Personal jurisdiction was not a commonly pursued defense in product liability for a number of years because of the less-than-favorable state of general jurisdiction. In 2014, we saw a shift in that trend following the United States Supreme Court’s decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), where SCOTUS made clear that the exercise of general jurisdiction, absent the most extreme of circumstances, requires the defendant to be “at home” in the forum state, i.e. the corporation can only be sued in the state of its principal place of business or its state of incorporation. This approach has been, and continues to be, effective for non-resident manufacturers, suppliers, and the like, on the general jurisdiction front. The result, however, was a more stringent approach to specific jurisdiction, i.e. an expected finding that the defendant has sufficient minimum contacts to allow for the exercise of specific jurisdiction.
On June 19, 2017, SCOTUS handed down its opinion in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017). SCOTUS used Bristol-Myers as an opportunity to reiterate a number of long-standing principles of specific jurisdiction that had been muddied over the years. The need for clarification was apparent with the California Supreme Court’s analysis of specific jurisdiction in this case. The California Supreme Court applied a “sliding scale” approach wherein the court concluded it could exercise specific jurisdiction over a non-resident defendant who had substantial contacts with the state that were unrelated to the subject lawsuit: “Under this approach, ‘the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.’” SCOTUS reversed the California Supreme Court, finding its analysis conflicts with the requirement that for a state to exercise specific jurisdiction over a non-resident defendant, “‘the suit’ must ‘arise out of or relate to the defendant’s contacts with the forum.’” “For this reason,” the Court stated, “‘specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.’” Rejecting California’s approach, SCOTUS stated:
Under the California approach, the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims. Our cases provide no support for this approach, which resembles a loose and spurious form of general jurisdiction. . . . As we have said, a corporation’s continuous activity of some sorts within a state . . . is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.
(Emphasis added).
Eight months have passed since Bristol-Myers, and numerous product liability opinions have relied on the case to address specific jurisdiction. The result? While some courts are readily finding Bristol-Myers precludes the exercise of specific jurisdiction in their case-specific scenarios,[1] others are struggling in their application of Bristol-Myers – particularly in cases with stream of commerce components. To date, courts appear to analyze differently cases where the state of purchase and state of injury are the same as opposed to cases where the state of purchase and state of injury are different.
The reticence to squarely apply Bristol-Myers in cases where the product at issue was purchased in the state of injury is illustrated in Kowal v. Westchester Wheels, Inc., 2017 WL 3996032 (Ill. App. Ct. Sept. 8, 2017). Giant Manufacturing Co., Ltd., a Taiwanese corporation, manufactured the bicycle at issue in this lawsuit in Taiwan, distributed it to a Virginia corporation, and the distributor sold it to a Giant brand retailer in Illinois. The plaintiff purchased the bicycle from the Illinois retailer and was subsequently injured in Illinois. The plaintiff filed her product liability suit in Illinois, and Giant moved to dismiss for lack of personal jurisdiction. In its assessment of specific jurisdiction, the court of appeals outright rejected any consideration of Bristol-Myers because it factually pertained to out-of-state consumers. The court of appeals found the plaintiff’s injuries “clearly” arose out of Giant’s contacts with Illinois because the plaintiff’s injury occurred during “her use of a bicycle manufactured by Giant Manufacturing and sold to plaintiff through a Giant brand authorized retailer in Illinois.”
On the other hand, in Ruiz v. TRW Vehicle Safety Systems, Inc., 2017 WL 4236544 (D. S.D. Sept. 22, 2017), the District Court of South Dakota found it could not exercise personal jurisdiction where the product was not purchased in the state of injury and suit was brought in the state of injury. TRW, a Delaware corporation with its principal place of business in Michigan, designs and manufacturers seat belt assemblies for automotives. The survivors of the decedent claim the seat belt assembly in Ruiz’s Ford F-250 failed during a rollover, ejecting him from the truck and causing his fatal injuries. The subject seat assembly was manufactured in Mexico, shipped to a Ford seat supplier in Kentucky, assembled in Kentucky, and sold to a dealership in Texas. The truck was sold and resold several times in Texas before being purchased in Texas by Ruiz. The subject accident occurred in South Dakota, where plaintiffs filed suit.
TRW moved for a dismissal for lack of personal jurisdiction. Relying on Bristol-Myers, it argued, inter alia, that if the court were to consider Ford a distributor of TRW seat belt assemblies, it could not be subject to jurisdiction in South Dakota because of Ford’s actions. The district court rejected this argument and stated Bristol-Myers “does not support this proposition.” Nevertheless, the district court concluded it could not exercise specific jurisdiction over TRW:
The fact that TRW serves a global market that includes all fifty states and manufactures a product in accordance with FMVSS and NHTSA standards is evidence that TRW is purposefully availing itself of a market for its product in the vehicle industry, but not necessarily of the forum state of South Dakota. The fact that such a market naturally includes South Dakota does not render TRW subject to jurisdiction in South Dakota.
(Internal citations omitted).
Finally, the case of Everett v. Leading Edge Air Foils, LLC, 2017 WL 2894135 (E.D. Wisc. July 7, 2017), illustrates the situation where the state of purchase and state of injury are different, but suit is brought in the state of purchase. This suit arose out of a plane crash that occurred in Missouri, allegedly caused by a defective engine. BRP-Rotax designed and manufactured the subject engine in Austria, where the company is organized and where it maintains its principal place of business. BRP-Rotax sells its products—and sold the subject engine—in the United States through distributor Kodiak Research, Ltd., which is organized and maintains its principal place of business in the Bahamas. Kodiak sold the subject engine to LEAF, a Wisconsin LLC, and the plaintiff purchased the engine from LEAF. Relying on Bristol-Myers and stream of commerce principles, the district court found it could exercise jurisdiction over BRP-Rotax and Kodiak:
The record establishes that the sale of the Rotax engine in Wisconsin was not an isolated occurrence but was part of the regular flow of Rotax products from BRP-Rotax, through Kodiak, to LEAF in Wisconsin; that both BRP-Rotax and Kodiak expected that consumers would purchase Rotax products from LEAF in Wisconsin; and that these defendants targeted Wisconsin.
In other words, the subject accident arose out of these defendants’ contacts with the forum state.
The product liability case law to date post-Bristol-Myers demonstrates the need for clarity on specific jurisdiction in cases with stream of commerce components. Until we see that clarity, defendants should take a close look at Bristol-Myers and the stream of commerce approach applied in the state where suit has been filed, and consider whether the facts of the case call for a specific jurisdiction challenge.
[1] See, e.g., McGill v. Conwed Corp., 2017 WL 4534827 (D. Minn. Oct. 10, 2017); Venuti v. Cont’l Motors Inc., 2018 WL 312532 (Utah Ct. App. Jan. 5, 2018).
