The opinion of the court was delivered by: MUNSON
MEMORANDUM-DECISION AND ORDER
This motion to dismiss for lack of personal jurisdiction (Fed.R.Civ.P. 12(b) (2)) requires this Court to determine the fairness of haling a foreign manufacturer into this forum. Numerous courts have erected verbal tests in attempts to give meaning to this area. After investigating those various superstructures, however, we tackle the core notion of fairness directly, and hold that it is reasonable to exercise jurisdiction.
Plaintiffs in this action have sued ten defendants for damages sustained by plaintiff Jerome Andrulonis' contraction of rabies. Their action arises under theories of negligence, strict products liability, breach of warranty, and the Federal Tort Claims Act, 28 U.S.C. §§ 2671-2680 (1976).
Mr. Andrulonis was a senior bacteriologist at the New York State Department of Health's Griffen Laboratory, working to develop a method for mass rabies immunization of wildlife. His research was a joint effort of the New York State Department of Health and the federal government's Center for Disease Control. At the time he contracted rabies, Mr. Andrulonis was attempting to coat a uniquely hazardous strain of rabies vaccine onto sugar pareils in an air suspension encapsulation machine known as a "Uni-Glatt." Defendant Glatt GmbH, a West German company with its principal place of business in Binzen, West Germany, manufactures the Uni-Glatt. Defendant Glatt Air Techniques, Inc. (GAT) distributes the machines in the United States for Glatt. Plaintiffs claim, inter alia, that the Uni-Glatt was defectively manufactured. Glatt denies liability, and contends that insufficient contacts exist between this forum and Glatt to allow exercise of personal jurisdiction over the German company.
Werner Glatt, Glatt's founder and chief executive, owns all of the stock capital of Glatt GmbH. Glatt GmbH's Answers to Plaintiffs' Interrogatories No. 3 (Glatt GmbH Answers). There are no shares of stock, shareholders, directors or officers in a GmbH; Mr. Glatt and his wife are the company's general managers. Id. Nos. 3-5.
Glatt GmbH depends heavily on international sales; exports have accounted for more than two-thirds of the company's total sales in each of the last five years. Exhibit A to Plaintiffs' Supplemental Memorandum of August 18, 1981 (Plaintiffs' Supplemental Memorandum). Glatt's sales totalled.$ 9.4 million in 1980. Id. Three distributors with the Glatt name exist: Glatt Maschinen und Apparatebau AG in Switzerland, Glatt-Labor Tecnic, S. A., in Spain, and Glatt Air Techniques, Inc., in the United States. Exhibit A to Glatt GmbH Answers; Exhibit G to Plaintiffs' Cross-Motion of September 4, 1980 (Plaintiffs' Cross-Motion). Glatt units also are produced under license in Japan and Brazil. Id. In 1980, the U. S. market alone represented over a third of Glatt GmbH's international sales, and 26% of Glatt's total sales, almost as much as the company's domestic sales in Germany. Exhibit A to Plaintiffs' Supplemental Memorandum.
Glatt GmbH does not sell directly in New York. It is not licensed to do business in New York, and maintains no bank account, office or phone listing in the state. Werner Glatt Affidavit of June 16, 1980, P6 (Werner Glatt Affidavit). Glatt Air Techniques, Inc., Glatt GmbH's sole U. S. distributor, handles all New York sales. GAT's Answers to Plaintiffs' Interrogatories P74 (GAT Answers). GAT was incorporated in New York in 1973. Exhibit B to Plaintiffs' Cross-Motion. GAT's financial operations were managed in New York City until about April, 1976, when it joined the sales, service and laboratory operations in New Jersey. Deposition of Howard Phykitt at 30-31 (Phykitt Deposition). The New York company had total sales of $ 6.8 million in 1979 and $ 3.8 million in 1980. Exhibit A to Plaintiffs' Supplemental Memorandum, at 2. Between 1977 and 1981, GAT sold six machines in New York. Id. GAT also leases Glatt equipment to customers, including the machine in question. GAT Answers Nos. 60, 61; id. Exhibit B.
Werner Glatt exercises extensive control over GAT's operations. He was an incorporator of GAT, serves on its board of directors, and has been its president since late 1977. He presently owns 85% of GAT's stock. Glatt GmbH Answers No. 41. Mr. Glatt loaned more than $ 50,000 to GAT. Exhibit B to Plaintiffs' Supplemental Memorandum. He made sales trips to New York for GAT to promote Glatt GmbH products. See Phykitt Deposition at 25, 57; letter of June 12, 1975, from Paul Portje of GAT to Ciba Geigy Corp. Mr. Glatt could turn down sales orders made by GAT. Phykitt Deposition at 28. He decided the timing of equipment delivery to GAT customers. Id. at 26-27. Mr. Glatt advised GAT on its internal organization, and was involved in the company's personnel decisions. Id. at 40, 58, 60; Deposition of Paul Portje at 26 (Portje Deposition).
The Glatt-GAT relationship extends beyond Werner Glatt's personal involvement. Glatt GmbH trained various GAT employees in West Germany. Translation of letter of July 29, 1980, from Werner Glatt to Howard Phykitt, executive vice-president of GAT, at 2; Glatt GmbH Answers No. 21; Phykitt Deposition at 7. Glatt GmbH employees also travelled frequently to GAT's New Jersey office. Translation of letter of April 15, 1980, from Werner Glatt to Howard Phykitt, at 1 (discussing recent visits by Mr. Glatt, Mr. Geppert and Mr. Nowak); Portje Deposition at 29-30, 41, 42; Phykitt Deposition at 18-19, 21, 25, 57. GAT occasionally called the German corporation regarding individual sales. Phykitt Deposition at 33. Glatt GmbH sent its financial advisor to GAT to ensure that GAT's accounting system would comply with the German corporation's needs. GAT board of directors meeting minutes of January 28, 1977. While Glatt did not dictate prices for its products sold in the United States, Portje Deposition at 52, GAT set its prices by merely factoring a conversion ratio onto Glatt GmbH's price book. Phykitt Deposition at 34; Portje Deposition at 33-34. Most importantly, at various times GAT executives held the American company out to prospective customers as Glatt GmbH's subsidiary. Letter of October 21, 1975, from Howard Phykitt to Ciba Geigy Corp. of Suffern, New York ("Glatt Air Techniques of Germany has set up a subsidiary company in Norwood, New Jersey, which is Glatt Air Techniques, Inc."); GAT Newsletter of December 5, 1977, at 1 (Exhibit C to Plaintiffs' Cross-Motion) (referring to GAT's "parent" company in Germany); Phykitt Deposition at 54. Werner Glatt himself considered the German corporation to be GAT's parent, and the Glatt-GAT operation as one entity. Translation of letter of July 29, 1980, from Werner Glatt to Howard Phykitt, at 2 ("G.A.T. often only is the advisor on behalf of the parent company in Binzen (West Germany) .... The market has to be handled with mutual teamwork"); id. at 3 ("the customers must feel that G.A.T. and teamwork/cooperation with the parent company form a unity.... As Manager and Vice President of the House of Glatt in the U. S. you have to be completely aware of this."); letter of September 5, 1979, from Werner Glatt to Howard Phykitt, at 2 ("You must not first of all keep in mind the U. S. market, but also observe the local situation here (in Germany).")
GAT's advertising and correspondence also suggest the lack of distinction between the two companies. Note, for example, a letter of April 13, 1978, from Kenneth Olsen, GAT's manager of marketing services, to Colin Duffy, of Ayerst Laboratories:
The Glatt Company is the world's leading manufacturer of fluid bed granulators, dryers, and coating apparatus for the Pharmaceutical Industry. Here at our Norwood, New Jersey, location we have a development laboratory for use in testing various materials on our equipment. We extend an invitation to you and your associates to visit our laboratory to view our fluid bed spray granulators and dryers, as well as the Wurster coating equipment and automated pan coating system. Perhaps after discussing any application that you may have for the Glatt equipment, we can schedule tests with your product on our machines.
Exhibit D to Plaintiffs' Cross-Motion (emphasis added). An ad in the April 1979 issue of Pharmaceutical Technology, at 81, included the following copy: "Glatt-The Leader In Fluid Bed Technology-Here's How We Can Fit Into Your Process Plans.... Glatt Air Techniques, Inc." Exhibit E to Plaintiffs' Cross-Motion (emphasis added). Whether or not GAT created this and similar ads ...