This piece summarizes several significant civil procedure decisions handed down by the New York Court of Appeals during its 2018-2019 term. Given our space limitations, we have addressed only a portion of the holdings in this arena in a somewhat abbreviated manner. There is something here for personal injury lawyers, commercial litigators, and even those who become involved in arbitration disputes or CPLR Article 78 proceedings. Our selections emphasize those decisions that are most relevant to everyday practice in the Empire State.

There are frequent citations in this piece to David D. Siegel & Patrick M. Connors, New York Practice (Thomson, 6th ed. 2018), where readers can find background on the civil practice issues presented in these cases. The treatise is supplemented biannually (most recently in July) and contains further discussion of the decisions reported below and other significant decisions from various courts.

No Longarm Jurisdiction Over Ohio Firearm Merchant. The Court’s decision in Williams v. Beemiller, –– N.Y.3d ––, 2019 WL 2030257 (2019), is another in a continuing line of cases demonstrating the difficulty in obtaining personal jurisdiction over nondomiciliaries in the aftermath of recent U.S. Supreme Court pronouncements on due process. See Siegel & Connors, New York Practice §§82, 88. In Williams, an Ohio firearm merchant sold a gun to an Ohio resident in Ohio. The gun was then resold on the black market and used by a gang member to shoot the plaintiff in Buffalo.

Plaintiffs commenced a personal injury action against the Ohio firearm merchant, among others, in Supreme Court, Erie County, alleging that defendants negligently sold and distributed the gun used in the shooting. The Court of Appeals affirmed the order of the Fourth Department dismissing the action against the Ohio merchant “under well-established due process precedent because he lack[ed] minimum contacts with this state.”

There were three lengthy opinions in Williams, with a four-judge majority observing that when the defense of lack of personal jurisdiction is timely asserted, “a New York court may not exercise personal jurisdiction over a non-domiciliary unless two requirements are satisfied: the action is permissible under the long-arm statute (CPLR 302) and the exercise of jurisdiction comports with due process.” Focusing exclusively on the latter requirement, the majority addressed the “minimum contacts” necessary to acquire jurisdiction over a nondomiciliary defendant in light of the Supreme Court’s 2014 decision in Walden v. Fiore, 571 U.S. 277 (2014). See Siegel & Connors, New York Practice §88. The Court concluded that there was no evidence that the Ohio firearm merchant “took purposeful action” to serve the New York market and “avail[] himself ‘of the privilege of conducting activities’” here. Defendant “did not maintain a website, had no retail store or business telephone listing, and did no advertising of any kind, except by posting a sign at his booth when participating in a gun show” in Ohio. The fact that one of defendant’s customers indicated that there was a chance that he might transport his purchased firearms to New York was deemed insufficient to establish “[constitutionally sufficient] ties with New York.”

In that the assertion of jurisdiction over the Ohio firearm merchant in a New York court would not comport with due process, the majority concluded that it was unnecessary to address whether defendant’s conduct satisfied CPLR 302(a).

A two-judge concurrence agreed with the majority’s due process analysis, but also determined that defendant’s conduct was, “in the first instance,” not covered by the provisions in CPLR 302(a)(3), which permit a New York court to exercise personal jurisdiction over a nondomiciliary who commits a tortious act outside the State that causes injury within. There are additional elements in CPLR 302(a)(3)(i) and (ii) that require the defendant to have some connection with New York or to “reasonably expect” the tortious act to have consequences here. See Siegel & Connors, New York Practice §88. While the Fourth Department ruled that the additional requirements were met in Williams and that defendant’s acts fell within CPLR 302(a)(3), the concurrence in the Court of Appeals determined that they were not satisfied.

A three-judge dissent in Williams concluded that the requirements in both CPLR 302(a)(3)(i) and (ii) were satisfied by defendant’s conduct in Ohio and that personal jurisdiction could be secured under either subparagraph. The dissent determined that defendant “derive[d] substantial revenue from goods used or consumed … in [New York]” under CPLR 302(a)(3)(i) based on his sales of a significant number of guns to a customer and his associates in Ohio, who later transported those guns to New York where they were used. The dissent also concluded that defendant should reasonably have expected the negligent sale to have consequences in New York and that he derived “substantial revenue from interstate or international commerce,” thereby satisfying the additional ground for longarm jurisdiction under CPLR 302(a)(3)(ii). Finally, the dissent reasoned that the assertion of jurisdiction would “comport with federal constitutional due process requirements.”

The good news for the plaintiffs in Williams is that two defendants, the firearms manufacturer and the wholesale distributor, did not contest personal jurisdiction and remain as parties in the New York action. The lesson for the bar is that issues of personal jurisdiction can result in close calls, like the 4-3 decision in Williams. If jurisdictional objections are asserted in the New York action and are not promptly resolved, the plaintiff must take care to calendar the statute of limitations in a jurisdiction where defendant is present and consider commencing a timely action there. See Siegel & Connors, New York Practice §231A (Item #5). The endeavor involves more time and effort, but it may provide salvation in this era of somewhat restrictive notions of personal jurisdiction.

Plaintiff Trustee Cannot Rely on CPLR 203(f)’s Relation Back Doctrine If Pre-Existing Action Is Not Valid. CPLR 203(f), an important relation back provision, is normally invoked to add an additional claim the plaintiff has against a defendant who is already a party. See Siegel & Connors, New York Practice §49. It provides that, for statute of limitations purposes, a claim in an amended pleading will be deemed to relate back to the time the claims in the original pleading were interposed as long as the original pleading gives notice of the transactions or occurrences out of which the new claim arises.

In U.S. Bank National Association v. DLJ Mortgage Capital, 33 N.Y.3d 84 (2019) (U.S. Bank #1), defendant sponsored and sold residential mortgage-backed securities trusts. Each trust was governed by a separate pooling and servicing agreement that contained representations and warranties about the general underwriting practices and quality of the individual loans that were secured by the mortgages. Each agreement included a “no action clause” that generally prevented individual certificate holders of the trust from pursuing an action under the agreements. Rather, the Trustee was empowered to bring an action for breach of the agreement on behalf of the certificate holders.

In U.S. Bank #1, an individual certificate holder commenced an action in violation of the “no action clause” claiming violations of the representations and warranties in the trust agreements within the applicable 6-year statute of limitations. See CPLR 213(2). After the statute of limitations expired, the trustee notified defendant of the alleged breach of warranties and demanded that defendant cure or repurchase the noncompliant loans in accordance with the remedy provisions in the agreement. The trustee then commenced an action against defendant asserting claims on behalf of the trusts.

The trustee argued that under CPLR 203(f), its entire action related back to the individual certificate holder’s prior timely action. The Court of Appeals disagreed, concluding that “CPLR 203(f) applies only in those cases where a valid pre-existing action has been filed,” and that “the [individual] certificate holder’s pre-existing action was not valid” because it was barred by the “no action clause.” In that “the certificate holder’s action was subject to dismissal,” the Court reasoned that there was no valid pre-existing action to which a claim in a subsequent amended pleading could relate back. Therefore, according to the Court, the trustee could not rely on “the relation-back doctrine of CPLR 203(f) to cure the certificate holder’s lack of a right to sue.”

It is difficult to classify the relief sought in U.S. Bank #1 under the heading of CPLR 203(f). The plaintiff trustee was not attempting to add a claim in an amended pleading in its action, but was rather attempting to have its untimely action deemed to relate back to the individual certificate holder’s timely action. Nor was the trustee seeking to add an additional party to an action after the statute of limitations had expired against that party, as is sometimes permitted under the “united in interest” doctrine, which is the stuff of CPLR 203(c). See Siegel & Connors, New York Practice §49 (July 2019 Supplement).

Plaintiff Trustee Can Invoke CPLR 205(a) When First Action Is Dismissed for Failure To Comply With a Procedural Condition Precedent. Similar parties were involved in another action involving a residential mortgage-backed securities trust in which a CPLR 205(a) issue was addressed by the Court of Appeals. In U.S. Bank National Association v. DLJ Mortgage Capital, 33 N.Y.3d 72 (2019) (U.S. Bank #2), defendant Ameriquest was the originator of numerous loans and made several representations and warranties regarding them. Defendant DLJ purchased a group of the loans from Ameriquest and then sold them, after which they were pooled into a trust. The agreements at issue contained a “sole remedy provision,” which required that any party discovering a breach of the representations and warranties to provide prompt notification and allow Ameriquest 90 days to remedy the defect. The agreements also contained a “backstop provision” requiring DLJ to cure a breach in the event that Ameriquest is “unable” to comply with its obligations.

The trustee notified DLJ of breaches of the representations and warranties and demanded that they be cured, but failed to notify Ameriquest. After DLJ failed to cure the breaches, the trustee commenced an action and DLJ moved to dismiss arguing, among other things, that the action was untimely. The supreme court concluded that the action was timely commenced within 6 years from the execution of the agreements, but granted the motion to dismiss “without prejudice to refiling pursuant to CPLR 205(a)” because of the trustee’s failure to comply with the sole remedy provision requiring the trustee to provide notice to Ameriquest. The First Department affirmed.

The Court of Appeals noted that in its decision in ACE Secs. v. DB Structured Prods., 25 N.Y.3d 581 (2015), it held that claims arising from violations of the representations and warranties made in mortgage backed securities agreements, like the claims for breach of warranties in most contracts, accrue on the date of the execution of the agreements. In ACE, the trustee failed to commence its action within the applicable 6-year statute of limitations. See CPLR 213(2); Siegel & Connors, New York Practice §41. In U.S. Bank #2, however, the action was timely commenced, but was dismissed for failing to comply with the sole remedy provision requiring the trustee to provide notice to Ameriquest.

The Court held that the trustee’s failure to comply with the sole remedy provision prior to the commencement of the first action did not render that action untimely. Rather, the trustee failed to comply with what the Court categorized as a “procedural condition precedent,” as opposed to a “substantive condition precedent,” in the pertinent agreements. While the initial action was dismissed, it was not a dismissal on the merits and the action was, in fact, “timely commenced” within the meaning of CPLR 205(a). Therefore, the Court ruled that CPLR 205(a) was available for a second action by the trustee.

In U.S. Bank #1, the trustee similarly contended that it could invoke CPLR 205(a) to commence a new action within 6 months from the dismissal of the individual certificate holder’s action, but the Court held that this argument was not preserved. In any event, it would seem that the propriety of another action based on CPLR 205(a) by the trustee in either litigation should be decided in the subsequent action, and not the action that is dismissed.

Attorney’s Violation of Judiciary Law §470 Does Not Render Pleadings a Nullity. Judiciary Law §470 requires nonresident attorneys admitted in New York to maintain an “office for the transaction of law business” in the State. The constitutionality of the statute was recently upheld by the Second Circuit after the Court of Appeals answered a certified question and ruled that the law requires a nonresident attorney to maintain a physical office in the State. See Siegel & Connors, New York Practice §202.

In Arrowhead Capital Finance v. Cheyne Specialty Fin. Fund, 32 N.Y.3d 645 (2019), the First Department adhered to its prior precedent and ruled that an attorney’s failure to maintain a New York office as required by Judiciary Law §470 requires the dismissal of an action commenced by such attorney, without prejudice to commencing a new action. That latter clause provides little comfort when the statute of limitations may have expired, as was the case in Arrowhead.

In a matter of life and death for the plaintiff, the Court of Appeals reversed the First Department’s order in Arrowhead, holding that the “failure by a nonresident attorney to comply with [Judiciary Law §470’s] requirement at the time a complaint is filed does not render that filing a nullity and, therefore, dismissal of the action is not required.” Instead, “the party may cure the section 470 violation with the appearance of compliant counsel or an application for admission pro hac vice by appropriate counsel.” See Stegemann v. Rensselaer County Sheriff’s Office, 153 A.D.3d 1053, 1055 (3d Dep’t 2017) (ordering defendants represented by counsel who were in violation of Judiciary Law §470, to “cause to be served and filed with this Court an application for admission pro hac vice by appropriate counsel or a notice of appearance … by new counsel … .”). In many situations, this will require the filing of a consent to change attorney in accordance with CPLR 321(b)(1). See Siegel & Connors, New York Practice §202 (July 2019 Supplement).

An interesting point of appellate procedure was also made in Arrowhead. Ordinarily, when the Court of Appeals grants a motion for leave to appeal, all issues within the review powers of the Court may be addressed by the parties. In Arrowhead, however, the plaintiff’s notice of motion for leave to appeal and the accompanying papers limited the issues upon which appeal was sought. The motion was granted, but the plaintiff was limited in the issues it could raise on the appeal “because ‘[t]o permit otherwise necessarily disadvantages the opposing parties, who might have joined issue or even cross-moved for leave to appeal as to additional issues had adequate notice been given.’” See also Siegel & Connors, New York Practice §530 (noting that when an appeal is taken as of right from only part of an interlocutory order, it constitutes a waiver of the right to appeal from other parts of the order).

Arbitration Agreements Between Employee and Employer Prohibiting Class, Collective, or Representative Claims Are Enforceable. Arbitration is often the preferred method of dispute resolution for various entities and there have been several recent court challenges to arbitration clauses in all sorts of agreements. See Siegel & Connors, New York Practice §587. For example, in Gold v. New York Life Insurance Co., 32 N.Y.3d 1009 (2018), plaintiff employees commenced a putative class action seeking recovery for allegedly illegal wage deductions and violations of overtime and minimum wage laws. A plaintiff employee’s contract contained an arbitration provision requiring arbitration of virtually any claim or dispute with her employer. Additionally, under the arbitration provision, the plaintiff waived any right to a jury trial and agreed that no claim could be brought or maintained “on a class action, collective action or representative action basis either in court or arbitration.”

The First Department, in a 3-2 decision, ruled that the arbitration provisions prohibiting class, collective, or representative claims, violate the National Labor Relations Act (NLRA) and were, therefore, unenforceable. The majority acknowledged a split among the federal circuit courts on the issue, and that conflict was subsequently resolved by the Supreme Court in its 2018 decision in Epic Sys. v. Lewis, 138 S.Ct. 1612 (2018). In Epic, the Court ruled that under “the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” Furthermore, the Court concluded that the NLRA did not provide a conflicting command that manifested a clear intention to displace the Federal Arbitration Act in this instance. Therefore, the Supreme Court ruled that arbitration agreements between an employee and employer prohibiting class, collective, or representative claims and requiring that disputes between them be resolved through one-on-one arbitration are enforceable.

After Epic was handed down, the Court of Appeals reversed in Gold and granted defendants’ motion to compel plaintiff to arbitrate her employment claims.

Court of Appeals Emphasizes Once Again That the Substantial Evidence Test Is a ‘Minimal Standard’. The Court once again addressed the substantial evidence test under CPLR 7803(4) in Haug v. State University of New York at Potsdam, 32 N.Y.3d 1044 (2018), “emphasiz[ing] that ‘[t]he substantial evidence standard is a minimal standard.’” In Haug, a college student brought an Article 78 proceeding against the respondent State University challenging its determination, after a hearing, that he engaged in sexual misconduct in violation of the University’s code of conduct. The proceeding was transferred to the Appellate Division, Third Department, which concluded that the University’s determination was not supported by substantial evidence.

In a decision from earlier in 2018, Marine Holdings v. New York City Commission on Human Rights, 31 N.Y.3d 1045 (2018), the Court of Appeals applied the substantial evidence test and observed that “‘[q]uite often there is substantial evidence on both sides’ of an issue disputed before an administrative agency … and the substantial evidence test ‘demands only that a given inference is reasonable and plausible, not necessarily the most probable.’” The Court applied that doctrine again when reversing in Haug, highlighting that “‘the courts have no right to review the facts generally as to weight of evidence, beyond seeing to it that there is substantial evidence’.”

Another point stressed in Haug concerns the admissibility of, and reliance upon, hearsay in an administrative proceeding. See Siegel & Connors, New York Practice §560. The Haug Court stated that “hearsay is admissible as competent evidence in an administrative proceeding, and if sufficiently relevant and probative may constitute substantial evidence even if contradicted by live testimony on credibility grounds.” The Court held that the hearsay evidence proffered at the administrative hearing in Haug, along with the student-petitioner’s own testimony, provided the requisite substantial evidence to support the finding that he committed sexual misconduct in violation of the student code of conduct.

Writ of Mandamus Is Only Available To Compel Performance of a Ministerial Duty That Does Not Involve Discretion. The writ of mandamus is designed to require the performance of a positive duty, not a discretionary one. See Siegel & Connors, New York Practice §558. That principle of law essentially resolved the appeal in Alliance to End Chickens as Kaporos v. New York City Police Dept., 32 N.Y.3d 1091 (2018), where plaintiffs sought a writ of mandamus to compel the New York City Police Department and the New York City Department of Health and Mental Hygiene to enforce certain laws related to preserving public health and preventing animal cruelty. Plaintiffs alleged that these laws are annually violated by Orthodox Jews performing the religious practice of Kaporos, which involves swinging a chicken over one’s head and then slaughtering it in accordance with religious law, all while in public view.

The Court of Appeals ruled that the enforcement of the laws cited by plaintiffs would entail at least some exercise of discretion, and that plaintiffs sought to override that discretion and compel a particular outcome. Therefore, mandamus was not the appropriate vehicle to seek this relief.

CPLR 8501(a)’s Requirement That Nonresident Plaintiff Post Security for Costs Withstands Constitutional Attack. CPLR 8501(a) permits the court, in certain instances, to order a nonresident plaintiff to post security for costs. CPLR 8503 prescribes that security for costs “shall be given by an undertaking” of $500 in the five boroughs in New York City and $250 in the remaining 57 counties, with the court retaining discretion to fix “such greater amount” as necessary to ensure payment of all costs awarded to the defendant. See Siegel & Connors, New York Practice §414 (July 2019 Supplement). In Clement v. Durban, 32 N.Y.3d 337 (2018), CPLR Article 85’s requirements withstood a challenge under the Privileges and Immunities Clause of the U.S. Constitution.

The plaintiff in Clement commenced a personal injury action when she was a New York resident, but subsequently moved to Georgia. Defendants then moved under CPLR 8501(a) and 8503 for an order compelling the plaintiff to post a minimum of $500 security for costs in the event she lost the case. Defendants also sought to stay the proceedings under CPLR 8502 until plaintiff complied with the order. Plaintiff argued that the requirements in CPLR 8501(a) and 8503 violated her rights under the Privileges and Immunities Clause of the Federal Constitution by impairing her fundamental right of access to the courts.

The Court of Appeals rejected the challenge and affirmed the order granting defendant security for costs. Although nonresidents are subject to different treatment under CPLR Article 85, the Court ruled that they “are provided reasonable and adequate access to the New York courts.”

Patrick M. Connors is the Albert and Angela Farone Distinguished Professor in New York Civil Practice at Albany Law School. He is the author of Siegel & Connors, New York Practice (Thomson, 6th ed. 2018), which is supplemented biannually in January and July.