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ELECTRO-CATHETER CORP. v. SURGICAL SPECIALTIES INS

June 5, 1984

ELECTRO-CATHETER CORPORATION, Plaintiff,
v.
SURGICAL SPECIALTIES INSTRUMENT COMPANY, INC., Defendant



The opinion of the court was delivered by: DEBEVOISE

 I. Preliminary Statement

 Plaintiff, Electro-Catheter Corporation, a New Jersey corporation with its principal place of business in Rahway, New Jersey, instituted this suit against defendant, Surgical Specialties Instrument Company, Inc., a Maryland corporation with its principal place of business in Crofton, Maryland, in the Superior Court of New Jersey. Thereafter, on March 8, 1984, defendant removed the case to federal court, basing jurisdiction upon diversity of citizenship under 28 U.S.C. ยง 1331. Presently before the court are (1) plaintiff's motion for partial summary judgment on the Second Count of the Amended Complaint in the amount of $43,330.53, and (2) defendant's motion for dismissal of the suit for lack of in personam jurisdiction and improper service of process.

 II. Factual and Procedural History

 Plaintiff is engaged in the business of developing, manufacturing and marketing catheters, electronic instruments and related products for use in the diagnosis and treatment of medical disorders. These products are manufactured by plaintiff in New Jersey. For the past 14 years, plaintiff's products were distributed by defendant in the territory covering the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, West Virginia and, for a time, Pennsylvania.

 Defendant purchased plaintiff's products by placing orders over the telephone or by mail. Plaintiff would then choose the method of shipment and deliver the goods to the defendant at standard distributor prices. Each shipment of goods from plaintiff to defendant was accompanied by an invoice showing the goods delivered and the price therefor. In recent years, the volume of defendant's purchases in New Jersey from plaintiff has grown from $438,000 in 1981 and $515,000 in 1982 to almost $600,000 in 1983.

 In addition to defendant's contacts with plaintiff by mail or telephone, the President and other representatives of defendant have visited plaintiff's offices in New Jersey to conduct business. In his certification, the President of defendant states that he visited the plaintiff's offices approximately 25 times. Other representatives of defendant have spent at least a dozen working days at plaintiff's offices since 1978.

 In the latter part of 1983, plaintiff concluded that defendant was not using its best efforts to sell plaintiff's products. Furthermore, defendant had failed to account to plaintiff since December 1982 for certain computers which plaintiff had supplied to defendant for loan to hospitals under contract to purchase plaintiff's catheters. Consequently, on January 19, 1984 plaintiff informed defendant by letter of its decision to terminate the relationship with defendant and to transact business through a different distributor named Cardio-Medical Products, Inc., located in New Jersey.

 On February 7, 1984, plaintiff commenced a suit in the Superior Court of New Jersey by filing a Verified Complaint seeking both a declaration that there is no contractual relationship between the plaintiff and defendant and an injunction restraining defendant from threatening other distributors and customers of plaintiff's products with suit or other legal action if such entities do business with plaintiff. The court then issued an Order to Show Cause on plaintiff's application for temporary injunctive relief. The Order to Show Cause provided that the order be served in lieu of a summons upon the defendant, either by certified mail or personally. The Order to Show Cause and the Complaint were served upon defendant both by certified mail and personally. See Affidavits of Martin and Anselmi.

 On February 16, 1984, defendant filed with the state court a motion to dismiss the Complaint for lack of personal jurisdiction on grounds that defendant had insufficient contacts with New Jersey. Then, on March 8, 1984, defendant removed this case to federal court. Plaintiff concedes that the action is removable since there is diversity of citizenship and the amount in controversy exceeds $10,000.

 On March 15, 1984, plaintiff filed an Amended Complaint seeking to recover from defendant the cost of goods sold and delivered to defendant between December 15, 1983 and February 19, 1984 as well as the value of certain computers loaned to defendant by plaintiff. Plaintiff now moves for partial summary judgment on the Second Count of the Amended Complaint seeking recovery for goods sold and delivered to defendant. Defendant's motion for dismissal of the Complaint on grounds that this court lacks personal jurisdiction and that service of process was ineffective is also pending. Each motion will be addressed separately below.

 III. Conclusions of Law

 A. Personal Jurisdiction over Defendant

 Rule 4(e) of the Federal Rules of Civil Procedure authorizes a district court to effect service of process upon, and thereby to assert jurisdiction over, nonresident defendants in the manner and to the extent allowed under the law of the forum state. The applicable statute in this case is New Jersey's "long-arm" statute, N.J. Court Rule 4:4-4(c)(1), which provides for personal jurisdiction over nonresident corporations "to the uttermost limits provided by the United States Constitution." Avdel Corporation v. Mecure, 58 N.J. 264, 268, 277 A.2d 207 (1971). *fn1" Under this statute, limitations on the exercise of personal jurisdiction over nonresident defendants in diversity cases are coextensive with those of the Due Process Clause of the Fourteenth Amendment. DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981). Thus, in the present case, the amenability to suit of the nonresident defendant must be evaluated by Fourteenth Amendment standards.

 The basic criteria for evaluating whether the exercise of jurisdiction comports with due process are set forth in International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945). International Shoe held that due process is satisfied when a nonresident defendant has certain minimal contacts with the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Id. at 316. In determining whether these due process considerations permit the exercise of in personam jurisdiction, the Third Circuit has distinguished between "personal jurisdiction in cases where the defendant's forum-related activities do not give rise to the claim, and personal jurisdiction in cases where the claim arises out of a specific forum-related act or series of acts." Paolino v. Channel Home Centers, 668 F.2d 721, 724 (3d Cir. 1981). See Horne v. Adolph Coors Co., 684 F.2d 255, 258 (3d Cir. 1982); Schwilm v. Holbrook, 661 F.2d 12, 14 (3d Cir. 1981); Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877, 890 (3d Cir. 1981), aff'd sub nom., Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 72 L. Ed. 2d 492, 102 S. Ct. 2099 (1982). When the claim at issue is not premised upon a nonresident defendant's activities within a forum state, the exercise of personal jurisdiction is reasonable and fair only if the contacts between the state and the defendant are substantial, continuous and systematic. Reliance Steel Products Co. v. Watson, Ess, Marshall, & Enggas, 675 F.2d 587, 588 (3d Cir. 1982). A less stringent test is required to support personal jurisdiction when the cause of action is related to or arises from a nonresident defendant's activities within a state. Compagnie des Bauxites de Guinee v. L'Union, 723 F.2d 357, 362 (3d Cir. 1983); Dickson v. Hertz Corp., 559 F. Supp. 1169, 1173 (D.V.I. 1983); Infomed v. Healthcare of Louisville, Inc., 526 F. Supp. 1287, 1289 (D.N.J.), aff'd, 673 F.2d 1299 (3d Cir. 1981) (unpublished judgment order). Rather than focus on the contacts between the defendant and the forum state, when the claim is related to defendant's activities within the state, the court must inquire whether the relationship of the transaction at issue to the forum justifies the forum state's assertion of jurisdiction over the defendant. Paolino v. Channel Home Centers, supra, 668 F.2d at 724 ("the focus . . . must be upon the relationship of the transaction to the forum"); Reliance Steel Products v. Watson, Ess, Marshall, & Enggas, supra, 675 F.2d at 588 ("the focus must be on the relationship of the transaction giving rise to the law suit to the forum where the plaintiff seeks to litigate it."); Western Union Telegraph Co. v. T.S.I., Ltd., 545 F. Supp. 329, 332 (D.N.J. 1982) ("There must be contacts between the transaction at issue and the forum state.")

 In appraising the fairness of exercising jurisdiction over a nonresident defendant which has contacts with the forum arising out of the transactions at issue in the suit, the Supreme Court has provided certain guidelines. McGee v. International Life Ins. Co., 355 U.S. 220, 223, 2 L. Ed. 2d 223, 78 S. Ct. 199 (1957), involved a Texas insurance company which delivered an insurance policy to a California resident and received premiums mailed from California. Even though the company had no contacts with California other than correspondence by mail, the court found that these facts demonstrated a substantial connection between the policy sued upon and California. In view of this substantial connection, coupled with the strong state policy interest in providing ...


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