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Nicastro v. McIntyre Machinery America

April 9, 2008


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6857-03.

The opinion of the court was delivered by: Lisa, J.A.D.



Argued October 3, 2007

Before Judges Cuff, Lisa and Simonelli.

The issue in this case is whether New Jersey courts can assert long-arm jurisdiction over the British manufacturer of an industrial machine, which plaintiff alleges was defectively designed and caused him to be injured in a workplace accident in New Jersey. Plaintiff's employer purchased the machine new from the manufacturer's exclusive United States distributor, an Ohio corporation, after the employer attended a national trade convention in Las Vegas, Nevada and learned about the machine at a booth exhibit jointly operated by the manufacturer and distributor. The manufacturer had no physical presence in New Jersey and asserted that it had no control over the activities of its United States distributor and had no knowledge of the domiciles of buyers to whom the distributor sold defendant's machines after defendant transferred title to the machines and shipped them to the distributor in Ohio. The trial court concluded that plaintiff failed to establish that defendant had sufficient minimum contacts with New Jersey to subject it to personal jurisdiction, and that even under the most liberal form of the stream-of-commerce theory, defendant would not be subject to personal jurisdiction in New Jersey.

We conclude that sufficient minimum contacts exist under the "stream-of-commerce plus" rationale espoused by Justice O'Connor in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 112, 107 S.Ct. 1026, 1032, 94 L.Ed. 2d 92, 104 (1987). We further conclude that entertainment of jurisdiction in New Jersey would not offend traditional notions of fair play and substantial justice. Accordingly, we reverse the order dismissing the complaint against the manufacturer for lack of personal jurisdiction.

J. McIntyre Machinery, Ltd. (defendant), a British corporation based in Nottingham, England, is in the business of manufacturing shearing machines used in scrap metal recycling operations. McIntyre Machinery America, Ltd. (McIntyre America), an Ohio corporation with its principal place of business in Stow, Ohio, was defendant's exclusive distributor in the United States prior to going bankrupt in 2001. McIntyre America was not a subsidiary of defendant and there was no commonality of ownership or management of the two companies. They were independent corporate entities. There was apparently no written contract between the two companies, but the record reveals a close ongoing business relationship in which they cooperated in selling defendant's products to United States industrial customers.

Plaintiff, Robert Nicastro, a New Jersey resident, was employed by Curcio Scrap Metal in Saddle Brook. On October 11, 2001, plaintiff's hand became lodged in a shearing machine he was operating, causing him severe injuries. The machine was a Model 640 Shear manufactured in 1995 by defendant in England.

The machine is about eight feet long and six feet high and weighs more than three tons.

In 1994 or 1995, Frank Curcio, the owner of Curcio Scrap Metal, attended the Institute of Scrap Recycling Industries (ISRI) convention in Las Vegas, Nevada. He visited an exhibitor's booth jointly operated by defendant and McIntyre America and obtained information about the Model 640, with which he was not previously familiar. Curcio learned that the machine was manufactured by defendant in England and distributed throughout the United States by its sole United States distributor, McIntyre America. Based upon that contact, Curcio ordered the machine.

Defendant shipped the machine from England to McIntyre America in Ohio, which then shipped it to Curcio Scrap Metal in Saddle Brook. The purchase price was $24,900, as reflected in the August 25, 1995 invoice issued by McIntyre America to Curcio Scrap Metal. The invoice described McIntyre America as "America's Link to Quality Metal Processing Equipment."

The machine came with an instruction manual bearing on its cover defendant's name, with a sticker affixed containing McIntyre America's name. The manual advised that owners and operators must familiarize themselves and comply with specified safety standards issued in the United Kingdom and the United States, and set forth sources in both countries for applicable "working practices and regulations."

Defendant's president attended the ISRI conventions in Las Vegas in 1994 and 1995, which Frank Curcio attended. The president attended ISRI conventions each year from 1990 through 2002, held in various cities in the United States. Some years, he was accompanied by one or two other management level officers of defendant. Defendant's management level personnel also attended exhibitions, conferences and annual meetings of other United States trade organizations in the scrap metal industry.

Notwithstanding the apparent absence of a written contract, defendant does not dispute that McIntyre America was its sole United States distributor during the relevant time period. Evidence in the record illuminates to some extent the nature of the relationship between the two companies regarding the sale of defendant's machines in the United States.

Defendant did not own property, maintain an office or bank account, or have employees in New Jersey. It was not licensed to do business in New Jersey and had no registered agent here. Its former managing director, Sally Johnson, certified that defendant "does not directly market, sell or solicit the business of anyone in New Jersey to buy its products, nor did it ever do so. McIntyre does not, and never did, employ a sales staff in or for the United States." (emphasis added).

In a January 13, 1999 letter to McIntyre America, Johnson expressed concern over apparent disputes developing between the two companies and stated that she and "the Boss" would come to the United States to meet with McIntyre America's representatives within the next few days "to see how we can get things back on an even keel and move the businesses forwards [sic]." Johnson stated that defendant would arrange for collection of some of its unsold machines and equipment (other than Model 640s), "which should help to get your storage costs down." She then stated:

I note also that you have 3 640s unsold which I understood to have been sent out against firm orders - otherwise we wouldn't have built them! Perhaps we should also look at bringing a couple of those back also. It is important for us to try to turn some of your stock into cash as quickly as possible, since it is presently costing us £20,000 per year to fund it. If we can get the stock levels down, then we could look again at machine costings and perhaps in the short term try to send out fewer machines but give you more margin on them.

In a November 23, 1999 communication from defendant's president to McIntyre America, it is evident that the difficulties between the two companies continued. He stated:

As you know, we are unhappy with the present situation. All we wish to do is sell our products in the States -- and get paid! If this isn't possible then the only other option open to us is for us to split up in an amicable fashion as quickly as we can. I note that you still have new machines in stock, which you are presently unable to sell. Please note that those machines are our property until they have been paid for in full.

During the interim period, on April 23, 1999, McIntyre America communicated with Johnson, referencing "what we discussed at ISRI" regarding "commissions." Apparently, McIntyre America took a "commission" on a sale before defendant was "paid by the customer for it." McIntyre America assured defendant that "[w]e do not plan to collect our commissions in this fashion on an ongoing basis," but explained that it was in a tight cash flow position at that time. McIntyre America assured defendant:

We have no problem waiting for you to receive payment from the customer first before requesting our commission via a comp[an]y invoice in the future. It was not our intention to upset you or your books over in England with our actions. That's why I paid you for the 407 shear, that we just got payment for by check, even though it has not even had time to clear our bank! We have all worked very hard to build up confidence in each other and we have no desire to jeopardize those strides. I have faxed over an invoice for the commission today, and I will send you out a hard copy in the mail.

These communications support the reasonable inference that defendant retained a significant measure of control over the level of McIntyre America's inventory of defendant's machines, which remained defendant's property until McIntyre America sold them to United States customers. It is also reasonable to infer that defendant dictated the "margin" or "commission" McIntyre America would receive when a sale was accomplished. It is thus evident that the two companies were acting closely in concert with each other to sell defendant's machines to customers throughout the United States, through a distribution system in which McIntyre America was a conduit for the sales.

Although our minimum contacts analysis focuses on the timeframe leading up to the sale of the product, we consider subsequent conduct by defendant for the limited purpose of supporting reasonable inferences that relate back to its conduct at the critical time. In addition to that which we have already described regarding direct dealings between defendant and McIntyre America, other uncontroverted conduct and statements by defendant demonstrate its continuing course of conduct with successors to McIntyre America, as defendant's exclusive distributors, and defendant's continuing activities directed at selling its products to United States customers through these exclusive distributors.

An article in a trade publication, Recycling Today, in May 2002, announced that defendant appointed Recycling Equipment Corp. (REC), of Pennsylvania, as its "exclusive North American distributor." The article described the first United States sale of a particular shear machine model to a Tennessee purchaser, and elaborated: "The machine was exhibited at the recent ISRI convention in Las Vegas, and was purchased from the J. McIntyre Machinery Ltd. booth." Information in the article was attributed to Sally Johnson. The article stated: "Although McIntyre shears are well established in America, this is the first shipment to the U.S. in more than 18 months, following the demise of J. McIntyre Machinery Ltd.'s former distributor, McIntyre America." Then, Johnson was quoted as ...

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