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Preliminary meetings in New York are not enough for a state court to exercise long-arm jurisdiction over a foreign corporation for “transacting business” here, a Manhattan Supreme Court justice has ruled. Justice Herman Cahn said that his court would not hear a contract dispute over the purchase of a Peruvian steel mill where the serious negotiation, drafting and execution of the deal took place in the South American country, not New York. Plaintiffs unsuccessfully argued that the foreign firms transacted business in New York because officials of the firms took part in meetings in the Manhattan offices of their Washington, D.C.-based lawyers. In Samsung America Inc. v. GS Industries Inc., 604472/96, Justice Cahn held that the contacts cited by the plaintiffs were “jurisdictionally meaningless.” The defendants’ retention of a Wall Street financial advisor and the Washington office of a New York law firm were irrelevant since none of the claims are related to the investment banking arrangement or the legal representation of the defendants. The opinion did not name the law firm hired by the defendants. Indeed, the preliminary meetings in New York were among the eight foreign defendants, and the only contact with the plaintiff, Samsung America, was by way of two fax transmissions sent from the city to the plaintiff in Texas. The meetings themselves were directly related to four other contracts, to which Samsung America was not a party, Justice Cahn pointed out. There was a “lack of meaningful negotiation between defendants and plaintiff at the meeting” and the more significant contacts occurred out of state and out of the United States. The key requirement to establish long-arm jurisdiction is that the court may exercise jurisdiction over a non-domiciliary which “transacts any business” in New York State, provided that the transaction is linked to the cause of action. One single transaction, however, is not enough to establish jurisdiction if, as in this case, it is not substantially related to the contract at issue and, moreover, if it is overwhelmingly outweighed by foreign contacts. “While some of the defendants briefly discussed plaintiff’s participation in their consortium at the New York meeting, no actual negotiations with plaintiff took place,” Justice Cahn noted in holding there had been no transaction in New York connected to the Peruvian steel mill purchase. The fact that the transaction was a significant issue among the defendants which were deciding how to form a consortium does not matter in the absence of any substantial contact between Samsung America and the defendants in New York. Samsung America was represented by Ira N. Glauber of Jaffe & Asher. Defendants Banco Wiese and Wiese Inversiones Financierias were represented by Robert J. Ward and John M. Conlon of Mayer, Brown & Platt. Defendant Stanton Funding was represented by Brooks R. Burdette of Schulte Roth & Zabel.

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