A Liability Case Reaches the Supreme Court
The Supreme Court heard oral arguments on Tuesday in a case that could have serious implications for lawsuits involving businesses overseas.
The story behind J. McIntyre Machinery v. Nicastro stretches back to 2001, when Robert Nicastro severed four fingers while using a shearing device that was manufactured by J. McIntyre, a small firm based in Derbyshire, England. McIntyre England claimed that the shearing device met American safety requirements, but, according to official court documents, it was determined that the machinery "did not meet American National Standard Institute requirements... or the Regulations from the Occupational Safety and Health Administration," and it did not conform with "the recognized guidelines published by the National Safety Council and the American Society of Mechanical Engineers for protecting machine operators."
Nicastro sued McIntyre England for product liability under New Jersey law in New Jersey state court. But McIntyre England and its lawyers moved to dismiss the complaint, because, they argued, the New Jersey court did not have personal jurisdiction over the case. They asserted that they had no expectation that their product would be sold and marketed to New Jersey customers, and thus they should not be held liable under New Jersey law.
The trial court agreed. They dismissed the case against McIntyre in April of 2008. Nicastro then took his case to the state's intermediate appellate court. That court reversed the ruling, essentially arguing that J. McIntyre established a distribution chain for its products in Ohio, and put its products into the "stream-of-commerce" of the United States. Therefore, the court reasoned, the English company was subject to the "benefits and protections of all fifty states," meaning they'd be required to go to court with Nicastro in New Jersey. The New Jersey Supreme Court affirmed that decision.
Now, the Supreme Court is deciding the case. At stake is not whether J. McIntyre is necessarily at fault, but whether or not a foreign company can be sued within a state court. According to the Supreme Court blog, the question being presented is "May a consumer sue a foreign manufacturer in state court over a product that the foreign company marketed and sold in the United States?"
Arthur Fergenson, representing the J. McIntyre, opened his arguments yesterday stating that: "Because J. McIntyre did not direct any activity at residents of New Jersey either itself or by directing its distributor...New Jersey lacked adjudicative jurisdiction."
Justice Elena Kagan, the newest member on the high court bench, sparred with Ferguson over the company's true intentions. "You targeted the entire United States," she said. "Why shouldn't there be jurisdiction in each of the States you targeted?"
Nicastro's lawyers then argued that because J. McIntyre officials were present at U.S. trade shows, they should have expected that their products could be bought by any company within the 50 states. Alexander Ross, Jr., Nicastro's representative, noted that "this particular manufacturer purposefully availed themselves of the entire U.S. market."
The judges will deliberate and release an opinion about the matter later this year. Small businesses that buy equipment from overseas markets should take particularly note to this case. If, for instance, that equipment injures a company employee, it may affect how—or if—the company has any recourse to sue the foreign manufacturer.