E-Alert Case Updates

Stream-of-Commerce Theory of Personal Jurisdiction Requires Purposeful Availment

J. McIntyre Machinery, Ltd. v. Nicastro
No. 09–1343 (U.S. 2011)
by Imran O. Shaukat, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this recent case, the Supreme Court of the United States concluded that the stream-of-commerce theory of personal jurisdiction could not displace the general rule that the exercise of judicial power is lawful only when a party purposefully avails itself of conducting activities within the forum State. Specifically, the Court held that New Jersey could not exercise jurisdiction over a foreign corporation that had not: (1) purposefully availed itself of doing business in the jurisdiction; or (2) placed goods in the stream-of-commerce with the expectation they would be purchased in the jurisdiction.

Here, Robert Nicastro injured his hand in New Jersey while using a metal-shearing machine manufactured by J. McIntyre Machinery, Ltd. (“J. McIntyre”), a company incorporated in England. Nicastro filed a products-liability suit in State Court, arguing that New Jersey had personal jurisdiction over J. McIntyre because: (1) a U.S. distributor agreed to sell J. McIntyre’s machines in the U.S.; (2) J. McIntyre officials attended trade shows in several states, although not in New Jersey; and (3) at least one of J. McIntyre’s machines ended up in New Jersey. J. McIntyre filed a Motion to Dismiss, arguing that personal jurisdiction was improper because the company neither marketed goods in, nor shipped goods to, New Jersey.

The trial court agreed with J. McIntyre, concluding that the company had no contacts with New Jersey, apart from the fact that the machine in question ended up in the State. On appeal, the Supreme Court of New Jersey reversed the decision of the trial court, concluding that New Jersey had jurisdiction because: (1) the injury occurred in New Jersey; (2) J. McIntyre knew or reasonably should have known that its products could be distributed to any of the fifty states; and (3) J. McIntyre failed to take reasonable steps to prevent the distribution of its products to New Jersey.

On appeal to the Supreme Court of the United States, the Court reversed the decision of the Supreme Court of New Jersey. The Court acknowledged that Nicastro failed to establish that J. McIntyre engaged in conduct purposefully directed at New Jersey. The Court reasoned that the company: (1) had no office in New Jersey; (2) neither owned property in, nor paid taxes to, New Jersey; and (3) neither advertised in, nor sent any employees to, New Jersey. Because the corporation never engaged in any activities in New Jersey that revealed an intent to invoke or benefit from the protection of the State’s laws, the Court concluded that the trial court correctly granted J. McIntyre’s Motion to Dismiss.