A Brave New World of Jurisdiction: An Instant Message Can Land You In A New York Court
In previous posts and article, we've explored the many ways in which electronic messages can create liability headaches. Michael Eisner, former CEO of Disney, perhaps said it best: "Nothing can bring down a company down faster than blind copies of e-mails which never should have been sent in the first place."The New York Court of Appeals has now deepened the e-mail and instant message pit. In Deutsche Bank Securities, Inc. v. Montana Board of Investments. 2006 N.Y. Lexis 1366; 2006 NY Slip Op 4338 (decided June 6, 2006), the Court held that an instant message sent to a recipient within New York can subject the sender to New York's long-arm jurisdiction. The defendant, from Montana, sent an instant message to plaintiff in New York canceling a trade for securities after events indicated that the value of the bonds would increase. Plaintiff commenced an action in New York State Supreme Court for breach of contract. Defendant moved to dismiss arguing, among other things, that the instant message was an insufficient basis for the assertion of personal jurisdiction. The court granted the motion, but the Appellate Division unanimously reversed and the Court of Appeals affirmed.
Chief Judge Judith Kaye wrote that given "technological advances," one "entering our state -- whether electronically or otherwise -- to negotiated and conclude a substantial transaction iw within the embrace of the New York long-arm statute."
While the Court may have relied, in part, on the sophistication of the parties and the pattern of electronic dealing between them, the decision nonetheless raises highly significant risk management issues with regard to the use of office technology. If other states follow New York's lead, an e-mail or instant message can bring a company, which may send out thousands of such communications each day to several states, within the clutches of jurisdictions which may be less than favorable. The importance of training and education on the use of such communications, following this decision, become much more imperative.