United States District Court, D. New Jersey
August 15, 2005.
KAZIMIERZ LEJA & ZOFIA LEJA, Plaintiffs,
SCHMIDT MANUFACTURING, INC., SYLVAN EQUIPMENT CORP., BOBCAT OF NEW YORK, INC., L,&L PAINTING CONTRACTING CO., INC., JOHN DOE I, et al., Defendants, and SCHMIDT MANUFACTURING, INC., Defendant/Third Party Plaintiff, v. SYPRIS TECHNOLOGIES, INC. f/k/a TUBE TURNS TECHNOLOGIES, INC., SYPRIS SOLUTIONS, INC., RICHARD ROES 1-8 and JOHN DOES 1-8, et al., Third Party Defendants.
The opinion of the court was delivered by: DICKINSON DEBEVOISE, Senior District Judge
Presently before the court are: (1) the motion of
defendant/third-party plaintiff Schmidt Manufacturing, Inc.
("Schmidt") for reconsideration of the court's opinion and order
dated June 3, 2005 or, in the alternative, to certify for
interlocutory appeal;*fn1 and (2) the motion of third-party
defendant Sypris Technologies, Inc. ("Sypris") for attorneys'
fees and costs with respect to Schmidt's Rule 11 motion for
sanctions and with respect to allegedly abusive discovery
tactics. For the reasons set forth below, Schmidt's motion for
reconsideration or, in the alternative, for certification will be
denied. Sypris's motion for attorneys' fees and costs relating to
Schmidt's Rule 11 motion will be denied, and Sypris's motion for
attorneys' fees and costs relating to Schmidt's allegedly abusive
discovery tactics will be referred to the Magistrate Judge. FACTUAL & PROCEDURAL BACKGROUND
The underlying dispute is a products liability action filed by
Plaintiffs Kazimierz and Zofia Leja seeking damages for injuries
to Kazimierz Leja arising from a workplace accident involving a
sandblasting machine manufactured by Schmidt. Schmidt filed a
third-party complaint against Sypris for indemnification and
Sypris filed a motion to dismiss for lack of personal
jurisdiction in January 2005. The return date was adjourned until
May 23, 2005 in order to provide Schmidt with time to conduct
jurisdictional discovery. Oral argument on Sypris's motion to
dismiss was heard on May 23, 2005. On May 25, 2005, Schmidt filed
a motion for Rule 11 sanctions against Sypris, alleging that
Sypris and its counsel either acted with bad faith or improper
purpose and engaged in delaying tactics with respect to
jurisdictional discovery and the filing of Sypris's motion to
In an opinion and order dated June 3, 2005 (the "June Opinion &
Order"), Sypris's motion to dismiss was granted and Schmidt's
motion for Rule 11 sanctions was denied. Schmidt's Rule 11 motion
was denied without oral argument and prior to the due date for
filing opposition papers. It is the June Opinion & Order from
which Schmidt seeks reconsideration or certification for
Sypris's pending motion for attorneys' fees and costs arises
from the costs of responding to Schmidt's Rule 11 motion and
I. Motion for reconsideration
Schmidt seeks reconsideration on the ground that the court
applied the wrong law in granting Sypris's motion to dismiss for lack of personal
jurisdiction. Schmidt argues that the court ignored controlling
New Jersey precedent and erroneously applied the law of other
jurisdictions such as Pennsylvania and New York.
In New Jersey, a motion for reconsideration is governed by
Local Civil Rule 7.1(g), which provides in part: "There shall be
served with the notice a brief setting forth concisely the
matters or controlling decisions which counsel believes the Judge
or Magistrate Judge has overlooked." L. CIV. R. 7.1(g). The court
in Tecchio v. U.S. ex rel. Meola has explained:
The word "overlooked is the operative term in the
rule, and it has been interpreted consistently as
referring only to facts and legal arguments properly
presented to the court at the time the motion on
which reargument is sought was initially decided." A
motion for reconsideration is not a means by which to
obtain a proverbial second bite of the apple. . . .
Accordingly, the Court has reconsidered its rulings
only where convinced that germane information was
No. 03-1529, 2003 WL 22952835, at *1 (D.N.J. Oct. 24, 2003)
(citing LITE, N.J. FEDERAL PRACTICE RULES, Comment 6(e)(1) to
Rule 7.1(g) (Gann)). Motions for reconsideration should be
granted sparingly and only when dispositive factual matters or
controlling decisions of law were brought to the court's
attention but not considered. McGarry v. Resolution Trust
Corp., 909 F. Supp. 241, 244 (D.N.J. 1995). A motion for
reconsideration may be granted if: (1) an intervening change in
the controlling law has occurred; (2) evidence not previously
available has become available; or (3) it is necessary to correct
a clear error of law or prevent manifest injustice. North River
Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194
, 1218 (3d Cir.
Schmidt argues that the motion for reconsideration should be
granted because the court committed a clear error of law. More
specifically, Schmidt argues that the court should not have
applied the following jurisdictional tests because they are not
applicable in New Jersey: (A) "centrality to the business" test, (B) "extensive and persuasive"
contacts, and (C) "solicitation plus" test. Finally, Schmidt also
argues that (D) the court should have extended the time period
examined for determining whether general personal jurisdiction
should be asserted.
A. "Centrality to the business" standard
Schmidt argues that the court erroneously relied on Provident
Nat'l Bank v. California Fed. Sav. & Loan Ass'n, 819 F.2d 434
(3d Cir. 1987) because Provident evaluated general jurisdiction
under Pennsylvania law. In a footnote, Schmidt states,
"Pennsylvania law has historically been far less liberal than New
Jersey in extending long-arm jurisdiction over a non-resident."
(Schmidt Br. at 3 n. 2.) It is true that Provident concerned
Pennsylvania's long-arm statute, not New Jersey's. It is also
true, however, that Pennsylvania's long-arm statute in
Provident is identical to New Jersey's long-arm statute
i.e., both states' long-arm statutes permit the exercise of
personal jurisdiction to the fullest extent allowed under the
U.S. Constitution. Accordingly, the test of whether a defendant's
contacts with the state were "central" to its business enunciated
by the Court of Appeals in Provident was equally applicable in
deciding Sypris's motion to dismiss for lack of personal
Schmidt implies in a footnote that the June Opinion & Order is
inconsistent with the court's opinion in GlaxoSmithKline
Consumer Healthcare L.P. v. Merix Pharmaceutical Corp., No.
Civ.A. 05-898(DRD), 2005 WL 1116318 (D.N.J. May 10, 2005), which
found that personal jurisdiction could be exercised. Schmidt
emphasizes the fact that Merix's sales to New Jersey was $240,000
and that this amount was "sufficient for jurisdictional
purposes." (Schmidt Br. at 4-5 n. 3.) The comparison of Merix's
contacts in GlaxoSmithKline with Sypris's contacts, however, is
distinguishable on at least two grounds. First, the court's
finding in GlaxoSmithKline that personal jurisdiction could be exercised
was not based on the dollar amount of sales in New Jersey, but
rather on Merix's other contacts with New Jersey, such as
advertising through various media in New Jersey. Second and
perhaps more importantly, the analysis in GlaxoSmithKline
pertained to a finding of specific personal jurisdiction, and the
June Opinion & Order found that specific personal jurisdiction
was lacking. Schmidt apparently does not contest this finding in
this motion for reconsideration. Rather, the arguments presented
by Schmidt pertain only to the court's finding that general
personal jurisdiction is also lacking. Therefore, the
GlaxoSmithKline opinion is inapposite here.
B. "Extensive and persuasive" contacts
Second, Schmidt argues that the court erred in using an
"extensive and persuasive" standard in evaluating whether general
personal jurisdiction exists. Again, Schmidt argues that the
opinion cited for this proposition, Reliance Steel Products Co.
v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 588-589 (3d
Cir. 1982), interpreted Pennsylvania rather than New Jersey law.
Although this is true, the "extensive and persuasive" language
does not introduce a new standard but merely describes the much
higher threshold required to assert general jurisdiction than
specific jurisdiction. Moreover, the "extensive and persuasive"
language has been used in numerous court opinions applying New
Jersey law, which have cited Reliance Steel. Eg., Wartsila
NSD N. Am., Inc. v. Hill Int'l, Inc., 269 F. Supp. 2d 547, 559
(D.N.J. 2003) ("The facts required to assert this `general'
jurisdiction must be `extensive and persuasive."); SDS USA, Inc.
v. Ken Specialties, Inc., Civ. No. 99-133, 2002 U.S. Dist. LEXIS
16762 (D.N.J. Aug. 28, 2002) ("Moreover, the facts required to
establish general jurisdiction must be `extensive and
persuasive.'"); Smith v. S&S Dundalk Eng'g Works, Ltd.,
139 F. Supp. 2d 610, 618 (D.N.J. 2001) ("The facts required to establish general jurisdiction must
be `extensive and persuasive.'"); Bryan v. Associated Container
Transp., 837 F. Supp. 633, 637 (D.N.J. 1993) ("The burden of
establishing `general jurisdiction' is more difficult `for the
facts required to assert general jurisdiction must be extensive
and persuasive.'"). Accordingly, this argument does not convince
the court to grant reconsideration.
C. "Solicitation plus" test
Next, Schmidt argues that the "solicitation plus" test has been
rejected in New Jersey. Schmidt cites Amercoat Corp. v. Reagent
Chem. & Research, Inc., 108 N.J. Super. 331, 341 (N.J.Super.
Ct. App. Div. 1970), which opined that International Shoe
implicitly rejected the "solicitation plus" test. Schmidt's
argument, however, ignores the analysis contained in the June
Opinion, which remains valid even if the "solicitation plus" test
is inapplicable. The analysis in the June Opinion found that
Sypris's solicitation activities "are better characterized as
sporadic, intermittent contacts rather than substantial and
continuous." (June Op. at 16.) The June Opinion analyzed Sypris's
activities and found them to be wanting because they were not
sufficiently continuous and systematic to justify the exercise of
general personal jurisdiction.
Furthermore, the solicitation plus analysis was but one of
several considerations used to analyze personal jurisdiction.
Taking Sypris's contacts into consideration, the finding does not
change. Sypris's contacts are not enough to establish general
personal jurisdiction under any test.
D. Historical contacts
Finally, Schmidt argues that the court should have included
"historical contacts" in its analysis of personal jurisdiction.
By "historical contacts" Schmidt means contacts dating back to
1927 through the present, rather than the period from 1995 to
2004 as examined in the June Opinion. Schmidt does not cite any case law to support its
position. Upon reexamination, the court finds that 1995-2004,
i.e., the last decade, was an appropriate period in which to
determine whether Sypris made continuous and systematic contacts
with New Jersey. To attribute to Sypris all the contacts dating
from 1927 which includes contacts made by predecessor entities
wholly unrelated to Sypris over half a century ago would not
comport with fundamental fairness. Businesses necessarily change
with time, including the amount and significance of business done
within a particular state. Sypris could not reasonably anticipate
being haled into New Jersey court to defend against any cause of
action based on the existence of a predecessor's contacts with
New Jersey back in 1927 or for several decades thereafter. Such
contacts are too remote in time to be attributable to Sypris for
personal jurisdiction purposes.
In summary, Schmidt's motion for reconsideration will be denied
because it is not necessary to correct a clear error of law or
prevent manifest injustice. See North River Ins. Co. v. CIGNA
Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995).
II. Motion to certify for interlocutory appeal
In the alternative, Schmidt requests the court to certify its
June Order for interlocutory appeal. The question sought to be
certified is whether the court may exercise personal jurisdiction
The district court may certify an order for interlocutory
appeal when it is "of the opinion that such order involves a
controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate appeal
from the order may materially advance the ultimate termination of
the litigation." 28 U.S.C. § 1292(b). "The Court of Appeals which
would have jurisdiction of an appeal of such action may
thereupon, in its discretion, permit an appeal to be taken from such order . . ." Id.
The motion to certify will be denied because an immediate
appeal will not materially advance the ultimate termination of
the litigation and there is no substantial ground for a
difference of opinion.
A. Controlling question of law
In order to certify a question, the appeal must present a
controlling question of law on an issue whose determination may
materially advance the ultimate termination of the case. The
question of whether the court may exercise personal jurisdiction
over Sypris is controlling as to whether Sypris should be a party
in the underlying action. Therefore, this first element is met.
B. Materially advancing the litigation
A controlling question of law may be certified only if its
determination may materially advance the ultimate termination of
the case. Schmidt argues that an immediate appeal would
materially advance the ultimate termination of the litigation.
Schmidt argues that the entire controversy doctrine mandates
impleading component parts manufacturers and cites cases in
support of this proposition. E.g., Harley Davidson Motor Co.,
Inc. v. Advance Die Casting, Inc., 150 N.J. 489 (N.J. 1997). The
cases cited by Schmidt, however, merely stand for the proposition
that, if possible, a single forum should decide the rights of all
parties. The cases do not suggest that if personal jurisdiction
over a party is lacking, that party should nevertheless be
compelled to litigate in a forum without jurisdiction. Therefore,
this argument is inapposite for purposes of deciding this motion.
Schmidt argues that the June Order will be effectively
unreviewable if Schmidt were not allowed to appeal immediately.
Schmidt, however, may file an appeal after a final judgment has been entered in this litigation, and if the June Order is
reversed Schmidt may commence an action in New Jersey against
Schmidt also argues that if Sypris is not included in this
case, there will necessarily be a second lawsuit. First, a second
lawsuit is not a foregone conclusion for several reasons,
including the possibility that Plaintiffs might not prevail on
their claims. Second, assuming arguendo that there will be a
second lawsuit, the second lawsuit would be between Schmidt and
Sypris for contribution. Plaintiffs' underlying products
liability action would not be delayed by Sypris's absence as a
party, nor should Plaintiffs' underlying products liability
action be delayed by an interlocutory appeal of an issue that
concerns third-party contribution. Third, Sypris is not a
necessary or indispensable party to this litigation.
Finally, Schmidt argues that if certification is denied, the
underlying action in this case will be delayed because the
parties will have to travel to Kentucky to conduct merits
discovery. Schmidt fails to show, however, how the presence of
Sypris as a third-party defendant would eliminate the need to
travel to conduct merits discovery. Therefore, this argument
C. Substantial ground for difference of opinion
Finally, in order to certify a question there must be
substantial ground for a difference of opinion. "[M]ere
disagreement with the district court's ruling does not constitute
a `substantial ground for difference of opinion' within the
meaning of § 1292(b). Rather, the `difference of opinion' must
arise out of genuine doubt as to the correct legal standard."
Kapossy v. McGraw-Hill, Inc., 942 F. Supp. 996, 1001 (D.N.J.
Schmidt argues that the Court of Appeals has not yet squarely
construed New Jersey state law on whether the "continuous and
systematic" standard adopted by New Jersey state courts, as opposed to the "continuous, systematic and central" test
discussed in Provident Bank, should be applied in the District
of New Jersey. First, the Court of Appeals did not create a new
test in Provident Bank, as Schmidt suggests. Rather, the Court
of Appeals applied the well-known continuous and systematic
contacts test. In applying this test, the Court of Appeals
explained the importance of examining the centrality of a
defendant's conduct in the jurisdiction to its business.
Provident Bank, 819 F.2d at 438. Second, Provident Bank is
binding precedent in the district court. Although Provident
Bank concerned Pennsylvania rather than New Jersey law, both
states' laws extend the exercise of personal jurisdiction to the
maximum extent permitted by the Constitution. Accordingly,
Provident Bank is equally applicable in Pennsylvania and New
In summary, there does not appear to be substantial ground for
a difference of opinion as to the correct legal standard.
III. Motion for attorneys' fees and costs
Sypris contends that Schmidt's counsel has used excessive
discovery and the Rule 11 motion as a bullying tactic and to
delay the underlying products liability action for over a year.
(Sypris Br. at 4.) Sypris has moved for attorneys' fees and costs
incurred in responding to (1) Schmidt's Rule 11 threats and
motion in the amount of $5,365.25 and (2) Schmidt's alleged abuse
of jurisdictional discovery in an amount, if any, to be
determined by the Magistrate Judge. Sypris's motion for
attorneys' fees and costs concerning the Rule 11 motion will be
denied, and the amount of fees and costs, if any, to be awarded
with respect to allegedly abusive discovery tactics will be
referred to the Magistrate Judge.
Sypris argues that as the prevailing party in Schmidt's Rule 11
motion, it should be awarded reasonable attorneys' fees and costs. "If warranted, the
court may award to the party prevailing on the motion the
reasonable expenses and attorney's fees incurred in presenting or
opposing the motion." FED. R. CIV. P. 11(c)(1)(A). However, Rule
11 sanctions cannot be applied as a penalty against a losing
party merely for losing. In re Cendant Corp. Derivative Action
Litig., 96 F. Supp. 2d 403, 406 (D.N.J. 2000). "Rule 11 is not
primarily a fee-shifting rule. Although sanctions may properly
include an award of counsel fees and expenses to the adversary,
the prime goal should be deterrence of repetition of improper
conduct, and an award of counsel fees or other monetary sanction
should not automatically be the sanction of choice." Waltz v.
County of Lycoming, 974 F.2d 387, 390 (3d Cir. 1992).
In this case, an award of attorneys' fees and costs to Sypris
is not warranted. Although Schmidt did not prevail on its Rule 11
motion or Sypris's motion to dismiss for lack of personal
jurisdiction, the unfavorable outcomes do not justify an award of
fees and costs against Schmidt. Furthermore, Sypris has not
provided evidence to support its contention that Schmidt filed
the Rule 11 motion solely to bully and intimidate.
Accordingly, Sypris's motion for attorneys' fees and costs
relating to Schmidt's Rule 11 motion will be denied.
For the foregoing reasons, Schmidt's motion for reconsideration
or, in the alternative, to certify for interlocutory appeal will
be denied. Sypris's motion for attorneys' fees and costs relating
to Schmidt's Rule 11 motion will be denied, and Sypris's motion
for attorneys' fees and costs relating to Schmidt's allegedly
abusive discovery tactics will be referred to the Magistrate
Judge. An appropriate order will be issued.