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An issue that comes up frequently at the outset of litigation is how to obtain jurisdiction over a foreign corporation. If the litigation involves a contractual dispute, chances are the contract contains a jurisdiction provision which resolves the issue quickly. However, as with most litigation matters, it is usually not that easy. Typically, it will come down to establishing sufficient contacts of the foreign business in New York to bring the company under the jurisdiction of New York courts.

In a ruling earlier this year by the Appellate Division Second Department, Aybar v. Aybar, 2019 N.Y. Slip Op. 00412 (2d Dep’t January 23, 2019), the Court assessed the precedent regarding how jurisdiction is obtained in New York when foreign corporate entities cross state lines. For many years, such questions appeared to be controlled by Pennoyer v. Neff, 95 U.S. 714 (1878), which held that a court’s jurisdiction was limited to its geographic boundaries.

This strict territorial approach became more flexible when the Court of Appeals, in Bagdon v. Philadelphia & Reading Coal & Iron Co., 217 N.Y. 432 (1916), held that when businesses register to do business within a state, an agent within that state is authorized to accept service of a summons on their behalf should litigation matters arise. Furthermore, the Court of Appeals, in Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 265 (1917), held that unregistered foreign corporations were considered under New York’s legal jurisdiction if they conducted “continuous” and “systematic and regular” business therein. This issue was clarified further by the U.S. Supreme Court in Int’l Shoe Co. v. Wash., 326 U.S. 310 (1945), which held that “due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice,’” Milliken v. Meyer, 311 U.S. 457. 463 (1940),otherwise known as long-arm jurisdiction.

Thus, based on this prior precedent, the general rule was that ‘certain minimum contacts’ with, and conducting ‘continuous,’ ‘systematic and regular’ business within, the geographic boundaries of New York State was enough for a foreign corporate party to be considered as ‘doing business’ in New York and therefore subject to its jurisdiction.

Then came Daimler AG v. Bauman, 571 U.S. 117 (2014), which significantly limited previously accepted jurisdictional boundaries. In Daimler, the U.S. Supreme Court held that general jurisdiction was maintained over corporations only where a corporation was incorporated; where it had its principal place of business; and where a corporation’s pursuit of business was substantial enough that it could be considered “at home” in that state.

Now, in Aybar, the Appellate Division has once again narrowed the grounds for establishing personal jurisdiction over foreign corporate defendants. The Court in Aybar held that a foreign corporation has not consented to general jurisdiction by simply registering to do business in New York State under New York’s current Business Corporation Law § 1301. In fact, the Appellate Division stated that to conclude such a thing was “unacceptably grasping” under Daimler. In this case, defendants Ford Motor Company and Goodyear Tire & Rubber Company were incorporated and had their principal places of business outside of New York State, yet they were registered to do business in New York. They were brought to Court in a personal injury litigation; however, the Appellate Division held that neither company had contacts with New York sufficient to establish that they were “at home” in the state. Such a decision once more renders uncertain how jurisdiction is decided for foreign corporations, especially considering that many corporations now do a majority of their business remotely in another state through online means that impact New York.

Based on this decision in Aybar, it is important to remember that the procedure for establishing a corporate party “at home” in New York no longer relies merely on whether it conducts in-state business, has registered to do business in New York, or appointed an agent for receipt of service. Furthermore, it is important for businesses entering into an agreement with a corporation legally defined as “foreign” in New York State, to include jurisdiction consent provisions to avoid any jurisdictional dispute at the outset of litigation. Please contact us to discuss your particular situation.

By Bernadette Starzee

A new law in New York City will prohibit most employers who operate there from conducting pre-employment drug testing for marijuana.

The law was passed last month and will go into effect May 10, 2020.

Certain positions, such as police officers, construction workers, commercial drivers, and workers caring for children or medical patients, among others, were excluded from the law.

About 2.8 percent of workers and job applicants tested positive for marijuana in 2018, according to Quest Diagnostics statistics.

Supporters of the New York City law said it would knock down a barrier that blocks people from employment based on private behavior and not ability to do the job. They also pointed out that marijuana can remain in the system for extended periods of time.

“If you ingest weed in whatever manner a month ago, I’m not sure how that prevents you from doing a job now,” Public Advocate Jumaane Williams, a Democrat who sponsored the proposal, told the New York City Council.

But not everyone agrees. “Private businesses should have the power to determine their own hiring practices – not just in deciding what skills and experience are relevant to certain positions, but also whether the use of a specific drug could have an adverse impact on a perspective employee’s ability to perform,” Council Republican Leader Steven Matteo said in a statement.

While recreational marijuana use is now legal in many states, it is still illegal in New York. But the city’s employment laws are among the nation’s most protective of workers.

With the passage of the new law, companies with operations in New York City that have drug testing policies “need to use this grace period before the law takes effect to change their policy or procedure,” said an expert.

He is advising clients with offices in New York City to stop testing for marijuana now, rather than waiting for the deadline to take effect. He said it is also likely that similar laws will pop up elsewhere across the state.

Though recreational marijuana use is illegal in New York, the state has a legal medicinal marijuana program, as do most states. Medical marijuana users in Massachusetts, Connecticut and Rhode Island have won lawsuits in recent years against companies that rescinded job offers or fired workers because of positive tests for pot. A number of businesses around the country have simply stopped testing job applicants for marijuana.  

“Over the past few years, a number of laws have been passed that require companies to be more careful about what they ask before offering prospects a job,” said Christine Malafi, senior partner and chair of the corporate department at Ronkonkoma-based Campolo, Middleton & McCormick. For instance, laws limiting the use of criminal background checks and prohibiting companies from asking about salary history have gone into effect in various jurisdictions.

“In this environment where unemployment is pretty low and where marijuana is becoming ever more socially acceptable…employers are either philosophically or practically having to take a long, hard look at whether they’re even going to screen for pot,” said Michael Clarkson.

The Associated Press contributed to this article. Read the full article here.

By Bernadette Starzee

By Oct. 9, employers throughout New York State must provide anti-sexual harassment training to all of their employees. But as the deadline looms, many companies have not started the training yet.

Many small businesses don’t have counsel, and they might not be cognizant of all of their responsibilities as an employer. But under New York law, all employers who operate in the state were required to have a sexual harassment prevention policy in place by last October. They were given a year after that to complete the training (though all workers in New York City had to be trained by April 1, 2019). The training must be repeated on an annual basis, and new employees must be trained shortly after they are hired.

Many attorneys with a concentration in employment law have been conducting training to help their clients comply with the new requirement.

Campolo, Middleton & McCormick, a law firm based in Ronkonkoma, will offer training sessions for employees of multiple companies in its training room next month.

“A lot of businesses have not complied yet, and there are many companies with just a few employees who don’t want to spend the extra funds to have a private training session,” said Christine Malafi, senior partner and chair of the firm’s corporate department. “This is a more economical way for them to do it.”

New York State also makes online resources available for employers to provide training. But while training can be completed online, in-person training has certain advantages.

In these live sessions, managers and employees are able to hone in on the questions that are relevant to them and address concerns that are uppermost in their minds.

Over the last several months, Malafi has been engaged by several chambers of commerce to provide anti-sexual harassment training to groups made up of their member businesses.

At these sessions, several participants recounted incidents that had happened to them in the workplace and asked if they should report them, Malafi said.

“The sessions made people more aware of what constitutes proper behavior and improper behavior in the workplace,” Malafi said. “In most of the complaints, in my opinion, the employee who is doing the offensive conduct is not aware that it is offensive to the other person, because the two individuals don’t take it the same way.”

The sessions provide a lot of back and forth on issues such as physical contact in the workplace.

“Someone might say, ‘What’s the big deal if I put a hand on someone’s shoulder?’” Malafi said. “I say you shouldn’t do it. You have to be cognizant about how the other person feels, and rather than make a mistake about how they would feel about it, it’s better to just not do it.”

With the diverse pool of people in the workforce – who come from a wide range of backgrounds and generations – different actions can be interpreted in many different ways.

“You might have people ranging in age from 19 to 80 in a workplace, and the age difference can make a gigantic difference in how people act,” Malafi said. “They might not realize how what they’re doing is offending people. With these sessions, there is a dialog back and forth. People feel comfortable because I’m not their supervisor or employer, so they feel more comfortable having an open discussion.”

Campolo, Middleton & McCormick offers two types of training sessions – one for managers and supervisors, and one for non-management employees.

The session for management has an extra component. “New York State does not require separate training for managers, but we feel it is extremely important that they receive extra training because the new law places responsibilities on managers and supervisors that did not exist before,” Malafi said.

Read more here.

Register for our sexual harassment prevention training sessions here.