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Stream-of-Commerce Theory of Personal Jurisdiction Requires Purposeful Availment
(July 2011) By Imran O. Shaukat, Summer Associate
For more information, contact Paul
Farquharson.
J. McIntyre Machinery,
Ltd. v. Nicastro, No. 09–1343 (U.S. Supreme Court, June 27, 2011) | View pdf
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.
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