Opinion ID: 727997
Heading Depth: 2
Heading Rank: 1

Heading: Transacts Business

Text: 13 The question of whether an out-of-state defendant transacts business in New York is determined by considering a variety of factors, including: (i) whether the defendant has an on-going contractual relationship with a New York corporation, George Reiner & Co. v. Schwartz, 41 N.Y.2d 648, 653, 394 N.Y.S.2d 844, 363 N.E.2d 551 (1977); (ii) whether the contract was negotiated or executed in New York, George Reiner, 41 N.Y.2d at 653, 394 N.Y.S.2d 844, 363 N.E.2d 551; Hoffritz, 763 F.2d at 60, and whether, after executing a contract with a New York business, the defendant has visited New York for the purpose of meeting with parties to the contract regarding the relationship, CutCo, 806 F.2d at 367-68; Hoffritz, 763 F.2d at 60; (iii) what the choice-of-law clause is in any such contract, CutCo, 806 F.2d at 366-67; Sacody Technologies, Inc. v. Avant, Inc., 862 F.Supp. 1152, 1156 (S.D.N.Y.1994) (choice-of-law clause is a significant, but not dispositive, factor); and (iv) whether the contract requires franchisees to send notices and payments into the forum state or subjects them to supervision by the corporation in the forum state, CutCo, 806 F.2d at 368. Although all are relevant, no one factor is dispositive. Other factors may also be considered, and the ultimate determination is based on the totality of the circumstances. See PaineWebber Inc. v. Westgate Group, Inc., 748 F.Supp. 115, 118 (S.D.N.Y.1990). 14 Applying those factors, we do not hesitate to conclude that the AVIS licensees transact business in New York. Their very businesses arise out of an ongoing contractual relationship with AVIS, which is headquartered in New York. Pursuant to these contractual arrangements, licensees submit monthly reports and fees to the New York headquarters and are in contact with individuals at AVIS headquarters on an almost daily basis. See CutCo, 806 F.2d at 368. Moreover, licensees have voluntarily located their professional association and fleet financing organization in New York and conduct joint advertising campaigns with the AVIS Advertising & Policy Committee and Advertising Trust in New York. In addition, it appears that most, if not all, licensees heavily rely upon AVIS's New York-based computer system for reservations. Cf. CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262-63 (6th Cir.1996) (electronic contacts with forum state via computer network constitute transacting business under Ohio long-arm statute where non-resident subscriber of computer network service located in Ohio had on-going contract with service to sell product on-line). 15 The licensees contend that, to the extent that some of the licensing agreements were entered into when AVIS was headquartered in Massachusetts, the fact that licensees now must deal with AVIS in New York is fortuitous and is not the kind of purposeful contact contemplated by Section 302(a)(1). They argue that, absent an intent to contract with a New York company, the transmission of payments and reports to New York and the performance of services by AVIS from New York on behalf of licensees lack jurisdictional relevance. We disagree. 16 In contrast to the decisions relied upon by licensees, the instant matter does not involve temporary, random, or tenuous relationships with the forum. Compare Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762-63 (2d Cir.1983) (disparate and unconnected shipments of goods into New York and mailing of a single cease and desist letter to plaintiff in New York insufficient to constitute transacting business); International Customs Assocs., Inc. v. Ford Motor Co., 893 F.Supp. 1251, 1260-61 (S.D.N.Y.1995) (New York choice-of-law clause insufficient to confer long-arm jurisdiction where only contacts were correspondence and telephone calls to New York by Taiwanese business and where a substantial portion of contract was to be performed in Taiwan); PaineWebber, 748 F.Supp. at 119-120 (where PaineWebber closed its Dallas branch office, thereby forcing Texas client to deal with its New York office for purposes of a single transaction, Texas client did not purposefully avail itself of the New York forum). 17 Indeed, even the licensees that contracted with AVIS prior to the move to New York have done constant business with AVIS in New York for over three decades, including the continuous transmission of payments and reports to New York. All but three have entered into new contracts with AVIS that contain New York choice-of-law clauses. The licensees' contacts with New York have been, therefore, anything but temporary, random, or tenuous. Rather, they have been continual, repetitive, and essential to the licensees' businesses. 18 The licensees also argue that jurisdiction in New York is improper because they did not negotiate or execute the contracts there and have rarely, if at all, made trips to New York to meet with AVIS regarding the performance of the contracts. But see CutCo, 806 F.2d at 367 (defendants' two relevant business visits to the forum not jurisdictionally insignificant); Hoffritz For Cutlery, 763 F.2d at 57, 60 (negotiations for on-going contractual relationship with New York company took place in New York and defendants subsequently visited New York more than fifty times to discuss business under the agreement). We find this argument unpersuasive. The licensees have a professional organization in New York to act as their agent in representing their collective interests with AVIS, a fact that wholly undercuts the lack of frequent personal trips to New York. Indeed, we question whether, in an age of e-mail and teleconferencing, the absence of actual personal visits to the forum is any longer of critical consequence. See CompuServe, 89 F.3d at 1262, 1264. The small number of personal trips by the licensees to New York does not, therefore, cause us to shrink from the conclusion that they purposefully availed themselves of the forum. 19 Having considered the totality of the circumstances--the daily contacts with AVIS in New York, the monthly payments and reports sent there, the business conducted with VSA, the money sent to the advertising trust, the rotating memberships on the Advertising & Policy Committee, AVIS's oversight of licensees, and the booking of reservations in New York--we conclude that licensees transact business in New York within the meaning of Section 302(a)(1). 20