902 F. Supp. 2d 349
S.D.N.Y.2012Background
- V Cars, LLC (Delaware; HQ New York) sues Israel Corp. (Israel) and CHERY (China) over an inchoate JV with CHERY; JV would manufacture in China and import/distribute in North America; LOI and IDA drafted 2004; Israel invited to invest; later Israel/CHERY formed a new JV without V Cars; V Cars alleges misappropriation of confidential information obtained during negotiations.
- Second Addendum to LOI (Dec 2005) extended V Cars’ capital timing; $200 million escrow arrangement; failure to deposit triggers termination rights for CHERY.
- In early 2006, V Cars provided materials to Pareto Securities; Pareto invited Israel to invest; no NDA or confidentiality agreement signed by Israel’s representatives.
- Aug–Sept 2006, Steinwascher (Israel) and Gilad (Israel) met in New York; discussions and non-binding equity proposals occurred; no binding agreement formed.
- Sept–Nov 2006, negotiations continued toward a revised structure with Israel/CHERY; October 25–26, 2006 Israel/CHERY proposed terms; November 22, 2006 V Cars withdrew; later in December 2006 Israel/CHERY entered escrow and MOU for a JV; by Feb 2007 CHERY/Israel JV formed (Qoros) and planned production for China, not U.S.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court has personal jurisdiction under CPLR 302(a)(1) | V Cars argues NY contacts via New York meetings and communications. | Israel contends no transacting business in NY; contacts are exploratory. | Lack of transacting business under 302(a)(1) (no NY transaction) |
| Whether there is jurisdiction under CPLR 302(a)(2) for tortious acts in NY | New York meetings alleged misrepresentations and misappropriation. | No actionable misrepresentations in NY; misappropriation occurred in China. | No NY-tort jurisdiction under 302(a)(2) |
| Whether there is jurisdiction under CPLR 302(a)(3) for injury in NY | Injury to NY-based dealer (Ciasulli) and anticipated NY market. | Injury occurred outside NY; foreseeability insufficient for NY injury. | No 302(a)(3) jurisdiction; injury not sufficiently direct in NY |
| Whether Israel waived personal-jurisdiction defense | Israel waived by failing to raise issue in motion or responsive pleading. | Israel pleaded lack of personal jurisdiction; no waiver. | Waiver not applicable; defense timely raised |
Key Cases Cited
- Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50 (2d Cir. 2012) (two-part due process and long-arm analysis under NY law)
- Best Van Lines, Inc. v. Walker, 490 F.3d 239 (2d Cir. 2007) (transacting business and nexus requirements under CPLR 302(a)(1))
- Longines-Wittnauer Watch Co. v. Barnes & Reinecke, 15 N.Y.2d 443 (NY 1965) (limits of § 302(a)(2) for acts within NY)
- Aquiline Capital Partners LLC v. Finarch LLC, 861 F. Supp. 2d 378 (S.D.N.Y. 2012) (out-of-state defendant transacting business through ongoing relationships)
- PaineWebber Inc. v. Westgate Group, Inc., 748 F. Supp. 115 (S.D.N.Y. 1990) (insufficiency of in-forum communications to establish jurisdiction)
- Penguin Group (USA) Inc. v. American Buddha, 609 F.3d 30 (2d Cir. 2010) (injury in NY must be direct and not merely economic)