The Assault on Traditional Long-Arm Jurisdiction Continues

In an effort to confront the realities of the rapidly changing global economy, the Supreme Court of New Jersey (the “court”) ruled in a recent five-to-two opinion that a plaintiff could bring a product liability action in a New Jersey state court against an England-based product manufacturer under what is termed the stream-of-commerce theory of personal jurisdiction. Nicastro v. J. McIntyre Machinery America, Ltd., 201 N.J. 48 (2010). The majority held that a British company could be subjected to New Jersey jurisdiction despite having no direct contact with New Jersey because the manufacturer's distribution scheme and marketing efforts targeted the U.S. as a whole, and it should have known that its product could end up in New Jersey.

The United Kingdom-incorporated defendant, J. McIntyre Machinery, Ltd. (“McIntyre”), manufactured recycling machinery in England, including the McIntyre Model 640 Shear, which is used to cut metal. McIntyre sold products in America through its exclusive U.S. distributor based in Ohio, McIntyre Machinery America, Ltd. (“McIntyre America”), which filed for bankruptcy in 2001, before the commencement of the plaintiff's suit in 2003. Thus, McIntyre America did not participate in the lawsuit. McIntyre and McIntyre America were at all times distinct and separate corporations.

The Nicastro case arose from a tragic but routine workplace accident at a New Jersey scrap metal shop in October 2001. After losing four fingers while operating a McIntyre shear, the plaintiff sued McIntyre and McIntyre America alleging, among other things, that the shear was defectively designed because it lacked guards that would have prevented his accident. What makes this case remarkable is the court's extension of long-arm jurisdiction over McIntyre, which had no contact with New Jersey other than attending a national industry trade show in Las Vegas, which was attended by the plaintiff's New Jersey employer and presumably other New Jersey residents and the fact that its machine was sold to a foreign distributor, which then sold that machine to the plaintiff's employer in New Jersey.

The Development of the Stream-of-Commerce Theory

The stream-of-commerce theory was first discussed by the United States Supreme Court in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), and further explained in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987). Prior to the development of the stream-of-commerce theory, courts exercised long-arm personal jurisdiction in keeping with the United States Supreme Court decision in International Shoe Co. v. Washington, 326 U.S. 310 (1945) and its progeny. Pursuant to International Shoe, the forum state could exercise personal jurisdiction over an out-of-state defendant without offending due process if the defendant made sufficient “minimum contacts” with the forum state. Id. at 316. This standard included an analysis of how regular and systematic the defendant's contacts were with the forum state. In light of the increase of cross-border business transactions since the International Shoe decision in 1945, the United States Supreme Court first discussed the stream-of-commerce theory in World-Wide Volkswagen in 1980.

Under the stream-of-commerce theory, a defendant manufacturer is subject to jurisdiction in the forum state if it “purposefully avails” itself of the forum state's market. World-Wide Volkswagen Corp., 444 U.S. at 297. The World-Wide Volkswagen Court explained that “[t]he forum 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.” Id. at 297-98.

Nearly seven years later, the Asahi Court in a plurality decision elaborated on the stream-of-commerce theory. Rather than clarifying the standard, however, much controversy developed since Asahi set forth countervailing guidance for determining whether a defendant's conduct should subject it to personal jurisdiction in a forum state.

Justice O'Connor's opinion in Asahi, joined by Justices Rehnquist, Powell and Scalia, supported what is commonly referred to as the “stream-of-commerce plus” theory of personal jurisdiction, requiring that a foreign manufacturer must have engaged in conduct that was “purposefully directed toward the forum state.” Asahi, 480 U.S. at 112. Under this theory, a foreign manufacturer could be subject to a state's long-arm jurisdiction if that manufacturer puts a product into the stream of commerce and engages in “additional conduct” that indicates “an intent or purpose to serve the market in the forum state.” Id. The “additional conduct” required by Justice O'Connor's “stream-of-commerce plus” theory could include such acts as “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.” Id.

According to Justice O'Connor, “[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.” Id. Therefore, a manufacturer's mere awareness that its product could end up in a particular market was not enough to subject it to personal jurisdiction in that market. Id.

Alternatively, Justice Brennan's opinion in Asahi, joined by Justices White, Marshall, and Blackmun, posited that no additional conduct is necessary to prove that a defendant manufacturer engaged in conduct purposefully directed at the forum state. Id. at 117. Justice Brennan noted, “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. Under Justice Brennan's application of the stream-of-commerce theory, “[a]s long as a participant in this process [entering a product into the stream of commerce] is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise.” Id. He explained further, “[a] defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State's laws that regulate and facilitate commercial activity. These benefits accrue regardless of whether that participant directly conducts business in the forum State, or engages in additional conduct directed toward that State.” Id.

In Nicastro, the majority opinion points out that since the Asahi ruling in 1987, certain courts have followed Justice O'Connor's “stream-of-commerce plus” theory. See, e.g., Bridgeport Music, Inc. v. Still N the Water Publ'g, 327 F.3d 472, 479-80 (6th Cir.), cert. denied 540 U.S. 948 (2003); Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 944-46 (4th Cir. 1994), cert. denied 513 U.S. 1151 (1995); Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 681-83 (1st Cir. 1992); Madara v. Hall, 916 F.2d 1510, 1519 (11th Cir. 1990); Sorrells v. R&R Custom Coach Works, 636 So.2d 668, 674 (Miss. 1994); Vt. Wholesale Bldg. Prods. v. J.W. Jones Lumber Co., 914 A.2d 818, 826 (N.H. 2006). Other courts have relied on Justice Brennan's broader interpretation. See, e.g., Barone v. Rich Bros. Interstate Display Fireworks Co., 25 F.3d 610, 613-15 (8th Cir.), cert. denied 513 U.S. 948 (1994); Irving v. Owens-Corning Fiberglass Corp., 864 F.2d 383, 386 (5th Cir.), cert. denied 493 U.S. 823 (1989); State v. NV Sumatra Trading, Co., 666 S.E.2d 218, 223 (S.C. 2008); Hill v. Showa Denka, K.K., 425 S.E.2d 609, 616 (W. Va. 1992), cert. denied 508 U.S. 908 (1993); Kopke v. A. Hartrodt S.R.L., 629 N.W.2d 662, 674 (Wis. 2001), cert. denied 534 U.S. 1079 (2002). Still other courts have chosen a hybrid or middle ground. See, e.g., Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 244 (2nd Cir. 1999); Pennzoil Prods. Co. v. Colelli & Assocs., 149 F.3d 197, 205-07 (3rd Cir. 1998); Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir.), cert. dismissed, 512 U.S. 1273 (1994); Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1547-48 (11th Cir.), cert. denied, 508 U.S. 907 (1993); A. Uberti & C. v. Leonardo, 892 P.2d 1354, 1359 (Ariz.), cert. denied 516 U.S. 906 (1995); Wiles v. Morita Iron Works Co., 530 N.E.2d 1382, 1389 (Ill. 1988); State v. Grand River Enters., Inc., 757 N.W.2d 305, 314 (S.D. 2008). In the end, only a final resolution of this issue by the United States Supreme Court will provide some uniformity.

The Nicastro Decision

In the Nicastro case, the Supreme Court of New Jersey strongly committed its course to the stream-of-commerce theory, building on an earlier decision, Charles Gendler & Co., Inc. v. Telecom Equipment Corporation, 102 N.J. 460 (1986), which pre-dated Asahi by less than a year. The Nicastro court stated, “[t]oday, 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.” Nicastro, 201 N.J. at 51.

The Gendler court reasoned that a Japanese manufacturer that knowingly utilized a national distribution and marketing model could be subject to suit in New Jersey state court because it should have known that its products would be sold in New Jersey and, thus, it should have expected that it could be haled into New Jersey state court. Gendler, 102 N.J. at 480. In so doing, Gendler utilized an interpretation of the stream-of-commerce theory that closely mirrored that of World-Wide Volkswagen and Justice Brennan in Asahi. The Nicastro court recognized these influences and found that the Gendler and the Appellate Division decision under review comported with Justice O'Connor's “stream-of-commerce plus” theory. Nicastro, 201 N.J. at 51. Moreover, the Nicastro court reasoned that targeting a national market, through actions such as the “general sales solicitations orchestrated by a manufacturer's independent distributor,” would arguably be sufficient “'additional conduct' to justify long-arm jurisdiction in all fifty states under the stream-of-commerce plus” theory. Id. at 52-53. For support, the Nicastro court cited three other decisions that reasoned similarly, including the very Appellate Court it was affirming. See Tobin v. Astra Pharm. Prods., Inc., 993 F.2d 528, 543-45 (6th Cir.), cert. denied, 510 U.S. 914 (1993); A. Uberti & C. v. Leonardo, 892 P.2d 1354, 1360-64 (Ariz.), cert. denied, 516 U.S. 906 (1995); Nicastro v. McIntyre Mach. Am. Ltd., 399 N.J. Super. 539, 557-60 (App. Div. 2008).

The Nicastro court asserted long-arm jurisdiction over McIntyre because McIntyre utilized a U.S.-based nationwide distribution system and should have expected that its product could end up being used in any state, including New Jersey. The court pointed to several facts in support of its position. McIntyre and McIntyre America attended U.S.-based national industry trade shows, including one in Las Vegas at which the plaintiff's employer first learned of the McIntyre shear. Both McIntyre and McIntyre America also attended conferences in New Orleans, Orlando, and Chicago. To the court, attendance at such national trade shows demonstrated McIntyre's active engagement and participation in its national marketing and distribution scheme. Additionally, the similarity in name between McIntyre and McIntyre America, despite their independence, made it too easy to infer that the two entities were related.

In conjunction with this, the information sheet that accompanied the McIntyre shear purchased by the plaintiff's employer included McIntyre's address in England. Moreover, the plaintiff's employer was under the impression, mistaken or not, that if the shear needed repairs or spare parts, then they could contact McIntyre in England. The record also indicated that McIntyre America's marketing efforts were guided, if not largely directed, by McIntyre. Lastly, McIntyre may have sold some of its machines to McIntyre America on consignment. For all of the foregoing reasons, even though McIntyre directed no activities specifically at New Jersey, the court found that McIntyre targeted the United States market, which necessarily included New Jersey. As a result, the court held that McIntyre was subject to jurisdiction in New Jersey state court through the stream-of-commerce theory as espoused in World-Wide Volkswagen and Asahi.

In so holding, the court determined that exercising jurisdiction in this case would not offend due process. It stated that with respect to due process, and in light of the “radical transformation of the international economy,” the court “must 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.” Id. at 56. Furthermore, the court reasoned that McIntyre's business practices made it nearly impossible to argue that defending a lawsuit in New Jersey would violate the traditional notions of fair play and substantial justice. If McIntyre was willing to travel around the United States attending trade shows, then it should also be willing to travel to the United States to defend a lawsuit arising from the use of its allegedly injurious product. The court also found several factors justifying New Jersey's interest in exercising jurisdiction over the lawsuit.

Conclusion

Ultimately, the Nicastro court's decision turned on whether a foreign manufacturer's exclusive U.S. distributor's marketing and distribution scheme, which generally targeted all fifty states, warranted long-arm jurisdiction over that foreign manufacturer in one state ' even if that manufacturer did not do business in the classical sense and directed no activity specifically at that state. Whether the Supreme Court of New Jersey's assertion of long-arm jurisdiction in Nicastro will set further precedent on the national scene has yet to be determined. An appeal to the United States Supreme Court, which has not examined long-arm jurisdiction in this manner for some time, is likely. Given Asahi's divided approach to the stream-of-commerce theory, the nation's highest court could grant certiorari in order to create a more certain and uniform approach to the application of long-arm jurisdiction ' particularly given the so-called new realities of the contemporary global economy.

The Nicastro majority opinion abrogates traditional notions of due process and signals a judicial willingness to expand long-arm jurisdiction to match a court's global economic view. If adopted more broadly, product manufacturers will be subject to personal jurisdiction worldwide without regard to business activities whenever and wherever they put their products into the stream of commerce. Traditional notions of due process are being changed forever by this turn to the jurisdictional dark side.

Roy Alan Cohen is Co-Chair of Porzio, Bromberg & Newman P.C.'s Complex Tort Practice Group and a senior trial lawyer focusing his practice on defending product liability, toxic tort, environmental, professional liability, construction, and trucking cases. Justin C. Hallberg is an associate in the firm's Complex Tort and Commercial Practice Groups. He focuses his practice on the defense of product liability, toxic tort, and environmental litigation matters, as well as providing regulatory counseling to businesses.

Has New Jersey turned to the jurisdictional dark side or has the global economy undermined the basic tenets of due process?

Whether a result of currency exchange rates, product distribution chains, labor costs, debt ratios, political issues, or the technological flow of information, what happens on one side of the world influences and often controls the reaction on the other side of the globe. Multinational companies and economies interact with one another like never before. Despite the current economic woes, manufacturers consistently target the U.S. market with the goal of selling and distributing their products throughout all 50 states. Often, these international manufacturers utilize and work closely with U.S.-based distributors to manufacture, market, sell, and distribute their products, or these manufacturers can sell their products directly over the Internet to customers all over the world. Business dealings now may not involve personal visits, attendance at meetings or industry trade shows, a physical presence, or any of the minimum contacts that have been utilized previously to evaluate personal jurisdiction. Even so, most state and federal courts have adhered to traditional notions of due process in the exercise of long-arm jurisdiction over out-of-state manufacturers. A few courts, however, including most recently the Supreme Court of New Jersey, have broken ranks and chosen a path that challenges the basic tenets of due process.

Overview of the Supreme Court of New Jersey's Recent Decision

In an effort to confront the realities of the rapidly changing global economy, the Supreme Court of New Jersey (the “court”) ruled in a recent five-to-two opinion that a plaintiff could bring a product liability action in a New Jersey state court against an England-based product manufacturer under what is termed the stream-of-commerce theory of personal jurisdiction. Nicastro v. J. McIntyre Machinery America, Ltd. , 201 N.J. 48 (2010). The majority held that a British company could be subjected to New Jersey jurisdiction despite having no direct contact with New Jersey because the manufacturer's distribution scheme and marketing efforts targeted the U.S. as a whole, and it should have known that its product could end up in New Jersey.

The United Kingdom-incorporated defendant, J. McIntyre Machinery, Ltd. (“McIntyre”), manufactured recycling machinery in England, including the McIntyre Model 640 Shear, which is used to cut metal. McIntyre sold products in America through its exclusive U.S. distributor based in Ohio, McIntyre Machinery America, Ltd. (“McIntyre America”), which filed for bankruptcy in 2001, before the commencement of the plaintiff's suit in 2003. Thus, McIntyre America did not participate in the lawsuit. McIntyre and McIntyre America were at all times distinct and separate corporations.

The Nicastro case arose from a tragic but routine workplace accident at a New Jersey scrap metal shop in October 2001. After losing four fingers while operating a McIntyre shear, the plaintiff sued McIntyre and McIntyre America alleging, among other things, that the shear was defectively designed because it lacked guards that would have prevented his accident. What makes this case remarkable is the court's extension of long-arm jurisdiction over McIntyre, which had no contact with New Jersey other than attending a national industry trade show in Las Vegas, which was attended by the plaintiff's New Jersey employer and presumably other New Jersey residents and the fact that its machine was sold to a foreign distributor, which then sold that machine to the plaintiff's employer in New Jersey.

The Development of the Stream-of-Commerce Theory

The stream-of-commerce theory was first discussed by the United States Supreme Court in World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286 (1980), and further explained in Asahi Metal Industry Co. v. Superior Court of California , 480 U.S. 102 (1987). Prior to the development of the stream-of-commerce theory, courts exercised long-arm personal jurisdiction in keeping with the United States Supreme Court decision in International Shoe Co. v. Washington , 326 U.S. 310 (1945) and its progeny. Pursuant to International Shoe, the forum state could exercise personal jurisdiction over an out-of-state defendant without offending due process if the defendant made sufficient “minimum contacts” with the forum state. Id. at 316. This standard included an analysis of how regular and systematic the defendant's contacts were with the forum state. In light of the increase of cross-border business transactions since the International Shoe decision in 1945, the United States Supreme Court first discussed the stream-of-commerce theory in World-Wide Volkswagen in 1980.

Under the stream-of-commerce theory, a defendant manufacturer is subject to jurisdiction in the forum state if it “purposefully avails” itself of the forum state's market. World-Wide Volkswagen Corp., 444 U.S. at 297. The World-Wide Volkswagen Court explained that “[t]he forum 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.” Id. at 297-98.

Nearly seven years later, the Asahi Court in a plurality decision elaborated on the stream-of-commerce theory. Rather than clarifying the standard, however, much controversy developed since Asahi set forth countervailing guidance for determining whether a defendant's conduct should subject it to personal jurisdiction in a forum state.

Justice O'Connor's opinion in Asahi, joined by Justices Rehnquist, Powell and Scalia, supported what is commonly referred to as the “stream-of-commerce plus” theory of personal jurisdiction, requiring that a foreign manufacturer must have engaged in conduct that was “purposefully directed toward the forum state.” Asahi, 480 U.S. at 112. Under this theory, a foreign manufacturer could be subject to a state's long-arm jurisdiction if that manufacturer puts a product into the stream of commerce and engages in “additional conduct” that indicates “an intent or purpose to serve the market in the forum state.” Id. The “additional conduct” required by Justice O'Connor's “stream-of-commerce plus” theory could include such acts as “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.” Id.

According to Justice O'Connor, “[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.” Id. Therefore, a manufacturer's mere awareness that its product could end up in a particular market was not enough to subject it to personal jurisdiction in that market. Id.

Alternatively, Justice Brennan's opinion in Asahi, joined by Justices White, Marshall, and Blackmun, posited that no additional conduct is necessary to prove that a defendant manufacturer engaged in conduct purposefully directed at the forum state. Id. at 117. Justice Brennan noted, “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. Under Justice Brennan's application of the stream-of-commerce theory, “[a]s long as a participant in this process [entering a product into the stream of commerce] is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise.” Id. He explained further, “[a] defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State's laws that regulate and facilitate commercial activity. These benefits accrue regardless of whether that participant directly conducts business in the forum State, or engages in additional conduct directed toward that State.” Id.

In Nicastro, the majority opinion points out that since the Asahi ruling in 1987, certain courts have followed Justice O'Connor's “stream-of-commerce plus” theory. See, e.g., Bridgeport Music, Inc. v. Still N the Water Publ'g, 327 F.3d 472, 479-80 (6th Cir.), cert. denied 540 U.S. 948 (2003); Lesnick v. Hollingsworth & Vose Co. , 35 F.3d 939, 944-46 (4th Cir. 1994), cert. denied 513 U.S. 1151 (1995); Boit v. Gar-Tec Prods., Inc. , 967 F.2d 671, 681-83 (1st Cir. 1992); Madara v. Hall , 916 F.2d 1510, 1519 (11th Cir. 1990); Sorrells v. R&R Custom Coach Works, 636 So.2d 668, 674 (Miss. 1994); V t. Wholesale Bldg. Prods. v. J.W. Jones Lumber Co. , 914 A.2d 818, 826 (N.H. 2006). Other courts have relied on Justice Brennan's broader interpretation. See, e.g., Barone v. Rich Bros. Interstate Display Fireworks Co. , 25 F.3d 610, 613-15 (8th Cir.), cert. denied 513 U.S. 948 (1994); Irving v. Owens-Corning Fiberglass Corp. , 864 F.2d 383, 386 (5th Cir.), cert. denied 493 U.S. 823 (1989); State v. NV Sumatra Trading, Co. , 666 S.E.2d 218, 223 (S.C. 2008); Hill v. Showa Denka, K.K. , 425 S.E.2d 609, 616 (W. Va. 1992), cert. denied 508 U.S. 908 (1993); Kopke v. A. Hartrodt S.R.L. , 629 N.W.2d 662, 674 (Wis. 2001), cert. denied 534 U.S. 1079 (2002). Still other courts have chosen a hybrid or middle ground. See, e.g., Kernan v. Kurz-Hastings, Inc. , 175 F.3d 236, 244 (2nd Cir. 1999); Pennzoil Prods. Co. v. Colelli & Assocs. , 149 F.3d 197, 205-07 (3rd Cir. 1998); Beverly Hills Fan Co. v. Royal Sovereign Corp. , 21 F.3d 1558, 1566 (Fed. Cir.), cert. dismissed, 512 U.S. 1273 (1994); Vermeulen v. Renault, U.S.A., Inc. , 985 F.2d 1534, 1547-48 (11th Cir.), cert. denied, 508 U.S. 907 (1993); A. Uberti & C. v. Leonardo , 892 P.2d 1354, 1359 (Ariz.), cert. denied 516 U.S. 906 (1995); Wiles v. Morita Iron Works Co. , 530 N.E.2d 1382, 1389 (Ill. 1988); State v. Grand River Enters., Inc. , 757 N.W.2d 305, 314 (S.D. 2008). In the end, only a final resolution of this issue by the United States Supreme Court will provide some uniformity.

The Nicastro Decision

In the Nicastro case, the Supreme Court of New Jersey strongly committed its course to the stream-of-commerce theory, building on an earlier decision, Charles Gendler & Co., Inc. v. Telecom Equipment Corporation , 102 N.J. 460 (1986), which pre-dated Asahi by less than a year. The Nicastro court stated, “[t]oday, 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.” Nicastro, 201 N.J. at 51.

The Gendler court reasoned that a Japanese manufacturer that knowingly utilized a national distribution and marketing model could be subject to suit in New Jersey state court because it should have known that its products would be sold in New Jersey and, thus, it should have expected that it could be haled into New Jersey state court. Gendler, 102 N.J. at 480. In so doing, Gendler utilized an interpretation of the stream-of-commerce theory that closely mirrored that of World-Wide Volkswagen and Justice Brennan in Asahi. The Nicastro court recognized these influences and found that the Gendler and the Appellate Division decision under review comported with Justice O'Connor's “stream-of-commerce plus” theory. Nicastro, 201 N.J. at 51. Moreover, the Nicastro court reasoned that targeting a national market, through actions such as the “general sales solicitations orchestrated by a manufacturer's independent distributor,” would arguably be sufficient “'additional conduct' to justify long-arm jurisdiction in all fifty states under the stream-of-commerce plus” theory. Id. at 52-53. For support, the Nicastro court cited three other decisions that reasoned similarly, including the very Appellate Court it was affirming. See Tobin v. Astra Pharm. Prods., Inc. , 993 F.2d 528, 543-45 (6th Cir.), cert. denied, 510 U.S. 914 (1993); A. Uberti & C. v. Leonardo , 892 P.2d 1354, 1360-64 (Ariz.), cert. denied, 516 U.S. 906 (1995); Nicastro v. McIntyre Mach. Am. Ltd., 399 N.J. Super. 539, 557-60 (App. Div. 2008).

The Nicastro court asserted long-arm jurisdiction over McIntyre because McIntyre utilized a U.S.-based nationwide distribution system and should have expected that its product could end up being used in any state, including New Jersey. The court pointed to several facts in support of its position. McIntyre and McIntyre America attended U.S.-based national industry trade shows, including one in Las Vegas at which the plaintiff's employer first learned of the McIntyre shear. Both McIntyre and McIntyre America also attended conferences in New Orleans, Orlando, and Chicago. To the court, attendance at such national trade shows demonstrated McIntyre's active engagement and participation in its national marketing and distribution scheme. Additionally, the similarity in name between McIntyre and McIntyre America, despite their independence, made it too easy to infer that the two entities were related.

In conjunction with this, the information sheet that accompanied the McIntyre shear purchased by the plaintiff's employer included McIntyre's address in England. Moreover, the plaintiff's employer was under the impression, mistaken or not, that if the shear needed repairs or spare parts, then they could contact McIntyre in England. The record also indicated that McIntyre America's marketing efforts were guided, if not largely directed, by McIntyre. Lastly, McIntyre may have sold some of its machines to McIntyre America on consignment. For all of the foregoing reasons, even though McIntyre directed no activities specifically at New Jersey, the court found that McIntyre targeted the United States market, which necessarily included New Jersey. As a result, the court held that McIntyre was subject to jurisdiction in New Jersey state court through the stream-of-commerce theory as espoused in World-Wide Volkswagen and Asahi.

In so holding, the court determined that exercising jurisdiction in this case would not offend due process. It stated that with respect to due process, and in light of the “radical transformation of the international economy,” the court “must 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.” Id. at 56. Furthermore, the court reasoned that McIntyre's business practices made it nearly impossible to argue that defending a lawsuit in New Jersey would violate the traditional notions of fair play and substantial justice. If McIntyre was willing to travel around the United States attending trade shows, then it should also be willing to travel to the United States to defend a lawsuit arising from the use of its allegedly injurious product. The court also found several factors justifying New Jersey's interest in exercising jurisdiction over the lawsuit.

Conclusion

Ultimately, the Nicastro court's decision turned on whether a foreign manufacturer's exclusive U.S. distributor's marketing and distribution scheme, which generally targeted all fifty states, warranted long-arm jurisdiction over that foreign manufacturer in one state ' even if that manufacturer did not do business in the classical sense and directed no activity specifically at that state. Whether the Supreme Court of New Jersey's assertion of long-arm jurisdiction in Nicastro will set further precedent on the national scene has yet to be determined. An appeal to the United States Supreme Court, which has not examined long-arm jurisdiction in this manner for some time, is likely. Given Asahi's divided approach to the stream-of-commerce theory, the nation's highest court could grant certiorari in order to create a more certain and uniform approach to the application of long-arm jurisdiction ' particularly given the so-called new realities of the contemporary global economy.

The Nicastro majority opinion abrogates traditional notions of due process and signals a judicial willingness to expand long-arm jurisdiction to match a court's global economic view. If adopted more broadly, product manufacturers will be subject to personal jurisdiction worldwide without regard to business activities whenever and wherever they put their products into the stream of commerce. Traditional notions of due process are being changed forever by this turn to the jurisdictional dark side.

Roy Alan Cohen is Co-Chair of Porzio, Bromberg & Newman P.C.'s Complex Tort Practice Group and a senior trial lawyer focusing his practice on defending product liability, toxic tort, environmental, professional liability, construction, and trucking cases. Justin C. Hallberg is an associate in the firm's Complex Tort and Commercial Practice Groups. He focuses his practice on the defense of product liability, toxic tort, and environmental litigation matters, as well as providing regulatory counseling to businesses.