Provision Of Services Through Third-Party Websites May Subject Non-Domiciliaries To Personal Jurisdiction In New York


In Robinson v. Intuit, Inc., et al., Index No. 101160/10 (Sup. Ct. NY County, Sept. 27, 2010) (“Intuit”), Justice Shirley Werner Kornreich held that a foreign corporation with no physical contacts with New York that had contracted to provide services in New York through the website of another party was nonetheless subject to personal jurisdiction in New York. Intuit sheds further light on the extent to which New York courts will exercise long-arm jurisdiction over non-domiciliaries through their “virtual” New York contacts.

Plaintiffs, New York residents, purchased the TurboTax program and a membership with the TurboTax Audit Defense program through the TurboTax website. The membership entitled plaintiffs to legal and accounting services provided by defendant Tax Resources, Inc. (“TRI”), a Florida corporation with its principle place of business in California, in the event plaintiffs were audited by the IRS.

Plaintiffs were audited in 2006. Pursuant to the audit service agreement, TRI assigned plaintiffs a certified public accountant (CPA) named Martin Solomon, also a New York resident, to handle their case. TRI informed plaintiffs not provide any information to the IRS because Solomon would be their “only point of contact with the IRS or state agency,” and further stated that TRI would pay Solomon’s fees. Unbeknownst to plaintiffs, however, Solomon’s CPA license had been revoked in 1998 after he was found guilty of professional misconduct for embezzling client funds. Solomon subsequently failed to forward plaintiffs’ relevent paperwork to the IRS or take any other action necessary to aid them in the auditing process. In January 2007, TRI notified plaintiffs that it was terminating their audit service because plaintiffs had failed to provide TRI with required documentation. Plaintiffs brought claims for breach of fiduciary duty and negligence against Intuit, Inc., TurboTax, TRI, and Solomon.

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