In the last few years, the United States Supreme Court and federal courts in New Jersey and Pennsylvania have provided additional guidance on what circumstances give rise to personal jurisdiction over foreign Defendants. The Third Circuit addressed the issue of consent to jurisdiction in Danziger & DeLlano v. Morgan Verkamp, LLC, in its January 15, 2020, decision where it held that removing a case to federal court is not a waiver of the defense of personal jurisdiction. In Danziger, two law firms were engaged in a dispute over whether the plaintiff firm was entitled to a referral fee following the defendant firm’s settlement of a qui tam action allegedly referred by the Plaintiff Danziger (“Danziger”).
In a recent case, the New Jersey Appellate Division addressed whether an Internet transaction between a New Jersey buyer and California seller exposed the seller to a New Jersey lawsuit initiated by the buyer.
The case, Jardim v. Overley, involved the sale of a vintage car. The seller, Overley, is a California resident. On May 2, 2018, he listed a 1960 Buick Invicta for sale on the website Hemmings.com, a marketplace used to list cars for sale. Overley explained in a certification that he is not in the business of selling cars and does not regularly conduct business over the Internet. The buyer, Jardim, is in the business of selling used cars and has an office in New Jersey. Jardim v. Overley, __ N.J. Super. __ (2019) (slip op. at 3–4).
On May 26, 2018, Jardim, through his business associate, e-mailed Overley and offered to purchase the car. In a series of e-mail and telephone communications over a two-day period, the parties negotiated and agreed on a purchase price. Once the price was set, the parties executed a bill of sale. Jardim arranged to have the car shipped from California to New Jersey, and on June 25, 2018, he received the car in New Jersey. Id. at 4–8.
When the car arrived, Jardim discovered that it was not in the condition Overley had advertised. He filed a lawsuit in the Law Division, alleging claims for breach of warranty, unjust enrichment, fraud, and consumer fraud. The trial court, however, dismissed Jardim’s claims for lack of personal jurisdiction over the seller. It reasoned that the parties’ contact was an isolated occurrence and that their negotiations did not create “sufficient minimum contacts with New Jersey to attach personal jurisdiction to Overley.” Id. at 8–9. Continue reading “Personal Jurisdiction and Internet Transactions”
The Supreme Court of the United States recently reaffirmed the principle that there must be a direct connection between a forum state and the underlying controversy in order for a court to exercise specific jurisdiction over the claims. Bristol-Myers Squibb Co. v. Superior Ct. of Calif., No. 16-466 (U.S. June 19, 2017).
Bristol-Myers Squibb (“BMS”) is incorporated in Delaware and maintains headquarters in New York. It conducts business in California, including the sale of a blood-thinning drug called Plavix. A group of plaintiffs, consisting of residents and nonresidents of California, sued BMS, alleging that Plavix had damaged their health. The nonresident plaintiffs did not allege that they obtained Plavix through California doctors, nor did they claim that their injuries or treatment had any relation to California. BMS challenged the trial court’s finding that it had personal jurisdiction over BMS with respect to the nonresident plaintiffs’ claims. The California Supreme Court affirmed, finding that while the court lacked general jurisdiction, it had specific jurisdiction over the nonresident plaintiffs’ claims. Id. at 3. It found that BMS’s “extensive contacts” with California permitted the exercise of specific jurisdiction “based on a less direct connection between BMS’s forum activities and plaintiffs’ claims than might otherwise be required.” Id. This “less direct connection” was satisfied because the claims of the nonresident plaintiffs were similar to the claims of the California plaintiffs. Id.
The Supreme Court of the United States reversed. Under the Court’s precedent, a lawsuit “must arise out of or relate to the defendant’s contacts with the forum” in order for the trial court to exercise specific jurisdiction. Id. at 5 (citing Daimler AG v. Bauman, 571 U.S. ___ (2014), slip op. at 8). There needs to be “an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State…” Id. at 5-6 (citing Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 919 (2011)). A defendant’s general connections with the forum state, such as regularly occurring sales of a product, are not enough for specific jurisdiction. Id. at 7. Instead, the connection must be specific to the claims of the plaintiff.
In this case, the nonresident plaintiffs were not prescribed Plavix in California, did not purchase or ingest the drug in California, and were not injured by it in California. “The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.” Id. at 8. It was not relevant that BMS conducted research in California on matters unrelated to Plavix. Id. Finally, the fact that BMS contracted with a California company, McKesson, to distribute Plavix nationally did not provide a basis for the exercise of specific jurisdiction. Id. at 11. BMS was not derivatively liable for McKesson’s conduct and did not engage in relevant acts together with McKesson.
In her dissent, Justice Sotomayor expressed her belief that since the nonresident plaintiffs’ claims against BMS concerned “conduct materially identical to acts the company took in California,” i.e. the marketing and distribution of Plavix, their claims “related to” BMS’s conduct in the forum state. She would have found specific jurisdiction.
New Jersey companies, specifically those who engage in business throughout the country, should take solace in this case. They cannot be sued in a foreign state under a theory of specific jurisdiction unless there is a direct relation between the company’s activities in the forum state and the plaintiffs’ allegations. The Supreme Court’s decision will also likely lead to increased filings in New Jersey, which is home to some of the largest pharmaceutical and consumer products companies in the country.
On July 5, 2017, the Superior Court of New Jersey, Appellate Division, ruled in favor of our client WolfBlock LLP in the matter of Dutch Run-Mays Draft V. Wolf Block, making it the first published case in a New Jersey court to apply the U.S. Supreme Court’s latest rulings on personal jurisdiction.
In 2004, Dutch Run, a West Virginia limited liability company having its place of business in Deerfield Beach, Florida, retained Pennsylvania attorney, Henry Miller, a partner with the law firm of WolfBlock LLP, a Pennsylvania limited liability partnership, in connection with Dutch Run’s acquisition of 5,000 acres of property in West Virginia. In March 2009, WolfBlock’s partners voted to dissolve the partnership, and all of its activities as a law firm ceased. At that time, WolfBlock shuttered all of its offices and its attorneys and staff were dismissed. Since that time, WolfBlock has been winding down its affairs. In 2014, Dutch Run filed suit against WolfBlock in the New Jersey Superior Court, Law Division, for legal malpractice arising out of its representation of Dutch Run in 2004. In this regard, Dutch Run claimed that there were title defects that rendered the West Virginia property unfit for residential development. Continue reading “Blank Rome Secures Precedential Opinion on Personal Jurisdiction in Dutch Run-Mays Draft V. Wolf Block“
New Jersey is home to numerous subsidiaries of foreign corporations, especially in the pharmaceutical and technology industries. In a decision, which will be welcomed by those corporations, the New Jersey Appellate Division recently reaffirmed that the foreign parent company of a wholly-owned New Jersey subsidiary is not subject to the general jurisdiction of New Jersey courts unless the plaintiff can meet the elements of piercing the corporate veil. FDASmart, Inc. v. Dishman Pharm. & Chems. Ltd., No. A-2800-15T3 (Dec. 29, 2016).
In FDASmart, the defendant Dishman Pharm. & Chems. Ltd (“DCPL”) was an Indian corporation with a principal place of business in India. In 2013, PKM, an Indian company, set up a meeting between FDASmart and DCPL to discuss the sale of a facility owned by a Chinese subsidiary of DCPL. A memorandum of understanding was entered into between PKM, FDASmart, and “Dishman Group” regarding the development of a sales strategy and ultimate sale of the facility. The name “Dishman Group” is a marketing term for DCPL and its subsidiaries. Eventually, the sale fell apart and FDASmart sued DCPL and DCPL’s wholly-owned New Jersey subsidiary, Dishman USA, in New Jersey state court. DCPL challenged that the court lacked personal jurisdiction over it but FDASmart asserted that DCPL had sufficient contacts with New Jersey because Dishman USA was a New Jersey corporation. Continue reading “Appellate Division Denies Jurisdiction over Indian Corporation with New Jersey Subsidiary”