New York Courts Extend Jurisdiction to Electronic Entry

For the first time, the New York Court of Appeals has recognized that electronic entry into the state can be sufficient to attract the jurisdiction of New York courts under that jurisdiction's long-arm statute. In Deutsche Bank Securities Inc v Montana Board of Investments, decided June 6, 2006, a $15 million bond purchase agreement was arranged between the defendant seller in Montana with the plaintiff buyer in New York entirely through the use of instant messaging and e-mail. The court unanimously held that a single business transaction is sufficient to attract jurisdiction where the defendant avails itself of the benefits of conducting business in New York State and should reasonably expect to defend its actions there. The fact that the out-of-state seller was a sophisticated institutional investor was a significant factor in the reasoning. Chief Judge Judith Kaye held that "a sophisticated institutional trader entering our state -- whether electronically or otherwise -- to negotiate and conclude a substantial transaction is within the embrace of the New York long-arm statute." It was also relevant that there was a pattern of dealing between the parties. The Court distinguished the case from that of an individual out-of-state investor placing an order by telephone to a broker in New York, which would not, in itself, attract New York jurisdiction. The result seems to be a logical extension of earlier decisions that involved deals made by telephone. Commentators have noted that this expected result brings New York closer to the approach of many states that do not impose statutory conditions on the assumption of jurisdiction. Even so, the New York approach is probably more restrictive than the Canadian approach of requiring a "real and substantial connection" with the jurisdiction in which the action is brought. For the full decision visit: http://www.courts.state.ny.us/reporter/3dseries/2006/2006_04338.htm For related commentary, see: http://www.law.com/jsp/article.jsp?id=1149584724205 Summary by: Tom Feather