New Jersey man thwarted in attempt to sue UK-based machinery maker

A U.S. Supreme Court decision handed down the same day as Goodyear suggests that the high court is seeking to clarify some blurry lines of jurisdiction.

New Jersey attorney Jonathan W. Miller of the Philadelphia, Pa.-based Locks Law Firm, told Lawyers Weekly that the high court had not visited the jurisdictional issues raised in J. McIntyre Machinery, Ltd. v. Nicastro (Lawyers Weekly No. 11-17-0659, 47 pp.) since its 1987 opinion in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987).

Miller wrote an amicus brief for the American Association of Justice in the Nicastro case.

The splintered six-justice U.S. Supreme Court majority reversal of a New Jersey Supreme Court ruling in a lawsuit against the maker of a metal shearing machine that severed a man’s fingers in 2001 may bar some injury claims brought in North Carolina against foreign companies, lawyers say.

“This is the kind of accident that happens all the time,” Raleigh attorney David F. Kirby told Lawyers Weekly.

Kirby was not involved in Nicastro, but he represented plaintiffs in the high court jurisdiction case that paralleled Nicastro — Goodyear Dunlop Tires Operations, S.A. v. Brown (Lawyers Weekly No. 11-17-0658, 17 pp.).

“These types of injury claims based on defective products are common, and the kind of facts we see in Nicastro, we’re going to see happening over and over again,” Kirby said.

And the court’s opinion in Nicastro, coupled with its opinion in Goodyear, may signal the high court’s desire to see tightening of jurisdictional rules in suits against foreign manufacturers, said Winston-Salem attorney William K. Davis, who represented the defendants in Goodyear.

So when a North Carolinian is injured by a product manufactured by a company based in another country, or even another state, Kirby asked, does the injured person have a right to bring the manufacturer to North Carolina to answer a lawsuit?

At least in the case of Nicastro, the answer was no.

Robert Nicastro alleged “that the [McIntyre Model 640 Shear] was a dangerous product defectively made” by J. McIntyre Machinery, Ltd., a Nottingham, England-based corporation.

At the time of Nicastro’s injury, McIntyre used an Ohio-based company, McIntyre Machinery America, Ltd. “as its exclusive distributor for the entire United States.”

Nicastro sued both companies in New Jersey, but the distributor entered bankruptcy, so Nicastro could only pursue the foreign manufacturer.

Ultimately the state’s Supreme Court rejected J. McIntyre’s motion to dismiss, holding 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 a product-liability action in that state.

The U.S. Supreme Court called that holding an “error regarding the stream of commerce doctrine of jurisdiction.”

Writing for a four-justice plurality that included Chief Justice John Roberts and Justices Antonin Scalia and Clarence Thomas, Justice Anthony Kennedy wrote that a court’s power to exercise jurisdiction over a defendant requires some act by which the defendant “purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.”

Placing goods into the stream of commerce “with the expectation that they will be purchased by consumers within the forum state” may indicate “purposeful availment,” Kennedy wrote, “but the principal inquiry is whether the defendant’s activities manifest an intention to submit to the power of the state.

“[I]t is not enough,” Justice Kennedy wrote, “that the defendant might have predicted that its goods will reach the forum state.”

Noting that J. McIntyre “had no office in New Jersey; it neither paid taxes nor owned property there; and it neither advertised in, nor sent any employees to the state,” the plurality opinion drew a distinction between a manufacturer’s “purposeful contacts with New Jersey, not with the United States, that alone are relevant.”

Miller said the key to whether jurisdiction over foreign manufacturers can be established in cases like Nicastro may be whether sufficient evidence can be gathered proving a relationship between the foreign company and the forum state.

Miller said the plurality opinion in Nicastro places an emphasis on discovery in jurisdictional disputes, and the outcome in a given case will depend on its specific factual circumstances.

“The duty for plaintiffs’ attorneys will be to get as much information as possible regarding a foreign company’s ties to the forum,” Miller said. “It will be expensive and time-consuming.”

And, Research Triangle Park attorney Mark McGrath told Lawyers Weekly, “Products liability cases are difficult enough – almost impossible – to begin with, and then to add to the calculus the involvement of a foreign company and  the time and expense of undertaking a jurisdictional fight, it really does affect my decision-making on whether to even take a case.” McGrath was not involved in Nicastro.

Nicastro spent years litigating the jurisdiction issue, and the facts he managed to produce, Justice Kennedy wrote, merely “reveal[ed] an intent to serve the U. S. market, but they do not show that J. McIntyre purposefully availed itself of the New Jersey market.”

Miller saw that as a distinction without a difference. “If a foreign company is willing to sell a product anywhere in the United States, that is the same as being willing to sell to New Jersey or North Carolina or any other state. There is no such thing as the United States separate from its fifty states.”

But the high court was convinced that J. McIntyre did not “engage in any activities in New Jersey that reveal[ed] an intent to invoke or benefit from the protection of its laws[.]”

And so it held that “New Jersey is without power to adjudge the rights and liabilities of J. McIntyre, and its exercise of jurisdiction would violate due process.”

It reversed the judgment of the New Jersey Supreme Court.

Parallel cases’ wide-ranging effects

The high court addressed the doctrine of general jurisdiction in Goodyear, Davis said, while in Nicastro it resized the specific jurisdiction doctrine from International Shoe Co. v. Washington, 326 U. S. 310 (1945) and its progeny.

Davis and Kirby both said the high court’s treatment of International Shoe‘s two jurisdictional feet – general and specific jurisdiction – was no accident.

“The court was sending a message,” Kirby said. “They took both of these cases to try to clarify what the rules are for asserting general or specific jurisdiction.”

Davis said the high court granted certiorari in both cases on the same day. The cases were argued back-to-back at the Supreme Court, and the opinions in both were released on the same day.

“They were given parallel treatment by the court,” Davis said.

But the results in the cases were anything but parallel.

Goodyear featured a unanimous majority, while Nicastro featured a six-justice majority with a four-justice plurality opinion, a concurring opinion and a three-justice dissent.

Kirby said there were some significant nuances between the court’s plurality, concurring and dissenting opinions in Nicastro that show that “There is not uniformity of thought among the Supreme Court justices about where the line should be drawn with respect to what are sufficient contacts with a forum state to establish specific jurisdiction.”

Still, Davis said, the Nicastro opinion will affect injury claims brought “not only in North Carolina but in states throughout the United States.”

Based on the plurality opinion in Nicastro, Kirby said, “Before I bring a case in North Carolina against a foreign company, I will have to determine that the company was doing active business in North Carolina to the extent that it had offices and a salesperson, it had products regularly shipped and sold in our state such that we could say it had a significant presence in North Carolina.”

Four machines brought into the state by a distributor – the facts in Nicastro – Kirby said, “is not sufficient contact to allow you to force a British manufacturer to come to a state court to defend a lawsuit.”

Justice Stephen Breyer, joined by Justice Samuel Alito, wrote an opinion concurring in the plurality’s judgment, but Breyer and Alito viewed Nicastro as “an unsuitable vehicle for making broad pronouncements that refashion basic jurisdictional rules.”

They joined in the plurality’s judgment but not its reasoning.

Justice Ruth Bader Ginsburg wrote a dissenting opinion, joined by Justices Sonia Sotomayor and Elena Kagan.

She wrote, quoting University of Texas law professor Russell J. Weintraub, that “the splintered majority today turn[s] the clock back to the days before modern long-arm statutes when a manufacturer, to avoid being hauled into court where a user is injured, need only Pilate-like wash its hands of a product by having independent distributors market it.”

The dissenting justices would have held J. McIntyre “answerable in New Jersey for the harm Nicastro suffered… using [the] shearing machine.”

Opinion Brief

Case name: J. McIntyre Machinery, Ltd. v. Nicastro

Court: United States Supreme Court

Judges: Justice Anthony Kennedy; Chief Justice John Roberts, Justice Antonin Scalia and Justice Clarence Thomas, concurring; Justices Stephen Breyer and Samuel Alito concurring in the result only; Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan, dissenting.

Date: June 27, 2011

Plaintiffs’ attorneys: Alexander W. Ross Jr. and Janice L. Heinold of Rakoski & Ross (Marlton, N.J.)

Defendants’ attorneys: Steven F. Gooby and James S. Coons of Morison Ansa Holden Assuncao & Prough (East Brunswick, N.J.)

Issue: May a foreign manufacturer that places a defective product into the stream of commerce through a distribution scheme that targets a national market, which includes the forum state, be subject to the jurisdiction of a court in the forum state in a product-liability action?

Holding: A court’s power to exercise specific jurisdiction over a defendant requires some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. It is not enough that the defendant might have predicted that its goods would reach the forum state.