Crespi v. Zeppy

• Decision Date: 18 March 2022
• Docket Number: A-2044-20
• Court: New Jersey Superior Court — Appellate Division
• Parties: IAN CRESPI, Plaintiff-Respondent, v. VAPE ZEPPY, MICHAEL EILYUK, EDWARD VINOKUR, CCM CUSTOMS, INC., and TED A. BURKHALTER, JR., Defendants, and SOCIALITE E-CIGS, LLC, THOMAS OTTOMBRINO, MAYVILLAGE TRADING, LLC, and TIANGANG YU, Defendants-Respondents, and LG CHEM, LTD., Defendant-Appellant.

IAN CRESPI, Plaintiff-Respondent, v. VAPE ZEPPY, MICHAEL EILYUK, EDWARD VINOKUR, CCM CUSTOMS, INC., and TED A. BURKHALTER, JR., Defendants, and SOCIALITE E-CIGS, LLC, THOMAS OTTOMBRINO, MAYVILLAGE TRADING, LLC, and TIANGANG YU, Defendants-Respondents, and LG CHEM, LTD., Defendant-Appellant.

No. A-2044-20

Superior Court of New Jersey, Appellate Division

March 18, 2022

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 2, 2022

On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Middlesex County, Docket No L-5099-17.

Rachel Atkin Hedley (Nelson Mullins Riley & Scarborough, LLP) of the South Carolina and New York bars, admitted pro hac vice argued the cause for appellant (Lewis Brisbois Bisgaard &amp Smith, LLP, and Rachel Atkin Hedley, attorneys; James S Rehberger, of counsel and on the briefs; Rachel Atkin Hedley, on the briefs).

Rachel E. Holt argued the cause for respondent Ian Crespi (Rebenack, Aronow & Mascolo, LLP, attorneys; Craig M. Aronow, of counsel and on the brief; Rachel E. Holt, on the brief).

Murray A. Klayman, attorney for respondents Socialite E-Cigs, LLC and Thomas Ottombrino, join in the brief of respondent Ian Crespi.

Kennedys, LLP, attorneys for respondents Mayvillage Trading, LLC and Tiangang Yu, join in the brief of respondent Ian Crespi.

Before Judges Gilson and Gummer.

PER CURIAM

By leave granted, defendant LG Chem, Ltd. (LG Chem), a South Korean company headquartered in Seoul, South Korea, appeals from an order denying LG Chem's motion to dismiss plaintiff Ian Crespi's product-liability complaint N.J.S.A. 2A:58C-1 to -11, for insufficient service of process and lack of personal jurisdiction and an order denying its subsequent motion for reconsideration. We reverse and remand for further proceedings.

I.

Plaintiff, a New Jersey resident, filed a complaint against LG Chem and others alleging he was injured on December 14, 2016, when a CCM Customs, Inc. 7.62 Mod vaporizer (vape), which he had purchased from defendant Vape Zeppy in New Jersey in October 2016, or the lithium ion battery it contained exploded in his face. Plaintiff identified the battery used in his vape as "Model MXJO 18650F 3000mah 35A high drain rechargeable flat top battery, Serial #H04312" and alleged it was manufactured by MXJO Tech, a company located in Shenzhen, China, or by LG Chem. According to plaintiff, LG Chem is in the business of "designing, manufacturing, constructing, assembling, inspecting and selling" batteries used in vape products. Plaintiff alleges LG Chem distributed the vape or manufactured and distributed the lithium ion battery that injured him. Plaintiff attempted to serve process on LG Chem in Michigan by delivering a copy of the summons and complaint to Jeremy Hagemeyer, the human-resources director of LG Chem Michigan, Inc. (LGCM), a Delaware corporation with its principal place of business located in Michigan that is one of LG Chem's United States-based subsidiaries.

LG Chem moved to dismiss plaintiff's complaint for insufficient service of process and lack of personal jurisdiction pursuant to Rule 4:6-2(d) and (b). In support of its motion, LG Chem submitted a certification by Hagemeyer, stating he is authorized to accept service only on behalf of LGCM, and if he had known the papers he had accepted were intended for LG Chem, he would not have accepted them.

LG Chem also submitted a certification by Joon Young Shin, a "Team Leader and authorized representative" of LG Chem, averring LG Chem "is not registered to do business" in New Jersey and does not have in New Jersey an office, any employees, "a registered agent for service of process," any leased or owned real property, a telephone number, a post-office box, a mailing address, or a bank account. Further, Shin certified that although LG Chem "manufacture[s] 18650 lithium ion cells for use in specific applications by sophisticated companies," it "does not design, manufacture, distribute, advertise, or sell 18650 lithium-ion battery cells for use by individual consumers as replaceable, rechargeable batteries in electronic cigarette devices" and "does not design or manufacture 18650 lithium ion cells for sale to individual consumers to use as standalone, replaceable batteries." According to Shin, LG Chem does not "design, manufacture, distribute, advertise, or sell" the "MXJO" brand lithium ion battery cells identified in the complaint and did not authorize or approve the re-wrapping of its cell in an "MXJO" exterior wrapping. Additionally, Shin certified LGCM "is a separate legal entity from [LG Chem] and has its own corporate offices and maintains a separate and independent corporate existence," is not "a general agent" or an "agent . . . for service of process" of LG Chem, and "is not authorized to accept service of process on behalf of LG Chem."

Plaintiff opposed the motion, asserting service on Hagemeyer was sufficient because LGCM was acting as LG Chem's agent and alter ego and that the court had general and specific jurisdiction over LG Chem because LG Chem operated in New Jersey and knew its product would end up in New Jersey.

The judge denied the motion and set forth the following facts in a written opinion:

This is a product liability action in which plaintiff alleges to have been injured on December 14, 2016 when his e-cigarette/vape device malfunctioned while he was using it with an "MXJO" lithium ion battery purchased in New Jersey from co-defendant Vape Zeppy and manufactured by [LG Chem]. [LG Chem] is a South Korean company with its headquarters and principal place of business in Seoul, South Korea, and subsidiaries in sixteen different countries. [LG Chem] is a global supplier of a wide range of products, including "18650 lithium ion battery cells." Plaintiff alleges causes of action against [LG Chem] for violations of the New Jersey Products Liability Act, strict liability, negligence, and breach of implied and express warranty.

Among [LG Chem's] subsidiaries are LG Chem America, Inc. ("LGCA") and LG Chem Michigan, Inc. ("LGCM"). LGCA is a Delaware corporation with its principal place of business in Atlanta, Georgia, which was relocated from Englewood Cliffs, New Jersey in 2015. LGCM is [LG Chem's] wholly-owned, direct subsidiary in North America. LGCM is a Delaware corporation and its principal place of business is in Michigan. LGCM's work is limited exclusively to manufacture of automotive batteries. LG Electronics USA, Inc. ("LGEUSA"), a subsidiary of LG Electronics, Inc., is a Delaware corporation with its principal place of business in Englewood Cliffs, New Jersey, where LGEUSA is currently in the process of constructing a new corporate Headquarters. On January 23, 2020, a process server attempted to effect personal service of process upon Jeremy Hagemeyer, Director of Human Resources for LGCM. Mr. Hagemeyer was met by the process server in the lobby of LGCM's offices in Michigan. Mr. Hagemeyer was handed an envelope labeled "LG Chem" and asked to sign a form acknowledging receipt.

Apparently based on those facts and citing Mills v. Ethicon, Inc., 406 F.Supp.3d 363 (D.N.J. 2019), and an unpublished federal trial court case, the judge held service on Hagemeyer was "sufficient," finding

LGCM, a domestic subsidiary of [LG Chem], acts essentially as an alter ego of [LG Chem] for the purposes of service of process. LGCM served as a conduit for the activities of [LG Chem] and exists to act as an instrumentality for the production of one of [LG Chem's] major products within the US.

The judge also was "satisfied that plaintiff has met his burden of establishing that [LG Chem] is subject to specific jurisdiction in New Jersey." The judge based that holding on the following analysis:

Despite [LG Chem's] contention that third parties have repackaged [LG Chem's] products for sale to New Jersey without authorization, this matter is not the first involving an LG Chem battery exploding and injuring a New Jersey resident. It can reasonably be concluded that plaintiff's injury would not have arisen had [LG Chem] not placed its faulty batteries into the stream of commerce to New Jersey. It does not offend traditional notions of fair play and substantial justice to find [LG Chem] subject to personal jurisdiction in New Jersey.

In a written opinion, the judge denied LG Chem's subsequent motion for reconsideration, stating he was "satisfied" his "analysis" of Mills, 406 F.Supp.3d at 393, "demonstrates that LGCM acted as an alter ego of LG Chem and that it was not impalpably incorrect to make the determination that one of LGCM's sole purposes of being in the United States is to act as an instrumentality for the production of LG Chem's major products." The judge denied the reconsideration motion as to his specific-jurisdiction decision, holding his decision "satisfied the standard to support a finding of specific jurisdiction in the state of New Jersey because [LG Chem's] product was purposely in New Jersey and caused an injury."

II.

In this appeal, LG Chem argues the judge erred in denying its motion to dismiss for insufficient service of process. LG Chem acknowledges an exception to the Hague Service Convention (HSC) rule on service - New Jersey permits service on a wholly-owned subsidiary of a foreign corporation if the subsidiary is an alter ego or agent of the parent - but faults the judge for failing to support with any facts or evidence his conclusion that LGCM was the alter ego of LG Chem. LG Chem also argues the judge erred in finding plaintiff had established LG Chem was subject to specific jurisdiction in New Jersey because plaintiff's claims did not arise out of or relate to contacts LG Chem had formed with New Jersey.

A.

Proper...