SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Robert Nicastro, et al. v. McIntyre Machinery America, Ltd. (A-29-08)
Argued January 21, 2009 -- Decided February 2, 2010
ALBIN, J., writing for a majority of the Court.
The issue in this appeal is whether New Jersey has personal jurisdiction over defendant, a foreign corporation, either under the minimum-contacts analysis or the stream-of-commerce theory.
On October 11, 2001, plaintiff Robert 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.
J. McIntyre and its American distributor were distinct corporate entities, independently operated and controlled, without any common ownership.
In September 2003, plaintiff named J. McIntyre and McIntyre America as defendants in a product-liability action in the Superior Court, Law Division. The complaint alleged that the shear machine was defective in that it did not have a safety guard that would have prevented the accident. The trial court granted J. McIntyre's motion to dismiss the action, finding that the English manufacturer did not have sufficient minimum contacts with New Jersey to justify the State's exercise of personal jurisdiction. Alternatively, the court held that New Jersey lacked personal jurisdiction even under "the most liberal[ly] accepted form of the stream of commerce theory."
In an unreported opinion, the Appellate Division reversed, allowing the parties to engage in discovery to 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 by this Court in Charles Gendler & Co. v. Telecom Equipment Corp., 102 N.J. 460 (1986) or in Justice O'Connor's plurality opinion in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987). During that discovery period, it was adduced that Frank Curcio, the owner of Curcio Scrap Metal of Saddle Brook, New Jersey, in either 1994 or 1995, attended a trade convention in Las Vegas, Nevada, sponsored by the Institute of Scrap Recycling Industries. That convention, as well as others throughout the United States, was attended by Michael Pownall, the president of J. McIntyre. While at the Las Vegas convention, Curcio visited the booth of McIntyre America and was introduced to the McIntyre 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 McIntyre 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."
At the conclusion of jurisdictional discovery, the trial court again granted J. McIntyre's motion to dismiss for lack of personal jurisdiction. The court emphasized that J. McIntyre had "no contacts with the state of New Jersey" and no "expectation that its product would be purchased and utilized in 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. McIntyre's] shear machines to New Jersey" and the company "purposely availed itself of the protections of [this State's] laws."
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." 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." 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. For those reasons, the Appellate Division had "no hesitancy" in finding J. McIntyre subject to the jurisdiction of the New Jersey Superior Court.
The Supreme Court granted J. McIntyre's petition for certification. The Court also granted amicus curiae status to the Association of Trial Lawyers - New Jersey.
HELD: The Court reaffirms the reasoning of its decision in Charles Gendler & Co. v. Telecom Equipment Corp., 102 N.J. 460 (1986), and holds 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.
1. The Court does 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. The power of the state to subject a person or business to the jurisdiction of its courts has evolved with the changing nature of the American economy. Now, our nation 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 World-Wide Volkswagen v. Woodson the United States Supreme Court posited a new theory of state-court jurisdiction - the stream of commerce - to respond to the contemporary realities of modern commerce. In recognition of the complex international marketing schemes that bring products into our State, in Charles Gendler & Co. v. Telecom Equipment Corp. this Court also adopted the stream-of-commerce theory. A year after Charles Gendler, the United States Supreme Court in Asahi Metal Industry Co. v. Superior Court of California elaborated on the stream-of-commerce theory in two competing four-member opinions. In finding that the California court lacked personal jurisdiction, Justice O'Connor construed the facts under a test that has become known as stream-of-commerce plus. 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. Justice Brennan, however, concluded that there was no need for plaintiff to present "additional conduct" to establish that the defendant's acts were "purposefully directed toward the forum State." (Pp. 15-28)
2. After Asahi Metal Industry Co. v. Superior Court of California, some federal and state courts have applied Justice O'Connor's stream-of-commerce plus theory. Other courts have taken Justice Brennan's 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 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. In some cases, courts have dodged the stream-of-commerce conflict entirely by deciding a jurisdictional issue on firmer and more traditional grounds. Here, the Court cannot evade consideration of the stream-of-commerce theory for it is the only basis on which the English manufacturer could be subject to the jurisdiction of a New Jersey court. (Pp. 29-32)
3. 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." The Court realizes more than ever that we live in a global marketplace. Today, the Court reaffirms the reasoning of its decision in Charles Gendler, and holds 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. A state has a strong interest in protecting its citizens from defective products as well as a paramount interest in ensuring a forum for its injured citizens who have suffered catastrophic injuries due to allegedly defective products in the workplace. 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. (Pp. 32-38)
4. The Court restates 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. 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. The focus is not on the manufacturer's control of the distribution scheme, but rather on the manufacturer's knowledge of the distribution scheme through which it is receiving economic benefits in each state where its products are sold. A manufacturer cannot shield itself merely by employing an independent distributor - a middleman - knowing the predictable route the product will take to market. If a 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. In light of those principles, the Court finds that the record supports the exercise of jurisdiction over J. McIntyre. J. McIntyre may not have known the precise destination of a purchased machine, but it clearly knew or should have known that the products were intended for sale and distribution to customers located anywhere in the United States. 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 present a compelling case that defending a product-liability action in New Jersey would offend "traditional notions of fair play and substantial justice." It would be unreasonable to expect that plaintiff's only form of 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. (Pp. 38-44)
5. 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 -- such as minimum contacts -- that will apply in contract and other types of cases. 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. (Pp. 44-45)
The judgment of the Appellate Division is AFFIRMED and the matter is REMANDED to the trial court for proceedings consistent with this opinion.
JUSTICE HOENS filed a separate, DISSENTING opinion, in which JUSTICE RIVERA-SOTO joins, stating that 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 Charles Gendler, and by the opinions of the United States Supreme Court in Asahi. Justice Hoens concludes that the majority has replaced a carefully balanced test with an unbounded one that presumes that participation in the global economy, without more, bespeaks purposeful availment of the benefits of this jurisdiction.
JUSTICE RIVERA-SOTO filed a separate, DISSENTING opinion, stating that 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. Justice Rivera-Soto concludes that this decision is ripe for review and correction by the Supreme Court of the United States.
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 RIVERA-SOTO joins. JUSTICE RIVERA-SOTO filed a separate, dissenting opinion.