Defendants move to dismiss the Complaint pursuant to CPLR 3211 (a) (8) for lack of personal jurisdiction or, in the alternative, pursuant to CPLR 327 (a) on the ground of forum non conveniens. The defendants' motion to dismiss is denied.

In January 2013, SCBT first contacted FirstFinancial Holdings, Inc. (First Financial) to propose a potential merger between the two companies. Shortly after that time, SCBT retained the services of a New York investment banker, Keefe, Bruyette, & Woods, Inc. (KBW), as well as a New York law firm, Wachtell Lipton (Wachtell), whom it had hired in 2012 to represent it on two other mergers, in connection with the expected SCBT-First Financial merger. In [*2]February 2013, SCBT and First Financial executed the final merger agreement.

The final merger agreement (merger agreement) called for a shareholder vote. A two-thirds affirmative vote of the outstanding shares is required for the transaction to proceed. Among many other provisions in the merger agreement was a clause designating New York City as the location of the merger closing.

The document central to this action is the Registration Statement filed with the SEC in April 2013. The Registration Statement was made available to SCBT shareholders via the SEC website in conjunction with the soliciting of shareholder votes in favor of the merger. Included within the Registration Statement was a fairness opinion, which SCBT obtained from KBW stating that the merger was fair to SCBT from a financial point of view, and a summary of the material financial analyses underlying the fairness opinion.

Plaintiff brings one cause of action against defendants: failure to disclose. Under that claim, plaintiff alleges that SCBT and the individual defendants had a fiduciary duty to disclose all material facts in the Registration Statement in order to allow SCBT's shareholders to make an informed decision as to whether to vote in favor of the SCBT-First Financial merger. Plaintiff alleges that the individual defendants have breached their fiduciary duties by making materially inadequate disclosures and material omissions in their disclosures. Plaintiff also claims that as a result of the inadequate disclosures, it has suffered damages.

On a motion to dismiss under the doctrine of forum non conveniens, "the burden rests upon the defendant challenging the forum to demonstrate relevant private or public interest factors which militate against accepting the litigation. Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479 (1984); Bader & Bader v Ford, 66 AD2d 642, 645 (1st Dept 1979) ("The party who seeks to invoke forum non conveniens to effect dismissal of the action and eventual transfer to another jurisdiction must clearly establish that New York is an inconvenient forum and that another is available which will best serve the ends of justice and the convenience of the parties"). "The court, after considering and balancing the various competing factors, must determine in the exercise of its sound discretion whether to retain jurisdiction or not." Pahlavi, 62 NY2d at 479.

Personal Jurisdiction Over Defendants:

Plaintiffs argue that personal jurisdiction is conferred over each of the named defendants based on several contacts, including defendants' relationship with a New York law firm, Wachtell, defendants' relationship with a New York investment bank, KBW, the designated location for the closing in New York, and the active trading of SCBT stock on a New York stock exchange.

A court may assert personal jurisdiction over a non-domiciliary defendant under CPLR 302 (a) (1) where that defendant "transacts any business within the state" and the alleged cause [*3]of action arises from the business transaction within the state. NY CPLR 302. Plaintiffs allege that defendants engaged in purposeful activity in New York when they retained a New York law firm to negotiate the terms of the SCBT-First Financial merger on their behalf, prepare the merger agreement and related documents, and advise the SCBT board with respect to the transaction, in addition to designating, in their filings with the SEC, New York as the state in which the merger's closing will take place.

It is uncontested that Wachtell, as SCBT's counsel in the SCBT-First Financial merger, has been involved in the merger transaction. The establishment of a "continuing attorney-client relationship in [the] state" can constitute a transaction of business under CPLR 302 (a) (1)." Fischbarg v Doucet, 9 NY3d 375, 377 (2007) (holding that jurisdiction was proper because defendants purposefully availed themselves of New York's legal services market by establishing a continuing attorney-client relationship through their retention of, and subsequent communications with, plaintiff). Defendants retained Wachtell to facilitate the acquisition of First Financial and that relationship is sufficient to establish a business transaction in New York.

CPLR 302 (a) (1) also requires the cause of action to arise from the business transaction. NY CPLR 302. That requirement might be met here. As emphasized by defendants, "there must be "a substantial relationship' between [the purposeful] activities and the transaction out of which the cause of action arose." SPCA of Upstate New York, Inc. v Am. Working Collie Ass'n, 18 NY3d 400, 404 (2012) (quoting Talbot v Johnson Newspaper Corp., 71 NY2d 827, 829 (1988)). The cause of action detailed in the complaint is a failure to disclose certain material facts, which also gives rise to a breach of fiduciary duty on the part of the individual defendants. Although plaintiffs claim that defendants retained Wachtell to perform a number of tasks, including advising SCBT with respect to the transaction, the relevant inquiry that remains unanswered is: "To what extent did defendants' relationship with Wachtell play a role in the occurrence of the alleged cause of action — a failure to disclose material facts in the registration statement?" Further discovery is needed to determine a clear answer to this pivotal question.

To survive a pre-discovery motion to dismiss for lack of jurisdiction, a plaintiff need only demonstrate that facts "may exist" to support jurisdiction. Peterson, 33 NY2d at 467 ("It need not be demonstrated that they do exist. This obviously must await discovery"). The pleaded facts suggest that personal jurisdiction may exist and therefore further jurisdictional discovery is appropriate. If the alleged contacts are insufficient to establish personal jurisdiction over each of the named defendants, plaintiffs have, at a minimum, established a "sufficient start" to indicate that the basis of jurisdiction is "not frivolous." Id.

Apart from arguing that this court lacks personal jurisdiction over SCBT, defendants also argue that the court similarly lacks personal jurisdiction over the individual defendants. Like the arguments made in favor of granting plaintiffs the opportunity to conduct jurisdictional discovery with respect to SCBT, the arguments made in reference to the individual defendants also establish a "sufficient start" warranting jurisdictional discovery. Plaintiffs allege that SCBT's contacts with New York suggest that the individual defendants may have been physically present in New York, as well as purposefully availed themselves of the benefits and protections of New York.

Although the alleged contacts with New York are those of SCBT and not the individual defendants directly, it is unfathomable that those contacts could have been instigated without the [*4]participation of the individual defendants.^[FN1] The facts suggest that further contact existed between the individual defendants and New York State, particularly with Wachtell, during the relevant time period, but the substantive evidence lies only within the grasp of the defendants. In cases where jurisdictional facts are unknown to the plaintiff, especially in cases where the information is known only by the defendants, a showing that jurisdiction "may exist" is sufficient to justify further discovery. Id. This is particularly true, in cases involving long-arm jurisdiction, as here, because the jurisdictional issues are likely to be more complex. Id.

The facts that plaintiff alleges are enough to constitute the "sufficient start" required for jurisdictional discovery. As a result, at this time, plaintiffs are able to overcome a motion to dismiss and defendants' motion is denied.

Forum Non Conveniens:

Defendants argue that this case should also be dismissed pursuant to CPLR 327 (a), which provides that a court may dismiss an action when it is in the interest of substantial justice that the action be heard in another forum. NY CPLR 327.

New York has a high bar for dismissing a case on the basis of forum non conveniens. Gilbert v Burnside, 16 Misc 2d 1089, 1093 (Sup Ct 1958) ("The doctrine of forum non conveniens is to be applied with caution, particularly where the plaintiff is a resident of the State"). The movant-defendant has the burden of proof to establish that private or public interests compel dismissing the action in favor of it being litigated in an alternative forum.

Pahlavi, 62 NY2d 474. Defendants have failed to meet that burden here.

There are several factors that courts have traditionally taken into consideration, including the burden on New York courts, the potential hardship to the defendant, the availability of an alternative forum, the residency of both parties, and the place of the transaction from which the cause of action arose. Id. Above all else, the court will use its discretion to ensure that justice, fairness, and convenience prevail. Id.

In this case, the foremost factor that favors dismissing the case is the availability of an alternative forum. The other factors are either relatively neutral or favor keeping the action in New York courts. First, the courts will not be overly burdened by keeping the action in the state. Second, although the defendants reside outside New York, the plaintiff is a New York resident and there is a policy reason for keeping the cases that involve a New York party. Gilbert, 16 Misc 2d at 1093. Finally, although it may be a potential hardship for the individual defendants to physically travel to New York, it will not be a hardship for them to defend themselves in this action. Defendants previously hired a New York law firm to work on the merger transaction and their counsel will be defending them in this case from New York. At most, a weighing of these factors reveals that both sides are approximately equal.

The relevant factors show that defendants have not established that dismissing this action so it may be brought in an alternative forum is within the interest of substantial justice, and therefore their motion is denied.

ENTER:

/s/Melvin L. Schweitzer

J.S.C.