Law School Case Brief
Nicastro v. McIntyre Mach. Am., Ltd. - 201 N.J. 48, 987 A.2d 575 (2010)
The Supreme Court of New Jersey has charted the contours of the stream-of-commerce theory. First, the stream-of-commerce theory supports the exercise of jurisdiction if the manufacturer knew or reasonably should have known of the distribution system through which its products were being sold in the forum state. Second, a manufacturer need not so control the distribution system to place its products into the stream of commerce and, therefore, control of that system is not necessary to subject the manufacturer to the jurisdiction of the forum state. Thus, the focus is on the manufacturer's actual or constructive awareness of the system, not on control of the distribution of its products. Third, a manufacturer's awareness of the distribution system, through which it receives economic and legal benefits, justifies subjecting the manufacturer to the jurisdiction of every forum within its distributors' market area. Accordingly, a manufacturer that knows its products are distributed through a nationwide distribution system should reasonably expect that those products would be sold throughout the fifty states and that it will be subject to the jurisdiction of every state. Last, a manufacturer that wishes to avoid the jurisdiction of a particular state must at least attempt to preclude the distribution and sale of its products in that state.
A worker, who was employed by a scrap metal company,severed four of his fingers while operating a recycling machine used to cut metal that was made by the manufacturer. The manufacturer was a foreign corporation, incorporated in the United Kingdom, who sold the machine through its American distributor. The trial court had found that the manufacturer did not have sufficient minimum contacts with New Jersey to justify the State's exercise of personal jurisdiction over it. The Appellate Division reversed following discovery, concluding that the exercise of jurisdiction over the manufacturer by New Jersey would not offend traditional notions of fair play and substantial justice and was justified under the stream-of-commerce plus rationale. The manufacturer sought further review in the Supreme Court of New Jersey.
Did the appellate court err when it directed that a consumer may sue a foreign manufacturer in state court over a product that the manufacturer marked and sold in the United States?
The Supreme Court of New Jersey affirmed the appellate court's judgment, which reinstated the worker's product-liability action, and remanded the matter to the trial court for further proceedings. The Court reaffirms the reasoning of its decision in Charles Gendler & Co. v. Telecom Equipment Corp., 102 N.J. 460, 508 A.2d 1127 (1986), and holds that a foreign manufacturer that places a defective product in the stream of commerce through a distribution scheme that targets a national market, which includes New Jersey, may be subject to the in personam jurisdiction of a New Jersey court in a product-liability action. The Court realizes more than ever that we live in a global marketplace. A state has a strong interest in protecting its citizens from defective products as well as a paramount interest in ensuring a forum for its injured citizens who have suffered catastrophic injuries due to allegedly defective products in the workplace.
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