Ties to New York Bank Found Insufficient to Create General Jurisdiction

On January 14, 2014, Justice Kapnick of the New York County Commercial Division issued a decision in Industrias De Papel R. Remenzoni S.A. v. Banco De Investimentos Credit Suisse (Brasil) S.A., 2014 NY Slip Op. 30074(U), addressing a variety of jurisdictional and forum non conveniens arguments on a motion to dismiss.

In Industrias De Papel, the plaintiff, a Brazilian paper company, sued a number of defendants, including various US and Brazilian Credit Suisse entities, for causes of action arising out of bond purchases. The Credit Suisse entities moved to dismiss for lack of jurisdiction and forum non conveniens.

The plaintiff’s first alleged basis for jurisdiction—and the subject of this post—was under CPLR 301: "A court may exercise such jurisdiction over property, persons, or status as might have been exercised heretofore." CPLR 301 is New York’s "general jurisdiction" statute, where a defendant who is "engaged in such a continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction," may be sued on causes of action arising anywhere in the world.

In support of its claim of personal jurisdiction over Credit Suisse Brazil in New York, the plaintiff alleged:

The CEO of Credit Suisse Brazil works out of New York and controls Credit Suisse Brazil from New York;
Credit Suisse Brazil maintains bank accounts and brokerage accounts in New York;
Credit Suisse solicits business in New York through various websites; and
Credit Suisse New York serves as Credit Suisse Brazil’s agent by (a) supporting Credit Suisse Brazil’s CEO, and (b) pitching its clients investment opportunities from Credit Suisse Brazil.

The court ruled that factual questions existed regarding the scope of the CEO’s activity in New York, and whether they were sufficient to give rise to general jurisdiction, and rejected the other three asserted bases entirely.

A bank account in New York only gives rise to personal jurisdiction if the bank account is used “for the receipt of substantially all of the income of a foreign corporation and for the payment of substantially all of its business expenses,” and plaintiff’s allegations did not satisfy this standard. An interactive recruiting website or a website providing customers with worldwide access to account information can only give rise to general jurisdiction if “the website is purposefully directed towards New York.” And because merely providing office space and a phone line to another company does not create an agency relationship, and plaintiff’s factual basis for alleging that Credit Suisse New York marketed Credit Suisse Brazil’s products were similarly insufficient, no agency relationship had been asserted.

Accordingly, the court permitted jurisdictional discovery to be taken solely on the nature and scope of Credit Suisse Brazil’s CEO’s business activities in New York.

In this opinion, we can see that courts are reluctant to use incidental banking or marketing activities in New York to serve as a basis for general jurisdiction.