E-Discovery in New York State

The Camelback defendant had no New York employees, and its principal traveled to New York only occasionally to attend trade shows. The court examined the “solicitation-plus” rule, which provides for a finding of jurisdiction where foreign defendants solicit business that is substantial, continuous and representative of an undertaking of other activities in New York. The court held that jurisdiction did not lie where a claim rests on allegations of solicitation and marketing by a non-New York agent through a Web-based reservation system “not located” in New York. Specifically,

Similarly, in New World Sourcing Group v. SGS SA,⁴ where one foreign defendant was listed as an affiliate/subsidiary on another foreign defendant’s Web site, the court held that the existence of such listing did not specifically target New York and was not interactive, which mitigated against finding jurisdiction under CPLR §301.

Applying CPLR §302, no jurisdiction was found where the only evidence offered to establish jurisdiction consisted of three inspection reports e-mailed from China from the foreign defendant, which “were not sent on a consistent basis over a period of one year and no telephone calls or other modes of communication were used.”

In Klein v. Education Loan Servicing, LLC,⁵ the court found that a loan servicing company’s Web site was not sufficiently interactive upon which to base jurisdiction, despite students’ ability to make payments through it. The court noted that there was insufficient evidence to establish that defendants had New York customers from whom they derived substantial revenue or that their business with New York customers was of a continuous nature.

None of the defendants, including the graduate loan service companies and their employees; the Web site itself, through which students could make payments; and the university and its dean and its loan service officers, were located in New York, nor did they have employees in New York.

The court in Calvert v. Cove⁶ held that “courts must look to the nature and quality of commercial activity that an entity conducts over the internet.”

Calvert was a landlord-tenant matter in which plaintiffs, New York residents, negotiated a lease over the phone to rent an apartment in Tennessee with a Tennessee-based defendant.

Finding no jurisdiction, the court held that defendant’s Web sites were passive in nature, where the on-screen printouts offered by plaintiffs revealed that defendant simply posted information about the properties available and provided a phone number for potential customers’ inquiries, and there was no indication that the defendant directed his advertising to New York. The fact that the site, “ForRent.Com,” was hosted in New York state did not satisfy due process requirements.

The issue of passive sites also was examined in Schoolman Transportation System Inc. v. Molly Corp.⁷

Schoolman involved a New York plaintiff who purchased a trolley from a Maine-based defendant, which was not authorized to do business in New York, did not employ personnel in New York, did not have a New York phone number, and did not have property in New York.

The trolley was assembled in Maine, plaintiff contacted defendant in Maine with respect to the purchase, and the contract was negotiated and entered into in Maine. The trolley was delivered to plaintiff in New York, after which plaintiff experienced mechanical difficulties and sued for breach of contract.

Reiterating the necessity for there to be “minimum contacts,” as well as precedent requiring there to be purposeful activity within the state that must be substantially related to the cause of action to establish jurisdiction, the court held that jurisdiction did not lie when a Web site advertised a product and provided contact information for a Maine company.

The court noted that a passive site, which merely made information available to potential customers, was not a basis for jurisdiction under CPLR §302(a)(1), and “[t]o find otherwise would result in subjecting every entity worldwide which maintains a Web site providing contact information, to New York’s long-arm jurisdiction. Such proposition would be unduly burdensome upon the calendars of the New York court system, and in contravention of the minimum contacts requirement of [International Shoe].”

Bases for Jurisdiction

In Bankrate Inc. v. Mainline Tavistock Inc.,⁸ the court directed “limited discovery to allow for a jurisdictional determination on a more complete record.”

Bankrate was a breach of contract action between a New York plaintiff and out-of-state defendants who signed contracts outside of New York involving publications in states other than New York. The court noted that: