Opinion
Civil Action No. 03-1215.
December 12, 2003
MEMORANDUM
Plaintiff seeks reconsideration of this Court's October 7, 2003 Order granting Defendants' Motion to Dismiss this action in its entirety as uncontested. For the following reasons, the Court grants Plaintiff's Motion for Reconsideration and returns this case to the active trial docket.
I. PROCEDURAL HISTORY
On February 27, 2003, Plaintiff, a home builder, filed a Complaint against Defendants Senju America, Inc. ("Senju America") and Senju Metal Industry Company, Ltd. ("Senju Metal"). Plaintiff alleged that Defendants supplied it with allegedly defective sprinkler heads which Plaintiff then installed in newly constructed homes, thereby subjecting it to liability for resulting damage. Defendant Senju America filed a motion to dismiss all counts of the Complaint, with the exception of that part of Count III of the Complaint which asserted a claim for breach of the implied warranty of general merchantability. Defendant Senju Metal, a Japanese corporation, simultaneously filed a motion to quash service upon it.
On June 3, 2003, by agreement of the parties, this Court entered an order dismissing Counts I and II of the Complaint with prejudice. This Order also dismissed Count IV of the Complaint (asserting breach of contract) and Count V of the Complaint (asserting fraud) without prejudice. The Order granted Plaintiff until June 30, 2003, to file an amended complaint, in which it could reassert claims for breach of contract and fraud. Plaintiff was also given an opportunity to re-serve Senju Metal in a proper manner.
On July 1, 2003, Plaintiff filed the First Amended Complaint ("FAC") in this action, in which it reasserted claims for fraud and breach of contract (Counts III and IV). The FAC also asserted a claim for breach of the implied warranty of merchantability (Counts I and II).
On August 25, 2003, Defendants filed a Motion to Dismiss the FAC. Senju Metal asserted that the Court lacked personal jurisdiction over it. Defendants further asserted that Plaintiff's entire Complaint failed to state a claim upon which relief could be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).
On October 7, 2003, Plaintiff having failed to file a response to Defendants' Motion to Dismiss, this Court entered an order granting the motion as uncontested. On October 17, 2003, Plaintiff filed the instant Motion for Reconsideration of this Court's October 7, 2003 Order. Defendants filed a response in opposition to the Motion for Reconsideration on October 31, 2003. Plaintiff filed a "Supplement Memorandum" on November 12, 2003, in further support of its Motion for Reconsideration.
Defendants have filed a motion to strike Plaintiff's Supplement Memorandum, asserting that Plaintiff filed this Memorandum without seeking leave of the Court as required under the Local Rules of Civil Procedure and the rules of this Chambers. Because the information contained in the Supplement Memorandum is not entirely duplicative of the information contained in the original Motion for Reconsideration, and because the Court finds that this information will be helpful to the Court in deciding this matter, the Court denies Defendants' Motion to Strike the Supplement Memorandum. However, Plaintiff is warned that failure to adhere to the rules of this Court in the future may have serious adverse consequences, and may result in the imposition of sanctions.
II. DISCUSSION
Plaintiff seeks reconsideration of this Court's October 7th Order pursuant to Local Rule of Civil Procedure 7.1(g). Plaintiff does not seek reconsideration of that part of the Court's order dismissing the fraud and breach of contract counts of the FAC (Counts III and IV.) However, Plaintiff does seek reconsideration of that part of the Order dismissing Counts I and II, which allege breach of the implied warranty of merchantability. Plaintiff argues that it is entitled to relief pursuant to this cause of action, and further argues that it has established that Senju Metal is subject to personal jurisdiction in this district.
"'The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence.'" Rosenbaum v. Unum Life Ins. Co. of America, Civ. A. No. 01-6758, 2003 U.S. Dist. Lexis 15652 (E.D. Pa. Sep. 8, 2003) (quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1986)). "Generally, a motion for reconsideration will only be granted on one of the following three grounds '(1) there has been an intervening change in controlling law; (2) new evidence, which was not previously available, has become available; or (3) it is necessary to correct a clear error of law or to prevent manifest injustice.'" Blue Mt. Mushroom, Co. v. Monterey Mushroom, 246 F. Supp.2d 394, 398 (E.D. Pa. 1995) (citations omitted).
Plaintiff's Motion for Reconsideration can also be read to seek relief from this Court's Order under Federal Rule of Civil Procedure 60(b), although Plaintiff does not specifically reference this rule. Rule 60(b) provides, in relevant part, that:
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order or proceedings for the following reasons: (1) mistake, inadvertence, surprise or excusable neglect; . . .
However, courts have held that "ignorance of the law and carelessness in its application are not sufficient grounds under Rule 60(b) for this Court to reconsider its order." Lee v. Toyota Motor Sales, U.S.A., Inc., NO. 96-2337, 1997 U.S. Dist. Lexis 6889, at * 5 (E.D. Pa. May 16, 1997); see also Douris v. County of Bucks, No. Civ. A. 99-3357, 2000 WL 1347014 (E.D. Pa. Sep. 19, 2000) (refusing to grant relief under Rule 60(b) where the plaintiff failed to respond to a motion for a protective order because of his mistaken belief that the motion had been mooted by a previous order of the court.)
In this case, Plaintiff's only explanation for failing to respond to Defendants' Motion to Dismiss the FAC is its contention that the parties were in the process of working out a stipulation concerning some, but not all, of the counts asserted in the FAC. Plaintiff appears to have mistakenly believed that Defendant's Motion to Dismiss the FAC likewise only sought dismissal of some of the counts in the FAC. It appears, therefore, that Plaintiff simply failed to actually read Defendants' Motion to Dismiss the FAC. Thus, to the extent that Plaintiff's Motion for Reconsideration can be read to seek relief under Rule 60(b), the Court finds that such relief would not be appropriate.
Plaintiff does not allege that there has been any intervening change in the law, that new evidence has become available or that this Court has committed any error of law. Thus, the success of Plaintiff's motion is dependant upon whether reconsideration is necessary to prevent a manifest injustice. In considering whether a party will suffer manifest injustice if reconsideration is not granted, courts have looked to the underlying merits of that party's claims, as well as to the effect that a failure to reconsider will have on the outcome of that party's case. See Kabcinski v. Bostrom Seating, Inc., No. 02-CV-8910, 2003 WL 21250651 (E.D. Pa. Mar. 7, 2003) (considering whether the defendant's motion to dismiss would have succeeded on its own merits in determining whether to grant reconsideration of the court's prior order granting the motion to dismiss as uncontested); Radionic Indus. v. Aerovox, Inc., 1992 WL 293281 (N.D. Ill. Oct. 13, 1992) (declining to vacate an order granting the defendant's motion for summary judgment after considering the merits of the plaintiff's claim and concluding that the evidence did not strongly support the plaintiff's position.) Plaintiff's Motion for Reconsideration and Supplement Memorandum in Support of its Motion for Reconsideration contain argument and supporting affidavits which attempt to refute the merits of Defendants' Motion to Dismiss. Accordingly, the Court has considered the merits of Plaintiff's claims in determining whether failing to reconsider the Court's Order dismissing the case would result in a manifest injustice, as well as in determining the merits of Defendants' Motion to Dismiss.
A. Personal Jurisdiction Over Defendant Senju Metal
Plaintiff argues that Senju Metal has consented to the personal jurisdiction of this Court in this matter by virtue of the fact that it is a named defendant in an action currently pending in Pennsylvania State court. See Stewart's Keep, Inc. v. HAS Protection, Inc., Case # 02-19600 (Pa. Ct. Common Pleas, Montgomery County.) According to Plaintiff, Senju Metal has not contested personal jurisdiction in that matter. (Pl's Mem. at § IV.) According to Plaintiff, the Stewart's Keep litigation also concerns leakage problems with sprinkler heads manufactured by Senju Metal and installed by Plaintiff.
Plaintiff has not cited, and the Court has not found, any support for the proposition that a party's consent to be sued in one action implies its general consent to be sued in an entirely separate action in the same jurisdiction. Courts have held that a party who chooses to initiate suit as a plaintiff in a forum state thereby waives any objection to personal jurisdiction in a suit lodged against it in the same state, at least in cases where the two suits involve the same subject matter. See General Contracting Trading Co., L.L.C. v. Interpole, Inc., 940 F.2d 20 (1st Cir. 1991) (defendant waived any right to raise personal jurisdiction objection in first action where the defendant had filed an entirely separate action against the plaintiff in the first action.) However, in this case, Senju Metal did not initiate suit against Plaintiff in the Stuart's Keep action. Rather, Senju Metal, along with Plaintiff, is a defendant in that action. It is true, according to the docket in the Stuart's Keep litigation, that Defendant has filed a cross claim against Plaintiff in the Stuart's Keep action. (Pl's Supp. Mem., Ex. B, "Stewart's Keep Docket Report".) However, the filing of a cross claim is easily distinguished from the initiation of an entirely separate lawsuit, because Senju Metal was required to file a cross claim in the Stuart's Keep action in order to preserve its rights as a defendant in that action, an action that it did not choose to bring itself. C.f. General Contracting, 940 F.2d at 24 ("courts should not ordinarily treat counterclaims — at least compulsory counterclaims — as waivers of jurisdictional objections.") (citations omitted.) Thus, the Court finds that Plaintiff has failed to establish that Senju Metal has consented to, or otherwise waived objection to, this Court's personal jurisdiction.
Plaintiff additionally argues that, regardless of consent, Senju Metal's contacts with Pennsylvania are sufficient for this Court to exercise personal jurisdiction over it. "Once a defendant asserts the defense of lack of personal jurisdiction, the burden is on the plaintiff to make a prima facie showing with sworn affidavits or other competent evidence that personal jurisdiction exists." Rose v. Continental, A.G., 2001 WL 236738, at * 1 (E.D. Pa. Mar. 2, 2001) (citing Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 66-67 (3d Cir. 1984)). Pursuant to Federal Rule of Civil Procedure 4(e), "a district court may assert personal jurisdiction 'over non-resident defendants to the extent permissible under the law of the state where the district court sits.'" Remick v. Manfredi, 238 F.3d 248, 255 (3d Cir. 2001) (quoting Pennzoil Products Co. v. Colelli Assoc., Inc., 149 F.3d 197, 200 (3d Cir. 1998)). A court sitting in Pennsylvania may exercise jurisdiction to the extent permitted by the United States Constitution. Rose, 2001 WL 236738, at *1.
In evaluating whether an exercise of personal jurisdiction is constitutional, a court first determines whether the defendant's contacts with the forum state are sufficient to support general personal jurisdiction. Pennzoil, 149 F.3d at 200. General jurisdiction exists where a nonresident's contacts with the forum are "continuous and substantial," and permits the court to exercise jurisdiction "regardless of whether the subject matter of the cause of action has any connection to the forum." Id. This standard is much more difficult to meet than the standard for specific jurisdiction, set forth infra. Rose, 2001 WL 236738, at * 1.
In the absence of general jurisdiction, a court looks to whether the requirements of specific personal jurisdiction are met. Specific jurisdiction exists where the plaintiff's claim "is related to or arises out of the defendant's contacts with the forum." Penzoil, 149 F.3d at at 201 (citations omitted). The analysis of specific jurisdiction involves two inquiries, the first mandatory and the second discretionary: (1) whether the defendant had minimum contacts with the forum such that it would have "reasonably anticipate[d] being haled into court there,"id. (quoting WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)); and (2) whether "the assertion of personal jurisdiction would comport with 'fair play and substantial justice.'" Id. (citations omitted). Although the latter standard is discretionary, the United States Court of Appeals for the Third Circuit ("Third Circuit") has "generally chosen to engage in this second tier of analysis in determining questions of personal jurisdiction." Id.
"A finding of minimum contacts demands the demonstration of 'some act by which the defendant purposely avail[ed] itself of the privilege of conducting business within the forum State, thus invoking the protection and benefits of its laws.'" Id. at 203 (citations omitted). The court also takes into account "the relationship among the forum, the defendant and the litigation."Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992) (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)).
Plaintiff contends that personal jurisdiction over Senju Metal can be established by considering the business conducted in this forum by Senju America. Senju Metal admits that Senju America is a wholly owned subsidiary corporation of Senju Metal. (See Def's Mot. Dismiss, Ex. A, "Hasegawa Dec.", at ¶ 8.) Senju America has not contested personal jurisdiction in this case.
Contrary to Plaintiff's assertion, the fact that a wholly owned subsidiary corporation is subject to personal jurisdiction in a court is not sufficient in itself to subject the parent corporation to the court's jurisdiction. See Clark v. Matsushita Elec. Co., 811 F. Supp. 1061, 1067 (M.D. Pa. 1993) ("Mere ownership by a parent corporation of a subsidiary present in the forum state will not automatically subject the parent to personal jurisdiction in that forum."); see also Rose, 2001 WL 236738, at *3.
Plaintiff never indicates in its Motion to Reconsider whether it seeks to rely upon both general and specific jurisdiction in establishing personal jurisdiction. To the extent that Plaintiff does seek to rely upon general jurisdiction, its submissions are insufficient to establish such general jurisdiction. Plaintiff does assert that Senju Metal maintains a website, and that this website boasts of the company's global presence and North American network. (Pl's Supp. Mem., at § III.) Courts have consistently held, however, that maintaining an informational website does not confer personal jurisdiction in every jurisdiction in which that website can be accessed. Rose, 2001 WL 236738, at *2 (collecting cases.) Moreover, Senju Metal's assertion in its website that it maintains a global network is clearly not sufficient to establish that Senju Metal maintains continuous and substantial contacts with this jurisdiction sufficient for a finding of general jurisdiction.
Plaintiff's arguments in favor of specific jurisdiction are more persuasive. Plaintiff asserts that it purchased approximately forty thousand allegedly defective sprinkler heads made by Senju Metal from a Pennsylvania distributor, and subsequently installed them in residential homes. (Pl's Supp. Mem., Ex. A, "Gourley Aff.", at ¶ 8.) Plaintiff further asserts that "sprinkler heads manufactured by Senju [Metal] are, in essence, a consumer product which has been widely disseminated throughout the Delaware Valley of Pennsylvania." (Pl's Supp. Mem., at § III.) However, Plaintiff provides no evidence on the subject of how these sprinkler heads traveled into this district. The leading United States Supreme Court case on this issue isAsahi Metal Indus. Co. v. California Superior Ct., 480 U.S. 102 (1987). There was no majority opinion in Asahi, however. Justice O'Connor's opinion, joined by a plurality of four members of the Court, found that a defendant that merely placed goods into the stream of commerce could not be subjected to personal jurisdiction in every forum in which the goods were sold to the end-user, even where the defendant had knowledge that the goods would eventually travel through the stream of commerce into that forum. Justice O'Connor wrote:
The "substantial connection" between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State. . . . The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State.Id. at 112 (emphasis in original) (citations omitted.) According to Justice O'Connor's opinion, additional affirmative conduct on the part of the defendant is necessary before personal jurisdiction can be exercised over the defendant:
Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State.Id.
According to the concurrence of Justice Brennan in Asahi, which was joined by three other Justices, if a defendant places goods into the stream of commerce knowing that the goods will eventually reach the forum state, and economically benefits from the sale of the goods in the forum state, no additional conduct purposefully directed at the forum state is necessary for the exercise of personal jurisdiction over that defendant in the forum state. Justice Brennan wrote,
A defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State's laws that regulate and facilitate commercial activity. These benefits accrue regardless of whether that participant directly conducts business in the forum State, or engages in additional conduct directed toward the State.Id. at 117 (Brennan, J., concurring.) The Third Circuit has not yet indicated whether it follows the reasoning of Justice O'Connor's plurality opinion or Justice Brennan's concurrence. Rather, courts in the Third Circuit have generally applied both tests in determining whether personal jurisdiction exists. See Penzoil, 149 F.3d at 205. The Court will follow this practice in this case.
Justice Stevens devised a third test for the exercise of personal jurisdiction in stream of commerce cases, which considers the volume, value and hazardous nature of goods placed in the stream of commerce. See id. at 122 (Stevens, J., concurring.)
In the instant case, Plaintiff submits an affidavit of Mr. James Gourley, Chief Executive Officer of Plaintiff, who asserts that, after Senju Metal sprinkler heads began to fail, a representative of Senju Metal visited Pennsylvania and conducted an engineering study concerning the problem, which was distributed to vendors and installers in the Pennsylvania market. (Pl's Supp. Mem., Ex. A, "Gourley Aff.", at ¶ 12.) The conduct of Senju Metal's representative in traveling to Pennsylvania to conduct an investigation and providing advice to local contractors concerning the findings of this investigation constitutes additional conduct evidencing an intent to serve the market in Pennsylvania, thereby satisfying the requirements of the O'Connor plurality. Furthermore, Senju Metal has clearly benefitted economically from the sale of tens of thousands of its sprinkler heads in the state of Pennsylvania. (Id. at ¶¶ 8-9.) Furthermore, given the number of sales involved, Senju Metal cannot dispute that it was aware of the distribution of its sprinkler heads into Pennsylvania, and of the resulting income it received from the sale of those sprinkler heads.
Having determined that Senju Metal has sufficient contacts with Pennsylvania for it to reasonably anticipate being haled into court in this state, we must now determine whether doing so would comport with notions of "fair play and substantial justice." Factors utilized by courts in determining the fairness of forcing a defendant to defend itself in a particular forum include "the burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies and the shared interest of the several states in furthering social policies." Pennzoil, 149 F.3d at 208. In this case, none of these factors "suggest that exercising jurisdiction would be unreasonable. . . ." Id. Indeed, this is not a case which arises out of a random or isolated event in the state of Pennsylvania. To the contrary, this suit arises out of the alleged failure, or potential failure, of tens of thousands of Senju Metal's products which have been installed in Pennsylvania homes. Furthermore, as noted, supra, Senju Metal has already consented to suit in Pennsylvania state court in an action also involving its allegedly defective sprinkler heads. Any inconvenience Senju Metal may suffer in connection with defending this additional lawsuit would therefore appear to be minimal.
The Court therefore finds that the personal jurisdiction of this Court over Senju Metal would be proper.
B. Breach of Implied Warranty of Merchantability
Plaintiff alleges a claim for breach of implied warranty of merchantability in Counts I and II of the FAC. Defendants move to dismiss this claim pursuant to Federal Rule of Civil Procedure 12(b)(6). A claim may be dismissed under Federal Rule of Civil Procedure 12(b)(6) only if the plaintiff can prove no set of facts in support of the claim that would entitle her to relief.ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994). The reviewing court must consider only those facts alleged in the complaint and accept all of the allegations as true. Id.
"In order to prevail under Pennsylvania law on a claim for breach of either warranty of fitness for a particular purpose or warranty of merchantability, a plaintiff must show that the product was defective." Petrucelli v. Borhinger Ratzinger, 46 F.3d 1298, 1309 (3d Cir. 1995) (citing Altronics of Bethlehem, Inc. v. Repco, Inc., 957 F.2d 1102, 1105 (3d Cir. 1992)). A defect can be established either by direct evidence or by circumstantial evidence. Altronics, 46 F.3d at 1309. Where a party attempts to prove a defect based upon circumstantial evidence, the party must show: "(1) that the product malfunctioned; (2) that plaintiffs used the product as intended or reasonably expected by the manufacturer; and (3) the absence of other reasonable secondary causes." Id.
Defendants argue in their Motion to Dismiss and their Opposition to Plaintiff's Motion for Reconsideration that Plaintiff has failed to properly allege the existence of a defect in Defendants' sprinkler heads, and that Plaintiff's allegations are therefore inadequate to support a claim for breach of implied warranty. Specifically, Defendants argue that "the FAC's allegations, at most, allege the existence of a defect through circumstantial evidence because the FAC never adequately pleadswhy the sprinkler heads are defective." (Defs.' Mem. at 18.) However, the FAC alleges that "the sprinkler heads sold by Senju were improperly designed and manufactured, were unfit for use in fire suppression systems, and were made of a type or kind of brass unsuitable for use as sprinkler heads in fire suppression systems." (FAC ¶ 21.) The FAC therefore clearly alleges that the sprinkler heads were defective because they were made of a type of brass unsuitable for use in sprinkler heads. Thus, Plaintiff alleges the existence of direct evidence that Defendants' sprinkler heads were defective, making the three-part showing required for circumstantial evidence cases unnecessary.
Plaintiff also alleges that Defendants waived their right to move for dismissal of the breach of warranty claims in the FAC by failing to move for dismissal of Plaintiff's breach of implied warranty claim in the original Complaint. However, Plaintiff has not cited, and the Court has not found, any authority which supports its argument. Moreover, the language used with respect to the breach of implied warranty claims in the original Complaint and the FAC is not identical.
C. Damages Count
Defendants also seek to dismiss Count VI of the FAC. Defendants argue that there is no independent cause of action for damages. The Court agrees. The Court will therefore grant Defendants' Motion to dismiss Count VI to the extent that the Court will not consider Count VI as a separate cause of action, but rather as a claim for damages based upon the preceding counts.
III. CONCLUSION
For the foregoing reasons, the Court finds that the allegations in the FAC and in the supporting affidavit are clearly sufficient to establish the personal jurisdiction of this Court over Defendant Senju Metal. The Court further finds that the allegations in the FAC with respect to Counts I and II are clearly sufficient to survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The Court therefore finds that failing to reconsider its order dismissing Counts I and II of the FAC would work a manifest injustice upon Plaintiff, who would be left with no possibility of relief in this Court for a potentially viable claim. Accordingly, the Court vacates that part of the Court's October 7, 2003 Order which dismissed Counts I and II of the FAC against Defendants Senju America and Senju Metal, and denies Defendants' Motion to Dismiss Counts I and II of the FAC.
Defendants also move to dismiss Count II of the FAC, which is titled "Breach of Implied Warranty of Merchantability: UCC 2-314," on the ground that this count is identical to Count I, which is titled "Breach of Implied Warranty of Merchantability." Defendants argue that, under Pennsylvania law, the implied warranty of merchantability arises under the UCC. Plaintiff argues, without explanation, that the two counts are not identical. The Court will not regard Counts I and II as asserting independent causes of action. Rather, the Court will regard Counts I and II as asserting a single cause of action for breach of implied warranty of merchantability under Pennsylvania law.
An appropriate order follows.
ORDER
AND NOW, this 12th day of December, 2003, IT IS HEREBY ORDERED as follows:
1) Plaintiff's Motion for Reconsideration is GRANTED.
2) Defendant Senju Metal's Motion to Dismiss the First Amended Complaint based upon lack of personal jurisdiction is DENIED.
3) Defendants' Motion to Dismiss Counts I and II of the First Amended Complaint for failure to state a claim upon which relief may be granted is DENIED.
4) The Court vacates that part of its October 7, 2003 Order dismissing Counts I and II of the First Amended Complaint against Defendants Senju America and Senju Metal.
5) This case shall be restored to the active trial docket.