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Klagstad, Lewis, Oshei, Woolf J. McIntyre Machinery, Ltd., v.

Nicastro

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Facts: Respondent Nicastros cause of action occurred when he severed four fingers from his left hand while operating a three-ton metal-shearing machine. He argued that his injury was caused by inadequate safety protections and a defective design. Though the machine was manufactured in England by J. McIntyre Machinery, Ltd., his employer, Curcio Scrap Metal, Inc., purchased it through a 3rd party distributor after viewing it at a trade show in Las Vegas, Nevada. The allegedly defective machine was 1 of 4 possibly solid in New Jersey. While J. McIntyre officials attended several trade shows like these in the United States, they never once attended any trade shows in New Jersey, and only a maximum of 4 machines were ever sold to parties in New Jersey. Procedural Posture: Nicastro filed his products-liability suit against McIntyre in New Jersey; Curcios principal place of business and the location where his injury occurred. Citing the stream of commerce theory, the State Supreme Court of New Jersey ruled that because J. McIntyre knew or reasonably should have known that its products could be sold in the forum state, New Jersey courts could exercise jurisdiction over the foreign manufacturer without violating Due Process. The Supreme Court of the United States granted certiorari. Issue: Can New Jersey Courts exercise jurisdiction over J. McIntyre Machinery, Ltd., a foreign defendant that has neither marketed nor shipped goods into the state, without violating Due Process? Holding: No, they cannot. At no time did [J. McIntyre] engage in any activities in New Jersey that reveal an intent to invoke or benefit from the protection of the State's laws. New Jersey is without power to adjudge the rights and liabilities of J. McIntyre, and its exercise of jurisdiction would violate due process. J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2791 (2011) Reasoning: In the plurality decision drafted by Justice Kennedy, the Supreme Court of the United States held that the New Jersey Supreme Court erred in its application of the stream of commerce doctrine. Id. at 2785. First, the court wished to correct such flawed personal jurisdiction analyses and establish that a stream of commerce test alone should never replace a complete inquiry into personal jurisdiction. As the court stated the general rule, jurisdiction is only properly exercised if the defendant purposefully avails itself of the forum State and the so-called stream-ofcommerce doctrine cannot displace it. Id. at 2785. The court did not place all of the blame on the New Jersey Supreme Court, however, saying that This Court's Asahi decision may be responsible in part for [the New Jersey Courts] error regarding the stream of commerce, and this case presents an opportunity to provide greater clarity. Id. at 2786. Attempting to clarify its split 4-4-1 Asahi decision, the Supreme Court went on to say that Justice Brennans formulation of the stream of commerce test was inconsistent with the premises of lawful judicial power it is the defendants actions, not his expectations, that empower a States courts to subject him to

Klagstad, Lewis, Oshei, Woolf

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judgment. Id. at 2789. Rejecting Justice Brennans test, the court instead preferred to rely on Justice OConnors formulation of the stream of commerce test and considered whether McIntyres conduct was purposefully directed at New Jersey. Using this elucidation of its standards, the court considered the facts most favorable to Nicastro: J. McIntyres 3rd party distributor sold machines in the U.S., J. McIntyre attended trade shows in several U.S. states other than New Jersey, and up to four machines were ultimately sold to New Jersey purchasers. Beyond that, however, The British manufacturer 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. Id. at 2790. As the trial court correctly pointed out, the defendant does not have a single contact with New Jersey short of the machine in question. Id. Justice Kennedy felt that while Nicastro may have revealed J. McIntyres intent to serve the U.S. market, he had failed to show that J. McIntyre directed marketing and sales efforts specifically at the state of New Jersey. Id. Even under the appropriate stream of commerce test, the court found that the facts alleged by Nicastro were insufficient for the State of New Jersey to exercise jurisdiction. Black Letter Law: Two principles are implicit First, personal jurisdiction requires a forum-by-forum, or sovereign-by-sovereign, analysis. The question is whether a defendant has followed a course of conduct directed at the society or economy existing within the jurisdiction of a given sovereign, so that the sovereign has the power to subject the defendant to judgment concerning that conduct The second principle is a corollary of the first. For jurisdiction, a litigant may have the requisite relationship with the United States Government but not with the government of any individual State. That would be an exceptional case, however. Id. at 2789. Concurring Opinion: Justices Breyer and Alito concurred, stating that a single isolated sale would not alone be sufficient for a finding of personal jurisdiction, even if defendant was aware that the stream of commerce may or will sweep the product into the forum state. Id. at 2792. However, Justices Breyer and Alito felt this finding was firmly based in precedent, and expressed hesitance to make an absolute rule or any other broad pronouncements that refashion basic jurisdictional rules. Id. at 2793 Dissenting Opinion: While Justices Ginsburg, Sotomayor, and Kagan agreed that McIntyre was not subject to general jurisdiction in New Jersey courts they disagreed with the majoritys finding that McIntyre did not purposefully direct its conduct to New Jersey. Id. at 2797. On the contrary, they reasoned that by promoting and selling its machines across the entire U.S., McIntyre purposefully availed itself of the entire U.S. market. Id. at 2801. By extension, they argued in the dissent, McIntyre availed itself of all States in which its products were sold. Id. By allowing New Jersey to exercise specific jurisdiction to decide whether McIntyre was liable for injuries caused by a design defect in its product, Justices Ginsburg, Sotomayor, and Kagan argued, they could prevent a foreign industrialist from abusing the U.S. judiciary to evade liability.

Klagstad, Lewis, Oshei, Woolf

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Analysis: Justice Kennedys opinion, along with the concurrence, effectively eliminates the ambiguity of Asahis split decision by rejecting Justice Brennans stream of commerce test. Now, when trying to determine whether a court may exercise personal jurisdiction over a foreign corporation doing business through a third party distributor, the court will ask: 1) Whether the defendant intentionally or purposefully directed business to the forum state, 2) How related the defendants contact with the forum state is to the cause of action at hand, and 3) Whether such an exercise of jurisdiction would offend traditional notions of fair play and substantial justice. It may also be important to note that while New Jersey Courts could not exercise jurisdiction over J. McIntyre, the Supreme found that the corporation did direct its marketing and sales efforts at the United States in general. In fact, the court suggested cases were possible in which no state could properly exercise jurisdiction over such a defendant. To deal with such cases, the court suggested that in the future Congress could authorize the exercise of jurisdiction in appropriate courts. Id. at 2790.