The opinion of the court was delivered by: DICKINSON DEBEVOISE, Senior District Judge
Presently before the court is the motion of third party
defendant Sypris Technologies, Inc. ("Sypris") to dismiss the
Third Amended Third Party Complaint for lack of personal
jurisdiction pursuant to FED. R. CIV. P. 12(b)(2), which is
opposed by defendant and third party plaintiff Schmidt
Manufacturing, Inc. ("Schmidt") as well as defendants Sylvan
Equipment Corp. ("Sylvan"), Bobcat of New York, Inc. ("Bobcat")
and L&L Painting Contracting Co., Inc. ("L&L Painting").*fn1
For the reasons set forth below, the motion to dismiss will be
granted. Because Sypris's motion to dismiss will be granted,
Schmidt's motion for Rule 11 sanctions against Sypris for filing
this motion to dismiss will be dismissed. Sypris's motion to
dismiss for lack of personal jurisdiction was not frivolous,
legally unreasonable or without factual foundation. FACTS
Plaintiffs Kazimierz and Zofia Leja ("Plaintiffs") filed this
product liability action alleging serious injuries to Kazimierz
Leja ("Leja") arising from a workplace accident involving a
sandblasting machine manufactured by Schmidt (the "Sandblaster").
Schmidt filed a notice of removal from the Superior Court of New
Jersey, where it was originally filed.
Schmidt filed a Second Amended Third Party Complaint on June
29, 2004 against Sypris, seeking indemnification and contribution
from Sypris. Schmidt alleges that Sypris negligently designed and
manufactured the t-bolt top closure (the "top closure") on the
Sandblaster which caused Leja's injuries. Schmidt was granted
leave to file, and did file, a Third Amended Third Party
Complaint naming Sypris, Sypris Solutions, and Tube Turns as
third party defendants.*fn2
Sypris, a subsidiary of Sypris Solutions, was incorporated in
Delaware on May 9, 2001, with its headquarters and manufacturing
facility in Kentucky. Sypris is in the business of manufacturing
component parts for pressurized vessels. Sypris is the
successor-in-interest to Tube Turns, which Schmidt has also
identified as a third party defendant. In or about 1983, Tube
Turns had closed its New Jersey offices. In 1983, Tube Turns's
parent AllChem sold Tube Turns to Sumitomo, a Japanese
corporation. In 1988, Tube Turns, Inc. was purchased by the
Sypris companies its present Kentucky management. In March
1991, Tube Turns, Inc. was renamed Tube Turns Technologies, Inc.
and operated as a wholly-owned subsidiary of the Sypris
companies. In March 1998, Tube Turns Technologies, Inc. was
merged into New Tube Turns Technologies, Inc., which was an
entity incorporated by the Sypris companies in December 1996 in Kentucky. The merged entity was thereafter renamed Tube Turns
Technologies, Inc., which continued to operate as a wholly owned
subsidiary until 2002 when it was merged into Sypris and became a
division of Sypris.
Sypris has sold at least 4,550 products to New Jersey companies
from 1999 to April 2005 for over $2.4 million, and at least 6,668
products to New Jersey companies between 1995 and 2004 for over
$3.7 million. Sypris has had over eighty New Jersey customers
from 1995 to 2005.
Sypris began selling top closures to Schmidt in 1983. The top
closures that were sold to Schmidt were specifically designed to
fit Schmidt's specifications. Schmidt purchased approximately 100
top closures a year from Sypris from 1983 through 2003. Sypris
never shipped the top closures to New Jersey. In 1995 or
1996,*fn3 Sypris sold the particular top closure at issue to
Schmidt from Louisville, Kentucky (FOB Louisville) and shipped to
Schmidt in Texas. The following sequence of sales and returns
ultimately led to the Sandblaster's resale to Leja's employer:
Sypris (KY) → Schmidt (TX) → Sylvan (NY) → Bobcat (NY) and
L&L Painting (NY) Bobcat and L&L Painting returned the
Sandblaster to Sylvan, which then resold the Sandblaster to West
Virginia Paint, Leja's employer.
Since 1999, Sypris has not had any sales agents outside of
Louisville, Kentucky and Houston, Texas. In 2002, Sypris sent one
employee, Edgar von Minden, to New Jersey to perform service work
at the request of a customer. Sypris sends updated product
catalogs and Christmas cards to existing New Jersey customers. In 2002, Sypris
sent notices of its name change to all customers. As evidence of
Sypris's advertising and marketing in New Jersey, Schmidt offers
the following exhibits:
Sypris sent an introduction letter dated October
25, 2001 to a New Jersey customer explaining Tube
Turns's business and suggesting a future business
relationship. (Lorell Certification Ex. 11.)
Sypris sent a brochure to a New Jersey customer on
March 26, 2001. (Lorell Certification Ex. 14.)
Sypris sent two sales brochures to a New Jersey
customer, one in or about 1995 and the other in or
about 1999. (Lorell Certification Ex. 15.)
Sypris sent a catalog to a New Jersey customer in
response to the customer's request. (Lorell
Certification Ex. 16.)
In addition, Schmidt alleges that Sypris "has sent and received
thousands of pages of facsimile and wire communications
concerning its business with New Jersey customers; has over one
thousand engineering documents in connection with its work with
New Jersey customers, and has prepared hundreds of test reports
certifying that its products sold in New Jersey conform with all
applicable codes." (Opp'n Br. at 10.)
Rule 4(e) of the Federal Rules of Civil Procedure authorizes
the court to assert personal jurisdiction over a non-resident to
the extent permissible under the law of the state where the court
sits, in this case New Jersey. New Jersey's long-arm rule, N.J.
Civ. P.R. 4:4-4, extends jurisdiction over a non-resident
defendant "to the uttermost limits permitted by the United States
Constitution." Charles Gendler Co. v. Telecom Equity Corp.,
102 N.J. 460, 469 (N.J. 1986) (citation omitted). Constitutional due
process permits the court to exercise personal jurisdiction over
a non-resident defendant who has "minimum contacts" with the
forum state, if maintenance of the suit does not offend
"traditional notions of fair play and substantial justice."
International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
Personal jurisdiction comes in two varieties, at least one of
which the court must have over Sypris in order to hear the third
party claims against it. One variety is known as specific
personal jurisdiction, which would exist if the cause of action
arises out of or is related to Sypris's contacts with New Jersey.
Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414 (1984). The court must determine whether Sypris has
established sufficient minimum contacts with New Jersey. Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). Sypris's
conduct and connection with New Jersey must be such that it could
reasonably anticipate being haled into court here. World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
Additionally, Sypris must have "purposefully avail[ed] itself of
the privilege of conducting activities within the forum state,
thus invoking the benefits and protections of its laws."
Rudzewicz, 471 U.S. at 475. To summarize, specific jurisdiction
exists if Sypris "purposely created contacts" with New Jersey,
making it reasonable for him to anticipate being haled into court
there. CSR Ltd. v. Fed. Ins. Co., 141 F. Supp. 2d 484, 490
Where the cause of action does not arise out of Sypris's forum
activities, a court may exercise another variety of personal
jurisdiction known as general personal jurisdiction if Sypris has
engaged in "continuous and systematic" contacts with New Jersey.
Helicopteros, 466 U.S. at 414-15. If "continuous and
systematic" contacts exist, Sypris could reasonably anticipate
being haled into court with respect to any cause of action.
Therefore, general jurisdiction requires "a very high threshold
of business activity." Ameripay, LLC v. Ameripay Payroll, Ltd.,
334 F. Supp. 2d 629, 633 (D.N.J. 2004) (citation omitted). The
facts required to establish general jurisdiction must be
"extensive and persuasive." Reliance Steel Prods. v. Watson,
Ess, Marshall, 675 F.2d 587, 589 (3d Cir. 1982).
Schmidt bears the burden of establishing, by a preponderance of
the evidence, that Sypris's contacts with New Jersey are
sufficient to give the court personal jurisdiction over Sypris.
Carteret Sav. Bank v. Shushan, 954 F.2d 141, 146 (3d Cir.
1992); Time Share Vacation Club v. Atl. Resorts, Ltd.,
735 F.2d 61, 63 (3d Cir. 1984). Moreover, Schmidt must sustain its burden
of proof "though sworn affidavits or other competent evidence,"
and not through bare pleadings alone. Id. at 67 n. 9. The court
must accept Schmidt's allegations as true and construe ...