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NY Legislature Passes Bill Making it Easier to Sue Corporations; Business Leaders Outraged

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NY Legislature Passes Bill Making it Easier to Sue Corporations; Business Leaders Outraged

By:  Benyamin Davidsons

New York’s legislature passed a new bill that would make it much easier to sue corporations in a NYS court.

As reported by Crain’s NY, business leaders are urging NYS Gov. Kathy Hochul not to sign the bill.  The legislation had quietly passed in the Senate and Assembly in June without the public hearing much about it.  A week after it passed, however, a surprise ruling by the U.S. Supreme Court bolstered the bill. The bill will now have far-reaching ramifications, in that it would force any company that is registered to do business in New York to also consent to being sued in New York’s courts.  Also known as “general jurisdiction”, this would apply even when an incident occurred in other states or countries.

Business groups have come out in full force against the bill, pushing the governor to veto it.  On Aug 1st, over two dozen groups including the Business Council of New York State and the Partnership for New York City penned a letter to Gov. Hochul, saying the legislation would deter companies from doing business in NY and would turn the state “into the world’s courtroom.”  In a July article in the New York Law Journal, attorneys at Gibson Dunn law firm said the legislation could burden the state’s “already overloaded” court system by encouraging more lawsuits, and open many more companies to being sued—which, they wrote, “may well cause some companies to leave our state and its main city’s shores.”

The state’s Office of Court Administration, which runs New York’s courts, is the main force behind the bill.  The bill was sponsored by state Sen. Michael Gianaris, a Democrat representing District 12, which includes Astoria, Long Island City, Sunnyside, Woodside, Ridgewood and Woodhaven.  Gianaris maintains that the bill would only “re-establish a century-old rule that we had in our state.”  He, and other supporters for the law, say the bill just clarifies a legal right that New Yorkers previously had for close to a century.

Per Crain’s, in 2014, a different Supreme Court ruling came and limited the ways people could sue corporations—ruling that corporations could only be sued in places where they are incorporated or in their principal place of business.  Since that 2014 ruling, the nonpartisan Office of Court Administration has tried to re-introduce the general jurisdiction bill in every legislative session.  “The opponents of this bill are seeking to avoid a method of corporate accountability that’s been in place in New York for a century,” Gianaris said in an interview. “In an era when corporations are running amok and are less accountable and less transparent than they’ve ever been, that is exactly the wrong direction to be moving.”

Gov. Hochul has until the end of 2023 to sign the bill.  A spokesman for the governor said she is reviewing the legislation. Hochul previously vetoed a similar version of the bill in 2021, mentioning the same concerns about deterring businesses and inundating our court system.

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