The World in U.S. Courts: Spring 2015 - Personal Jurisdiction
Plaintiffs, the Epsteins, sued Goodman Manufacturing Company and Revcor for damage sustained to their property after their furnace failed. Goodman and Revcor filed a third-party complaint for indemnification against the General Electric Company, which allegedly sold Goodman and Revcor a malfunctioning blower motor. General Electric, in turn, filed an indemnification claim against Elica, which manufactured the blower motor. Elica, finally, filed an indemnification claim against SKF-Italy, which manufactured bearings in the blower motor.
SKF-Italy, an Italian corporation, moved to dismiss for lack of personal jurisdiction, and the parties engaged in jurisdictional discovery to determine whether the court had personal jurisdiction under New Jersey's long-arm statute, which permits the exercise of personal jurisdiction to the fullest limits of the Due Process Clause of the U.S. Constitution. The District Court considered SKF-Italy not itself to be subject to personal jurisdiction, but it was part of a global group comprised of SKF-Italy and 80 other entities, all owned by a Swedish corporation.
Elica argued that the entire SKF Group could properly be considered a single entity for jurisdictional purposes as they were effectively alter-egos of each other, and together had the requisite U.S. contacts to support jurisdiction. The court found that the alter-ego test was not satisfied because the SKF entities did not exercise enough control over each other to find that they were essentially the same entity.