Minimum contacts analysis for personal jurisdiction over foreign components manufacturer
January 23rd, 2012
In Robert Windsor, Jr., et al., v. Spinner Industry Co., Ltd., et al., Civil No. JKB 10-114 (D.Md. Dec. 15, 2011), the U.S. District Court for the District of Maryland analyzed the appropriate standard by which to determine whether a foreign corporation has sufficient minimum contacts in order to assert personal jurisdiction over the defendant under the U.S. Supreme Court's holdings in Asahi Metal Indus, co., v. Superior Court of California, 480 U.S. 102 (2987) and J. McIntyre Machinery, Ltd., v. Nicastro, 131 S.Ct. 2780 (2011).
Plaintiffs brought suit against defendants after the front wheel of Robert Windsor?s bicycle dislodged, causing him and his toddler son, to be thrown to the ground. Plaintiffs alleged that defendants were involved in the design, manufacture, or assembly of the bicycle or its components, the defects of which were the proximate cause of the accident. Defendant, Joy Industrial Company ("Joy"), a Taiwanese company who manufactured the "quick release skewer" mechanism which secures the wheels to the bicycle, moved to dismiss all claims against it on the grounds that it was not subject to personal jurisdiction in Maryland.
Since plaintiffs bear the burden of establishing personal jurisdiction, plaintiffs argued that, even though Joy had no direct contact with Maryland, the nationwide marketing of Joy's products by intermediaries created sufficient minimum contacts to establish personal jurisdiction. Specifically, Joy sold its products to distributors, manufacturers, and trading companies in the U.S., which then market or sell the product in Maryland. Thus, it was foreseeable that Joy's product would be sold in Maryland and Joy availed itself to the forum jurisdiction.
In analyzing whether the Court had specific jurisdiction over a non-resident manufacturer whose only connection to the forum was that its products were sold there by a third-party distributor the Court looked to the U.S. Supreme Court's opinions in Asahi and McIntyre. Unfortunately, neither Asahi nor McIntyre were majority opinions causing ambiguity as to what standard actually applied to determine jurisdiction is these cases.
Without a majority opinion, the District Court sought to find consensus between the plurality and concurring opinions "on the narrowest grounds" to fashion an appropriate standard. In so doing, the Court found that, contrary to the plaintiffs' position, "McIntyre clearly rejects foreseeability as the standard for personal jurisdiction" and instead "specific jurisdiction must arise from a defendant's deliberate connection with the forum state." "Beyond this, however, McIntyre merely affirms that status quo." Consequently, the District Court relied upon the Fourth Circuit Court's precedent on the issue which largely adopted Justice O'Connor's plurality position in Asahi, i.e., a restrictive view that requires a defendant take some deliberate and overt action to target the markets of the forum State. The Fourth Circuit analyzed minimum contacts on the basis of "whether a defendant has created a substantial connection to the forum state by action purposefully directed toward the forum state or otherwise invoking the benefits and protections of the laws of the state," and specifically rejected the notion that a state could assert personal jurisdiction over a defendant merely because the company expected its product would ultimately be sold in the state.
Applied here, the Court found that the facts were insufficient to demonstrate jurisdiction over Joy based solely upon the motions and that the plaintiffs had failed to offer any details regarding the particular chain of distribution that brought the allegedly defective product to Maryland, or that Joy had any "additional contact" evincing intent to serve the Maryland bicycle market in particular. However, there was still a question of whether jurisdiction was proper since the manufacturers and distributors to whom Joy sells its products, not only market their products in Maryland, but maintain established channels of distribution there, suggesting a regular course of sales. Accordingly, the Court held Joy's Motion to Dismiss for lack of personal jurisdiction in abeyance in order to conduct a hearing to determine the extent of Joy's contacts with Maryland.
Plaintiffs brought suit against defendants after the front wheel of Robert Windsor?s bicycle dislodged, causing him and his toddler son, to be thrown to the ground. Plaintiffs alleged that defendants were involved in the design, manufacture, or assembly of the bicycle or its components, the defects of which were the proximate cause of the accident. Defendant, Joy Industrial Company ("Joy"), a Taiwanese company who manufactured the "quick release skewer" mechanism which secures the wheels to the bicycle, moved to dismiss all claims against it on the grounds that it was not subject to personal jurisdiction in Maryland.
Since plaintiffs bear the burden of establishing personal jurisdiction, plaintiffs argued that, even though Joy had no direct contact with Maryland, the nationwide marketing of Joy's products by intermediaries created sufficient minimum contacts to establish personal jurisdiction. Specifically, Joy sold its products to distributors, manufacturers, and trading companies in the U.S., which then market or sell the product in Maryland. Thus, it was foreseeable that Joy's product would be sold in Maryland and Joy availed itself to the forum jurisdiction.
In analyzing whether the Court had specific jurisdiction over a non-resident manufacturer whose only connection to the forum was that its products were sold there by a third-party distributor the Court looked to the U.S. Supreme Court's opinions in Asahi and McIntyre. Unfortunately, neither Asahi nor McIntyre were majority opinions causing ambiguity as to what standard actually applied to determine jurisdiction is these cases.
Without a majority opinion, the District Court sought to find consensus between the plurality and concurring opinions "on the narrowest grounds" to fashion an appropriate standard. In so doing, the Court found that, contrary to the plaintiffs' position, "McIntyre clearly rejects foreseeability as the standard for personal jurisdiction" and instead "specific jurisdiction must arise from a defendant's deliberate connection with the forum state." "Beyond this, however, McIntyre merely affirms that status quo." Consequently, the District Court relied upon the Fourth Circuit Court's precedent on the issue which largely adopted Justice O'Connor's plurality position in Asahi, i.e., a restrictive view that requires a defendant take some deliberate and overt action to target the markets of the forum State. The Fourth Circuit analyzed minimum contacts on the basis of "whether a defendant has created a substantial connection to the forum state by action purposefully directed toward the forum state or otherwise invoking the benefits and protections of the laws of the state," and specifically rejected the notion that a state could assert personal jurisdiction over a defendant merely because the company expected its product would ultimately be sold in the state.
Applied here, the Court found that the facts were insufficient to demonstrate jurisdiction over Joy based solely upon the motions and that the plaintiffs had failed to offer any details regarding the particular chain of distribution that brought the allegedly defective product to Maryland, or that Joy had any "additional contact" evincing intent to serve the Maryland bicycle market in particular. However, there was still a question of whether jurisdiction was proper since the manufacturers and distributors to whom Joy sells its products, not only market their products in Maryland, but maintain established channels of distribution there, suggesting a regular course of sales. Accordingly, the Court held Joy's Motion to Dismiss for lack of personal jurisdiction in abeyance in order to conduct a hearing to determine the extent of Joy's contacts with Maryland.
