In Mische v. Bracey’s Supermarket, ___ N.J. Super. __ (App. Div. 2011), the Appellate Division identified the issue it had to decide in the first sentence of its opinion:  “whether an out-of-state business entity’s membership in and purchase of goods and services from a New Jersey-based retailer’s cooperative provides a sufficient foundation for the New Jersey courts to exercise long-arm jurisdiction over a claim against that business entity that is unrelated to its agreement with the retailer’s cooperative.”  In the second sentence of its opinion, the court answered that question, concluding “that New Jersey’s exercise of jurisdiction over such a claim would violate the Due Process Clause of the Fourteenth Amendment.”

On July 16, 2007, the plaintiff was involved in a slip-and-fall accident in the defendant’s supermarket in Mt. Pocono, Pennsylvania.  The defendant also operated two other supermarkets in Pennsylvania.  At the time of the accident, the plaintiff lived in Pennsylvania but at some point thereafter she moved to New Jersey.  Nearly two years after the accident she filed her personal injury lawsuit in Passaic County, New Jersey.

Following discovery, the defendant moved to dismiss on the ground that New Jersey courts did not have jurisdiction over it.  In its motion, the defendant noted that it was a Pennsylvania corporation that did not do business in New Jersey; did not own or control property in New Jersey; did not have any agents in New Jersey; and did not advertise in New Jersey.  In opposition, the plaintiff argued that the defendant held itself out to the public as part of the “Shop Rite” chain, which had stores in New Jersey.  The plaintiff also stressed that the defendant purchased 85% of its products, as well as certain services, from a retailers cooperative that was based in Elizabeth, New Jersey, of which it was a member.  The trial court granted the defendant’s motion, and the Appellate Division affirmed.

The Appellate Division started its analysis by reciting well-established principles concerning the exercise of jurisdiction and the differences between specific jurisdiction (when a cause of action arises directly from a defendant’s contacts with the forum state) and general jurisdiction (when a cause of action is not related to the defendant’s contacts with the forum state).  Because the plaintiff’s accident in the defendant’s Pennsylvania store was not related to the defendant’s contacts with New Jersey, the plaintiff had to show that the New Jersey courts had general jurisdiction, which is a difficult standard to meet that requires extensive contacts between the defendant and the forum.

After recounting the defendant’s lack of contacts with New Jersey, whereby its sole contact with the State was its purchase of products and services from the New Jersey-based cooperative, the court explained that “[t]his form of contact is insufficient to support the exercise of general jurisdiction over defendant by the New Jersey courts.”  The court was unmoved by the argument that the defendant’s membership in and purchases from the New Jersey-based cooperative was sufficient to establish jurisdiction.  On that point, the Appellate Division conceded that it had not found a case specifically addressing that issue, but it nonetheless emphasized that “it is well established that ownership of an entity conducting business in New Jersey is an insufficient basis for the assertion of jurisdiction over the out-of-state company.”

The court reviewed supportive caselaw from other jurisdictions and ruled that the defendant’s membership in the New Jersey-based cooperative was “an insufficient predicate for the exercise by the New Jersey courts of long-arm jurisdiction over a claim that has no relation to that membership.”  The court reasoned that the plaintiff’s accident was completely unrelated to the defendant’s purchases from the New Jersey-based group, and the plaintiff went shopping at the defendant’s store because she lived in Pennsylvania, not because the defendant belonged to the New Jersey-based cooperative.  Accordingly, the court held that New Jersey’s courts could not exercise jurisdiction over the defendant.