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A United States District Court for the Southern District of New York granted a party's motion to transfer a breach of contract action to Nebraska and did not decide whether filing an arbitration claim in New York constitutes submission to personal jurisdiction in New York when the arbitration organization requires that all claims be submitted to the New York office.
In Credit Suisse Securities (USA) LLC v. Hilliard, No. 06 Civ.1993(MGC), 2007 WL 14555 (S.D.N.Y. Jan. 3, 2007), Credit Suisse brought an action against Hilliard for breach of contract, and Hilliard petitioned the court to dismiss the action for lack of personal jurisdiction or, alternatively, to transfer the action for the United States District Court for the District of Nebraska.
Pursuant to the rules of the National Association of Securities Dealers (NASD), Hilliard has instituted arbitration by filing a claim with NASD in New York. Suisse argued that this action showed that Hilliard submitted to the jurisdiction of New York, despite the fact that Hilliard requested that arbitration take place in Nebraska.
In previous cases, this Court had held that parties consented to personal jurisdiction in New York when the parties agreed to arbitrate disputes before the NASD. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Shaddock, 822 F.Supp. 125 (S.D.N.Y. 1993). However, in a more recent decision, a New York Court had ruled that a party's submission of an arbitration claim to an arbitration organization headquartered in New York did not constitute consent to personal jurisdiction in New York. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. McLeon, 622 N.Y.S.2d 954 (N.Y. App. 1995).
Considering these decisions, this Court called into question the validity of the rule holding that parties consent to personal jurisdiction by filing a claim with an arbitration organization located in New York. However, the Court did not reach the question of personal jurisdiction and instead granted Hilliard's motion to transfer the action to the District of Nebraska.
Both parties had consented to personal jurisdiction in Nebraska, and a substantial number of the events giving rise to the Credit Suisse's claims occurred in Nebraska. Additionally, NASD had already commenced arbitration in Nebraska.
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