Reach out and Sue Someone
New York State has a statute that says:
“… a court may exercise personal jurisdiction over any non-domiciliary…who in person or through an agent: …transacts any business within the state….”
It is called a “Long Arm” Statute. So you can reach out from your own state and sue that non-paying client on your home turf.
In layman’s language this means that if someone has purposely availed himself of the privileges and benefits of New York’s laws he is deemed to have subjected himself to the jurisdiction of the New York courts.
Simply stated, what this means, is that if a client in California asks a recruiter in New York to find a candidate and then does not pay the recruiter the fee that is due then the client can be sued in a New York Court. So if you are a California client you have to come a long way to defend that lawsuit.
Enforcing a Judgment
And if the client does not defend the lawsuit and judgment is entered against the client by default, then that judgment can be sued upon in California under the “Full Faith and Credit” clause of the United States Constitution that requires the California courts to enforce that judgment, and the underlying cause of action for the fee cannot be litigated again.
Did you know for example that the same is true when you are driving your car in another state and get into an accident? By driving in the state you are subjecting yourself to the jurisdiction of the courts of that state in case there is lawsuit arising out of that accident.
Do other states have such a law? I cannot say with certainty, but I believe that all do, with possibly varying language and interpretations. So the first thing to do is ask your lawyer. Is there such a statute in your state?
Then, when that far away client does not pay your fee, and thinks you have to come to its state, and you would not do that because of the cost and inconvenience, reach out and sue from home. That’ll teach ‘em.
Hire a Litigator
So the next question is: does your lawyer know how to sue for your fee and deal with all of the specious defenses that unknowledgeable defendant clients think prevents you from collecting that fee? It would help to have an expert in your corner, but if you do not have one you can create one.
Retain a lawyer who is a litigator: someone with experience suing on contracts. Then explain your case, and that there are cases that support your position. Refer back to some articles that appeared in this publication and elsewhere. That is my recommendation when I get the call from an out of state recruiter that needs help with a fee matter. Use and develop local counsel and reach out and sue.
An Ounce of Prevention
But to save you the trouble of relying on the Long Arm Statute you can do something else. Insert this phrase in your contract:
GOVERNING LAW: This agreement will be governed by and enforced in accordance with the laws of the state of ____. The parties agree that state and federal courts within the state of __________ shall have the exclusive jurisdiction over any litigation brought or arising out of this agreement.
COST OF ENFORCING AGREEMENT: In the event (Recruiter) institutes litigation to enforce its rights under this agreement and is the prevailing party in such litigation, (Recruiter) shall be entitled to costs of suit and reasonable attorney fees incurred by it in connection with such litigation.
Have your attorney review these clauses to conform to your state law. This provision takes the uncertainty out of whether your state’s courts have jurisdiction in a lawsuit against an out of state defendant.
From Where I Sit
I don’t as a rule offer personal comments or observation about the subject matter that I am writing about. Nor do I usually editorialize about the material. I like to keep my observations to whatever law is the subject matter of the article. But in this instance I have to make an exception and tell the reader why I wrote about this subject.
Of late I have been receiving an unusual number of telephone calls from recruiters from different parts of the country, even as far away as California. In each instance the recruiter was a single practitioner or part of a small boutique specialty firm. Although they all practiced in different areas of expertise or industries they all had one thing in common; they recruited for companies in other states than where they were located and recruited candidates from other states as well. They were not dealing locally. So their clients were not nearby but rather across state lines.
And in each instance there was no problem with the placement, or even proving that they were the “efficient procuring cause.” In some instances there were even written and signed contracts. The amount of the fees was not in dispute and there was not a question that they had sent the hired candidate. There was just the fact that the company was in another state and thought that the recruiter would not go after them given the cost and inconvenience of doing so.
What then surprised me when I looked at their contracts was that there was no provision for local “venue and jurisdiction” i.e., the consent of the client to be sued in the local courts where the recruiter was located, a clause such as is contained in this article. Then I realized how uninformed the recruiting industry as a whole may likely be as well.
So I decided to send out the message. Be prepared to “reach out and sue someone,” and to tell you and your lawyer how to do it as well.
Good luck.
A. Bernard Frechtman, Esq. is the author of Staffing Industry Law, A Guide for the Personnel Professional. He may be reached at (212) 580 7402 or via e-mail at abflaw@att.net or on his web page: http://www.frechtman.com. Note: This article is not intended as legal advice. In all instances the reader is cautioned to consult with legal counsel when utilizing this information. A.B.F.