In a well-attended CLE, SDNY Local Counsel author, yours truly, and Prof. Pfeffer, SDNY Local Counsel contributor, presented on the Supreme Court's recent decisions in:
J. McIntyre Machinery Ltd. v. Nicastro, U.S., No. 09-1343 (certiorari petition granted 9/28/10),
and
Goodyear Luxembourg Tires SA v. Brown, U.S., No. 10-76 (certiorari petition granted 9/28/10).
Special thanks to the New York County Lawyers Association and the SDNY Chapter of the Federal Bar Association for co-sponsoring the event.
In J. McIntyre Machinery Ltd. v. Nicastro, the New Jersey Supreme Court found jurisdiction valid in that state over an out-of-state manufacturer. That manufacturer had sold its machine to an Ohio distributor, who then sold it at a Nevada trade show to the company that employed plaintiff, who, in turn, was injured by the machine in New Jersey.
In Goodyear Luxembourg Tires SA v. Brown, the North Carolina Court of Appeals found that jurisdiction was valid over an out-of-state manufacturer of tires based on its sale in North Carolina, even though the plaintiff was injured overseas and the events of the law suit had no connection to North Carolina, other than the fact that plaintiffs lived there.
The U.S. Supreme Court's unanimous decision in Goodyear comes as no surprise. The Court reigned in a lower court practice of finding "general jurisdiction" based upon contacts with the state -- usually in sympathetic cases where the lower courts could not deem the lawsuit as "arising out of" certain contacts with the state. In short, after Goodyear, there should not be a finding of "general jurisdiction" unless the defendant is "at home" in the state. Being at home means that the forum is the home state of the person or company or that person or company has such pervasive contacts that the state is like a second home (which should be rare).
The Court's plurality decision in Nicastro, however, is not so simple. The decision is a must read for any Supreme Court-watcher because of the interplay between the competing plurality, concurrence and dissent is fascinating.
Still, despite the plurality's attempt to go back to basics and phrase the analysis as a state's sovereignty meets due process issue, there remains numerous open questions and no true clarity. In fact, the concurrence and dissent indicate that the due process limitations of long-arm statutes in the new age of global markets and e-commerce is still an open question.
The take-aways from Nicastro that we at SDNY Local Counsel find interesting are:
(i) the phrase "stream of commerce" is no more than a metaphor and not a doctrine that can answer jurisdictional questions in the absolute. In short, the Supreme Court has emphasized the need for a minimum contacts analysis and that putting a product in the "stream of commerce" may be just one factor in such an analysis. Indeed, without more, the stream of commerce metaphor may be insufficient to sustain an assertion of jurisdiction.
(ii) the plurality's criticism of foreseeability as a touchstone for the due process limits of long-arm jurisdiction (which appears to require more than simply putting a product in the stream of commerce that causes injury in the state) may run up against New York's long-arm statute which contemplates jurisdiction when a defendant:
[§302 (a): ]
3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or …
In sum, clarity is not forthcoming from the Court on the due process limitations on long-arm jurisdiction and may not be taken up again any time soon.
Showing posts with label long-arm. Show all posts
Showing posts with label long-arm. Show all posts
Wednesday, July 13, 2011
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."
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."
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