In Nicastro V. McIntyre Machinery America Ltd., 201 N.J. 48 (2010), the New Jersey Supreme Court held that New Jersey had jurisdiction over a foreign manufacturer in a products liability action under the stream-of-commerce theory because the manufacturer knew or should have known that the distribution system through which its products were being sold targeted a fifty-state market and the product might end up in New Jersey. Through this decision, the New Jersey Supreme Court reaffirmed its earlier decision in Charles Gendler & Co. v. Telecom Equipment Corp., 102 N.J. 460 (1986), which adopted the stream-of-commerce theory articulated by the Unites States Supreme Court in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980).
Plaintiff Robert Nicastro was operating a recycling machine used to cut metal at work when his hand caught in the blade, severing four fingers. Plaintiff brought a products liability action against the manufacturer of the recycling machine, J. McIntyre Machinery, Ltd., a company incorporated in the United Kingdom. J. McIntyre sold its machinery through its exclusive United States distributor, McIntyre Machinery America, Ltd. The trial court granted J. McIntyre’s motion to dismiss, finding that the manufacturer did not have sufficient minimum contacts with New Jersey to justify the State’s exercise of personal jurisdiction over it. The Appellate Division reversed, holding that the exercise of jurisdiction by New Jersey was justified under the stream-of-commerce plus rationale espoused in a plurality decision of Justice O’Connor of the U.S. Supreme Court in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987). The New Jersey Supreme Court granted J. McIntyre’s petition for certification.
The Supreme Court found that because there were no minimum contacts that would justify jurisdiction over J. McIntyre, jurisdiction had to be analyzed pursuant to the stream-of-commerce theory, first annunciated by the U.S. Supreme Court in World-wide Volkswagen. The stream-of-commerce theory refers to the exercise of 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.” 444 U.S. at 397-98. Tracking the developments in the law of personal jurisdiction, the U.S. Supreme Court emphasized that jurisdictional questions have to be answered in light of today’s global marketplace.
In Charles Gendler, the New Jersey Supreme Court adopted the stream-of-commerce theory annunciated in World-Wide Volkswagen as the jurisdictional test in New Jersey and held that jurisdiction is supported if a manufacturer knew, or should have known, of the distribution system through which its products were being sold in the forum state. The Court held that control of the distribution system was not the important factor in exercising jurisdiction; rather, it was the awareness of the distribution system through which a corporation derived economic gain that justified jurisdiction.
One year after the New Jersey Supreme Court decided Charles Gendler, the U.S. Supreme Court decided Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987) and elaborated on the stream-of-commerce theory in two plurality decisions. Justice O’Connor’s opinion utilized a test known as “stream-of-commerce plus,” which required that the actions of a defendant be “purposefully directed toward the forum State” in order for a court of that state to exercise personal jurisdiction. Justice Brennan’s looser articulation of the stream-of-commerce theory did not require any additional action on behalf of the defendant in order for the forum state to exercise jurisdiction but did require that any exercise of jurisdiction comport with traditional notions of fair play and substantial justice.
It was within the Charles Gendler and Asahi Metal framework that the Court decided Nicastro. The Court articulated policy reasons for extending jurisdiction over a manufacturer who sells products through a distributor knowing that the final destination might be in New Jersey. The Court held that New Jersey has a paramount interest ensuring a forum for citizens who suffer injuries due to allegedly defective products and that a manufacturer could avoid being haled into a New Jersey court by making it clear that it is not marketing its products in New Jersey. The Court found that J. McIntyre knew that its products were distributed throughout all fifty states because company officials attended numerous trade shows in various United States cities where its products were advertised. It was clear from the record that those attending the trade shows came from states other than the states where the shows were held. Nicastro’s employer purchased the machine in issue after attending a Las Vegas trade show; J. McIntyre’s president attended the same convention. The Court concluded that New Jersey courts could exercise jurisdiction over J. McIntyre because it knew or should have known that its distribution scheme would make its products available in New Jersey. Because the Court did not require any additional conduct, the jurisdictional test it adopted is aligned closer to Justice Brennan’s view than Justice O’Connor’s in Asahi Metal. The Court cautioned that the stream-of-commerce theory it articulated is particularly applicable to products liability actions and might not be suitable in other actions.
Justice Hoens authored the dissenting opinion and stated her belief that “the majority has created an entirely new and unbounded test for asserting jurisdiction over foreign entities.” In Justice Hoens’ view, the majority opinion broke with the precedent of Charles Gendler and Asahi Metal because the stream-of-commerce theory employed in the majority opinion was not used in the context of a due process analysis. Instead, the majority equated the mere placement of a product into the stream of commerce with what due process would otherwise demand. The minority opinion further objected to the focus the majority placed on the injury of the plaintiff rather than the defendant and its relationship to the forum state. In a separate dissent, Justice Riveria-Soto suggested that the decision is “ripe for review and correction by the Supreme Court of the United States.”
In any event, it now appears clear that New Jersey Courts will find jurisdiction to exist for most product manufacturers if they have any expectation that their products will be distributed in New Jersey.