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New Jersey Regional Council of Carpenters v. D.R. Horton, Inc.

2010 WL 2674474 (U.S. Dist. Ct. D. N.J. 2010) (Unpublished)

SUBSIDIARIES; JURISDICTION — Where a parent company approves the funds for purchases of land for projects sought by its subsidiary in New Jersey and where it makes frequent trips to New Jersey to examine such properties, and where it advertises properties for sale in New Jersey on the New Jersey home page, the parent company may be subject to the jurisdiction of New Jersey courts even though it conducts its day-to-day business in New Jersey through a subsidiary.

A trade union sued the parent company of a New Jersey residential construction subsidiary that allegedly knowingly hired undocumented workers for the purpose of depressing wages, decreasing costs, and avoiding payment of employee benefits and payroll taxes. The case was removed to the United States District Court, and the Court considered the parent company’s summary judgment motion to dismiss the suit for lack of personal jurisdiction.

The Court explained that it could maintain personal jurisdiction under one of two theories: specific jurisdiction or general jurisdiction. A court obtains general jurisdiction over a defendant when the defendant has maintained continuous and substantial connections with the state in which the court sits. It obtains specific jurisdiction over a defendant where the defendant has purposefully directed sufficient minimum contacts with that state such that it reasonably should anticipate being subject to lawsuits there, that its contacts with the state give rise to the claims raised in court, and that assertion of personal jurisdiction would not offend notions of fair play and substantial justice. Personal jurisdiction can also be asserted in a parent company-subsidiary relationship where the parent does more than merely own the subsidiary in regard to forum contacts.

In this matter, the Court ruled that it could exercise general jurisdiction over the parent company because of evidence demonstrating its contacts with New Jersey were continuous and systematic. Representatives of the company frequently visited New Jersey to meet with employees of its subsidiary to review plans for land acquisition, to take tours of ongoing construction projects, and to review financial information. Further, the parent company engaged in numerous mail and wire communications with the New Jersey subsidiary, and owned a website that advertised homes for sale in New Jersey on a New Jersey homepage. Such evidence demonstrated opportunities for the parent company to exchange information and communicate with New Jersey potential customers.
The Court also held that there was sufficient evidence of specific jurisdiction, in that the parent company approved and funded the purchase of land for the project that gave rise to use of undocumented workers, and had met with union employees who were to work on that same project. Lastly, the Court was satisfied that the parent company had deliberately marketed its New Jersey subsidiary as an organ of the parent company such that both entities could be considered combined. Homes were marketed and sold in a way that gave consumers the impression they were dealing with a large national corporation rather than with a small local New Jersey company. The subsidiary used its parent company’s name, logo, and ticker symbol on its advertisements for New Jersey homes and press releases. The Court also found that the parent company’s corporate manual demonstrated the parent was involved in the day-to-day operations of the local company, such that the local company did not, and could not, operate independently. Specifically, the local company had to request corporate approval to purchase the land parcel where the underlying dispute occurred.

For the foregoing reasons, the Court denied the parent company’s motion to dismiss the lawsuit based on a lack of personal jurisdiction.

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