A New York state appellate court has clamped down on an attempt by a group of hedge funds to get around the U.S. Supreme Court’s ruling in Morrison v. National Australia Bank.

The court’s ruling on Thursday in Viking Global Equities v. Porsche Automobil Holding SE is a big victory for Robert Giuffra Jr. of Sullivan & Cromwell and his client Porsche AG in their efforts to defeat hedge fund short sellers seeking billions of dollars.

Reversing a lower court ruling, a five-judge panel from New York’s Appellate Division, First Department, held that the hedge funds were barred from pursuing their suit in the state on the ground of forum non conveniens. The ruling (which you can read here) appeared to be an easy call for the court: It came less than a month after oral arguments and required all of two-and-a-half pages to explain.

The litigation was sparked by Porsche’s 2008 announcement that it had amassed close to a 75 percent stake in Volkswagen. The revelation was a disaster for hedge funds that had shorted VW’s stock or made swap deals based on its share price. The hedge funds, which included Tiger Global and Glenhill Capital, claimed they had been defrauded by Porsche, which had publicly concealed its takeover plans.

The appellate panel found that there wasn’t a substantial nexus between the transactions at issue and New York. The short sales took place on foreign exchanges, and the defendant and most of the plaintiffs are not New York residents. The only events connected to New York were some phone calls and emails among the parties, the court noted.

The hedge funds had originally filed their claims in federal court, but Manhattan U.S. District Judge Harold Baer tossed those claims two years ago, finding they didn’t have enough connection to this country under Morrison. The hedge funds responded by filing a fraud and unjust enrichment suit in New York state court. Last August, New York Supreme Court Justice Charles Ramos in Manhattan refused to dismiss those claims.

In his 22-page ruling, Ramos noted that the hedge funds’ principal places of business are in New York, and that Porsche’s head of investor relations participated in at least ten phone conversations with the plaintiffs in New York in which he made alleged misrepresentations. Ramos wrote: “At the core of plaintiffs’ claims are whether New York court may hold responsible a foreign entity, who conducts business globally, for fraudulent misrepresentations purportedly at New York plaintiffs. New York clearly has such a vested interest in such an action.”

As our colleague Julie Triedman pointed out in her article on the appellate oral arguments, if Ramos’s ruling had stood, other investors whose federal securities fraud claims have run up against Morrison might have been emboldened to take their claims to state court.

You can read Porsche’s opening appellate brief here and its reply brief here. The plaintiff hedge funds’ opposition brief is here. The hedge funds are represented by a quartet of firms: Bartlit Beck Herman Palenchar & Scott; Quinn Emanuel Urquhart & Sullivan; Kleinberg, Kaplan, Wolff & Cohen; and Dowd Bennett.

“This is an important victory for Porsche,” Sullivan’s Giuffra told us in an email. “The appeals court squarely held that these cases do not belong in a New York State court and rejected the hedge funds’ effort to end-run Morrison.”

We contacted Bartlit Beck’s James Heaton III, who gave the oral argument for the hedge funds. He declined to comment and said his clients would have no comment.

Porsche’s troubles aren’t over, however. It still faces litigation in Germany brought brought by the hedge funds, who filed a suit last January seeking 2 billion euros. (In contrast to the New York case, that suit would be tried before a judge, not a jury.) The hedge funds have also filed an appeal of the dismissal of the federal suit with the U.S. Court of Appeals for the Second Circuit. The court heard oral arguments last February and has not yet issued a ruling. And last week, German prosecutors charged former Porsche CEO Wendelin Wiedeking and ex-CFO Holger Haerter with market manipulation over the use of options in the failed Volkswagen bid.