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."
Monday, June 14, 2010
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.
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.
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