Paysafe Ltd. v Koller 2025 NY Slip Op 31603(U) May 2, 2025 Supreme Court, New York County Docket Number: Index No. 655350/2024 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 655350/2024 NYSCEF DOC. NO. 18 RECEIVED NYSCEF: 05/02/2025
SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LYLE E. FRANK PART 11M Justice ---------------------------------------------------------------------------------X INDEX NO. 655350/2024 PAYSAFE LIMITED MOTION DATE 12/23/2024 Plaintiff, MOTION SEQ. NO. 001 -v- STEVEN KOLLER, DECISION + ORDER ON MOTION Defendant. ---------------------------------------------------------------------------------X
The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17 were read on this motion to/for DISMISS .
Upon the foregoing documents, defendant’s motion is denied.
Background
Paysafe Limited (“Plaintiff”) is a platform that enables payment processing (such as
digital wallets) between customers and businesses. Steven Koller (“Defendant”) was employed
by one of Plaintiff’s subsidiaries for seven years and worked as a Vice President of New
Business Development. Starting in 2021, Plaintiff repeatedly offered bonus compensation to
Defendant in the form of a grant of restricted stock units (“RSUs”). These are shares of stock that
come with certain restrictions or conditions that must be met and are a common method of
attracting and retaining corporate leadership. For each grant of RSUs, the parties entered into a
Restricted Stock Unit Agreement (the “Agreement”) which contained certain restrictive
covenants associated with the stock grant, including a non-compete clause. This Agreement
contained a New York choice of law and venue provision. In July of 2024, Defendant left
Plaintiff to join one of Plaintiff’s biggest competitors. As a result, Plaintiff brought the present
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proceeding, pleading breach of contract and requesting injunctive relief, a declaratory judgment,
and compensatory damages.
Standard of Review
CPLR § 3211(a)(8) permits a party to move to dismiss a cause of action asserted against
them on the grounds that the court lacks personal jurisdiction over them. It is well settled that
when considering a motion to dismiss pursuant to CPLR § 3211, “the pleading is to be liberally
construed, accepting all the facts alleged in the pleading to be true and according the plaintiff the
benefit of every possible inference.” Avgush v. Town of Yorktown, 303 A.D.2d 340, 341 (2d
Dept. 2003). Dismissal of the complaint is warranted “if the plaintiff fails to assert facts in
support of an element of the claim, or if the factual allegations and inferences to be drawn from
them do not allow for an enforceable right of recovery.” Connaughton v. Chipotle Mexican Grill,
Inc, 29 N.Y.3d 137, 142 (2017).
Discussion
Defendant brings the present pre-answer motion to dismiss for lack of personal
jurisdiction. He is a Nebraska resident, and he did not conduct business for Plaintiff in New York
at any time. For a New York court to have person jurisdiction over a non-domiciliary, the New
York long-arm statute found in CPLR § 302 must be satisfied, as well as the U.S. Constitutional
due process analysis. See, e.g., LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214 [2000]. But
even if a party would not satisfy either or both prongs, they may consent to personal jurisdiction
by a valid and enforceable forum selection clause. See, e.g., P.S. Fin., LLC v. Eureka
Woodworks, Inc., 214 A.D.3d 1, 17 – 18 [2nd Dept. 2023]; Sterling Natl. Bank v. Eastern
Shipping Worldwide, Inc., 35 A.D.3d 222, 222 [1st Dept. 2006]. The Agreement that forms the
basis of this action contains a forum selection and choice of law provision. Therefore, the issue
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before the Court here is whether the forum selection clause in the Agreement is valid and
binding.
The relevant portion of the Agreement reads as follows:
THIS RESTRICTED SHARE UNIT AGREEMENT AND ITS ENFORCEMENT AND ANY CONTROVERSY ARISING OUT OF OR RELATING TO ANY RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Participant hereby (a) agrees that any action, directly or indirectly, arising out of, under or relating to the Restricted Share Units hereunder shall exclusively be brought in and shall exclusively be heard and determined by either the Supreme Court of the State of New York sitting in Manhattan … [capitals in original]
The parties do not dispute that the first sentence requires that Plaintiff’s claims against
Defendant be governed by New York law. Defendant argues that because the forum selection
sentence following refers to “Restricted Stock Units” and not “Restricted Stock Unit
Agreement”, the forum selection clause is more limited than the choice of law clause. Because
the complaint “seeks no relief and alleges no dispute with respect to” the RSUs, Defendant
argues that the forum selection clause does not apply. It is not disputed that the grant of the
RSUs was subject to the restrictive covenants in the Agreement, and that the said restrictive
covenants were agreed to in consideration for the grant.
The question becomes whether an action to enforce a restrictive covenant, that Defendant
agreed to in exchange for the RSU compensation, is an action that “indirectly” “relates to” the
said compensation. Defendant urges the Court to consider the “relates to” portion as a general
catch-all provision that must be limited by the use of “arising out of” and “under” preceding it.
Essentially, Defendant is arguing that the Plaintiff’s claim must explicitly arise out of the stock
units themselves. But this interpretation would negate the use of the phrase “relates to” and
render it superfluous, as well as the word “indirectly.” The phrase “relates to” has been
considered by the Court of Appeals and the U.S. Supreme Court as “having a connection with, or
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reference to the subject matter set forth”, albeit a connection that must be “subject to some
limitation.” Matter of the People of the State of New York, by Eliot Spitzer, as Attorney Gen. v.
Applied Card Sys., Inc., 11 N.Y.3d 105, 116 [2008].
It will be helpful to look at other applications of the phrase “relates to”. In the ERISA
context, “the phrase ‘relate to’ was given its broad common-sense meaning, such that a state law
‘relate[s] to a benefit plan in the normal sense of the phrase, if it has a connection with or
reference to such a plan.” Tufino v. New York Hotel & Motel Trades Council & Hotel Ass’ns
Local 6, 223 A.D.2d 245, 247 [1st Dept. 1996]. When interpreting the phrase ‘proceeds relating
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Paysafe Ltd. v Koller 2025 NY Slip Op 31603(U) May 2, 2025 Supreme Court, New York County Docket Number: Index No. 655350/2024 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 655350/2024 NYSCEF DOC. NO. 18 RECEIVED NYSCEF: 05/02/2025
SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LYLE E. FRANK PART 11M Justice ---------------------------------------------------------------------------------X INDEX NO. 655350/2024 PAYSAFE LIMITED MOTION DATE 12/23/2024 Plaintiff, MOTION SEQ. NO. 001 -v- STEVEN KOLLER, DECISION + ORDER ON MOTION Defendant. ---------------------------------------------------------------------------------X
The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 16, 17 were read on this motion to/for DISMISS .
Upon the foregoing documents, defendant’s motion is denied.
Background
Paysafe Limited (“Plaintiff”) is a platform that enables payment processing (such as
digital wallets) between customers and businesses. Steven Koller (“Defendant”) was employed
by one of Plaintiff’s subsidiaries for seven years and worked as a Vice President of New
Business Development. Starting in 2021, Plaintiff repeatedly offered bonus compensation to
Defendant in the form of a grant of restricted stock units (“RSUs”). These are shares of stock that
come with certain restrictions or conditions that must be met and are a common method of
attracting and retaining corporate leadership. For each grant of RSUs, the parties entered into a
Restricted Stock Unit Agreement (the “Agreement”) which contained certain restrictive
covenants associated with the stock grant, including a non-compete clause. This Agreement
contained a New York choice of law and venue provision. In July of 2024, Defendant left
Plaintiff to join one of Plaintiff’s biggest competitors. As a result, Plaintiff brought the present
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proceeding, pleading breach of contract and requesting injunctive relief, a declaratory judgment,
and compensatory damages.
Standard of Review
CPLR § 3211(a)(8) permits a party to move to dismiss a cause of action asserted against
them on the grounds that the court lacks personal jurisdiction over them. It is well settled that
when considering a motion to dismiss pursuant to CPLR § 3211, “the pleading is to be liberally
construed, accepting all the facts alleged in the pleading to be true and according the plaintiff the
benefit of every possible inference.” Avgush v. Town of Yorktown, 303 A.D.2d 340, 341 (2d
Dept. 2003). Dismissal of the complaint is warranted “if the plaintiff fails to assert facts in
support of an element of the claim, or if the factual allegations and inferences to be drawn from
them do not allow for an enforceable right of recovery.” Connaughton v. Chipotle Mexican Grill,
Inc, 29 N.Y.3d 137, 142 (2017).
Discussion
Defendant brings the present pre-answer motion to dismiss for lack of personal
jurisdiction. He is a Nebraska resident, and he did not conduct business for Plaintiff in New York
at any time. For a New York court to have person jurisdiction over a non-domiciliary, the New
York long-arm statute found in CPLR § 302 must be satisfied, as well as the U.S. Constitutional
due process analysis. See, e.g., LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214 [2000]. But
even if a party would not satisfy either or both prongs, they may consent to personal jurisdiction
by a valid and enforceable forum selection clause. See, e.g., P.S. Fin., LLC v. Eureka
Woodworks, Inc., 214 A.D.3d 1, 17 – 18 [2nd Dept. 2023]; Sterling Natl. Bank v. Eastern
Shipping Worldwide, Inc., 35 A.D.3d 222, 222 [1st Dept. 2006]. The Agreement that forms the
basis of this action contains a forum selection and choice of law provision. Therefore, the issue
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before the Court here is whether the forum selection clause in the Agreement is valid and
binding.
The relevant portion of the Agreement reads as follows:
THIS RESTRICTED SHARE UNIT AGREEMENT AND ITS ENFORCEMENT AND ANY CONTROVERSY ARISING OUT OF OR RELATING TO ANY RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Participant hereby (a) agrees that any action, directly or indirectly, arising out of, under or relating to the Restricted Share Units hereunder shall exclusively be brought in and shall exclusively be heard and determined by either the Supreme Court of the State of New York sitting in Manhattan … [capitals in original]
The parties do not dispute that the first sentence requires that Plaintiff’s claims against
Defendant be governed by New York law. Defendant argues that because the forum selection
sentence following refers to “Restricted Stock Units” and not “Restricted Stock Unit
Agreement”, the forum selection clause is more limited than the choice of law clause. Because
the complaint “seeks no relief and alleges no dispute with respect to” the RSUs, Defendant
argues that the forum selection clause does not apply. It is not disputed that the grant of the
RSUs was subject to the restrictive covenants in the Agreement, and that the said restrictive
covenants were agreed to in consideration for the grant.
The question becomes whether an action to enforce a restrictive covenant, that Defendant
agreed to in exchange for the RSU compensation, is an action that “indirectly” “relates to” the
said compensation. Defendant urges the Court to consider the “relates to” portion as a general
catch-all provision that must be limited by the use of “arising out of” and “under” preceding it.
Essentially, Defendant is arguing that the Plaintiff’s claim must explicitly arise out of the stock
units themselves. But this interpretation would negate the use of the phrase “relates to” and
render it superfluous, as well as the word “indirectly.” The phrase “relates to” has been
considered by the Court of Appeals and the U.S. Supreme Court as “having a connection with, or
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reference to the subject matter set forth”, albeit a connection that must be “subject to some
limitation.” Matter of the People of the State of New York, by Eliot Spitzer, as Attorney Gen. v.
Applied Card Sys., Inc., 11 N.Y.3d 105, 116 [2008].
It will be helpful to look at other applications of the phrase “relates to”. In the ERISA
context, “the phrase ‘relate to’ was given its broad common-sense meaning, such that a state law
‘relate[s] to a benefit plan in the normal sense of the phrase, if it has a connection with or
reference to such a plan.” Tufino v. New York Hotel & Motel Trades Council & Hotel Ass’ns
Local 6, 223 A.D.2d 245, 247 [1st Dept. 1996]. When interpreting the phrase ‘proceeds relating
to’ a sale in a contract, the First Department reversed the trial court on the grounds that its
interpretation of the phrase was “unduly constrained” and held that “the phrase relating to
indicates that the proceeds do not have to be specifically in exchange for a sale of interests in the
manager but instead must have some connection or relation to such a sale.” McKeon v.
Musallam, 211 A.D.3d 407, 409 [1st Dept. 2022]. Here, the restrictive covenants were singled
out and explicitly stated multiple times to constitute consideration for the RSUs. It logically
flows, then, that the restrictive covenants must connect to or relate to the RSUs. Therefore,
because here the complaint seeks to remedy a breach of the restrictive covenants, the action
would satisfy the indirectly relating to the RSUs requirement. The forum selection clause binding
as regards the restrictive covenants and this case.
Defendant Waived Right to Dismiss Under Forum Non Conveniens
Defendant has urged the Court to dismiss the action on the grounds of forum non
conveniens even if the forum selection clause is found to be valid. This doctrine allows a court to
dismiss an action when it “finds that in the interest of substantial justice the action should be
heard in another forum.” CPLR § 327(a). The First Department has held that “where a party to a
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contract has agreed in advance of litigation to submit to the jurisdiction of a court, she is later
precluded from attacking that court’s jurisdiction on grounds of forum non conveniens.”
National Union Fire Ins. Co. v. Worley, 257 A.D.2d 228, 232 [1st Dept. 1999]. But a forum
selection clause “may be set aside if it is shown by the resisting party to be unreasonable or
unjust […] such that a trial in the contractual forum would be so gravely difficult and
inconvenient that the challenging party would, for all practical purposes, be deprived of his or
her day in court.” Northern Leasing Sys., Inc. v. French, 48 Misc. 3d 43, 45 [1st Dept. 2015]. In
Northern, the court decided to “favorably exercise [their] discretion” “in the particular
circumstances of this case” to dismiss despite a forum selection clause. Id. These circumstances
included no substantial nexus with New York, an amount in controversy under $2,000, and an
elderly defendant. Id. Defendant also cites to 3H Enterprises, in which a “significant” factor in
the court’s discretionary dismissal was that the defendants were “senior citizens who suffer from
health problems which make it difficult and inadvisable to travel.” 3H Enterprises v. Bennett,
276 A.D.2d 965, 967 [3rd Dept. 2000]. The Court does not find that the circumstances of the
present case are such that would necessitate dismissal despite a binding forum selection clause.
Accordingly, it is hereby
ADJUDGED that the defendant’s motion to dismiss is denied; and it is further
ORDERED that defendant is directed to serve an answer to the complaint within 20 days
after service of a copy of this order with notice of entry.
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5/2/2025 DATE LYLE E. FRANK, J.S.C. CHECK ONE: CASE DISPOSED X NON-FINAL DISPOSITION
□ □ GRANTED X DENIED GRANTED IN PART OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE
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