Remote Work Sufficed to Invoke Personal Jurisdiction

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Posted on: Nov 18 2024

One of the many changes that the Covid 19 pandemic brought to the workplace was remote employment for employees and consultants alike. When consultants from a different state perform services for a business or entity, questions arise, for dispute resolution purposes, about whether the court can exercise personal jurisdiction over them. In Applied Healthcare Research Mgt. v. Ibrahim, 2024 N.Y. Slip Op. 05734 (4th Dept. Nov. 15, 2024) (here), the Appellate Division, Fourth Department addressed such a situation. As discussed below, the Court found that although the consultant was domiciled in a different state, she had entered New York for jurisdictional purposes.

Applied Healthcare involved a breach of contract action. Plaintiff, a New York corporation, commenced the action seeking damages arising from defendant’s alleged breach of the parties’ consulting agreement and from allegedly defamatory letters defendant sent to two of plaintiff’s clients. Defendant, an individual residing in Texas, moved to dismiss the complaint pursuant to CPLR 3211 (a) (8) on the ground that the motion court lacked personal jurisdiction over her or, in the alternative, pursuant to CPLR 3211 (a) (7) on the ground that the complaint failed to state a claim. The motion court denied the motion, and defendant appealed.

On appeal, the Fourth Department modified the order by granting the motion in part and dismissing the first, third, and fourth causes of action, and as modified affirmed the order.

Pursuant to New York’s long-arm statute, “a court may exercise personal jurisdiction over any non-domiciliary … who in person or through an agent … transacts any business within the state.”[1] Jurisdiction can attach on the basis of one transaction, even if the defendant never enters the state, “‘so long as the defendant’s activities [in state] were purposeful and there is a substantial relationship between the transaction and the claim asserted.’”[2] Purposeful activities are those by which a defendant, “through volitional acts, ‘avails itself of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws.’”[3] Such acts may be contrasted with “random, fortuitous, or attenuated contacts, … [or] the unilateral activity of another party or a third person.”[4]

Applying the foregoing principles, and viewing the facts and circumstances in their “totality”,[5] the Court concluded “that defendant had the requisite “‘minimum contacts’ with [the] state to warrant the exercise of long-arm jurisdiction pursuant to CPLR 302 (a) (1)” and ‘that the exercise of jurisdiction … comport[ed] with due process.’”[6]

The Court explained that “the parties’ contract called for defendant to provide data models for plaintiff’s clients. Although defendant never physically entered New York as part of her relationship with plaintiff, she purposefully entered into a months-long contract with plaintiff that required her to project herself into New York to retrieve digital files from plaintiff’s New York-based server, including software, proprietary data, and examples of prior work.”[7]

Moreover, said the Court, the parties’ contract explicitly required defendant “to project herself into New York and transmit files to and from plaintiff’s server.”[8] Thus, concluded the Court, “Defendant was thereby enabled to transact business within the state, ‘without physically entering the state…,’[9] by means of ‘the knowing and repeated transmission of computer files over the [i]nternet’ to and from New York.”[10]

Further, noted the Court, jurisdiction was proper under CPLR 302 (a) (3)[11] because “plaintiff allege[d] that defendant breached the contract by failing to deliver to plaintiff the data models she created.” “Whether the provision of those data models [was] considered ‘goods’ or ‘services,’” said the Court, “defendant’s failure to deliver them to New York constitute[d] a basis for personal jurisdiction.”[12]

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] CPLR 302 (a) (1).

[2] Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65, 71 (2006) (quoting Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988))., cert. denied, 549 U.S. 1095 (2006); see also Fischbarg v. Doucet, 9 N.Y.3d 375, 380 (2007).

[3] Fischbarg, 9 N.Y.3d at 380 (quoting McKee Elec. Co. v. Rauland-Borg Corp., 20 N.Y.2d 377, 382 (1967)); see Cellino & Barnes, P.C. v. Martin, Lister & Alvarez, PLLC, 117 A.D.3d 1459, 1461 (4th Dept. 2014), lv. dismissed, 24 N.Y.3d 928 (2014).

[4] Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (internal quotation marks omitted); see generally LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 216-217 (2000).

[5] See Sager v. City of Buffalo, 151 A.D.3d 1908, 1909 (4th Dept. 2017); Atwal v. Atwal, 24 A.D.3d 1297, 1298 (4th Dept. 2005).

[6] Slip Op. at *2 (quoting Cellino & Barnes, 117 A.D.3d at 1461, and citing generally LaMarca, 95 N.Y.2d at 216).

[7] Id. at *1.

[8] Id. The provision of the agreement highlighted by the Court provided: “[a]ll communication will be through [plaintiff’s] email server, phone and intranet.” Id. at *1-*2.

[9] Id. at *2 (quoting Deutsche Bank Sec., 7 N.Y.3d at 71).

[10] Id. (quoting Best Van Lines, Inc. v. Walker, 490 F.3d 239, 251 (2d Cir. 2007) (internal quotation marks omitted), and citing Centrifugal Force, Inc. v. Softnet Communication, Inc., 2009 WL 1059647, *5 (S.D.N.Y. Apr. 17, 2009); Grimaldi v. Guinn, 72 A.D.3d 37, 51-52 (2d Dept. 2010)).

[11] Pursuant to CPLR 302 (a) (3), “New York courts may … exercise jurisdiction over a nondomiciliary who contracts outside [the] State to supply goods or services in New York even if the goods are never shipped or the services are never supplied in New York, so long as the cause of action … arose out of that contract.” Alan Lupton Assoc. v. Northeast Plastics, 105 A.D.2d 3, 6 (4th Dept. 1984); see generally Island Wholesale Wood Supplies v. Blanchard Indus., 101 A.D.2d 878, 880 (2d Dept. 1984).

[12] Id. (citing LHR, Inc. v. T-Mobile USA, Inc., 88 A.D.3d 1301, 1302 (4th Dept. 2011); Courtroom Tel. Network v. Focus Media, 264 A.D.2d 351, 353 (1st Dept. 1999)).