Frummer v. Hilton Hotels International, Inc.
19 N.Y.2d 533, 227 N.E.2d 851, 281 N.Y.S.2d 41 (1967)
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Rule of Law:
A foreign corporation is subject to general personal jurisdiction in New York if it engages in a continuous and systematic course of "doing business" within the state, either directly or through an agent, sufficient to warrant a finding of its "presence," even if the cause of action arises outside New York.
Facts:
- In 1963, the plaintiff visited England and stayed at the London Hilton Hotel.
- While at the London Hilton Hotel, the plaintiff fell and was injured in his room attempting to take a shower in an "ovular," modernistic bathtub.
- The London Hilton Hotel is leased and operated by Hilton Hotels (U. K.) Ltd. (Hilton U.K.), a British corporation.
- Hilton Hotels Corporation and Hilton Hotels International are Delaware corporations doing business in New York.
- The Hilton Reservation Service maintains a New York office, a New York bank account, and a New York telephone number.
- The Hilton Reservation Service advertises its function as a liaison for travel agents and tour operators and provides lodging rates for wholesalers.
- The Hilton Reservation Service accepts and confirms room reservations at the London Hilton and other Hilton hotels.
- Hilton (U.K.) and the Hilton Reservation Service are commonly owned by the other defendant Hilton entities and the Service operates on a non-profit basis for the benefit of Hilton hotels.
Procedural Posture:
- The plaintiff initiated a lawsuit in a New York court against Hilton Hotels (U. K.) Ltd., Hilton Hotels Corporation, and Hilton Hotels International, seeking damages for personal injuries.
- Hilton Hotels (U. K.) Ltd. moved to dismiss the complaint against it, arguing that the New York court lacked personal jurisdiction over its person.
- The trial court denied Hilton (U.K.)'s motion to dismiss, asserting jurisdiction.
- The Appellate Division affirmed the trial court's decision, sustaining jurisdiction over Hilton (U.K.).
- The New York Court of Appeals reviewed the case on appeal from the Appellate Division, with a certified question regarding the validity of jurisdiction.
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Issue:
Does a foreign corporation, operating a hotel abroad, establish sufficient "doing business" in New York for traditional personal jurisdiction under CPLR 301 when a commonly-owned, non-profit reservation service located in New York conducts continuous and systematic activities on its behalf, including accepting and confirming reservations?
Opinions:
Majority - Chief Judge Fuld
Yes, personal jurisdiction was validly acquired over Hilton (U.K.) because it was "doing business" in New York in the traditional sense through the activities of the Hilton Reservation Service. The court found that the Hilton Reservation Service engaged in a "continuous and systematic course of 'doing business'" for Hilton (U.K.), including maintaining a New York office, bank account, and telephone, conducting public relations, generating business, and critically, accepting and confirming room reservations for the London Hilton. This level of activity satisfied the "minimum contacts" required by due process, ensuring "traditional notions of fair play and substantial justice" were met. The common ownership of Hilton (U.K.) and the Hilton Reservation Service was significant as it supported an inference of a broad agency relationship, distinguishing this case from situations involving mere independent travel agencies or "mere solicitation." The court concluded that the Service effectively performed all the business Hilton (U.K.) could do if it were physically present.
Dissenting - Justice Breitel
No, personal jurisdiction should not be extended over Hilton (U.K.) under traditional "doing business" concepts. Justice Breitel argued that the majority improperly stretched jurisdictional boundaries by relying on the relationship between affiliated corporations without sufficient evidence of fraud, misrepresentation, or intermingling of activities. He contended that the Hilton Reservation Service's activities, primarily "confirming availabilities" based on forecasts rather than accepting and confirming binding reservations, amounted to no more than "mere solicitation," which traditionally is insufficient for jurisdiction. The dissent emphasized the importance of upholding corporate separateness for international business and warned against an overbroad interpretation that could negatively impact global trade and invite reciprocal jurisdictional claims against American companies abroad.
Analysis:
This case significantly clarified and expanded the scope of "doing business" jurisdiction under CPLR 301 in New York, particularly concerning foreign corporations operating through domestic agents or affiliates. It establishes that extensive, systematic activities performed by a local agent, even a commonly-owned one, that effectively conduct the foreign corporation's business, can create sufficient "presence" for general personal jurisdiction. The decision indicates a pragmatic approach to jurisdiction, focusing on the functional reality of a foreign entity's engagement in the state rather than strict corporate formalities, especially when reservations are actively accepted and confirmed, distinguishing it from mere promotional activities. This ruling has implications for global businesses, particularly in the hospitality and travel industries, requiring them to consider the jurisdictional consequences of their domestic marketing and reservation services.
