No NJ Jurisdiction Found for Illinois Employee

Illinois Based Employee of Computer Consulting Software Company Cannot be Sued in New Jersey Due to Lack of Jurisdiction

Baanyan Software Services tried to sue its Illinois based employee in New Jersey for breach of contract. In Baanyan Software Services v. Kuncha, no. A-2058-12T3 (Dec. 19, 2013 App. Div.), the Appellate Division found that New Jersey lacked jurisdiction over this employee and the company would have to sue him in Illinois.

Baanyan, an information technology development and software consulting company, with headquarters in Edison, New Jersey, hired the defendant Kuncha as a computer system analyst pursuant to a written consulting agreement. When Kuncha was hired, she was living in California, which is where she signed the agreement.

The terms of the contract were negotiated by email and telephone calls. The contract contained no forum selection clause, in which the parties would select a forum state as the state where any lawsuits would be filed for any disputes that might arise under the contract.

The contract required that Kuncha relocate to Illinois to service Baanyan’s clients. Thereafter, she was paid by direct deposit into her Illinois bank account. At no time, did the defendant work in New Jersey, nor did she provide any services to a Baanyan client located in New Jersey.

She only worked for Baanyan for about 6 months, and began working for one of their clients and then a competitor after moving to Tennessee. Baanyan sued Kuncha for breach of contract and other claims.

Kuncha moved to dismiss based upon lack of jurisdiction. She argued lack of minimum contacts with the State of New Jersey. The Appellate Division applied the federal constitutional standard and found that her acts did not create either general jurisdiction, nor specific jurisdiction.

Simply telephonic contacts with individuals and entities located in New Jersey alone were insufficient minimum contacts to establish personal jurisdiction of the defendant. Receiving payment from Baanyan and submitting timesheets to Baanyan were all electronic and did not require any contact with New Jersey. The court found that, to allow Baanyan, an international company to compel an individual employee to defend a New Jersey lawsuit, where that employee was hired to work in Illinois, violated principles of “fair play and substantial justice.”

This case points out the difficulties there may be in obtaining jurisdiction in suing an individual or a company who has no connection to the State of New Jersey but for a contract entered into with the New Jersey company. With the use of today’s technology, many contracts are entered into solely using electronic means. Using a forum selection clause would likely have prevented this jurisdictional problem because the parties would have chosen this state as its forum to resolve any disputes.

Tags: Jurisdiction