The World in U.S. Courts: Spring 2016 - Personal Jurisdiction/Foreign Sovereign Immunities Act (FSIA)/Forum Non Conveniens
January.16.2016
The plaintiffs were New York citizens who sued defendants, an Antiguan real estate company and its Antiguan citizen principal, for a real estate transaction gone awry. The plaintiffs had engaged defendants to assist them in the purchase of property on the island of Antigua and wired $150,000 to cover deposits and brokers' fees. The defendants allegedly used those funds to pay themselves $95,000, nearly twice the agreed-upon broker's fee, and the remaining $55,000 in funds were unaccounted for and went missing.
The defendants moved to dismiss on grounds that the Court lacked personal jurisdiction over them. The plaintiffs, who bore the burden of demonstrating personal jurisdiction, relied exclusively on New York's long arm statute. First, they argued that defendant RE/MAX Antigua transacted business in New York via its website, pointing to numerous interactive features on the website that allowed users to book Antiguan rental villas, rent cars, and submit questions and inquiries about rental properties. The Court, however, rejected this argument because the plaintiffs failed to allege that they used any of the interactive features. In fact, the interactive features were not even available on the website until after the transactions at issue had occurred, compelling the conclusion that the plaintiffs did nothing more than merely view the website and obtain information from it. Under New York law, a website that provides only information without giving a New York consumer the ability to transact any business on the website is considered passive and outside the reach of New York's long arm statute.
The court likewise rejected the argument that personal jurisdiction could be based on RE/MAX Antigua having signed a franchise agreement subjecting it to U.S. law and jurisdiction in Colorado for suits arising out of the franchise agreement. The Court failed to see the connection between the franchise agreement and this case, which arose out of conduct not covered by the franchise agreement. Finally, the Court rejected the argument that the individual Antiguan citizen defendant should be subject to personal jurisdiction based on a suggested meeting in New York that never occurred.