Nicastro sustained serious injuries while in New Jersey, using a metal shearing machine that was manufactured in England by J. McIntyre. The New Jersey Supreme Court upheld jurisdiction over J. McIntyre, holding that doing so did not offend the Due Process Clause.
The general rule that the exercise of jurisdiction over a defendant is not proper unless the defendant purposefully avails itself of activities so as to invoke the benefits and protections of the forum state’s laws applies in products liability cases.
Nicastro sustained serious injuries while in New Jersey, using a metal shearing machine that was manufactured in England by J. McIntyre. McIntyre was incorporated and operated in England, and at no time marketed goods in New Jersey or shipped them to New Jersey. Nicastro brought a product liability action against McIntyre in New Jersey state court. The New Jersey Supreme Court upheld jurisdiction over J. McIntyre because the injury occurred in New Jersey, and because McIntyre knew or should have known that its products might be sold in the United States’ 50 states and because it failed to prevent distribution of its products in New Jersey. Moreover, as stated (more broadly) by the Supreme Court, the New Jersey Supreme Court held that jurisdiction over a foreign manufacturer or a product could be exercised as long as the manufacturer knew or should have known that is products were distributed through a nationwide distribution system that might lead to its products being sold throughout the United States.
Did the New Jersey Supreme Court err in upholding the exercise of jurisdiction over J. McIntyre?
Yes. For jurisdictional purposes, the New Jersey Supreme Court’s reliance on the stream of commerce metaphor carried its decision expanding jurisdiction too far. The stream of commerce doctrine of jurisdiction observes that a defendant may be subject to jurisdiction without entering a forum if it seeks to serve a given state’s commercial market. However, the principal inquiry must still be whether the defendant purposefully availed itself of the privilege of conducting activities within the state, affording it the privileges and protections of the state’s laws.
The dissent argued that, given McIntyre’s activities and desire to reach customers throughout the United States, Nicastro’s state court product liability action had been brought in an entirely appropriate forum, and the Court’s plurality opinion would take a “giant step” away from previous decisions refining the minimum contacts analysis. (The dissent noted several times that the Court’s decision was a decision by a plurality of he justices).
This opinion argued that, based on precedent, the three main facts relied on by the New Jersey Supreme Court (that the United States distributer once sold a machine to a New Jersey customer; that the manufacturer wanted to sell to anyone in the United States; and that the manufacturer sent representatives to trade shows in the United States) did not provide sufficient grounds for the exercise of jurisdiction.
For jurisdictional purposes, as a general rule, it is not enough that a defendant might have predicted that its goods would reach the forum state. Rather, the defendant must be said to have targeted the forum. The New Jersey Supreme Court’s holding and account of the stream of commerce doctrine were incorrect.