Appendix — J. McIntyre Machinery, Ltd. v. Nicastro
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APPENDIX A OPINION OF THE
SUPREME COURT OF NEW JERSEY
DECIDED FEBRUARY 2, 2010
SUPREME COURT OF NEW JERSEY
A-29 September Term 2008
ROBERT NICASTRO and
ROSEANN NICASTRO, h/w,
Plaintiffs-Respondents,
Vv.
MC INTYRE MACHINERY AMERICA, LTD.,
Defendant,
and
J.MC INTYRE MACHINIERY LTD.,
Defendant- Appellant.
Argued January 21, 2009 — Decided February 2, 2010
JUSTICE ALBIN delivered the opinion of the
Court.
Today, all the world is a market. In our contemporary
international economy, trade knows few boundaries, and
itis now commonplace that dangerous products will find
their way, through purposeful marketing, to our nation’s
shores and into our State. The question before us is
Appendix A
whether the jurisdictional law of this State will reflect
this new reality.
In this case, the foreign manufacturer of an allegedly
defective and dangerous industrial machine tarpeted the
United States economy for the sale of its product. The
machine was sold to a New Jersey husiness by the
manufacturer’s exclusive American distributor. An
employee of that New Jersey business lost several
fingers while using the machine because the machine
allegedly lacked a safety guard. ‘The foreign
manufacturer knew or reasonably should have known
that by placing a product in the stream of commerce
through a distribution scheme that targeted a fifty-state
market the product might be purchased by a New
Jersey consumer. We must resolve whether under those
circumstances the manufacturer is subject to the
jurisdiction of our State court system in a product.
liability action.
We affirm the Appellate Division, which found the
New Jersey Superior Court, Law Division, as the proper
forum for this action. We also reaffirm our decision in
Charles Gendler & Co. v. Telecom Equipment Corp., in
which we held that “the stream-of-commerce theory
supports the exercise of jurisdiction if the manufacturer
knew or reasonably should have known of the
distribution system through which its products
were being sold in the forum state.” 102 NJ. 460, 480,
508 A.2d 1127 (1986). The increasingly fast-paced
globalization of the world economy has removed national
borders as barriers to trade and has proven the wisdom
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Appendix A
of Charles Gendler. Due process permits this State to
provide a judicial forum for its citizens who are injured
by dangerous and defective products placed in the
stream of commerce by a foreign manufacturer that has
targeted a geographical market that includes New
Jersey. See id. at 480-83, 508 A.2d 1127. The exercise of
jurisdiction in this case comports with traditional notions
of fair play and substantial justice.
I.
A.
On October 11, 2001, plaintiff Kubert Nicastro, an
employee for thirty years of Curcio Scrap Metal, was
operating the McIntyre Model 640 Shear, a recycling
machine used to cut metal. Nicastro’s right hand
accidentally got caught in the machine’s blades, severing
four of his fingers. The Model 640 Shear was
manufactured by J. McIntyre Machinery, Ltd.
(J. McIntyre), a company incorporated in the United
Kingdom, and then sold, through its exclusive United
States distributor, McIntyre Machinery America, Ltd.
(McIntyre America), to Curcio Scrap Metal.
In September 2008, plaintiff named J. McIntyre and
McIntyre America as defendants in a product-liability
action, N.J.S.A. 2A:58C-2, in the Superior Court, Law
Division, Bergen County. The complaint alleged that the
shear machine manufactured by J. McIntyre and
distributed by McIntyre America “was not reasonably
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Appendix A
fit, suitable, or safe for its intended purpose.”' The
complaint, in particular, asserted that the machine
“failed to contain adequate warnings or instructions,”
and that its defective design “allow|ed] the plaintiff to
become injured while operating the machine in the
normal course of his employment.” The foeus of this
product-liability lawsuit, as made clear from plaintiff’s
expert’s report, is that the McIntyre Model 640 Shear
did not have a safety guard that would have prevented
the accident. Plaintiff is seeking damages for past and
future medical expenses, lost wages, and physical pain
and suffering.”
Bb.
The trial court granted J. McIntyre’s motion to
dismiss the aetion, finding that the English
manufacturer did not have sufficient minimum contacts
with New Jersey to justify the State’s exercise of
personal jurisdiction over it. Alternatively, the court heid
that even under “the most liberal|ly] accepted form of
the stream of commerce theory,” J. McIntyre “would
not be subject to personal jurisdiction in New Jersey.”
In an unreported opinion, the Appellate Division
reversed, allowing the parties to engage in discovery to
1. Nicastro’s wife, Roseann, also a plaintiff, filed a loss-of-
consortium claim in the same complaint. For the sake of
convenience, we refer only to plaintiff Robert Nicastro.
2. MeIntyre America, the distributor, filed for bankruptcy
in 2001 and has not participated in this lawsuit.
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Appendix A
establish whether New Jersey has the authority to
exercise jurisdiction over J. McIntyre on the basis of
either a traditional minimum-contacts analysis or the
stream-of-commerce theory as articulated in Charles
Gendler or in Justice O’Connor’s plurality opinion in
Asahi Metal Industry Co. v. Superior Court of
California, 480 U.S. 102, 107 S. Ct. 1026, 94 L. Ed. 2d
92 (1987) (plurality opinion).
Here is the relevant information adduced during the
discovery period. In either 1994 or 1995, Frank Curcio,
the owner of Curcio Scrap Metal of Saddle Brook, New
Jersey, attended a trade convention in Las Vegas,
Nevada, sponsored by the Institute of Scrap Recycling
Industries. While there, he visited the booth of
McIntyre America and was introduced to the MeIntyre
Model 640 Shear.
In 1995, Curcio Scrap Metal purchased the machine
from McIntyre America at a cost of $ 24,900. The
machine was shipped from MelIntyre America’s
headquarters in Stow, Ohio to Saddle Brook, and the
invoice instructed that the check be made payable to
“McIntyre Machinery of America, Inc.” Affixed to the
machine was a label with the following information:
“J. McIntyre Machinery,” its address, and the model and
serial number of the machine. Curcio also received an
information sheet listing J. McIntyre’s address in
Nottingham, England, as well as its telephone and fax
numbers. An instruction manual that accompanied the
shear machine referenced both United States and
United Kingdom safety regulations. Based on
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Appendix A
documentation received with the machine, Curcio
concluded that “had we needed any repair parts, we
would have called J. McIntyre Machinery Ltd. in
England, which is where we would call today for repairs
or parts.” *
J. MeIntyre’s principal place of business is in
Nottingham, England, where it designs and
manufactures metal recycling machinery and equipment.
It holds American and European patents in recycling
technology. Michael Pownall, the president of
J. McIntyre, attended the scrap metal conventions held
in Las Vegas in 1994 and 1995, including the one where
Curcio visited the McIntyre America booth. Additionally,
from at least 1990 until 2005, J. McIntyre officials,
including Pownall, attended trade conventions,
exhibitions, and conferences throughout the United
States in such cities as Chicago, Las Vegas, New Orleans,
Orlando, San Diego, and San Francisco. During the
period that McIntyre America was the exclusive United
States distributor for J. MeIntyre’s products, Melntyre
America fielded any requests for information about
those products at the scrap metal conventions and trade
shows in the United States.
3. Curcio’s perception, at the time of purchase and today,
is in no way altered by a J. McIntyre representative’s claim that
“{J.] Melntyre does not, and never did, provide maintenance or
repair services for its products to businesses or individuals in
New Jersey.” (Emphasis added). The representative did not
suggest that J. MeIntyre was not servicing its machines in states
other than New Jersey.
Ta
Appendix A
J. MeIntyre and its American distributor were
distinct corporate entities, independently operated and
controlled, without any common ownership. McIntyre
America, however, “structured [its] advertising and
sales efforts in accordance with [J. MeIntyre’s] direction
and guidance whenever possible.”* Although J.
McIntyre claimed that it sold its machines outright to
McIntyre America, the correspondence between the two
companies suggests that at least some of the machines
were sold on consignment to its American distributor.
For example, in a 1999 letter to McIntyre America,
J. McIntyre’s president noted: “[Y]Jou still have new
machines in stock, which you are presently unable to
sell. Please note that those machines are our property
until they have been paid for in full.” Indeed, in a 1999
e-mail, Melntyre America reported to J. McIntyre that
it had “no problem waiting for [J. McIntyre] to receive
payment from the customer first before requesting our
commission via a company invoice in the future.” °
At the conclusion of jurisdictional discovery, the trial
court again granted J. MelIntyre’s motion to dismiss for
lack of personal jurisdiction. The court emphasized that
J. McIntyre had “no contacts with the state of New
Jersey” it did not directly sell or solicit business in
this State or have a physical presence here. Not only
4. This remark was set forth in a January 2000 letter from
MelIntyre America to J. McIntyre.
5. For a more detailed account of the “discovery” evidence,
see Nicastro v. McIntyre Mach. Am., Ltd., 399 N.J. Super. 539,
545-48, 945 A.2d 92 (App. Div. 2008).
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Appendix A
did the court find no evidence establishing a connection
between J. McIntyre and this State, but it also
concluded that J. McIntyre had no “expectation that
its product would be purchased and utilized in New
Jersey.” The court maintained that “(t]he fact that
(J. MeIntyre] may have sufficient aggregate minimum
contacts with the United States to establish jurisdiction
in this country is not a reason to extend jurisdiction to
the Superior Court of New Jersey.” In the court’s view,
J. McIntyre could be haled into a New Jersey court
under the stream-of-commerce theory only if the
company engaged in a nationwide distribution scheme
that “purposefully brought [J. MecIntyre’s] shear
machines to New Jersey” and the company “purposely
availed itself of the protections of [this State’s] laws.”
Il.
In an opinion authored by Judge Lisa, the Appellate
Division reversed, concluding that the exercise of
jurisdiction by New Jersey “would not offend traditional
notions of fair play and substantial justice” and was
justified “under the ‘stream-of-commerce plus’ rationale
espoused by Justice O’Connor in Asahi.” Nicastro v.
McIntyre Mach. Am., Ltd., 399 N.J. Super. 539, 545,
945 A.2d 92 (App. Div. 2008) (citing Asahi, supra, 480
U.S. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 104). The
panel noted that in Asahi two different views of the
stream-of-commerce doctrine of jurisdiction were
advanced, one by Justice O’Connor and the other by
Justice Brennan, with each view supported by four
different members of the Court. /d. at 555-56, 945 A.2d
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Appendix A
92. The panel held that the facts of this case met Justice
O’Connor’s more restrictive stream-of-commerce plus
test, and therefore also satisfied Justice Brennan’s
framework for jurisdiction in stream-of-commerce cases.
Id. at 557-58, 565, 945 A.2d 92.
The Appellate Division ultimately found that J.
McIntyre not only “plac[ed] the shear machine that
injured plaintiff into the stream of commerce by
transferring it to its distributor, McIntyre America, with
an awareness that its machine might end up in New
Jersey, [but] also engaged in additional conduct
indicating an intent or purpose to serve the New Jersey
market.” Jd. at 558, 564-65, 945 A.2d 92 (citing Asahi,
supra, 480 U.S. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d
at 104). The Appellate Division identified a number of
factors in reaching its determination: (1) J. McIntyre
“designated McIntyre America as its exclusive
distributor for the entire United States,” and did so “for
the purpose of selling its machines in all fifty states,”
Id. at 558, 945 A.2d 92; (2) J. MeIntyre knew “that
McIntyre America was not the end user of the many
machines it sold to McIntyre America,” id. at 559, 945
A.2d 92; (3) when J. McIntyre’s management officials
attended trade conventions in cities in this country, the
company “was engaged in purposeful conduct to avail
itself of the entire United States market,” ibid.; (4) the
sale to Curcio of the McIntyre Model 640 Shear “was
the result of the very distribution scheme purposefully
established by [| J. McIntyre] for the sale of its machines
to potential customers located anywhere within the
exclusive sales territory of McIntyre America,” which
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Appendix A
included New Jersey, ibid.; and (5) J. McIntyre designed
the Model 640 Shear “to conform to United Siates
specifications and requirements, and represented such
compliance in the instruction manual that came with the
machine,” zd. at 564, 945 A.2d 92.
Last, the panel emphasized New Jersey’s “strong
interest in providing a forum for its injured workers who
sustain industrial accidents” and the practical benefits
of litigating the case in this State, where the injury
occurred and where the evidence and most of the
witnesses are located. Jd. at 565, 945 A.2d 92. The panel
also noted that it would not be unreasonable to expect
J. McIntyre officials, who have visited this country to
promote its products, to travel to this State to respond
to claims that one of its defectively designed machines
caused serious and permanent injuries to a worker
operating it. Jd. at 565-66, 945 A.2d 92. For those reasons,
the Appellate Division had “no hesitancy” in finding J.
McIntyre subject to the jurisdiction of the New Jersey
Superior Court. /d. at 566, 945 A.2d 92.
We granted J. McIntyre’s petition for certification.
196 N.J. 344, 953 A.2d 763 (2008). We also granted th»
motion of the Association of Trial Lawyers - New Jersey
to participate in this case as amicus curiae.®
6. The Association of Trial Lawyers - New Jersey is now
known as the New Jersey Association for Justice.
lla
Appendix A
ITT.
Defendant J. McIntyre argues that the Appellate
Division, in holding it subject to the jurisdiction of the
New Jersey court system, did not properly apply Justice
O’Connor’s “stream-of-commerce plus” test as set forth
in Asahi. Moreover, J. McIntyre posits that even under
Justice Brennan’s stream-of-commerce test, a New
Jersey court could not assert its jurisdictional authority.
J. McIntyre disclaims any responsibility for the fact
that its shear machine “made its way to New Jersey.” It
only admits that it did “limited business” in the United
States and sold a purportedly defective machine to an
Ohio distributor. It insists that it had no knowledge that
the distributor would later sell the machine to a New
Jersey customer. Because it claims to have had no role
or control over the sale of the machine to a New Jersey
business owner, J. McIntyre contends the “single act of
placing the machine into the stream of commerce outside
of New Jersey is not enough [for this State’s courts] to
exercise personal jurisdiction over [it] in accordance with
due process.” J. McIntyre disavows marketing its
products in, or having any contacts or relationships with,
New Jersey and therefore maintains that it would
“offend traditional notions of fair play and substantial
justice” for it to be subject to the jurisdiction of our
courts. (Citation and internal quotation marks omitted).
Finally, J. McIntyre submits that the Appellate Division
has rendered meaningless Justice O’Connor’s
requirement that, in addition to placing a product in
the stream of commerce, a manufacturer engage in
12a
Appendix A
conduct “‘purposefully directed toward the forum
State,’” such as direct marketing or designing a product
for a customer in a particular state. (Quoting Asahi,
supra, 480 U.S. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d
at 104). Due process, it submits, does not empower a
state, such as New Jersey, to exercise jurisdiction over
a foreign manufacturer doing business generally in the
United States.
In contrast, plaintiff Nicastro asks this Court to
affirm the Appellate Division and find that J. McIntyre
is subject to the jurisdiction of this State’s courts
because it targeted the United States as its
geographical market and placed in the stream of
commerce the defective industrial machine that
permanently injured him. Plaintiff considers the
jurisdictional issue at the heart of this case settled by
this Court’s decision in Charles Gendler. He asserts that
J. McIntyre “sells its products throughout the United
States, and yet claims immunity from suit anywhere, due
to the strategy of using . . . [a] financially-irresponsible
distributor with a nearly identical name.” He
prophesizes that “[t]o permit [J. McIntyre] to avoid
personal jurisdiction in this products-liability matter will
create a road-map for foreign manufacturers on how to
dump their unsafe products in the United States” and
escape liability in the state where their products cause
personal injuries. Plaintiff urges that public policy should
not allow such a “flanking maneuver” that will “leavie|
a catastrophically-injured citizen without legal
recourse.”
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Appendix A
Amicus curiae, the Association of Trial Lawyers -
New Jersey, urges this Court to reaffirm the stream-of-
commerce doctrine adopted in Charles Gendler and
espoused by Justice Brennan in Asahi as the basis for
our courts to exercise jurisdiction over a foreign
manufacturer whose defective product injures a New
Jersey resident. The Association maintains that the use
of the stream-of-commerce plus theory to “requir[e]
additional conduct directed specifically to New Jersey .
.. is arefusal to acknowledge the reality of globalization.”
It observes that “[njo foreign manufacturer can expect
to sell its product to the United States market, whether
through a distributor or otherwise, without the product
ultimately becoming located in one of the fifty states,”
and therefore J. McIntyre should not be surprised to
be haled into a court of a state where its defective
machine caused injury. Moreover, “[e]ven if there were
personal] jurisdiction over [J. McIntyre] in another State
or the United Kingdom,” the Association believes that
requiring plaintiff to file a lawsuit in a place other than
New Jersey, where he was injured and where everything
relevant to his case is located, would defy this State’s
public policy to provide a forum for relief for workers
victimized by defective products.
IV.
In determining whether our State courts have
authority to exercise personal! jurisdiction over J.
McIntyre, we begin by dispensing with certain
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Appendix A
jurisdictional doctrines that do not apply in this case.‘
We do not find that J. McIntyre had a presence or
minimum contacts in this State in any jurisprudential
sense that would justify a New Jersey court to
exercise jurisdiction in this case. Plaintiff’s claim that
J. McIntyre may be sued in this State must sink or swim
with the stream-of-commerce theory of jurisdiction.
Before turning to that claim, a brief history of the
development of our law governing jurisdiction will help
inform our analysis.
A.
The power of a state to subject a person or business
to the jurisdiction of its courts has evolved with the
changing nature of the American economy. Our country
has grown from an agrarian/manufacture-based
economy dominated by local markets to a national
economy fueled by the forces of industrialization.
See generally Walter Licht, Jndustrializing America:
The Nineteenth Century 133 (1995) (documenting
evolution of American businesses from “producer|s] of
small batches of goods sold in local and regional
markets” to “marketers of mass-produced items
nationally and even internationally”). Now, our nation
7. The facts in this case are basically undisputed. It is the
legal consequences that flow from the facts that are at issue.
Therefore, the standard of review is de novo. See Manalapan
Realty, L.P v. Twp. Comm. of Manalapan, 140 N.J. 366, 378, 658
A.2d 1230 (1995) (“A trial court’s interpretation of the law and
the legal consequences that flow from established facts are not
entitled to any special deference.”).
1Sa
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is part of a global economy driven by startling advances
in the transportation of products and people and
instantaneous dissemination of information. The
expanding reach of a state court’s jurisdiction, as
permitted by due process, has reflected those historical
developments.
In the nineteenth century, and earlier, a state court
generally could not exercise personal jurisdiction over
a non-resident defendant in accordance with due process
unless the defendant was subject to process while
physically present in the state. See Pennoyer v. Neff, 95
U.S. 714, 720-22, 24 L. Ed. 565, 568 (1878). That scheme
emphasized the limits of a state’s authority to subject a
person outside its borders to the jurisdiction of its courts.
With the passaye of time, technological progress in
communications and transportation “increased the flow
of commerce between States” and, correspondingly,
“the need for [state courts to exercise] jurisdiction over
nonresidents.” Hanson v. Denckla, 357 U.S. 235, 250
51, 78 S. Ct. 1228, 1238, 2 L. Ed. 2d 1283, 1296 (1958).
That same technological progress has “made it much
less burdensome for a party sued to defend [it |self in a
State where [it] engages in economic activity.” McGee v.
Int'l Life Ins. Co., 355 U.S. 220, 228, 78S. Ct. 199, 201, 2
L.. Ed. 2d 223, 226 (1957). With the changing nature of
the economy evolved a more flexible standard of
jurisdiction “from the rigid rule of Pennoyer v. Neff.”
Hanson, supra, 357 U.S. at 251, 78 S. Ct. at 1288, 2
L.. kid. 2d at 1296. “In a continuing process of evolution
[the United States Supreme Court] accepted and then
16a
Appendix A
abandoned ‘consent,’ ‘doing business,’ and ‘presence’
as the standard for measuring the extent of state judicial!
power over [foreign] corporations.” McGee, supra, 3855
U.S. at 222, 78S. Ct. at 200-01, 2 L. led. 2d at 225. The
Court “expand|ed| the permissible scope of state
jurisdiction over foreign corporations and other
nonresidents” due in large part “to the fundamental
transformation of our national economy.” /d. at 222, 75
S. Ct. at 201, 2 L. Ed. 2d at 226.
In the mid-twentieth century, in /uternational Shoe
Co. vo Washington, the Court held that the State of
Washington’s courts could exercise personal jurisdiction
over a Delaware corporation in proceedings instituted
“to recover [the corporation’s| unpaid contributions to
the state unemployment compensation fund.” 826 U.S.
$10, 311, 821, 66S. Ct. 154, 156, 161, 90 LL. Bed. 95, 99,
105 (1945). The Delaware corporation had no offices or
stock of merchandise in Washington but it directed
cleven to thirteen salesmen who resided there and filled
orders for products shipped into the state. /d. at 313
14, 66S. Ct. at 157, 90 L. Fed. at 100. Because of the
salesmen’s “systematic and continuous” activities in
Washington, the Court found that the jurisdictional
requirements of due process had been met in rendering
the out-of-state corporation accountable in Washington's
courts. /d. at 320, 66S. Ct. at 160, 90 T,. Ped. at 104. In
words now familiar, the Court noted that
due process requires only that in order to
subject a defendant to a judpiment on
personam, if he be not present within the
l7a
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territory of the forum, he have certain
minimum contacts with it such that the
maintenance of the suit does not offend
“traditional notions of fair play and
substantial justice.”
(Jd. at 316, 66 S. Ct. at 158, 90 L. Ed. at 102
(second and third emphases added) (quoting
Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct.
339, 343, 85 L.. Ed. 278, 283 (1940)).]
In McGee v. International Life Insurance Co., the
Court held that a California state court properly
exercised personal jurisdiction over a Texas life
insurance company, which reneged on paying the
beneficiary aCaliforniaresident the proceeds ofa
policy on the death of the insured. 355 U.S. at 221-23,
78 S. Ct. at 200-201, 2 L. Ed. 2d at 224-26. Although the
Texas company was not technically “present” in
California, “[t]he [insurance] contract was delivered in
California, the premiums were mailed from there and
the insured was a resident of that State when he died.”
Id. at 222-23, 78 S. Ct. at 200-01, 2 L. Ed. 2d at 225-26.
lor due-process purposes, it was sufficient “that the suit
was based on a contract which had [a] substantial
connection with [California].” /d. at 223, 78 S. Ct. at 201,
2 L. Ed. 2d at 226.
During the thirty-five years following /nternational
Shoe, a rapidly changing world economy required the
United States Supreme Court to think anew about the
limits of a state court’s jurisdictional reach. In World-
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Appendix A
Wide Volkswagen Corp. v. Woodson, the Court
addressed for the first time whether an international
manufacturer or distributor that places in the stream
of commerce a purportedly defective product could be
subject to the jurisdiction of a state where the product
was purchased or accident occurred. 444 U.S. 286, 297-
98, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490, 501-02 (1980).
In that case, the Robinsons claimed that they were
traveling through Oklahoma in their Audi when another
vehicle struck their car in the rear, causing severe
injuries due to a fire triggered by the “defective design
and placement of the Audi’s gas tank and fuel system.”
Id. at 288, 100 S. Ct. at 562, 62 L. Ed. 2d at 495. The
Robinsons, who were residents of New York where the
Audi was purchased, filed a product-liability action in
Oklahoma. Jbid. The Court reaffirmed Jxternational
Shoe’s minimum-contacts test and pronounced that the
Due Process Clause did not permit an Oklahoma court
to exercise in personam jurisdiction over an Audi’s
retailer and wholesale distributor, both incorporated in
New York, when their “only connection with Oklahoma
[was] the fact that an automobile sold in New York to
New York residents became involved in an accident in
Oklahoma.”’’ /d. at 287-89, 299, 100 S. Ct. at 562-63, 568,
62 L. Ed. 2d at 495-96, 502.
8. In World-Wide Volkswagen, the manufacturer of the
Audi automobile did not challenge jurisdiction in that product-
liability case. 444 U.S. at 288 & n.3, 100 S. Ct. at 562-63 & n.3, 62
(Cont'd)
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However, the Court posited a new theory of state-
court jurisdiction the stream of commerce to
respond to the contemporary realitics of modern
commerce. The Court stated that
[w]hen a corporation “purposefully avails itself
of the privilege of conducting activities within
the forum State,” it has clear notice that it is
subject to suit there, and can act to alleviate
the risk of burdensome litigation by procuring
insurance, passing the expected costs on to
customers, or, if the risks are too great,
severing its connection with the State. Hence
if the sale of a product of a [foreign
automobile] manufacturer or distributor .. .
is not simply an isolated occurrence, but arises
from the efforts of the manufacturer or
distributor to serve, directly or indirectly, the
market for its product in other States, it is
not unreasonable to subject it to suit in one
of those States if its allegedly defective
(Cont'd)
L. Ed. 2d at 495-96 & n.3. Therefore, the Court addressed,
exclusively, Oklahoma’s assertion of jurisdiction over the
automobile’s regional distributor and retail dealer, not its
foreign manufacturer. /b2d.; see also Juelich v. Yamazaki Mazak
Optonies Corp., 682 N.W.2d 565, 571 n.4 (Minn. 2004) (“While
the example used by the Court [to illustrate the stream-of-
commerce theory] dealt with jurisdiction over manufacturers
and national distributors, the only parties contesting
jurisdiction in World-Wide Volkswagen were the retail dealer
and regional distributor.”).
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Appendix A
merchandise has there been the source of
injury to its owner or to others. The forwm
State does not exceed its powers under the
Due Process Clause if it asserts personal
jurisdiction over a corporation that delivers
its products into the stream of commerce with
the expectation that they will be purchased
by consumers in the forum State.
|/d. at 297-98, 100 S. Ct. at 567, 62 L. Ed. 2d at
501-02 (emphasis added) (citation omitted). |
That formulation of the stream-of-commerce theory did
not afford jurisdiction to an Oklahoma court against the
automobile’s retailer and distributor. /d. at 298, 100
S. Ct. at 567, 62 L. Ed. 2d at 502.
Interestingly, in his dissent, Justice Brennan
observed that “[t]he model of society on which the
International Shoe Court based its opinion is no longer
accurate” given the increased mobility of people and
products due to the advances in transportation and
communication. /d. at 308-09, 100 S. Ct. at 568, 62 L.
Ed. 2d at 508-09 (Brennan, J., dissenting). He did not
believe that if “a State |gave| a nonresident defendant
adequate notice and opportunity to defend, . . . the Due
Process Clause is offended merely because the
defendant has to board a plane to get to the site of the
trial.” Jd. at 310-11, 100 S. Ct. at 568, 62 L. Ed. 2d at
510. Nevertheless, Justice Brennan would require the
plaintiff to bear the burden of “demonstratling]
sufficient contacts among the parties, the forum, and
2la
Appendix A
the litigation to make the forum a reasonable State in
which to hold the trial.” /d. at 312, 100 S. Ct. at 568, 62
L. Ed. 2d at 511.
In the wake of World-Wide Volkswagen, and in
recognition of the complex international marketing
schemes that bring products into our State, in Charles
Gendler & Co. v. Telecom Equipment Corp., we
“adopt[ed] the stream-of-commerce theory as a basis
for asserting personal jurisdiction over a non-resident
defendant.” 102 N.J. 460, 477, 508 A.2d 1127 (1986). In
Charles Gendler, the defendant Japanese manufacturer
opposed New Jersey’s assertion of jurisdiction in a suit
involving its sale of an allegedly defective telephone
system through its New York subsidiaries to an
independent New Jersey corporation, which then sold
the defective product to the plaintiff, Charles Gendler
& Co., Inc., a company with a business office in New
Jersey. /d. at 467, 508 A.2d 1127.
In adopting the stream-of-commerce theory, we took
into account the contemporary reality of how companies
in foreign countries market their products in the United
States. See Jd. at 477-79, 508 A.2d 1127. We observed
that for a foreign manufacturer, “the sale of its product.
in a distant state is not simply an isolated event, but
the result of the corporation’s efforts to cultivate the
largest possible market for its product.” /d. at 477-78,
508 A.2d 1127. We acknowledged that “[iJn today’s
complex business world, foreign manufacturers rarely
deliver products directly to consumers in the United
States,” but instead “employ middlemen, many of whom
22a
Appendix A
are often independent, to act as their distribution arms.”
Id. at 479, 508 A.2d 1127. With that understanding, we
rejected the notion that foreign manufacturers should
“be allowed to insulate themselves by using
intermediaries in a chain of distribution or by professing
ignorance of the ultimate destination of their products.”
Ibid.
In Charles Gendler, in considering a state court’s
power to exercise in personam jurisdiction, we charted
the contours of the stream-of-commerce theory. See /d.
at 480-81, 508 A.2d 1127. First, “the stream-of-commerce
theory supports the exercise of jurisdiction if the
manufacturer knew or reasonably should have known
of the distribution system through which its products
were being sold in the forum state.” Jd. at 480, 508 A.2d
1127. Second, “a manufacturer need not so control the
distribution system to place its products into the stream
of commerce and, therefore, control of that system is
not necessary to subject the manufacturer to the
jurisdiction of the forum state.” /d. at 481, 508 A.2d 1127.
Thus, “(t]he focus is on the manufacturer’s actual or
constructive awareness of the system, not on control of
the distribution of its products.” /bid. Third, “|a]
manufacturer’s awareness of the distribution system,
through which it receives economic and legal benefits,
justifies subjecting the manufacturer to the jurisdiction
of every forum within its distributors’ market area.”
Ibid. “Accordingly, a manufacturer that knows its
products are distributed through a nationwide
distribution system should reasonably expect that those
products would be sold throughout the fifty states and
23a
Appendix A
that it will be subject to the jurisdiction of every state.”
Ibid. Last, a manufacturer that wishes to avoid the
jurisdiction of a particular state must at least “attempt| |
to preclude the distribution and sale of its products in
[that] state.” /bid.
In light of that new pronouncement on the stream-
of-commerce theory, we remanded for additional
discovery relating to jurisdiction, with a specific fucus
on “whether (the foreign defendant] was aware or should
have been aware of a system for distributing its
telephones throughout the United States.” /d. at 483,
508 A.2d 1127.
A year after Charles Gendler, the United States
Supreme Court in Asahi Metal Industry Co. v. Superior
Court of California, 480 U.S. 102, 107 S. Ct. 1026, 94
L. Ed. 2d 92 (1987), elaborated on the stream-of-
commerce theory in two competing four-member
opinions. In that case, the plaintiff in a product-liability
action sued the Taiwanese manufacturer of an allegedly
defective motorcycle tire tube that exploded on a
California roadway, causing an accident that severely
injured the plaintiff-driver and killed his wife. /d. at 105-
06, 107 S. Ct. at 1029, 94 L. Ed. 2d at 100. The Taiwanese
manufacturer, in turn, sought indemnification from its
codefendant, Asahi Metal Industry Co., Ltd., the
Japanese manufacturer of the tube’s valve assembly.
id. at 106, 107 S. Ct. at 1029, 94 L. Ed. 2d at 100-01.
After the plaintiff’s claims were settled and dismissed,
the Taiwanese manufacturer’s indemnification action
against Asahi in California remained. /d. at 106, 107
24a
Appendix A
S. Ct. at 1029, 94 L. Ed. 2d at 100. On one point all nine
members of the Court agreed: the California state court
could not, consistent with due process, exercise personal
jurisdiction over Asahi in the indemnification action.
Id. at 113-16, 107 S. Ct. at 1033-34, 94 L. Ed. 2d at 105-
07.
In finding that the California court lacked personal
jurisdiction, Justice O’Connor, writing for four members
of the Court, construed the facts under a test that has
become known as stream-of-commerce plus. /d. at 108-
13, 107 S. Ct. at 1030-32, 94 L. Ed. 2d at 102-05 (plurality
opinion). Under that test, the actions of a defendant must
be “purposefully directed toward the forum State” for
a court of that state to exercise personal jurisdiction.
Id. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 104. In
Justice O’Connor’s view, “|t)he placement of a product
into the stream of commerce, without more, is not an
act of the defendant purposefully directed toward the
forum State.” /bid. The stream-of-commerce plus test
requires that the defendant engage in “[a]dditional
conduct . . . indicat[ing] an intent or purpose to serve
the market in the forum State.” /bid. That “additional
conduct” could be “designing the product for the market
in the forum State, advertising in the forum State,
establishing channels for providing regular advice to
customers in the forum State, or marketing the product
through a distributor who has agreed to serve as the
sales agent in the forum State.” /bid. Justice O’Connor
emphasized that “a defendant’s awareness that the
stream of commerce may or will sweep the product into
the forum State does not convert the mere act of placing
25a
Appendix A
the product into the stream into an act purposefully
directed toward the forum State.” /bid.
Within that framework, Justice O’Connor found that
the Japanese corporation Asahi did not “purposefully
avail itself of the California market” simply by sclling
component parts to a Taiwanese manufacturer, even if
Asahi was aware that the completed product would be
sold in California. /d. at 112, 114, 107 S. Ct. at 1032-33,
94 L. Ed. 2d at 104-06. Justice O’Connor reasoned that
because Asahi had no offices or agents in California, did
not advertise or solicit business in the state, and “did
not create, control, or employ the distribution system
that brought its valves” there, a California court could
not exercise personal jurisdiction. Jd. at 112-13, 107
S. Ct. at 1032, 94 L. Ed. 2d at 105. Justice O’Connor
concluded that there was a lack of “minimum contacts”
with California and therefore “the exercise of personal
jurisdiction is [not] consistent with fair play and
substantial justice.” /d. at 116, 107 S. Ct. at 1034, 94
L. Ed. 2d at 107.
Joined by three other members of the Court, Justice
Brennan did not believe that Justice O’Connor’s opinion
kept faith with the stream-of-commerce theory
enunciated in World-Wide Volkswagen. Id. at 116-21, 107
S. Ct. at 1034-37, 94 L. Ed. 2d at 107-10 (Srennan, J.,
coneurring in part and concurring in judgment).
To trigger a court’s power to exercise personal
jurisdiction under the stream-of-commerce doctrine,
Justice Brennan saw no need for a plaintiff to present
“additional conduct” to establish that the defendant’s
264
Appendix A
acts were “purposefully directed toward the form State.”
Id. at 116-17, 107 S. Ct. at 1034, 94 L. Ed. 2d at 107
(citation and internal quotation marks omitted).
According to Justice Brennan, “[t]he stream of
commerce refers ... to the regular and anticipated flow
oi products from manufacture to distribution to retail
sale.” Jd. at 117, 107 S. Ct. at 1034, 94 L. Ed. 2d at 107.
Therefore, “laJs long as a participant in this process is
aware that the final product is being marketed in the
forum State, the possibility of a lawsuit there cannot
come as a surprise.” /bid. Thus, the burden of litigation
in the forum state is an economic expense related to
the cost of doing business. /d. at 117, 107 S. Ct. at 1034-
35, 94 L. Ed. 2d at 107. Justice Brennan observed that
the commercial benefits of selling a product in a state
“accrue regardless of whether that participant directly
conducts business in... or engages in additional conduct
directed toward that State.” Jd. at 117, 107 S. Ct. at
1035, 94 L. Ed. 2d at 107. He noted that “most courts
and commentators have found that jurisdiction
premised on the placement of a product into the stream
of commerce is consistent with the Due Process Clause,
and have not required a showing of additional conduct.”
Id. at 117, 107 S. Ct. at 1035, 94 L. Ed. 2d at 107-08.
Although Justice Brennan concluded that Asahi had
the necessary minimum contacts with California, /d. at
121, 107 S. Ct. at 1036-37, 94 L. Ed. 2d at 110, he
nevertheless agreed with Justice O’Connor that
California’s exercise of personal jurisdiction over Asahi
would not comport with “fair play and substantial
27a
Appendix A
justice,”? /d. at 116, 107 S. Ct. at 1034, 94 L. Ed. 2d at
107 (citation and internal quotation marks omitted).
B.
After Asahi, some federal and state courts have
applied Justice O’Connor’s stream-of-commerce plus
theory.'® Other courts have taken Justice Brennan’s
9. Justice Stevens, writing for himself and two other
members of the Court, “[saw] no reason in this case for [Justice
O’Connor’s} plurality to articulate ‘purposeful direction’ or any
other test as the nexus between an act of a defendant and the
forum State that is necessary to establish minimum contacts.”
480 U.S. at 122, 1075S. Ct. at 1037, 94 L. Ed. 2d at 110 (Stevens, J.,
concurring in part and concurring in judgment). Accordingly,
Justice O’Connor could not garner five votes for her stream-of-
commerce plus test. Nevertheless, Justice Stevens also agreed
that California did not have a basis to assert jurisdiction because
the “minimum requirements inherent in the concept of fair play
and substantial justice . . . defeat{ed] the reasonableness of
jurisdiction.” /d. at 121-22, 1078S. Ct. at 1037, 94 L. Ed. 2d at 110
(citation and internal quotation marks omitted).
10. See, eg, Bridgeport Music, Inc. v. Still N the Water
Publ’g, 327 F.3d 472, 479-80 (6th Cir.) (expressing “preference”
for Justice O’Connor’s approach and applying it to case), cert.
denied, 540 U.S. 948, 124 S. Ct. 399, 157 L. Ed. 2d 279 (2003);
Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 944-46 (4th
Cir. 1994) (taking approach similar to that of Justice O'Connor)
cert. denied, 513 U.S. 1151, 1158. Ct. 1103, 130 L. Ed. 2d 1070
(1995); Bowt v. Gar-Tec Prods., Inc. , 967 F.2d 671, 681-83 (1st Cir.
1992) (same); Madara v. Hall, 916 F.2d 1510, 1519 (11th Cir
1990) (same); Sorrells v. Rh & R Custom Coach Works, 636 So. 2d
(Cont'd)
28a
Appendix A
approach or have read World-Wide Volkswagen more
expansively than Justice O’Connor’s parsing of that
opinion in Asahi.’ Yet, others simply have declined to
(Cont'd)
668, 674 (Miss. 1994) (applying Justice O’Connor’s theory); Vt.
Wholesale Bldg. Prods. v. J.W. Jones Lumber Co., 154 N.H. 626,
914 A.2d 818, $26 (N.H. 2006) (declining “to adopt Justice
Krennan’s view,” and “find[ing] Justice O’Connor’s ‘stream of
commerce plus’ theory more consistent with World-Wide
Volkswagen”).
11. Barone v. Rich Bros. Interstate Display Fireworks Ca,
25 F.3d 610, 613-15 (8th Cir.) (taking broad approach to stream
of-commerce theory), cert. denied, 513 U.S. 94%, 1155. Ct. 359,
130 L. Ed. 2d 313 (1994); Iroing v. Owens-Corning Fiberglas
Corp., 864 F.2d 384, 3X6 (Sth Cir.) (“Because the Court’s
splintered view of minimum contacts in Asahi provides no clear
guidance on this issuc, we continue to gauge [the defendant’s]
contacts with Texas by the stream of commerce standard as
described in World-Wide Volkswagen and embraced in this
circuit.”), cert. denied, 493 U.S. 823, 1108. Ct. 838, 107 L. Ed. 2d
AY (1989); State v. NV Sumatra Tobacco Trading, Co., 879 S.C.
&1, 666 S.E.2d 218, 223 (S.C. 2008) (finding personal jurisdiction
under broad stream-of-commerce theory where defendant's
“actions indicate that it purposely availed itself of conducting
business in all 50 states, including South Carolina”); Hall v.
Showa Denko, K.K., 188 W. Va. 654, 425 S.E.2d 609, 616 CW. Va.
1992) (noting that under stream-of-commerce theory, personal
jurisdiction “can be exercised without the need to show
additional conduct by the defendant aimed at the forum state”),
cert. denied, 508 U.S. 908, 113 5S. Ct. 2338, 124 L. Ed. 2d 249
(1993); Kopke v. A. Hartrodt S.R.L., 2001 W199, 245 Wis. 2d 396,
629 N.W.2d 662, 674 (Wis. 2001) (“We believe the stream of
commerce theory as set forth by Justice Brennan is the correct
analysis to apply to the case at hand.”), cert. denied, 534 U.S.
1079, 122 S. Ct. 808, 151 L. kd. 2d 694 (2002).
29a
Appendix A
choose between the views of the two Justices — instead
applying both, with some directing their analyses to
Justice O’Connor’s more restrictive approach without
explicitly rejecting Justice Brennan’s approach.“
12. See, ¢.g., Kernan v. Kurz Hastings, lne., 175 F.3d 236,
244 (2d Cir. 1999) (declining to “adopt either view of the ‘stream
of commerce’ standard” because jurisdiction existed even under
Justice O’Connor’s “more restrictive view”); Pennzoil Prods.
Co. v. Colelli & Assocs. , 149 F.3d 197, 205-07 (3d Cir. 1998) (Laking
approaches articulated by both Justices O’Connor and
Brennan); Beverly Hills Fan Co v Royal Sovereign Corp., 21
F.3d 1558, 1566 (Fed. Cir.) (same), cert. dismissed, 512 U.S. 1273,
115 S. Ct. 18, 129 L. Ed. 2d 917 (1994): Vermeulen v. Renault,
U.S.A., Inc., 985 F.2d 1584, 1547-48 (Lith Cir.) (refusing to
determine which approach controls because jurisdiction could
be exercised even under Justice O’Connor’s “more stringent
‘stream of commerce plus’ analysis”), cert. dented, 50% U.S. 907,
113 S. Ct. 2434, 124 L. id. 2d 246 (1993); A. Uberti & Cv
Leonardo, 181 Ariz. 565, 92 P2d 1354, 1359 (Ariz.) (refraining
from “enterling| the debate between” Asahi's theories because
“we decide this case under Asahi'’s more restrictive
interpretation of due process”), cert. denied, 516 U.S. 906, 1168.
Ct. 273, 133 L. Ed. 2d 194 (1995); Wiles v Morita Tron Works
Co., 125 Il. 2d 144, 530 N.E.2d 1382, 1389, 125 Ill. Dee. $12 CI).
1988) (“We need not decide [between Asahi's theories]... for
we believe that even under the broader version of the stream of
commerce theory there were no minimum contacts ... .”); State
v. Grand River Enters., Inc., 2008 SD 98, 757 N.W.2d 305, 314
(S.D. 2008) (“We do not reach the State’s ‘plus’ argument
because we conclude that the State failed to meet its burden of
proof even under the more inclusive expectation standard in
World-Wide Volkswagen/Asahi.”).
Ou
Appendix A
In some cases, Courts have dodped the stream-of-
commerce conflict entirely by deciding a jurisdictional
issue on firmer and more traditional prounds. For
example, in Lebel ov. Rverglades Marina, Ine., a contract
dispute case involving a claim of fraud, we saw no need
to decide whether the defendant Florida company, which
sold a luxury racing boat. to a New Jersey resident, was
subject to the jurisdiction of a New Jersey court based
on the stream of-commerce theory. 115 N.J. 317, 319
20, 558 A.2d 1252 (1989) (“Rather than embark on a
prediction of the future course of this stream of
jurisprudence, we shall hew closely to the limited
fundamentals about which there is little or no dispute
or debate.”). Instead, we turned to the traditional
International Shoe standard, finding that the
defendant’s actions met the minimum-contacts
requirement and that the exercise of jurisdiction by New
Jersey would not offend “traditional notions of fair play
and substantial justice.” /d. at 321-29, 558 Al2d 12h2
(quoting Int'l Shoe Co., supra, 826 US. at 316,665. Ct.
at 158, 90 L.. Fed. at 102).
Here, unlike in Lebel, we eannot evade
consideration of the stream-of commerce theory for it
is the only basis on which the Fnylish manufacturer
could be subject to the jurisdiction of a New Jersey
court.
3la
Appendix A
Vv
New Jersey has a long-arm rule that permits service
of process on a non-resident defendant “consistent with
due process of law.” R. 4:4-4(b)(1). Therefore, our State
courts may exercise jurisdiction over a non-resident
defendant “to the uttermost limits permitted by the
United States Constitution.” Avdel Corp. v. Mecure, 58
N.J. 264, 268, 277 A.2d 207 (1971). There is no question
that the United States Supreme Court in Asahi
embraced the stream-of-commerce theory in one form
or another. In the twenty-two years since Asahi,
transnational commerce has accelerated, and we realize
more than ever that we live in a global marketplace. In
light of Asahz, and given what we know of the modern
economic world, we must decide whether the stream-
of-commerce test that we set forth in Charles Gendler
cumports with the Due Process Clause of the Fourteenth
Amendment.
A.
‘Today, we reaffirm the reasoning of our decision in
Charles Gendler, and hold that a foreign manufacturer
that places a defective product in the stream of
commerce through a distribution scheme that targets a
national market, which includes New Jersey, may be
subject to the in personam jurisdiction of a New Jersey
court in a product-liability action. All in all, Charles
Gendler, in pronouncing when a State court can exercise
personal jurisdiction over a defendant based on the
stream-of-commerce doctrine, gave a faithful and fair
32a
Appendix A
reading of World-Wide Volkswagen, one that is more
reflective of Justice Brennan’s views expressed in
Asahi.
Notably, where a foreign manufacturer has sold its
products through a nationwide distribution scheme,
some courts — including the Appellate Division in this
case _— have construed Justice O’Connor’s stream-of-
commerce plus theory in Asahi in a way that is
indistinguishable from Charles Gendler and the general
language of World-Wide Volkswagen. See, e.g., Tobin v.
Astra Pharm. Prods., Inc., 993 F.2d 528, 543-45 (6th
Cir.), cert. denied, 510 U.S. 914, 114 S. Ct. 304, 126 L.
Eid. 2d 252 (1993); A. Uberti & C. v. Leonardo, 181 Ariz.
565, 892 P2d 1354, 1360-64 (Ariz.), cert. denied, 516 U.S.
906, 116 S. Ct. 273, 1383 L. Ed. 2d 194 (1995); Nicastro,
supra, 399 N.J. Super. at 557-560, 564-65.
Those courts did not believe that Justice O’Connor
intended that a foreign manufacturer seeking to capture
a national market through a nationwide distribution
scheme would be immune from suit in every state. In
the views of those courts, the additional conduct
required by Justice O’Connor under her stream-of
commerce approach would be the targeting of the
national market through, among other things, general
sales solicitations orchestrated by a manufacturer’s
independent distributor. See, e.g., Tobin, supra, 993 F.2d
at 543-45; A. Uberti & C., supra, 892 P2d at 1360-65;
Nicastro, supra, 399 N.J. Super. at 557-560, 564-65.
Thus, even under Justice O’Connor’s approach,
arguably, a manufacturer would be amenable to
33a
Appendix A
jurisdiction in every state that is part of its national
distribution scheme. See, e.g., Tobin, supra, 993 F.2d at
543-45 (permitting Kentucky to exercise personal
jurisdiction over Netherlands drug manufacturer, which
sought Federal Drug Administration approval for drug
and, through American distributor, “made a deliberate
decision to market [the drug] in all 50 states, including
Kentucky”); A. Uberti & C., supra, 892 P2d at 1360-65
(permitting Arizona to exercise personal jurisdiction
over Italian firearms manufacturer, which sold revolvers
intended for sale in United States through American
distributor); Nicastro, supra, 399 N.J. Super. at 564,
945 A.2d 92 (“| Dilefendant’s conduct in establishing and
operating under this exclusive distributorship
arrangement constituted the necessary other conduct
by which it purposefully availed itself of the benefits and
protections of all fifty states, including New Jersey.”).
Charles Gendler, although decided twenty-three
years ago, speaks to the present realities of
international trade and complex marketing techniques
of transnational corporations that bring products, some
dangerous and defective, into our State. In Charles
Gendler, we recognized approaches concerning
jurisdiction in stream-of-commerce cases that had long
been in use in New Jersey courts. See Charles Gendler,
supra, 102 N.J. at 476-77, 508 A.2d 1127 (citing Coons
v. Honda Motor Co., Ltd. of Japan, 176 N.J. Super. 575,
424 A.2d 446 (App. Div. 1980), vacated and remanded,
455 U.S. 996, 102 S. Ct. 1625, 71 L. Ed. 2d 857 (1982),
rev'd on other grounds, 94 N.J. 307, 463 A.2d 921 (1983),
reh’g granted, 95 N.J. 234, 470 A.2d 446, modified, 96
34a
Appendix A
N.J.419, 476 A.2d 763 (1984), cert. denied, 469 U.S. 1123,
105 S. Ct. 808, 83 L. Ed. 2d 800 (1985); Certisimo v.
Heidelberg Co., 122 N.J. Super. 1, 298 A.2d 298 (Law
Div. 1972), aff'd sub nom. Van Feuwen v. Heidelberg
E., Inc., 124 N.J. Super. 251, 306 A.2d 79 (App. Div.
1973)).
The preeminent issue is whether we will read the
Due Proeess Clause in a way that renders a state, such
as New Jersey, powerless to provide relief to a resident
who suffers serious injuries from a product that was sold
and marketed by a manufacturer, through an
independent distributor, knowing that the final
destination might be a New Jersey consumer.
A number of significant policy reasons animate the
approach articulated in CharlesGendler the approach
we follow today. A state has a strong interest in
protecting its citizens from defective products, whether
those products are toys that endanger children, tainted
pharmaceutical drugs that harm patients, or workplace
machinery that causes disabling injuries to employees.
A state also has a paramount interest in ensuring a
forum for its injured citizens who have suffered
catastrophic injuries due to allegedly defective products
in the workplace. See Burger King Corp. v. Rudzewicz,
471 U.S. 462, 473, 105 S. Ct. 2174, 2182, 85 L. Ed. 2d
528, 541 (1985) (“A State generally has a manifest
interest in providing its residents with a convenient
forum for redressing injuries inflicted by out-of-state
actors.” (citation and internal quotation marks omitted));
see also Charles Gendler, supra, 102 N.J. at 483, 508
35a
Appendix A
A.2d 1127 (“A state’s interest in providing a forum for
its residents is more compelling in a personal injury
action than in commercial litigation.”).
It would be strange indeed if a New Jersey
manufacturer that makes a defective and dangerous
product and is both subject to the jurisdiction of our
courts and accountable under our product-liability laws
would be able to move its plant to a foreign land and
peddle its wares through an independent distributor
across the nation, with some purchased by New Jersey
consumers, and suddenly become beyond the reach of
one of our injured citizens through this State’s legal
system. Our conception of jurisdiction must surely
comport with traditional notions of fair play and
substantial justice, but must also reflect modern truths
the radical transformation of the international
economy. Just as changing times led the United States
Supreme Court to jettison “‘consent,’ ‘doing business,’
and ‘presence’ as the standard for measuring the extent
of state judicial power over [foreign] corporations,”
McGee, supra, 355 U.S. at 222, 78 8. Ct. at 200-01, 2
L. Ed. 2d at 225, so too must we discard outmoded
constructs of jurisdiction in product-liability cases, and
embrace a modality that will provide legal relief to our
citizens harmed by the products of a foreign
manufacturer that knows or should know, through the
distribution scheme it employs, that its wares might find
their way into our State.
In today’s world, foreign manufacturers, plying
overseas markets, should be covered by insurance,
36a
Appendix A
accounting for the risks of doing business and providing
a fund for eonsumers who may be injured by their
products. See World-Wide Volkswagen, supra, 444 U.S.
at 297, 100 S. Ct. at 567, 62 L. Ed. 2d at 501. Defending
a suit in one of the United States, moreover, is not as
burdensome as it once might have been, given that air
transport can bring the principals of a business here
within hours and instantaneous communication allows
an ongoing dialogue with counsel in this country.
See McGee, supra, 355 U.S. at 223, 78S. Ct. at 201, 2 L.
Ed. 2d at 226. If it is not inconvenient for the principals
of a company to attend trade conventions and conduct
business meetings with an independent distributor in
this country for the purpose of marketing its products,
then it should not be too great a burden to defend a
lawsuit here when one of its defective products causes
serious bodily injury. Although we cannot control
manufacturing plants leaving this country or control a
foreign manufacturer’s employment policy, working
conditions, or the quality of its operations, we can ensure
that a manufacturer that targets its defective products
at a wide geographic market that includes New Jersey
will not be immune from suit in our State’s courts.
A manufacturer that wants to avoid being haled into a
New Jersey court need only make clear that it is not
marketing its products in this State. See Charles
Gendler, supra, 102 N.J. at 481, 508 A.2d 1127.
37a
Appendix A
B.
Before addressing the facts in this case, we restate
the governing stream-of-commerce principles in Charles
Gendler that will apply in a product-liability case.”
A foreign manufacturer will be subject to this State’s
jurisdiction if it knows or reasonably should know that
through its distribution scheme its products are being
sold in New Jersey. /d. at 480, 508 A.2d 1127. A
manufacturer that knows or reasonably should know
that its products are distributed through a nationwide
distribution system that might lead to those products
being sold in any of the fifty states must expect that it
will be subject to this State’s jurisdiction if one of its
defective products is sold to a New Jersey consumer,
causing injury. /d. at 480-81, 503 A.2d 1127. The focus is
not on the manufacturer’s .. .trol of the distribution
scheme, but rather on the manufacturer’s knowledge
of the distribution scheime through which it is receiving
economic benefits in each state where its products are
sold. Jbid. A manufacturer cannot shield itself merely
by employing an independent distributor a
middleman knowing the predictable route the product
13. In this ease, we address the stream-of-commerce
doctrine in a product-liability action in which an allegedly
defective machine severely injured a New Jersey resident. We
do net discount that there may he cases in which a plaintiff’s
injury may be so minor that an assertion of jurisdiction by a
New Jersey court would not comport with traditional notions of
fair play and substantial justice. See Charles Gendler, supra,
102 N.J. at 482, 508 A.2d 1127 (“We recognize that the nature of
the injury is relevant to the jurisdictional inquiry.”).
38a
Appendix A
will take to market. Jd. at 479-80, 508 A.2d 1127. Ifa
manufacturer does not want to subject itself to the
jurisdiction of a New Jersey court while targeting the
United States market, then it must take some
reasonable step to prevent the distribution of its
products in this State. /d. at 481, 508 A.2d 1126."
C.
In light of those principles, we find that the record
supports the exercise of jurisdiction over J. McIntyre
under the stream-of-commerce doctrine. J. McIntyre,
a company incorporated in the United Kingdom,
14. Given this detailed standard, taken from Charles
Gendler, we are at a loss at how the dissent can claim that the
majority has created “a new test that consists of but one inquiry:
whether a product has found its way here.” Jnfra at (slip op.
dissent at 4). That mischaracterization is repeated in varying
forms throughout the dissent. See, e.g., infra at (slip op.
dissent at 17, 21-23, 27-29). It is the dissent’s narrow parsing of
Charles Gendler, not our copious quotations from and analysis
of that opinion, which “has contorted the stream of commerce
theory.” Jnfra at (slip op. dissent at 22-23). The dissent turns
a blind eye to the language in Charles Gendler that does not fit
into its constricted view of jurisdiction. For example, the dissent
tellingly omits that, under Charles Gendler, supra, a
manufacturer with a “nationwide distribution system should
reasonably expect that those products would be sold throughout
the fifty states and that it will be subject to the jurisdiction of
every state.” 102 N.J. at 481, 508 A.2d 1127. Ultimately, the
dissent does not accept the basic teachings of Charles Gendler
and would convert the “stream of commerce” doctrine into a
dry bed.
39a
Appendix A
targeted the United States market for the sale of its
recycling products. It did so by engaging McIntyre
America, an Ohio-based company, as its exclusive United
States distributor for an approximately seven-year
period ending in 2001. J. McIntyre knew or reasonably
should have known that the distribution system
extended to the entire United States, because its
company Officials, along with McIntyre America officials,
attended scrap metal trade shows and conventions in
various American cities where its products were
advertised. Indeed, J. McIntyre’s president was present
at the Las Vegas trade convention where his exclusive
distributor introduced plaintiff’s employer to the
allegedly defective MeIntyre Model 640 Shear that
severed four of plaintiff’s fingers.
It is clear that those attending the scrap metal trade
shows and conventions came from areas other than the
cities hosting those events, and that the joint
appearances by J. McIntyre and McIntyre America
were calculated efforts to penetrate the overall
American market. Plaintiff’s employer, a New Jersey
businessman, is just one example of a person who
traveled thousands of miles to a convention where, by
dint of a sales effort, he purchased one of J. McIntyre’s
machines. J. MeIntyre may not have had access to
McIntyre America’s customer list, but J. McIntyre knew
or reasonably should have known that its machines were
being sold in states other than Ohio and in cities other
than where the trade conventions were held.
J. MeIntyre may not have known the precise destination
of a purchased machine, but it clearly knew or should
40a
Appendix A
have known that the products were intended for sale
and distribution to customers located anywhere in the
United States.
J. MeIntyre and MeIntyre America shared a
common name that may have suggested to unwitting
members of the public some form of corporate
relationship, despite the fact that both companies were
independent business entities with different owners and
management. The information sheet that accompanied
the 640 Model Shear included J. McIntyre’s address
and telephone number and, according to the New Jersey
businessman who purchased that machine, “had we
needed any repair parts, we would have called JJ.
McIntyre Machinery Ltd. in England, which is where
we would call today for repairs or parts.” There can be
little doubt that J. McIntyre and McIntyre America
worked together to promote and sell J. McIntyre
products in the United States as evidenced by their
shared communications and joint participation at
industry trade conventions. It bears mentioning that J.
McIntyre maintained ownership of at least some of its
products delivered to McIntyre America until the
distributor sold the products to a United States
customer. Under that product-consignment relationship,
McIntyre America would earn a commission from its sale
of J. MeIntyre’s products after J. McIntyre collected
its payment.
Because J. McIntyre knew or reasonably should
have known that its distribution scheme would make its
products available to New Jersey consumers, it now must
4la
Appendix A
present a compelling case that defending a product-
liability action in New Jersey would offend “traditional
notions of fair play and substantial justice.’” Lebel,
supra, 115 N.J. at 328, 558 A.2d 1252 (citing Burger King
Corp., supra, 471 U.S. at 477, 105 S. Ct. at 2184, 85 L.
Ed. 2d at 544). However, J. McIntyre cannot make out
a case that travel to New Jersey is onerous or an unfair
burden for it to bear. J. McIntyre’s officials have visited
various cities throughout the United States to promote
its business interests, attending trade conventions and
meeting with representatives of its exclusive distributor.
Certainly, defending the product-liability action in Ohio,
where J. McIntyre’s now-defunct exclusive distributor
conducted business, or in Nevada, the site of the 1994
and 1995 trade conventions, would be no more
convenient than in New Jersey. Indeed, New Jersey is
a shorter distance from England than those locales, and
neither the Ohio nor Nevada courts would seem to have
an interest in resolving a product-liability action in which
an English manufacturer’s product injured a New
Jersey resident in New Jersey.
On the other hand, New Jersey has a strong interest
in exercising jurisdiction. Plaintiff is a New Jersey
resident; the allegedly defective product was purchased
by a New Jersey consumer, plaintiff’s employer; the
injury oceurred in a New Jersey workplace; plaintiff was
treated for his injuries in the New Jersey regional area;
the evidence the shear machine’ and most of the
necessary witnesses are located in New Jersey; and last,
the law of this State likely will govern the action. It would
be unreasonable to expect that plaintiff’s only form of
42a
Appendix A
relief is to be found in the courts of the United Kingdom,
which may not have the same protections provided by
this State’s product-liability law. Under all the
circumstances, New Jersey has a rightful claim to
resolve the dispute between the parties and to assert
jurisdiction over this product-liability action. We will not
deny plaintiff a forum in the courts of this State.
Vi.
The stream-of-commerce doctrine of jurisdiction is
particularly suitable in product-liability actions. It will
not necessarily be a substitute for other jurisdictional
doctrines, i.e., minimum contacts, that will apply in
contract and other types of cases. See McKesson Corp.
v. Hackensack Med. Imaging, 197 N.J. 262, 266-67, 277-
78, 962 A.2d 1076 (2009) (applying minimum-contacts
test in holding that Texas court properly exercised
personal jurisdiction over defendant New Jersey
corporation that entered into commercial transactions
with plaintiff-corporation in Texas). Within the confines
of due process, jurisdictional doctrines must reflect the
economic and social realities of the day. The exercise of
jurisdiction by New Jersey in this case is a reasoned
response to the globalization of commerce that permits
foreign manufacturers to market their products
through distribution systems that bring those products
into this State. With the privilege of distributing
products to consumers in our State comes the
responsibility of answering in a New Jersey court if one
of those consumers is injured by a defective product.
4ha
Appendix A
For the reasons expressed, we affirm the judgment
of the Appellate Division, which reinstated plaintiff’s
product-liability action, and remand this matter to the
trial court for proceedings consistent with this opinion.
CHIEF JUSTICE RABNER and JUSTICES
LONG , LaVECCHIA , and WALLACE join in
JUSTICE ALBIN’s opinion. JUSTICE HOENS filed a
separate, dissenting opinion, in which JUSTICE
RIVE RA-SOTO joins. JUSTICE RIVE RA-SOTO filed
a separate, dissenting opinion.
44a
APPENDIX B DISSENTING OPINION OF THE
SUPREME COURT OF NEW JERSEY
DECIDED FEBRUARY 2, 2010
SUPREME COURT OF NEW JERSEY
A-29 September Term Z008
ROBERT NICASTRO and
ROSKANN NICASTRO, h/w,
Plaintiffs-Respondents,
v.
MCINTYRE MACHINERY AMICRICA, LTD.,
Defendant,
and
J-.MC INTYRIE MACHINERY LTD.,
Defendant. Appellant,
JUSTICH HOLNS, dissenting.
| respectfully dissent. Quoting extensively from this
Court’s decision in Charles Gendler & Co. » Telecom
Kquipment Corp., 102 N.J. 460, 508 A.2d 1127 (1986),
the majority asserts, indeed insists, that it is merely
reaffirming and applying the bedrock jurisdictional
45a
Appendix B
principles this Court has long embraced. Ante at
(slip op. at 33, 38-40). The majority purports as well to
harmonize the Gend/ler holding with the analyses set
forth in the competing plurality opinions of the United
States Supreme Court, see Asahi Metal Indus. Co., Lid.,
480 U.S. 102, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987). In
fact, the majority’s opinion does nothing of the sort.
Instead, in place of utilizing any of the analytical
frameworks found in those three precedents, the
majority has created an entirely new and unbounded
test for asserting jurisdiction over foreign entities.
Indeed, it is only by ignoring the essential underpinnings
shared by those three opinions that the majority can
reach its result; it is only by the use of subtle and
unspoken shifts in language and emphasis that the
majority is able to transform Gendler from what it is to
what the majority chooses to have it mean. And
transform it is precisely what the majority does. Because
where Gendler used the stream of commerce theory as
but one part of a larger due process analysis, with its
traditional focus on the foreign defendant’s connection
to this forum, the majority has effectively substituted
any effort by a manufacturer to sell its produvt anywhere
in the nation as the only act needed for assertion of our
jurisdiction.
Repeated quotations and soaring language about
the realities of the global marketplace might compel the
casual reader to follow what appears to be the majority's
relentless logic. But those rhetorical techniques cannot
mask the fact that the majority today embarks on a path
464
Appendix B
that stretches our notions about due process, and about
what is fundamentally fair, beyond the breaking point.
In doing so, the majority has, notwithstanding its
protestations to the contrary, elected to forge a new and
uncharted path. Because it is a path with which I cannot
agree, I dissent.
I.
The issue presented to the Court in this dispute is
a familiar one, for it requires us to decide whether our
courts have jurisdiction over a foreign manufacturer of
a product that is alleged to have injured one of our
residents. At the same time, what might otherwise be
an almost mundane exercise is complicated by the
challenge of balancing the rights of the parties when
the realities of a twenty-first century global economy
strain against the outer limits of due process. In an effort
to strike the right balance, we are asked to apply the
stream of commerce theory, as articulated by this Court,
see Gendler, supra, 102 N.J. at 480-81, 508 A.2d 1127;
cf Lebel v. Everglades Marina, Inc., 115 N.J.317 1989)
(declining to employ stream of commerce in place of
traditional jurisdictional analysis), and as explained in
the competing plurality opinions handed down by the
United States Supreme Court, see Asahi, supra, 480
U.S. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 104
(O’Connor, J., plurality opinion); id. at 117, 107 S. Ct. at
1034-35, 94 L. Ed. 2d at 107-08 (Brennan, J., concurring).
That theory, therefore, is at the heart of the debate in
this appeal.
47a
Appendix B
In the majority's view, applying that theory
demands that this foreign manufacturer be subject to
the jurisdiction of our courts. Objectively analyzed,
however, it is hardly that simple, because in its
articulation of the stream of commerce theory, the
majority has strayed far from the precedents it purports
to apply. Starkly stated, the majority has abandoned the
cautious wisdom of Gendler and Asahi, creating in their
place a new test that consists of but one inquiry: whether
a product has found its way here. In the majority’s
version of the stream of commerce theory, that fact alone
suffices to subject the manufacturer of that product to
our jurisdiction. But the majority’s opinion fails to
articulate an analysis consistent with any of the well-
established tests that have discussed the stream of
commerce theory and, in the process, departs radically
from all of them. More to the point, the majority reaches
its result only by disregarding carefully developed
notions of due process to which non-resident defendants
always have been entitled. | therefore respectfully
dissent.
Three opinions, one in Gendier and the two plurality
opinions in Asahi, stand at the core of the debate over
jurisdiction in this appeal. Although each uses “stream
of commerce” as its central theme, those decisions agree
on neither the meaning nor the implications of that
concept as it relates to the exercise of jurisdiction.
Instead, each of those opinions considers the
manufacturer’s use of modern commercial distribution
schemes, referred to as the stream of commerce, as but
one part of a traditional jurisdictional inquiry. In doing
48a
Appendix B
so, those opinions express diverse views that spring from
different theoretical underpinnings, but none of them
uses the stream of commerce concept as an independent
source of jurisdiction; each considers it solely for the
role it plays in the context of a due process analysis.
In reality, it is only by appreciating what each of
those decisions actually understood the “stream of
commerce” theory to mean that one can hope to apply
any of those distinct theories about jurisdiction to this
dispute. One cannot, as does the majority in this appeal,
simply pluck out the words “stream of commerce” from
those opinions and, repeating them like some ancient
incantation, imply that it is a free-standing theory that
supports the result the majority reaches. Nor can one
use the phrase as if it were a short-hand substitute for
a single analytical approach, so as to suggest that one
has adhered to settled principles expressed in those
three opinions. On the contrary, a careful explanation
of the different versions of the stream of commerce
theory set forth in those three opinions will best
illustrate how the majority’s approach hav departed
from, rather than adhered to, any of those precedents.
A.
This Court’s prescient and groundbreaking opinion
in Gendler is perhaps the best starting place, because
it engaged in a thorough and scholarly analysis of the
underlying problem of jurisdiction over foreign
manufacturers that not only preceded the United States
Supreme Court’s effort to tackle the question, but that
continues to serve us well today.
49a
Appendix B
As the Gendler Court recognized, all questions
concerning a state’s assertion of personal jurisdiction
“must comport with the due-process requirement of the
fourteenth amendment.” Gendler, supra, 102 N.J. at 469,
508 A.2d 1127. Although we have long interpreted our
long-arm jurisdiction to be consistent with “the
uttermost limits permitted by the United States
Constitution,” ibid. (quoting Avdel Corp. v. Mecure, 58
N.J. 264, 268, 277 A.2d 207 (1971)), the fundamental and
unquestioned right of a foreign defendant to due process
remains the essential touchstone of jurisdiction.
In Gendler, the Court traced the origins of the
stream of commerce theory through a review of the
historical development of our theories of long-arm
jurisdiction generally, beginning with the requirement
of physical presence, ibid. (citing Pennoyer v. Neff, 5
Otto 714, 95 U.S. 714, 24 L. Ed. 565 (1878)), through the
minimum contacts approach begun thereafter, see zbid.
(quoting /nt'l Shoe Co. v. Washington, 326 U.S. 310, 316,
66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945)), to explain
the framework within which a stream of commerce theory
might apply. As part of that analysis, the Court pointed
out that deciding whether it is fair to subject any
defendant to suit in a particular forum has evolved to
include coneepts such as whether defendant has
“purposefully availled] itself of the privilege of
conducting activities within the forum State, thus
invoking the benefits and protections of its laws,” zd. at
471, 508 A,2d 1127 (quoting Hunson v. Denckla, 357 U.S.
235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283, 1298
(1958)), and whether “defendant’s contacts with the
50a
Appendix B
forum state [are] such that it ‘should reasonably
anticipate being haled into court there.” /d. at 470, 508
A.2d 1127 (quoting World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L.
Ed. 2d 490, 501 (1980)).
The Court in Gendler pointed out that the United
States Supreme Court, in World-Wide Volkswagen, had
recognized the vitality of a stream of commerce theory,
but described that theory as having two component
parts. Quoting the United States Supreme Court, this
Court described the theory as permitting the exercise
of jurisdiction over a non-resident manufacturer if that
manufacturer first, places its products into the stream
of commerce and, second, does so “with the expectation
that they will be purchased by consumers in the forum
State.” Jd. at 474, 508 A.2d 1127 (quoting World-Wide
Volkswagen, supra, 444 U.S. at 298, 100 S. Ct. at 567, 62
L. Ed. 2d at 502). That second consideration, that is,
the manufacturer’s expectation, was related to the
Court’s reliance on a foreseeability analysis, and remains
entirely consistent with the traditional inquiry about
whether defendant could reasonably anticipate being
“haled into court.” Jd. at 475, 508 A.2d 1127. Although
this Court referred to the stream of commerce theory
that had developed in the federal courts as “an
independent basis to satisfy the minimum-contacts
standard,” id. at 476, 508 A.2d 1127 (citing Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S. Ct. 2174,
2182, 85 L. Ed. 2d 528, 541 (1985)), its quotations from
the United States Supreme Court’s opinion in Burger
King make plain that this Court recognized that stream
Sla
Appendix B
of commerce necessarily includes the element of
expectation of purchase in this state. That is, by
recognizing that there are two elements to the theory,
this Court did not substitute mere usage of the stream
of commerce as if it were a free-standing basis for
jurisdiction, but instead included within it the fairness
and foreseeability analyses that are essential to due
process. /bid.
Turning to an exhaustive analysis of both state and
federal precedents in which the stream of commerce
theory had been considered, this Court considered the
exercise of jurisdiction over foreign manufacturers
generally, finding that concepts such as the nature of
the chosen chain of distribution, see id. at 477-78, 508
A.2d 1127, and evidence of a manufacturer’s “purposeful
penetration of the [forum state’s] market,” id. at 478,
508 A.2d 1127, were relevant to any consideration of the
stream of commerce theory. In the end, however, the
Court returned to fundamental concepts of due process,
holding fast to considerations of purposeful availment,
ibid., reasonable expectations of being haled into court,
id. at 475, 508 A.2d 1127, and receipt of benefits of the
forum, 7d. at 480, 508 A.2d 1127, as the guiding principles
of our jurisdictional analysis. This Court described with
precision the test to be applied: “The crucial question
is whether [the foreign manufacturer] was aware or
should have been aware of a system of distribution that
is purposefully directed at New Jersey residents.”
Gendler, supra, 102 N.J. at 484, 508 A.2d 1127 (emphasis
added).
$2a
Appendix B
It is instructive to emphasize what Gendler did not
decide. This Court did not conclude that the simple
process of a product being placed into the general
stream of commerce and ending up here was enough to
support jurisdiction. Nor did this Court decide that
creating a system of distribution that resulted in a
product finding its way here was enough. Instead, this
Court linked together two elements, awareness and
purposefulness, that are critical, from the point of view
of due process, to an exercise of jurisdiction. All of the
comments in Gendler about the realities of a global
economy and of nationwide patterns of distribution
aside, this Court remained true to concepts long
recognized to be the fundamental basis on which any
state can exercise jurisdiction over a foreign entity.
B.
An analysis of the two competing plurality opinions
of the United States Supreme Court in Asahi, supra,
leads to a similar conclusion, that is, that in evaluating
any state’s exercise of long-arm jurisdiction, the Court’s
core concern is due process. On that point, both the
plurality opinion authored by Justice O’Connor and the
concurring opinion written by Justice Brennan agree.
The basis for deciding all jurisdictional questions
remains rooted in our traditional notions of due process,
see Asahi, supra, 480 U.S. at 108-09, 107 S. Ct. at 1030,
94 L. Ed. 2d at 102 (O’Connor, J., plurality opinion);
id. at 117, 107 S. Ct. at 1034-35, 94 L. Ed. 2d at 107-08
(Brennan, J., concurring), and must comport with “fair
play and substantial justice,” see id. at 113, 107 S. Ct. at
53a
Appendix B
1033, 94 L. Ed. 2d at 105 (O’Connor, J., plurality opinion)
(quoting ntl Shoe, supra, 326 U.S. at 316, 66 S. Ct. at
158, 90 L. Ed. at 102); id. at 116, 107 S. Ct. at 1034, 94
L. Ed. 2d at 107 (Brennan, J., concurring) (quoting /nxt’l
Shoe, supra, 326 U.S. at 320, 66 S. Ct. at 160, 90 L. Ed.
at 104).
Each of the plurality opinions uses the same test,
namely, whether the foreign manufacturer has done
something to “purposefully avail itself of the market in
the forum State.” Asahi, supra, 480 U.S. at 110, 107
S. Ct. at 1031, 94 L. Ed. 2d at 103 (O’Connor, J., plurality
opinion); 7d. at 116-17, 1078S. Ct. at 1034, 94 L. Ed. 2d at
107 (Brennan, J., concurring). Each, significantly, makes
clear that it is inappropriate to define the stream of
commerce theory in such a way that the label takes the
place of an evaluation of purposeful availment.
That is, Justice O’Connor, as part of considering the
stream of commerce theory, framed the question in
terms of whether it is consistent with the protections
afforded by the Due Process Clause to assert
jurisdiction over a defendant whose product was
“swept” by the stream of commerce “into the forum
State, but [where] the defendant did nothing else to
purposefully avail itself of the market in the forum
State.” Asahi, supra, 480 U.S. at 110, 1078S. Ct. at 1031,
94 L. Ed. 2d at 103. In her view, merely placing a product
into the stream of commerce is insufficient to support
jurisdiction because, without more, it cannot constitute
action purposefully directed at the forum state. /d. at
112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 104. Although
54a
Appendix B
reaching a different conclusion on what purposeful
availment requires, Justice Brennan’s opinion does not
disagree with the notion that merely placing a product
into the stream of commerce will not suffice. He explicitly
pointed out that, in his understanding, “[tjhe stream of
commerce refers not to unpredictable currents or
eddies, but to the regular and anticipated flow of
products from manufacture to distribution to retail sale.”
/d. at 117, 107 S. Ct. at 1034, 94 L. Ed. 2d at 107.
Both of the plurality opinions in Asahi, therefore,
caution against using “stream of commerce” as a
surrogate for the analysis of the connection between the
foreign entity and the forum that due process demands.
The two opinions differ only in their definition of what,
in addition to placing a product into the stream of
commerce, will be required in order for the assertion of
jurisdiction to pass constitutional muster.
For Justice O’Connor, the key lies in identifying
sufficient additional conduct that would qualify to meet
the test of purposeful availment. In her view, such
conduct could be anything that would indicate that the
foreign entity intended to serve a forum state’s market,
including: designing the product for the forum state’s
market; advertising there; establishing channels for
providing regular advice to customers in the particular
forum state; or marketing the product through a
distributor that has agreed to serve as the sales agent
in the forum state. /d. at 112, 107 S. Ct. at 1032,
94 L. Ed. 2d at 104.
55a
Appendix B
Applying those concepts to the factual record before
the Court in Asahi, Justice O’Connor concluded that
the plaintiff’s proofs fell short. She noted, for example,
that the defendant did no business in the forum state,
had no office, no agents, no employees and no property
there. /d. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d at 105.
She observed that the defendant did not create, control
or directly utilize the distribution system that brought
its product to the forum state, because its product was
merely a component of a vehicle being sold and
distributed by others. /bid. Moreover, she found in the
record no evidence that the defendant had designed its
product in anticipation of sales in the forum state.
Td. at 113, 107S. Ct. at 1032, 94 L. Ed. 2d at 105. Because
the record lacked any evidence of conduct by the
defendant that would tend to demonstrate that it had
engaged in purposeful availment of the benefits of the
forum, the opinion concluded that due process
considerations would be offended by requiring it to
appear and defend there.
More to the point, Justice O’Connor’s plurality
opinion in Asahi closely linked the assertion of
jurisdiction over a defendant that has introduced a
product into the stream of commerce to traditional
notions of personal jurisdiction and the Due Process
Clause, because jurisdiction rested on conduct of some
variety or an intentional act directed at the forum.
Far from simply relying on the act of introducing one’s
product into the stream of commerce, her opinion is
rooted in the well-settled principle that jurisdiction must
be based on some action or conduct that demonstrates
56a
Appendix B
that the defendant has purposefully availed itself of the
forum state’s market.
Justice Brennan’s concurring opinion in Asahi
expressed a different view, but one that is equally
grounded on ordinary concepts of due process and the
extent to which that constitutional guarantee would be
offended by the absence of a direct physical connection
between the manufacturer’s activities and the result of
its product ending up in the forum state. He, too,
considered the nature and extent of a manufacturer’s
activities that would suffice to satisfy the basic
requirement that jurisdiction be supported by a
defendant’s purposeful availment of the forum state’s
market. Jd. at 116-17, 107 S. Ct. 1034-35, 94 L. Ed. 2d at
107-08. He disagreed with Justice O’Connor’s conclusion
that affirmative conduct was needed, reasoning that due
process notions of purposeful availment could be
satisfied instead by evidence demonstrating that the
manufacturer was aware of the fact that its produc was
being marketed in the forum state. /d. at 116-17, 107
S. Ct. at 1034, 94 L. Ed. 2d at 107. Simple awareness of
a remote possibility, however, is insufficient for
jurisdiction as Justice Brennan understood it. Rather,
in his words,
[tlhe stream of commerce refers not to
unpredictable currents or eddies, but to the
regular and anticipated flow of products from
manufacture to distribution to retail sale. As
long as a participant in this process is aware
that the final product is being marketed in the
S7a
Appendix B
forum State, the possibility of a lawsuit there
cannot come as a surprise.
[/d. at 117, 1075. Ct. at 1034, 94 L. Fd. 2d at
107. |
Although Justice Brennan found it unnecessary for a
plaintiff to show “additional conduct” directed toward
the forum by a manufacturer, he defined the stream of
commerce to include an affirmative awareness that the
product, either separately or as a component part, is
heing marketed in the forum state. /hid.
Justice brennan commented that, as long as the
manufacturer “is aware that the final product is being
marketed in the forum,” ibid., there is a connection
between the manufacturer and the forum sufficient for
due process purposes. His opinion, therefore, did not
substitute mere placement of a product into the stream
of commerce for the ordinary requirements needed to
satisfy due process. Nor did he embrace some
metaphysical or theoretical definition of awareness.
Instead, his opinion emphasized that there are two key
indicia of “awareness” needed to support jurisdiction
consistent with due process, namely, the regularity of
the sales in or to the forum state and evidence of
defendant’s expectation that its product would be
purchased there. /d. at 121, 1078S. Ct. at 1056-37, 94 L.
Ed. 2d at 110.
SK&a
Appendix B
As part of his examination of the factual record in
Asahi, Justice Brennan concluded that the evidence of
regular and extensive sales of a product by the
defendant to a manufacturer for incorporation as a
component part, coupled with the defendant’s
knowledge that the manufacturer was cnyayed in the
regular course of selling the final product in the forum
state, wus the crucial basis for the exercise of
jurisdiction. He pointed out that the defendant’s
components were included in at least eighteen percent
of the products sold in one forum state store and that.
the defendant, on average, annually sold hundreds of
thousands of its components to the manufacturer.
See id. at 121.4, 1075. Ct. at 1037 n.4, 94 L. Fed. 2d at
110 n.4. Justice Brennan, therefore, found ample
support for the “awareness” analysis embodied in his
stream of commerce theory, leading to the conclusion
that the defendant’s due process rights would not be
abridged by subjecting it to jurisdiction. /d. at 121, 107
S. Ct. at 1036 37, 94 1. Fd. 2d at 110.
Neither of the Asahi opinions abandoned due
process as the essential underpinning of jurisdiction,
or reliance on purposeful availment as the core of that
analysis. Neither of the Asahi opinions, moreover,
equated merely placing a product into the stream of
commerce somewhere in the United States with
purposeful availment sufficient to comport with due
process and to support jurisdiction. On the contrary, as
those opinions and this Court’s decision in Gendler make
59a
Appendix B
clear, this Court and the United States Supreme Court
have never strayed from the recognition that due
process is fundamental to the constitutional assertion
of jurisdiction over a non-resident defendant. This
Court and the United States Supreme Court have never
varied from holding that due process demands that there
be some connection between a defendant and the forum,
whether that analysis is expressed in terms of mintmum
contacts, see /nt’l Shoe, supra, 326 U.S. at 316, 66S. Ct.
at 158, 90 L. Ed. at 102, or purposeful availment,
see Burger King, supra, 471 U.S. at 475-76, 105 S. Ct.
at 2183-84, 85 L. Ed. 2d at 542-43, or an action
purposefully directed toward the forum State, see Asahi,
supra, 480 U.S. at 112, 107 S. Ct. at 1032, 94 L. Ed. 2d
at 104 (O’Connor, J., plurality opinion), or awareness of
regular and extensive sales of its product by another,
see Asahi, supra, 480 U.S. at 121, 1078. Ct. at 1036-37,
94 L. Ed. 2d at 110 (Brennan, J., coneurring), or
purposefulness demonstrated by the knowledge that
one’s products will be sold in the forum state,
see Gendler, supra, 102 N.J. at 480, 508 A.2d 1127.
Today, in the guise of reaffirming Gendler, ante at
(slip op. at 33), the majority cuts all ties with precedent
and does what Asahi warned against, equating the mere
placement of a product into the stream of commerce
somewhere with whatever due process would otherwise
demand for assertion of jurisdiction anywhere. The
majority does so by first conceding that nothing in this
record would satisfy the traditional minimum contacts
test, ante at (slip op. at 15). It then describes the
stream of commerce as if it were an alternative rationale,
60a
Appendix B
ibid., proceeding thereafter to review the factual record
in terms meant to match the ones used by this Court in
Gendler.
As characterized by the majority, this case is about
a foreign company that engaged in “purposeful
marketing” of its product, ante at —_ (slip op. at 2), that
used a “distribution scheme,” 2b7d., and that “targeted”
a geographical market that included New Jersey, ante
at (slip op. at 2,3, 33). There can be little debate, of
course, that if defendant in fact had a “distribution
scheme” like the ones considered in Gendler and Asahi,
and if it “targeted” this state in particular, our traditional
notions of due process would support the exercise of
jurisdiction. This record, however, has evidence neither
of a “distribution scheme” nor of “targeting” consistent
with what this Court in Gendler or the United States
Supreme Court in Asahi discussed. Indeed, it is only
through subtle and unspoken, but analytically
significant, shifts in the meaning of those phrases that
the majority is able to assert that it is applying those
preeedents faithfully. It is, however, the very real
distinctions between what the earlier opinions meant
and what the majority today means that demonstrate
that there is no faithful adherence to those precedents
at all.
First, the “distribution scheme” in Gendler included
a foreign manufacturer’s creation of a wholly-owned
subsidiary that was authorized to do business in this
state, Gendler, supra, 102 N.J. at 467, 508 A.2d 1127,
and that company’s use of another wholly-owned
6la
A Pp end ix B
subsidiary that sold its products to a New Jersey
corporation for eventual sale to plaintiff. 7b¢d. Moreover,
the foreign corporation in Gendler conceded that the
sale in New Jersey was “not an isolated transaction,”
ibid., but was part of larger and “|dJeliberate sales
efforts,” id. at 469, 508 A.2d 1127, aimed at this state.
Likewise, in Asahi, the foreign manufacturer’s
distribution system resulted in what Justice Brennan
described as “regular and extensive sales” of its product
for use as a component part in products sold in the state
seeking to assert jurisdiction. Asahi, supra, 480 U.S.
at 121, 107 S. Ct. at 1087, 94 L. Ed. 2d at 110.
Nothing in this record approaches the sort of
“distribution scheme” to which those precedents
referred. Instead, we are confronted with a foreign
manufacturer that chose an entirely distinct, unaffiliated
Ohio corporation to serve as its distributor, that had
little, if any, success in its efforts to control or direct
that entity’s activities, that sent a representative to
trade shows somewhere in this country from time to
time, and whose independent distributor made but one
sale of a machine that ended up in this state.
Notwithstanding that record, through clever repetition
of phrases like “distribution scheme,” the majority
transforms what might at most be deseribed as a trickle
of goods into a flood of products sufficient to meet the
demands of due process when, in truth, the facts fall
short. Apparently mindful of Justice Brennan’s caution
that we not equate stream of commerce with the
“unpredictable currents and eddies, but to the regular
and anticipated flow of its products,” see zd. at 117, 107
62a
Appendix B
S. Ct. at 1034, 94 L. Ed. 2d at 107, the majority
mischaracterizes the record to achieve precisely that
end.
Second, the record is barren of the kind of targeting
that this Court in Gendler and the United States
Supreme Court in Asakh? considered. In each of those
opinions, the Courts evaluated the manufacturer's
connection with the particular forum and utilized the
stream of commerce to the extent that it played a role
as the vehicle for getting the product to that forum. For
example, in Gendler, one could conclude that there was
an effort to access and exploit a market in New Jersey
beeause the manufacturer utilized an alter ego, a wholly-
owned subsidiary doing business here, and engaged in
“[{dleliberate sales efforts” aimed at this state. Gendler,
supra, 102 N.J. at 469, 508 A.2d 1127. In Asahi, although
the record was hardly extensive, both of the opinions
are clear about what is required, at a minimum, for this
element of the test. For Justice O’Connor, it remains
purposeful availment as evideneed through conduct
aimed at a particular forum’s market, see Asah2, supra,
480 U.S. at 112, 107 S. Ct. at 10382, 94 L. Ed. 2d at 104;
for Justice Brennan, it requires affirmative awareness
that the stream of commerce is being used to market
the product in the target state, id. at 117, 107 S. Ct. at
1034, 94 L. Ed. 2d at 107.
Nothing in this record rises to that level, for there
is no evidence that the foreign corporation made any
eifort to send its products here; there is nothing more
than a decision to market its product somewhere within
63a
Appendix B
this nation. Ignoring this Court’s plain command in
Gendler that the “crucial question” includes a “system
of distribution that is purposefully directed at
New Jersey residents,” Gendler, supra, 102 N.J. at 484,
508 A.2d 1127, the majority simply replaces targeting
of this state, which would comport with due process, with
a generic effort toward the whole of the United States,
which does not.
The majority has, in reality, redefined the crucial
jurisdictional terms to suit its ends. Affixing the wholly
unwarranted label of “distribution scheme” now takes
the place of explaining how the marketing efforts in this
record rise to the level contemplated by that phrase in
Gendler or Asahi. Redefining the target market from
this forum to “a geographical market that includes New
Jersey,” ante at (slip op. at 3), masks the fact that there
was no focus on this state. These are subtle shifts in
emphasis indeed, but they are intentional ones, utilized
to accomplish the majority’s goal of transforming the
due process requirement that there be a connection
between the foreign entity and the forum state into a
test in which the mere act of placing a product into the
general stream of commerce somewhere in this nation
will suffice. Justice O’Connor and Justice Brennan both
rejected such a view, and the suggestion that somehow
in Gendler this Court did otherwise is false.
Merely including extensive quotations from
Gendler, and from the competing plurality opinions in
Asahi, does not equate with analytical faithfulness to
the principles on which those cases rest. Citing Gendler’s
64a
Appendix B
language about the global economy and about modern
methods for distribution of allegedly dangerous
products, as if those concerns alone support jurisdiction
over a non-resident, misses the entire point of the
Gendler analysis. Likewise, quoting from the opinions
in Asahi without appreciating the fine distinctions about
whether purposeful availment is tested by the additional
conduct of the manufacturer, or by awareness of a
regular and extensive distribution scheme, ignores the
thorny constitutional questions those Courts, and this
one, must confront fairly and squarely.
Instead of recognizing that in each of those opinions
the stream of commerce is the beginning, and not the
end, of the inquiry into jurisdiction, the majority has
contorted the stream of commerce theory to its own
ends. By ignoring the second half of the Gendler test,
that is, the element of purposeful direction at New
Jersey residents, Gendler, supra, 102 N.J. at 484, 508
A.2d 1127, the majority has transformed the analysis of
the due process demands of jurisdiction into a single
question: was a product introduced into the stream of
commerce somewhere in the United States, eventually
ending up here. That approach is not only cireular and
simplistic, it is, in the end, an unconstitutional one,
because it is starkly inconsistent with fundamental
notions of fairness and due process that this Court and
the United States Supreme Court have identified as the
touchstone of jurisdiction.
I part company with the majority’s opinion because
it fails to recognize that what gives content to the stream
65a
Appendix B
of commerce theory is the manufacturer’s conduct, or
knowledge, or awareness of what others were doing with
its product. It is those elements that satisfy the
traditional component of purposeful availment and that,
therefore, permit an exercise of jurisdiction that does
not offend the outermost bounds of due process. Any
jurisdictional inquiry must contend with the accepted
two-part test, through which we recognize that due
process demands some act, some evidence, some proof
of affirmative awareness, that one’s actions will likely
result in a sale in the forum state. Because the majority
has substituted any act, or potentially no act at all, that
can be equated with permitting one’s product to enter
generally into the stream of commerce for that essential
component of our due process analysis, I cannot agree.
ITT.
1 part from my colleagues for a separate reason,
albeit one that requires only a brief exposition. In
World-Wide Volkswagen, the United States Supreme
Court commented that part of deciding whether it is
reasonable to require a nonresident corporation to
defend itself in a particular forum ineludes an analysis
of factors other than those that focus on defendant
alone. The Court noted:
[T]he burden on the defendant, while always
a primary concern, will in an appropriate case
be considered in light of other relevant
factors, including the forum State’s interest
in adjudicating the disputel,]... the plaintiff’s
66a
Appendix B
interest in obtaining convenient and effective
relief[,] . . . the interstate judicial system’s
interest in obtaining the most efficient
resolution of controversies|[,] and the shared
interest of the several States in furthering
fundamental substantive social policies] .]
[World-Wide Volkswagen, supra, 444 U.S. at
292, 100 S. Ct. at 564, 62 L. Ed. 2d at 498
(citations omitted). |
Through this language, the Supreme Court made plain
that the essential focus of the due process analysis must
be on defendant and its relationship to the forum, and
that the other considerations play a subsidiary role
should the court conclude that there are sufficient
contacts to support jurisdiction. In each of the decisions .
of that Court, the focus of the jurisdictional] analysis is
on defendant and its behavior or activities, rather than
on plaintiff and his or her injuries or damages. The
United States Supreme Court, although reciting facts
relating to the damage or injury alleged, has done so in
a cursory fashion, presumably to ensure that sympathy
for an injured plaintiff would not shift the focus away
from the due process rights of the nonresident
defendant. See, e.g., Asahi, supra, 480 U.S. at 105, 107
S. Ct. at 1029, 94 L. Ed. 2d at 100 (noting that plaintiff
was “severely injured”); World-Wide Volkswagen, supra,
444 U.S. at 288, 100 S. Ct. at 562, 62 L. Ed. 2d at 495
(noting that plaintiffs were “severely burned” when their
car caught fire after accident with another vehicle).
67a
Appendix B
Apparently concluding that an appropriate
evaluation of defendant’s due process rights should
instead be conducted only in the context of a full
explanation of the factual assertions, the majority
engages in an unnecessarily detailed description of
plaintiff’s severe injuries, coupled with repeated
references to defendant’s “dangerous” machine as the
cause. That all of us desire to make certain that our
citizens have access to our courts, that all of us agree
that we should make a forum available so that injured
individuals can achieve justice and fair compensation
for their injuries caused by the negligence of others, is
a given. But in this appeal, involving a dispute on a
matter as to which the seriousness of the injury or the
fault of the manufacturer is largely irrelevant, the
majority’s election to make such considerations so great
a part of its reasoning suggests a disturbing shift in focus
in two ways.
First, the majority rather inexplicably uses the fact
of plaintiff’s severe injuries to support its jurisdictional
analysis, commenting that this newly adopted test
applies in products liability cases, ante at (slip op. at
2), and observing that lesser injuries somehow might
not be sufficient to support jurisdiction, ante at (slip
op. at n.13). Apparently, the majority’s stream of
commerce approach would not, in these same factual
circumstances, afford sufficient basis for us to grant the
machine’s corporate owner access to our courts if it
sought to pursue a contract or warranty claim. Likewise,
the usual focus on due process as it applies to a foreign
defendant now turns in some never explained fashion
68a
Appendix B
on whether the plaintiff includes the right sort of claim
in the pleading and has injuries that the majority
considers worthy of concern. In either case, those
comments evidence a new, unexplained and unfounded
approach to jurisdiction.
The majority therefore, sadly, creates a new rule only
for the class of claims and claimants it favors, rather
than one that applies to all like-situated matters and
litigants. Indeed, the proof of that may be found in the
supremely ironic fact that, on the same date on which
we heard oral argument in this appeal, we issued our
unanimous opinion in McKesson Corp. v. Hackensack
Medical Imaging, 197 N.J. 262, 962 A.2d 1076 (2009).
The Court there, using language that the majority today
echoes, commented that “[i]n today’s rapidly shrinking
world, the purchase of goods from out-of-state vendors
has become commonplace.” /d. at 278, 962 A.2d 1076.
Contrary to the majority’s conclusion that for some
plaintiffs, that fact alone supports the exercise of
jurisdiction, this Court in McKesson utilized our
traditional due process approach, cautioning that
“(t]hose instances, standing alone, are insufficient to
establish the requisite minimum contacts needed to
invoke long-arm jurisdiction consistent with due
process.” Jbid.
Second, the majority opinion includes a change in
focus from an appropriate analysis of a defendant’s due
process rights to concerns that plaintiffs be assured of
access to the most convenient forum. Particularly
troubling in this regard is the end of the opinion, in
69a
Appendix B
which the majority appears to address two issues
without benefit of briefing or argument. First, engaging
in a discussion that should properly be characterized as
a forum non conveniens analysis and, second, baldly
asserting that our substantive law will apply, ante at
(slip op. at 44), the majority seeks to add support for its
conclusion that defendant should be forced to defend
itself here. Whether a dispassionate forum non
conveniens or choice of law analysis would yield that
result is of no consequence; the inclusion of those points,
as if the outcome is self-evident, betrays a majority that
has lost sight of the fact that the focus of the analysis of
due process and jurisdiction should be on defendant.
Because the majority opinion is pervaded by
expressions of concern for plaintiff, his particular cause
of action, the severity of his injuries and his interests,
and because it has shifted from fairness to the
nonresident defendant as the “primary concern,” see
World-Wide Volkswagen, supra, 444 U.S. at 292, 100 S.
Ct. at 564, 62 L. Ed. 2d at 498, of a jurisdictional
analysis, | respectfully dissent.
IV.
The version of the stream of commerce theory that
the majority uses is a radical departure from the
articulations of that theory as embraced by this Court
in Gendler, and by the opinions of the United States
Supreme Court in Asahi. It shatters the traditional,
constitutionally-required ties between jurisdiction and
connection with the forum, instead concluding that the
70a
Appendix B
mere happenstance of a product finding its way here is
sufficient indicia of foreseeability or availment or
awareness which has long been the hallmark of due
process. It avoids faithful application of the fundamental
fairness concerns that have long guided this Court, and
the United States Supreme Court, by relying on circular
rhetoric about the global economy as if that alone
comports with due process. In the end, the majority has
replaced a carefully balanced test, albeit one with some
slightly varying emphases, but that remained true to
our notions of due process, with an unbounded one that
presumes that participation in the global economy,
without more, bespeaks purposeful availment of the
benefits of this jurisdiction. I respectfully dissent.
JUSTICE RIVERA-SOTO joins in this opinion.
Tla
APPENDIX C DISSENTING OPINION OF
THE SUPREME COURT OF NEW JERSEY
DECIDED FEBRUARY 2, 2010
SUPREME COURT OF NEW JERSEY
A-29 September Term 2008
ROBERT NICASTRO and
ROSEANN NICASTRO, h/w,
Plaintiffs-Respondents,
Vv
MC INTYRE MACHINERY AMERICA, LTD.,
Defendant,
and
J.MC INTYRE MACHINERY LTD.,
Defendant-Appellant.
JUSTICE RIVERA-SOTO, dissenting.
In all respects, I wholeheartedly join in Justice
Hoens’s thoughtful, comprehensive and scholarly
dissent. I write separately, however, solely to urge
explicitly a point implied in Justice Hoens’s dissent.
72a
Appendix ©
The majority’s decision implicates and, in large and
sweeping swaths, upends established notions of
constitutional decision making that form the bedrock of
our federal system. In so doing, it offends those core
federalist concepts that rightly and prudentially limit
the exercise of any one state’s judicial power via the
invocation of long-arm jurisprudence. It, therefore,
cannot be allowed to stand. Because the majority “has
decided an important federal question in a way that
conflicts with” settled federal constitutional principles,
Sup. Ct. R. 100b), creates a new, insubstantial, and
meaningless standard for the unbounded exercise of
long-arm jurisdiction, and disturbs the careful balance
that limits the exercise of judicial power between and
among the several states, this decision is ripe for review
and correction by the Supreme Court of the United
States.
73a
APPENDIX D- OPINION OF THE SUPERIOR
COURT OF NEW JERSEY, APPELLATE DIVISION
DECIDED APRIL 9, 2008
SUPERIOR COURT OF NEW JERSEY,
APPELLATE DIVISION
DOCKET NO. A-1755-06T5
ROBERT NICASTRO and
ROSEANN NICASTRO, h/w,
Plaintiffs-Appellants
v.
McINTYRE MACHINERY AMERICA, LTD.,
J. McINTYRE MACHINERY LTD.,
Defendants-Respondents.
Argued October 3, 2007 — Decided April 9, 2008
LISA , J.A.D.
The issue in this case is whether New Jersey courts
can assert long-arm jurisdiction over the British
manufacturer of an industrial machine, which plaintiff
alleges was defectively designed and caused him to be
injured in a workplace accident in New Jersey. Plaintiff’s
employer purchased the machine new from the
manufacturer’s exclusive United States distributor, an
Ohio corporation, after the employer attended a national
trade convention in Las Vegas, Nevada and learned
about the machine at a booth exhibit jointly operated
74a
Appendix D
by the manufacturer and distributor. The manufacturer
had no physical presence in New Jersey and asserted
that it had no control over the activities of its United
States distributor and had no knowledge of the
domiciles of buyers to whom the distributor sold
defendant’s machines after defendant transferred title
to the machines and shipped them to the distributor in
Ohio. The trial court concluded that plaintiff failed to
establish that defendant had sufficient minimum
contacts with New Jersey to subject it to personal
jurisdiction, and that even under the most liberal form
of the stream-of-commerce theory, defendant would not
be subject to personal jurisdiction in New Jersey.
We conclude that sufficient minimum contacts exist
under the “stream-of-commerece plus” rationale
espoused by Justice O’Connor in Asahi Metal Industry
Co. v. Superior Court of California, 480 U.S. 102, 112,
107 S. Ct. 1026, 1032, 94 L. Ed. 2d 92, 104 (1987). We
further conclude that entertainment of jurisdiction in
New Jersey would not offend traditional notions of fair
play and substantial justice. Accordingly, we reverse the
order dismissing the complaint against the
manufacturer for lack of personal jurisdiction.
J. Melntyre Machinery, Ltd. (defendant), a British
corporation based in Nottingham, England, is in the
business of manufacturing shearing machines used in
scrap metal recycling operations. McIntyre Machinery
America, Ltd. (McIntyre America), an Ohio corporation
with its principal place of business in Stow, Ohio, was
defendant’s exclusive distributor in the United States
75a
Appendix D
prior to going bankrupt in 2001. MeIntyre America was
not a subsidiary of defendant and there was no
commonality of ownership or management of the two
companies. They were independent corporate entities.
There was apparently no written contract between the
two companies, but the record reveals a close ongoing
business relationship in which they cooperated in selling
defendant’s products to United States industrial
customers.
Plaintiff, Robert Nicastro, a New Jersey resident,
was employed by Curcio Scrap Metal in Saddle Brook.
On October 11, 2001, plaintiffs hand became lodged in a
shearing machine he was operating, causing him severe
injuries. The machine was a Model 640 Shear
manufactured in 1995 by defendant in England. The
machine is about eight feet long and six feet high and
weighs more than three tons.
In 1994 or 1995, Frank Curcio, the owner of Curcio
Serap Metal, attended the Institute of Scrap Recycling
Industries (ISRI) convention in Las Vegas, Nevada. He
visited an exhibitor’s booth jointly operated by
defendant and Melntyre America and obtained
information about the Mode! 640, with which he was not
previously familiar. Curcio learned that the machine was
manufactured by defendant in England and distributed
throughout the United States by its sole United States
distributor, Meintyre America. Based upon that contact,
Curcio ordered the machine.
76a
Appendix D
Defendant shipped the machine from England to
Melntyre America in Ohio, which then shipped it to
Curcio Scrap Metal in Saddle Brook. The purchase price
was $ 24,900, as reflected in the August 25, 1995 invoice
issued by McIntyre America to Curcio Scrap Metal. The
invoice described McIntyre America as “America’s Link
to Quality Metal Processing Equipment.”
The machine came with an instruction manual
bearing on its cover defendant’s name, with a sticker
affixed containing McIntyre America’s name. The
manual advised that owners and operators must
familiarize themselves and comply with specified safety
standards issued in the United Kingdom and the United
States, and set forth sources in both countries for
applicable “working practices and regulations.”
Defendant’s president attended the ISRI
conventions in Las Vegas in 1994 and 1995, which Frank
Curcio attended. The president attended ISRI
conventions each year from 1990 through 2002, held in
various cities in the United States. Some years, he was
accompanied by one or two other management level
officers of defendant. Defendant’s management level
personnel also attended exhibitions, conferences and
annual meetings of other United States trade
organizations in the scrap metal industry.
Notwithstanding the apparent absence of a written
contract, defendant does not dispute that McIntyre
America was its sole United States distributor during
the relevant time period. Evidence in the record
77a
Appendix D
illuminates to some extent the nature of the relationship
between the two companies regarding the sale of
defendant’s machines in the United States.
Defendant did not own property, maintain an office
or bank account, or have employees in New Jersey. It
was not licensed to do business in New Jersey and had
no registered agent here. Its former managing director,
Sally Johnson, certified that defendant “does not
directly market, sell or solicit the business of anyone in
New Jersey to buy its products, nor did it ever do so.
McIntyre does not, and never did, employ a sales staff
in or for the United States.” (emphasis added).
In a January 13, 1999 letter to McIntyre America,
Johnson expressed concern over apparent disputes
developing between the two companies and stated that
she and “the Boss” would come to the United States to
meet with McIntyre America’s representatives within
the next few days “to see how we can get things back on
an even keel and move the businesses forwards [sic].”
Johnson stated that defendant would arrange for
collection of some of its unsold machines and equipment
(other than Mode! 640s), “which should help to get your
storage costs down.” She then stated:
I note also that you have 3 640s unsold which
I understood to have been sent out against
firmorders otherwise we wouldn’t have built
them! Perhaps we should also look at bringing
a couple of those back also. It is important for
us to try to turn some of your stock into cash
78a
Appendix D
as quickly as possible, since it is presently
costing us £ 20,000 per year to fund it. If we
can get the stock levels down, then we could
look again at machine costings and perhaps
in the short term try to send out fewer
machines but give you more margin on them.
In a November 23, 1999 communication from
defendant’s president to MeIntyre America, it is evident
that the difficulties between the two companies
continued. He stated:
As you know, we are unhappy with the
present situation. All we wish to do is sell our
products in the States and get paid! If this
isn’t possible then the only other option open
to us is for us to split up in an amicable fashion
as quickly as we can. I note that you still have
new machines in stock, which you are
presently unable to sell. Please note that
those machines are our property until they
have been paid for in full.
During the interim period, on April 23, 1999,
MeIntyre America communicated with Johnson,
referencing “what we discussed at ISRI” regarding
“commissions.” Apparently, McIntyre America took a
“commission” on a sale before defendant was “paid by
the customer for it.” MeIntyre America assured
defendant that “[wJe do not plan to collect our
commissions in this fashion on an ongoing basis,” but
79a
Appendix D
explained that it was in a tight cash flow position at that
time. McIntyre America assured defendant:
We have no problem waiting for you to receive
payment from the customer first before
requesting our commission via a comp[anly
invoice in the future. It was not our intention
to upset you or your books over in England
with our actions. That’s why I paid you for the
407 shear, that we just got payment for by
check, even though it has not even had time
to clear our bank! We have all worked very
hard to build up confidence in each other and
we have no desire to jeopardize those strides.
I have faxed over an invoice for the
commission today, and I will send you out a
hard copy in the mail.
These communications support the reasonable
inference that defendant retained a significant measure
of control over the level of McIntyre America’s
inventory of defendant’s machines, which remained
defendant’s property until McIntyre America sold them
to United States customers. It is also reasonable to infer
that defendant dictated the “margin” or “commission”
MelIntyre America would receive when a sale was
accomplished. It is thus evident that the two companies
were acting closely in concert with each other to sell
defendant’s machines to customers throughout the
United States, through a distribution system in which
MelIntyre America was a conduit for the sales.
80a
Appendix D
Although our minimum contacts analysis focuses on
the time-frame leading up to the sale of the product, we
consider subsequent conduct by defendant for the
limited purpose of supporting reasonable inferences
that relate back to its conduct at the critical time. In
addition to that which we have already described
regarding direct dealings between defendant and
McIntyre America, other uncontroverted conduct and
statements by defendant demonstrate its continuing
course of conduct with successors to McIntyre America,
as defendant’s exclusive distributors, and defendant’s
continuing activities directed at selling its products to
United States customers through these exclusive
distributors.
An article in a trade publication, Recycling Today,
in May 2002, announced that defendant appointed
Recycling Equipment Corp. (REC), of Pennsylvania, as
its “exclusive North American distributor.” The article
described the first United States sale of a particular
shear machine model to a Tennessee purchaser, and
elaborated: “The machine was exhibited at the recent
ISRI convention in Las Vegas, and was purchased from
the J. MeIntyre Machinery Ltd. booth.” Information in
the article was attributed to Sally Johnson. The article
stated: “Although McIntyre shears are well established
in America, this is the first shipment to the U.S. in more
than 18 months, following the demise of J. McIntyre
Machinery Ltd.’s former distributor, McIntyre
America.” Then, Johnson was quoted as saying, “We had
a fantastic ISRI show with our new distributor REC.
... We received strong inquiries, and it is actually some
8la
Appendix D
years since we sold a shear off the stand at an American
exhibition.”
REC was then replaced by Strip Technology, Inc.
(Strip-Tec), of Texas, as defendant’s exclusive United
States distributor. In October 2003, this article appeared
in Recycling Today:
Strip Technology Inc. (Strip-Tec), Fort
Worth, Texas, has recently ordered its
second container load of alligator shears
manufactured by J. McIntyre Machinery
Ltd., Dunkirk, U.K.
“Since having been appointed sole agents
for the McIntyre shear range only six months
ago, Strip-Tec has placed an order for its
second container of equipment,” a news
release from the British equipment maker
states.
Strip-Tec president Bobby Alexander says
his company is carrying J. McIntyre shears
in stock at the company’s facility in Fort Worth
while also holding a spare parts inventory to
offer “excellent back-up support for the
McIntyre shear range.”
Sally Johnson, J. MeIntyre’s managing
director, has also advised North American
buyers to deal only with Strip Tec for the
purchase of new J. McIntyre shears.
82a
Appendix D
“J. McIntyre Machinery is keen to stress
that Strip Tec is now the only company
authorized to sell new McIntyre equipment
following the demise of our former agent
McIntyre America in 2001,” says Johnson,
referring to a former Ohio-based distributor.
Johnson has asked recyclers who learn of
any North American companies offering new
McIntyre shears other than Strip ‘Tec “or
its appointed representatives” to contact
Strip Tec in the U.S. at (800) 426-4126 or J.
McIntyre Machinery Ltd in the U.K. at &8F44
115-900-3650. “These machines may not have
been authorized for sale by the manufacturer,
and as such may be being sold illegally and
without the latest operating instructions,
warning labels and operator guarding,”
Johnson says of equipment offered in North
America by someone other than Strip Tec.
Johnson also says any MelIntyre
customers who purchased their machines from
the prior distributor “are encouraged to
register their equipment with Strip-Tec in
order to receive information on latest
equipment updates and allow McIntyre and
Strip-Tec to offer full support and competitive
pricing on genuine McIntyre spare parts.”
Curcio does not contend that it utilized the trade
publication articles as sources of information for the
83a
Appendix D
machine it purchased. And, of course, we realize that
the articles we have quoted did not involve McIntyre
America, but its suecessors. Nevertheless, the evidence
supports defendant’s continuing outreach for United
States sales of its machines and parts through its
exclusive United States distributor and no one else. The
articles specifically mention McIntyre America. It is
reasonable to infer that the arrangements were similar
during McIntyre America’s tenure as defendant’s
exclusive United States distributor.
The trial court found that defendant “does not have
a single contact with New Jersey short of the machine
in question ending up in this state.” The court deemed
it critical that the manufacturer and distributor were
“entirely separate business entitlies].” Apparently
accepting the statement in Johnson’s certification that
defendant “had no knowledge of the business dealings
between [McIntyre America] and its customers,
including Curcio, concerning the at-issue shear,” the
court found “no evidence here establishing that the
defendant had any expectation that its product would
be purchased and utilized in New Jersey.” The court
therefore concluded that no basis for personal
jurisdiction was established, either under the traditional
minimum contacts test or the stream-of-commerce
theory.’
1. The order dismissing the complaint now under review
was entered on November 3, 2006. A prior order, entered on
March 5, 2004, dismissed the complaint for lack of persona]
(Cont'd)
84a
Appendix D
New Jersey’s equivalent of along-arm statute, Rule
4:4-4(b)(1), permits service of process on a non-resident
defendant “consistent with due process of law.”
Accordingly, New Jersey courts have allowed out-of-
state service to the outermost limits permitted by the
United States Constitution. Avdel Corp. v. Mecure, 58
N.J. 264, 268, 277 A.2d 207 (1971).
Due process requires that a defendant who is not
physically present have “certain minimum contacts with
{the forum] such that the maintenance of the suit does
not offend ‘traditional notions of fair play and substantial
justice.’” /nt’l Shoe Co. v. Washington, 236 U.S. 310, 316,
66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463, 61S. Ct. 339, 343,
85 L. Ed. 278, 288 (1940)). “Minimum contacts”
is understood to require that a defendant has
“purposefully availled) itself of the privilege of
conducting activities within the forum State, thus
invoking the benefits and protections of its laws.”
Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228,
1240, 2 L. Ed. 2d 1283, 1298 (1958). The purpose of the
minimum contacts doctrine is to protect a defendant
against litigating in an inconvenient forum and to ensure
that states do not exceed their jurisdictional limits.
(Cont'd)
jurisdiction. Plaintiffs appealed and we reversed and remanded
to allow jurisdictional] discovery. Nicastro v. Mcintyre Mach.
Am., Ltd., No. A-3891-03T1 (App.Div. May 26, 2005). After that
discovery was conducted, defendant again moved for dismissal,
which was granted by the November 3, 2006 order.
8Sa
Appendix D
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
291-92, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490, 498 (1980).
The doctrine has been relaxed substantially over the
years because of the fundamental transformation in the
American economy, commonly involving interstate
business transactions without physical presence.
Id. at 292-93, 100 S. Ct. at 565, 62 L. Ed. 2d at 498.
The due process analysis requires consideration of
whether the defendant should reasonably anticipate
being haled into court in the forum state. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174,
2183, 85 L. Ed. 2d 528, 542 (1985). It must be shown
that the defendant has purposefully availed itself of the
privilege of engaging in activities within the forum state,
thus gaining the benefits and protections of its laws.
Id. at 475, 105 S. Ct. at 2188, 85 L. Ed. 2d at 542. The
purposeful availment requirement protects defendants
against being haled into court in a foreign jurisdiction
solely on the basis of random, fortuitous, or attenuated
contacts, or as a result of the unilateral activity of some
other party. /bid.
If a plaintiff succeeds in establishing sufficient
minimum contacts, the court must also determine
whether entertaining jurisdiction would be consistent
with considerations of fair play and substantial justice.
Id. at 476, 105 S. Ct. at 2184, 85 L. Ed. 2d at 543; Lebel
v. Hverglades Marina, Inc., 115 N.J. 317, 322, 558 A.2d
1252 (1989).
K6a
Appendix D
More than fifty years apo, the United States
Supreme Court recognized that the minimum contacts
basis as an alternative to the requirement of physical
presence for the assertion of 7m personam jurisdiction
was justified by the “increasing nationalization of
commerce,” in which many business transactions were
conducted across state lines, and the corresponding
improvements in modern transportation and
communication that made it less burdensome for a party
sued to defend himself in a state where he engages in
economic activity. McGee v. In’l Life Ins. Co., 355 US.
220, 222-243, 78S. Ct. 199, 201, 2 L. led. 2d 223, 226 (1957).
In World-Wide Volkswagen, supra the Court observed
that these “historical developments ... have only
accelerated in the yeneration since (McGee/ was
decided.” 444 U.S. at 293, 100 S. Ct. at 565, 62 L. Ed. 2d
at 498-99.
Another generation has now passed since World
Wide Volkswagen was decided in 1980, and “the
acceleration in the internationalization of commerce is
apparent.” Barone v. Rich Bros. Interstate Display
Fireworks Co., 25 03d 610, 615 (Sth Cir), cert. denied,
513 U.S. 94%, 115 S. Ct. 359, 180 L. led. 2d 818 (1994).
With increased vlobalization of commerce, “it is only
reasonable for companies that distribute allegedly
defective products through reyional distributors in this
country to anticipate being haled into court by plaintiffs
in their home states.” /bid. At the same time, however,
a countervailing policy consideration cautions that
particularly careful inquiry must be made into the
reasonableness of the assertion of Jurisdiction over an
87a
Appendix D
alien defendant, and courts should be unwilling to find
the serious burdens on an alien defendant of having to
litigate in a foreign country outweighed by only minimal
interest on the part of a plaintiff or the forum state.
Asahi, supra, 480 U.S. at 115, 107 S. Ct. at 1034, 94
L. Ed. 2d at 106-07.
In the minimum-contacts analysis, courts distinguish
between specific and general jurisdiction. Wilson v.
Paradise Vill. Beach Resort & Spa, 395 N.J. Super. 520,
527, 929 A.2d 1122 (App.Div.2007). “Although the
minimum-contacts test centers on the defendant’s
relationship with the forum state, the sufficiency of the
contacts for jurisdictional purposes depends on ‘the
relationship among the defendant, the forum, and the
litigation * * *.’” Charles Gendler & Co., Inc. v. Telecom
Equip. Corp., 102 N.J. 460, 471, 508 A.2d 1127 (1986)
(quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct.
2569, 2580, 53 L. Ed. 2d 683, 698 (1977)). When the cause
of action is unrelated to the defendant’s contacts with
the forum state, the court’s jurisdiction is general, and
continuous and substantial contacts are required.
Id. at 471-72, 508 A.2d 1127. However, when the cause
of action arises directly out of the defendant’s contact
with the forum state, the court’s jurisdiction is specific,
and an isolated act by the defendant may be sufficient
to support jurisdiction over that defendant. /d. at 471,
508 A.2d 1127. Jurisdiction is more likely to be found
when the cause of action arises directly out of the
defendant’s contacts with the forum state. /bid. Because
plaintiffs cause of action arises directly out of the sale
to a New Jersey purchaser for use in New Jersey of the
88a
Appendix D
shear machine that allegedly caused plaintiff’s injury,
this is a case of specific jurisdiction.
In World-Wide Volkswagen, supra the United
States Supreme Court adopted the stream-of-commerce
theory as a basis for establishing minimum contacts, 441
U.S. at 297-98, 100 S. Ct. at 567, 62 L. Ed. 2d at 501-02,
and the Court reiterated its commitment to the theory
in Burger King, supra, 471 U.S. at 473, 105 S. Ct. at
2182, 85 L. Ed. 2d at 541. In 1986, in Charles Gendler,
supra the New Jersey Supreme Court adopted the
stream-of-commerce theory, and explained it this way:
In World-Wide Volkswagen, the Supreme
Court noted that the stream-of-commerce
theory would apply to subject foreign
manufacturers and major distributors, but not
local retailers or distributors, to jurisdiction
in the states where their products were
eventually shipped and sold. The foreseeable
market served by local retailers and
distributors, which are at the end of the
distribution chain, is constrained. In contrast,
manufacturers and distributors, which are at
the start of a distribution chain, serve a larger
market and purposely conduct their activities
to make their product available for purchase
in as many forums as possible. For such a
manufacturer, the sale of its product in a
distant state is not simply an isolated event,
but the result of the corporation’s efforts to
cultivate the largest possible market for its
89a
Appendix D
product. Because the manufacturer and
primary distributor intend to serve and derive
benefits from a larger market, it is fair to
subject them to jurisdiction, while excusing a
secondary distributor or retailer.
As observed in several eases, foreign
manufacturers derive benefits from the
indirect sale of their products throughout the
United States. By increasing the distribution
of its products, the manufacturer not only
benefits economically from indirect sales to
forum residents, but also benefits from the
protection provided by the laws of the forum
state. Thus, a manufacturer that distributes
its products into the stream of commerce for
widespread distribution derives both legal and
economic benefits from the states in which its
products are sold. In sum, the system through
which the manufacturer distributes its
products evidences the manufacturer’s
purposeful penetration of the market.
A foreign manufacturer that purposefully
avails itself of those benefits should be subject
to personal jurisdiction, even though its
products are distributed by independent
companies or by an independent, but wholly-
owned, subsidiary. In today’s complex
business world, foreign manufacturers rarely
deliver products directly to consumers in the
United States. Instead, these manufacturers
90a
Appendix D
employ middlemen, many of whom are often
independent, to act as their distribution arms.
To allow a foreign manufacturer to shield itself
from liability for damages caused by its
products distributed by those middlemen
would be to permit a legal technicality to
subvert justice and economic reality in the
worst sense. Foreign manufacturers should
not be allowed to insulate themselves by using
intermediaries in a chain of distribution or by
professing ignorance of the ultimate
destination of their products. Thus, the
stream-of-commerce theory supports personal
jurisdiction over foreign manufacturers that
derive benefits from the distribution and sale
of their products in the United States.
As applied to a manufacturer, the stream-
of-commerce theory supports the exercise of
jurisdiction if the manufacturer knew or
reasonably should have known of the
distribution system through which its
products were being sold in the forum state.
The manufacturer’s awareness of the
distribution system satisfies the requirement
that the manufacturer have a reasonable
expectation that its products will be
purchased in the forum state. It makes no
difference whether the manufacturer had
actual or constructive knowledge of the
distribution system. A manufacturer that
should have known, like one that actually
9la
Appendix D
knows, that its products will be sold in the
forum state purposefully avails itself of the
benefits of the forum’s laws.
By definition, a stream-of-commerce case
involves a sale not by the manufacturer, but
by another entity in the chain of distribution.
To be subject to the stream-of-commerce
theory in some jurisdictions, the manufacturer
must purposefully participate in or control the
distribution of its products. We believe,
however, that a manufacturer need not so
control the distribution system to place its
products into the stream of commerce and,
therefore, control of that system is not
necessary to subject the manufacturer to the
jurisdiction of the forum state. The focus is
on the manufacturer’s actual or constructive
awareness of the system, not on control of the
distribution of its products. A manufacturer’s
establishment or control of a distribution
system, of course, satisfies the requirement
that the manufacturer was aware of that
distribution system.
A manufacturer’s awareness of the
distribution system, through which it receives
economic and legal benefits, justifies
subjecting the manufacturer to the
jurisdiction of every forum within its
distributors’ market area. Accordingly, a
manufacturer that knows its products are
92a
Appendix D
distributed through a nationwide distribution
system should reasonably expect that those
products would be sold throughout the fifty
states and that it will be subject to the
jurisdiction of every state.
1102 N.J. at 477-481, 508 A.2d 1127 (citations
and quotation marks omitted). ]
Less than a year after our Supreme Court decided
Charles Gendler, the United States Supreme Court
decided Asahi, in which it sought to refine the
boundaries of the stream-of-commerce theory. The
Court split four-four-one. Writing for four members of
the Court, Justice O’Connor espoused the view that the
stream-of-commerce theory required a showing of an
action of the defendant purposefully directed toward the
forum state, and that the placement of a product into
the stream of commerce, without more, would not fulfill
that requirement. Asahi, supra, 480 U.S. at 112, 1078S.
Ct. at 1032, 94 L. Ed. 2d at 104. In her view, “[a]dditional
conduct of the defendant may indicate an intent or
purpose to serve the market in the forum State, for
example, designing the product for the market in the
forum State, advertising in the forum State,
establishing channels for providing regular advice to
customers in the forum State, or marketing the product
through a distributor who has agreed to serve as the
sales agent in the forum State.” /bid. However, mere
awareness that the stream of commerce might sweep
the product into the forum state would not convert the
mere act of placing the product into the stream of
93a
Appendix D
commerce into an act purposefully directed toward the
forum state. /bid. Justice O’Connor pointed out that
although the foreign manufacturer in Asahz might have
been aware that some of its component products would
be incorporated into other products ultimately sold in
-California, the manufacturer “did not create, control,
or employ the distribution system that brought its valves
to California,” zd. at 112-13, 107S. Ct. at 1032, 94 L. Ed.
2d at 104-05, suggesting that the result might have been
different if one of those circumstances were present.
Justice Brennan, writing for four members of the
Court, rejected Justice O’Connor’s “additional conduct”
requirement. /d. at 116-21, 107 S. Ct. at 1034-37, 94
L. Ed. 2d at 107-10. In his view, the purposeful availment
requirement is satisfied by placement of a product in
the stream of commerce with an awareness that the final
product is being marketed in the forum state, because,
by definition, the stream-of-commerce “refers not to
unpredictable currents or eddies, but to the regular and
anticipated flow of products from manufacturer to
distributor to retail sale.” /d. at 117, 107 S. Ct. at 1034,
94 L. Ed. 2d at 107.
The New Jersey Supreme Court next had the
occasion to consider the stream-of-commerce theory in
Lebel, supra in which it announced that until the United
States Supreme Court, “as the umpire of federalism,”
more clearly “draws the lines” defining the theory, the
New Jersey Supreme Court would “hew closely to the
limited fundamentals about which there is little or no
dispute or debate.” 115 N.J. at 319-20, 558 A.2d 1252.
94a
Appendix D
The Court proceeded to decide the case, finding
jurisdiction based on traditional minimum contacts
principles. /d. at 321-29, 558 A.2d 1252.
This court has interpreted our Supreme Court’s
announcement in Lebel as not a rejection of the stream-
of-commerce theory, but an admonition to avoid use of
the theory as the basis for a jurisdictional decision if
jurisdiction can be sustained on traditional minimum-
contacts analysis. Cruz v. Robinson Engineering Corp.,
253 N.J. Super. 66, 72, 600 A.2d 1238 (App.Div.), certif
denied, 130 N.J. 9, 611 A.2d 648 (1992). Judge Pressler
there analyzed the disposition in Asahi, and pointed out
that all nine Justices agreed that because the injured
plaintiff’s claim against all defendants was settled, and
all that remained to the litigation was an indemnification
claim between two alien corporations, California’s
exercise of jurisdiction for the sole purpose of
adjudicating that claim would offend traditional notions
of fair play and substantial justice. /d. at 70-71, 600 A.2d
1238. The entire Court agreed that California’s minimal
interest in the remaining aspect of the dispute was
outweighed by the undue litigative burden that would
be placed on an alien corporation if compelled to resolve
the dispute in a California court. /d. at 71, 600 A.2d 1238.
As a result, the disagreement between the Justices
regarding the precise parameters of the stream-of-
commerce theory was somewhat minimized. /bid.
The Eighth Circuit, based upon a similar analysis,
coneluded that, “Asahz [ |] stands for no more than that
it is unreasonable to adjudicate third-party litigation
95a
Appendix D
between two foreign companies in this country absent
consent by the nonresident defendant.” Barone, supra,
25 F.3d at 614. The court noted, “‘Because the | United
States] Supreme Court established the stream of
commerce theory, and a majority of the court has not
yet rejected it, we consider that theory to be
determinative.” /bid. (quoting Dehmlow v. Austin
Fireworks, 963 F.2d 941, 946 (7th Cir.1992)).
We agree that the stream-of-commerce theory
remains viable, and note that it “has achieved fairly wide
acceptance in the federal courts.” Beverly Hills Fan Co.
v. Royal Sovereign Corp., 21 F.3d 1558, 1564
(Fed.Cir.1994). We are unable in this case to conclude
that application of traditional minimum contacts
principles will result in a finding of jurisdiction.
Accordingly, because we are convinced that the stream-
of-commerce theory remains viable, we apply it.
While some courts have utilized Justice Brennan’s
pure stream-of-commerce rationale, we find it
unnecessary to do so in this case. Instead, we follow those
courts that have taken the more cautious approach by
applying Justice O’Connor’s more restrictive rationale,
which has come to be known as “stream-of-commerce
plus.” See 16 James W. Moore et al., Moore’s Federal
Practice Civil § 108.42 nn. 35 & 36 (3d ed.
2008)(discussing post-Asahi federal cases adopting
Justice O’Connor’s “stream-of-commerce plus” rationale
as compared to federal cases adopting Justice
Brennan’s traditional stream-of-commerce theory). The
more restrictive approach, of course, encompasses the
less restrictive one.
96a
Appendix D
Therefore, in order to determine whether New
Jersey courts have personal] jurisdiction over defendant,
we must evaluate whether defendant, in addition to
placing the shear machine that injured plaintiff into the
stream of commerce by transferring it to its distributor,
McIntyre America, with an awareness that its machine
might end up in New Jersey, also engaged in additional
conduct indicating an intent or purpose to serve the
New Jersey market. Asahi, supra, 480 U.S. at 112, 107
S. Ct. at 1032, 94 L. Ed. 2d at 104.
Defendant designated McIntyre America as its
exclusive distributor for the entire United States.
Therefore, anyone in any state that wished to purchase
one of defendant’s machines was required to purchase
it from McIntyre America, defendant’s exclusive sales
agent in this country. This was not a temporary or
fleeting arrangement. From at least as early as 1995,
when Curcio purchased the machine, until its
bankruptcy in 2001, McIntyre America enjoyed this
relationship with defendant on an ongoing basis. The
relationship was established by defendant for the
purpose of selling its machines in all fifty states. The
machines were designed to conform with United States
standards as well as those in the United Kingdom.
McIntyre America traded on defendant’s name and held
itself out as “America’s Link to Quality Metal Processing
Equipment.”
Defendant attempts to avoid a finding of sufficient
minimum contacts because (1) McIntyre America was a
separate and independent business entity, (2) McIntyre
97a
Appendix D
America, not defendant, sold the machines to customers
(including Curcio), and (3) defendant had no knowledge
of the identity or whereabouts of the customers to whom
McIntyre America sold. We reject defendant’s
arguments.
Defendant was well aware that McIntyre America
was not the end user of the many machines it sold to
McIntyre America over the years. By definition,
McIntyre America was defendant’s distributor and its
function was to resell the machines to end users. These
are large, potentially dangerous, industrial machines,
designed for a limited market of users engaged in the
metal recycling industry. The machines are designed for
use in a Stationary location in an industrial setting. Thus,
it would reasonably be anticipated by defendant and
McIntyre America that upon sale to the end user, the
machine would remain at its location for use by workers
there.
When defendant sold and shipped machines to
McIntyre America in Ohio, defendant did not do so with
the purpose of availing itself of the Ohio market. When
defendant’s senior management personnel attended
trade conventions in Las Vegas and other United States
cities to display its machines and seek buyers for them
(through McIntyre America), its purpose was not to sell
machines for use in Las Vegas or those other cities.
Defendant was engaged in purposeful conduct to avail
itself of the entire United States market, namely to
effect sales, through its exclusive distributor, to end
users in all fifty states, including New Jersey.
98a
Appendix D
The sale of the machine to Curcio was not the result
of conduct by a party unrelated to defendant and it was
not an isolated transaction. It was the result of the very
distribution scheme purposefully established by
defendant for the sale of its machines to potential
customers located anywhere within the exclusive sales
territory of McIntyre America. That territory included
New Jersey.
Applying Justice O’Connor’s stream-of-commerce
formulation in similar situations, courts have held that
sales by distributors to customers within their
distribution territory, pursuant to distribution
arrangements established by the manufacturer, exposed
the manufacturer to specific in personam jurisdiction
for claims arising out of those sales. This is the very
type of “additional conduct” Justice O’Connor suggested
as sufficient to satisfy the purposeful availment
requirement, namely “marketing the product through
a distributor who has agreed to serve as the sales ayent
in the forum State.” Asahi, supra, 480 U.S. at 112, 107
S. Ct. 1032, 94 L. Ed. 2d at 104. We discuss a sampling
of such cases.
The Supreme Court of Arizona found jurisdiction
over an Italian firearm’s manufacturer which sold guns,
manufactured to meet United States specifications, to
an intermediary distributor I°.0.B. Milan, which then
sold them to a distributor serving the United States
market, which finally sold the gun that was the subject
of the litigation to the end user consumer in Tucson,
Arizona. A. Uberti & C. v. Leonardo, 181 Ariz. 565, 892
99a
Appendix D
P2d 1354, 1355-65 (1995). An accidental discharge of the
gun killed a family member of the purchaser and
defective design was alleged. /d. at 1356-57. The court
rejected defendant’s argument that its activities, at best,
focused on the United States in general, not Arizona.
Id. at 1362-64. The court stated:
Were this true, then no individual state could
assert jurisdiction over Defendant simply
because Defendant did not target a particular
state or group of states but instead intended
to sell its product to all of America. The
argument turns common sense on its head.
Holding that a defendant intending to sell its
products to any and all citizens in the United
States could not be held accountable in any
jurisdiction where its products caused injury
defies any sensible concept of due process. We
have no doubt that Defendant did not care
whether its guns were sold in Arizona,
Massachusetts, or California, but it is quite
clear that through its distributor Defendant
contemplated serving the market throughout
America. Given evidence of intent to serve this
market, according to Justice O’Connor’s
opinion in Asahi principles of due process
permit suit against Defendant in states where
its products cause damage.
Hence if the sale of a product of a
manufacturer or distributor ...is not
simply an isolated occurrence, but
1000
Appendix 1)
arises from the efforts of the
manufacturer or distributor to
serve, directly or indirectly, the
market for its product in other
States, it is not unreasonable to
subject it to suit in one of those
States if its allegedly defective
merchandise has there been the
source of injury lo its owners or to
others.
[/d. at 1362 (quoting Asuki, supra, 480 U.S.
at 110,107S. Ct. at 1031, 94 1... led. 2d at 108). |
The court did “not believe that Plaintiffs must show
Defendant's specific intent to sell in Arizona. An intent
to sell across America is enough.” /bid. Further,
rejecting an argument similar to that made by
defendant in the case before us, the court said, “We do
not believe that a foreign manufacturer that knowingly
and intentionally distributes its products in America
through an American company can avoid jurisdiction of
American courts by the simple expedient of closing: its
eyes and making no effort to learn about or restrict
distributor’s activities,” noting that a manufacturer has
the option of limiting its risk by precluding its distributor
from selling its product in particular states. /d. at 1462-
3.
Addressing the second prong of the due process
analysis, fair play and substantial justice, the court
concluded that Arizona’s interest in protecting the
1Ola
Appendix D
health and safety of its residents was a substantial state
interest. /d. at 1364. The aecident happened in Arizona,
and most witnesses and material evidence was located
there. /bid. Those important local interests far
outweighed any inconvenience to the defendant in
having to litigate the case in Arizona. /bid. Accordingly,
the exercise of jurisdiction was fair and reasonable.
Id. at 1364-65.
Finally, the court noted a public policy consideration,
namely that due process should not provide a safe
harbor allowing alien corporations to ship potentially
dangerous products to the United States, driving
American manufacturers out of business while allowing
the alien companies to produce, with immunity,
dangerous products for distribution in this country.
Id. at 1363.
In Fortis Corporate Insurance v. Viken Ship
Management, 450 F.3d 214, 220-22 (6th Cir.2006), the
court found a sufficient “plus factor” to impose
jurisdiction in Ohio over a Norwegian owner of ocean-
going cargo vessels because it outfitted its vessels to
ship products to the Great Lakes, and its vessels did
make frequent calls to Great Lakes ports over a period
of years including Toledo, Ohio. The ship owner
chartered a fleet of vessels to a Canadian company for
several years to transport cargo on an as-needed basis.
Id. at 215. The Canadian company then subchartered
the ship in question to a United States company to
transport goods from Poland to Toledo and en route sea
water entered the cargo hold and damaged the goods.
1 bid.
102a
Appendix D
The court also found the second prong satisfied.
ld. at 223. Recognizing the caution to exercise great care
when dealing with personal jurisdiction in the
international field, the court noted that Ohio’s strong
interest in insuring that shipments to its ports are
reliable and the plaintiff’s interest in obtaining relief in
an Ohio court outweighed any inconvenience to the
defendant. /bid.
In a patent infringement case, the Federal Circuit
found jurisdiction in Virginia over the Chinese
manufacturer of a ceiling fan, transferred from the
manufacturer to its New Jersey distributor, which then
shipped it to Virginia for sale to customers through an
intermediary, Builder’s Square. Beverly Hills Fan Co.,
supra, 21 F.3d at 1559-72. The court concluded that from
the ongoing relationships between the various parties
in the distribution chain, “it can be presumed that the
distribution channel] formed by [the manufacturer and
its New Jersey distributor] and Builder’s Square was
intentionally established, and that defendants knew, or
reasonably could have foreseen, that a termination point
of the channel was Virginia.” /d. at 1564. The
manufacturer’s sole contact with Virginia resulted from
indirect shipments through the stream of commerce.
/bid. The court found that specific jurisdiction was
established under either version of the stream-of-
commerce theory expressed in Asahi (including, of
course, Justice O’Connor’s more restrictive formulation)
because the Chinese manufacturer and New Jersey
distributor acted “in consort, placed the accused fan in
the stream of commerce, they knew the likely destination
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of the products, and their conduct and connections with
the forum state were such that they should reasonably
have anticipated being brought into court there.”
Td. at 1566.
In Tobin v. Astra Pharmaceutical Products, Inc.,
993 F.2d 528, 542-45 (6th Cir), cert. denied, 510 U.S. 914,
1148S. Ct. 304, 126 L. Ed. 2d 252 (1993), the court held a
Netherlands drug manufacturer subject to in personam
jurisdiction in Kentucky, in circumstances in which its
products were submitted to the Food and Drug
Administration (F DA) for approval and then distributed
through its exclusive United States distributor to an
end user in Kentucky. The court held that the
manufacturer’s direct efforts in obtaining FDA approval
allowed the manufacturer “to avail itself of the vast,
lucrative markets of each state in the United States.”
Id. at 543. The manufacturer’s licensing agreement with
the distributor authorized the distributor to distribute
the drug that was the subject of the litigation and
allegedly caused harm to plaintiff, throughout its
territory, defined in the agreement as “the United States
of America, its territories and possessions, and Puerto
Rico.” bid. Applying Justice O’Connor’s test, the court
noted that the manufacturer “made a deliberate decision
to market [the drug in question] in all 50 states,
including Kentucky, the forum state.” /bzd. The court
went on to explain that the manufacturer
did not, for example, seek a “New England
regional distributor” or a distributor for
specifie states. It sought and obtained a
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distributor to market its product in each and
every state. Even the Asahi plurality
recognized that “marketing the product
through a distributor who has agreed to serve
as the sales agent in the forum State” can
“indicate an intent or purpose to serve the
market in the forum State.”
[/d. at 544 (quoting Asahi, supra, 480 U.S. at
112, 1078. Ct. at 1032, 94 L. Ed. 2d at 104).]
The court also considered as an additional factor that
the manufacturer “arguably also kept control over an
essential element of the product the package insert.”
1bid.
The court concluded that the manufacturer could
not expect to rely solely on the use of an independent
distributor to insulate itself from suit. /d. at 544. It
submitted its drug application to the FDA for approval,
conducted clinical studies in the United States, and
sought out a United States distributor to “exploit the
United States market.” /bid. Thus, the manufacturer
did not simply place its product into the stream of
commerce but “purposefully availed itself of the privilege
of conducting business in all states, including the state
of Kentucky.” /bid. The court found misguided the
manufacturer’s argument that it did nothing in
particular to purposely avail itself of the forum market,
as distinguished from any other state: “If we were to
accept defendant’s argument on this point, a foreign
manufacturer could insulate itself from liability in each
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of the fifty states simply by using an independent
national distributor to market its products, a result we
specifically rejected in [another case]. [The
manufacturer] cannot deny that by licensing [its
distributor] to distribute [the drug] in all fifty states it
employed the distribution system that brought [the
drug] to Kentucky.” /did.
The court also found the second prong of the due
process test satisfied. 7d. at 544-45. Applying the more
stringent standard pertaining to international
defendants, the court found that the interests of the
forum state and the plaintiff were very high, in that a
Kentucky resident was injured, and those legitimate and
important interests outweighed any inconvenience to
the alien manufacturer in having to litigate the case in
Kentucky. /d. at 545.
In the case before us, defendant purposefully
established a distribution scheme by which McIntyre
America would serve as its conduit for sales of
defendant’s machines in all fifty states, including New
Jersey. Crediting defendant’s assertion that it did not
know the identity or location of customers to whom
MeIntyre America sold the machines, we are
nevertheless satisfied that defendant’s conduct in
establishing and operating under this exclusive
distributorship arrangement constituted the necessary
other conduct by which it purposefully availed itself of
the benefits and protections of all fifty states, including
New Jersey. Additionally, defendant designed the
machine that is the subject of this litigation to conform
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to United States specifications and requirements, and
represented such compliance in the instruction manual
that came with the machine. Finally, senior personnel
of defendant attended national trade shows in the
United States, exhibiting its products jointly with its
exclusive United States distributor in an effort to make
sales to customers in any or all of the states of the union.
Indeed, Frank Curcio attended such a show and visited
the joint exhibit of defendant and McIntyre America,
which provided him with the information and inducement
to purchase the machine that is the subject of this case.
Considering all of the circumstances, we conclude
that, under the “stream-of-commerce plus” theory,
defendant engaged in purposeful conduct to avail itself
of the New Jersey market, thus constituting sufficient
minimum contacts with New Jersey to justify the
assertion of in personam jurisdict
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