TORT - PRODUCTS LIABILITY - PERSONAL JURISDICTION - DUE PROCESS - LONG ARM STATUTE - FAIR PLAY - SUBSTANTIAL JUSTICE - CPLR 302


ISSUE & DISPOSITION

Issue(s)

Whether exercise of long-arm jurisdiction over defendant manufacturer is consistent with both CPLR 302 and due process.

Disposition

Yes. CPLR 302 confers jurisdiction over defendant manufacturer in light of its contacts with New York; and the exercise of that jurisdiction is consistent with due process.

SUMMARY

Plaintiff, a Town of Niagara employee, sued defendant for injuries sustained when he fell from a sanitation truck equipped with a defective rear loading device. Defendant is a Texas corporation with a manufacturing facility in Virginia and distributor in New York. Defendant advertises in a nationally published magazine and further offers warranties and troubleshooting advice to the ultimate purchasers of its equipment. Defendant sold the rear-loading device alleged to have caused plaintiff's injuries to its New York distributor which in turn sold it to the Town of Niagara. In the year of the accident, $514,490 of defendant's $18,245,292 in revenue was derived from New York. Defendant moved to dismiss for lack of personal jurisdiction.

The Court held that CPLR 302 conferred jurisdiction over defendant and that conferral of jurisdiction was consistent with due process. Conferral of jurisdiction under CPLR 302 rests on five elements: first, that defendant committed a tortuous act outside the State; second, that the cause of action arises from the act; third, that the act caused injury to a person or property within the State; fourth, that defendant expected the act to have consequences in the State; and finally, that defendant derived substantial revenue from interstate commerce. The first three elements are not in dispute. The fourth element is met where the nonresident tortfeasor expects that his or her activity in another state will have direct consequences in the forum State. The invoice for the rear-loading device (which indicates the loader was destined for Niagara, New York and includes a reference to a "New York Light Bar") showed that defendant had reason to expect any defects to have direct consequences in New York. The fifth element is intended to preclude jurisdiction over business operations that are of a local character. With a manufacturing facility in Virginia, defendant is inherently engaged in interstate commerce. Its national advertising as well as New York sales figures further show that defendant derives substantial revenue through interstate commerce.

In International Shoe Co. v Washington, 326 U.S. 310, the Supreme Court held that a state may exercise jurisdiction over non-domiciliary defendants provided defendant had minimum contacts with the forum State and that maintenance of the suit did not offend traditional notions of fair play and substantial justice. The standard for minimum contacts is met where the tortfeasor purposefully conducts activities within the forum State and as such reasonably anticipates being subject to jurisdiction there. Defendant forged ties with New York and had every reason to foresee that its contact raised the prospect of defending this suit. The prospect of defending a suit, however, must also comport with traditional notions of fair play and substantial justice; extension of jurisdiction must be reasonable. This is determined by examining the burden on the defendant, the interests of the forum State, and plaintiff's interest in obtaining relief. The burden on defendant is not great given it is a U.S. corporation fully familiar with the legal system. New York further has an interest in providing a convenient forum for plaintiff. Finally, considering defendant's business extended to New York, it is only fair to extend the reach of New York's jurisdiction to cover it. Such extension of jurisdiction does not offend traditional notions of fair play and substantial justice. The order of the Appellate Division was reversed.


Prepared by the liibulletin-ny summer board.