Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 22, 2020

Plaintiff Sufficiently Alleges Jurisdiction Over Foreign Defendant That Did Not Travel to New York

On January 6, 2020, Justice Schecter of the New York County Commercial Division issued a decision in My Size, Inc. v. North Empire LLC, 2020 NY Slip Op. 30276(U), holding that a plaintiff had sufficiently alleged jurisdiction over a defendant that had not traveled to New York, explaining:

While conceding that this court lacks general jurisdiction over defendants, North Empire asserts that this court may exercise personal jurisdiction over them pursuant to CPLR 302, citing three presently uncontested allegations to support its position. First, defendants are alleged to have directed My Size’s transfer agent, V Stock, located in New York, to send the Certificate to My Size in Israel. Second, defendants are also alleged to have directed the Certificate to be mailed back to V Stock in New York. Third, defendants communicated with Martin, North Empire’s president, via phone, text and email dozens of times, many of them while Martin was in New York, in connection with the stock transfer at issue in this litigation.

Personal jurisdiction exists here under CPLR 302(a)(l). As defendants concede, engagement by an individual in a business transaction solely in his or her corporate capacity does not insulate him or her from the court’s exercise of personal jurisdiction over them under CPLR 302(a)(l). They argue, however, that defendants’ communications into New York did not confer jurisdiction, citing cases where phone calls and written correspondence were deemed insufficient absent New York-based conduct attributable to the defendant.

Defendants ignore the New York-based conduct of V Stock (My Size’s transfer agent) and their own role in redirecting the Certificate from New York to Israel and then back to New York. In fact, North Empire need not establish a formal agency relationship between V Stock on the one side and defendants on the other. It is sufficient for purposes of establishing personal jurisdiction in New York that V Stock engaged in purposeful activities in this State in relation to the transaction for the benefit of and with the knowledge and consent of defendants and that they exercised some control over V Stock in the matter. Accordingly, personal jurisdiction over defendants is satisfied pursuant to CPLR 302(a)(l).

(Internal quotations and citations omitted).

This decision illustrates an issue that often arises in commercial litigation in New York. Whether the defendant is located on the other side of the world or across the Hudson in New Jersey, a New York court cannot assert jurisdiction over the defendant (that is, hear a case against it) unless there is a proper connection between the defendant and New York. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure whether there is jurisdiction over you, or over a party with which you are having a dispute, in New York.

Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.

View posts