Rajnikant Patel v. Karnavati America, LLC , 437 N.J. Super. 415 ( 2014 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2737-13T4
RAJNIKANT PATEL and
RASIKA PATEL, his wife,
APPROVED FOR PUBLICATION
Plaintiffs-Respondents,
October 9, 2014
v.
APPELLATE DIVISION
KARNAVATI AMERICA, LLC, CADILA
PHARMACEUTICAL, LTD, SCHNEIDER
ELECTRIC, USA, INC.,
Defendants,
and
KARNAVATI ENGINEERING, LTD,
Defendant-Appellant,
and
GLOBEPHARMA, INC.,
Defendant-Respondent.
_______________________________
Argued September 10, 2014 - Decided October 9, 2014
Before Judges Lihotz, Espinosa and
Rothstadt.
On appeal from the Superior Court of New
Jersey, Law Division, Middlesex County,
Docket No. L-8317-10.
Daniel C. Fleming argued the cause for
appellant (Wong Fleming, P.C., attorneys;
Mr. Fleming and Mark W. Thompson, on the
brief).
Brian M. Gerstein argued the cause for
respondents Rajnikant and Rasika Patel
(Harkavy, Goldman, Goldman & Gerstein,
attorneys; Mr. Gerstein, on the brief).
Larry E. Hardcastle, II, argued the cause
for respondent GlobePharma, Inc. (Lanciano &
Associates, LLC, attorneys; Mr. Hardcastle
and Michael W. Hoffman, on the brief).
The opinion of the court was delivered by
LIHOTZ, P.J.A.D.
We examine whether the Law Division properly exercised
personal jurisdiction over defendant Karnavati Engineering, Ltd.
(Karnavati), a corporation located in India.1 Plaintiff
Rajnikant Patel2 alleged the defective design of a RIMEK UNIK-1
tablet press machine (the machine) manufactured in India by
Karnavati caused him to suffer personal injuries while working
on the New Jersey premises of his employer, Neil Laboratories/
Advent Pharmaceuticals (Neil Labs). On our leave granted,
Karnavati appeals from the Law Division's December 19, 2013
order denying its motion to dismiss plaintiff's complaint for
1
The complaint also named Karnavati's corporate affiliates,
Karnavati America, LLC (KAL) and Cadila Pharmaceutical, Ltd.
(Cadila) as defendants. The motions of KAL and Cadila to
dismiss for lack of personal jurisdiction were granted.
2
For ease, we refer to Rajnikant Patel as the plaintiff,
understanding his wife Rasika Patel has filed a derivative per
quod claim.
2 A-2737-13T4
lack of jurisdiction. R. 4:6-2(b). Karnavati argues the motion
judge's finding of minimum contacts is factually flawed leading
to an erroneous legal conclusion. We agree and reverse.
The recital of the arduous procedural history detailing
plaintiff's efforts to join and serve parties and proceed with
his suit is not necessary to our discussion of whether New
Jersey has jurisdiction over Karnavati. We limit our discussion
to those facts found in the motion record that are relevant to
our analysis.
Plaintiff resides in Middlesex County and is employed by
Neil Labs, working at its facility in East Windsor. Plaintiff
suffered "severe personal injuries" at the facility on November
4, 2008, when a towel he was using to clean the machine while it
was running, caught and pulled his left hand into the machine.
Plaintiff alleges "[t]he safety interlocks [on the machine] were
either bypassed and/or inoperable." Among the claims included
in his complaint are: the machine was "defectively designed,
manufactured, and/or maintained, causing same to fail"; express
and implied warranties were breached; negligence occurred in the
"design, manufacture, sale, distribution, inspection,
maintenance and/or repair" of the machine; and the failure to
warn of the machine's unreasonably dangerous propensities caused
injury.
3 A-2737-13T4
Karnavati moved to dismiss the complaint in lieu of filing
an answer. Jurisdictional discovery was conducted.3
Mukund Modi, Karnavati's Senior Vice President, filed a
certification averring Karnavati, which manufactures tablet
press machines used in the pharmaceutical industry, was
incorporated and operates in India. Although it manufactured
the machine asserted to cause plaintiff's injuries, Karnavati
never shipped its machines to New Jersey. In fact, since its
incorporation, Karnavati only shipped one product to the United
States, when it sent a different device to Maryland, in December
2003. Modi certified Karnavati is not registered to do business
in New Jersey; does not advertise in New Jersey; has never
engaged in any sales in New Jersey; has never solicited business
from or paid taxes to the state; has never attended trade shows
or conferences "for the purposes of displaying its tablet press
machines, in New Jersey or elsewhere in the United States"; and
has never sent its employees to New Jersey for any reason.
Additionally, Karnavati never owned, used, or possessed real or
personal property in New Jersey; owned or controlled any state
bank accounts; or maintained insurance for products liability
conduct in the state.
3
Plaintiff never sought or argued additional discovery was
necessary.
4 A-2737-13T4
Karnavati sold the machine in question to GlobePharma, Inc.
(Globe) in 2002. Globe is a closely held corporation, with a
place of business in New Brunswick. Globe "design[s],
manufacture[s], and s[ells] . . . unit-dose samplers for powders
used in pharmaceutical and nutritional supplement
manufacturing[,]" as well as "new and used pharmaceutical and
nutritional supplement machinery such as . . . table-top rotary
tablet press machines."
The purchase order for the subject machine was prepared by
Globe and sent to Karnavati. Globe sought two machines
described as:
Double Rotary Tablet Press[es], Model KEB—
4/35, with 35 stations for IPT, standard B
tooling, GMP model with sturdy acrylic
guards AC variable speed drive, gravity feed
system, manual lubrication system, safety
interlocks and the modifications suggested
by Neil [Labs], a list of which was already
sent to Mr. Nalk.
In the "Terms & Conditions" section of the purchase order, Globe
provided:
A representative from Neil Labs will visit
Karnavati for trial running of the machines.
A pharmaceutical powder (which will be
shipped from Hyderabad to Karnavati) will be
run on these machines. Neil Labs may bring
their own tooling or they may need tooling
from Karnavati. Neil Labs has to be totally
satisfied before the machines are accepted.
Modifications suggested by Neil Labs are of
essence for acceptance of the machines by
Neil Labs.
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The machine was sent by sea, freight on board, to Globe,
which took possession in Mumbai, India. Globe paid for the
machine before it left India.
This was not the first time Globe and Karnavati did
business. In January 1998, Globe and Karnavati executed an
"Exclusive Distribution Agreement," under which Karnavati agreed
to exclusively supply Globe with "pharmaceutical machinery,
especially tablet presses, packaging machinery, and all-purpose
equipment" within the territorial limits of North America, for a
period of two years. Karnavati agreed to provide a "full
warranty for one year for any manufacturing or material defects
towards machines supplied to Globe." Further, the parties
agreed "[i]f specifically required by Globe, [Karnavati] shall
provide training to the personnel appointed by Globe in
installation, operation, and maintenance of the machines" and
provided Karnavati's technicians would assist Globe. Globe
agreed to use its best efforts to generate a specified level of
sales during the two-year agreement term. Globe also assumed
responsibility to promote and advertise the machines using
brochures of the machines supplied by Karnavati. Finally, the
agreement was governed by the laws of India.
Nothing suggests the exclusive distribution agreement
continued beyond the initial two-year period. However, Globe's
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president certified, in the course of its business, Globe
continued to acquire and resell machinery manufactured by
Karnavati, although not on an exclusive basis.
Following argument of Karnavati's motion to dismiss, the
judge concluded New Jersey courts had jurisdiction because
"there [wa]s a sufficient showing here that the tablet press was
made for and sold to a New Jersey company, for the purpose of
being used in New Jersey." The judge distinguished the facts of
this matter from those presented in the United States Supreme
Court's recent decision in J. McIntyre Machinery, Limited v.
Nicastro, __ U.S. __, 131 S. Ct. 2780, 180 L. Ed. 2d 765 (2011),
reasoning jurisdiction here was not based on Karnavati's "effort
to market its goods through the United States." Rather,
applying jurisdictional jurisprudence, the judge found the
purchase order demonstrated "the sale and the production of [the
machine] was for the purpose of benefitting a New Jersey company
in New Jersey." Relying on this court's decision in Cruz v.
Robinson Engineering Corporation, 253 N.J. Super. 66 (App.
Div.), certif. denied, 130 N.J. 9 (1992), the judge reasoned New
Jersey courts had personal jurisdiction because Karnavati had
"purposely availed itself of this jurisdiction and c[ould] be
hailed into court . . . in New Jersey to address a personal
7 A-2737-13T4
injury complaint" arising from the use of the machine it
manufactured and designed for Neil Labs.
On December 6, 2013, an order memorializing these findings
was filed. The motion judge filed an amplification of his
determination, pursuant to Rule 2:5-1(b), once leave to appeal
was granted.
"The question of in personam jurisdiction is a mixed
question of law and fact[.]" Citibank, N.A. v. Estate of
Simpson, 290 N.J. Super. 519, 532 (App. Div. 1996). In our
review, we examine whether the trial court's factual findings
are "supported by substantial, credible evidence" in the record.
Mastondrea v. Occidental Hotels Mgmt. S.A., 391 N.J. Super. 261,
268 (App. Div. 2007). However, whether these facts support the
court's exercise of "personal jurisdiction over a defendant is a
question of law," which we review de novo. YA Global Invs.,
L.P. v. Cliff, 419 N.J. Super. 1, 8 (App. Div. 2011). Plaintiff
bears the burden of pleading sufficient facts to establish
jurisdiction. Blakey, supra, 164 N.J. at 71; Jacobs v. Walt
Disney World, Co., 309 N.J. Super. 443, 454 (App. Div. 1998).
"[T]erritorial presence in the forum is the basic
prerequisite for subjecting a defendant to its in personam
judgment." Estate of Simpson, supra, 290 N.J. Super. at 526.
The Fourteenth Amendment's Due Process Clause "'protect[s] a
8 A-2737-13T4
person against having the Government impose burdens upon him
except in accordance with the valid laws of the land.'"
Nicastro, supra, __ U.S. at __, 131 S. Ct. at 2786, 180 L. Ed.
2d at 773 (plurality op.) (quoting Giaccio v. Pennsylvania, 382
U.S. 399, 403, 86 S. Ct. 518, 521, 15 L. Ed. 2d 447, 450
(1966)). "[T]hose who live or operate primarily outside a State
have a due process right not to be subjected to judgment in its
courts as a general matter." Id. at __, 131 S. Ct. at 2787, 180
L. Ed. 2d at 774.
Absent actual territorial presence, jurisdiction may extend
to out-of-state parties that engage in sufficient contacts with
the forum, as long as those contacts satisfy the protections of
the Due Process Clause of the Fourteenth Amendment. New
Jersey's long-arm jurisprudence allows "out-of-state service to
the uttermost limits permitted by the United States
Constitution." Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971).
See also Reliance Nat'l Ins. Co. in Liquidation v. Dana Transp.,
Inc., 376 N.J. Super. 537, 543 (App. Div. 2005) (noting New
Jersey courts exercise in personam jurisdiction "to the
outermost limit of [their] ability to do so"); Pressler &
Verniero, Current N.J. Court Rules, comment 3.1.1 on R. 4:4-4
(2014). Specifically, the contacts with the forum must be such
that "'the maintenance of the suit does not offend traditional
9 A-2737-13T4
notions of fair play and substantial justice.'" Waste Mgmt.,
Inc. v. Admiral Ins. Co., 138 N.J. 106, 132 (1994) (O'Hern, J.,
concurring) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310,
316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945)), cert. denied
sub nom., WMX Techs. v. Canadian Gen. Ins. Co., 513 U.S. 1183,
115 S. Ct. 1175, 130 L. Ed. 2d 1128 (1995). See also R. 4:4-
4(b)(1) (providing methods of serving and obtaining in personam
jurisdiction over out-of-state defendants "consistent with due
process of law").
Any jurisdictional analysis must begin with "an examination
of the defendant's minimum contacts with the state[.]" Baanyan
Software Servs., Inc. v. Kuncha, 433 N.J. Super. 466, 476 (App.
Div. 2013). The analysis is fact sensitive and must be
undertaken "on a case-by-case basis." Blakey v. Cont'l
Airlines, 164 N.J. 38, 66 (2000).
It is also well settled that the requisite
quality and quantum of contacts is dependent
on whether general or specific jurisdiction
is asserted, that is, whether the defendant
is subject to any claim that may be brought
against him in the forum state whether or
not related to or arising out of the
contacts themselves, i.e., general
jurisdiction, or whether the claim is
related to or arises out of the contacts in
the forum, i.e., specific jurisdiction.
[Estate of Simpson, supra, 290 N.J. Super.
at 526-27.]
10 A-2737-13T4
To establish general jurisdiction, "[a] defendant must have
contacts with th[e] State that are 'so continuous and
substantial as to justify subjecting the defendant to the
jurisdiction.'" Baanyan, supra, 433 N.J. Super. at 474 (quoting
Waste Mgmt., supra, 138 N.J. at 123). "[This] standard for
establishing general jurisdiction is fairly high, and requires
that the defendant's contacts be of the sort that approximate
physical presence." Wilson v. Paradise Village Beach Resort &
Spa, 395 N.J. Super. 520, 528 (App. Div. 2007) (internal
quotation marks omitted). On the other hand, "[s]pecific
jurisdiction is available when the 'cause of action arises
directly out of a defendant's contact with the forum state.'"
Baanyan, supra, 433 N.J. Super. at 474 (quoting Waste Mgmt.,
supra, 138 N.J. at 119). "In the context of specific
jurisdiction, the minimum contacts inquiry must focus on 'the
relationship among the defendant, the forum, and the
litigation.'" Lebel v. Everglades Marina, Inc., 115 N.J. 317,
323 (1989) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.
Ct. 2569, 2579, 45 L. Ed. 2d 683, 698 (1977)). "[W]hen the
defendant is not present in the forum state, it is essential
that there be some act by which the defendant purposefully
avails [itself] of the privilege of conducting activities within
the forum state, thus invoking the benefit and protection of its
11 A-2737-13T4
laws." Baanyan, supra, 433 N.J. Super. at 475 (internal
quotation marks omitted).
Here, no one disputes Karnavati's contacts with New Jersey
are not sufficiently continuous or substantial to warrant an
exercise of general jurisdiction. The motion judge concluded
the facts do support application of specific jurisdiction.
Thus, the ultimate question is whether Karnavati submitted to
the judicial power of New Jersey in connection with its
activities directed at the State, justifying specific
jurisdiction "'in a suit arising out of or related to the
defendant's contacts with the forum.'" Nicastro, supra, __ U.S.
at __, 131 S. Ct. at 2788, 180 L. Ed. 2d at 775 (plurality op.)
(quoting Helicopteros Nacionales de Colombia, S. A. v. Hall, 466
U.S. 408, 414 n. 8, 104 S. Ct. 1868, 1872 n. 8, 80 L. Ed. 2d
404, 411 n. 8 (1984)). See also Burger King Corp. v. Rudzewicz,
471 U.S. 462, 474, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528, 542
(1985) (emphasizing the critical inquiry is whether "the
defendant's conduct and connection with the forum State are such
that he should reasonably anticipate being haled into court
there"); Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228,
1240, 2 L. Ed. 2d 1283, 1298 (1958) (holding generally the
exercise of judicial power is not lawful unless the defendant
"purposefully avails itself of the privilege of conducting
12 A-2737-13T4
activities within the forum State, thus invoking the benefits
and protections of its laws").
Defendant argues "there is absolutely no evidence that
[Karnavati] ever purposely availed itself of the right to do
business in New Jersey[.]" It maintains the holding in Nicastro
defeats plaintiff's claims of specific jurisdiction. The
essence of defendant's position, which is repeated before us, is
the single sale of a product to an independent corporation in
India, even if accompanied by the knowledge the product will be
delivered to a user in New Jersey, is insufficient to allow the
application of long-arm jurisdiction. The trial judge rejected
consideration of Nicastro, finding it factually distinguishable
from this matter.
In Nicastro, a British manufacturer sold its machines to an
independent distributor in the United States, and had no
contacts with New Jersey, where the plaintiff was injured while
using one of the machines sold in the United States. Nicastro,
supra, __ U.S. at __, 131 S. Ct. at 2785-86, 180 L. Ed. 2d at
772-73 (plurality op.). Justice Kennedy, joined by Chief
Justice Roberts and Justices Scalia and Thomas, delivered the
opinion of the court; Justice Breyer filed a concurring opinion
joined by Justice Alito; and Justice Ginsburg, joined by
Justices Sotomayor and Kagan, dissented.
13 A-2737-13T4
The majority opinion stemmed the apparent extension of
jurisdiction over foreign defendants under what had become known
as "the stream of commerce theory," which was first announced in
World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 297-
98, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490, 502 (1980) ("[A]
forum State does not exceed its powers under the Due Process
Clause if it asserts personal jurisdiction over a corporation
that delivers its products into the stream of commerce with the
expectation that they will be purchased by consumers in the
forum State."). See also Charles Gendler & Co. v. Telecom
Equip. Corp., 102 N.J. 460 (1986) (adopting stream of commerce
theory when considering extra-territorial jurisdiction).
Justice Kennedy specifically examined the holding of the New
Jersey Supreme Court, which concluded "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 the personal
jurisdiction of a New Jersey court in a product-liability
action." Nicastro v. McIntyre Mach. Am., Ltd., 201 N.J. 48, 73
(2010). The majority of the Court reversed the New Jersey
Supreme Court's holding, rejecting its expansion of the stream
of commerce theory to the point where "a producer is subject to
jurisdiction for a products-liability action so long as it
14 A-2737-13T4
'knows or reasonably should know that its products are
distributed through a nationwide distribution system that might
lead to those products being sold in any of the fifty states.'"
Nicastro, supra, __ U.S. at __, 131 S. Ct. at 2793, 180 L. Ed.
2d at 780 (plurality op.) (quoting Nicastro, supra, 201 N.J. at
76-77).
In setting aside jurisdiction based on what equated to a
defendant's knowledge of foreseeable consequences because such a
basis offended the traditional notions of fair play and
substantial justice requirements of due process, the majority of
the justices re-focused review on whether long-arm jurisdiction
applies, examining "whether the defendant's activities manifest
an intention to submit to the power of a sovereign. In other
words, the defendant must 'purposefully avai[l] itself of the
privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its laws[.]'" Id. at
__, 131 S. Ct. at 2788, 180 L. Ed. 2d at 775 (quoting Hanson,
supra, 357 U.S. at 253, 78 S. Ct. at 1240, 2 L. Ed. 2d at 1298).
"The defendant's transmission of goods permits the exercise of
jurisdiction only where the defendant can be said to have
targeted the forum; as a general rule, it is not enough that the
defendant might have predicted that its goods will reach the
forum State." Ibid. Further, Justice Kennedy flatly rejected
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the New Jersey Supreme Court's reliance on public policy
concerns, including a state's "'strong interest in protecting
its citizens from defective products,'" explaining: "[t]hat
interest is doubtless strong, but the Constitution commands
restraint before discarding liberty in the name of expediency."
Id. at __, 131 S. Ct. at 2791, 180 L. Ed. 2d at 778 (quoting
Nicastro, supra, 201 N.J. at 75).
Justice Breyer agreed the New Jersey Supreme Court's
opinion must be reversed, but wrote separately, providing
precedential support to avoid what he viewed as the inclusion of
unnecessarily "broad pronouncements that refashion basic
jurisdictional rules." Id. at __, 131 S. Ct. at 2793, 180 L.
Ed. 2d at 780 (Breyer, J., concurring). In concluding personal
jurisdiction was not supported, he explained:
None of our precedents finds that a single
isolated sale, even if accompanied by the
kind of sales effort indicated here, is
sufficient. Rather, this Court's previous
holdings suggest the contrary. The Court
has held that a single sale to a customer
who takes an accident-causing product to a
different State (where the accident takes
place) is not a sufficient basis for
asserting jurisdiction. See World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286,
100 S. Ct. 559, 62 L. Ed. 2d 490 (1980).
And the Court, in separate opinions, has
strongly suggested that a single sale of a
product in a State does not constitute an
adequate basis for asserting jurisdiction
over an out-of-state defendant, even if that
defendant places his goods in the stream of
16 A-2737-13T4
commerce, fully aware (and hoping) that such
a sale will take place. See Asahi Metal
Industry Co. v. Superior Court of Cal.,
Solano Cty., 480 U.S. 102, 111, 112, 107 S.
Ct. 1026, 94 L. Ed. 2d 92 (1987) (opinion of
O'Connor, J.) (requiring "something more"
than simply placing "a product into the
stream of commerce," even if defendant is
"awar[e]" that the stream "may or will sweep
the product into the forum State"); id., at
117, 107 S. Ct. 1026, 94 L. Ed. 2d 92
(Brennan, J., concurring in part and
concurring in judgment) (jurisdiction should
lie where a sale in a State is part of "the
regular and anticipated flow" of commerce
into the State, but not where that sale is
only an "edd[y]," i.e., an isolated
occurrence); id., at 122, 107 S. Ct. 1026,
94 L. Ed. 2d 92 (Stevens, J., concurring in
part and concurring in judgment) (indicating
that "the volume, the value, and the
hazardous character" of a good may affect
the jurisdictional inquiry and emphasizing
Asahi's "regular course of dealing").
[Nicastro, supra, __ U.S. at __, 131 S. Ct.
at 2792, 180 L. Ed. 2d at 779 (Breyer, J.,
concurring).]
In this matter, plaintiff and Globe challenge Karnavati's
position that it is not subject to suit in New Jersey, and
advance the correctness of the motion judge's conclusion in
favor of New Jersey's exercise of personal jurisdiction.
Factual support for the Law Division's conclusion is garnered
from the 1998 distribution agreement between Karnavati and
Globe, which is suggested to establish Karnavati's knowledge its
products would be sold in New Jersey; the subject machine was
sold pursuant to the distribution agreement; and the machine was
17 A-2737-13T4
custom-made specifically for and sold to Neil Labs, a New Jersey
company, for use in New Jersey, evidencing Karnavati's intent to
benefit an entity in the State. Regarding this last point, the
judge's opinion noted: the purchase order expresses the machines
must be tailored to Neil Labs' specifications and must include
"safety interlocks and . . . modifications suggested by Neil
[Labs]"; "[m]odifications suggested by Neil Labs" were "of
essence" for its acceptance of the machines; and Neil Labs could
"send a representative to Karnavati for a trial run to ensure
operation."
Additionally, plaintiff and Globe reiterate the
applicability of our analysis in Cruz, which the trial judge
found persuasive. Cruz involved a products liability claim by a
New Jersey plaintiff injured on the New Jersey industrial
premises of his employer while using a heavy-duty urn filter
press manufactured by the California defendant. Cruz, supra,
253 N.J. Super. at 68. This court found no need to consider the
stream of commerce theory when analyzing the jurisdictional
challenge. Rather, we found adequate, undisputed facts proving
the defendant manufacturer had engaged in "purposeful conduct"
with New Jersey, warranting the exercise of specific
jurisdiction. Id. at 73. Assessing the defendant's contacts,
we noted the machine at issue was "a major industrial piece of
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equipment," described as the "cornerstone" of the employer's
"entire industrial operation, custom-ordered, custom produced
and taking over a year to fabricate." Ibid. The facts clearly
demonstrated the defendant manufacturer "certainly understood
. . . that the subject of the agreement was not only to be
shipped to New Jersey but was, moreover, the sine qua non of
[the employer's] plant, the predicate of the whole New Jersey
operation." Ibid.
Although Cruz involved a single direct sale to New Jersey,
the imposition of jurisdiction was based on the facts that
demonstrate significant, repeated interactions occurred over the
course of one year between the New Jersey employer which
purchased the machine and the foreign manufacturer. Id. at 74.
Letters, phone calls and personal meetings took place as the
parties worked together to customize and deliver the machine.
Id. at 74. Again, both parties knew the New Jersey employer had
no business without the machine. Id. at 75. The totality of
these numerous contacts were found to satisfy due process
allowing New Jersey's exercise of jurisdiction over the
nonresident manufacturer, a decision that did "'not offend
traditional notions of fair play and substantial justice.'"
Nicastro, supra, __ U.S. at __, 131 S. Ct. at 2787, 180 L. Ed.
19 A-2737-13T4
2d at 774 (plurality op.) (quoting Int'l Shoe, supra, 326 U.S.
at 316, 66 S. Ct. at 158, 90 L. Ed. at 102).
We cannot agree the facts in this matter square with those
in Cruz. This transaction, between Karnavati and Globe, took
place through Karnavati's office in India. The record does not
reflect the level of interaction between Karnavati and Neil Labs
in New Jersey, distinguishing these facts from the significant
contacts shown between the manufacturer and buyer in Cruz. In
Cruz, the contacts between the manufacturer and the forum
included a series of deliberate interactions over an extended
period, to ensure the machine, which was essential to the
buyer's operations, complied with the buyer's required
specifications for use in New Jersey. Here, there is no
information supporting a finding of a course of interaction
between Neil Labs and Karnavati in negotiating this sale, or
showing the parties worked together to customize the machine for
use in New Jersey.
Further, unlike in Cruz, the record does not support a
finding the machine was either unique or pivotal to Neil Labs'
New Jersey operations. The purchase order drawn up by Globe
allows Neil Labs the right to inspect the machine prior to its
delivery; however, we are not told whether this occurred, and,
if inspection in fact took place, the record is silent as to the
20 A-2737-13T4
time and place, and whether the inspection was conducted by
Globe or Karnavati.
Contrary to the motion judge's finding, Karnavati's sale to
Globe was not pursuant to their exclusive distribution
agreement, because that agreement had expired two years earlier.
We also reject the trial judge's determination that Karnavati
merely used Globe as an intermediary to ship the machine. In
fact, Neil Labs was Globe's customer and it was Globe which
ordered the machine. There is no legal relationship between
Karnavati and Globe; they are separate and distinct entities,
independently conducting their respective businesses. Thus, we
are left with only the purchase order, which the motion judge
concluded supplied Karnavati's contacts with the forum, placing
it on notice it would be subject to suit in New Jersey. We
disagree.
First, we reject the contention that Karnavati's
fulfillment of Globe's purchase order in India, which referenced
Globe's intended resale to a New Jersey resident, suggested the
regularity in manner and magnitude of sales to a distributor or
retailer in a forum state requisite to the exercise of
jurisdiction by the forum under a post-Nicastro stream of
commerce theory. The facts presented speak generally of other
national sales, and offer no evidence of Karnavati's marketing
21 A-2737-13T4
or promotional efforts. There is no showing Karnavati directed
marketing efforts or sales to New Jersey; evinced an intent or
purpose to serve the forum by designing the machine for the New
Jersey market; or established lines of communication, such as a
website, to provide service or advice to New Jersey actual or
potential customers. The facts in this record fail to support a
finding Karnavati engaged in sales efforts "to serve, directly
or indirectly, the market for its product in other States," as
was found in World-Wide Volkswagen, supra, 444 U.S. at 297, 100
S. Ct. at 567, 62 L. Ed. 2d at 501-02. See also Nicastro,
supra, __ U.S. at __, 131 S. Ct. at 2792, 180 L. Ed. 2d at 779
(Breyer, J., concurring) (finding stream of commerce
inapplicable when no "'regular . . . flow' or 'regular course'
of sales'" is shown); Asahi, supra, 480 U.S. at 117, 107 S. Ct.
at 1035, 94 L. Ed. 2d at 107 (Brennan, J., concurring)
("[S]tream of commerce refers not to unpredictable currents or
eddies, but to the regular and anticipated flow of products from
manufacture to distribution to retail sale.").
Second, the facts do not demonstrate the nonresident
Karnavati purposefully availed itself of "the privilege of
conducting activities within the forum State, thus invoking the
benefits and protections of its laws." Hanson, supra, 357 U.S.
at 253, 78 S. Ct. at 1240, 2 L. Ed. 2d at 1298. As noted above,
22 A-2737-13T4
the record lacks proof of Karnavati's course of dealing with the
forum generally or with Neil Labs specifically, with respect to
effectuating the sale of the machine. Neither plaintiff nor
Globe discuss the extent of contacts specific to this machine,
facts found essential to this court's finding in Cruz. Other
than pointing to the language in the purchase order, Globe and
plaintiff fail to identify specific actions by Karnavati which
demonstrate its desire to conduct business in New Jersey.
Plaintiff and Globe do not reveal whether Karnavati altered its
standard machine in preparing the order at issue; whether
Karnavati's employees offered Neil Labs training or expertise;
or whether Neil Labs called Karnavati at any time with regard to
the machine order.
In extending jurisdiction based upon purposeful availment,
we measure a nonresident defendant's purposeful conduct
connecting it to the forum, not "the unilateral activity of
another who merely claims a relationship to the defendant[.]"
Charles Gendler, supra, 102 N.J. at 471 (quoting Hanson, supra,
357 U.S. at 253, 78 S. Ct. at 1240, 2 L. Ed. 2d at 1298). See
also Waste Mgmt., supra, 138 N.J. at 121. Simply stated, the
issue is notice: "[t]he defendant's contacts with the forum
state must be such that it 'should reasonably anticipate being
haled into court there.'" Charles Gendler, supra, 102 N.J. at
23 A-2737-13T4
470 (quoting World-Wide Volkswagen, supra, 444 U.S. at 297, 100
S. Ct. at 567, 62 L. Ed. 2d at 501).
Here, we are presented only with Globe's purchase order,
which noted its sale to Neil Labs. We would be hard-pressed to
conclude Karnavati's sale of a machine to Globe in India, for
Globe's resale to Neil Labs in New Jersey shows Karnavati's
purposeful availment of business opportunities that support the
exercise of personal jurisdiction in New Jersey. More is
needed. The trial court's determination that the necessary
jurisdictional contacts were satisfactorily shown on these
limited facts alone was erroneous.
Globe also maintains the effects of the expired
distribution agreement evince Karnavati's contacts with the
State, and such past contacts support personal jurisdiction.
Certainly, Globe's prior relationship gave it familiarity with
Karnavati's products. However, as Justice Kennedy explained in
Nicastro, when a defendant manufacturer's conduct consists of
mere "sales efforts" to sell its machines in the United States
through a distributor, but does not target the New Jersey market
in particular, jurisdiction in the specific State forum does not
lie. Nicastro, __ U.S. at __, 131 S. Ct. at 2786, 180 L. Ed. 2d
at 773 (plurality op.). Absent additional evidential support
activities within the forum, Globe's theory is unpersuasive.
24 A-2737-13T4
As noted above, plaintiff bears the burden of pleading
sufficient facts to establish jurisdiction. Following our
review of this record, we conclude he has failed to do so. The
record is insufficient to support the conclusion Karnavati's
conduct surrounding the sale of the tablet press machine
involved in plaintiff's injuries constituted "purposeful acts"
for which Karnavati would be on notice that it would be subject
to suit in New Jersey. Accura Zeisel Mach. Corp. v. Timco,
Inc., 305 N.J. Super. 559, 566 (App. Div. 1997).
Reversed.
25 A-2737-13T4