Just before the Christmas break the New York Court of Appeals released its decision in Fischbarg which I missed while I prepared for and proceeded to make merry during the holidays.
Fischbarg deals with New York’s “longarm jurisdiction” legislation (CPLR 302(a)(1) for those looking for the cite). Normally, if a dispute has nothing to do with the place where the lawsuit is brought, the court will decline to hear the dispute. However, the U.S. State and Federal courts have resorted to this “longarm” jurisdiction to agree to hear disputes involving persons not resident in the applicable State (or in the U.S. for that matter). This agreement to hear the dispute is usually predicated upon some action by the “foreigner” to conduct business in the applicable State.
In Fischbarg, the California defendants hired a lawyer in New York State to assist with litigation. The defendants never set foot in New York State and the lawyer performed all of his work in New York. The parties communicated through the phone, mail, e-mail and facsimile over a period of many months. This was sufficient for the Court to determine that the defendants had “established … a relationship and repeated protect[ed] themselves into New York” and therefore had transacted business in New York to permit the longarm jurisdiction to be exercised. It is also important to note that the Court stressed the fact that it was dealing an ongoing relationship and that limited contacts in New York (for example, simply phoning in an order for goods or having a corporate officer attend one time to discuss business) will not be sufficient to trigger the longarm jurisdiction.
While the case deals with a lawyer, there is no reason why it would not be applicable to any professionals or consultants. The reality is that most business is conducted via non-face-to-face communications, the greater majority being e-mail today. The result of Fishbarg is that any business engaging the services of someone in New York runs the risk that the New York courts will agree to accept jurisdiction to hear the dispute and the “foreigner” will have to go to New York to fight the case. If you wish to avoid such a result, any retainer or engagement agreements you have with New York businesses or advisors should contain jurisdiction or “attornment clauses” in which the parties agree that any disputes will be heard only by the courts of a particular place so as to preclude the New York courts from assuming jurisdiction.