- To Sue in NJ, the Other Side Must Have Contact with NJ.
- To enable NJ court to exercise specific jurisdiction over a non-resident defendant, the lawsuit must “aris[e] out of or relate[e] to the defendant’s contacts with the state of NJ.”
- In determining whether there is a sufficient jurisdictional relationship between the nonresident defendant and New Jersey, courts must consider whether the defendant “purposefully avail[ed] itself of the privilege of conducting activities within NJ.
- To determine if a defendant’s contacts within New Jersey are sufficiently purposeful, a court examines the defendant’s “conduct and connection” with this state, and assess whether the defendant should “reasonably anticipate being hauled into court” here.
I read an interesting case about a New Jersey company trying to sue a business in Florida because they failed to pay an invoice. It’s instructive to all NJ businesses that sell goods and services across the US. Here the plaintiff was a New Jersey-based company that sells beauty supply products to retail stores. It is incorporated in New Jersey, and its principal place of business is in New Jersey.
The defendants are related businesses with common principals. They own and operate five retail stores in Florida that sell beauty items. This company is incorporated in Florida and does not have any offices, employees, or assets in New Jersey.
Defendant failed to pay several invoices totaling nearly $100,000+. Consequently, plaintiff sued the offending corporation and its principals in the Law Division of NJ Superior Court to collect on the unpaid invoice.
Defendant moved to dismiss the complaint based on lack of personal jurisdiction in New Jersey. Defendant claimed it did not have sufficient minimum business contacts in this State.
The trial court granted defendants’ motion, dismissed the complaint and found that the record established neither general nor specific jurisdiction over the Florida corporation in New Jersey. The court reasoned in its oral decision:
The facts demonstrate that all the dealings were in Florida with a company that’s solely located in Florida. They don’t engage in business outside of Florida. They have no assets, locations, employees, or bank accounts in New Jersey, never appointed an agent to accept service or process, they’ve never attended trade, shows or other product marketing events in New Jersey, or traveled to New Jersey for any reason.
The fact that these two entities were doing business because a salesman from the plaintiff traveled to Florida and solicited them in Florida and the only real dealing was that somebody in Florida on behalf of the defendants said they would purchase something and then the order got fulfilled through the plaintiff’s facility in New Jersey is not enough to give jurisdiction over the Florida company.
The court added this more generic observation:
“If we were going to find jurisdiction on that basis, I think we would open the floodgates that anybody who provides goods can always sue in – in their location, whether or not the other party has minimum contacts with the state generally or specifically. I don’t – I just don’t find it.”
In an ensuing appeal, the plaintiff NJ corporation argued the trial court erred in dismissing the complaint not because of general jurisdiction in New Jersey, but there was a sufficient “transactional nexus” to create specific jurisdiction in this State.
The Appellate Court said “no way!” They reasoned that because the primary focus of [the] personal jurisdiction inquiry is the defendant’s relationship to the forum state, NJ courts have recognized “specific” (sometimes called “case-linked”) jurisdiction.
Defendants’ unrefuted certification shows that it was plaintiff who initiated the parties’ relationship by sending its sales force to Florida and persuading defendant to make purchases. The orders were filled and sent to Florida. Defendant’s company did not travel to New Jersey in connection with the purchases. Instead, it was a passive buyer of products sent by an out-of-state supplier.
So how does the internet affect the outcome of a case like this?
In a recent published opinion, the court ruled that a California seller of a used vintage car was not subject to personal jurisdiction in New Jersey, where the car buyer resided. We reasoned that the seller’s “one-time” efforts in luring and obtaining the buyer’s business did not meet the minimum contacts requirement for jurisdiction, because the seller’s online car listing was accessible from anywhere in the country. The fact that the seller was aware that the buyer who contacted him happened to be located in New Jersey was not sufficient to create jurisdiction.
So the lesson learned is be sure you have jurisdiction before you go to court in New Jersey.
To discuss your NJ contract and business law matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Contract Law Attorney