9 N.Y.3d 501 (2007)
A person who sues a New York resident in a non-U.S. jurisdiction, and whose contacts with New York stem from that foreign lawsuit, does not necessarily transact business within New York under CPLR 302(a)(1), even if success in the foreign suit results in acts to be performed by the subject of the suit in New York.
Summary
Rachel Ehrenfeld, a New York author, was sued for defamation in England by Khalid Salim Bin Mahfouz, a Saudi Arabian businessman, based on statements in her book. Mahfouz served papers and sent communications related to the English lawsuit to Ehrenfeld in New York. Ehrenfeld then sued Mahfouz in New York, seeking a declaration that the English judgment was unenforceable. The New York Court of Appeals held that Mahfouz’s contacts with New York, stemming solely from the English lawsuit, did not constitute transacting business in New York under CPLR 302(a)(1), and therefore, New York courts lacked personal jurisdiction over him. The court emphasized that Mahfouz’s actions did not purposefully avail him of the benefits and protections of New York law.
Facts
Rachel Ehrenfeld, a New York-based author, wrote a book, “Funding Evil,” alleging that Khalid Salim Bin Mahfouz supported terrorist groups. The book was published in the U.S., but some copies were sold in the UK. Mahfouz, a Saudi Arabian businessman, claimed the allegations were false and sued Ehrenfeld for defamation in England. Mahfouz’s lawyers contacted Ehrenfeld in New York, seeking an apology and retraction. When Ehrenfeld refused, Mahfouz sued her in England, serving her with court papers at her New York City apartment and communicating with her via mail and e-mail regarding the English action.
Procedural History
Mahfouz obtained a default judgment against Ehrenfeld in England. Ehrenfeld then filed suit against Mahfouz in the United States District Court for the Southern District of New York, seeking a declaratory judgment that the English judgment was unenforceable. The district court dismissed the case for lack of personal jurisdiction. The Second Circuit certified a question to the New York Court of Appeals regarding whether CPLR 302(a)(1) conferred personal jurisdiction over Mahfouz. The New York Court of Appeals answered in the negative.
Issue(s)
Whether CPLR 302(a)(1) confers personal jurisdiction over a person (1) who sued a New York resident in a non-U.S. jurisdiction; and (2) whose contacts with New York stemmed from the foreign lawsuit and whose success in the foreign suit resulted in acts that must be performed by the subject of the suit in New York?
Holding
No, because these contacts do not constitute the transaction of business in New York under CPLR 302(a)(1).
Court’s Reasoning
The court reasoned that under CPLR 302(a)(1), a court may exercise personal jurisdiction over a non-domiciliary who transacts business within the state if the cause of action arises from that transaction. The “overriding criterion” is whether the defendant “purposefully avails itself of the privilege of conducting activities within [New York].” The court found that Mahfouz’s contacts with New York were solely related to the English lawsuit and did not involve invoking the benefits or protections of New York law. His communications were intended to further his assertion of rights under English law. The court distinguished cases where a defendant actively sought to consummate a transaction in New York or established an ongoing relationship governed by New York law.
The court rejected the argument that Mahfouz’s refusal to waive enforcement of the English judgment in New York constituted purposeful availment. Citing Ferrante Equip. Co. v. Lasker-Goldman Corp., 26 N.Y.2d 280 (1970), the court stated that the mere receipt of a benefit or profit from a contract performed by others in New York is not sufficient to confer jurisdiction. The alleged chilling effect on Ehrenfeld’s speech did not arise from Mahfouz’s invocation of New York law, but from the English remedy and Ehrenfeld’s own activities in New York.
The court declined to adopt the Ninth Circuit’s holding in Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199 (2006), because California’s long-arm statute is coextensive with federal due process requirements, while New York’s long-arm statute is more restrictive. The court emphasized that New York law requires purposeful availment of New York law, which was not present in this case. The court stated that using an effects test would be “an unwarranted extension of [section 302 (a) (1)] and a usurpation of a function more properly belonging to the Legislature.”