On January 17, 2024, the Appellate Division issued a decision in Allure Pet Products, LLC, v. Donnelly Marketing & Development LLC, et al., —A.3d—–, 2024 WL 172209 (App. Div. 2024) which answered whether a New Jersey court could exercise personal jurisdiction over Utah defendants who contracted with the New Jersey plaintiff.
In Allure Pet Products, the plaintiff was a New Jersey corporation that was a wholesale and consumer pet product supplier. The key defendant was a corporation that organized trade shows internationally. The plaintiff also individually sued the owner of the defendant corporation. The contract between the parties reserved exhibit space for the plaintiff at a planned trade show in Germany in 2020. The show was canceled due to COVID-19, and the defendants refused to refund the plaintiff’s reservation or to give it a credit for the follow up show in 2022.
The parties’ relationship began in 2011, when one of the owners of the plaintiff contacted the Utah defendants to have them acquire a booth at a 2012 “Interzoo” expo on the plaintiff’s behalf, which the defendants did. In 2013, the Utah defendants sent all their clients, plaintiff included, a special deal to secure their booth at the next Interzoo expo in 2014 for the same rate price. The defendants would send these offers to their clients via certified mail. If the client accepted, they would return a signed copy of the contract and a check for the deposit. Pursuant to the offer, the plaintiff reserved its space for the 2014 expo.
The relationship under this custom, with the plaintiff renewing for the 2016, 2018 and eventually the 2020 expo. Faced with the worldwide COVID-19 pandemic, the sponsor of the expo postponed the event to 2021. The defendants suggested that the plaintiff attend the 2021 and that the parties would operate under the 2020 contract. The plaintiff agreed. In 2021, with the pandemic ongoing, the sponsor once again postponed the expo, this time to 2022. The plaintiff then demanded that the defendants either refund its money under the 2020 contract, or apply it to the 2022 expo. When the defendants refused, the plaintiff initiated the suit in the Law Division.
The defendants moved to dismiss the Complaint for lack of personal jurisdiction, and the Law Division ordered the parties engage in discovery regarding the jurisdictional issue. Discovery revealed that the Utah defendants did business with ten or more New Jersey clients, some of which dated back to the early 2000s.
In evaluating whether specific jurisdiction existed for the Utah defendants, the Appellate Division was satisfied that the defendants’ repeated solicitation of business from the plaintiff, as well as other New Jersey companies, constituted sufficient minimum contacts with the state. The Court held that it was irrelevant that the impetus of the contractual relationship of the parties began at the plaintiff’s request in 2011. What mattered to the Court was the defendants’ repeated solicitation of the plaintiff’s business thereafter. The Appellate Division also found that it was proper to consider the defendants’ other New Jersey clientele to show that the defendants’ contact with the state was not limited to this single relationship. Rather, it showed that the defendants’ derived a stream of income from New Jersey. Further, the Court found that it would not be unfair to exercise jurisdiction over these defendants because the contract had no forum selection clause, it involved a modest amount of money[1], there would not be a jury trial and there were limited witnesses who could be deposed remotely.
Allure Pet Products serves as a reminder that a defendant can expose itself to the jurisdiction of New Jersey courts without setting foot in the state. If a prospective defendant solicits business from residents of the state, then that defendant has had minimum contacts with the state. It does not matter if those New Jersey residents were the ones to initiate the contractual relationship, if the out of state defendant re-solicits those residents, it has created contact with the state. Another important take away: do not forget forum selection clauses in your business contracts!
The Allure Pet Products decision can be found here.
For additional questions, please contact Philip D. Priore, Esq. and/or Scott J. Tredwell, Esq.
This article was prepared by McCormick & Priore, P.C. to provide information on recent legal developments of interest to our readers. This publication is in no way intended to provide legal advice or to create an attorney-client relationship. All Rights Reserved. This article may not be reprinted without the express permission of McCormick & Priore, P.C.
[1] The plaintiff was seeking the refund of the $14,256.80 it had paid to the defendants for its booth at the 2020 expo.
