Foreign manufacturers (and domestic manufacturers with foreign affiliates), take note: You could find yourselves defending product liability lawsuits in New Jersey even if your only connection to the state is that a product of yours was shipped there by a distributor.

In Nicastro et al. v. McIntyre Machinery America  Ltd. et al., the state Appellate Division held that a New Jersey man injured at work, also in the state, could file suit in New Jersey against the British maker of the shearing machine he blamed for his injuries. The man's employer had ordered the machine at a convention in Nevada from the sole U.S. distributor for the British maker. The British company then shipped the order to the Ohio-based distributor, which then shipped it to the employer in New Jersey.

There was no evidence of other New Jersey sales. The manufacturer, J. McIntyre Machinery Ltd., did not own property, maintain an office or a bank account, or have employees in the state. It was not licensed to do business in New Jersey and did not market, sell or solicit business in New Jersey. Finally, McIntyre did not employ a sales staff in the U.S. Its sole U.S. distributor, McIntyre Machinery America Ltd., was not a subsidiary. The two companies did not share ownership, management or a written distributorship agreement.

The Appellate Division, in the April 9 decision, said the British manufacturer saw the entire U.S., including New Jersey, as its territory, and that was enough to establish stream of commerce jurisdiction. It found that the distributor's territory was the whole country; the invoice for the machine dubbed the distributor "America’s Link to Quality Metal Processing Equipment"; instructions for the machine advised the operator to comply with U.S. safety standards and regulations; and the president of the British firm had attended conventions in American cities from 1990 through 2002.

The U.S. Supreme Court weighed in on a similar case in 1987, Ashai Metal Industry Co. v. Superior Court. However, justices in the majority differed on the extent of contact needed to warrant stream of commerce jurisdiction. Similarly, in the last 20 years, New Jersey courts have not been clear in this area either.

Copyright © 2008 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

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