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ETEAM, Inc. v. CLD Solutions

October 7, 2008


On appeal from the Superior Court of New Jersey, Law Division-Special Civil Part, Bergen County, Docket No. DC-11090-07.

Per curiam.


Submitted: September 10, 2008

Before Judges Cuff and Baxter.

Plaintiff ETEAM, Inc. (ETEAM) appeals from an order dismissing its complaint against defendant CLD Solutions (CLD) for lack of personal jurisdiction. We reverse.

We derive the facts from the certifications filed in support of and in opposition to defendant's motion to dismiss. The facts are undisputed; it is the application of the law to the facts that controls the disposition of this appeal.

ETEAM is a New Jersey corporation with its principal place of business at 1001 Durham Avenue, Suite 201, South Plainfield. ETEAM is in the information technology (IT) field and provides software development and consulting services to numerous corporations throughout the United States. Through its New Jersey office, ETEAM employs consultants who are proficient in software development. The employees of ETEAM are subcontracted by ETEAM to its clients requiring IT services. At all times, the ETEAM consultants/subcontractors remain employees of ETEAM, and ETEAM is responsible for their payroll and benefits.

On or about August 15, 2006, ETEAM and CLD entered a Subcontractor Agreement. Prior to this date, CLD contacted ETEAM in its New Jersey office. CLD is located in Dallas, Texas. It sought to retain an ETEAM employee in a consultant capacity to provide certain IT services. Rodney Cole, a principal of CLD, initiated this contact by a telephone call to an ETEAM representative in New Jersey.

Ben Thakur, ETEAM's Vice President of Operations, executed the Subcontractor Agreement in ETEAM's New Jersey office. The consultant, Pankaj Sital, supplied to CLD was an ETEAM employee. Sital performed certain services for CLD and submitted timesheets for the hours worked. Based upon the timesheets, ETEAM billed CLD for these services. ETEAM paid Sital his weekly wages and any additional employee benefits because he remained an employee of this New Jersey company.

CLD failed to remit payment to ETEAM for services performed by Sital, valued at $4,785, thereby breaching the Subcontractor Agreement. CLD asserts that it was dissatisfied with the services provided by the ETEAM consultant. We cannot discern from this record where the ETEAM consultant resided or even where he performed the services.

The motion judge found that the minimum contacts required by due process to exercise personal jurisdiction over CLD could only be established in accordance with the principles governing specific jurisdiction rather than general jurisdiction. The motion judge found that the only contact in New Jersey was a telephone call to plaintiff's New Jersey office. Based on that finding, the motion judge proceeded to hold that CLD "did not purposefully avail themselves of being in court in New Jersey. They engaged in no extensive contact, and did not reasonably expect being [haled] into court in New Jersey."

New Jersey's equivalent of a long-arm statute, Rule 4:4-4(b)(1), permits service of process on a non-resident defendant "consistent with due process of law." Accordingly, New Jersey courts have allowed out-of-state service to the outermost limits permitted by the United States Constitution. Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971).

Due process requires that a defendant who is not physically present have "certain minimum contacts with [the forum] such that the 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, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278, 283 (1940)). "Minimum contacts" is understood to require that a defendant has "purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed. 2d 1283, 1298 (1958). The purpose of the minimum contacts doctrine is to protect a defendant against litigating in an inconvenient forum and to ensure that states do not exceed their jurisdictional limits. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S.Ct. 559, 564, 62 L.Ed. 2d 490, 498 (1980). The doctrine has been relaxed substantially over the years because of the fundamental transformation in the American economy, commonly involving interstate business transactions without physical presence. Id. at 292-93, 100 S.Ct. at 565, 62 L.Ed. 2d at 498.

More than fifty years ago, the United State Supreme Court recognized that the minimum contacts basis, as an alternative to the requirement of physical presence for the assertion of in personam jurisdiction, was justified by the "increasing nationalization of commerce," in which many business transactions were conducted across state lines. The corresponding improvements in modern transportation and communication made it less burdensome for a party sued to defend himself in a state where he engages in economic activity. McGee v. Int'l Life Ins. Co., 355 U.S. 220, 222-23, 78 S.Ct. 199, 201, 2 L.Ed. 2d 223, 226 (1957). In World-Wide Volkswagen, supra, the Court ...

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