Mercury Public Affairs, LLC v. Airbus Defence and Space, S.A.U.

Background

Mercury Public Affairs LLC alleged that Airbus Defence and Space, S.A.U. (ADSS) hired it in April 2013 to provide consulting services related to efforts to sell aircraft to the United Nations and certain African nations. Mercury alleged that it performed the work from April 2013 through June 2014 under a verbal agreement requiring monthly payments of $10,125. The work included arranging meetings with foreign officials, much of it from Mercury’s New York office. ADSS representatives allegedly attended some meetings in New York City.

Mercury alleged that ADSS later sent an unsigned written contract that memorialized the payment terms. That draft identified Airbus Defense and Space, Inc. (ADSI), rather than ADSS, as the counterparty. Mercury revised, signed, and returned the draft, but neither ADSI nor ADSS signed it. The draft contained an arbitration clause. Mercury alleged that it stopped working in August 2014 after receiving no payments and that ADSS later offered $171,533.23 to settle its obligations, but did not pay.

Motions and parties’ positions

ADSS moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and under Section 2 of the Federal Arbitration Act. ADSS argued that the allegations did not establish sufficient contacts with New York under New York’s long-arm statute or the Constitution. ADSS also argued that the alleged verbal agreement with ADSS and the unsigned written agreement with ADSI were one integrated agreement requiring arbitration.

Mercury argued that ADSS transacted business in New York by hiring a New York-based company to perform consulting services from New York and by sending representatives to meetings in New York. Mercury also argued that the arbitration clause appeared only in the proposed agreement with ADSI, which was not a party to the case, and that ADSS had not shown an agreement between ADSS and Mercury to arbitrate.

Personal jurisdiction ruling

The court applied New York’s long-arm statute and constitutional due-process principles. Because ADSS submitted no affidavit contesting the jurisdictional facts, the court accepted Mercury’s complaint allegations and supporting affidavit as true for purposes of the motion and viewed doubts in Mercury’s favor.

The court held that Mercury made a prima facie showing of specific personal jurisdiction. It relied on allegations that ADSS maintained an ongoing business relationship with Mercury, a company headquartered in New York; that substantial consulting work was performed from New York; and that ADSS representatives attended meetings with Mercury in New York City concerning the consulting work and potential aircraft sales. The court found these contacts sufficient to show that ADSS transacted business in New York and that Mercury’s claim had a substantial connection to that business.

The court rejected ADSS’s argument that jurisdiction was improper because the aircraft were not being sold to New York residents. The court explained that the relevant transaction was ADSS’s contract for consulting services from a New York-based company and its meetings with Mercury in New York, not the location of the potential aircraft purchasers.

Arbitration ruling

The court stated that whether an arbitration agreement exists and whether it covers a dispute are questions for the court. It rejected ADSS’s attempt to treat the alleged verbal agreement with ADSS and the proposed written agreement with ADSI as the same agreement, emphasizing that the two companies remained legally separate.

The court further held that the arbitration clause appeared only in the proposed agreement between Mercury and ADSI. ADSS was not identified as a party to that agreement and did not establish a basis for enforcing its arbitration clause. ADSS also provided no evidence of an arbitration agreement directly between ADSS and Mercury. On the limited record at the motion-to-dismiss stage, the court found no clear, explicit, and unequivocal agreement requiring Mercury to arbitrate with ADSS.

Disposition

The court denied ADSS’s motion to dismiss the amended complaint for lack of personal jurisdiction and under the Federal Arbitration Act. The court directed ADSS to file an answer by September 7, 2020, and directed the Clerk to close the motion’s docket entry. The opinion did not decide whether Mercury ultimately was entitled to payment.