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Jurisdictional ruling affects foreign firm with N.J. subsidiary, report says

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In a case that could be of interest to foreign companies with a physical presence in New Jersey, the state Appellate Division reportedly has ruled that an Indian pharmaceutical company cannot be sued in Superior Court despite having such a presence.

An article in the New Jersey Law Journal said this week that a ruling in FDASmart v. Dishman Pharmaceuticals and Chemicals found that New Jersey is not the appropriate jurisdiction for the suit against Dishman, based in India, despite the location of its Dishman USA subsidiary in Middlesex.

“(It’s) undisputed that (Dishman Pharmaceuticals) is not ‘at home’ in New Jersey; it is not incorporated in this state, nor is New Jersey its principal place of business,” Appellate Division Judge Heidi Currier wrote in a ruling published Thursday, according to the article. “Therefore, plaintiff must show that defendant had continuous and systematic contacts with New Jersey so as to justify it being haled into New Jersey’s courts.”

The ruling offers some clarity about the “alter ego theory” of jurisdiction, according to the article, as the court said FDASmart failed to show that Dishman USA’s New Jersey activities “should be attributed to its parent … for jurisdictional purposes.”

The court added that, “(F)orum contacts of a subsidiary corporation will not be imputed to a parent corporation for jurisdictional purposes without a showing of something more than mere ownership.”

The lawsuit is tied to a failed sale of a manufacturing facility owned by a Dishman subsidiary in China to Amawalk, New York-based FDASmart. FDASmart filed contract claims in New Jersey state court after the deal’s failure, the article said, claiming it was owed money for consulting services.

The article said the deal’s memoranda of understanding noted the applicability of Indian law, and the court said consulting fees were paid in India.

Middlesex County Superior Court Judge Vincent LeBlon had ruled in favor of FDASmart, the article said, finding that New Jersey did have general jurisdiction in the case. Dishman then appealed to the Appellate Division.

The case was remanded, but an FDASmart attorney said he would file a reconsideration motion, the article said.

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