Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


August 22, 1996

REYNOLDS PUBLISHERS, INC., on behalf of itself and all others similarly situated, Plaintiffs,

The opinion of the court was delivered by: ROSEN

 ROSEN, Magistrate Judge:


 Plaintiff Reynolds Publishing, Inc. d/b/a Spectracolor (hereinafter "Reynolds"), operated a commercial printing and publishing business in Cherry Hill, NJ, with approximately 20 employees and annual gross sales generally $ 1.5 million. (Complaint P 2, P's Br. at 4 n. 2). Beginning in December 1989, the plaintiff contracted with a non-party vendor in Pennsylvania for the purchase of computer equipment, specifically the Varitype 4300 Adobe Postscript Laser Image Setter. The plaintiff required financing to complete the transaction. Consequently, the vendor contacted Defendants Graphic Financial Group, Ltd. and Graphics Leasing Corporation, affiliated equipment and tangible personal property leasing and financing companies. The defendants' principal place of business and place of incorporation is in Massachusetts. The plaintiff entered five leases for substantially the same property between December 1989 and January 1990 -- the only alteration was for an upgrade. (Complaint PP 11-30). According to the terms of the lease agreements, the plaintiff was to pay "use tax" if applicable. (See Lease Agreements attached as Exhibits A through E). The defendants charged use tax to the plaintiff on each of the leases in its monthly statements, which the plaintiff paid. (See Complaint PP 13-30).

 The plaintiff paid the full amount on four of the five lease agreements (apportioned over 60 monthly payments). (Id.). *fn1" At some unidentified time, the plaintiff became aware of N.J.S.A. 54:32B-8.29, which the plaintiff alleges exempts publishers of newspapers from the equipment use tax. *fn2" Thus, the plaintiff contends that by collecting use tax from parties who are exempt from tax, the defendants violated the provisions of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-2, et seq. On January 12, 1996, the plaintiff filed a putative class action, and on February 9, 1996, the defendants removed the action to this court and subsequently filed the present motion to dismiss.

 Contained within the subject agreements was a forum selection clause. The clause appears in paragraph 3, on the first page of the agreements and states in full as follows:

ACCEPTANCE. INSTALLATION SHALL BE DEEMED TO HAVE OCCURRED WHEN THE EQUIPMENT HAS BEEN DELIVERED TO AND ASSEMBLED ON LESSEE'S PREMISES, AND HAS BEEN PUT IN CONDITION READY FOR LESSEE'S USE, WHETHER OR NOT LESSEE SHALL HAVE THEN RECEIVED INSTRUCTIONS FOR ITS OPERATION. This Agreement is not consummated nor binding on LESSOR until accepted by an authorized officer of LESSOR. All prepayments specified in the Schedule of Rent Payments and Additional Provisions (in paragraph 1): (a) if installation occurs, will be applied in accordance with the Schedule of Rent Payments and Additional Provisions; (b) if installation fails to occur by reason of LESSEE'S failure or refusal to permit it, will be permanently retained by LESSOR, for liquidated damages. If installation does not occur for any other reason, the advance rentals will be returned to LESSEE within a reasonable period of time less reasonable costs incurred for LESSOR's administration. No officer or employee of LESSOR is authorized to waive, modify or add to any of the provisions hereof except in writing. NO REPRESENTATIONS MADE BY ANYONE OTHER THAN AN AUTHORIZED OFFICER OF LESSOR IN WRITING ARE BINDING ON LESSOR. This agreement shall be considered to be a MASSACHUSETTS contract and shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the law, and in the courts, of the Commonwealth of Massachusetts.

 (Complaint, Exhibits A-E).

 The defendants assert that the motion should be dismissed on two grounds: (1) that this court lacks personal jurisdiction over the defendants, and (2) that the forum selection clause divests the court of jurisdiction over the case. With respect to personal jurisdiction, the defendants contend that the lease agreements have no substantial connection to New Jersey, and thus, specific jurisdiction cannot be found. Further, the defendants contend that they do not have sufficient contacts with the forum state for the court to exercise general jurisdiction. In opposition, the plaintiff asserts that the subject property is located in New Jersey and that, according to New Jersey law, the defendants have places of business throughout New Jersey at locations where the equipment and tangible property leased to New Jersey individuals and entities are maintained. (Complaint P 3, citing N.J.S.A. 54:32B-2(i)(F)). With respect to the forum selection clause, the defendants assert that it is valid and enforceable, while the plaintiff alleges that it is fraught with fraud and misrepresentation, and is contrary to public policy.


 A. Personal Jurisdiction is Present

 This court has personal jurisdiction over defendants if the exercise of that jurisdiction comports with the laws of New Jersey, Fed. R. Civ. P. 4(e), and does not violate due process. International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945). The Court in International Shoe found that the Due Process Clause of the Fourteenth Amendment permits a court to exercise jurisdiction over a party whenever that party has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Id. at 316. This court's inquiry is simplified as New Jersey has adopted a long-arm statute that reaches as far as due process permits. Carteret Savings Bank, F.A. v. Shushan, 954 F.2d 141 (3d Cir.), cert. denied, 506 U.S. 817, 113 S. Ct. 61, 121 L. Ed. 2d 29 (1992) (citing New Jersey Court Rule 4:4-4 which permits service "consistent with due process of law"); see also Avdel Corporation v. Mecure, 58 N.J. 264, 268, 277 A.2d 207, 209 (1971) (recognizing that New Jersey allows service out of state pursuant to New Jersey's long-arm statute "to the uttermost limits permitted by the United States Constitution").

 Where, as here, a defendant raises the issue of personal jurisdiction, the plaintiff bears the burden of establishing that the defendant's contacts with the forum state comport with the requirements of due process. "To carry this burden, plaintiff must show 'with reasonable particularity' that the forum, and thus the court has either: (1) specific jurisdiction (where the cause of action arose from the defendant's activities within the forum state), or (2) general jurisdiction (derived from defendant's continuous and systematic conduct in the forum state)." Giangola v. Walt Disney World Company, 753 F. Supp. 148, 154 (D.N.J. 1990) (citing Provident Nat'l Bank v. California Federal Savings & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987)). Once a court has found that a defendant's contacts with the forum are sufficient to confer jurisdiction, "in appropriate cases" the court may evaluate other factors. Burger King Corp v. Rudzewicz, 471 U.S. 462, 476-77, 85 L. Ed. 2d 528, 105 S. Ct. 2174 (1985). Included among the factors are (i) the burden on defendant, (ii) the forum state's interest in adjudicating the dispute, (iii) the plaintiff's interest in obtaining convenient and effective relief, (iv) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (v) the shared interest of the several States in furthering fundamental substantive social policies. See id. at 477 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980)). As this court has previously noted, "the central concern in a question of personal jurisdiction is the predictability and fairness of the court taking jurisdiction over the defendant." Giangola, 753 F. Supp. at 155. To find a proper exercise of jurisdiction, "it is essential that there be some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958) (quoted in Burger King, 471 U.S. at 475).

 The defendants contest the existence of either specific or general personal jurisdiction. (Ds' Br. at 4-5). The defendants state that "there is only one connection between these leases and the state of New Jersey, and that connection has nothing to do with the defendants: the plaintiff chose to locate the leased equipment in New Jersey." (Id. at 5). In support of this assertion, the defendants refer the court to the terms of the agreement which specifically state that "this Agreement shall be considered to be a MASSACHUSETTS contract and shall be deemed to have been make in Middlesex County, Massachusetts, regardless of the order in which the signature of the parties shall be affixed hereto[.]" (See Complaint, Exhibit A). In counterdistinction, the plaintiff offers N.J.S.A. 54:32B-2, which provides that a "vendor" in New Jersey includes "[a] person who purchases tangible personal property for lease, whether in this State or elsewhere." The statute further provides that "the presence of leased tangible personal property in this State is deemed to be a place of business in this State." Id. Under this statute, specifically applicable to leased personal property, the defendant is considered to have a place of business in New Jersey. This clearly confers general jurisdiction upon this court. Moreover, the exercise of specific jurisdiction is also appropriate as the contact with the state -- the Agreement -- provides the basis for the case. The defendant's contact with the plaintiff spanned several years and several lease contracts. Further, the plaintiff made up to sixty monthly payments on each of the five contracts. (See Complaint, Exhibits A through E). As the Third Circuit recognized, "due process does not require a defendant's physical presence in the forum before personal jurisdiction is exercised." Grand Entertainment Group LTD v. Star Media Sales, Inc., 988 F.2d 476, 482 (3d Cir. 1993). Rather, "courts must also look into 'prior negotiations and contemplated future consequences.'" Id. (quoting Quill Corp. v. North Dakota, 504 U.S. 298, 307, 119 L. Ed. 2d 91, 112 S. Ct. 1904 (1992)). The consequences of an ongoing commitment with customers located in New Jersey should have been contemplated by the defendants.

 This court may properly exercise personal jurisdiction over the defendants, and the defendants' motion to dismiss on this ground shall be denied.

 B. Forum Selection Clause

 That this court has personal jurisdiction over the defendants, however, does not end the inquiry. The defendants additionally have requested dismissal on the ground that the forum selection clause is valid and enforceable. The defendants argue that this enforceable clause divests this court of jurisdiction as there is no venue proper here. The defendants rely for this argument upon Instrumentation Associates, Inc. v. Madsen Electronics (Canada), Inc., 859 F.2d 4 (3d Cir. 1988). This case appears to assert that if the plaintiff does not request a transfer when a defendant has moved for dismissal, the court should not sua sponte conduct a transfer analysis. See id. at 6, n. 4. However, the Third Circuit recently substantially revised a trial court's inquiry with respect to jurisdiction, dismissal or transfer when a forum selection clause is involved. See Jumara v. State Farm Insurance Company, 55 F.3d 873, 877, n. 3 (3d Cir. 1995) (rejecting the argument that the court may not address the transfer issue unless the parties invoke the transfer statute). The court required trial courts to consider -- sua sponte -- the applicability of the federal transfer statutes, 28 U.S.C. §§ 1404(a) and 1406. *fn3" As this court has determined that it can invoke in personam jurisdiction, the proper analysis involves the § 1404(a) balancing test. Id.

 In Jumara, the Third Circuit articulated the standard for transfer in § 1404(a) cases. Courts must consider not only the factors articulated in section 1404(a) (convenience of parties, convenience of witnesses, or interests of justice), but also "all relevant factors to determine whether on balance the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum." 55 F.3d at 879 (quoting 15 WRIGHT, MILLER & COOPER § 3847). Those factors include private interests -- "plaintiff's forum preference as manifested in the original choice . . .; the defendant's preference . . .; whether the claim arose elsewhere . . .; the convenience of the parties as indicated by their relative physical and financial condition . . .; the convenience of the witnesses-but only to the extent that the witnesses may actually be unavailable for trial in one of the fora . . .; and the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum)." Jumara, 55 F.3d at 879 (citations omitted). The factors also include public interests -- "the enforceability of the judgment . . .; practical considerations that could make the trial easy, expeditious, or inexpensive . . ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.