Lynch, Larner and Horn. The opinion of the court was delivered by Lynch, P.J.A.D.
Leave having been granted, defendants appeal from an interlocutory order of the Chancery Division determining that the instant action was maintainable as a class action on behalf of those holders of preferred stock of defendant Bates Manufacturing Co. (Bates), a Delaware corporation, who failed to convert their shares into common stock on or before the close of business on May 16, 1975 (hereafter "cutoff date"). Bates had notified its preferred stockholders that May 16, 1975 was the last day on which the privilege of conversion could be exercised. The notice provided that if conversion were not sought by that date, the stock would be redeemed. Plaintiff claimed that such notice did not comply with Bates' corporate charter.
In her complaint on behalf of herself and all other members of the alleged class, plaintiff sought to compel Bates to convert the stockholders' preferred stock into common stock of the corporation despite their failure to request conversion by the cutoff date. Plaintiff also sought compensatory and punitive damages, attorney fees and costs. If this action succeeds, members of the class will apparently obtain a substantial financial gain because the common stock they
will receive for each preferred share has a greater value than the redemption price of a preferred share.
The trial judge found that plaintiff had established all of the requirements of maintaining a class action as provided in R. 4:32-1. The court's order set forth three questions of law which were said to be common to the class: (1) was adequate notice given of the redemption and termination of the conversion privilege of the preferred stock; (2) did the officers and directors of Bates violate their fiduciary duty to the preferred stockholders, and (3) did Bates violate its certificate of incorporation by setting the cutoff date on May 16, 1975, which was 11 days before the redemption date of the stock rather than 10 days before the redemption date as allegedly required by the corporate charter. It is contended that contrary to their rights under the charter, the preferred stockholders were deprived of one day more to exercise their right to convert.
The trial judge determined that the class on whose behalf this action could be maintained consists of the 295 holders of Bates' preferred stock who failed to convert their shares by the cutoff date. We are advised by counsel for Bates that of the 294 members of the class other than plaintiff, only 31 are residents of New Jersey. Plaintiff's counsel correctly observes that there is no proof in the record in this respect. It is also true, however, that plaintiff, who had the burden of producing proof to justify the class action, failed to produce any proof as to the proportion of the members of the class who are subject to the jurisdiction of the New Jersey court. For the purpose of this opinion we accept the representation that 263 members of the class are not residents of this State.
The dispositive issue here is whether a class action is appropriate in light of the circumstances that the plaintiff class consists primarily of nonresidents of New Jersey who have no contacts whatsoever with this State; that defendant is a foreign corporation not authorized to do business and with no assets in this State and, further, that New Jersey has
no significant interest in determining the issues involved in the litigation.
We conclude that class action certification is not appropriate for these reasons: (1) a judgment for or against the class would not satisfy due process with respect to the 263 members of the class who are nonresidents of New Jersey; (2) even if jurisdiction did exist as to such nonresidents, the doctrine of forum non conveniens would militate against New Jersey's assumption of the burden of this litigation.