Recently, suing a non-resident debtor in New York became somewhat more complicated. Two types of jurisdictional analysis are involved. First, there is an analysis that examines the general activity of a non-resident actor in the state. Does the non-resident actor have an office in the state and conduct regular business, and if so, how much and how often? This type of jurisdiction is often referred to as “presence” jurisdiction. The second kind of analysis focuses on specific activity of the non-resident actor in the state and whether the activity has a nexus to the claim against the non-resident actor. This second form of jurisdiction is commonly referred to as “long-arm” jurisdiction.
In January 2014, the United States Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (“Bauman”) essentially rewrote the familiar standard concerning general jurisdiction which provided that a non-resident actor is present in the state when it “does business” both “continuously and systematically.” Instead, the Court articulated the test as not “whether a foreign corporation’s in-forum contacts can be said to be in some sense ‘continuous and systematic,’ rather, it is whether that corporation’s ‘affiliations with the State’ are so ‘continuous and systematic’ as to render it essentially at home in the forum State.”
In attempt to deal with criticisms raised in a concurrence by Justice Sotomayor that the majority had unnecessarily made the burden too difficult for a plaintiff seeking redress against a non-resident defendant that conducted substantial business in the state, the majority in Bauman reasoned that “[T]he general jurisdiction inquiry does not ‘focus solely on the magnitude of the defendant’s in-state contacts’ [citation omitted]. General jurisdiction instead calls for an appraisal of a corporation’s activities in their entirety, nationwide and worldwide. A corporation that operates in many places can scarcely be deemed at home in all of them. Otherwise, ‘at home’ would be synonymous with ‘doing business’ tests framed before specific jurisdiction evolved in the United States.”
In other words, the Supreme Court in Bauman did not take on the standards involved in specific jurisdiction, leaving intact the analysis of the magnitude of the contact which forms the basis of specific or long-arm jurisdiction.
As it is the age of internet retailing, what happens if your client buys merchandise from an on-line seller who has no office in New York and very little direct contact? Can you a fashion an argument to obtain jurisdiction over the internet seller if there is a claim against the seller?
Clearly, under Bauman, and even pre-Bauman, establishing presence in New York is going to be difficult with an internet seller operating a web site located outside of New York. What about long-arm jurisdiction?
In Mishin v. Motes, 49 Misc. 3d 1206(A) (Dist. Ct. Nassau Co. 2015) (“Mishin”), a New York lower court in a well reasoned decision holds in the affirmative provided the internet seller’s acts are purposeful and there is substantial relationship between the transaction and the claim asserted. In Mishin, the plaintiff purchased a gun from a web site of a seller located in Florida. The gun had some operational issues and the plaintiff engaged in a series of communications with the seller by phone and email. Eventually, the gun was sent to the seller in Florida for repair. The plaintiff alleged that the internet seller’s website provided the following means of communication between a consumer and defendant: (a) telephone number; (b) email; (c) “contact us” link; (d) Facebook; and (e) Twitter.
Given these facts, the Court in Mishin held that “if a Web site provides information, permits access to e-mail communication, describes the goods or services offered, downloads a printed order form, or allows online sales with the use of a credit card, and sales are, in fact, made in this manner in the forum state, particularly by the injured consumer, then the assertion of personal jurisdiction may be reasonable. This seems to be the trend for the sale of goods and services that are delivered after they are ordered by the consumer on his or her home computer (citations omitted)”.
Clearly, the web seller in Mishin did not regard New York as its home state and therefore did not have a presence in New York for the purpose of general jurisdiction. But due process and fair play are not offended if long arm jurisdiction is exercised over a web seller who purposely seeks sales in New York and encourages direct communications and interaction with New York buyers.