiaries tend to be under especially close control where a company produces a limited number of products. In such a case the company has a higher stake in the maintenance of quality standards, a higher sense of risk in sharing its technology with others, a higher need for a centralized marketing strategy.... The strategy of [these] 'firms, therefore, requires relatively tight controls. R. Vernon, The Economic Environment of International Business, 219 (1972). Finally, a crucial factor in the degree of control over the subsidiary is the age of the subsidiary and the extent to which the subsidiary has been able to develop independently of its parent. A leading scholar of international trade distinguishes multinational firms from national firms with foreign operations: “A multinational firm starts out like a national firm with foreign operations, but after time each national operation takes on a life of its own.” C. Kindleberger, American Business Abroad, 183 (1969). The history of modern international business enterprise is largely the history of just this development from a national firm with foreign sales operations, to the truly multinational firm with quasi-independent component entities. See M. Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970, 411-439 (1974). An important question in assessing presence for jurisdictional purposes is whether a multinational has reached a state in its evolution when it can be said that its sales and marketing subsidiaries truly have a “life of their own.” C. Kindleberger, American Business Abroad, 183 (1969). Although such an organization can generally be defined as “an enterprise which owns ánd controls activities in different countries,” P. Buckley and M. Casson, The Future of the Multinational Enterprises, 1 (1976), it is clear that there are distinct differences between a company like Unilever, with many manufacturing subsidiaries in dozens of countries; a company like Trans World Airlines, which also operates in dozens of countries, but with distinctly different operations; a company like Bethlehem Steel, with mining operations in seven countries, all supporting the company’s manufacturing activities in the United States; a company like Gulf Oil Company, which owns and operates oil fields in several countries and transports and markets oil; and a company like Rolls Royce or Omega watches, with manufacturing operations in one country, but export network and sales and services outlets all over the world. Whether or not we wish to call all these companies multinational, there are notable differences.. . Aharoni, On the Definition of a Multinational Corporation, in The Multinational Enterprise in Transition, 15-16 (A. Kapoor and P. Grub eds. 1972). The expanding multinational generally traverses a number of stages. At first it exports its goods to markets abroad, next it establishes sales organizations abroad, then it may license the use of its patents, and finally it may establish foreign manufacturing facilities. At a later stage it may “multinationalize its management and, ultimately, multinationalize the ownership of its stock.” Jacoby, The Multinational Corporation, in The Multinational Enterprise in Transition, 22 (A. Kapoor and P. Grub eds. 1972). While many thousands of corporations are at the first, export stage, only a handful have developed into advanced multinational enterprises each of whose elements can be said to be significant in its own right. After World War II, foreign companies gained familiarity with the United States market “by first exporting to this country; then, after achieving acceptance for their products, foreign firms set up manufacturing or assembly plants here.” U.S. Department of Commerce, Foreign Direct Investment in the United States, 100 (1976). As these later stages were reached, the businesses established came to have lives of their own. The “monocentric” enterprise gradually gave way to a polycentric one, with more autonomy in the different elements. Wilkins detects three stages: in the first stage, the firm “reached out to sell or to obtain and in doing so felt the necessity or saw the opportunity to cross over domestic boundaries.” M. Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970, 416 (1974). The relationship was “monocentric” with the center of operations clearly in the parent’s home country. The external activities in a monocentric relationship were “spokes on a wheel, with the parent company at the hub.” Id. In stage two, the functions of the branches broadened. There might, for example, be investment by the subsidiary in a plant for local production or the subsidiary might sell products in third-country markets. “What characterizes stage two is the presence of foreign units that have developed their own separate histories and their own satellite activities.” Id. at 417. The final, third, stage is characteristic of the most advanced of these entities: It garbles any chart’s attempt to delineate international trade and control lines. The parent company comes to have a number of foreign multifunctional centers, serving overlapping geographical areas with various products. Supply and market lines cross international boundaries in ... chaotic confusion.... Id. at 419. Over time, certain foreign subsidiaries and affiliates have become full-fledged, fully integrated, multiprocess, multiproduct enterprises, with engineering, product planning and research staffs, with a continuity of employee, supplier, dealer, consumer and banking relationships, with their own prominent role in foreign industries, with their own dealings with foreign governments and with their own third-country investments. Id. at 420-421. At this final stage, complicated, many-faceted relationships have replaced simple bilateral connections. Id. at 421. 3. Japanese Multinationals in General Hattori, like many Japanese export-based multinationals, remains in large part a monocentric organization so far as involves the United States. It is only in the past decade that Japanese firms have invested in manufacturing and other non-marketing investments in this country. M. Yoshino, Japan’s Multinational Enterprises, 1 (1976); R. Tindall, Multinational Enterprises, 36 (1972) (“prior to 1970 there was little talk about Japanese companies as multinational enterprises”). This relative lateness results from several causes. Although in the 1930s Japan began to develop a thriving trade in Asia and ranked fourth worldwide in volume of export, G. Allen, Japan’s Economic Expansion, 227 (1965), the Second World War crippled Japan’s foreign trade. It was the late 1950s before pre-war trade levels were again attained. Id. at 233. See, also, P. Buckley and M. Casson, The Future of the Multinational Enterprises, 7 (1976) (graphic representation of the date of establishment of Japanese-owned subsidiaries). Another reason that the Japanese multinationals have been monocentric in focus is that they were the great Zaibatsu trading companies that traditionally functioned as commission distributors of merchandise. It was only in the 1960s that the large Japanese manufacturers first began to market their own products. K. Haitani, The Japanese Economic System: An Institutional Overview, 129 (1976). Foreign direct investment by Japan in the West was historically late in coming and was generally re-, stricted to sales and marketing activities. See U.S. Department of Commerce, Foreign Direct Investment in the United States, 109 (1976) (Japan’s success in exporting to the United States obviated need to make direct investments except in sales facilities). The boom in Japanese exports after the post-World War II recovery brought with it the incorporation of hundreds of sales subsidiaries abroad. Whereas prior to the War exports to the United States were largely commodities such as silk, tea, fish and textiles, after the Japanese recovery exports included highly sophisticated manufactured goods. G. Allen, Japan’s Economic Expansion, 236 (1965). These goods needed the kind of marketing and service apparatus that the huge trading companies were not able to provide. M. Yoshino, Japan’s Multi national Enterprises, 118 (1976). As a result, between 1952 and 1973, fifty leading firms dealing in automobiles, motorcycles, electrical machinery, precision instruments, non-electrical machinery and other products established over three hundred sales subsidiaries in major export markets to perform marketing and technical tasks. In view of the requirement for close control over marketing and technical activities as well as for frequent communication between the local unit and headquarters it is not surprising that nearly 71% of these subsidiaries were wholly-owned. Id. at 19. Activities of these Japanese-controlled sales and marketing affiliates accounted for approximately ten billion dollars of trade between the United States and Japan in 1974. U.S. Department of Commerce, Foreign Direct Investment in the United States, 39 (1976). Japanese exports to the United States in calendar year 1979 were well over twenty-six billion dollars and they continued to increase in 1980. United States Department of Commerce Statistics. While sales and marketing subsidiaries generally are more likely to be controlled by the parent and less likely to develop lives of their own than those involved in manufacturing, Japanese subsidiaries in particular may be singularly responsive to the wishes of their parent companies. Defendants draw the court’s attention to cultural differences that distinguish the multinationals of different parent countries. Defendants’ Memorandum in Relation to the Motion to Dismiss at 20-23. They contend that the Japanese preference for minority equity positions in direct foreign investment indicates loose control by Japanese parents of their subsidiaries. Id. at 20. See, also, M. Duerr and J. Roach, Organization and Control of International Operations 125 (1975). This argument as to Japanese preference for minority ownership of subsidiaries cuts against defendants’ position, since sales subsidiaries generally, and Hattori’s sales and marketing subsidiaries in particular, are wholly-owned. On defendants’ view of the matter this would presumably speak for a desire to maintain even greater control than would usually be the case. 4. Japanese Hierarchical Structures Significant in terms of cultural considerations that seem to affect real economic power relationships relevant to jurisdiction is the widely-noted hierarchical structure that joins the Japanese subsidiary to its parent, and the Japanese employee to his or her employer. In Japan subsidiaries are commonly referred to as ko-gaisha (child company) in relation to oya-gaisha (parent). “The use of the words ‘parent’ and ‘child’ suggests the existence of a familial relationship of control and dependency.” K. Haitani, The Japanese Economic System: An Institutional Overview, 126 (1976); see, also, M. Yoshino, Japan’s Multinational Enterprises, 169 (1976) (tendency of parent to impose its will on subsidiary because of strong Japanese sense of hierarchy); R. Tindall, Multinational Enterprises, 38 ff. (1972) (description of parent-subsidiary relations among Mitsubishi group of companies). Thus, quite apart from the matter of one hundred percent stock ownership, a Japanese parent may expect to exert control over any of its child companies. The sense of hierarchy is apparently to be found in typical employee-employer relations as well. An inferior in Japanese social organization is “conditioned to attribute authority to the wishes of his superior .... The subordinate is extremely conscious of his standing in the group.” K. Haitani, The Japanese Economic System: An Institutional Overview, 92 (1976). Although the precise systems of control may differ from those found in Western organizations, Defendants’ Memorandum in Relation to the Motion to Dismiss at 21, this cannot mean that control is any the less pervasive. Those reared in the tradition of American corporate culture cannot help wondering how Japanese organizations maintain their vigor and productivity in the absence of a formal control mechanism and an explicit system of performance evaluation supported by immediate financial reward. The answer is that the Japanese corporation relies on — and consciously fosters — emotional commitment to the organization by the employee at every level. M. Yoshino, Japan’s Multinational Enterprises, 166 (1976). Decision-making is often done on a group basis; this strengthens, not weakens, the sense of employee loyalty to his employer. See, generally, E. Vogel, Japan as Number One, 146 (1979). Decision-making is also apparently widely diffused, rather than decentralized, throughout the organization. M. Yoshino, Japan’s Managerial System: Tradition and Innovation, 258 (1968). The Japanese corporate employer reinforces the loyalty of its employees by the “implicit guarantee of lifetime security;” this ensures not only his technical and professional loyalty, “but more important, his emotional tie to the firm.” M. Yoshino, Japan’s Multinational Enterprises, 163 (1976). Under the shukko system, an employee may be assigned to another employer or to a subsidiary. While on external assignment the employee keeps his “security in, and identity with” his original employer. K. Haitani, The Japanese Economic System: An Institutional Overview, 46 (1976). Thus, for example, new government agencies in Japan may be staffed with employees of another agency. However, “until the homegrown careermen rise through the ranks, the key positions in the new agency are monopolized by the shukko ‘colonists’ and the agency is subjected to external controls exerted through them.” Id. at 46-47. 5. Application of Law to Facts Moving defendants place great stock in the formal separation of Hattori from its 100% directly-owned subsidiary and its 100% indirectly-owned subsidiaries. They state that the subsidiaries do not receive loans from the parent, Moriya Affidavit of May 13, 1980 at 13(b), that they generally buy from the parent by letter of credit posted with a Japanese bank abroad, Id. at 13(d), that they do their own advertising (although at times they participate in promotions organized by Hattori), Id. at 13(f), and that the parent has no bank account, office or phone listing in New York, is not licensed to do business here, Id. at 13(i), does not assign its “salaried employees” to New York, Id. at 13(h), and is not involved in the personnel policies or the hiring of personnel by its New York subsidiaries. Id. at 13(g). Plaintiff, on the other hand, points to the complete stock ownership by the parent and additionally draws our attention to the interchange and overlap of directors and officers between parent and subsidiaries, Exhibit 2 to Codraro Affidavit, to the fact that intercompany loans are made to other Hat-tori subsidiaries and are assertedly available, if needed, to the New York subsidiaries, Plaintiff’s Supplemental Memorandum at 4, that the financial statements of the New York subsidiaries are consolidated in Hattori’s reports filed under the securities and exchange law of Japan, and that unrealized profits and losses arising from sales among the consolidated companies are eliminated in the financial statements. Id. at 6. It also