Defendants' Indirect Connections to New York Insufficient to Establish Personal Jurisdiction

On November 6, 2014, the First Department issued a decision in Bluewaters Communications Holdings, LLC v. Ecclestone, 2014 NY Slip Op. 07600, affirming a trial court's dismissal of foreign defendants for lack of personal jurisdiction.

In Bluewaters Communications Holding, the First Department affirmed the holding that there was not jurisdiction over defendants in New York, explaining:

Plaintiff maintains that the personal jurisdiction defendants committed a tort outside the state that caused injury within the state (see CPLR 302[a][3][ii]), i.e., its loss of New York-based customers, nonparties Apollo Management, L.P. and King Street Capital Management, L.L.C. However, the complaint does not refer to Apollo and King Street as plaintiff's customers; rather, it refers to them as plaintiff's financiers. Contrary to plaintiff's argument, the complaint does not allege tortious interference with plaintiff's economic relations with Apollo and King Street.

In any event, the event that gave rise to the injury did not occur in New York. That event occurred when Ecclestone persuaded defendant Gerhard Gribkowsky (a German), via the promise of money, to steer the sale by defendant Bayerische Landesbank Anstalt des Öffentlichen Rechts (BLB) (a German bank) of its shares of nonparty Speed Investments Limited (a Jersey company) to defendant CVC Capital Partners Ltd. (an English company) instead of plaintiff's predecessor in interest (a Jersey company with offices in Jersey and London).

Plaintiff argues that the personal jurisdiction defendants are subject to New York jurisdiction because they conspired with CVC, which transacted business in the state (see CPLR 302[a][1]) by buying the Speed shares owned by nonparty Lehman Commercial Paper, Inc., which had an office in New York. However, plaintiff does not meet the requirements for establishing conspiracy jurisdiction. For example, CVC's purchase of Lehman's Speed shares was not a tort, and the complaint does not allege that CVC bought those shares at the direction, under the control, at the request, or on behalf of the personal jurisdiction defendants. The mere conclusory claim that an activity is a conspiracy does not make it so.

Plaintiff alleges that Ecclestone and Bambino bribed Gribkowsky in U.S. dollars and that the payments went from nonparties First Bridge Holding Limited (a Mauritius company) and Lewington Invest Limited (a British Virgin Islands company) to nonparty GG Consulting (an Austrian company). Plaintiff contends that, because the payments were made in U.S. dollars, they must have gone through New York banks. However, Ecclestone's and Bambino's indirect use of the New York banking system does not constitute the transaction of business in New York pursuant to CPLR 302(a)(1). Nor does it constitute the commission of a tort within New York pursuant to CPLR 302(a)(2). Unlike the third-party defendants in Mashreqbank PSC v Ahmed Hamad Al Gosaibi & Bros. Co. (2010 NY Slip Op 33909[U], *12 [Sup Ct, NY County 2010], revd on other grounds 101 AD3d 1 [1st Dept 2012], revd on other grounds 23 NY3d 129 [2014]), Ecclestone and Bambino — the alleged payors of the bribe — did not fraudulently gain funds for their own benefit. Nor does American BankNote Corp. v Daniele (45 AD3d 338 [1st Dept 2007]) avail plaintiff with respect to its CPLR 302(a)(2) argument, since that case dealt with jurisdictional discovery and involved a greater connection to the New York metropolitan area than the instant action.

(Internal quotations and citations omitted).