On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-773-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo, Grall and Alvarez.
Plaintiff Darryl T. Garvin is a resident of New Jersey who purchased shares of publicly traded stock in Idearc, Inc. (Idearc) that became worthless when Idearc later filed for bankruptcy and reorganized. Garvin commenced this litigation to recover damages from Idearc's chief executive officer, defendant Scott W. Klein. Garvin claimed to have purchased the stock in reliance on material misrepresentations and omissions Klein made in two press releases Idearc issued in September and October 2008 that Garvin read on the internet and during a "webcast/teleconference," which had been announced in the October press release, that he viewed online.
Although Idearc does business in New Jersey, Klein is a resident of Texas who has never lived, owned property, voted or had an office in this State while employed by Idearc. Alleging that his contacts with this State were insufficient to permit our courts to exercise personal jurisdiction, Klein moved to dismiss Garvin's amended complaint. The trial court granted Klein's motion and denied Garvin's motion for reconsideration.
Garvin now appeals from those orders. Because Garvin has not established a "relationship among [Klein], the forum, and the litigation" that is sufficient to permit exercise of personal jurisdiction, we affirm. Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2580, 53 L. Ed. 2d 683, 698 (1977);
Lebel v. Everglades Marina, Inc., 115 N.J. 317, 323, 326 (1989).
Garvin's amended complaint and certification submitted in support of his motion for reconsideration include these allegations. In 2008, Garvin was considering investing in stocks that had been hit hard by the harsh downtrend in the stock market but would recover. He wanted to avoid investments in companies that had an "identifiable near term risk [of bankruptcy]."
Garvin did not buy stock in Idearc until he read a September 2, 2008 press release, and he purchased additional shares after reading an October 30, 2008 press release and listening to Klein speak that day on a "website/teleconference" announced in the press release. At argument on the motion to dismiss, Garvin, who is an attorney and appeared pro se, explained that such a press release "gets picked up by all these financial sites and [is published] throughout the website." A reader "get[s] this information almost instantaneously through numerous sources at that point," the same as if Klein had issued a press release "and all the magazines in the country picked it up." Garvin read the press releases on a website and learned about the "webcast/teleconference" from one of them. Garvin did not assert that he received any information from Klein or Idearc via e-mail or any other communication addressed to him or that the websites he visited were in any way targeted to investors or potential investors residing in New Jersey.
According to Garvin, based on what he read and heard in the press releases and "website/teleconference," he believed that Idearc "provided a unique opportunity at that time given its reported financial condition, taken together with [Klein's] representations." Klein had "assured shareholders and prospective Idearc shareholders that while Idearc was producing a positive cash flow, there was no reason why Idearc would have to file for bankruptcy." In addition, Klein "represented that he had a plan for generating more revenues and decreasing Idearc's costs, and that he intended to use Idearc's resources to pursue his plan to transform Idearc." Klein advised shareholders that his plan "was progressing as planned" but never advised shareholders that the plan included "filing for reorganization in bankruptcy" until the petition was filed.
Garvin asserted that the bankruptcy filing became necessary because of the long-term debt that Idearc carried before Klein became its CEO. In his view, however, statements Klein made after the bankruptcy filing showed that the reorganization was part of Klein's plan for reforming Idearc from the outset.
A judgment rendered by a court lacking personal jurisdiction violates the Due Process Clause of the Fourteenth Amendment. Pennoyer v. Neff, 95 U.S. 714, 733, 24 L. Ed. 565, 572 (1877); Blakey v. Cont'l Airlines, Inc., 164 N.J. 38, 64-65 (2000). The Due Process Clause "limit[s] every foray into the realm of long-arm jurisdiction over non-residents," Blakey, supra, 164 N.J. at 66, and its demands must be satisfied in this case involving a defendant who is a Texas resident.
"[A] state court's assertion of personal jurisdiction does not violate the Due Process Clause if the defendant has 'certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice."'" Blakey, supra, 164 N.J. at 65 (quoting 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))). Where, as here, the defendant is an individual sued for actions taken as an officer of a corporation, the ...