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Leja v. Schmidt Manufacturing

October 19, 2010

ZOFIA LEJA, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF KAZMIERZ LEJA, PLAINTIFF,
v.
SCHMIDT MANUFACTURING, INC., ET AL. DEFENDANTS.



The opinion of the court was delivered by: Debevoise, Senior District Judge

FOR PUBLICATION

OPINION

This matter comes before the Court on a motion submitted by Defendant Schmidt Manufacturing, Inc. ("Schmidt") for reconsideration pursuant to Federal Rule of Civil Procedure 60(b) of the Court‟s Opinions and Orders of June 7 and August 17, 2005.*fn1 In the former, the Court ruled that it lacks personal jurisdiction over another company named by Schmidt as a third-party defendant, Sypris Technologies, Inc. ("Sypris").*fn2 See Leja v. Schmidt Mfg., Inc., 2005 WL 1366533 (D.N.J. 2005) (hereinafter "Leja I"). In the latter, the Court denied Schmidt‟s request for reconsideration of that ruling. See Leja v. Schmidt Mfg., Inc., 2005 WL 2009924 (D.N.J. 2005) (hereinafter "Leja II").

In its pending Motion for Reconsideration, Schmidt contends that the Supreme Court of New Jersey‟s recent decision in Nicastro v. McIntyre Machinery America, Ltd., 987 A.2d 575 (N.J. 2010), authorizes the Court to exercise personal jurisdiction over Sypris. Specifically, Schmidt argues that Nicastro supports the proposition that a state may assert personal jurisdiction over a manufacturer who inserted its products into the "stream of commerce" as long as that manufacturer knew or should have known that those products would make their way to that state. The Court rejected that assertion in its earlier rulings, stating that "the mere foreseeability that a product one sells may end up in the forum state does not render the seller amenable to suit in the forum state." Leja I, 2005 WL 1366533 at * 4 (quoting Pennzoil Prods. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 203 (3d Cir. 1998)). Accordingly, although Schmidt admits that Nicastro did not change the applicable law relating to personal jurisdiction, it contends that the Supreme Court of New Jersey‟s analysis in that case fundamentally contradicts this Court‟s earlier rulings, and requires that they be reconsidered.

For the reasons set forth below, the pending Motion for Reconsideration will be denied. First, Schmidt‟s motion is untimely. The decision on which Schmidt‟s arguments rely was issued over six months before the company filed its request for reconsideration. Yet despite engaging in multiple communications and appearing in at least one oral argument during that time period, Schmidt made no effort to bring the ruling on which it now relies to the attention of the Court. While such a delay might not be unreasonable under normal circumstances, it was unjustified given the exceptionally protracted history of this case, the delay that would be inherent in reintroducing Sypris to the case, and the potential prejudice Plaintiff would suffer from that delay. Even if Schmidt‟s motion had been submitted within a reasonable time, it fails to point to any new evidence that was not previously available, an intervening change in law, or the need to prevent manifest injustice. Therefore, Schmidt has not asserted a proper basis for reconsideration. Finally, the portions of Nicastro on which Schmidt bases its request for reconsideration impermissibly expand the jurisdictional scope of the stream of commerce theory beyond the limits enumerated in previous decisions by the Supreme Court of the United States. Therefore, those parts of Nicastro must be disregarded, and the pending Motion for Reconsideration must be denied.

I. BACKGROUND

The facts relevant to the pending Motion were set forth at length in the Court‟s June 7 and August 17, 2005 Opinions. See Leja I, 2005 WL 1366533 at *1-3; Leja II, 2005 WL 2009924 at *1-4. In order to provide context for today‟s ruling, some of the background discussed in those Opinions will be repeated below.

This matter arises out of an industrial accident. On May 4, 2000, decedent Kazimierz Leja suffered severe injuries when he attempted to open a bulk sandblasting unit ("the machine") manufactured by Schmidt while it was still pressurized. The machine operated by releasing an abrasive stream of gas and liquid, which was propelled by tension built up by pumping air into the "pressure vessel" located at its apex. In order to refill the liquid abrasive materials within the machine, its operator was required to periodically execute a "blow-down" procedure in which the pressure built up inside was released by activating a valve located on its side. The operator would then climb a ladder and open a metal lid at the top of the pressure vessel known as the "camlock closure," which was secured by five T-bolts.*fn3

The machine was custom-built by Schmidt in 1996 for the Sylvan Equipment Corporation ("Sylvan") which acts as a machinery distributor and has its primary place of business in New York. In doing so, Schmidt assembled various component parts that were produced by other manufacturers. Included among those parts was the camlock closure, which was designed and manufactured by Sypris.

Sylvan leased the machine to L&L Painting Company ("L&L"), a New York company, for use in the removal of paint from the Outerbridge Crossing -- a bridge that runs between Staten Island, New York, and Elizabeth, New Jersey. When it proved inadequate for that task, Sylvan took the machine back from L&L and sold it to Mr. Leja‟s employer, the West Virginia Paint and Tank Company ("WVP").

The day of the accident, Mr. Leja attempted to open the camlock closure without first releasing the pressure inside the machine by activating the blow-down valve. The result was disastrous: pressure stored inside the machine caused an explosion that propelled the lid of the camlock closure and several pieces of shrapnel upward into Mr. Leja‟s body. The injuries to his right arm were particularly severe, and required that the limb be amputated shortly after the accident.*fn4

On August 31, 2001, Mr. Leja and his wife Zofia filed a Complaint against Schmidt in the Superior Court of New Jersey alleging that the May 4, 2000 accident was caused by defects in the machine‟s design and Schmidt‟s failure to include proper warnings that would have prevented Mr. Leja from attempting to open the machine while it was still pressurized. Schmidt removed the action to this Court based on diversity of citizenship on October 30, 2001. The Lejas subsequently amended their Complaint to add several companies as Defendants, all of whom later entered settlement agreements and were voluntarily discharged from the proceedings.

On July 13, 2004, Schmidt filed a third-party Complaint in which it alleged that Sypris defectively designed the camlock closure. On the basis of that allegation, Schmidt argued that, if it was found liable to Plaintiffs, it would be entitled to indemnification and contribution from Sypris.

Arguing that it lacked the minimum contacts with New Jersey necessary for this Court to exercise jurisdiction, Sypris moved to dismiss the third-party claims asserted against it by Schmidt pursuant to Federal Rule of Civil Procedure 12(b)(2). Schmidt subsequently sought leave to amend its third-party Complaint. The Court granted that request on December 14, 2004, and Schmidt filed an Amended Third-Party Complaint against Sypris nine days later. Relying on many of the same arguments it articulated in its original request, Sypris filed a renewed Motion to Dismiss for lack of personal jurisdiction on January 7, 2005. After a series of adjournments, Schmidt submitted opposition to that Motion on May 9, 2005. Sypris replied on May 16th, and the Court held oral arguments at which both parties were allowed to articulate their respective positions on May 23, 2005.

A. The June 7, 2005 Ruling

In a ruling dated June 7, 2005, the Court held that it lacks personal jurisdiction over Sypris and granted that company‟s Motion to Dismiss the third-party claims asserted against it by Schmidt. In doing so, it first distinguished between the two types of personal jurisdiction -- specific and general -- stating:

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 (D.N.J. 2001).

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).

Leja I, 2005 WL 1366533 at *3.*fn5

The Court then ruled that it had neither specific nor general personal jurisdiction over Sypris. That ruling was based on an extensive analysis of the contacts between Sypris and New Jersey.

With respect to specific personal jurisdiction, the Court noted that:

In this case, Plaintiffs‟ cause of action does not arise out of, and is not related to, Sypris‟s contacts with New Jersey. Sypris did not purposefully sell or direct the top closure which allegedly caused Leja‟s injuries to New Jersey. In fact, the Sandblaster to which the top closure was attached arrived in New Jersey only after multiple transactions and travels to interim locations outside of New Jersey. Sypris sold the top closure to Schmidt and shipped the top closure to Texas, where Schmidt incorporated the top closure into its Sandblaster. The subsequent travels and eventual resting place of the Sandblaster in New Jersey was not the result of Sypris‟s purposeful conduct. Rather, the eventual sale of the Sandblaster to Leja‟s employer in New Jersey was a "random, fortuitous, or attenuated contact" that is insufficient to exercise specific personal jurisdiction. See Rudzewicz, 471 U.S. at 475. After Sypris sold and shipped the top closure to Schmidt in Texas, all subsequent events -- i.e., Schmidt‟s subsequent sale of the Sandblaster to Sylvan, which then sold it to Bobcat and L&L Painting, which then returned it to Sylvan, which then sold it to Leja‟s employer -- cannot be attributed to the purposeful conduct of Sypris.

Id. at *5.

In deciding that it lacked specific personal jurisdiction over Sypris, the Court explicitly rejected Schmidt‟s arguments that it could exercise such jurisdiction under the "stream of commerce" theory announced by the Supreme Court of the United States in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), and further discussed in Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102 (1987). As the Court noted in its June 7, 2005 Opinion, the latter case resulted in two plurality opinions which presented "different conceptions" of the amount and pervasiveness of contacts between a litigant and a given forum necessary to result in "purposeful availment of through the stream of commerce." Leja I, 2005 WL 1366533 at *5 (quoting Pennzoil, 149 F.3d at 204). The first, authored by Justice O‚ÄüConnor, held that "placement of a product in the stream of commerce must be accompanied by some additional conduct of the defendant that may indicate an intent or purpose to serve the market in the forum State." Id. (citing Asahi, 480 U.S. at 112). Examples of such conduct include "designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State." Asahi, 480 U.S. at 112. The second plurality opinion in Asahi, authored by Justice ...


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