Opinion ID: 763568
Heading Depth: 3
Heading Rank: 1

Heading: New York's Long-Arm Statute

Text: 14 The parties agree that the only possible basis for jurisdiction over Navitas under New York's long-arm statute is § 302(a)(3)(ii). It states in pertinent part: 15 As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent: 16 ... 17 3. commits a tortious act without the state causing injury to person or property within the state, ... if he 18 ... 19 (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce. 20 § 302(a)(3)(ii). The parties agree further that the analysis of whether jurisdiction is proper under § 302(a)(3)(ii) reduces to the question of whether Navitas expect[ed] or should reasonably [have] expect[ed] that its actions would have consequences in New York. 21 The test of whether a defendant expects or should reasonably expect his act to have consequences within the State is an objective rather than subjective one. Allen v. Auto Specialties Mfg. Co., 45 A.D.2d 331, 357 N.Y.S.2d 547, 550 (3d Dep't 1974). New York courts have sought to avoid conflict with federal constitutional due process limits on state court jurisdiction by applying the reasonable expectation requirement in a manner consistent with United States Supreme Court precedent. See In re DES Cases, 789 F.Supp. 552, 570-71 (E.D.N.Y.1992) (collecting cases). Thus, New York courts have asserted that the simple likelihood or foreseeability that a defendant's product will find its way into New York does not satisfy this element, and that purposeful availment of the benefits of the laws of New York such that the defendant may reasonably anticipate being haled into New York court is required. Id.; see, e.g., Martinez v. American Standard, 91 A.D.2d 652, 457 N.Y.S.2d 97, 98-99 (2d Dep't 1982) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)), aff'd, 60 N.Y.2d 873, 470 N.Y.S.2d 367, 458 N.E.2d 826 (1983); Schaadt v. T.W. Kutter, Inc., 169 A.D.2d 969, 564 N.Y.S.2d 865, 866 (3d Dep't 1991) ([I]t is not enough that a defendant foresaw the possibility that its product would find its way here; foreseeability must be coupled with evidence of a purposeful New York affiliation, for example, a discernible effort to directly or indirectly serve the New York market.); see also Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 (1988) (noting requirement under § 302(a)(3)(ii) that the defendant's activities here were purposeful). 22 Judge Heckman, after reviewing relevant New York state case law, held that Kurz-Hasting's agreement to sell Navitas's products in (among other places) the United States was sufficient in and of itself to support a finding of  'foreseeability ... coupled with a purposeful act'  for purposes of § 302(a)(3)(ii). See Kurz-Hastings, 997 F.Supp. at 374 (alteration in original) (quoting Cortlandt Racquet Club, Inc. v. Oy Saunatec, Ltd., 978 F.Supp. 520, 523 (S.D.N.Y.1997)). We agree. 23 In Schaadt v. T.W. Kutter, Inc., the plaintiff, who was injured when her hand was caught in a meat packaging machine, brought an action in New York against the German manufacturer of the machine as well as the Massachusetts company that sold the machine in the United States. After the trial court denied the German manufacturer's motion for summary judgment on the ground of lack of personal jurisdiction, the Appellate Division, Third Department, reversed. See id., 564 N.Y.S.2d at 866. The Schaadt court held that plaintiff had failed to adduce evidence that the German company had attempted, directly or indirectly, to serve the New York market, and that the sole fact that the company had sold its products to a Massachusetts company, which then sold the machines throughout the United States, was insufficient to satisfy § 302(a)(3)(ii)'s reasonable expectation requirement. See id. 24 The First Department reached a different result in Kappas v. T.W. Kutter, Inc., 192 A.D.2d 402, 596 N.Y.S.2d 361 (1st Dep't 1993). In Kappas, another person injured by a meat packaging machine brought suit against the same Massachusetts company sued in Schaadt, which then brought a third-party claim against the same German manufacturer. The First Department, however, found that summary judgment against the German manufacturer was inappropriate given the existence of issues of fact as to whether the manufacturer had sufficient contacts with New York so as to be subject to long-arm jurisdiction. The Kappas court found that the German manufacturer had entered into a written contract, after the operative events in Schaadt, which designated the Massachusetts company as the exclusive distributor and promoter of the German machines in the United States. See Kappas, 596 N.Y.S.2d at 362. This finding, coupled with the finding that the Massachusetts company was to repair and service machines sold in New York, precluded the entry of summary judgment in the German manufacturer's favor. See id. 25 Finally, the case of Adams v. Bodum Inc., 208 A.D.2d 450, 617 N.Y.S.2d 316 (1st Dep't 1994) is consistent with Kappas. In Adams, the First Department found that a foreign coffee maker manufacturer's exclusive distributorship agreement with a domestic distributor, covering all of the United States, provided a sufficient basis for finding that the manufacturer should have reasonably expected that New York residents would be purchasing and using its product. See id. at 316. 26 Although it is admittedly a close question, we agree with Judge Heckman that § 302(a)(3)(ii) permits the exercise of personal jurisdiction over Navitas on the facts of this case. As already noted, Kurz-Hastings sold the allegedly defective machine to Forbes in New York pursuant to an exclusive sales rights agreement with Navitas. That agreement not only gave Kurz-Hastings the right to sell Navitas's machines anywhere outside of seventeen specified Asian countries, it also provided for the exchange of information relevant to product development, as well as pricing information (if either party intended to revise prices). The sales rights agreement makes this case more like Adams and Kappas, and distinguishes the Schaadt case relied upon by Navitas. In addition, Navitas's President, Mr. Arita, admitted to the existence of an oral agreement to manufacture machines for sale by Kurz-Hastings, a Pennsylvania corporation, and that Navitas had general knowledge that Kurz-Hastings would resell the machines in Pennsylvania and throughout the United States. 27 These facts, taken together, convince us that Navitas did indeed attempt to serve the New York market, even if it did so indirectly; that the agreement did not specify New York, but instead, with an exception for certain Asian countries, permitted the sale of Navitas's hot stamping presses throughout the world, cannot serve to defeat jurisdiction. In short, Kurz-Hastings presented evidence sufficient to satisfy § 302(a)(3)(ii)'s reasonable expectation requirement.