Wednesday, December 29, 2010

New York Law Journal Article re: SDNY Jurisdiction Based on Websites

SDNY Local Counsel author, Luke McGrath, and our contributing correspondent, Prof. Robert Pfeffer, were recently featured in the December 17, 2010 edition of the New York Law Journal. 

The Article, entitled, Jurisdiction.com:  New York's Longest Arm Yet?, discusses the recent Second Circuit decision, Chloe v. Queen Bee of Beverly Hills, LLC,  No. 09-3361-cv, __ F.3d __ 2010, WL 3035495 (Aug. 5, 2010).  Our authors posit that, after Chloe, case law in New York is now consistent:  there is clearly long-arm jurisdiction based upon "active" websites and clearly no such jurisdiction based purely on passive websites that allow no user interaction and are no more than a web-based image containing information (which, for example, do not allow a user to input information, or purchase merchandise or services).

A copy of the article (copyright The New York Law Journal), is available on-line from the New York Law Journal:  http://www.law.com/jsp/nylj/index.jsp

SDNY Local Counsel and Prof. Pfeffer will post further offerings on jurisdictional issues in the future.

Wednesday, October 27, 2010

U.S. Supreme Court Watch On Personal Jurisdiction From Prof. Pfeffer

Below is a much appreciated contribution from our friend of the SDNY Local Counsel, Prof. Robert Pfeffer.  This post focuses on the personal jurisdiction cases currently pending before the Supreme Court.

Civil litigators should take note of two personal jurisdiction cases in which the Supreme Court has taken certiorari in the upcoming term.  No argument date has been scheduled, but the cases will be argued, and opinons will be issued, by the time the Court completes in term in June 2011. The decisions being reviewed originated from the New Jersey Supreme Court and the North Carolina intermediate appellate court.  These courts that may not be considered "local" to SDNY, but the ramifications of these Supreme Court decisons may be felt in New York and throughout the country.  The current holdings take a more extensive view of jurisdiction than any Supreme Court case ever has.

The New Jersey case:  J. McIntyre Machinery Ltd. v. Nicastro, U.S., No. 09-1343 (certiorari petition granted 9/28/10).

The issue presented here was last addressed by the US Supreme Court in Asahi, but that case did not generate a majority theory on the extent to which stream of commerce theory could support personal jurisdiction consistent with the due process clause of the Fourteenth Amendment. Rather it generated two competing four justice pluralities (the court did reach a majority on the theory that there was no personal jurisdiciton because the only remaining parties were both non-US companies that were adjudicating the issue of indemnity -- the American plaintiff having settled its suit). Brennan, writing for four justices, concluded that placing a product in the stream of commerce with the expectation that it would end up in a given state was sufficient for the exercise of jurisdiction under the due process clause. O'Connor, writing for four justices, concluded that there needed to be both placement with knowledge and additional activity directed toward the forum state (sometimes called stream of commerce "plus"). The New Jersey lower-court opinion finds jurisdiction on a bases that is beyond either what Brennan's or O'Connor's opinions discussed, namely based upon placing a product with a national distributor and having that product cause injury in a given state, even if the defendant did not know that the product was being distributed in that state, and where there was no evidence that any of defendant’s products other than the one machine that allegedly caused plaintiff’s injury were distributed in New Jersey.” The Supreme Court's ruling on this case should be of particular interest to plaintiffs counsel seeking to sue non-US entities in tort or to those who defend foreign companies. The case also has broader implications for jurisdiction in all commercial cases involving large corporate defendants.

The North Carolina case:  Goodyear Luxembourg Tires SA v. Brown, U.S., No. 10-76 (certiorari petition granted 9/28/10) [link to case:  http://www.aoc.state.nc.us/www/public/coa/opinions/2009/pdf/080944-1.pdf ]

This case involves general jurisdiction -- situations in which the suit does NOT arise from the defendant's contacts with a state.  The Supreme Court has indicated that for the exercise of general jurisdiction to be constitutional, that the contacts with a given state must be quite extensive.  Interstingly, the Supreme Court has only upheld the exercise of general jurisdiction once, in the Perkins case.  The North Carolina court concluded that a defendant's sale of tires in a state was enough to subject that defendant to jurisdiction in the state in a case involving an accident that occurred in France due to allegedly defective tires that apparently had nothing to do with North Carolina. The Supreme Court's ruling in this case will have implications for any commericial defendants who have a large volume of sales of a product or service in a given state or througout the United States. In particular, should the Supreme Court affirm the North Carolina court's decision, commercial defendants would arguably be subject to suit to in any state in which it sold goods or services even if the plaintiff's suit is unrelated to those sales, and even if the plaintiff itself has no connection to that state. That result would therefore be a dream-come-true for plaintiff's who wish to shop for a plaintiff's friendly forum, and a nightmare for defendant's seeking to avoid those forums.

Since most of the justices currently on the U.S. Supreme Court were not there the last time the Supreme Court undertook jurisdiction (Roberts, Alito, Thomas, Breyer, Ginsberg, Sotomayer and Kagan were not there) it is hard to predict how the Court will rule in these cases.

Here is a link that will allow one to open the full-text of these opinions

http://www.masstortdefense.com/2010/10/articles/supreme-court-grants-cert-in-important-personal-jurisdiction-cases/

Prof. Pfeffer is a visiting associate professor at the University of Alabama School of Law teaching Civil Procedure, Contracts, Sales, and Criminal Procedure.  Please look for additional blog entries from Mr. McGrath and Prof. Pfeffer on SDNY Local Counsel Blog as these cases are argued and decisions are issued.

Tuesday, October 19, 2010

Ensuring Proper Discovery Responses That Are Also Cost-Effective

In keeping with SDNY Local Counsel’s commitment to provide insight into the most talked about issues facing litigants in New York today, SDNY Local Counsel will sponsor and post discussions regarding cost-effective and fool-safe procedures to ensure full compliance with discovery requirements in state and federal courts.

Stay tuned ...

Friday, September 17, 2010

Tabor House Event a Success -- Please Support Tabor House

We had a successful fund-raising effort for the Tabor House last night. 

Tabor House is a halfway house providing support for men who are seeking to regain the dignity lost by addiction. 

Tabor House has a 75% sobriety success-rate for five years out of the house -- this is an astonishing success-rate.  George Rose, Head of Operations for the New York Yankee organization in Japan, is one of the founders and the McGrath Family and my firm Dunnington, Bartholow & Miller (special thanks to Ray Dowd and Carol Sigmund) threw in their support for George and the event. 

Yankee GM Brian Cashman gave a Q&A and a good time was had by all ... proving that doing well by doing good is a great way to practice in law, in baseball and in life!

To support Tabor House please visit   http://www.taborhouse.org/Tabor_House/Welcome.html

Monday, June 14, 2010

The Case of the Resort Condo: New York's Long-Arm of the Law[*]

In case anyone was wondering, yes, you may be haled** into a New York Court for your actions outside of New York, relating to subject matter outside New York.

For example, if a New York resident purchases a condo outside of the United States by flying to the location of the condo and purchasing it (i.e. signing the contract) at that location, the New York resident may still be able to sue in New York.  Unless the contract specifically provides for a venue (for example, expressly stating all lawsuits arising from the purchase or sale will be brought in a specific jurisdiction outside New York) the developer or operator of the condo-hotel property may be sued in New York, even if the developer and operator do not consider themselves to be conducting any business activity in New York.

New York cases on this point are all over the map.  Unlike other states in which the long-arm statute expressly allows jurisdiction to the extent constitutionally permissible (like California, for example), the New York long-arm statute is narrower than the due process clause of the United States Consitution.  Personal jurisdiciton cases in New York (including most cases in the four federal district courts in New York, see FRCP 4(k)) generally focus upon whether the exercise of jurisdiciton is allowed by NY CPLR 302.  If jurisdiction is not consistent with that provision, then a New York court cannot exercise jurisdiction over a defendant even if doing so would be consistent with the due process clause.  Correspondingly, if the exercise of jurisdiction is consistent with CPLR 302, then the due process clause, being broader than that section, will necessarily be satisfied.  Accordingly, most New York cases focus on whether the developer/operator was doing business in New York or transacted business in New York sufficient under the CPLR 302 to justify haling** the developer and/or operator into a New York Court.  At this point the facts (and sympathies) take over because New York case law may recognize internet activity (for example) and other business practices to be sufficient to satisfy the New York long-arm statute.

To illustrate, if the developer or operator employed a real estate broker who marketed the condo in such a way as to target the New York market (i.e. potential condo purchasers who live in New York), a New York Court may find that it has jurisdiction over these defendants. In short, if they availed themselves of the market, a New York Court may find that they should be prepared to defend actions in New York arising out of their marketing activities.

On the other hand, if the developer or operator can convince the Court that there is no material connection to New York other than the fact that the condo purchaser resides there (when not residing in condos purchased outside the United States), some New York Courts will tell a plaintiff that they have "made their bed, now lie in it" requiring the plaintiff to bring suit in the jurisdiction where the plaintiff purchased the condo property instead of New York.

Keep watching SDNY Local Counsel as we analyze the "Case of the Resort Condo" by collecting and comparing recent cases that match the fact pattern.

* Special thanks to Prof. Robert Pfeffer, Visiting Associate Professor at University of Alabama School of Law, who has helped me update this blog entry. See later blog postings for news on SDNY Local Counsel's collaboration with Prof. Pfeffer.


** For you philologists (i.e. word-o-philes): a person is "haled" into a court reluctantly, a NYC Yellow Taxi is "hailed," and cargo is "hauled."

Saturday, June 5, 2010

The Unspoken D-I-Y Option: Independent Arbitration

Critics of arbitration often assert that arbitration under JAMS, AAA and other well-known arbitration service-providers ("Providers") has the potential to become more expensive then pursuing traditional litigation. The argument goes that deep-pocketed entities use arbitration as a bludgeon to force adversaries with little or no resources to settle or abandon their claims.

SDNY Local Counsel has appeared in a number of arbitrations administered under various Providers and those Providers offer excellent services that may be the right choice in certain circumstances. However, arbitration under certain Providers--especially arbitration in which extensive discovery is allowed--may become extremely expensive.

Stepping over this debate, SDNY Local Counsel wishes to remind our readers of a potential low-cost alternative: "Independent Arbitration." The fact is, many lawyers, retired judges and other trustworthy, fair-minded individuals are willing to act as arbitrators for a flat or low-hourly fee and conduct an arbitration at a convenient, low or no-cost location (such as a law office conference room). In short, D-I-Y arbitration may offer all concerned significant savings. However, if Independent Arbitration is of interest to you, there are a few things to be aware of:

1) in order to pursue independent arbitration the arbitration clause in your agreement should not specify administration under any Provider;

2) if an arbitration clause does not specify a procedure, the parties will have to decide on the proper procedure to select an Arbitrator and, also, a proper procedure under which to conduct the Arbitration. Leaving these details to be decided after the parties to an agreement are in dispute is a recipe for disaster. Accordingly, an Independent Arbitration clause should refer to a general set of rules to follow or state certain basic rules expressly.

3) even if you expressly state a low-cost procedure in your arbitration clause as a substitute for a Provider's rules, you may not be fully protected -- your adversary may be able to make an end-run around your procedures by insisting on following the Provider's rules instead. For example, one Provider states in its rules that previously agreed upon procedures different from the Provider's rules may be used, but only if all parties agree to such procedures in writing after the Arbitration commences. Thus, an adversary could easily balk at the previously agreed upon procedures and force you to follow a Provider's procedures after an arbitration is commenced.

By means of example and for purposes of discussion, SDNY Local Counsel provides this Sample Rules for Independent Arbitration as a guide for would-be arbitration do-it-yourself-ers.

Friday, May 28, 2010

SDNY Local Counsel Author Joins Dunnington, Bartholow & Miller LLP

Many of you have inquired about my law firm:

About Dunnington:

Dunnington, Bartholow & Miller LLP provides best-of-class legal advice across a number of practice areas. Below is a sampling of the types of services we offer our clients:

1) Corporate Services

Our corporate partners are experts in providing legal advice supporting every aspect of your business. Our partners’ collective experience as both inside-counsel and outside-counsel for large, multi-national firms enables us to execute effectively as an extension of our corporate clients’ legal departments. Our corporate department handles, among other matters, the following:

• corporate finance, corporate structuring and counseling to both public and private companies and startups;

• mergers and acquisitions;

• Loan workouts, debt restructuring and bankruptcy matters;

• cross-border and international transactions;

• executive compensation issues; and

• regulatory compliance and corporate governance issues.

2) Litigation Services

Our litigation partners handle litigation, arbitration and mediation, including commercial, probate, intellectual property, real estate and construction, tax, and employment matters. In addition, Mr. McGrath will continue his white-collar defense, investigations and corporate due diligence practice at the firm.

3) Real Estate

Our real estate group provides legal representation and counseling on, among other matters, large-scale leasing transactions and complex transactions arising out of today’s volatile real estate climate (which includes, as discussed above, an expertise in work-outs and construction litigation).

4) Tax and Trusts & Estates

Our tax and “T&E” partners have decades of experience representing corporations and individual clients. We assist our private clients with individual tax, estate planning, probate and estate administration matters. We represent both our corporate and private clients in proceedings before the Internal Revenue Service, the U.S. Tax Court and many other government agencies.

* * *

Long-term relationships characterize Dunnington’s client base, whether the client is a banking institution, a multi-national corporation or the fourth generation of an original individual client. Our goal is to provide sound, comprehensive services that achieve practical results and constructive benefits for you in both the near-term and the long-term.

Monday, May 24, 2010

SDNY Federal Bar Association Wine Tasting Follow-Up

All:

Thank you for sharing a terrific evening at the SDNY Chapter Federal Bar Association Spring Wine Tasting. Our next event is a Second Circuit Procedure CLE on June 8 -- (see SDNY Local Counsel Blog dated May 21 for details).

Special thanks to Jim and Johnny at:



(click image to go to website)




Special thanks to Jenny Rogers for event planning.

Also, many thanks for the generosity of our sponsors:

Dunnington, Bartholow & Miller LLP
Locke Lord Bissell & Liddell LLP
Smith Gambrell & Russell LLP

Below please find the Tasting Order from the event
and some tasting notes (click on the image to enlarge):

Friday, May 21, 2010

Please remember to register for the Second Circuit procedures CLE scheduled for June 8 (see flyer below).

The SDNY FBA continues to offer exceptional events, keep checking SDNY Local Counsel for additional listings.

Brave New World: Filing Appeals in the Second Circuit Court of Appeals






















[click on the image for a printable version of the flyer]


Space is limited. Register now at:
http://ww2.ca2.uscourts.gov/cle/login.aspx

Thursday, May 20, 2010

SDNY Chapter Federal Bar Association Spring Wine Tasting

Thank you everyone for attending the successful SDNY Chapter FBA Spring Wine Tasting at Jo's backroom. For those interested, SDNY Local Counsel will post the wines tasted and a short recap of the tasting notes.