George Reiner & Co., Inc. v. Schwartz, 41 N.Y.2d 648 (1977)
A non-domiciliary who is physically present in New York and enters into a contract, thereby establishing a continuing relationship with a New York corporation, is subject to personal jurisdiction in New York for causes of action arising from that contract.
Summary
George Reiner & Co. sued Arnold Schwartz for violating his employment contract. Schwartz, a Massachusetts resident, argued New York lacked personal jurisdiction. The Court of Appeals held that by traveling to New York, interviewing for a job, and entering into an employment agreement with a New York company, Schwartz purposefully availed himself of the privilege of conducting activities within New York, thus establishing personal jurisdiction. This single transaction was sufficient because it created a continuing relationship and the lawsuit arose directly from that agreement.
Facts
Arnold Schwartz, a Massachusetts resident, responded to an advertisement by George Reiner & Co., a New York corporation. At the company’s request and expense, Schwartz traveled to Albany, New York, for an interview. An employment agreement was reached, and Schwartz returned to Massachusetts with a memorandum outlining his sales territory (New England), commission rate, and other employment details. Schwartz worked for Reiner for over four years, covering New England from his Massachusetts home office. Reiner later sued Schwartz, alleging he fraudulently violated the contract by retaining excess drawings over commissions.
Procedural History
Reiner sued Schwartz in New York. Schwartz moved to dismiss the action for lack of personal and subject matter jurisdiction. Special Term granted the motion based on lack of personal jurisdiction. The Appellate Division reversed and reinstated the complaint. The New York Court of Appeals granted leave to appeal and certified the question of whether Special Term erred in dismissing the case for lack of personal jurisdiction.
Issue(s)
Whether a non-domiciliary, by traveling to New York for a job interview and entering into an employment contract with a New York corporation, transacts business within New York sufficient to establish personal jurisdiction under CPLR 302(a)(1) for a cause of action arising from that contract.
Holding
Yes, because by purposefully coming into New York to seek employment, interviewing, and entering into an agreement with a New York employer that contemplated and resulted in a continuing relationship, the defendant availed himself of the privilege of conducting activities in New York, thus invoking the benefits and protection of its laws.
Court’s Reasoning
The Court relied on the principle established in International Shoe Co. v. Washington, which requires minimum contacts with the forum state such that maintaining the suit does not offend traditional notions of fair play and substantial justice. The court emphasized that CPLR 302(a)(1) allows for personal jurisdiction over a non-domiciliary who transacts any business within the state, as long as the cause of action arises from that transaction. The Court determined that Schwartz’s physical presence in New York to negotiate and enter into the employment contract constituted the transaction of business within the state. The court stated that this was the “clearest sort of case” for jurisdiction, as the contract, which established a continuing relationship, was made in New York, and the cause of action arose directly from that contract. The court distinguished this case from McKee Elec. Co. v. Rauland-Borg Corp., where the defendant’s contact with New York was a casual attempt to smooth out difficulties, not the purposeful creation of a contractual relationship. The court emphasized that Schwartz “purposefully availed himself of the privilege of conducting activities, in our jurisdiction, thus invoking the benefits and protection of our laws.”