72 NY2d 780 (1988)
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The New York Court of Appeals will decline to answer a certified question from a federal court if the answer would not be determinative of the pending action and does not satisfy the requirements of the New York Constitution.
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Summary
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The Second Circuit Court of Appeals certified a question to the New York Court of Appeals regarding whether New York’s Franchise Sales Act provides a basis for personal jurisdiction. The Court of Appeals declined to answer, holding that the question, as framed, was not determinative of the cause pending in the Second Circuit, as required by the New York Constitution. Answering the question would only establish an abstract proposition without resolving the specific jurisdictional issues in the case, including constitutional challenges and the applicability of the long-arm statute.
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Facts
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Guerdon Enterprises, Inc., a New York corporation, entered into franchise agreements with Software Centre International (SCI), a California franchisor, for retail stores in New York. SCI, along with its officers Robert Fick and William Janeski, allegedly made misrepresentations during a California meeting about SCI’s financial condition, upon which Guerdon relied. SCI later went bankrupt without performing the agreements.
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Procedural History
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Guerdon sued SCI, Fick, and Janeski in the Federal District Court for the Eastern District of New York, alleging violations of New York’s Franchise Sales Act. The District Court dismissed the complaint against Fick and Janeski for lack of personal jurisdiction, rejecting the argument that General Business Law § 686 provided a jurisdictional basis and citing the fiduciary shield doctrine. Guerdon appealed to the Second Circuit Court of Appeals, which then certified a question to the New York Court of Appeals.
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Issue(s)
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Whether New York’s Franchise Sales Act, N.Y. Gen. Bus. Law § 686, provides a basis for personal jurisdiction as well as a method for service of process such that the New York Court of Appeals should answer a certified question regarding its applicability.
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Holding
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No, because the question as framed does not satisfy the requirement that it “may be determinative” of the pending action in the Second Circuit, nor does it permit consideration of the constitutionality of the statute in its actual application.
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Court’s Reasoning
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The Court of Appeals reasoned that answering the certified question in the affirmative would only establish a general proposition about the statute’s potential jurisdictional basis. It would not necessarily determine whether the statute applies in this specific case, where the individual defendants had seemingly engaged in no activities within New York. The court emphasized that a proper determination of personal jurisdiction must account for constitutional limitations. As the court stated, “[W]e cannot answer that question in a vacuum, divorced from consideration of the constitutionality of the statute in its actual application…We would have to assume constitutionality in order to answer the question posed.”
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Furthermore, the Court noted that even if the Franchise Sales Act did not provide a basis for jurisdiction, the question of whether New York’s long-arm statute (CPLR 302) could confer jurisdiction would remain unresolved. Thus, the Court concluded that answering the certified question would not be meaningfully dispositive of the case before the Second Circuit. The court emphasized that the question certified