Defendants Subject to Personal Jurisdiction in New York Based on Actions of their Agent

On July 1, 2020, Justice Cohen of the New York County Commercial Division issued a decision in J.G. Jewlry PTE. LTD. v. TJC Jewelry, Inc., 2020 NY Slip Op. 32153(U), holding that defendants were subject to personal jurisdiction in New York based on the actions of their agents, explaining:

On a motion to dismiss for lack of personal jurisdiction, the opposing party need only demonstrate that facts may exist whereby to defeat the motion and it need not be demonstrated that they do exist.

Here, at the very least, Plaintiffs have made a sufficient showing of personal jurisdiction to warrant further discovery on the issue. Plaintiffs' jurisdictional argument is premised on CPLR 302(a)(l) through (3):

. . .

The starting point is subsection (a)(l), which is a single act statute; accordingly, physical presence is not required and one New York transaction is sufficient for personal jurisdiction. The statute applies where the defendant's New York activities were purposeful and substantially related to the claim, with purposeful activities defined as those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

Plaintiffs' allegations, set forth in the Amended Complaint and supplemented in its opposition to the motion to dismiss, indicate that SRK and The Jewelry Company purposefully projected themselves into New York in order to transact business that is substantially related to the claims here. To begin with, Plaintiffs allege that TJC acted as agent in New York for SRK and The Jewelry Company. The conduct of an agent may be attributed to the principal for jurisdictional purposes where the agent engaged in purposeful activities in this state in relation to the transaction at issue for the benefit of and with the knowledge and consent of the principal and the principal exercised some control over the agent in the matter. TJC is allegedly controlled, or wholly owned, by SRK and sells only products of SRK and The Jewelry Company, and TJC's chief executive allegedly worked at JD M's offices and provided services on behalf of those companies. Also, SRK and The Jewelry Company allegedly sent goods to TJC at JDM's office, for re-packaging and delivery to SRK's U.S.-based customers.

In addition, SRK and The Jewelry Company co-authorized the JGJ bank account in New York from which it transferred funds, shipped goods to JDM's offices in New York en route to their final customers, deployed employees to work out of the JDM office during the joint venture, and more. These allegations evince volitional acts on the part of the Moving Defendants to conduct business in New York in conjunction with Plaintiffs, and thus satisfy the requirements of CPLR 302(a)(l).

Further, exercising personal jurisdiction over Defendants comports with due process. To satisfy due process, the defendant must have certain minimum contacts with the State such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. This standard asks whether the defendant has minimum contacts with the forum state, and whether personal jurisdiction is reasonable under the circumstances of the particular case.

The contacts with New York alleged in this case meet both requirements of the due process inquiry. First, based on the activities described above, Defendants had the required minimum contacts with New York. They purposefully conducted business with New York entities - that is, the JDM Entities - and also allegedly directed their own agents, employees, and goods to the forum. And second, the exercise of personal jurisdiction over Defendants in New York is reasonable in these circumstances. Considering that the non-domiciliary's long business arm extended to New York, it seems only fair to extend correspondingly the reach of New York's jurisdictional long-arm. In short, it is both fair and reasonable to subject Defendants to the jurisdiction where they purposefully directed their business dealings.

Therefore, the branch of Defendants' motion seeking to dismiss the Amended Complaint for lack of personal jurisdiction is DENIED.

(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.