Personal Jurisdiction over Foreign Company

Gonzalez v. Archer Daniels Midland Co., No. CUM-L-228-19 (N.J. Super. Ct., Law Div. Nov. 19, 2019)

In this products liability action, plaintiff sought to hold Stephan Machinery liable under the New Jersey Product Liability Act, N.J.S.A 2A:58C-1 to -11, for personal injuries he allegedly sustained while operating one of the company’s machines during the course of his employment. In lieu of filing an answer, Stephan Machinery filed a pre-answer motion to dismiss based on lack of jurisdiction. In support of the motion, Stephan Machinery relied on a certification from its organizational representative attesting to the fact that Stephan Machinery was a German company that was not “at home” in New Jersey, which demonstrated that the court’s exercise of general jurisdiction would violate due process. The representative also confirmed that the company did not engage in conduct purposefully directed at New Jersey that would support an exercise of specific jurisdiction. Instead, the motion record demonstrated that Stephan Machinery engaged an independent distributor located in the United States to market and sell its products to residents in New Jersey. Plaintiff sought to defeat the motion by arguing that jurisdiction over Stephan Machinery existed under an alter ego theory, which allows for the forum contacts of a subsidiary corporation to be imputed to a parent corporation for jurisdictional purposes. However, the sole evidence identified by plaintiff in support of this theory was the mere existence of a parent-subsidiary relationship between Stephan Machinery and the American distributor.

In granting Stephan Machinery’s motion, the court specifically rejected application of the alter ego theory of jurisdiction under the circumstances, finding that plaintiff failed to satisfy his burden to prove that jurisdiction was proper through affidavits or other competent evidence or to demonstrate that he could meet this burden if allowed to pursue jurisdictional discovery. The court observed that plaintiff did not identify any evidence showing something more than mere ownership between the companies, such as proof that Stephan Machinery so controlled and dominated the American distributor so as to effectively disregard the latter’s independent corporate existence and warrant the imputation of the subsidiary’s forum contacts to Stephan Machinery for jurisdictional purposes. The court also noted that plaintiff did not establish that the parent-subsidiary relationship was created by Stephan Machinery to defeat the ends of justice, to perpetrate a fraud, to accomplish a crime, or otherwise to evade the law.

Stephan Machinery GmbH was represented by partner Kenneth M. Labbate and special counsel Craig R. Rygiel.


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