State of New York v. Vayu, Inc.
Not yet published in New York Reports (2023)
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Rule of Law:
A non-domiciliary defendant is subject to specific personal jurisdiction under New York's long-arm statute, CPLR 302(a)(1), if it purposefully transacts business within the state through volitional acts, including extensive remote communications and in-state meetings, from which the cause of action arises, provided that exercising jurisdiction comports with federal due process.
Facts:
- In 2013, Daniel Pepper, CEO of Vayu, contacted Dr. Peter Small about using Unmanned Aerial Vehicles (UAVs) for transporting laboratory samples.
- In 2015, Dr. Small, then a professor and director at SUNY Stony Brook, contacted Pepper to propose a business relationship between Vayu and SUNY Stony Brook for developing and using UAVs to deliver medical supplies to remote areas globally.
- Between 2015 and 2017, Pepper and other Vayu representatives engaged in extensive communications (phone, email, and one in-person meeting) with Small and other SUNY Stony Brook representatives in New York, discussing UAV development and partnership opportunities.
- In summer 2016, Vayu and SUNY Stony Brook collaboratively submitted a successful USAID grant application, wherein Vayu listed SUNY Stony Brook as a "partner" for a project to supply UAVs to Madagascar.
- In September 2016, SUNY Stony Brook purchased two UAVs from Vayu, sending payment from New York, with the UAVs shipped directly from Michigan to Madagascar.
- After the UAVs experienced operational problems by November 2016, Pepper met Small in New York in September 2017, where they agreed to modify the original terms for replacement UAVs and training, and discussed future collaboration.
- In November 2017, SUNY Stony Brook returned the defective UAVs to Vayu in Michigan, but Vayu subsequently failed to replace them or issue a refund.
Procedural Posture:
- Plaintiff State of New York commenced an action in Supreme Court (the trial court) on behalf of SUNY Stony Brook against Vayu, Inc., asserting breach of contract and other claims.
- Vayu moved to dismiss the complaint for lack of personal jurisdiction.
- Supreme Court (the trial court) granted Vayu's motion to dismiss.
- Plaintiff appealed the Supreme Court's decision to the Appellate Division.
- A divided Appellate Division affirmed the Supreme Court's dismissal.
- Plaintiff appealed the Appellate Division's decision to the Court of Appeals.
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Issue:
Does a non-domiciliary corporation that engages in extensive remote communications with a New York state entity, collaborates on a grant application, sells products paid for from New York, and holds an in-person meeting in New York to modify contract terms and discuss future business, purposefully transact business within New York State sufficient to establish specific personal jurisdiction under CPLR 302(a)(1) and the Due Process Clause?
Opinions:
Majority - Garcia, J.
Yes, a non-domiciliary corporation that engages in extensive remote communications, collaborates on a grant, sells products paid for from New York, and conducts an in-person meeting in New York to modify contract terms and discuss future business, purposefully transacted business within New York State, establishing personal jurisdiction under CPLR 302(a)(1) and satisfying due process. The Court held that Vayu’s actions demonstrated a clear intent to engage purposefully in business activities within New York. Vayu projected itself into the State for two years through calls and emails with SUNY Stony Brook, which led to the UAV sale and indicated a purposeful effort to establish a substantial ongoing business relationship. The Court emphasized that physical presence is not required, citing Paterno and Deutsche Bank, but noted the significance of Vayu’s CEO traveling to New York to meet with Small, especially given that this meeting resulted in a modification of the agreement and discussions of future opportunities. The Court found the cause of action clearly arose from these New York-related business transactions and that exercising jurisdiction comports with due process, as Vayu purposefully availed itself of the benefits of conducting activities within New York and should have reasonably anticipated being haled into court there.
Dissenting - Rivera, J.
No, a non-domiciliary corporation's contacts with New York, including remote negotiations for an out-of-state delivery and a single meeting to address product complaints, are insufficient to establish that it purposefully transacted business within New York State for personal jurisdiction under CPLR 302(a)(1) or to satisfy federal due process. Justice Rivera argued that the impetus for the contract came from SUNY Stony Brook's professor, not Vayu's targeted solicitation in New York. The contract was formed remotely for products manufactured in Michigan and delivered to Madagascar, not New York. The dissenting opinion characterized Vayu's New York contacts, including the CEO's visit, as primarily "responsive in nature" to "smooth out difficulties" with an already completed transaction, similar to McKee, rather than purposeful availment to transact new business. Rivera, J. stated that the discussions of a potential future relationship did not lead to a contract in New York and were not the basis of the current lawsuit. Furthermore, the dissent argued that exercising jurisdiction would not comport with federal due process, as Vayu's contacts were not its "own choice" to purposely avail itself of the forum state but rather responses to a New York party's initiative for an out-of-state sale and delivery.
Analysis:
This case clarifies and reinforces New York's expansive interpretation of CPLR 302(a)(1), particularly concerning "transacting business" through remote means and the significance of in-state meetings, even if reactive. It signals that a pattern of communications, collaboration on external projects, and a single in-person meeting related to contract modification can collectively establish purposeful availment, even if the goods are delivered elsewhere. The decision broadens the scope of jurisdiction over out-of-state commercial actors engaging in complex, ongoing relationships with New York entities, highlighting that the "quality" of contacts, not just their initiation or location of goods, is paramount. This may encourage businesses to be more cautious about the extent of their interactions with New York-based parties if they wish to avoid jurisdiction.
