E-mails and Phone Calls Made to New York Sufficient Basis for Personal Jurisdiction

On February 14, 2023, the Court of Appeals issued a decision in State of New York v. Vayu, Inc., 2023 NY Slip Op. 00801, holding that e-mails and phone calls made to New York were a sufficient basis for personal jurisdiction, explaining:

When assessing whether there is personal jurisdiction over a defendant pursuant to the transacts any business clause of New York’s long-arm statute, courts must ask whether what the defendant did in New York constitutes a sufficient transaction to satisfy the statute. Examination of a defendant’s actions in New York is primarily a fact-based inquiry that requires an assessment of whether the non-domiciliary’s activities in the state were purposeful. Purposeful activities, this Court has explained, are volitional acts by which the non-domiciliary avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. Although determining what facts constitute purposeful availment is an objective inquiry, it always requires a court to closely examine the defendant’s contacts for their quality. We conclude that Vayu’s actions, outlined below, were purposeful and amounted to the transaction of business within this State.

In 2013, Vayu’s Chief Executive Officer, Daniel Pepper, contacted Dr. Peter Small, who was not yet affiliated with SUNY Stony Brook, about using UAVs to transport laboratory samples. It is unclear whether Small was in New York at the time. Two years later, in 2015, while working as a professor of medicine and director of the Global Health Institute at SUNY Stony Brook, Small contacted Pepper seeking a business relationship between Vayu and SUNY Stony Brook for the development and use of UAVs to deliver medical supplies to remote areas in underdeveloped countries. From 2015 through 2017, Pepper communicated with Small and other representatives of SUNY Stony Brook through telephone calls to SUNY Stony Brook phone numbers, emails to SUNY Stony Brook email addresses, and later through a face-to-face meeting in New York. These discussions concerned both the development of UAVs to be sold to SUNY Stony Brook, as well as broader partnership opportunities. In the summer of 2016, Vayu and SUNY Stony Brook worked together to submit a grant application to the United States Agency for International Development (USAID), in which Vayu described SUNY Stony Brook as a “partner” and identified Small as a key member of its “team.” The submission also outlined a two-year budget with SUNY Stony Brook receiving approximately $85,000 per year for costs such as travel, stipends, and technical support as part of an effort to supply 10 UAVs to Madagascar. USAID ultimately approved the grant proposal that included these representations.

In September 2016, SUNY Stony Brook purchased two UAVs from Vayu for $25,000 each. Vayu sent an invoice to SUNY Stony Brook at a post office box located in New York, and Vayu accepted a wire payment from SUNY Stony Brook that originated in New York. Attached to the invoice was a note from a Vayu employee stating “[w]e can discuss down the line whether [Small] would like these shipped to NY, or on [SUNY Stony Brook’s] behalf to Madagascar.” The drones were later shipped directly to Madagascar from Michigan. By November 2016, however, problems arose with the operation of the two UAVs. Vayu employees and SUNY Stony Brook representatives attempted to resolve the issues by telephone and email, and in September 2017, Pepper offered to meet Small in New York. At that meeting, Pepper and Small agreed to terms for moving forward, which were memorialized via email: SUNY Stony Brook would bear the cost of shipping the UAVs from Madagascar to Michigan; Vayu would provide replacement UAVs that met SUNY Stony Brook’s specifications; and Vayu would train one of SUNY Stony Brook’s employees to operate the UAVs. The two parties also discussed an ongoing business relationship and future opportunities between Vayu and SUNY Stony Brook. In November 2017, SUNY Stony Brook returned the two UAVs to Vayu in Michigan. Vayu failed to replace them or provide a refund.

These facts demonstrate a clear intent by Vayu to engage purposefully in business activities within the meaning of CPLR 302 (a) (1). For two years, Vayu projected itself into the State via calls and emails with Small and others at SUNY Stony Brook that resulted in the sale of two UAVs. The content of the communications here show that Vayu purposefully sought to establish a substantial ongoing business relationship with SUNY Stony Brook. Long-arm jurisdiction is appropriately exercised over commercial actors who have, as Vayu did here, used electronic and telephonic means to project themselves into New York to conduct business transactions. And, although being physically present in New York is not required, the fact that Pepper traveled to New York to meet with Small in furtherance of the ongoing business relationship is significant.

In granting Vayu’s motion to dismiss, Supreme Court emphasized that it was Small at SUNY Stony Brook who reached out to Pepper for the purpose of creating the business relationship at issue and described later communications between Vayu and representatives of SUNY Stony Brook as predominantly responsive in nature. Similarly, the Appellate Division majority concluded that the relationship was a single transaction that occurred after Small began work at SUNY Stony Brook and contacted Vayu’s CEO. The court opined that it was undisputed that the parties formed a relationship, but nevertheless characterized the communications between the parties as only discussing the ongoing issues related to the UAVs which did not result in more sales in New York or seek to advance defendant’s business contacts in New York. The reasoning of both courts is inconsistent with the record and our precedent.

We have noted that CPLR 302 is a single-act statute requiring but one transaction—albeit a purposeful transaction—to confer jurisdiction in New York. In any event, the communications here relate not only to the sale of the two drones, but also to a continuing business relationship between Vayu and SUNY Stony Brook. Moreover, this is not a case where plaintiff responded to a passive website, but rather involved an active dialogue between principals based on earlier personal contact. And, although a defendant’s initiation of contact with New York is a relevant factor in the purposeful availment analysis, it is not determinative. Moreover, contrary to the dissent’s characterization of this arrangement as a unilateral plan conceived by Small, the email communications between the two make clear that Pepper reached out to Small in December 2013 to discuss the idea to use drones to transport lab samples. According to Pepper, that idea was a shared vision between the two, specifically for an affordable and autonomous, long-range delivery drone that can address the needs of last mile rural healthcare delivery. The sale of the drones to SUNY Stony Brook for use in Madagascar furthered this shared vision.

The Appellate Division majority also discounted the meeting in New York because the visit by the CEO to New York in 2017 was for the purpose of discussing issues regarding the completed purchase of the UAVs, rather than seeking additional business from SUNY Stony Brook or other entities in New York. This conclusion was also incorrect. Although at the time of the 2017 meeting in New York, SUNY Stony Brook had already accepted delivery of the allegedly defective UAVs, that meeting led to modification of the agreement, including the agreement to replace the drones. In its cause of action for breach of contract, plaintiff alleged that, after acknowledging the defects in the drones, defendant breached the terms governing replacement. The circumstances here, involving actions undertaken pursuant to an ongoing business relationship, are distinguishable from those in Paterno, where the alleged tort—malpractice based on a medical procedure performed by defendant in Florida—had already taken place prior to certain contacts plaintiff claimed established the requisite relationship with New York.

We have made clear that the nature and purpose of a solitary business meeting conducted for a single day in New York may supply the minimum contacts necessary to subject a nonresident participant to the jurisdiction of our courts. Here, however, there was more than this bare minimum: the meeting was part of a far reaching and long-standing relationship. The parties had a two-year business relationship when the principals met—at Pepper’s request—in New York in 2017. In the weeks that followed, the parties exchanged emails and calls, including an email from Pepper to Small memorializing the modified terms of the agreement with an assurance that above all else, we want to figure out a solution and work together. The meeting in New York, and the follow up communications, designedly and materially forwarded the negotiation and performance of the contract for sale of the UAVs.

The second prong of New York’s long-arm statute, requiring the cause of action to arise from a defendant’s relevant business transaction in the state, is easily met. Plaintiff’s claims are based on the sale of the two UAVs, and Vayu’s contacts in New York were directly related to efforts to resolve the dispute over operability of the purchased UAVs. Thus, there is an articulable nexus or substantial relationship between defendant’s New York activities and the parties’ contract, defendant’s alleged breach thereof, and potential damages.

(Internal quotations and citations omitted).

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