Paterno V. Laser Spine Institute: Did the New York court of appeals' misapplication of unjustified policy fears lead to a miscarriage of justice and the creation of inadequate precedent for the proper use of the empire state's long-arm statute?

Author:Carlisle, Jay C.

    This article discusses CPLR section 302(a)(1) as applied by the New York State Court of Appeals in Paterno v. Laser Spine Institute. (1) The Paterno Court failed to properly apply a statutory jurisdictional analysis by conflating it with a due process inquiry. (2) Also, the Court unnecessarily balanced the interests of the Empire State's citizens in having a forum for access to justice with unjustified policy fears of potential costs to the state from assertions of in personam jurisdiction. (3) Furthermore, the Court's policy focus (4) on the protection of medical doctors from lawsuits (5) and the prevention of "floodgate" litigation which would adversely affect the medical profession was not justified by the record and created poor precedent for subsequent judicial application of the state's long-arm statute. (6)

    This article will examine CPLR section 302(a)(1), under Paterno v. Laser Spine Institute and some of its predecessors, to demonstrate that sometimes overarching policy concerns get in the way of a strict statutory analysis under CPLR section 302(a)(1). (7) We analyze how the Court of Appeals in Paterno conflated the jurisdictional basis and due process analyses and determine that the Court, based on a faulty statutory analysis, erroneously decided that there was no statutory jurisdiction. (8)

    Our article is divided into six parts. Part II briefly discusses the history of the CPLR and the manner of obtaining jurisdiction through Sections 301 and 302, focusing mainly on long-arm jurisdiction. Part III discusses and analyzes leading cases, which involve the application of CPLR 302 in obtaining personal jurisdiction. Part IV discusses a recent case, Paterno v. Laser Spine Institute, in great detail, and Part V engages in a critical analysis of Paterno with reference to a similar case, Grimaldi v. Guinn. (9) Part VI addresses policy considerations and Part VII concludes with a discussion of how the Paterno Court entangled its jurisdictional analysis and where the Court may be headed with its future application of CPLR section 302(a)(1).


    The CPLR is over fifty years old (10) and is recognized as one of the oldest state procedural codes. (11) As such, it is important to review its history and discuss, throughout this paper, how the rules continue to evolve and develop.

    Under the CPLR, a New York State court cannot render a valid, binding judgment without jurisdiction. (12) Until the nineteenth century, the prevailing doctrine held that due process did not permit state courts to exercise personal jurisdiction over non-domiciliaries and foreign corporations unless they were present within the state at the time of the commencement of the action. (13) The law on jurisdiction has since changed and expanded as interstate travel increased and technology progressed. (14)

    1. General Jurisdiction under CPLR 301

      If a defendant consents, is domiciled, incorporated, or licensed to do business in New York, a New York court may exercise personal jurisdiction over that defendant. (15) Jurisdiction over the property of a defendant includes both in rem and quasi in rem jurisdiction. (16) In rem jurisdiction occurs when the litigation involves property within the territorial boundaries in New York. (17) Quasi in rem jurisdiction occurs when a non-domiciliary's property within the State is attached to obtain a ground for jurisdiction in a cause of action not directly related to the property. (18) These traditional bases of jurisdiction are referred to as general jurisdiction and are incorporated in CPLR 301. (19) The 2014 U.S. Supreme Court decision in Daimler AG v. Bauman (20) limits general jurisdiction in New York to the state of incorporation, the state where the corporation has its principal place of business or to certain "exceptional circumstances" matters. It seems clear that the broad general jurisdiction of CPLR 301 permitted under Tauza and its progeny is no longer constitutionally permitted in New York. Since Daimler has no direct relevancy to CPLR 302, we chose not to discuss its implications to assertions of long arm jurisdiction in this article.

    2. Long-Arm Jurisdiction under CPLR 302

      Modeled after section 17 of the Illinois Civil Practice Act, (21) CPLR 302 defines when courts have personal jurisdiction by acts of non-domiciliaries. (22)

      [B]ut unlike that [Illinois] act, which has been interpreted to "reflect a conscious purpose to assert jurisdiction over nonresident defendants to the extent permitted by the due-process clause," the legislative and judicial history of CPLR 302 indicates that New York's long arm statute was not initially designed to "confer the full complement of personal jurisdiction constitutionally permitted." (23) CPLR 302 is referred to as specific jurisdiction.

      Specific jurisdiction, pursuant to CPLR 302, permits courts to assert long-arm jurisdiction over non-domiciliary individuals and corporations that are not subject to general jurisdiction. (24) CPLR section 302(a)(1) provides, in relevant part:

      Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent: transacts any business within the state or contracts anywhere to supply goods or services in the state.... (25) Jurisdiction is determined by a three-step process. (26) First, assuming the court has subject matter jurisdiction, the court determines whether the plaintiff's service of process upon the defendant was proper. (27) Second, the court determines whether there is a statutory basis under CPLR 301 or 302 that renders service effective. (28) Third, the court determines whether the exercise of in personam jurisdiction complies with the constitutional mandate of fairness. (29) But, in cases of specific jurisdiction, only if there is a statutory basis must the court then decide if jurisdiction is permitted under the Due Process Clause of the United States Constitution. (30)

      The concept of long-arm jurisdiction derives from the existence of a statute which authorizes it. (31) Many state statutes, including New York's long-arm statute, contain a list of specific state-directed activities that permit the assertion of in personam jurisdiction only if the particular claim arises from one of the enumerated forms of activity. (32) Jurisdiction is a fact-based determination. (33) It "depends on facts quite distinct from the merits of the controversy." (34) As such, it is necessary to separate the facts, which have jurisdictional significance from those, which bear only upon the merits. (35) In personam jurisdiction must be analyzed separately for each cause of action. (36)

      Because, as mentioned previously, the statute does not reach constitutional limits, the statutory analysis under CPLR 302 can sometimes resemble that of a due process analysis (37) under the Fourteenth Amendment. (38) In other words, the court may incorrectly place more weight on the Due Process analysis than on the statutory basis analysis: "[e]xcessive emphasis on the federal Due Process Clause has obstructed and distorted the statutory inquiry of CPLR section 302(a)(1) by New York State and federal courts." (39) This entangled analysis, thus, may lead to a faulty jurisdictional analysis, (40) and inconsistent judicial decisions. (41) As such, this conflation has produced a body of confusing precedent and frustrated the aforementioned legislative intent of the CPLR's drafters. (42)

      "While New York has not pushed an assertion of jurisdictional power to the Constitution's outer bounds as set by the Supreme Court, the legislature, on occasion, has shown a willingness to target identifiable problems and expand CPLR 302 to meet them." (43) It has thus become a "single contact" long-arm statute. (44) For example, a 1979 amendment to CPLR section 302(a)(1) (45) expanded the "transaction of business" concept to allow New York courts to exercise personal jurisdiction over a non-domiciliary who contracts outside New York to supply goods or services in New York, even if the contract is breached before the goods are ever shipped into, or the services performed in, New York. (46) As we see, New York's long-arm statute was designed to take advantage of the minimum contacts approach to jurisdiction outlined in International Shoe v. Washington. (41)

      1. CPLR 302(a)(1) and the "Arising out of Requirement

        By requiring that the cause of action arise from an enumerated act, the Court of Appeals has imposed a requirement of demonstrating an "articulable nexus." "There is no bright-line test for determining whether [an articulable] nexus is present in a particular case." (48) The "inquiry is a fact-specific one" (49) and must be analyzed separately for each cause of action. (50) The Court of Appeals has defined the required nexus as "a substantial relationship to the transaction out of which the instant cause of action arose." (51) The Second Circuit has characterized the nexus as '"a direct relation between the cause of action and the in-state conduct."' (52) However, unless the cause of action is based upon some breach of contract, the courts have been reluctant to find a nexus. (53) The "arising from" prong of the CPLR section 302(a)(1) essentially limits the broader "transaction of business" prong by restricting jurisdiction to claims connected in a meaningful way to the business transacted in New York. (54)

        Causation itself, however, is not required, but rather is permissive. (55) In expanding the "arising out of requirement, the Licci court intimated that CPLR section 302(a)(1) "does not require that every element of the cause of action pleaded must relate to the New York contacts." (56) The Court stated that "where at least one element arises from the New York contacts, the relationship between the business transaction and the claim...

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