Rajnikant Patel v. Karnavati America LLC

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(NOTE: The status of this decision is Published.)
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0
RAJNIKANT PATEL and
RASIKA PATEL, his wife,
APPROVED FOR PUBLICATION
October 9, 2014
APPELLATE DIVISION
Plaintiffs-Respondents,
v.
KARNAVATI AMERICA, LLC, CADILA
PHARMACEUTICAL, LTD, SCHNEIDER
ELECTRIC, USA, INC.,
Defendants,
and
KARNAVATI ENGINEERING, LTD,
Defendant-Appellant,
and
GLOBEPHARMA, INC.,
Defendant-Respondent.
_______________________________
October 9, 2014
<=" 10,=" september=" argued=" -=" 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 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.
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.
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.
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 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 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 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 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.]
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 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 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.
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 '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 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 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 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 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. 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 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 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, 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 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.
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.
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.
3 Plaintiff never sought or argued additional discovery was necessary.
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