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Lighting One, Inc. v. Spring City Electrical Manufacturing Co.

July 10, 2007

LIGHTING ONE, INC., PLAINTIFF,
v.
SPRING CITY ELECTRICAL MANUFACTURING COMPANY, INDEPENDENCE LIGHTING, AND KENT LAZOR, DEFENDANTS.



The opinion of the court was delivered by: Hon. Joseph H. Rodriguez

MEMORANDUM OPINION & ORDER

This matter comes before the Court on the motion of Defendants Spring City Electrical Manufacturing Company, ("Spring City"), Independence Lighting, and Kent Lazor, ("Lazor"), (collectively "Defendants"), to dismiss the Complaint pursuant to Fed. R. Civ. P. 12(b)(2). For the reasons set forth below, the motion is denied.

I. Background

Plaintiff Lighting One, Inc., ("Lighting One"), a New Jersey corporation with its principal place of business in Pennsauken, New Jersey, (Fine Certif. at ¶ 2), is in the business of selling lighting fixtures, equipment, and accessories. (Id. at ¶ 4.) In or about 1993, Spring City, a Pennsylvania corporation with its principal place of business in Spring City, Pennsylvania, (Rosfelder Certif. at ¶ 2), entered into a Sales Representative Agreement with Lighting One under which Lighting One became Spring City's representative for Eastern Pennsylvania, Delaware, and Southern New Jersey. (Fine Certif. at ¶¶ 5-6.) Under the agreement, Lighting One received commissions upon sales of Spring City products. (Compl. at ¶ 8.) Approximately twenty-five to thirty-five percent of Lighting One's sales for Spring City occurred in New Jersey. (Fine Certif. at ¶ 9.) Spring City also directly billed and shipped to customers in New Jersey for Lighting One's sales. (Id. at ¶ 10.)

Plaintiff alleges that in or about March 2005, Spring City, without justification or warning, unilaterally terminated the agreement. (Compl. at ¶ 10.) At the time of termination, Plaintiff claims it was owed in excess of $60,000 for outstanding sales and commissions, including undelivered merchandise. (Id. at ¶¶ 12-14.) Plaintiff also alleges that Spring City conspired with Kent Lazor, a Lighting One employee at the time of the conspiracy, to delay sales for Lighting One so that they could be renewed by Independence Lighting, Lazor's new company. (Id. at ¶ 19-23; Lazor Certif. at ¶ 2.) Lazor is domiciled in and is a citizen of Pennsylvania. (Lazor Certif. at ¶ 1.) Independence Lighting is a Pennsylvania corporation with its principal place of business in Exton, Pennsylvania. (Id. at ¶ 3.) Plaintiff claims that the delayed commissions would have netted in excess of $30,000, including alleged sales to New Jersey entities Cooper Electric and Township of Lakewood. (Fine Certif. at ¶ 18.) Lastly, Plaintiff claims that Lazor retained certain Lighting One property when his employment was terminated. (Compl. at ¶ 25.)

Lighting One brought suit in the Law Division of the Superior Court of New Jersey, Camden County, on December 8, 2006, for Breach of Contract, Promissory Estoppel, Unjust Enrichment, Tortious Interference with an Economic Advantage, Unfair Business Practices, Conversion, Civil Conspiracy, Breach of Duty of Loyalty, and Breach of Duty of Good Faith and Fair Dealing. (Amended Notice of Removal at ¶¶ 1-2.) Defendants filed a notice of removal on February 9, 2007, pursuant to 28 U.S.C. §§ 1441, 1446, and 1332. Defendants filed this motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) five days later.

II. Analysis

Whether a court can exercise personal jurisdiction depends on "the relationship among the defendant, the forum, and the litigation." Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). An exercise of personal jurisdiction must satisfy the defendant's due process rights, which requires "certain minimum contacts with [the forum] such that maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Personal jurisdiction can be either general or specific. Jacobs v. Walt Disney World, Co., 707 A.2d 477, 481 (N.J. Super. Ct. App. Div. 1998). Specific jurisdiction is established when the cause of action arises directly out of the defendant's contacts with the forum. Waste Mgmt., Inc. v. Admiral Ins. Co., 649 A.2d 379, 385 (N.J. 1994). Contacts with the forum can include acts by an out-of-state defendant who directs an "effect" on the plaintiff in the forum. Carteret Savings Bank, FA v. Shushan, 954 F.2d 141, 148 (3d Cir. 1992). Alternatively, general jurisdiction is established when the defendant engages in "continuous and systematic activities in the forum" that may be unrelated to the cause of action. Waste Mgmt., 649 A.2d at 385.

Plaintiff bears the burden of demonstrating that the defendant's contacts with the forum establish personal jurisdiction. Jacobs, 707 A.2d at 482. However, in the absence of an evidentiary hearing on a Rule 12(b)(2) motion, "the plaintiff need only establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its allegations taken as true and all factual disputes drawn in its favor." Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004). In a suit with multiple defendants, the court must have personal jurisdiction over each defendant. Waste Mgmt., 649 A.2d at 389. New Jersey's long-arm statute permits service on non-resident defendants to the "uttermost limits permitted by the United States Constitution." Avdel Corp. v. Mecure, 277 A.2d 207, 209 (N.J. 1971).

A. Specific Jurisdiction

The threshold inquiry for specific jurisdiction is whether the defendant had sufficient "minimum contacts" with the jurisdiction. Waste Mgmt., 649 A.2d at 685 (citing Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Minimum contacts are satisfied if "'the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefit and protection of its laws.'" Hanson, 357 U.S. at 253 (citing Int'l Shoe, 326 U.S. at 319)). Such purposeful contact with the forum makes it reasonable for the defendant "to anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). However, specific jurisdiction is not satisfied where the unilateral acts of the plaintiff alone bring the defendant into the forum. Id. at 298.

Under the facts alleged, Spring City has sufficient minimum contacts with New Jersey to establish personal jurisdiction. Plaintiff's underlying causes of action against Spring City include: Breach of Contract, Promissory Estoppel, Unjust Enrichment, Unfair Business Practices, Conversion, Civil Conspiracy, and Breach of Duty of Good Faith and Fair Dealing. (Compl. at ¶¶ 27-39, 44-53, 58-63.) The majority of these allegations relate to an agreement between Plaintiff and Spring City under which Plaintiff would become the Defendant's sole representative for Southern New Jersey, portions of Eastern Pennsylvania, and the whole of Delaware. (Fine Certif. at ¶ 5-6.) Although a contract alone is not sufficient for establishing minimum contacts, other acts pursuant to the contract such as negotiations, future consequences, and course of dealings can establish jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478-79 (1985). Defendant alleges that none of the sales at issue in the complaint occurred in New Jersey and thus, the agreement alone with its "territory of coverage" provision is insufficient to create minimum contacts. (Defendant's Brief at 5-6, citing Waste Mgmt., 649 A.2d at 389.)

However, the facts alleged show that pursuant to the contract, Spring City purposefully availed itself of the benefits and protections of New Jersey beyond the formation of the agreement itself. For example, twenty-five to thirty-five percent of Lighting One's sales for Spring City occurred in New Jersey. (Fine Certif. at ¶ 9.) Spring City also directly billed customers in New Jersey and arranged for direct delivery in New Jersey. (Id. at ¶ 10.) Moreover, at least two of the sales at issue concern sales to New Jersey entities, Cooper Electric and Township of Lakewood. (Id. at ¶ 18.) While Defendant denies that these sales are truly in dispute, (Rosfelder Supp. Certif. at ¶ 5), the Plaintiff's allegations are accepted as true for purposes of Rule 12(b)(2). Miller Yacht, 384 F.3d at 97. Plaintiff's burden is only to make out a prima facie case for jurisdiction, which it has done with the affidavits submitted to the Court. See id. Furthermore, even though those two New Jersey sales account for only a small portion of the underlying amount in controversy, Plaintiff can seek relief from tortious activity anywhere Spring City has minimum contacts provided it does not offend notions of "fair play and substantial justice." See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 780-81 (1984) (regarding volume of contacts). Therefore, Spring City has sufficient minimum contacts with New Jersey to satisfy personal jurisdiction.

Defendant Spring City is also subject to personal jurisdiction in New Jersey under the "effects" test. The "effects" test requires "that the nonresident defendant purposely and deliberately direct his act toward the forum state." Covenant Bank for Savings v. Cohen, 806 F. Supp. 52, 56 (D.N.J. 1992). However, the effects must be distinguished between acts directed at a plaintiff in a forum, which ...


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