The Long-Arm of the (NY) Law

June 17, 2009

So lately I’ve been thinking today about NY state longarm jurisdiction.  This article is certainly is provocatively titled — if somewhat misleading so — Does E-Mailing a New Yorker Give the State Jurisdiction Over You?

Well, not really…

New York’s long-arm statute provides that “a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state or contracts anywhere to supply goods or services in the state… By this ” ‘single act statute’ . . . proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant’s activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted[.] (Deutsche Bank v. Montana Board of Investments, 7 N.Y.3d 71)

However the long-arm is not long enough to reach to defendants in civil suits with no physical presence in the state of New York.  

For Example, Judge Edward H. Lehner rejected an assertion of jurisdiction over a nonresident defendant where the parties’ negotiations were conducted via telephone and email, because the defendant was not physically present in New York and its performance under the agreement took place outside of New York. Hospitality Int’l, Inc. v. Hotels Unlimited, Inc. Index No. 109609/08 (Sup. Ct. N.Y. Co. Feb. 25, 2009). Norman C. Simon and Samantha V. Ettari,“You’ve Got Mail!” Can Sending An Email Be Enough To Establish Personal Jurisdiction? The Metropolitan Corporate Counsel 6 (June 2009).

Nonetheless, the long arm can reach as far as the Republic of Mexico and the Low Countries, even when the defendant has no physical presence in the state, so long as there is a “substantial relationship” between the business transacted and the cause of action.

While we’re on the subject, here is an interesting read: 

Long Arm Jurisdiction for Lawyer’s Fees for Out-of-State Services

 

Fischbarg is also an interesting application of CPLR 302(a)(1), which permits long arm jurisdiction over a non-resident for a cause of action that arises out of a transaction of business in New York.  In Fischbarg, a California resident and corporation retained a New York lawyer to commence an action against an Oregon corporation in United States District Court for the District of Oregon, where he obtained admission pro hac vice.  The plaintiff’s attorney never physically went to Oregon, conducting hearings, depositions and the like by telephone, and the California clients never came to New York, communicating by telephone, e-mail, mail and facsimile.  During the course of the Oregon litigation, a fee dispute arose between the attorney and the clients, and the attorney resigned.  After the clients settled the Oregon lawsuit, the attorney sued  in New York for his fees, and the clients disputed New York’s personal jurisdiction over them. The Supreme Court upheld personal jurisdiction, and the First Department, in a three-two split decision, upheld personal jurisdiction.  The dissent at the First Department viewed the New York attorney as taking advantage of his own contacts with New York to create jurisdiction.

 

The Court of Appeals sided with the attorney and upheld personal jurisdiction under CPLR 302(a)(1). In doing so, the Court agreed that a plaintiff seeking to use CPLR 302(a)(1) cannot use his or her own activities to create the transaction of business. However, contacts initiated by the clients were enough to constitute a transaction of business. The clients had sought out the attorney in New York, established an ongoing attorney-client relationship there, and communicated with him there.  “Not all purposeful activity,” held the Court, “constitutes the “transaction of business’ in New York within the meaning of CPLR 302(a)“; rather it is the “the quality of the defendants’ New York contacts that is the primary consideration.” The quality of the clients’ conduct crossed the threshold.

Likewise, as was the case last year in Deutsche Bank Securities, Inc. v. Montana Board of Investors, the clients in Fischbarg never physically entered New York. Physical presence, pointed out the Court, is “immaterial.” Phone calls, e-mail and mail can be enough, and in Fischbarg, the clients “projected themselves into our state’s legal services market.”

The Court also addressed whether or not the cause of action arose out of a transaction of business in New York even though the claim was for legal services rendered in the Oregon action. In the view of the Court, since the clients’ communications to New York were integral to the cause of action for fees, i.e. those communications formed the attorney-client relationship out of which the fees were earned, the cause of action did arise out of that transaction. In the words of the Court, the clients’ contact with the forum “formed the basis of this action and, indeed, plaintiff’s claims for legal fees are directly dependent upon them.”

2006-2007 SURVEY OF NEW YORK LAW: ARTICLE: CIVIL PRACTICE 58 Syracuse L. Rev. 713, 741-742 (2008)

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