Baanyan Software Services, Inc. v. Kuncha, 433 N.J. Super. 466 (App. Div. 2013). Under Rule 4:4-4, New Jersey asserts personal jurisdiction over defendants to the outer limits of what due process allows. But personal jurisdiction is not unlimited, as this opinion by Judge Carroll shows.
Plaintiff is a software company that is headquartered in Edison, New Jersey but is part of a multi-national corporate organization based in India and the United States. Plaintiff employed defendant as a computer systems analyst. At the time the parties signed the employment agreement, which did not state an address for plaintiff, defendant lived in California. She negotiated the agreement by e-mail and phone. Plaintiff signed the agreement in New Jersey. The agreement called for defendant to relocate to Illinois, where she proceeded to service clients of plaintiff who were located in Illinois and Ohio. Defendant sent timesheets to plaintiff electronically. Plaintiff paid defendant via direct deposits to her Illinois bank account, with checks that bore a New Jersey address for plaintiff. Importantly, however, defendant never worked in New Jersey or provided services to any client that was based in New Jersey.
Thereafter, defendant left plaintiff’s employ and went to work for one of plaintiff’s Ohio clients that she had serviced while employed by plaintiff. Defendant then moved to Tennessee and got a job with another software company, this one headquartered in Tennessee.
Plaintiff filed suit against defendant in New Jersey, alleging breach of contract, interference with plaintiff’s business relationships, and other claims. Defendant moved to dismiss the case for lack of personal jurisdiction over her. The Law Division granted that motion. Plaintiff appealed, but the Appellate Division affirmed.
After a useful discussion of the general principles behind personal jurisdiction, and the minimum contacts with the forum state that are necessary, as a matter of due process, to establish either general jurisdiction or specific jurisdiction, Judge Carroll noted that “the existence of minimum contacts turns on the presence or absence of intentional acts of the defendant to avail itself of some benefit of a forum state.” The ultimate polestar is “fair play and substantial justice.” Applying those principles, and the de novo standard of review, the panel affirmed the dismissal of the action.
The “extensive contacts” necessary for general jurisdiction were absent here. Defendant never resided or did business in New Jersey, but only in Illinois, for Illinois and Ohio clients. Specific jurisdiction also was not supported by the facts, which plaintiff bore the burden of demonstrating.
Plaintiff contended that “defendant had purposely sought out employment” with plaintiff. But defendant’s certification stated that she had been recommended to plaintiff by one of plaintiff’s salespeople in India, and plaintiff’s own website boasted that plaintiff “finds and retains qualified professionals … [by r]eaching out from its locations in USA and India.” Thus, Judge Carroll found no evidence that defendant had sought out employment with plaintiff in New Jersey.
Moreover, citing Pfundstein v. Omnicon Grp., Inc., 285 N.J. Super. 245 (App. Div. 1995), Judge Carroll stated that “telephonic and electronic communications with individuals and entities located in New Jersey alone, are insufficient minimum contacts to establish personal jurisdiction over a defendant.” Thus, defendant’s negotiation of her contract, her submission of time sheets, and plaintiff’s transmission of direct-deposit paychecks to defendant, all of which occurred only telephonically or electronically, did not support personal jurisdiction over defendant.
Finally, “fair play and substantial justice” did not support jurisdiction over defendant in New Jersey. “[T]o allow Baanyan, an international company, to compel an individual employee to defend against a New Jersey lawsuit, where that employee was hired to work in Illinois, and never lived in, worked in, or visited New Jersey, violates principles of ‘fair play and substantial justice.'” Plaintiff could seek relief in Tennessee, where defendant now lived, or Illinois, where defendant had worked, where plaintiff’s clients whom defendant serviced were located, and where “any breach of contract or tort that was allegedly committed occurred.”
In a footnote, Judge Carroll observed that defendant’s brief challenged a counsel fee that had been awarded as a sanction against her. The panel declined to address that sanction, however, since defendant had not cross-appealed. Only orders designated in a notice of appeal or cross-appeal will be cognizable in the appellate courts, a useful reminder.