## Facts

- Nicholas J. Delagi, a U.S. soldier stationed in Germany, bought a Volkswagen from an authorized dealer in Germany in 1965.
- Delagi alleged the vehicle’s front wheel suspension collapsed while he was driving in Germany, causing a crash and serious injuries.
- Delagi later sued Volkswagenwerk AG (VWAG), a German corporation, in New York for negligence and breach of warranty.
- VWAG manufactured and sold Volkswagens in Germany, had never qualified to do business in New York, and maintained no New York office or place of business.
- VWAG exported vehicles to the United States through Volkswagen of America, Inc. (VWoA), a wholly owned New Jersey subsidiary and exclusive U.S. importer; VWoA also had no New York office and was not qualified to do business in New York.
- After importation at non–New York ports, VWoA resold vehicles to 14 independent wholesale distributors that took title at the port and reshipped to independent franchised dealers.
- In New York, the distributor was World-Wide Volkswagen Corp., owned by U.S. investors unrelated to VWAG and VWoA.
- Delagi did not allege his claims arose from any transaction of business by VWAG in New York; he relied on VWAG’s alleged continuous New York market presence through the distribution system.
- VWAG moved to dismiss for lack of personal jurisdiction; lower courts upheld jurisdiction, and VWAG appealed.

## Issues

1. Whether New York courts may exercise personal jurisdiction over a foreign manufacturer that has no offices, employees, or authorization to do business in New York, when its products are sold there through an independent, multi-step distribution chain.
2. Whether general jurisdiction may be based solely on substantial in-state sales and product presence where the plaintiff’s injury occurred abroad and the claim did not arise from New York transactions.

## Decision

- The New York Court of Appeals held New York lacked personal jurisdiction over VWAG on these facts.
- The court reversed the order sustaining jurisdiction and dismissed the complaint against VWAG.
- The court concluded VWAG was not “doing business” in New York so as to be “present” for general jurisdiction, because in-state sales occurred through separate corporate entities and independent distributors without a showing of agency or control.
- The court noted plaintiff did not claim the action arose from any New York transaction by VWAG, defeating any theory requiring an in-state nexus.

## Legal Principles

- A foreign corporation is subject to New York general jurisdiction only if it engages in a continuous and systematic course of doing business in New York sufficient to treat it as present in the state.
- Mere sales and widespread product use in New York, when accomplished through independent distributors and retailers, do not establish that the foreign manufacturer is doing business in New York.
- General jurisdiction may be supported by in-state business conducted directly or through an agent, but not by the unilateral resale activities of independent intermediaries absent proof they function as the manufacturer’s agent or alter ego.
- Where the claim arises from events outside New York and does not arise from business transacted in New York, jurisdiction cannot be sustained on a transaction-based theory requiring an in-state connection.

## Conclusion

New York could not assert jurisdiction over a German automobile manufacturer for an accident in Germany when the manufacturer had no New York offices or authorization to do business there and its products reached New York only through separate corporate entities and independent distributors, without evidence of agency or control.


Delagi v. Volkswagenwerk AG, 29 N.Y.2d 426 (N.Y. 1972)