NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3833-19 A-3934-19 A-3935-19
RICHARD RICHARDSON,
Plaintiff-Respondent,
vs.
SKY ZONE, LLC, SKY ZONE FRANCHISE GROUP, LLC, CIRCUSTRIX HOLDINGS, LLC, SKY NJ, LLC d/b/a SKY ZONE,
Defendants-Appellants,
and
RPSZ CONSTRUCTION, LLC,
Defendant,
FUN SPOT MANUFACTURING, LLC, INTERNATIONAL ASSOCIATION OF TRAMPOLINE PARKS, INC., AMERICAN SOCIETY FOR TESTING AND MATERIALS d/b/a ASTM INTERNATIONAL,
Defendants-Respondents. ________________________________
SKY ZONE, LLC, SKY ZONE FRANCHISE GROUP, LLC, CIRCUSTRIX HOLDINGS, LLC, SKY NJ, LLC d/b/a SKY ZONE, FUN SPOT MANUFACTURING, LLC, INTERNATIONAL ASSOCIATION OF TRAMPOLINE PARKS, INC.,
Defendants-Respondents,
AMERICAN SOCIETY FOR TESTING AND MATERIALS d/b/a ASTM INTERNATIONAL,
Defendant-Appellant. ________________________________
A-3833-19 2 Plaintiff-Respondent,
SKY ZONE, LLC, SKY ZONE FRANCHISE GROUP, LLC, CIRCUSTRIX HOLDINGS, LLC, SKY NJ, LLC d/b/a SKY ZONE, FUN SPOT MANUFACTURING, LLC,
INTERNATIONAL ASSOCIATION OF TRAMPOLINE PARKS, INC.,
Defendant-Appellant,
AMERICAN SOCIETY FOR TESTING AND MATERIALS d/b/a ASTM INTERNATIONAL,
Defendant-Respondent. ________________________________
Submitted January 20, 2021 – Decided April 8, 2021
Before Judges Fisher, Gilson, and Gummer.
A-3833-19 3 On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L- 1796-19.
Wood Smith Henning & Berman LLP, attorneys for appellants Sky Zone, LLC, Sky Zone Franchise Group, LLC, CircusTrix Holdings, LLC, Sky NJ, LLC in A- 3833-19 (Kelly A. Waters and Carolynn A. Mulder, on the briefs).
Green, Silverstein & Groff, LLC, attorneys for appellant in American Society for Testing and Materials d/b/a ASTM International A-3934-19 and as respondent in A-3935-19 (Joseph B. Silverstein, on the briefs).
Barnaba & Marconi, LLP, and R. Wayne Pierce (The Pierce Law Firm, LLC) of the Maryland bar, admitted pro hac vice, attorneys for appellant International Association of Trampoline Parks, Inc. in A-3935-19 and as respondent in A-3934-19 (Dennis M. Marconi and R. Wayne Pierce, on the briefs).
Chazen & Chazen, LLC, attorneys for respondent Richard Richardson (David K. Chazen, on the brief).
PER CURIAM
These back-to-back appeals, which we consolidate for purposes of issuing
a single opinion, involve injuries plaintiff sustained at an indoor trampoline
park. Defendants Sky NJ, LLC, Sky Zone, LLC, Sky Zone Franchise Group,
LLC, and CircusTrix Holdings, LLC (Sky Zone) appeal an order denying their
motion to dismiss and to compel arbitration. Defendants American Society for
A-3833-19 4 Testing and Materials (ASTM) and International Association of Trampoline
Parks, Inc. (IATP) appeal orders denying their motions to dismiss, which were
based on their status as "discovery" defendants. We reverse all three orders.
I.
Plaintiff filed a complaint, alleging he had sustained injuries at a Sky Zone
"trampoline park and recreational facility." He named as defendants the Sky
Zone defendants and RPSZ Construction, LLC.
Plaintiff amended the complaint, adding as defendants: Fun Spot
Manufacturing, LLC; "International Association of Trampoline Parks, Inc.
(Discovery Only)"; and "American Society for Testing and Materials d/b/a
ASTM International (Discovery Only)." As alleged by plaintiff, ASTM issued
standards for trampoline parks. As to defendant IATP, plaintiff represented in
the first amended complaint that he had "name[d] [IATP] as a defendant for
discovery purposes only and will dismiss this action as to [IATP] when it
complies fully with all discovery demands." He made the same representation
as to defendant ASTM. The only "judgment" plaintiff sought regarding ASTM
and IATP was "for discovery and for such further relief as the [c]ourt deems
equitable and just."
A-3833-19 5 Plaintiff alleged that on July 11, 2019, he went to a Sky Zone trampoline
park and, like all visitors to the trampoline park, was required to sign 1 a
document entitled "Participant Agreement, Release and Assumption of Risk
(The Agreement) – Sky Zone Moorestown." The general release section of the
agreement expressly covers the Sky Zone defendants and their owners. 2
The agreement contains an "acknowledgement of potential injuries"
provision, in which patrons agree "participating in trampoline and other
activities is inherently and obviously dangerous." The agreement includes a
"voluntary assumption of risk acknowledgment" provision, recognizing patrons
"are participating voluntarily at [their] own risk" and could suffer "significant
bodily injuries" or "die or become paralyzed, partially or fully, through their use
of the Sky Zone facility and participation in Sky Zone activities."
1 Although in his complaint and amended complaint, plaintiff referred to himself as "having executed" the agreement, in the certification he submitted in opposition to Sky Zone's motion to dismiss, plaintiff stated that while he was driving, his girlfriend used her mobile phone to sign the agreement on behalf of plaintiff, herself, and their three children. 2 According to plaintiff, CircusTrix Holdings, LLC purchased Sky Zone, LLC and Sky Zone Franchise Group, LLC and "is a successor-in-interest, and/or through a franchise agreement controlled the business operations and business practices of the [d]efendant Sky NJ, LLC d/b/a Sky Zone, and/or" assumed the liabilities of the other Sky Zone defendants and RPSZ Construction, LLC. A-3833-19 6 The agreement contains a "release of liability" section, which provides
patrons "forever, irrevocably and unconditionally release, waive, relinquish,
discharge from liability and covenant not to sue [Sky Zone]" for
any and all claims . . . of whatever kind or nature, in law, equity or otherwise, . . . related to or arising, directly or indirectly, from [their] access to and/or use of the Sky Zone [f]acility, . . . including, without limitation, any claim for negligence, failure to warn or other omission, . . . personal injury, . . . [or] bodily harm ....
The agreement also has a section entitled in part "arbitration of disputes,"
which was acknowledged with a check mark, indicating plaintiff understood he
was "waiving [his] right . . . to maintain a lawsuit against [Sky Zone] . . . for
any and all claims covered by this [a]greement." This section also provides:
By agreeing to arbitrate, I understand that I will NOT have the right to have my claim determined by a jury . . . . Reciprocally, [the Sky Zone defendants] waive their right to maintain a lawsuit against [plaintiff] . . . for any and all claims covered by this [a]greement, and they will not have the right to have their claim(s) determined by a jury. ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO MY . . . ACCESS TO AND/OR USE OF THE SKY ZONE PREMISES AND/OR ITS EQUIPMENT, INCLUDING THE DETERMINATION OF THE SCOPE OR APPLICABILITY OF THIS AGREEMENT TO ARBITRATE, SHALL BE BROUGHT WITHIN ONE YEAR OF ITS ACCRUAL (i.e., the date of the alleged injury) FOR AN ADULT AND WITHIN THE APPLICABLE STATUTE OF
A-3833-19 7 LIMITATIONS FOR A MINOR AND BE DETERMINED BY ARBITRATION IN THE COUNTY OF THE SKY ZONE FACILITY . . . BEFORE ONE ARBITRATOR. THE ARBITRATION SHALL BE ADMINISTERED BY [JUDICIAL ARBITRATION AND MEDIATION SERVICES (JAMS)] PURSUANT TO ITS RULE 16.1 EXPEDITED ARBITRATION RULES AND PROCEDURES. JUDGMENT ON THE AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THIS CLAUSE SHALL NOT PRECLUDE PARTIES FROM SEEKING PROVISIONAL REMEDIES IN AID OF ARBITRATION FROM A COURT OF APPROPRIATE JURISDICTION. This [a]greement shall be governed by, construed and interpreted in accordance with the laws of the State of New Jersey, without regard to choice of law principles. Notwithstanding the provision with respect to the applicable substantive law, any arbitration conducted pursuant to the terms of this [a]greement shall be governed by the Federal Arbitration Act (9 U.S.C., Sec. 1-16). I understand and acknowledge that the JAMS Arbitration Rules to which I agree are available online for my review at jamsadr.com, and include JAMS Comprehensive Arbitration Rules & Procedures; Rule 16.1 Expedited Procedures; and, Policy On Consumer Minimum Standards Of Procedural Fairness.
The capitalized text of the agreement also appears in bold print.
Plaintiff asserts JAMS was not an available arbitration forum when
plaintiff executed the agreement. To support that assertion, plaintiff relies on a
2017 response of the New Jersey Advisory Committee on Professional Ethics,
Committee on the Unauthorized Practice of Law, and Committee on Attorney
A-3833-19 8 Advertising to an inquiry from JAMS's attorney about JAMS opening a New
Jersey office. JAMS's attorney described JAMS as "an independent alternative
dispute resolution (ADR) and third-party neutral services provider" consisting
of "lawyers and retired judges who serve as mediators or arbitrators (third -party
neutrals)." The committees determined that as "third-party neutrals," JAMS's
lawyers and retired judges were practicing law and, therefore, were required to
"abide by the pertinent Court Rules and Rules of Professional Conduct." Sky
Zone does not dispute JAMS's inability to act as the arbitrator of the parties'
dispute.
The agreement also contained a severability clause, in which plaintiff
acknowledged "I have had sufficient opportunity to read this entire document. I
have read and understood and voluntarily agree to be bound by its terms." The
clause also provided:
This [a]greement constitutes and contains the entire agreement between [Sky Zone] and [plaintiff's] . . . use of the Sky Zone Facility. There are no other agreements, oral, written, or implied, with respect to such matters. . . . If any term or provision of this [agreement] shall be held illegal, unenforceable, or in conflict with any law governing this [agreement] the validity of the remaining portions shall not be affected thereby.
A-3833-19 9 Severability clauses "are indicative of the parties' intent that the agreement as a
whole survives the excision of an unenforceable provision." Arafa v. Health
Express Corp., 243 N.J. 147, 169 n.2 (2020).
Instead of answering the amended complaint, the Sky Zone defendants
moved to dismiss and to compel arbitration based on the language of the
agreement. In opposing the motion, plaintiff submitted a certification in which
he asserted he would not have signed the agreement had he been "informed of
the inequities and costs associated with arbitration" and that he was "waiving
[his] constitutional right to have a jury decide my case." As for JAMS, plaintiff
faulted Sky Zone for not providing the expedited JAMS arbitration rules to him
and for not telling him that arbitration would "[c]ause me to be unable to
properly prepare and prosecute my case under the JAMS expedited procedure."
He did not assert he had looked at the JAMS website address provided in the
agreement or otherwise reviewed any JAMS information, rules, or procedures.
Nevertheless, his lawyer argued the arbitration provision was unenforceable
because there was no meeting of the minds due to JAMS's unavailability.
After hearing oral argument, the motion judge denied the motion, finding
the agreement was not binding on the parties because there was no meeting of
the minds. The judge based that finding on his conclusions that: (1) the waiver
A-3833-19 10 provision rendered the arbitration provision illusory; and (2) JAMS was an
integral part of the agreement and was unavailable.
ASTM moved to dismiss the amended complaint, arguing it was not a
proper party to the case and had not been served properly. Relying on Beckwith
v. Bethlehem Steel Corp., 182 N.J. Super. 376 (Law Div. 1981), ASTM argued
it had no pecuniary interest making it a proper defendant in this case and
balancing the parties' burdens favored ASTM, a non-profit entity with an office
in Pennsylvania and no physical presence in New Jersey, because plaintiff could
obtain the discovery it sought through the "Uniform Discovery Act."3 In
opposition, plaintiff argued the "industry" had an economic interest and that
ASTM had an economic interest "in maintaining the integrity of their committee
process." Attempting to minimize the impact of discovery on ASTM, plaintiff's
lawyer represented he was "not looking to sue ASTM as a discovery defendant
in every single Sky Zone case I have." After hearing oral argument, the motion
judge denied ASTM's motion. The judge seemed to acknowledge plaintiff had
not established that ASTM had a financial interest in terms of potential loss of
3 See Catalina Mktg. Corp. v. Hudyman, 459 N.J. Super. 613, 618 (App. Div. 2019) (rejecting assertion that New Jersey has not adopted the Uniform Interstate Depositions and Discovery Act and noting New Jersey court rules that effectively adopt and conform with provisions of that act). A-3833-19 11 money but indicated ASTM might "want to stand behind their standards and
show that [plaintiff's] expert is incorrect." He concluded the requested
information was "essential" to plaintiff's case and that ASTM could provide it
"in an easy way." As for ASTM's argument that it was not properly served, the
judge concluded plaintiff's counsel's affidavit of inquiry "substantially
conforms."
IATP, also based in Pennsylvania and with no New Jersey office, moved
to dismiss the amended complaint, arguing plaintiff had failed to establish
personal or equitable jurisdiction and that it did not have a financial interest in
the outcome of the case. After hearing oral argument, the judge denied IATP's
motion, finding "everything [IATP does] as an organization has an impact in
every state . . . where parks are promoting [IATP's] support as being emblematic
of why people should go to their facilities" and that New Jersey courts have
personal jurisdiction over IATP because IATP's "actions can somehow impact
state residents." The court also found that equitable jurisdiction was proper
because plaintiff's discovery request was necessary for him to prove his
allegations and that it was "[n]ot a burden on IATP" to produce the requested
discovery.
A-3833-19 12 The judge issued an order denying each of the motions to dismiss. In a
subsequent order, he amended the initial order "to clarify" he had denied Sky
Zone's motion to dismiss and compel arbitration.
Appealing the denial of its motion to dismiss and to compel arbitration,
Sky Zone asserts the agreement is enforceable because: (i) the parties clearly
intended to arbitrate any dispute by arbitration notwithstanding JAMS's
unavailability; and (ii) federal and state law and the agreement's language
provide for a court-appointed alternate arbitrator. Sky Zone argues the motion
judge also erred in finding the arbitration provision "illusory," contending the
arbitration provision is "separate and distinct" from the release of liability
provision, the severability clause maintains the arbitration provision's validity
even if the liability of waiver provision is unenforceable, and the "interpretation
and determination of the applicability and enforceability of the liability waiver"
is for the arbitrator to decide.
In response, plaintiff argues the arbitration agreement is unenforceable
because, among other reasons, the agreement lacked a meeting of the minds due
to the unavailability of JAMS as arbitrator, which plaintiff contends was an
"integral contract term." Plaintiff also argues the agreement is illusory because
A-3833-19 13 it requires plaintiff to "waive and/or release all potential claims" while "also
imposing a mandatory . . . duty" to arbitrate any dispute or claim.
Defendants ASTM and IATP appeal the denials of their motions, making
the same arguments they made to the motion judge.
II.
We apply a de novo standard to the legal question whether an arbitration
agreement is enforceable. Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 131
(2020); see also Kernahan v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301,
316 (2019) ("Whether a contractual arbitration provision is enforceable is a
question of law, and we need not defer to the interpretative analysis of the trial
. . . court[] unless we find it persuasive."). In reviewing arbitration agreements,
we recognize arbitration is a "favored means of dispute resolution[,]" Hojnowski
v. Vans Skate Park, 187 N.J. 323, 342 (2006), and "are mindful of the strong
preference to enforce arbitration agreements, both at the state and federal level,"
Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). See also Arafa,
243 N.J. at 170.
In determining whether a valid agreement to arbitrate exists, we apply
"state contract-law principles." Hojnowski, 187 N.J. at 342; see also Kernahan,
236 N.J. at 317-18. Under those principles, "[a]n arbitration agreement is valid
A-3833-19 14 only if the parties intended to arbitrate because parties are not required 'to
arbitrate when they have not agreed to do so.'" Kernahan, 236 N.J. at 317
(quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ.,
489 U.S. 468, 478 (1989)). Thus, our first inquiry is whether the parties actually
and knowingly agreed to arbitrate their dispute. Ibid.; see also Atalese v. U.S.
Legal Servs. Grp., L.P., 219 N.J. 430, 442 (2014).
That inquiry begins with the language of the arbitration clause. To reflect
mutual assent to arbitrate, the terms of an arbitration provision must be
"sufficiently clear to place a consumer on notice that he or she is waiving a
constitutional or statutory right." Atalese, 219 N.J. at 443. "No particular form
of words is necessary to accomplish a clear and unambiguous waiver of rights."
Id. at 444. If "at least in some general and sufficiently broad way" the language
of the clause conveys that arbitration is a waiver of the right to bring suit in a
judicial forum, the clause will be enforced. Id. at 447. "The key . . . is clarity."
Barr v. Bishop Rosen & Co., 442 N.J. Super. 599, 607 (App. Div. 2015).
The language of the arbitration clause of the parties' agreement is clear.
It states plaintiff was "agreeing to arbitrate any dispute as set forth in this
section" and was "waiving [his] right . . . to maintain a lawsuit." It sets forth
that "[b]y agreeing to arbitrate, [plaintiff] understand[s] that [he] will NOT have
A-3833-19 15 the right to have [his] claim determined by a jury." That broad language is a
clear and unambiguous waiver of plaintiff's right to a jury trial and to pursue his
claims in a court of law and, accordingly, is enforceable. See Flanzman, 244
N.J. at 137-38; Atalese, 219 N.J. at 444-45; Martindale v. Sandvik, Inc., 173
N.J. 76, 92 (2002).
Having determined the parties agreed to arbitrate and the agreement is
enforceable, we turn to the question of whether JAMS's unavailability
eviscerates that agreement. In Flanzman, 244 N.J. at 133,4 a case involving an
arbitration agreement in which the parties did not designate a specific arbitrator
or a process for the selection of an arbitrator, the Court recognized federal and
state policy favoring arbitration, citing both "the federal policy expressed by
Congress in the [Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 to 16]" and our
Legislature's codification of "'its endorsement of arbitration agreements'" in the
New Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -36. Flanzman, 244
N.J. at 133 (quoting Hojnowski, 187 N.J. at 342). The Court found that
Congress had "promoted arbitration by addressing the selection of an arbitrator"
in section 5 of the FAA. Ibid. That section authorizes a court to designate an
arbitrator "if for any other reason there shall be a lapse in the naming of an
4 Flanzman was decided after the motion judge's decision in this case. A-3833-19 16 arbitrator . . . or in filling a vacancy." 9 U.S.C. § 5. The NJAA has a similar
provision, authorizing court-appointment of an arbitrator if "an arbitrator
appointed fails or is unable to act . . ." N.J.S.A. 2A:23B-11(a). Given those
statutory provisions and finding that "[n]o New Jersey statutory provision or
prior decision has elevated the selection of an 'arbitral institution' . . . to the
status of [an] essential contract term[] . . . " the Court reversed our decision
invalidating the arbitration agreement. 244 N.J. at 139-41.
In so ruling, the Court distinguished our holding in Kleine v. Emeritus at
Emerson, 445 N.J. Super. 545 (App. Div. 2016), noting that in Flanzman "there
was no agreement to a particular arbitral organization that proved to be
unavailable, and no evidence that the involvement of a specific organization was
an essential term of the parties' [a]greement." 244 N.J. at 140. In Kleine, we
held that an arbitration clause was not enforceable because the selected arbitral
forum was not available and "there was no meeting of the minds as to an arbitral
forum if [the selected forum] was not available." 445 N.J. Super. at 552. Unlike
the arbitration clause at issue in this case, the Kleine arbitration clause did not
reference the FAA or the NJAA, and the parties in Kleine did not raise or rely
on the arbiter-selection provisions of section 5 of the FAA or N.J.S.A. 2A:23B-
11(a), which have since been recognized by the Court in Flanzman.
A-3833-19 17 The Third Circuit addressed the application of section 5 of the FAA in
Khan v. Dell Inc., 669 F.3d 350, 351 (3d Cir. 2012), to an arbitration clause that
designated an unavailable arbitral forum. Like the arbitration clause in this case,
the Khan clause specifically referenced the FAA. Ibid. Opposing the
defendant's motion to compel arbitration, the plaintiff contended that the arbitral
designation was "integral" to the arbitration provision. Id. at 353. The court
recognized that section 5 of the FAA "provides a mechanism for substituting an
arbitrator when the designated arbitrator is unavailable." Id. at 354. The court
noted that "[i]n determining the applicability of [s]ection 5 of the FAA when an
arbitrator is unavailable, courts have focused on whether the designation of the
arbitrator was 'integral' to the arbitration provision or was merely an ancillary
consideration." Ibid. The court found that an arbitral designation is integral
rather than "'an ancillary logistical concern'" when it is "'so central to the
arbitration agreement that the unavailability of that arbitrator [brings] the
agreement to an end.'" Ibid. (quoting Reddam v. KPMG LLP, 457 F.3d 1054,
1061 (9th Cir. 2006) (abrogated in part on other grounds by Atl. Nat'l Trust LLC
v. Mt. Hawley Ins. Co., 621 F.3d 931 (9th Cir. 2010))). The court held that to
demonstrate the central importance of the arbitral designation, "the parties must
have unambiguously expressed their intent not to arbitrate their disputes in the
A-3833-19 18 event that the designated arbitral forum is unavailable." Ibid. The court also
held that the unavailability of the designated arbitral forum constituted a "lapse"
within the meaning of section 5 of the FAA, believing "a narrower construction
. . . would be inconsistent with the 'liberal federal policy in favor of arbitration'
articulated in the FAA." Id. at 356-57.
Under that legal framework, we consider the parties' agreement. The
arbitration clause states the agreement would be interpreted in accordance with
New Jersey law and the arbitration would be governed by the FAA. The FAA
and the NJAA provide for a court-appointed arbitrator if the designated
arbitrator is unavailable. The arbitration clause enables the parties to seek from
a court "provisional remedies in aid of arbitration." The agreement does not
state the parties intended not to arbitrate their disputes if JAMS is unavailable,
and nothing indicates the designation of JAMS was integral to the arbitration
clause. Accordingly, we conclude the unavailability of JAMS does not render
the arbitration clause unenforceable.
The arbitration clause is enforceable. In light of its terms, the other issues
raised by plaintiff about the agreement, including the viability of the release-of-
liability provision, is for the arbitrator, not a judge, to decide. Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440, 449 (2006) (finding "a challenge to the
A-3833-19 19 validity of the contract as a whole, and not specifically to the arbitration clause,
must go to the arbitrator"); Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 211
(2019) ("delegation of authority to the arbitrator to resolve disputes relating to
the enforceability of the agreement was valid").
Accordingly, we reverse the denial of Sky Zone's motion to compel
arbitration and remand for entry of a new order, compelling arbitration and
staying this court action. See N.J.S.A. 2A:23B-7(g) (stating "[i]f the court
orders arbitration, the court on just terms shall stay any judicial proceeding that
involves a claim subject to the arbitration"); see also 9 U.S.C. § 3 (stating a court
action should be stayed if that action involves "any issue referable to
arbitration"). If the parties are unable to agree on an alternate arbitrator, they
may apply to the trial judge in accordance with N.J.S.A. 2A:23B-11(a) and
section 5 of the FAA and ask the judge to appoint an arbitrator. All other issues
shall be determined by the arbitrator in accordance with the arbitration
agreement.
III.
"When a motion to dismiss for lack of jurisdiction is made, it is only the
jurisdictional allegations that are relevant, not the sufficiency of the allegations
respecting the cause of action." Rippon v. Smigel, 449 N.J. Super. 344, 359-60
A-3833-19 20 (App. Div. 2017). A motion to dismiss for lack of personal jurisdiction pursuant
to Rule 4:6-2(b) presents questions of law and fact. Pullen v. Galloway, 461
N.J. Super. 587, 596 (App. Div. 2019). We review de novo the judge's legal
conclusions and generally defer to a judge's factual findings if they are supported
in the record. Ibid.
New Jersey has long followed the legal principle that a witness isn't a
defendant based solely on its status as witness. See Walker v. Pa. R.R. Co., 134
N.J. Eq. 544, 549 (Ch. 1944); McCarter v. Farmers' Loan & Trust Co., 105 N.J.
Eq. 322, 323 (Ch. 1929). To be made a party to a lawsuit, a person or entity
must have some interest in the subject matter of the lawsuit. McCarter, 105 N.J.
Eq. at 323. That interest is more than just intellectual curiosity; it is pecuniary
in nature as to the outcome of the lawsuit. Beckwith, 182 N.J. Super. at 380-81;
Arcell v. Ashland Chem. Co., 152 N.J. Super. 471, 507 (Law Div. 1977); cf.
Davila v. Cont'l Can Co., 205 N.J. Super. 205, 207 (App. Div. 1985) (observing
that "[i]n the action on appeal before us, defendant has a financial stake").
Although that general rule has exceptions, see Walker, 134 N.J. Eq. at 549-50,
none of them applies here.
If a defendant does not have a pecuniary interest in the outcome of the
lawsuit, a court deciding whether the lawsuit should continue against that
A-3833-19 21 defendant balances the plaintiff's need for the discovery sought from that
defendant and the value of the information sought as against the ease in which
the information may be provided by the defendant and the availability of less
burdensome means to obtain the same information. Beckwith, 182 N.J. Super.
at 382. In Beckwith, the plaintiffs sought to join as a defendant for the sole
purpose of obtaining discovery from an out-of-state, non-profit corporation that
did not conduct business in New Jersey. Judge Keefe, then sitting as a trial
judge, dismissed the complaint, finding the defendant did not have a pecuniary
interest in the controversy and the plaintiffs could have sought discovery in the
state where the defendant had its office. Id. at 381-85.
The record establishes that neither ASTM nor IATP has a pecuniary
interest in the outcome of this lawsuit. Plaintiff does not allege in his amended
complaint that either has a pecuniary interest or facts from which a reasonable
inference could be drawn that they have a pecuniary interest. The trial judge's
"on the fence" assumption that ASTM may sustain "some sort of loss of a fee or
something by any members in the trampoline industry" is pure speculation and
insufficient to sustain a finding of jurisdiction. His belief that "this information
is going to have a greater financial impact on [IATP] based upon what I
understand to be the interrelationship between Sky Zone and [IATP]" is
A-3833-19 22 unsupported speculation premised on unsupported speculation. Plaintiff's
assertion that "ASTM negligently allowed the trampoline industry to subvert its
system to develop consensus standards that benefit public health and safety" is
not pleaded in the amended complaint. That some defendants are members of
ASTM or IATP and several years ago one defendant's CEO was the chairman of
IATP does not establish that either ASTM or IATP has a pecuniary interest in
the outcome of this litigation.
We hold the balancing test favors defendants. Plaintiff does not dispute
that ASTM and IATP are out-of-state entities with no offices in New Jersey.
The judge's finding that IATP has no burden as an out-of-state defendant in a
lawsuit because "[i]t's a simple electronic transfer" is not supported legally,
factually, or by the history of this litigation. Plaintiff's asserted need for
discovery from ASTM and IATP and the importance of that information to the
case is outweighed by the availability and ease of other means of obtaining that
information. Plaintiff simply could have followed the applicable court rules.
See Catalina Mktg. Corp., 459 N.J. Super. at 618; Beckwith, 182 N.J. Super. at
382-83.
Accordingly, we find that ASTM and IATP were improperly joined as
"discovery" defendants and reverse the denials of ASTM's and IATP's motions
A-3833-19 23 to dismiss. Having resolved this aspect of the appeal, we need not reach
defendants' other jurisdictional arguments.
Reversed and remanded. We do not retain jurisdiction.
A-3833-19 24