SHORT-ANSWER QUESTIONS

4. D is a corporation based in Italy, with no American subsidiaries, that manufactures drill presses in Italy and exports them throughout the world. D appoints Distrib, a corporation, to be the exclusive distributor of D’s products in North America. Distrib is owned by persons who have no ownership interest in D. Distrib is incorporated in North Carolina, and has its principal place of business in South Carolina. The distributorship agreement between D and Distrib provides that Distrib “shall use its best efforts to sell as many machines made by D in the United States and Canada as is reasonably practicable.” Distrib then asks D to approve (as the distribution agreement requires) Distrib’s plan to open, at Distrib’s expense, a sales office in New Jersey. Distrib points out to D that New Jersey has many potential customers for the type of drill presses made by D, and that these customers will be more likely to buy if Distrib has a local office. D agrees, and Distrib opens the office. From that N.J. office, Distrib sells a drill press made by D to Cust, a machine shop located in New Jersey. P, an employee of Cust, is injured when the drill press pierces the palm of P’s hand. P sues D in tort in New Jersey state court, alleging that the absence of a guard on the press made the product dangerously defective. The New Jersey long-arm allows service on “any defendant, wherever based, who makes a product that causes physical injury within this state.” P makes service on D as authorized by the statute. D moves for dismissal, asserting that the New Jersey courts cannot constitutionally exercise personal jurisdiction over D in this case. Should the court grant D’s motion? _________________

5. D is a corporation that manufactures valves to be used in various heating devices. D is incorporated in Germany, and has its only offices there. D sells many valves to Boiler Co., a Spanish manufacturer of boilers. A boiler made by Boiler Co. and with a valve made by D is installed in a hotel in Amsterdam, Holland. While P, a Texas resident, is visiting that hotel, the boiler explodes, causing P to be burned in the ensuing fire. D has a wholly-owned U.S. subsidiary, D-Sub, that is incorporated in Delaware, and that has its principal place of business in Virginia. From the Virginia office, D-Sub makes sales of D’s products throughout the U.S.; these sales collectively represent 12% of D’s worldwide sales. About 8% of D-Sub’s sales (and thus less than 1% of D’s worldwide sales) are made to customers located in Texas. In reliance on D-Sub’s sales in Texas, P brings a product liability suit against D and D-Sub in Texas state court, claiming that a defect in the valve that was sold by D to Boiler Co. and incorporated by the latter into the boiler installed in Amsterdam was the cause of P’s injuries. D and D-Sub both move to dismiss the suit on grounds that personal jurisdiction may not constitutionally be exercised against either by the Texas court. How should the Texas court rule on the motions? (Answer separately with respect to D and D-Sub.) _________________