New Jersey Courts have finally clarified that a certificate of authority is only needed in New Jersey if a company is engaged in intrastate commerce.  See Bonnier Corporation v Jersey Cape Yacht Sales, Inc., No. A-2404-09T2, App. Div 101310. Bonnier relied on the US Supreme Court decision of Eli Lilly & Co., v. Sav-on Drugs, Inc., 366 U.s.  276, 81 S.Ct. 1316 (1961), which case determined that a State’s imposition of the certificate of authority unduly burdened interstate commerce and therefore violated the Commerce Clause where a company only engages in interstate commerce.

Factors looked at include ownership of real estate, location of an office, telephone listing, sales to retailers vs just wholesalers and employees regularly in NJ.  Sales people traveling to NJ to sell to businesses in NJ or bare solicitation of orders is not sufficient to require a certificate of authority.  However, targeting the needs of its NJ customers and fulfilling the orders through NJ suppliers is enough to subject the company to a determination of intrastate business and a need for a certificate of authority.

Companies that engage in intrastate commerce in NJ must have a certificate of authority from NJ to file a legal action in NJ.  See N.J.S. A. 14A:13-3(1) and N.J.S. A. 14A:13-11(1).

This clarification provided by the Bonner case is significant because previously there was a blanket requirement for a foreign corporation (headquartered or incorporated in a state other than NJ) to have a NJ certificate of authority to file suit in NJ or be subject to dismissal under N.J.S.A. 14A:13-11.

Gabrielle L. Strich, Esq.

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