Nicastro v. McIntyre Machinery America

• Decision Date: 02 February 2010
• Docket Number: A-29 September Term 2008
• Parties: Robert NICASTRO and Roseann Nicastro, h/w, Plaintiffs-Respondents, v. McINTYRE MACHINERY AMERICA, LTD., Defendant, and J. McIntyre Machinery Ltd., Defendant-Appellant.
• Court: New Jersey Supreme Court

987 A.2d 575

201 N.J. 48

Robert NICASTRO and Roseann Nicastro, h/w, Plaintiffs-Respondents, v. McINTYRE MACHINERY AMERICA, LTD., Defendant, and J. McIntyre Machinery Ltd., Defendant-Appellant.

A-29 September Term 2008

Supreme Court of New Jersey.

Argued January 21, 2009.

Decided February 2, 2010.

Steven F. Gooby, East Brunswick, argued the cause for appellant (Ansa Assuncao,

attorneys; Mr. Gooby and James S. Coons, on the briefs).

Alexander W. Ross, Jr., Marlton, argued the cause for respondents (Rakoski & Ross, attorneys; Mr. Ross and Janice L. Heinold, on the brief).

Jonathan W. Miller, argued the cause for amicus curiae Association of Trial Lawyers-New Jersey (Locks Law Firm, attorneys; Mr. Miller & Michael A. Galpern, Cherry Hill, on the brief).

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 it is 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 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 targeted the United States economy for the sale of its product. The machine was sold to a New Jersey business 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 N.J. 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 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 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.

In September 2003, 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 fit, suitable, or safe for its intended purpose."¹ 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 focus 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.²

B.

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 over it. Alternatively, the court held 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 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 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." 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 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."³

J. McIntyre'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. McIntyre's products, McIntyre America fielded any requests for information about those products at the scrap metal conventions and trade shows in the United States.

J. McIntyre 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. McIntyre's] direction and guidance whenever possible."⁴ 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]ou 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, McIntyre 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."⁵

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" — it did not directly sell or solicit business in this State or have a physical presence here. Not only 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. McIntyre] 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. McIntyre's] shear machines to New Jersey" and the company "purposely availed itself of the protections of [this State's] laws."

II.

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...