NOREX V. BLAVATNIK HOW THE COURT OF APPEALS BORROWED FIRST AND SAVED LATER. Peter McGowan* & Isaac S. Greaney** I. INTRODUCTION

NOREX V. BLAVATNIK HOW THE COURT OF APPEALS BORROWED FIRST AND SAVED LATER Peter McGowan* & Isaac S. Greaney** I. INTRODUCTION In a case of first impression, Norex Petroleum Limited v. Blavatnik, 1 the New York State Court of Appeals decided whether a nonresident plaintiff who filed a timely action in a New York federal court may refile claims arising from the same transaction in state court within six months of the federal action s non-merits termination, even though the suit would be untimely in the out-of-state jurisdiction where the claims accrued. 2 In a unanimous decision reversing the appellate division, which had previously upheld the trial court s dismissal of the action, the Court of Appeals held that such a suit is not time barred and instructed the trial court to resolve whether or not six state law claims, pled for the very first time nearly nine years after the original action was commenced, ought to proceed to a final determination on the merits. 3 Since the opinion seeks to resolve an open question of law in New York civil practice, at the outset of its opinion, the Court of Appeals * Peter McGowan is the Managing Attorney at Sidley Austin LLP in New York. Mr. McGowan serves as a board member for the New York Managing Attorneys and Clerks Association (MACA) where he is a regular contributor to MACA s bi-monthly newsletter, writing on subjects related to New York Civil Practice and Federal Rules of Civil Procedure. In addition, he is a member of the New York State Bar Association s Committee on New York Civil Practice Law and Rules. Mr. McGowan graduated from Fordham University and received a J.D. from Brooklyn Law School. ** Isaac Greaney is a complex commercial litigation partner with the firm of Sidley Austin LLP. Mr. Greaney is a member of the American Bar Association s Litigation Section, the New York State Bar Association as a member of the Committee on Securities Litigation and Arbitration, and the New York City Bar Association. He also is a Sustaining Member of the Federal Bar Council and SIFMA s Compliance & Legal Division. Mr. Greaney graduated from the University of Chicago and received a J.D. from Fordham University School of Law. 1 Norex Petroleum Ltd. v. Blavatinik, 23 N.Y.3d 665, 16 N.E.3d 561, 992 N.Y.S.2d 503 (2014). 2 at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505 (emphasis added). 3 See id. at 671 72, 679 80, 16 N.E.3d at 565 66, 571 72, 992 N.Y.S.2d at 507 08, 513 14. 149

150 Albany Law Review [Vol. 78.1 provided a review of the twelve-year procedural history of this case, which is essential to understand how the court reached its decision. The plaintiff initially commenced an action in federal court on February 26, 2002, alleging various federal causes of action under the Racketeer Influenced and Corrupt Organizations Act (RICO). 4 Defendants moved to dismiss on numerous grounds including forum non conveniens. 5 On February 18, 2004, the federal district court dismissed the action finding that the relevant factors favored a Russian venue. 6 On December 21, 2004, the plaintiff amended its complaint to assert claims for tortious interference and unjust enrichment under Russian law. 7 Defendants again moved to dismiss for lack of subject matter jurisdiction. 8 On September 24, 2007, the court granted the motion to dismiss. 9 Norex appealed to the U.S. Court of Appeals for the Second Circuit, which affirmed the dismissal on September 28, 2010. 10 Norex next sought a hearing en banc before the Second Circuit, and on January 18, 2011, the court denied Norex s petition. 11 Identifying CPLR section 205(a) as a potential savings statute, Norex moved to stay the mandate to avoid potentially triggering the running of relevant savings action statutes so that it would have time to submit a petition for certiorari in the U.S. Supreme Court. 12 On March 7, 2011, Norex commenced a new action in New York State Supreme Court asserting several claims under Russian law. 13 Finally, on June 23, 2011, nearly eight years into litigation, Norex amended its complaint to add six New York state law claims that it had not previously asserted. 14 The New York trial court s dismissal of Norex s amended complaint is the subject of the appeal. 15 In order to determine the timeliness of Norex s new action, the court set out to address the interplay between two CPLR provisions, sections 202 and 205(a), which are New York State s borrowing and 4 at 669, 16 N.E.3d at 564, 992 N.Y.S.2d at 506. 5 6 (citing Norex Petroleum Ltd. v. Access Indus., 304 F. Supp. 2d 570, 584 (S.D.N.Y. 2004)). 7 Norex, 23 N.Y.3d at 669, 16 N.E.3d at 564, 992 N.Y.S.2d at 506. 8 9 10 at 670, 16 N.E.3d at 564, 992 N.Y.S.2d at 506. 11 at 671, 16 N.E.3d at 565, 992 N.Y.S.2d at 507. 12 (internal quotation marks omitted). 13 See id. 14 15 See id. at 671 72, 16 N.E.3d at 565 66, 992 N.Y.S.2d at 507 08.

2014/2015] Norex v. Blavatnik 151 saving statutes, respectively. 16 While discussed in greater detail below, a brief introduction to both the borrowing and savings statutes is worthwhile. When filing a new action under CPLR section 202, a foreign plaintiff must borrow the statute of limitations from the jurisdiction where the claim arose if such time period is shorter than New York s. 17 Additionally, CPLR section 205(a) provides that if such a lawsuit was timely in the foreign jurisdiction, it will also be timely in New York under the savings statute. 18 The nonresident plaintiff who borrows from the foreign jurisdiction is permitted to refile the lawsuit in New York State court within six months after the action has been dismissed on nonsubstantive grounds, thus saving his cause of action. 19 Both of these statutes, standing alone, can greatly affect the outcome of a lawsuit. Individually, the potential impact of CPLR section 205(a) should never be underestimated, especially as Professor Siegel describes it as a skyscraper on New York s procedural skyline. 20 Although only one sentence long, CPLR section 202 can also play an 16 at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505. CPLR section 202 provides that: An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply. N.Y. C.P.L.R. 202 (McKinney 2014). CPLR section 205(a) allows for an action to be refiled if it was terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits.... C.P.L.R. 205(a). 17 Norex, 23 N.Y.3d at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505. 18 19 In Federal Practice, 28 U.S.C. 1367(d) is also a savings statute and reads: The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period. 28 U.S.C. 1367(d) (2013). Despite the fact that the lower courts opinions regarding this statute evoked interest in legal academic circles, the court in Norex determined that once the plaintiff s suit was not time bared under CPLR section 202, there was no need to consider whether Norex s claims were timely filed in state court pursuant to 28 U.S.C. 1367(d)." Norex, 23 N.Y.3d at 679 80, 16 N.E.3d at 571 72, 992 N.Y.S.2d at 513 14. 20 DAVID D. SIEGEL, NEW YORK PRACTICE 52, at 74 (5th ed. 2011). Professor Siegel refers to CPLR section 205(a) as a skyscraper on New York s procedural skyline [because of ]... the numerous cases that have refused to award [the six month extension]. Professor Siegel goes on to note that it is clear that CPLR section 205(a) will not save a lawsuit that has either been voluntarily dismissed or if there has been a final adjudication on the merits. It becomes more difficult to determine when CPLR section 205(a) will save a lawsuit that has been dismissed for lack of personal jurisdiction or if the case has been dismissed for failure to prosecute. See id.

152 Albany Law Review [Vol. 78.1 important role in the final outcome of a lawsuit in New York by determining the timeliness of an action. While the scenario of a foreign plaintiff refiling a lawsuit seems to be a simple affair with CPLR sections 202 and 205(a) providing the procedural framework, the Norex case presented the Court of Appeals with an opportunity to fully address how the borrowing and savings statutes interact with each other in the context of the filing of a new action. In particular, the court held that the statute of limitations comparison required under CPLR section 202 occurs when the plaintiff files its initial action and does not occur again when the plaintiff refiles pursuant to CPLR section 205(a). 21 In reaching this conclusion, the court assumed that Norex had met all of the requirements of CPLR section 205(a) and expressly instructed the trial court to address the defendant s arguments in that regard. 22 This article will review the statutory text and case law related to CPLR section 202 and CPLR section 205(a) and analyze whether the Court of Appeals decision in Norex truly resolved the open question of New York civil procedure involving the interplay of... New York s borrowing statute, and... New York s saving statute. 23 This article will also address how the court s decision balances the need to prevent forum shopping by a foreign plaintiff with the goal of resolving lawsuits on the merits. Finally, the article will identify a number of issues under CPLR section 205(a) that the Court of Appeals left unresolved, which themselves could present additional open issues under New York procedural law. 24 II. CPLR SECTION 202: CAUSE OF ACTION ACCRUING WITHOUT THE STATE (BORROWING STATUTE) While only one sentence in length, the text of CPLR section 202 is surprisingly complicated. It reads: An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time 21 Norex, 23 N.Y.3d at 679, 16 N.E.3d at 571, 992 N.Y.S.2d at 513. 22 at 668 n.3, 16 N.E.3d at 563 n.3, 992 N.Y.S.2d at 505 n.3. 23 at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505. 24 An understanding of the importance of footnote 3 in the court s decision is critical, as the court clearly articulates the limitations of its decision. at 668 n.3, 16 N.E.3d at 563 n.3, 992 N.Y.S.2d at 505 n.3 ( Norex s state court action, refiled pursuant to CPLR 205(a), is not time-barred by CPLR 202; we do not address and express no opinion about whether Norex s lawsuit fulfills other requirements of section 205(a). ).

2014/2015] Norex v. Blavatnik 153 limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply. 25 Having read the statute, one is left to wonder when a nonresident plaintiff will actually be able to benefit from CPLR section 202 and borrow the statute of limitations from a foreign jurisdiction. 26 This question is best answered by analyzing the purpose and intent behind the statute. Quite simply, the main goal of CPLR section 202 is to prevent forum shopping by a nonresident plaintiff looking to commence an action in New York based on an out-of-state claim. 27 Under CPLR section 202, the New York State court must look to the statute of limitations under the laws of the place where the cause of action accrued and then borrow the time limitation of the other jurisdiction only if it is shorter than New York s. 28 Contrary to the statute s nomenclature, Professor Siegel s understanding of CPLR section 202 is helpful. He sees it in terms of not necessarily borrowing anything but instead observes that the statute really dictates a comparison, with a borrowing of the foreign period only if it is the shorter of the two compared. 29 Whether one looks at the statute as a comparison or as a borrowing, there is no doubt that CPLR section 202 is only applicable in the following instance: when the action is commenced by a foreign plaintiff and the cause of action accrued outside of New York State. 30 Assuming both of these criteria are present, the statute of limitations periods are compared, with the shorter of the two being applied. 31 Still left unclear is how to determine when a cause of action accrues without the state. 32 25 N.Y. C.P.L.R. 202 (McKinney 2014). 26 Professor Siegel maintains that under CPLR section 202, [i]f the claim has expired under either the New York or foreign period... it s barred. SIEGEL, NEW YORK PRACTICE, supra note 20, 57, at 82. 27 Ins. Co. of N. Am. v. ABB Power Generation, 91 N.Y.2d 180, 186, 690 N.E.2d 1249, 1252, 668 N.Y.S.2d 143, 146 (1997) ( [T]he primary purpose of CPLR 202 is to prevent forum shopping by a nonresident seeking to take advantage of a more favorable Statute of Limitations in New York. (citing Antone v. Gen. Motors Corp., Buick Motor Div., 64 N.Y.2d 20, 27 28, 473 N.E.2d 742, 745, 484 N.Y.S.2d 514, 517 (1984))). 28 SIEGEL, NEW YORK PRACTICE, supra note 20, 57, at 82. 29 30 See id. 31 32 Professor Siegel has observed as much, noting that [t]he question of where... [an] action accrued can be a sticky one, especially in this age of more sophisticated choice of law principles.

154 Albany Law Review [Vol. 78.1 The Court of Appeals answered that question in Global Financial Corp. v. Triarc Corp. 33 by finding that when an injury is economic the alleged cause of action will accrue where the plaintiff resides and sustains the economic impact of the loss. 34 Prior to Global Financial, courts had used the most significant contacts test in order to decide which state s substantive law would control where a cause of action accrued under CPLR section 202. 35 This doctrine was clearly articulated in 1963 by the New York State Court of Appeals in Babcock v. Jackson. 36 In Babcock, the court determined that it would no longer strictly apply the traditional choice of law rule, -- that the substantive rights and liabilities arising out of a tortious occurrence are determinable by the law of the place of the tort. 37 Instead, the court found that [w]here the issue involves standards of conduct, it is more than likely that it is the law of the place of the tort which will be controlling but the disposition of other issues must turn, as does the issue of the standard of conduct itself, on the law of the jurisdiction which has the strongest interest in the resolution of the particular issue presented. 38 The cases involving CPLR section 202 traditionally have focused on where the alleged injury took place and, once that was established, whether the action would have been timely in the foreign jurisdiction so that the borrowing statute could be applied. 39 The facts in Norex left no doubt that the situs of the alleged injuries was Alberta, Canada, since the plaintiff was an Alberta resident and the alleged economic injury had occurred in Canada. 40 Because 33 Global Fin. Corp. v. Triarc Corp., 93 N.Y.2d 525, 715 N.E.2d 482, 693 N.Y.S.2d 479 (1999). 34 at 529, 715 N.E.2d at 485, 693 N.Y.S.2d at 482 (citing Smith Barney, Harris Upham & Co. v. Luckie, 85 N.Y.2d 193, 207, 647 N.E.2d 1308, 1316, 623 N.Y.S.2d 800, 808 (1995)). 35 See SIEGEL, NEW YORK PRACTICE, supra note 20, 57, at 82 83. 36 Babcock v. Jackson, 12 N.Y.2d 473, 191 N.E.2d 279, 240 N.Y.S.2d 743 (1963). 37 at 477, 191 N.E.2d at 281, 240 N.Y.S.2d at 746. 38 at 484, 191 N.E.2d at 285, 240 N.Y.S.2d at 752. In re Estate of McLaughlin provides further insight into the situs of the alleged injury and how CPLR section 202 would be applied. The cause of action in McLaughlin sounded in replevin and the Third Department refused to borrow California s statute of limitations and went on to apply the shorter New York period. In re Estate of McLaughlin, 78 A.D.3d 1304, 1305 06, 910 N.Y.S.2d 252, 254 (App. Div. 3d Dep t 2010). The court held that the place of injury in such a case would be the location of the chattel in dispute, noting that the alleged injury occurred when petitioner refused to hand over the property essentially effectuating a conversion of the property which undoubtedly occurred in New York. at 1306, 910 N.Y.S.2d at 254. 39 See SIEGEL, NEW YORK PRACTICE, supra note 20, 57, at 82 84. 40 Norex Petroleum Ltd. v. Blavatnik, 23 N.Y.3d 665, 671, 16 N.E.3d 561, 565, 992 N.Y.S.2d 503, 507 (2014).

2014/2015] Norex v. Blavatnik 155 of these factors, the plaintiff would be subject to any applicable Canadian statute of limitations. 41 The novel procedural question in Norex that the court had to decide was whether or not the refiled action was timely under Alberta law even though Alberta lacked any tolling provisions akin to CPLR section 205(a). 42 To resolve this question, the Norex court chose to borrow under CPLR section 202 only once at the time of the original filing in federal court thus concluding that the absence of any foreign tolling provision was of no moment since the original action was timely in Alberta at the time it was filed in New York federal court. 43 Further, once satisfied that the goal of CPLR section 202 the prevention of forum shopping by a foreign plaintiff was also met, the court allowed Norex, as a foreign plaintiff, an opportunity to save its lawsuit for a final adjudication on the merits under CPLR section 205(a). 44 III. CPLR SECTION 205: TERMINATION OF AN ACTION (SAVINGS STATUTE) CPLR section 205(a) states, in part, that the plaintiff, in a prior action that was dismissed, may commence a new lawsuit only if the original action was terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits.... 45 Further, this new action must be based upon the same transaction or occurrence or series of transactions or occurrences as the previous action and must be commenced within six months after the termination [of the original action] provided that the new action would have been timely commenced at the time of commencement of the prior action and that service upon defendant 41 See N.Y. C.P.L.R. 202 (McKinney 2014); Norex, 23 N.Y.3d at 671, 16 N.E.3d at 565, 992 N.Y.S.2d at 507. The court has also recognized that under CPLR section 202, the out-of-state plaintiffs are subject to the statute of limitations of the place where the injury occurred, but that when borrowing the foreign statute, [a]ll the extensions and tolls applied in the foreign state must be imported with the foreign statutory period, so that the entire foreign statute of limitations... applie[s], and not merely its period. Smith Barney, Harris Upham & Co. v. Luckie, 85 N.Y.2d 193, 207, 647 N.E.2d 1308, 1316, 623 N.Y.S.2d 800, 808 (1995) (alterations in original) (citation omitted) (quoting Joseph M. McLaughlin, Practice Commentaries, C202:3, in N.Y. C.P.L.R. 202 (McKinney 1990)) (internal quotation marks omitted). 42 See Norex, 23 N.Y.3d at 671, 16 N.E.3d at 565, 992 N.Y.S.2d at 507. 43 at 680, 16 N.E.3d at 569, 992 N.Y.S.2d at 511. 44 at 678 79, 16 N.E.3d at 570 71, 992 N.Y.S.2d at 512 13. 45 C.P.L.R. 205(a).

156 Albany Law Review [Vol. 78.1 is effected within such six-month period. 46 Unlike CPLR section 202, the text of CPLR section 205(a) is rather straightforward. A plaintiff may avail himself of the six month toll except in four enumerated instances: when the action is terminated by (1) a voluntary discontinuance, (2) lack of personal jurisdiction over the defendant, (3) dismissal for neglect to prosecute, or (4) a final judgment upon the merits. 47 The purpose behind CPLR section 205(a) is clearly articulated in a seminal Court of Appeals case, Reliance Insurance Co. v. Polyvision Corp. 48 In Reliance the court determined whether a corporation may refile an action under CPLR section 205(a) when the timely-filed prior action was commenced by a different, related corporate entity and was subsequently dismissed for naming the wrong plaintiff. 49 In holding that the different, related plaintiff could not benefit from the savings statute, the court noted that the text of CPLR section 205(a) traces its roots to seventeenth century England, [and] the remedial concept embodied in CPLR 205(a) has existed in New York law since at least 1788. 50 In turning to the text of the statute, the court noted that the benefit provided by the section is explicitly, and exclusively, bestowed on the plaintiff who prosecuted the initial action. 51 In Norex, the parties dispute under section 205(a) centered on whether the Federal Court dismissal constituted a final determination on the merits. The defendants in Norex clearly thought that the initial federal action had been dismissed on the merits and, as such, the plaintiff s lawsuit could not be saved under CPLR section 205(a), while the plaintiff obviously thought 46 47 48 Reliance Ins. Co. v. Polyvision Corp., 9 N.Y.3d 52, 876 N.E.2d 898, 845 N.Y.S.2d 212 (2007). 49 at 56, 876 N.E.2d at 899, 845 N.Y.S.2d at 213. 50 (citing Gaines v. City of N.Y., 215 N.Y. 533, 537 38, 109 N.E. 594, 595 (1915)). 51 Reliance Ins. Co., 9 N.Y.3d at 57, 876 N.E.2d at 900, 845 N.Y.S.2d at 214. The text of CPLR section 205(a) limits who may actually commence a new action to the following: the original plaintiff who was a named party to the dismissed action or that person s executor or administrator. C.P.L.R. 205(a). This limitation should be duly noted by commercial litigators specifically in the context of related corporations with separate legal identities. In the context of CPLR section 205(a), the Court of Appeals, by narrowly applying the statute, and out of concern over potentially breathing new life into otherwise stale claims, has held that a different, related corporate entity will not qualify as the same plaintiff and thus cannot save a cause of action on behalf of its corporate brethren. Reliance Ins. Co., 9 N.Y.3d at 57 58, 876 N.E.2d at 900 01, 845 N.Y.S.2d at 214 15.

2014/2015] Norex v. Blavatnik 157 otherwise. 52 Because of this, it is important to understand if and when there has been a final determination on the merits in order to decide whether the court may grant the plaintiff the six-month extension to refile the action based on CPLR section 205(a). In 2009, when faced with this question, the Court of Appeals provided a robust endorsement of CPLR 205(a) s six-month recommencement privilege. 53 In Goldstein v. New York State Urban Development Corp., 54 the court held that a plaintiff may refile an action in state court after the federal court dismissed the federal causes of action on the merits. 55 In Goldstein, the federal court also chose not to exercise supplemental jurisdiction over the state law claims and subsequently dismissed them without prejudice. 56 By way of background, the plaintiffs in Goldstein brought an action in federal court challenging New York State s condemnation of their property in Brooklyn under the theory that the condemnation violated the Public Use Clause of the Fifth Amendment to the United States Constitution. 57 Subsequent to the dismissal in federal court, the plaintiffs brought another proceeding in state court under Eminent Domain Procedure Law (EDPL) section 207, arguing that the standard for taking under the New York State Constitution was more restrictive than that of the United States Constitution. 58 Prior to reaching the merits, the court had to decide whether the action ought to be dismissed as untimely under EDPL section 207. 59 To reach its decision on whether the action was timely, the court analyzed whether the thirty-day time limit to seek review under EDPL section 207 is a statute of limitations or a condition precedent. 60 In deciding that it was a statute of 52 Norex Petroleum Ltd. v. Blavatnik, 23 N.Y.3d 665, 668 n.3, 16 N.E.3d 561, 563 n.3, 992 N.Y.S.2d 503, 505 n.3 (2014) ( We appreciate that defendants contend that the termination of Norex s federal action constituted a final judgment upon the merits within the meaning of CPLR 205(a). ). 53 Vincent C. Alexander, Practice Commentaries, C205:6, in N.Y. C.P.L.R. 205 (McKinney 2010). 54 Goldstein v. N.Y. State Urban Dev. Corp., 13 N.Y.3d 511, 921 N.E.2d 164, 893 N.Y.S.2d 472 (2009). 55 at 520, 921 N.E.2d at 167 68, 893 N.Y.S.2d at 475 76. 56 at 518 19, 921 N.E.2d at 167, 893 N.Y.S.2d at 475. 57 at 518, 921 N.E.2d at 166 67, 893 N.Y.S.2d at 474 75. 58 See id. at 519, 921 N.E.2d at 167, 893 N.Y.S.2d at 475. 59 at 519 20, 921 N.E.2d at 167, 893 N.Y.S.2d at 475. EDPL section 207 imposes a thirty-day time limit when seeking judicial review of the state s condemnation. N.Y. EM. DOM. PROC. LAW 207 (McKinney 2014). 60 Goldstein, 13 N.Y.3d at 521 22, 921 N.E.2d at 169, 893 N.Y.S.2d at 477.

158 Albany Law Review [Vol. 78.1 limitations, the appellate division applied the CPLR 205(a) toll. 61 Because the proceeding was based upon the same transaction or occurrence as the federal action, and was commenced within six months after the date upon which the determination of the United States District Court in the federal action became final, [it was] timely. 62 As discussed in more detail below, the Norex court ultimately chose not to rule as to whether or not there was a final determination on the merits of the prior federal action, instead leaving it for the trial court to decide how CPLR section 205(a) should be applied in that case. 63 IV. ANALYSIS OF NOREX DECISION As noted above, the court had to decide the novel question of whether or not a plaintiff may refile an action in state court alleging new claims arising from the same transaction or occurrence even if such claims would be untimely if filed in the jurisdiction where the causes of action accrued. In applying CPLR section 202 when the original action was filed, the Norex court ultimately decided that such a suit would be timely but on much narrower grounds than either the plaintiff or defendant argued. 64 The plaintiff argued that under both CPLR section 202 and CPLR section 205(a) such a case is timely because its original lawsuit was timely in federal court in 2002. 65 The defendant on the other hand argued that such a lawsuit is untimely pursuant to CPLR section 202 and CPLR section 205(a) because, under Alberta law, the refiled action in 2011 was untimely since Alberta has no savings statute. 66 The court, in reaching its decision, builds upon case law already established in a trio of decisions, which apply the borrowing and savings statutes. 67 61 Goldstein v. N.Y. State Urban Dev. Corp., 64 A.D.3d 168, 177, 879 N.Y.S.2d 524, 531 (App. Div. 2d Dep t), aff d, 13 N.Y.3d 511, 921 N.E.2d 164, 893 N.Y.S.2d 472 (2009). 62 63 Norex Petroleum Ltd. v. Blavatnik, 23 N.Y.3d 665, 668 n.3, 16 N.E.3d 561, 563 n.3, 992 N.Y.S.2d 503, 505 n.3 (2014). 64 See id. at 672 73, 679, 16 N.E.3d 561, 566, 571, 992 N.Y.S.2d 503, 508, 513. 65 at 672 73, 16 N.E.3d at 566, 992 N.Y.S.2d at 508. 66 67 See id. at 672 75, 16 N.E.3d at 566 71, 992 N.Y.S.2d at 508 13 (citing Global Financial Corp. v. Triarc Corp., 93 N.Y.2d 525, 715 N.E.2d 482, 693 N.Y.S.2d 479 (1999); Smith Barney, Harris Upham & Co. v. Luckie, 85 N.Y.2d 193, 647 N.E.2d 1308, 623 N.Y.S.2d 800 (1995); Besser v. E.R. Squibb & Sons, Inc., 146 A.D.2d 107, 539 N.Y.S.2d 734 (App. Div. 1st Dep t 1989), aff d, 75 N.Y.2d 847, 552 N.E.2d 171, 552 N.Y.S.2d 923 (1990)).

2014/2015] Norex v. Blavatnik 159 These decisions, along with an analysis on forum shopping, form the basis of the court s opinion. A. Global Financial, Smith Barney and Besser In Global Financial, the court decided where a nonresident s contract claims accrue for purposes of CPLR 202, not whether a new action commenced pursuant to CPLR 205(a) may be time-barred by CPLR 202 even though the prior action from which the new action flows was timely. 68 Both the plaintiff and defendants in Norex cited to Global Financial in support of their arguments. 69 The plaintiff argued that: Global Financial plainly stands for the proposition that CPLR 205(a) is available to non-resident plaintiffs, like Global Financial and Norex, whose claims accrue outside New York, even if the state laws borrowed under CPLR 202 for purposes of determining the limitations period (Florida in the case of Global Financial, Alberta in this case) do not have a savings statute at all. 70 The defendants argued that: [T]he parties and the Court focused on the original filing 68 Norex, 23 N.Y.3d at 674, 16 N.E.3d at 567, 992 N.Y.S.2d at 509 (emphasis added). Since the analysis under CPLR sections 202 and 205 are fact specific, the court spent a significant amount of time addressing the facts of Global Financial. at 673 74, 16 N.E.3d at 566 67, 992 N.Y.S.2d at 508 09. The foreign plaintiff in Global Financial initially brought an action in federal court claiming the defendant owed it commissions and fees. at 673, 16 N.E.3d at 567, 992 N.Y.S.2d at 509. The complaint was filed nearly six years after the defendant had refused a demand for payment. Because both parties were from Delaware, the federal court dismissed the action citing lack of subject matter jurisdiction. Similar to Norex, Global Financial next commenced an action in New York State court within the six-month savings period. The defendant argued that the state court action was time barred since it was not brought within the time afforded by either Delaware, where the plaintiff was incorporated, or Pennsylvania, where it had its principal place of business. The plaintiff argued that the claims accrued in New York and, as such, were timely under the six-year statute of limitations for breach of contract as provided by New York law. Because both the Delaware and Pennsylvania periods were shorter than New York s six years, the court reasoned that the claims were time-barred whether one look[ed] to... Delaware or Pennsylvania. at 673 74, 16 N.E.3d at 567, 992 N.Y.S.2d at 509 (alteration in original) (quoting Global Financial, 93 N.Y.2d at 530, 715 N.E.2d at 485, 693 N.Y.S.2d at 482). Consequently, the plaintiff s federal lawsuit the prior action within the meaning of CPLR 205(a) was untimely, necessarily rendering the new action in state court untimely as well. Norex, 23 N.Y.3d at 674, 16 N.E.3d at 567, 992 N.Y.S.2d at 509. 69 Norex, 23 N.Y.3d at 674 75, 16 N.E.3d at 568, 992 N.Y.S.2d at 510. 70 at 674, 16 N.E.3d at 568, 992 N.Y.S.2d at 510 (quoting Reply Brief for Plaintiff- Appellant at 10, Norex Petroleum Ltd., 23 N.Y.3d 665, 16 N.E.3d 561, 992 N.Y.S.2d 503 (No. 2013-00263)) (internal quotation marks omitted).

160 Albany Law Review [Vol. 78.1 date in Global Financial merely because the plaintiff s claim was going to be saved on the refiling date, if originally timely filed, no matter which state s law applied. As summed up by defendants, borrowing all of Delaware, Pennsylvania, or Florida law i.e., limitations and tolling provisions would have been outcome-neutral under CPLR 202. 71 Critically, the court rejected both arguments by noting that, in its Global Financial analysis, it never took into account the savings statutes (or lack thereof) in any of the relevant foreign states. 72 The court also pointed out that both parties overestimated the importance of the reference to CPLR section 205 in a case where it was already agreed upon that the state court action was not timebarred by section 202 so long as the prior federal court action had been timely filed. 73 In Smith Barney, the court had to decide two appeals that presented the same issue whether the timeliness of arbitration claims pursuant to an agreement governed by the Federal Arbitration Act was a question reserved to the arbitrators or the courts because each arbitration agreement contained a New York choice of law provision and, under New York law, statute of limitations questions are properly resolved by the courts. 74 The Norex court was unpersuaded by the defendants reliance on Smith Barney for the proposition that CPLR section 202 required Norex s state court action to be timely under Alberta law when filed in March 2011, either because Alberta s statute of limitations had not yet expired or Norex s claims were saved by an Alberta tolling statute. 75 Following its reasoning in Smith Barney that when applying CPLR section 202 it needed to borrow not only the foreign statute of limitations but any extensions and tolls that may be applied 76 the Norex court fully embraced this position because the legislature enacted section 202 primarily to prevent forum shopping; i.e., to make sure that nonresidents do not 71 Norex, 23 N.Y.3d at 675, 16 N.E.3d at 568, 992 N.Y.S.2d at 510 (quoting Joint Brief for Defendants-Respondents at 25, Norex Petroleum Ltd., 23 N.Y.3d 665, 16 N.E.3d 561, 992 N.Y.S.2d 503 (No. APL-2013-00263)). 72 Norex, 23 N.Y.3d at 675, 16 N.E.3d at 568, 992 N.Y.S.2d at 510. 73 74 Smith Barney, Harris Upham & Co. v. Luckie, 85 N.Y.2d 193, 197, 647 N.E.2d 1308, 1310, 623 N.Y.S.2d 800, 802 (1995). 75 Norex, 23 N.Y.3d at 677, 16 N.E.3d at 569, 992 N.Y.S.2d at 511. 76 Smith Barney, 85 N.Y.2d at 207, 647 N.E.2d at 1316, 623 N.Y.S.2d at 808.

2014/2015] Norex v. Blavatnik 161 select a New York forum and burden New York s state and federal courts when, and perhaps precisely because, their lawsuits are time-barred by the applicable laws of the foreign states where the causes of action accrued. 77 Finally, in Besser, the First Department had to resolve whether or not CPLR section 202 trumped CPLR section 214 78 in an action brought by a non-new York resident plaintiff. 79 The court found that CPLR section 202 was applicable and the claims were time barred since the legislative intent when enacting CPLR section 214(c)(2) was to provide to New York residents only not the entire world a one-year window period in which to sue for claims otherwise barred by law. 80 The Norex defendants tried the same approach as the plaintiff in Besser, arguing that CPLR section 202 should take precedence over CPLR section 205(a) as a savings statute, resulting in the dismissal of the plaintiff s claim as untimely. 81 Again the court found such an argument unavailing and noted that both CPLR section 214(c)(2) and CPLR section 205(a) were not at all similar other than being remedial in nature. 82 The court also pointed out that there is no evident legislative intent to limit the savings statute s beneficial scope to resident plaintiffs. 83 As evidenced by its analysis of the relevant case law, the Norex court had determined that when approaching the intersection of CPLR section 202 and CPLR section 205(a), once the goal of CPLR section 202 was met at the time of the initial filing, it would have no more role to play and the only issue left to resolve was whether CPLR section 205(a) could save the plaintiff s lawsuit. 84 77 Norex, 23 N.Y.3d at 676, 16 N.E.3d at 569, 992 N.Y.S.2d at 511 (citing Ins. Co. of N. Am. v. ABB Power Generation, 91 N.Y.2d 180, 186 87, 690 N.E.2d 1249, 1252, 668 N.Y.S.2d 143, 146 (1997)). 78 CPLR section 214(c)(2) is a provision which revived certain causes of action that would be otherwise time barred. Norex, 23 N.Y.3d at 677, 16 N.E.3d at 570, 992 N.Y.S.2d at 512. Under this statute, a plaintiff was given a one time, one year window in which they were able to commence an action even if the statute of limitations had expired after the discovery of injuries resulting from an exposure to diethylstilbestrol (DES). 79 Besser v. E. R. Squibb & Sons, Inc., 146 A.D.2d 107, 109 111, 539 N.Y.S.2d 734, 734 35 (App. Div. 1st Dep t 1989), aff d, 75 N.Y.2d 847, 552 N.E.2d 171, 552 N.Y.S.2d 923 (1990). 80 at 110, 539 N.Y.S.2d at 735. 81 Norex, 23 N.Y.3d at 677 78, 16 N.E.3d at 570, 992 N.Y.S.2d at 512. 82 at 678, 16 N.E.3d at 570, 992 N.Y.S.2d at 512. 83 84 at 679, 16 N.E.2d at 571, 992 N.Y.S.2d at 513.

162 Albany Law Review [Vol. 78.1 B. Forum Shopping As noted above, the crux of the Norex decision starts once the court addresses the significance of whether or not Norex had engaged in forum shopping within the context of CPLR section 202. Because of this, it is critical to once again note that the objective of CPLR section 202 is to prevent forum shopping by a nonresident plaintiff suing on an injury that occurs outside the state. 85 CPLR section 202 essentially functions as a gatekeeper statute to ensure that a foreign plaintiff cannot take advantage of the more favorable statute of limitations in New York State. 86 This analysis is fact based and requires the court to determine whether the nonresident plaintiff has a cause of action that accrued outside the state. 87 Once it determined that CPLR section 202 should apply based on its factual analysis, the Norex court still had to decide at what stage of the litigation to apply CPLR section 202. The Norex court specifically reiterated the policy behind CPLR section 202, stating that it prohibited a nonresident plaintiff from forum shopping by suing in New York courts to take advantage of a longer statute of limitations.... 88 Ultimately, despite its complex legal and procedural history, this case would turn on whether or not the defendants could show some element of forum shopping by the nonresident plaintiff. After analyzing the facts, the court was satisfied that the policy of CPLR section 202 (the prevention of forum shopping) was fully served because Norex filed its complaint in New York federal court within weeks of the events which led to the claims alleged in the federal lawsuit, and as such, 85 See supra note 27 and accompanying text. 86 See Portfolio Recovery Assocs. v. King, 14 N.Y.3d 410, 417 18, 927 N.E.2d 1059, 1062, 901 N.Y.S.2d 575, 578 (2010) (concluding that CPLR section 202 required the court to apply Delaware s three-year statute of limitations and tolling provisions). The contract at issue in Portfolio Recovery Associates contained a standard choice of law clause stating that it would be governed by the laws of Delaware. at 415, 927 N.E.2d at 1060, 901 N.Y.S.2d at 576. Because choice of law provisions generally apply only to substantive issues, not statute of limitations, the court noted that [t]he Appellate Division properly concluded that the Delaware choice of law clause did not require the application of the Delaware three-year statute of limitations to bar Portfolio s claims. at 415 16, 927 N.E.2d at 1061, 901 N.Y.S.2d at 577. However, the court reasoned that the analysis should have continued, and once the facts showed that the economic injury occurred in Delaware and the plaintiff was not a New York resident, the court found that the appellate division should have applied CPLR section 202 to determine whether or not Portfolio s claims were timely. at 416, 927 N.E.2d at 1061, 901 N.Y.S.2d at 577. 87 88 Norex, 23 N.Y.3d at 678, 16 N.E.3d at 571, 992 N.Y.S.2d at 513.

2014/2015] Norex v. Blavatnik 163 it was timely under both Alberta and New York statutes of limitations. 89 Critically, the court ruled that once Norex timely commenced its federal court action in New York, the borrowing statute s purpose to prevent forum shopping was fulfilled, and CPLR 202 had no more role to play. 90 The court clarified that CPLR section 202 would be applied only once at the outset of the original lawsuit. 91 With this subtle distinction, the court affirmatively answered the question presented: [W]hether a nonresident plaintiff who filed a timely action in a New York federal court may refile claims arising from the same transaction in state court within six months of the federal action s non-merits termination, even though the suit would be untimely in the out-of-state jurisdiction where the claims accrued. 92 What is also critical to this forum shopping analysis is the finding that, because Norex s original federal action was timely, its refiled state court action must also be timely, and the absence of a tolling or savings provision in Alberta law had no practical effect with regard to the original federal action. 93 Further, once the court found that Norex s state court action was not time barred under CPLR section 202, it never had to consider whether Norex s claims were timely filed in state court pursuant to 28 U.S.C. 1367(d). 94 In so holding, the court overruled the appellate division and made clear that CPLR section 202 will be applied only once, leaving any issues as to whether CPLR section 205(a) will save the action even though the claims alleged in the refiled state court action had not 89 at 678 79, 16 N.E.3d at 571, 992 N.Y.S.2d at 513. 90 at 679, 16 N.E.3d at 571, 992 N.Y.S.2d at 513. 91 See id. 92 at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505 (emphasis added). 93 at 677, 16 N.E.3d at 570, 992 N.Y.S.2d at 512. 94 at 680, 16 N.E.3d at 571 72, 992 N.Y.S.2d at 513 14. For a more detailed discussion of 28 U.S.C. 1367, see supra note 19. This statute allows for federal courts to assert supplemental jurisdiction over all other claims related to the federal action. 28 U.S.C. 1367 (2013). In the event those claims are dismissed, 1367 tolls the statute of limitations for thirty days and permits the action to be refiled in state court. See 1367(d). It should be noted however, that the claims at issue in the refiled action were never asserted in the federal court action. See Norex, 23 N.Y.3d at 671, 16 N.E.3d at 565, 992 N.Y.S.2d at 507. In a footnote, the Norex court determined that [f]or purposes of discussion in this opinion, we simply assume that, within the meaning of section 205(a), Norex s federal action was not terminated on the merits, and Norex s state court action alleges claims upon the same transaction or occurrence as its federal predecessor. at 668 n.3, 16 N.E.3d at 563 n.3, 992 N.Y.S.2d at 505 n.3.

164 Albany Law Review [Vol. 78.1 been pled in the original action. 95 V. CONCLUSION In Norex, the Court of Appeals did resolve an open question of New York civil procedure, as promised at the outset of the court s opinion. 96 After Norex, the limitations period comparison dictated by CPLR section 202 takes place only upon the initial filing of a complaint, and does not take place a second time when a terminated action is refiled pursuant to CPLR section 205(a). However, in resolving this narrow question, the court did not address numerous remaining questions that the parties briefed and argued and that the trial court will need to address (in some instances for the second time). Foremost, the court simply assume[d] that, within the meaning of section 205(a), Norex s federal action was not terminated on the merits, and Norex s state court action alleges claims upon the same transaction or occurrence as its federal predecessor. 97 The court instead directed the trial court to resolve whether the federal court s dismissal of Norex s RICO claims (for lack of subject matter jurisdiction) and Russian law claims (for lack of supplemental jurisdiction) constituted a final judgment on the merits under CPLR section 205(a). 98 Similarly, the court did not resolve whether CPLR section 205(a) permits a plaintiff to raise New York state law claims, which it had not previously raised in the federal action, simply because those claims arise from the same transaction or occurrence as the claims that plaintiff did assert in the federal action. Each of these questions regarding the application of CPLR section 205(a) also may present open questions under New York law in the circumstances of this case. Indeed, the parties had briefed these questions extensively on appeal, 99 and the appellate division had resolved each of these questions in favor of defendants 95 The appellate division had affirmed the trial court s ruling, holding that the federal complaint was dismissed on the merits, which bars plaintiff from bringing the state claims that it alleges are based upon the same transaction or occurrence or series of transactions or occurrences it pled in its federal action. Norex Petroleum Ltd. v. Blavatnik, 105 A.D.3d 659, 660, 963 N.Y.S.2d 644, 645 (App. Div. 1st Dep t 2013), rev d, 23 N.Y.3d 665, 16 N.E.3d 561, 992 N.Y.S.2d 503. 96 Norex, 23 N.Y.3d at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505. 97 at 668 n.3, 16 N.E.3d at 563 n.3, 992 N.Y.S.2d at 505 n.3. 98 99 Reply Brief for Plaintiff-Appellant, supra note 70, at 18 20, 28 31; Joint Brief for Defendants-Respondents, supra note 71, at 35 36.

2014/2015] Norex v. Blavatnik 165 (albeit arguably in dicta). 100 As a result, while Norex s New York state law claims survive, their lifespan may be short unless Norex can change the lower courts opinion that Norex did not meet the requirements of CPLR section 205(a). Either way, [t]his dramatic and long-running contest over control of a lucrative oil field in Western Siberia may present the Court of Appeals with another open question of New York civil procedure under CPLR section 205(a), rather than CPLR section 202. 101 100 Norex, 23 N.Y.3d at 671 73, 16 N.E.3d at 565 66, 992 N.Y.S.2d at 507 08. 101 at 668, 16 N.E.3d at 563, 992 N.Y.S.2d at 505.