Checklist for Starting a Business Lawsuit in New York Courts

In simple terms, jurisdiction (or, more specifically, personal jurisdiction) relates to a court’s ability to adjudicate over a prospective defendant. Generally speaking, New York has jurisdiction over persons and entities that are domiciled in New York. There are also certain situations where courts in New York can exercise jurisdiction over prospective defendants when they are not domiciled in New York. This may occur, by mere example, when the prospective defendant transacts business in New York. Another example of when this might occur is when the parties to a contract stipulated to New York having jurisdiction over matters pertaining thereto. The rules regarding jurisdiction are complicated and you should consult with a business attorney regarding whether New York has jurisdiction over your prospective action. Commencing an action in New York when New York does not have jurisdiction over the matter can result in dismissal of the case.

Generally speaking, only very select categories of cases can be commenced in federal court. One such category is referred to as “diversity jurisdiction”. The rules regarding diversity jurisdiction are complicated and should be addressed with an experienced NY commercial litigation lawyer. One example of where diversity jurisdiction may apply is where all of the plaintiffs are from different states in the United States than are all of the defendants. Moreover, for diversity jurisdiction to apply, the amount in controversy must be more than $75,000.00, exclusive of costs and interest. Another example of cases which may be brought in federal court are cases which involve matters of federal law (often referred to as “federal question” jurisdiction). This includes, for instance, cases involving question of U.S. trademark and/or copyright law.

You should make this decision in consultation with counsel. There are advantages and disadvantages to both the state court and federal court systems. By mere example, federal court judges typically carry fewer cases on their docket and, as such, your case may get more individualized attention in federal court than in state court. At the same time litigating in federal court can be more expensive than litigating in state court.

It depends. If the case is being started in New York City and the amount of the claim is more than $50,000.00 and/or you are seeking equitable relief (such as a preliminary or permanent injunction) you are generally going to start the action in New York Supreme Court. If the case is being started in New York City and the amount of the claim is less than $50,000.00 and you are not seeking equitable relief you are generally going to start the action in the Civil Court of the City of New York. While there are critical exceptions (such as, by mere example, landlord-tenant matters), the Civil Court of the City of New York generally cannot adjudicate over matters where the plaintiff is seeking a claim in excess of $50,000.00 and/or- again, absent certain exceptions- where equitable/non-monetary relief is being sought. The decision about where to start the case is a critical one and should be made in consultation with the attorney who will be representing you in that action.

The place where an action is filed is know as the venue. There are a number of factors which determine the venue of the action including, by mere example, the residence of the plaintiff, the residence of the defendant, the place where the claim arose, and/or contractual provisions regarding choice of venue. Decisions regarding choice of venue should be made in consultation with counsel.

There are four federal court districts in New York state: the Southern District of New York (“SDNY”), the Eastern District of New York (the “EDNY”), the Western District of New York (the “WDNY”), and the Norther District of New York (the “NDNY”). with respect to New York City, the SDNY covers the counties of Manhattan and the Bronx and the EDNY covers Kings, Queens, and Richmond counties. The issue of what district to file in should be addressed with the attorney that will be representing you in that action.

The time periods in which claims must be commenced- known as the statute of limitations- vary. By mere example, claims for breached of contract must be commenced within 6 years while claims for defamation (libel and slander) must be commenced within 1 year. The calculation of the statute of limitations is complicated and should be done in consultation with counsel. With very few exceptions, statute of limitations periods cannot be extended and commencing an action after the statute of limitations has expired will almost always be fatal to your case.

In commercial litigation, the name of the document where claims are typically asserted is known as the complaint. In state court actions, notice of the claims are sometimes first provided in a “summons with notice” with a complaint subsequently being served on the defendant once it is demanded. In certain limited circumstances, claims are sometimes asserted in a document known as a petition. Your New York business litigation attorney can assist you in determining the appropriate document in which to assert your claims.

When retained to represent plaintiffs, we provide counsel on issues pertaining to the commencement of your action so as to best ensure that it moves forward effectively. Please contact us today to discuss your matter.