Do E-mails Sent to NY Businesses Constitute "Conducting Business" for Jurisdictional Purposes?

In Deutsche Bank Sec., Inc. v Montana Bd. of Invs., 2006 NY Slip Op 04338, the New York Court of Appeals considered the issue of whether long-arm jurisdiction applied to a commercial entity's use of e-mail and instant messages to communicate with businesses located in New York.

The litigation in this case arose from what was essentially a breach of contract action between a bank based in Manhattan and a Montana state agency.  A number of instant messages (sent through the Bloomberg Instant Messaging System), were exchanged over a 2 day period relating to a possible large scale bond trade which ultimately fell through.

In determining whether long-arm jurisdiction applied to the transactions, the Court first set forth the appropriate standard for long-arm jurisdiction in New York:

New York's long-arm statute provides that "a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state or contracts anywhere to supply goods or services in the state" (CPLR 302 [a] [1]). By this "'single act statute' . . . proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted" (Kreutter v McFadden Oil Corp., 71 NY2d 460, 467 [1988])...

"(S)o long as a party avails itself of the benefits of the forum, has sufficient minimum contacts with it, and should reasonably expect to defend its actions there, due process is not offended if that party is subjected to jurisdiction even if not 'present' in that State" (id. at 466).

The Court noted that its past decisions had extended long-arm jurisdiction to commercial actors using electronic and telephonic means to project themselves into New York in order to conduct business transactions.  The Court extended this line of reasoning and, in a unanimous decision, concluded that:

As distinct from an out-of-state individual investor making a telephone call to a stockbroker in New York ), MBOI is a sophisticated institutional trader that entered New York to transact business here by knowingly initiating and pursuing a negotiation with a DBSI employee in New York that culminated in the sale of $15 million in bonds.

In short, when the requirements of due process are met, as they are here, a sophisticated institutional trader knowingly 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. (Internal quotations and citations omitted).

The Court also rejected the argument that a Montana statute that purported to vest exclusive jurisdiction with Montana courts applied:

We continue to hold that where, as here, a lawsuit arises from a commercial transaction in which another state, or its agent, has knowingly projected itself into New York to take advantage of our financial markets, New York courts should not dismiss the action as a matter of comity.

This case and its underlying facts are discussed in more detail in this article from the New York Law Journal and in this Newsday article.