KELLY MORAN VS. BIOLITEC INC. (C-000063-09, MERCER COUNTY AND STATEWIDE)
A-3701-14T3
| N.J. Super. Ct. App. Div. | Nov 14, 2017Background
- Biolitec, Inc. (originally incorporated in New Jersey in 1989) listed plaintiffs as initial directors and Wolfgang Neuberger (Austrian) as CEO and 90% owner; Biolitec, Inc. relocated out of New Jersey by 1990 and since 1995 has been headquartered in Massachusetts.
- Neuberger later transferred his ownership to Biolitec AG (a German parent) and also solely owned Biomed Technology Holdings, Ltd. (Malaysian); Biolitec AG and affiliates manufactured/distributed medical lasers abroad.
- Plaintiffs alleged that between 2000–2008 Neuberger and Biolitec AG looted Biolitec, Inc. through overcharging, inflated invoices, and improper interest charges — all occurring while the company operated from Massachusetts.
- Plaintiffs sued in New Jersey (Oppressed Minority Shareholder statute) seeking involuntary dissolution; defendants moved to dismiss for lack of personal jurisdiction and submitted certifications denying contacts with New Jersey.
- Trial court denied dismissal, relying on Delaware authority (Armstrong) and reasoning that Neuberger’s original board role and Biolitec AG’s controlling ownership of a NJ corporation supplied minimum contacts; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether New Jersey courts have specific personal jurisdiction over Neuberger (nonresident director/CEO) for claims arising from alleged misappropriation of Biolitec, Inc. | Neuberger knowingly availed himself of NJ by serving as an original director/CEO of a NJ corporation; thus he should reasonably expect suit in NJ. | Neuberger lacks sufficient minimum contacts: he is nonresident, never solicited business or owned property in NJ, and alleged misconduct occurred outside NJ. | Reversed: insufficient minimum contacts; original director status alone does not establish specific jurisdiction. |
| Whether New Jersey may exercise jurisdiction over Biolitec AG (foreign parent) solely by its controlling ownership of a NJ subsidiary | Control/ownership of a closely held NJ corporation and fiduciary duties justify haling parent into NJ courts. | Mere ownership of a NJ subsidiary, without purposeful contacts or conduct directed at NJ, does not establish specific jurisdiction. | Reversed: ownership alone insufficient; no NJ contacts or forum-related conduct tied to plaintiffs’ claims. |
| Whether Delaware-based reasoning in Armstrong (statutory consent by directors) applies to justify jurisdiction in NJ | Plaintiffs urged courts to follow Armstrong to hold directors/parents amenable to suit in the chartering forum. | Armstrong depends on a Delaware statute (10 Del. C. §3114) consent-to-suit; NJ has no analogous statute, so Armstrong is inapposite. | Held: Armstrong distinguishable; New Jersey lacks the Delaware statutory mechanism, so its rationale does not support jurisdiction here. |
Key Cases Cited
- International Shoe Co. v. Washington, 326 U.S. 310 (establishes minimum contacts due process standard)
- Shaffer v. Heitner, 433 U.S. 186 (shares/officeholding alone do not establish jurisdiction absent related forum contacts)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (specific vs. general jurisdiction and forum-connection requirement)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful availment and foreseeability in jurisdiction analysis)
- Armstrong v. Pomerance, 423 A.2d 174 (Del. 1980) (Delaware upheld jurisdiction over nonresident directors based on §3114 statutory consent; distinguished here)