O'Flaherty Heim Birnbaum Kirchner & Curtis Ltd.

“Purposeful Availment” Test Limited

So long as a manufacturer knows or reasonably should have known that its’ products were distributed through a nationwide distribution system that could lead to a sale of its product in the United States, the manufacturer has purposefully availed himself to the jurisdiction of each of the states.  This has been the law of the land since the United States Supreme Court decided World-Wide Volkswagon Corp. v. Woodson in 1980.  In the thirty years since World-Wide Volkswagon, the “stream of commerce” theory, as it has become known, has been used to hail foreign corporations into state courts on a regular basis.    

The Supreme Court of the United States effectively ended such use in June, when it handed down its opinion in J. McIntyre Machinery, Ltd. v. Nicastro.  Robert Nicastro severely injured his hand while using a metal-shearing machine.  Nicastro injured his hand while using the machine in New Jersey.  The machine had also been purchased in New Jersey.  While the machine had been purchased from a U.S. distributor who had, in turn, purchased the machine from the manufacturer, McIntyre, McIntyre actually manufactured the machine in England.  Further, McIntyre was also both incorporated and operated in England.  Despite never having advertised in or sent goods to New Jersey, the New Jersey Supreme Court, applying the stream of commerce theory, found that the sale of the machine to the U.S. distributor subjected McIntyre to jurisdiction in New Jersey. 

In a four-justice plurality, Justice Kennedy held that because McIntyre did not engage in any activities that revealed intent to benefit from the protection of New Jersey’s laws, McIntyre had not purposefully availed itself to jurisdiction in New Jersey.  In a concurrence, Justice Alito joined Justice Breyer in declining to adopt the plurality rule, noting that an isolated sale, even if accompanied by efforts to sell goods within the state, is not sufficient for personal jurisdiction.  

Where does that leave us?  After Nicastro, what is purposeful availment?  Justice Kennedy noted that McIntyre did sell its goods to a U.S. distributor but that “it is (McIntyre’s) purposeful contacts with New Jersey not with the United States, that alone are relevant.”  How one can sell into the American market but not into particular states is unclear.  The importance of settling this issue is increased given the rapid growth of the selling of goods through the internet.

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