1 F. Supp. 3d 163
S.D.N.Y.2014Background
- Torres (owner of Fine Art Account, Inc. d/b/a Fred Torres Collaborations (FTC)), a New York corporation, alleges DLC Studios and David LaChapelle unlawfully terminated a representation agreement and misappropriated FTC assets; third-party defendants Ghretta Hynd and Michael Anderson are accused of participating in the misconduct.
- Allegations as to Hynd: a DLC Studios employee who allegedly directed employees to steal a server containing FTC client/sales databases and to remove artworks from a New York storage facility; she communicated frequently with FTC and traveled to New York periodically.
- Allegations as to Anderson: a bookkeeper/financial advisor to Torres/FTC who allegedly accessed/confidentially possessed Torres/FTC financial records and provided information used by LaChapelle/DLC in attachment proceedings alleging Torres was liquidating New York property.
- Procedural posture: Hynd and Anderson moved to dismiss the third-party claims for lack of personal jurisdiction under New York’s long-arm statute and as violative of due process; court applies New York long-arm analysis then federal due-process test.
- Court construed pleadings and declarations in plaintiffs’ favor at the prima facie stage and denied both motions, allowing jurisdictional discovery to proceed where factual gaps remained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hynd is subject to New York jurisdiction for conversion of a server and related thefts under C.P.L.R. § 302(a)(2) | Hynd used/controlled New York-based agents (employees who committed wrongful acts in NY) and thus can be charged under agency/conspiracy theories | §302(a)(2) requires the defendant to be physically present in NY when committing the tort; Hynd is an Oregon resident with limited NY contacts | The court found plaintiffs made a prima facie showing that Hynd either directed or conspired with in-state actors to commit the torts, so §302(a)(2) may apply (agency/conspiracy impute in-state acts) |
| Whether Hynd is subject to jurisdiction for tortious interference (communications from outside NY) under § 302(a)(3)(h) | The tortious acts caused injury in NY and Hynd should have expected consequences in NY; she derives revenue from interstate services for DLC | Hynd contends salary from a NY corporation does not show she derives substantial revenue from interstate commerce | Court held situs-of-injury and expectation elements met; insufficient showing on "substantial revenue" but declined dismissal and permitted jurisdictional discovery on that point |
| Whether Anderson transacted business in NY under C.P.L.R. § 302(a)(1) so claims alleging misappropriation of financial info arise from that transaction | Anderson had a long-standing financial relationship with FTC/Torres, lived and worked in NY for a period, handled New York property transactions and finances — thus purposefully availed himself | Anderson says he is a California resident with minimal NY contacts and limited/remote engagement for FTC | Viewing pleadings favorably to plaintiffs, the court found Anderson’s multi-year services, NY residence period, and access to NY-confidential information suffice to make out a prima facie showing that he transacted business in NY and that the claims arise from that business |
| Whether exercising jurisdiction over Hynd and Anderson comported with due process | Plaintiffs: defendants purposefully directed activities at NY and injuries arose from those activities | Defendants: exercise of jurisdiction would be unreasonable and burdensome given their residence, family, and employment responsibilities | Court found minimum contacts satisfied and defendants did not show a "compelling case" that jurisdiction would be unreasonable; reasonableness factors favor NY jurisdiction |
Key Cases Cited
- Licci v. Lebanese Canadian Bank, 732 F.3d 161 (2d Cir. 2013) (two-step test: state long-arm then federal due-process analysis and prima facie pleading standard)
- Bensusan Restaurant Corp. v. Ring, 126 F.3d 25 (2d Cir. 1997) (§302(a)(2) typically requires defendant’s physical presence in NY when committing the tort)
- Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460 (N.Y. 1988) (fiduciary-shield doctrine rejected; corporate capacity does not bar personal jurisdiction over officers who transact business or commit torts in NY)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (minimum contacts and reasonableness balancing for due process)
- City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114 (2d Cir. 2011) (plaintiff must show defendant derives "substantial revenue" from interstate commerce under §302(a)(3)(h))
- Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560 (2d Cir. 1996) (factors for assessing reasonableness of jurisdiction)
- Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13 (N.Y. 1970) (New York’s intent to reach nonresidents who purposefully transact business in NY)
- Calder v. Jones, 465 U.S. 783 (U.S. 1984) (intentional torts expressly aimed at the forum can support specific jurisdiction)